<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-1
POST-EFFECTIVE AMENDMENT NUMBER 13 TO
REGISTRATION STATEMENT NO. 2-95577
IDS FLEXIBLE SAVINGS CERTIFICATE
UNDER
THE SECURITIES ACT OF 1933
IDS CERTIFICATE COMPANY
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
6725
(Primary Standard Industrial Classification Code Number)
41-6009975
(I.R.S. Employer Identification No.)
IDS Tower 10, Minneapolis, MN 55440-0010, (612) 671-3131
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Bruce A. Kohn, IDS Tower 10, Minneapolis, MN 55440-0010
(612) 671-2221
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24f-2 of the Investment Company Act of 1940. Registrants' Rule
24f-2 Notices for its most recent fiscal year (December 31) will be
filed on or about February 28, 1995.
<PAGE>
PAGE 2
Explanatory Note
The first prospectus contained in Part I of the Registration
Statement will be used, with minor variations, in connection with
the following Registration Statements: No. 2-68296, No. 2-76193,
No. 33-3562 and No.33-22503. In each case, the first several pages
of the prospectuses vary to describe the unique attributes of each
certificate. The balance of the prospectus is almost identical for
all certificates.
<PAGE>
PAGE 3
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS FLEXIBLE SAVINGS CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds;
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 4
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure and
certificates issued; Directors
and Officers.
Item 12. Disclosure of Directors and Officers;
Commission Position on Also see Item 17 in
Indemnification for Part II.
Securities Act Liabilities.
<PAGE>
PAGE 5
IDS Flexible Savings Certificate
Prospectus - April 26, 1995
IDS Flexible Savings Certificates are issued by IDS Certificate
Company (IDSC). You may purchase this certificate by selecting a
term of 6, 12, 18, 24, 30 or 36 months and an initial investment of
at least $1,000 but not more than $1 million (unless you receive
prior authorization to invest more). Your principal and interest
is guaranteed by IDSC. IDSC guarantees a fixed rate of interest
depending upon the term you select. You may make additional
investments during the term subject to certain limitations. You
may invest in successive terms up to a total of 20 years from the
issue date of the certificate. Your interest rate will be
determined as described in "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Flexible
Savings Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Flexible Savings Certificate as described in the prospectus, or to
bind IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
An American Express company
<PAGE>
PAGE 6
Inside Cover
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices.
Northeast Regional Office Midwest Regional Office
7 World Trade Center, Suite 1300 Northwestern Atrium Center
New York, NY 10048 500 West Madison Street
Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Boulevard, 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed rate of interest for each term. For the
initial term, the rate will be within a specified range of certain
average certificates of deposit interest rates, as published in the
most recent BANK RATE MONITOR National Index TM, North Palm Beach,
FL 33408, as explained under "About the certificate."
Here are the interest rates in effect on the date of this
prospectus, April 26, 1995:
Simple Effective
interest annualized
Term rate* yield**
6-month
12-month
18-month
24-month
30-month
36-month
*These are the rates for investments under $100,000. Rates may
depend on the factors described in "Interest" under "About the
certificate."
**Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for future terms are set at the discretion
of IDSC and may also differ from the rates shown here.
We reserve the right to issue other securities with different
terms.<PAGE>
PAGE 7
Table of contents
About the certificate
Investment amounts and terms 4p
Face amount and principal 4p
Value at maturity 5p
Receiving cash during the term 5p
Interest 5p
Rates for new purchases 6p
Promotions and pricing flexibility 7p
Additional Investments 8p
How to invest and withdraw funds
Buying your certificate 10p
Full and partial withdrawals 12p
When your certificate term ends 14p
Transfer to other accounts 15p
Retirement plans: special policies 16p
Transfer of ownership 18p
For more information 18p
Taxes on your earnings
Retirement accounts 19p
Gifts to minors 19p
Foreign investors 22p
How your money is used and protected
Invested and guaranteed by IDSC 23p
Regulated by government 23p
Backed by our investments 24p
Investment policies 24p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation 26p
Capital structure and certificates issued 26p
Investment management and services 27p
Distribution 28p
Employment of other American Express affiliates 29p
Directors and officers 29p
Auditors 32p
Financial information
Summary of selected financial information 33p
Management's discussion and analysis of
financial condition and results of operations 34p
Report of independent auditors 40p
Financial statements 42p
Notes to financial statements 49p
<PAGE>
PAGE 8
About the certificate
Investment amounts and terms
You may purchase the IDS Flexible Savings Certificate with a single
payment of at least $1,000 payable in U.S. currency. Unless you
receive prior authorization, your total amount paid in over the
life of the certificate, less withdrawals, cannot exceed $1
million.
After determining the amount you wish to invest, you select a term
of 6, 12, 18, 24, 30 or 36 months for which we will guarantee an
interest rate. Generally, you will be able to select any of the
terms offered. But if your certificate is nearing its 20-year
maturity, you will not be allowed to select a term that would carry
the certificate past its maturity date.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Face amount and principal
The face amount of the certificate is the amount of your initial
investment, and will remain the same over the life of the
certificate. Any investment or withdrawal within 15 days of the
end of a term will be added on or deducted to determine principal
for the new term. The principal is the amount that is reinvested
at the beginning of each subsequent term, and is calculated as
follows:
Principal equals Face amount (initial investment)
plus At the end of a term, interest credited
to your account during the term
minus Any interest paid to you in cash
plus Any additional investments to your
certificate
minus Any withdrawals, fees and applicable
penalties.
Principal may change during a term as described in "Add-on feature"
and "Full and partial withdrawals."
For example: Assume your initial investment (face amount) of
$5,000 has earned $75 of interest during the term. You have not
taken any interest as cash, or made any withdrawals. You have
invested an additional $2,500 prior to the beginning of the next
term. Your principal for the next term will equal:
<PAGE>
PAGE 9
$5,000.00 Face Amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
or fees
$7,575.00 Principal at the beginning of the next
term.
Value at maturity
You may continue to invest for successive terms for up to a total
of 20 years. Your certificate matures at 20 years from its issue
date. At maturity, the value of your certificate will be the total
of your purchase price, plus additional investments and any
credited interest not paid to you in cash, less any withdrawals and
penalties. Some fees may apply as described in "How to invest and
withdraw funds."
Receiving cash during the term
If you need your money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your investments earn interest from the date they are credited to
your account. Interest is compounded and credited at the end of
each certificate month (on the monthly anniversary of the issue
date).
IDSC declares and guarantees a fixed rate of interest for each term
during the life of your certificate. We calculate the amount of
interest you earn each certificate month by:
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases
When your application is accepted, you will receive a confirmation
of your purchase showing the rate that your investment will earn.
IDSC guarantees that when rates for new purchases take effect, the
rates will be within a range based on the average interest rates
then published in the BANK RATE MONITOR National Index (TM) (the
BRM Index).
<PAGE>
PAGE 10
In the case of the 6-, 12-, 24-, and 30-month terms IDSC guarantees
that, for purchases of certificates for less than $100,000, your
rate for your initial term will be equal to or up to 100 basis
points (1%) above such rates for comparable length certificates of
deposit (CDs). In the case of these terms, for purchases of
certificates for $100,000 or more, IDSC guarantees that your rate
for your initial term will be within a range of 15-115 basis points
above such rates for comparable length certificates of deposit.
In the case of the 18-month term, because the BRM Index doesn't
typically publish rates for comparable length certificates of
deposit, we guarantee that, for purchases of certificates for less
than $100,000, the rate for your initial term will be within a
range of 10-110 basis points above the rates for the 12-month
certificates of deposit. In the case of the 18-month term, for
purchases of certificates of $100,000 or more, we guarantee that
your rate for your initial term will be within a range of 25-125
basis points above the rates for the 12-month certificates of
deposit.
In the case of the 36-month term, because the BRM Index doesn't
typically publish rates for comparable length certificates of
deposit, we guarantee that, for purchases of certificates for less
than $100,000, the rate for your initial term will be within 20-120
basis points above the rates for the 30-month certificate of
deposit. In the case of the 36-month term, for purchases of
certificates of $100,000 or more, we guarantee that your rate for
your initial term will be within 35-135 basis points above the
rates for the 30-month certificates of deposit. For example, if
the rate most recently published in the BRM Index with respect to
the 30-month certificate of deposit is 3.75% our rates in effect
for that week for 36-month terms would be between 3.95% and 4.95%
for purchases for less than $100,000.
However, IDSC guarantees that, for persons who have received a
special promotional coupon from IDSC for purchase of a Flexible
Savings Certificate with an initial term of 6, 12, 24 or 30 months
and have satisfied the conditions in the coupon, when rates for new
purchases take effect, the rate for the initial term will be within
a range from 100 basis points (1%) to 200 basis points above the
average interest rate published for comparable length CDs in the
BRM Index. Similarly, IDSC guarantees that, for persons who have
received a special promotional coupon from IDSC for purchase of a
Flexible Savings Certificate with an initial term of 18 or 36
months and have satisfied the conditions in the coupon, when rates
for new purchases take effect, the rate for an initial term of 18
or 36 months will be within a range from 100 basis points (1%) to
200 basis points above the average interest rate published for 12-
month CDs or 30-month CDs, respectively, in the BRM Index. For
example, the coupon may require that you make a minimum investment
and that you are not an existing client of American Express
Financial Corporation, American Express Financial Advisors Inc., or
another subsidiary of American Express Financial Corporation.
American Express Financial Corporation will select persons to
receive the coupon based on a business strategy to build
relationships with new clients in selected market segments who
American Express Financial Corporation believes meet threshold <PAGE>
PAGE 11
requirements for such factors as household income and home values.
From time to time coupons may be sent only to persons who both fit
this strategy and live in particular parts of the country or are
affiliated with particular organizations such as an automobile
club.
From time to time, IDSC may offer certificates with different terms
than those described above. Such terms may be from 7-47 months.
For these terms, IDSC guarantees that, for purchases of
certificates for less than $100,000, your rate for your initial
term will be within a range of 100-200 basis points above the rates
published in the BRM Index for the certificates of deposit
specified above that have the longest maturity that is less than
the term of the IDS certificate in question. For purchases of
certificates of $100,000 or more, the range for your initial term
will be 115-215 points above the same rate. For example, in the
case of terms from 7-11 months, IDSC guarantees that, for purchases
of certificates for less than $100,000, your rate for your initial
term will be within a range of 100-200 basis points above the rates
for the 6-month certificates of deposit, and for purchases of
certificates for $100,000 or more, your rate for your initial term
will be within a range of 115-215 basis points above the rates for
the 6-month certificates of deposit. [Because of tax laws, persons
who are neither citizens nor residents of the United States will
not be eligible to purchase certificates with terms of more than 6
months and less than 12 months.]
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, American Express
Financial Corporation, or any of their affiliates. The BRM Index
used by IDSC is a 25-city index.
The BANK RATE MONITOR is available in your local library. To
obtain information on current BRM Index rates, call the Client
Service Organization from 8 a.m. to 6 p.m. your local time at:
1-800-437-3133 or
TTY: 1-800-846-4293.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect for your chosen term on the date of
your application
o the rate in effect on the date your application is
accepted by IDSC.
However, if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days before receipt<PAGE>
PAGE 12
Except for specific promotions, IDSC guarantees an initial rate 25
basis points above the rate offered to the general public on this
IDSC certificate if it is purchased by using the CD transfer
service offered by American Express Financial Advisors, Inc. to
help you transfer money from a bank or thrift CD account into IDSC
investments. To be eligible for this rate, you must transfer at
least $10,000 from a CD account to IDSC to purchase one or more IDS
Cash Reserve Certificates and/or IDS Flexible Saving Certificates,
and this rate will only apply to those certificates.
Except for specific promotions, active or retired American Express
Financial Corporation employees, IDSC's directors, American Express
financial advisors, their immediate families and any U.S. employee
of any affiliated company of IDSC are guaranteed an initial rate 75
basis points above the rate offered to the general public,
reflecting the lower distribution costs associated with such sales.
Promotions and pricing flexibility
From time to time, IDSC may sponsor or participate in promotions
involving one or more of the certificates and their respective
terms. For example, we may offer different rates to new clients,
to existing clients, or to individuals who have purchased other
products or used other services of American Express Financial
Corporation or its subsidiaries.
We also may offer different rates based on your amount invested,
maturity selected, geographic location and whether the certificate
is purchased for an IRA or a qualified retirement account.
These promotions will generally be for a specified period of time.
If we offer a promotion, the rates for new purchases will be within
the range of rates described under "Rates for new purchases".
Rates for future terms: Interest on your certificate for future
terms may be greater or less than the rates you receive during your
first term. In setting future interest rates, a primary
consideration will be the prevailing investment climate, including
certificate of deposit yields as reflected in the BRM Index.
Nevertheless, we have complete discretion as to what interest rate
shall be declared beyond the initial term. At least six days in
advance of each term, we will send you notice of the rate that your
certificate will earn for that term. If the BRM Index is no longer
publicly available or feasible to use, IDSC may use another,
similar index as a guide for setting rates.
Performance: From February 1990 through February 1995, IDS
Flexible Savings Certificate 1 year yields were higher than average
bank and thrift 1 year certificate of deposit yields and Super NOW
accounts, as measured by the BRM Index:
INSERT HERE UPDATED VERSION OF GRAPH FROM CURRENT PROSPECTUS
FORMAT THE FOLLOWING AS A NOTE TO THE GRAPH;
<PAGE>
PAGE 13
o The graph compares past yields and should not be considered a
prediction of future performance.
Additional investments
You may make investments within 15 calendar days after the end of a
term (the "grace period"). Additional investments may be in any
amount so long as your total investment, less withdrawals, does not
exceed $1 million (unless you receive prior authorization from IDSC
to invest more). You will earn interest on additional investments
from the date we accept them. IDSC will send a confirmation of
additional investments.
Add-on feature: You may also add to your certificate during the
term. Additional investments may not exceed 25% of the
certificate's principal balance at the end of the grace period.
This principal includes the balance at the end of the previous
term, plus or minus any deposits or withdrawals during the grace
period.
Any add-on or withdrawal during the grace period will change the
principal amount used to determine the amount available for the 25%
add-on feature.
For example, suppose your original balance is $9,000. During the
grace period, you add $1,000. At any time during the current term,
you could add up to 25% of principal ($9,000 + $1,000 = $10,000),
or $2,500 to your certificate.
The interest rate for these additional investments is the rate then
in effect for your account. If your additional investment
increases the principal of your certificate so that your
certificate's principal has exceeded a break point for a higher
interest rate, the certificate will earn this higher interest rate
for the remainder of the term, from the date the additional
investment is accepted.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted, you
will receive a confirmation of your purchase, indicating your
account number and applicable rate of interest for your first term,
as described under "Rates for new purchases."
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification Number). See "Taxes on your earnings."
<PAGE>
PAGE 14
Purchase policies
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation
must convert your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
This could take up to two business days.
o IDSC has complete discretion to determine whether to accept an
application.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Two ways to make additional investments
1
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
2
By wire
For investment into an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
account number) for (your name).
If this information is not included, the order may be rejected and
all money received, less any costs IDSC incurs, will be returned
promptly.<PAGE>
PAGE 15
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, IDSC and Norwest Bank
Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Bank wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, American Express Financial Corporation and its other
subsidiaries are not responsible for any delays that occur in
wiring funds, including delays in processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
o Full and partial withdrawals of principal are subject to
penalties, described below.
o If a withdrawal reduces your account value to a point where we
pay a lower interest rate, you will earn the lower rate from
the date of the withdrawal.
o You may not otherwise make a partial withdrawal if it would
reduce your certificate balance to less than $1,000. If you
request such a withdrawal, we will contact you for revised
instructions.
o Scheduled partial withdrawals may be made monthly, quarterly,
semiannually, annually and at term end.
o Withdrawals before the end of the certificate month will
result in loss of accrued interest on the amount withdrawn.
You'll get the best result by timing a withdrawal at the end
of the certificate month.
Penalties for early withdrawal during a term: When you request a
full or partial withdrawal, we pay the amount you request:
o first from interest credited during the current term
o then from the principal of your certificate.
Any additional investments or withdrawals during a term are added
to or deducted from the principal and are used in determining any
withdrawal charges.<PAGE>
PAGE 16
Penalty exceptions: There is never a penalty for withdrawal of
interest. In addition, you may withdraw up to 10% of your
principal during the term without a withdrawal penalty. The
principal available for the 10% no-penalty withdrawal feature is
the balance in the certificate at the beginning of the term plus or
minus any deposits or withdrawals made during the grace period.
See Retirement plans: special policies section on page 16 for
additional penalty exceptions.
The following example demonstrates how this feature works:
Suppose your certificate balance is $1,000. During the grace
period, you add $500, bringing the principal to $1,500. At any
time during the term, you could withdraw up to $150 of principal
with no penalty.
Any additional investments or withdrawals following the grace
period will not change the principal amount used to determine the
amount available for the 10% no-penalty withdrawal feature.
Withdrawal penalties: For withdrawals during the term of more than
the interest credited that term and over 10% of the certificate's
principal, a 2% withdrawal penalty will be deducted from the
account's remaining balance.
For example, assume you invest $20,000 in a certificate and select
a two-year term. A little over a year later assume you have earned
$1,600 in interest. The following demonstrates how the withdrawal
charge is deducted:
When you withdraw a specific amount of money, we would have to
withdraw somewhat more from your account to cover the withdrawal
charge. For instance, suppose you request a $5,000 check. The
first $1,600 paid to you is interest earned that term, the next
$2,000 is 10% of principal, and not subject to the withdrawal
penalty, and the remaining $1,400 paid to you is principal over the
10% limit. We would send you a check for $5,000 and deduct a
withdrawal charge of $28.00 ($1,400 x 2%) from the remaining
balance of your certificate account. Your new balance would be
$16,572 ($21,600 - $5,028).
$20,000.00 Total investments
$1,600.00 Interest credited
$21,600.00 Total balance
$5,000.00 Requested check
($1,600.00) Credited interest withdrawn
($2,000.00) 10 percent of principal -- not subject to
penalty
___________
$1,400.00 Remaining portion of requested withdrawal --
subject to penalty
2.00% Withdrawal penalty percent
$28.00 Actual withdrawal penalty
<PAGE>
PAGE 17
$21,600.00 Balance prior to withdrawal
($5,000.00) Requested withdrawal check
($ 28.00) Withdrawal penalty
$16,572.00 Total balance after withdrawal
Additionally, if you withdraw during a certificate month, you will
not earn interest for the month on the amount withdrawn.
For more information on withdrawal charges, talk with your American
Express financial advisor or call Client Service Organization at
the number on the back cover.
When your certificate term ends
Shortly before the end of the term you have selected for your
certificate, we will send you a notice indicating the interest rate
that will apply to the certificate for the new term. When your
certificate term ends we will automatically renew your certificate
for the same term unless you tell us otherwise. If you wish to
select a different term, you must notify us in writing before the
end of the grace period. You will not be allowed to select a term
that would carry the certificate past its maturity date.
The interest rates that will apply to your new term will be those
in effect on the day the new term begins. We will send you a
confirmation showing the rate of interest that will apply to the
new term you have selected. This rate of interest will not be
changed during that term.
If you want to withdraw your certificate without a withdrawal
charge, you must notify us within 15 calendar days following the
end of a term. However, you will lose any interest accrued since
the end of the term.
You may also add to your investment within the 15 calendar days
following the end of your term. see "Additional investments" under
"About the certificate."
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. A check may be
mailed earlier if your bank provides evidence that your check
has cleared.
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
<PAGE>
PAGE 18
Transfers to other accounts
You may transfer part or all of your certificate for any other
American Express Financial Advisors, Inc. certificate or into
another existing American Express Financial Advisors, Inc. account
that has the same registered ownership (subject to any terms and
conditions that may apply).
Two ways to request a withdrawal or transfer
1
By phone
Call between 8 a.m. and 6 p.m. your local time:
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o Transfers into an American Express Financial Corporation
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither IDSC nor American Express
Financial Corporation will be liable for any loss resulting
from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis MN 55440-0010
<PAGE>
PAGE 19
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Avenue
Minneapolis MN 55402
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transfers to another American Express Financial Advisors Inc.
account with different ownership (all current registered
owners must sign the request).
Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC's account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
<PAGE>
PAGE 20
3
Electronic transfer
o Only for preauthorized recurring payments
o No charge
o Deposited electronically in your bank account
o Three to five days from request to first deposit
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, the full value of the
certificate will automatically transfer to a new or existing
cash management account according to the rules outlined in the
Custodial Retirement Plan document.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o We will waive withdrawal penalties on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA
account at American Express Financial Corporation, a $25
termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Withdrawal at Death
If a certificate is surrendered upon the client's death, any
applicable surrender charge will be waived. In addition, if an IRA
termination fee is applicable, it will also be waived.
<PAGE>
PAGE 21
Transfer of ownership
o While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate
for an IRA, 401(k) plan or other qualified retirement plan,
you may be unable to transfer or assign the certificate
without losing the account's favorable tax status. Please
consult your tax advisor.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your financial advisor
or call IDSC's toll free client service number.
1-800-437-3133 or
TTY: 1-800-846-4293
Taxes on your earnings
Interest on your certificate is taxable when credited to your
account. Each calendar year we provide certificate account owner
and the IRS with reports of all earnings over $10 (Form 1099).
Withdrawals are reported to the certificate account owner and the
IRS on Form 1099-B, Proceeds from Broker Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions may apply.) Also,
withdrawals of principal during a certificate month may be subject
to the certificate's provision for loss of interest.
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
<PAGE>
PAGE 22
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
A living trust The grantor-trustee (the person
who puts the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation<PAGE>
PAGE 23
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors Inc. office for Federal
Form W-9, Request for Taxpayer Identification Number and
Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your certificate to satisfy estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax advisor about your personal situation.
<PAGE>
PAGE 24
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Flexible Savings Certificate is issued and guaranteed by
IDSC, a wholly owned subsidiary of American Express Financial
Corporation. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than
$___ billion and a net worth in excess of $___ million on Dec. 31,
1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American Express
Financial Corporation for advisory and other services and
distribution fees to American Express Financial Advisors, Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
Most banks and thrifts offer investments known as certificates of
deposit that are similar to our certificates in many ways. Early
withdrawals of bank CDs often result in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Flexible Savings Certificate is a security, its
offer and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
<PAGE>
PAGE 25
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
__% preferred stocks
__% government agency bonds
__% corporate and other bonds
__% mortgages
__% municipal bonds
__% cash and cash equivalents
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Financial Corporation is a wholly owned subsidiary of
American Express Company. Copies of our Dec. 31, 1994 schedule of
Investments in Securities of Unaffiliated Issuers are available
upon request. For comments regarding the valuation, carrying
values and unrealized appreciation (depreciation) of investment
securities, see Notes 1, 2 and 3 to the financial statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.<PAGE>
PAGE 26
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your certificate is managed
Relationship between IDSC and American Express Financial
Corporation
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.<PAGE>
PAGE 27
Before IDSC was created, American Express Financial Corporation
(formerly known as IDS Financial Corporation) our parent company
and organizer, had issued similar certificates since 1894. As of
January 1, 1995, IDS changed its name to American Express Financial
Corporation. IDSC, IDS and now American Express Financial
Corporation have never failed to meet their certificate payments.
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. American Express Advisors Inc., a wholly
owned subsidiary of American Express Financial Corporation,
provides a broad range of financial advising services for
individuals and businesses through its nationwide network of more
than ___ offices and more than _____ financial advisors. American
Express Financial Advisors Inc. financial advising services are
comprehensive, beginning with a detailed written analysis that's
tailored to your needs. Your analysis may address one or all of
these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other businesses including:
o travel related services (including American Express Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors, Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding _______ shares of
common stock, par value of $10 per share. American Express
Financial Corporation owns all of the outstanding shares.
As of Dec. 31, 1994, IDSC had issued (in face amount) $--
$_____________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment advisor and is
responsible for:
<PAGE>
PAGE 28
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Corporation or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets):
Advisory and services fee computation:
0.75% of first $250 million
0.65 of next 250 million
0.55 of next 250 million
0.50 of next 250 million
0.45 of any amount over $1 billion
Excluded from assets for this computation are mortgage loans, real
estate, and any other asset on which we pay a service fee.
Advisory and services fees for the past three years:
Percentage of
Year Total fees included assets
1994 $
1993 $
1992 $
Estimated advisory and services fees for 1995 are $______________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate holder accounts), and
o expenses of customer settlements not attributable to sales
function.
<PAGE>
PAGE 29
Distribution
Under a Distribution Agreement with American Express Financial
Advisors, Inc. we pay for the distribution of this certificate as
follows:
o 0.25% of the initial payment on the issue date of the
certificate, and
o 0.25% of the certificate's reserve at the beginning of the
second and subsequent quarters from issue date. This fee is
not assessed to your certificate account.
For certificates paying a special promotional coupon rate described
in "Rates for new purchases" under "About the certificate,"
American Express Financial Advisors Inc. waives its distribution
fee.
Total distribution fees paid to American Express Financial
Advisors, Inc. for all series of certificates amounted to
$__________ during the year ended Dec. 31, 1994. We expect to pay
American Express Financial Advisors Inc. distribution fees
amounting to $__________ during 1995.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors, Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
American Express Financial Corporation may employ affiliates of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.<PAGE>
PAGE 30
We paid a total of $______ during 1994 to directors not employed by
American Express Financial Corporation.
Board of directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968<PAGE>
PAGE 31
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.<PAGE>
PAGE 32
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company
since 1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
<PAGE>
PAGE 33
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1994.
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express, the parent company of
American Express Financial Corporation and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments and guarantees interest in advance
for a three-month term.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
IDS Future Value Certificate - A single payment certificate that
guarantees interest in advance for a four, five, six, seven, eight,
nine or ten-year maturity.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad stock market index, with
guaranteed return of principal.
<PAGE>
PAGE 34
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS CASH RESERVE CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 35
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 36
IDS Cash Reserve Certificate
Prospectus April 26, 1995
Earn attractive rates with ready access to your cash reserves.
IDS Cash Reserve Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with an initial
investment of at least $1,000 or monthly investments of at least
$50. Your principal and interest are guaranteed by IDSC. Your
certificate earns a fixed rate of interest, declared every three
months. Investments in the certificate may continue for
successive three-month terms up to a total of 20 years from the
issue date of the certificate. Unless you receive prior
authorization from IDSC, your total investment, excluding interest
earned, cannot exceed $1 million. Your interest rate will be
determined as described in "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OF ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Cash
Reserve Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Cash Reserve Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
An American Express Company
<PAGE>
PAGE 37
INSIDE COVER:
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St. Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed interest rate for each three-month term
during the life of the certificate. For your initial term, IDSC
guarantees that when the rate for new purchases takes effect, the
rate will be within a specified range of the average rate for
three-month certificates of deposit as published in the most recent
BANK RATE MONITORTM, North Palm Beach, FL 33408, as explained
under "About the certificate."
Here are the interest rates in effect on the date of this
prospectus, April 26, 1995:
Investment Simple Effective
amount interest rate* annualized yield**
$50 to $999
$1,000 to $24,999
$25,000 or more
*Rates may depend on factors described in "Interest" under "About
the certificate."
**Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later three-month terms are set at the
discretion of IDSC and may also differ from the rates shown here.
We reserve the right to issue other securities with different
terms.
<PAGE>
PAGE 38
Table of contents
About the certificate......
Investment amounts and terms...... 4p
Face amount and principal...... 5p
Value at maturity...... 5p
Receiving cash during the term...... 5p
Interest...... 5p
Rates for new purchases...... 6p
How to invest and withdraw funds......
Buying your certificate...... 9p
Additional investments...... 9p
Full and partial withdrawals...... 11p
When your certificate term ends 12p
Transfers to other accounts...... 12p
Retirement plans: special policies...... 15p
Transfer of ownership...... 15p
For more information...... 15p
Taxes on your earnings......
Retirement accounts 16p
Gifts to minors 16p
Foreign investors...... 19p
How your money is used and protected
Invested and guaranteed by IDSC...... 20p
Regulated by government...... 20p
Backed by our investments...... 21p
Investment policies...... 22p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation...... 24p
Capital structure and certificates issued...... 24p
Investment management and services...... 25p
Distribution...... 26p
Employment of other American Express affiliates......27p
Directors and officers...... 27p
Auditors...... 30p
Financial information......
Summary of selected financial information...... 31p
Management's discussion and analysis of
financial condition and results of operations......
Report of independent auditors...... 40p
Financial statements...... 42p
Notes to financial statements...... 49p
<PAGE>
PAGE 39
About the certificate
Investment amounts and terms
You can purchase this certificate with an initial investment of at
least $1,000 or monthly investments of at least $50 through
scheduled bank authorization or payroll deduction. Your total
investments over the life of the certificate may not exceed $1
million unless you receive prior authorization from IDSC.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. A minimum investment of $50 per month is
required for these types of accounts. If so used, the amount of
your contribution (investment) will be subject to any limitations
of the plan and applicable federal law.
Face amount and principal
The face amount of the certificate is the amount of your initial
investment, and will remain the same over the life of the
certificate.
The principal is the amount that is reinvested at the beginning of
each subsequent term, and is calculated as follows:
Principal equals Face Amount (initial investment)
plus At the end of a term, interest credited to
your account during the term
minus Any interest paid to you in cash
plus Any additional investments to your
certificate
minus Any withdrawals, fees and applicable
penalties.
For example: Assume your initial investment (face amount) of
$5,000 has earned $75 of interest during the term. You have not
taken any interest as cash, or made any withdrawals. You have
invested an additional $2,500 prior to the beginning of the next
term. Your principal for the next term will equal:
$5,000.00 Face Amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
or fees
$7,575.00 Principal at the beginning of the next
term.
<PAGE>
PAGE 40
Value at maturity
Your certificate matures 20 years from its issue date. At
maturity, the value of your certificate will be the total of your
actual investment, plus credited interest not paid to you in cash,
less withdrawals, penalties and fees. When your certificate
matures, you will receive a check for your principal, plus any
credited interest, less any withdrawals, penalties and fees. Bank
authorizations will automatically be stopped at maturity or full
withdrawal.
Receiving cash during the term
If you need your money before your certificate matures, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your investments earn interest from the date they are credited to
your account. Interest is compounded and credited at the end of
each certificate month (on the monthly anniversary of the issue
date).
IDSC declares and guarantees a fixed rate of interest for each
three-month term during the life of your certificate. We calculate
the amount of interest you earn each certificate month by:
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases: When your application is accepted, you
will receive a confirmation showing the rate that your investment
will earn for the first term. For accounts of $1,000 to $24,999.99
IDSC guarantees that this rate will be within a range from 20 basis
points (0.20%) below to 80 basis points (0.80%) above the average
interest rate published for 3-month CDs in the BANK RATE MONITOR
National IndexTM (the BRM Index). For example, if the average rate
most recently published is 2.75%, our rate in effect for that week
for amounts of $1,000 to $24,999.99 would be between 3.55% to
4.55%. For accounts of $25,000 or more, this rate will be within a
range from 0 basis points (0.0%) below to 100 basis points (1.00%)
above the same index rate. For accounts of less than $1,000, this
rate will be within a range of 90 basis points (0.90%) below to 10
basis points (0.10%) above the average interest rate. (CD accounts
offered by banks generally are government insured.)
<PAGE>
PAGE 41
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, American Express
Financial Corporation, or any of their affiliates. The BRM Index
used by IDSC is a 25-city index.
The BANK RATE MONITOR may be available in your local library. To
obtain information on the current BRM Index rates, call the Client
Service Organization at the number listed on the back cover.
1-800-437-3133
TTY: 1-800-846-4293.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days prior to receipt.
Except for specific promotions, IDSC guarantees an initial rate 25
basis points above the rate offered to the general public on this
IDS certificate if it is purchased by using the CD transfer service
offered by American Express Financial Advisors Inc. to help you
transfer money from a bank or thrift CD account to IDS investments.
To be eligible for this rate, you must transfer at least $10,000
from a CD account to IDSC to purchase one or more IDS Cash Reserve
Certificates and/or IDS Flexible Savings Certificates, and this
rate will only apply to those certificates.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use other products or services offered
by American Express Financial Advisors Inc. or its affiliates.
These promotions will generally be for a specified period of time.
If we offer a promotion, the rates for new purchases will be within
the range of rates described under "Rates for new purchases,"
above.
Rates for future terms: Interest on your certificate for future
three-month terms may be greater or less than the rates you receive
during the first three months. In setting future rates, a primary
consideration will be the prevailing investment climate, including
3-month CD rates as reflected in the BRM Index. Nevertheless, we <PAGE>
PAGE 42
have complete discretion as to what interest shall be declared
beyond the initial three-month term. If the BRM Index is no longer
publicly available or feasible to use, IDSC may use another similar
index as a guide for setting rates.
Performance: From February 1990 through February 1995, IDS Cash
Reserve interest rates were higher than average bank and thrift 3-
month CD yields, as measured by the BRM Index:
Yield from May 1990 through February 1995
8% _____ IDS Cash Reserve Certificate
..... Money Market Deposit Account
6% ***** Certificate of Deposit - Three Month
4% Three lines comparing the rates for IDS Cash Reserve
Certificate versus money market deposit accounts and
2% three-month certificates of deposit, with IDS Cash
Reserve's line generally above the other two.
0%
1990 1991 1992 1993 1994 1995
This graph compares past interest rates offered on IDS Cash Reserve
Certificate to those of 3-month CDs and money market deposit
accounts and should not be considered a prediction of future
performance.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted, you
will receive a confirmation of your purchase, indicating your
account number and applicable rate of interest for your first term,
as described under "Rates for new purchases."
Additional investments
You may make additional investments at any time. Additional
investments must be at least $50 and your total investment, less
withdrawals, may not exceed $1 million (unless you receive prior
authorization from IDSC to invest more). You will earn interest on
additional investments from the date we accept them. IDSC will
send a confirmation of additional investments.
IMPORTANT: When opening an account, you must provide IDSC with your
correct Taxpayer Identification Number (Social Security or Employer
Identification Number). See "Taxes on your earnings."
<PAGE>
PAGE 43
Purchase policies
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation
must convert your check to federal funds (e.g., monies of
member banks with the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
o IDSC has complete discretion to determine whether to accept an
application.
o If you make no investments for a period of at least 12
consecutive months and your principal is less than $1,000, we
may send you a notice of our intent to cancel the certificate.
After the notice, if an investment is not made within 60 days
your certificate will be canceled, and we will send you a
check for its full value.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Three ways to make investments
1
By scheduled investment plan
Contact your financial advisor to set up one of the following
scheduled plans for monthly investments:
o bank authorization (automatic deduction from your bank
account)
o automatic payroll deduction
o direct deposit of Social Security check
o other plan approved by IDSC
To cancel a bank authorization, you must instruct IDSC in writing
or over the phone. We must receive notice at least three business
days before the date funds would normally be withdrawn from your
bank account.
<PAGE>
PAGE 44
2
By mail
For monthly or lump sum investments, send your check along with
your name and account number to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
3
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
account number) for (your name).
If this information is not included, the order may be rejected and
all money received, less any costs American Express Financial
Corporation incurs, will be returned promptly.
o Minimum amounts each wire investment: $1,000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, IDSC and Norwest Bank
Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Bank wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, American Express Financial Corporation and its other
subsidiaries are not responsible for any delays that occur in
wiring funds, including delays in processing by the bank.
o You must pay any fee the bank charges for wiring.
<PAGE>
PAGE 45
Full and partial withdrawals
You may withdraw your certificate for its full value at any time.
If you purchase this certificate for an IRA, 401(k), or other
retirement plan account, early withdrawals or cash payments of
interest taken prematurely may be subject to IRS penalty taxes.
o Complete withdrawal of your certificate is made by giving us
proper instructions.
To complete these transactions, see "Two ways to request a
withdrawal or transfer" section.
o You may make an unscheduled partial withdrawal of at least
$100 at any time.
o Interest payments in cash may be sent to you at the end of
each month, quarterly, semiannually or annually.
o Scheduled partial withdrawals may be sent to you monthly,
quarterly, semiannually or annually. The minimum withdrawal
amount is $50.
o Withdrawals before the end of the certificate month will
result in loss of interest on the amount withdrawn. You'll
get the best result by timing a withdrawal at the end of the
certificate month.
o You may not otherwise make a partial withdrawal if it would
reduce your certificate balance to less than $1,000. If you
request such a withdrawal, we will contact you for revised
instructions.
o Withdrawals that reduce your certificate's principal below a
break point for a lower interest rate will cause the remaining
principal to earn the lower interest rate for the rest of the
term from the date of the withdrawal.
o Withdrawals on certificates purchased by bank authorization or
payroll deduction may cause the balance to fall below $1,000.
The remaining balance will earn the lower interest rate that
applies to balances of less than $1,000.
When your certificate term ends
Shortly before the end of your certificate's term we will send you
a notice indicating the interest rate that will apply to the new
term. Unless you tell us otherwise, your certificate will
automatically continue for another term. The interest rate that
will apply to your new term will be the rate in effect on the day
the new term begins. This rate of interest will not be changed
during that term unless your certificate's principal falls below a
break point for a lower interest rate.
<PAGE>
PAGE 46
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. (A check may be
mailed earlier if your bank provides evidence that your check
has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate for any other IDS
certificate or into another existing American Express Financial
Advisors Inc. account that has the same registered ownership
(subject to any terms and conditions that may apply).
Two ways to request a withdrawal or transfer
1
By phone
Call between 8 a.m. and 6 p.m. your local time:
(612) 671-4737 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither IDSC nor American Express
Financial Corporation or its other subsidiaries will be liable
for any loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
<PAGE>
PAGE 47
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis MN 55440-0010
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Avenue
Minneapolis MN 55402
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transferring into an American Express Financial Advisors Inc.
account with a different ownership (all current registered
owners must sign the request).
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
Three ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or it is a full withdrawal, charges are
deducted from proceeds of the withdrawal.
<PAGE>
PAGE 48
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o Service fee, if any, is deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
3
Electronic transfer
o Only for preauthorized recurring payments
o No charge
o Deposited electronically in your bank account
o Three-five days from request to first deposit
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, the full value of the
certificate will automatically transfer to a new or existing
cash management account according to the rules outlined in the
Custodial Retirement Plan document.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
<PAGE>
PAGE 49
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your financial advisor
or call IDSC's toll free client service number:
1-800-437-3133
TTY: 1-800-846-4293.
Taxes on your earnings
Interest on your certificate is taxable when credited to your
account. Each calendar year we provide certificate holders and the
IRS with reports of all earnings over $10 (Form 1099). Withdrawals
are reported to the certificate holder and the IRS on Form 1099-B,
Proceeds from Broker Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
<PAGE>
PAGE 50
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. Other exceptions also may apply. Also,
withdrawals of principal during a certificate month may be subject
to the certificate's provision for loss of interest.
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person listed on
the account
<PAGE>
PAGE 51
Custodian account of a The minor
minor (Uniform Gifts/
Transfers to Minors Act)
A living trust The grantor-trustee (the person who
puts the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless no
legal entity is designated in the
account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors Inc. office for Federal
Form W-9, "Request for Taxpayer Identification Number and
Certification."
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your <PAGE>
PAGE 52
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your IDS certificate to satisfy estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Cash Reserve Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of American Express Financial
Corporation. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than
$____ billion and a net worth in excess of $____ million on Dec.
31, 1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American Express
Financial Corporation for advisory and other services and
distribution fees to American Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
Most banks and thrifts offer investments known as certificates of
deposit that are similar to our certificates in many ways. Early
withdrawals of bank CDs often result in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Cash Reserve Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the <PAGE>
PAGE 53
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
__% preferred stocks
__% government agency bonds
__% corporate and other bonds
__% mortgages
__% municipal bonds
__% cash and cash equivalents
More than __% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Bank & Trust), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of American
Express Financial Corporation. Copies of our Dec. 31, 1994
schedule of Investments in Securities of Unaffiliated Issuers are
available upon request. For comments regarding the valuation,
carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial
statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
<PAGE>
PAGE 54
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities. We
will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and American Express Financial
Corporation
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
<PAGE>
PAGE 55
Before IDSC was created, American Express Financial Corporation
(formerly known as IDS Financial Corporation) had issued similar
certificates since 1894. As of January 1, 1995 IDS Financial
Services Inc. has become American Express Financial Corporation.
IDSC and American Express Financial Corporation have never failed
to meet their certificate payments.
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. As of Dec. 31, 1994, American Express
Financial Corporation managed investments, including its own, of
more than $__ billion. American Express Financial Advisors Inc., a
wholly owned subsidiary of American Express Financial Corporation,
provides a broad range of financial advising services for
individuals and businesses through its nationwide network of more
than ___ offices and more than _____ financial advisors. American
Express Financial Corporation financial advising services are
comprehensive, beginning with a detailed written analysis that's
tailored to your needs. Your analysis may address one or all of
these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other business including:
o travel related services (including American Express Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of
common stock, par value of $10 per share. American Express
Financial Corporation owns all of the outstanding shares.
As of Dec. 31, 1994, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
<PAGE>
PAGE 56
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment advisor and is
responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Corporation or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets).
Advisory and Services Fee Computation
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1993 $15,036,091 0.50%
1992 $17,851,271 0.50
1991 $19,787,451 0.49
Estimated advisory and services fees for 1995 are $__________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
<PAGE>
PAGE 57
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate holder accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 0.25% of the initial payment on the issue date of the
certificate, and
o 0.25% of the certificate's reserve at the beginning of the
second and subsequent quarters from issue date. This fee is
not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1994. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1995.
See Note 1 to Financial Statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
American Express Financial Corporation may employ an affiliate of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
<PAGE>
PAGE 58
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
We paid a total of $______ during 1994 to directors not employed by
American Express Financial Corporation.
Board of Directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
<PAGE>
PAGE 59
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
<PAGE>
PAGE 60
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The Officers and Directors as a group beneficially own less than 1%
of the common stock of American Express.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing <PAGE>
PAGE 61
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1994.
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express, the parent company of
American Express Financial Corporation and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and guarantees interest in
advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Future Value Certificate - A single payment certificate that
guarantees interest in advance for four, five, six, seven, eight,
nine or ten-year maturity.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with a guaranteed
return of principal.
<PAGE>
PAGE 62
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS INSTALLMENT CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 63
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 64
IDS Installment Certificate
Prospectus
April 26, 1995
Earn attractive rates while you build your savings.
IDS Installment Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with monthly investments
of at least $50 but not more than $5,000 (unless you receive prior
authorization from IDSC to invest more). Your principal is
guaranteed by IDSC. Your certificate earns interest, which is
declared every three months, guaranteed for a three-month period
and compounded monthly. In addition, you may receive bonus
interest payments if you make regular investments for specified
periods. Your certificate matures 10 years from its issue date.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS
Installment Certificate. It contains facts that can help you
decide if the certificate is the right investment for you. Read
the prospectus before you invest and keep it for future reference.
No one has the authority to change the terms and conditions of the
IDS Installment Certificate as described in the prospectus, or to
bind IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN
55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
An American Express company
<PAGE>
PAGE 65
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees a fixed rate of interest for each three-month
period during the life of your certificate. The rate for your
first three months will be within a specified range of the average
rate for bank money market accounts published in the most recent
BANK RATE MONITOR National Index TM, North Palm Beach, FL 33408, as
explained under "About the certificate," below.
Here are the interest rates in effect on the date of this
prospectus, April 26, 1995:
Simple interest rate ____%
Effective annualized yield* ____%
* Assuming monthly compounding.
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later three-month periods are set at
the discretion of IDSC and may also differ from the rates shown
here.
We reserve the right to issue other securities with different
terms.
<PAGE>
PAGE 66
Contents
Table of contents
About the certificate
Investment amounts 4p
Face amount and principal 4p
Value at maturity 4p
Receiving cash during the term 4p
Interest 4p
Rates for new purchases 5p
Bonus payments 6p
Calculating your bonus 7p
How to invest and withdraw funds
Buying your certificate 9p
Full and partial withdrawals 11p
Transfers to other accounts 12p
Retirement plans: special policies 15p
Transfer of ownership 15p
For more information 16p
Taxes on your earnings
Retirement accounts 16p
Gifts to minors 16p
Foreign investors 18p
How your money is used and protected
Invested and guaranteed by IDSC 19p
Regulated by government 19p
Backed by our investments 19p
Investment policies 20p
How your money is managed
Relationship between IDSC and American
Express Financial Corporation 21p
Capital structure and certificates issued 22p
Investment management and services 22p
Distribution 24p
Employment of other American Express affiliates 24p
Directors and officers 24p
Auditors 27p
Annual financial information
Summary of selected financial information p
Management's discussion and analysis of
financial condition and results of operations
Report of independent auditors
Financial Statements
Notes to financial statements
<PAGE>
PAGE 67
About the certificate
Investment amounts
You may purchase the IDS Installment Certificate in scheduled
monthly installments of at least $50 but not more than $5,000
payable in U.S. currency. You may also make additional lump-sum
investments in any amount, as long as these investments plus your
scheduled payments over the life of the certificate do not total
more than $600,000.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Face amount and principal
The face amount of your certificate is the total of your scheduled
monthly investments during its 10-year life. The minimum face
amount is $6,000, or the total of 120 monthly investments of $50
each. Your maximum face amount cannot exceed $600,000. Your
principal is the amount you actually invest over the life of the
certificate, less any withdrawals of your investments and penalties
and fees. It is guaranteed by IDSC.
Value at maturity
Your certificate matures 10 years from its issue date. At
maturity, you will receive a check for the value of your
certificate which will be the total of your actual investments,
plus credited interest not paid to you in cash and any bonus
payments, less withdrawals, penalties and fees.
Receiving cash during the term
If you need your money before your certificate matures, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
Your payments earn interest from the date they are credited to your
account. Interest is compounded and credited at the end of each
certificate month (on the monthly anniversary of the issue date).
IDSC declares and guarantees a fixed rate of interest for each
three-month period during the life of your certificate. We
calculate the amount of interest you earn each certificate month
by:<PAGE>
PAGE 68
o applying the interest rate then in effect to your balance
each day
o adding these daily amounts to get a monthly total
o subtracting interest accrued on any amount you withdraw
during the certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
Rates for new purchases
When your application is accepted, you will receive a confirmation
showing the rate that your investment will earn for the first
three-month period. IDSC guarantees that this rate will range from
within 25 basis points (0.25%) below to 75 basis points (0.75%)
above the average interest rate for bank money market deposit
accounts then published in the BANK RATE MONITOR National Index (TM)
(the BRM Index). For example, if the average rate most recently
published is 2.75%, our rate in effect for that week would be
between 2.50 and 3.50%. (Bank money market deposit accounts are
government insured.)
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408, by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service Inc. has no connection with IDSC, American Express
Financial Corporation, or any of their affiliates. The BRM Index
used by IDSC is a 25-city index.
The BANK RATE MONITOR may be available in your local library. To
obtain information on the current BRM Index rates, call the
Certificate Service Organization at:
800-437-3133 or
TTY: 800-846-4293.
Rates for new purchases are reviewed and may change weekly.
Normally, the rate you receive will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days prior to receipt.<PAGE>
PAGE 69
Active or retired American Express Financial Corporation employees,
IDSC directors, American Express financial advisors, their
immediate families and any U.S. employee of any affiliated company
of IDSC are guaranteed an initial rate 75 basis points above the
rate offered to the general public, reflecting the lower
distribution costs associated with such sales.
Rates for future periods: Interest on your certificate for future
three-month periods may be greater or less than the rates you
receive during the first three months. In setting future interest
rates, a primary consideration will be the prevailing investment
climate, including bank money market deposit account average rates
as reflected in the BRM Index. Nevertheless, we have complete
discretion as to what interest shall be declared beyond the initial
three-month period. At least six days in advance of each three-
month period, we will send you notice of the rate that your
certificate will earn for that period. If the BRM Index is no
longer publicly available or feasible to use, IDSC may use another,
similar index as a guide for setting rates.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use products or services offered by
American Express Financial Advisors Inc. or its affiliates.
We also may offer different rates based on your amount invested,
maturity selected, geographic location and whether the certificate
is purchased for an IRA or a qualified retirement account.
These promotions will generally be for a specified period of time.
If we offer a promotion, rates will be within the range of rates
described under "Rates for new purchases," above.
Performance: From February 1990 through February 1995, IDSC
Installment certificate yields were generally higher than average
bank money market deposit accounts and Super Now accounts, as
measured by the BRM Index:
* The graph compares past yields and should not be considered a
prediction of future performance. The certificate's yields reflect
its former policy, in effect through April 1992, of compounding
interest rates each calendar quarter. Monthly compounding is
reflected from May 1992 through February 1995.
Bonus payments
If you make regular investments over a period of 24 months or more,
IDSC will pay you a monthly bonus. Monthly payments must be made
during the certificate month to qualify for the bonus. Your bonus
will be a percentage of your weighted average monthly investment
(WAMI). This percentage will increase from year three through year
six if you continue to make regular investments:<PAGE>
PAGE 70
Minimum Totaling at Over Monthly
number of least this this bonus
monthly minimum time during Percentage
investments amount period period of WAMI
20 $1,200 years 1-2 year 3 3%
additional 10 600 year 3 year 4 4%
additional 10 600 year 4 year 5 5%
additional 10 600 year 5 year 6 10%
* calculated from issue through the last month of the preceding
period
Bonus payments are credited to your account at the end of each
certificate month. They immediately become part of your balance
and begin to earn interest.
The illustrations below show the cumulative effect of bonus
payments on a hypothetical investment. Suppose you invest $100 per
month, receive interest at a constant rate of 2.96% (an effective
annual yield of 3.00%, assuming a Jan. 1 purchase) and make no
additional lump-sum investments and no withdrawals. (The rate and
yield are for illustration only and may not be in effect when you
purchase your certificate.) Your interest, balance and average
annual yield would increase as follows:
<TABLE><CAPTION>
Installment Certificate example
Without bonus Added by bonus Total with bonus
Cumulative Cumulative Balance Cumulative Cumulative Balance Average
investments interest on bonus interest annual
investment on bonus yield*
<S> <C> <C> <C> <C> <C> <C> <C>
1st year end $1,200.00 $ 19.42 $1,219.42 $ 0.00 $ 0.00 $1,219.42 3.00%
2nd year end 2,400.00 75.42 2,475.42 0.00 0.00 2,475.42 3.00
3rd year end 3,600.00 169.11 3,769.11 36.00 0.58 3,805.69 3.64
4th year end 4,800.00 301.62 5,101.62 84.00 2.45 5,188.07 3.83
5th year end 6,000.00 474.11 6,474.11 144.00 6.01 6,624.12 3.91
6th year end 7,200.00 687.78 7,887.78 264.00 12.45 8,164.23 4.13
</TABLE>
* Average from date of issue to end of year indicated.
Important: The increase in yield that you receive from bonus
payments may be more or less than in the example, depending upon
interest rates during the six years following issue of your
certificate. If actual interest rates are higher than in the
example, the effect of the bonus will be less. For example, at a
7.00% interest rate, bonus payments would raise the certificate's
average annual yield from issue through year six by 1.07%, compared
to 1.13% (4.13 - 3.00) in the example. If actual interest rates
are lower than in the example, the increase in the average annual
yield would be somewhat more than 1.13%.
Calculating your bonus
To determine your bonus we:
o first calculate your average monthly investment over the
life of your certificate, weighting it to reflect the
amount of time each dollar has been invested (your<PAGE>
PAGE 71
weighted average monthly investment). Money invested
early is given more weight than money invested later.
o then calculate your monthly bonus as a specified
percentage of your weighted average monthly investment .
Here is an example to illustrate the two calculations: Suppose you
make 24 consecutive monthly investments - $100 per month for the
first six months and $150 per month thereafter (a total of $3300).
Month Investment X Months held = Weighted value
1 $ 100 24 $ 2,400
2 100 23 2,300
3 100 22 2,200
4 100 21 2,100
5 100 20 2,000
6 100 19 1,900
7... 150 18... 2,700
24 150 1 150
SUM $3,300 300 $38,550
To weight each investment, we multiply it by the number of months
we hold it -- 24 months for the first $100 investment, 23 for the
second, etc. We hold your first $150 investment for 18 months, so
its weighted value is $150 x 18, or $2,700. We continue through
your final $150 investment, which has a weight of one.
Step 1 We add the weighted values: $2,400 +
$2,300+...+$150 = $38,550
We add the numbers of months held.:
24+23+22+...+1 = 300
Step 2 We divide the sum of weighted values by the sum of months
held: $38,550 (divided by) 300 = $128.50 -- your weighted average
monthly investment at the end of 24 months.
Step 3 We multiply your weighted average monthly investment by
the applicable bonus percentage (3% in the third year);
3% of $128.50 = $6.43 -- your bonus payment each month in
year 3, a total of $46.32 for the year.
This procedure is repeated in months 36, 48 and 60 to calculate
your weighted average monthly investment from issue through years
three, four and five, respectively. These weighted averages are
then multiplied by the applicable percentages -- 4%, 5% and 10% -- to
determine monthly bonus payments for years 4, 5 and 6,
respectively.
Effect of partial withdrawals: If you withdraw part of your
principal, you will not receive credit toward a bonus for the
sum(s) you withdraw. The weighted sum of your investments will
decrease in proportion to the amount of principal you withdraw, and
your bonus will be reduced accordingly. Using the example above,
if you withdrew $1,000 before the end of the 24th month, your total
investment would decrease by 30.3%. We would adjust by 30.3%:
<PAGE>
PAGE 72
o the weighted sum of your investments, from $38,550 to
$26,869
o your weighted average monthly investment, to $89.56
($26,869 (divided by) 300), and
o your third-year bonus to $2.69 per month (3% of $89.56),
or $32.28 for the year.
Withdrawals may also affect your eligibility for bonus payments in
the third through sixth years. To remain eligible you must
maintain a balance at least equal to the amount you would have
accumulated if you had invested the required minimum of $600 per
year. You will become ineligible if withdrawals reduce your
balance below this level.
Other eligibility policies: If you have not made the required
regular investments specified earlier, you may not receive bonus
payments in the year bonuses would normally be paid. But you may
become eligible during the next bonus period by making the required
investments in the next year. For example, assume that you make
the required investments for the first 24 months and receive bonus
payments in the third year. But during the third year, you make
only three monthly investments. In that case, you would not
receive the bonus payments that would normally be made in the
fourth year. However, if you make all your regular monthly
investments in the fourth year, and your account principal balance
reaches the required equivalent of 48 investments of $50 per month
($2,400 at the end of the fourth year), then you would qualify for
bonus payments in year five, based on the new weighted average
monthly investment.
Interest rate from years seven through 10: From year seven until
your certificate matures, you will receive interest rates
comparable to a one-year fixed-rate investment. A rate will be
declared during the 72nd month and guaranteed for a three-month
period starting in the 73rd month. Thereafter, the rate will be
declared every three months and guaranteed for three-month periods.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted, you
will receive a confirmation of your purchase, indicating your
account number and showing the rate of interest for your first
three months, as described under "Rates for new purchases," above.
<PAGE>
PAGE 73
Important: When opening an account, you must provide IDSC with your
correct Taxpayer Identification Number (Social Security or Employer
Identification Number). See "Taxes on your earnings."
Once your account is set up, there are several convenient ways to
make monthly investments.
Purchase policies:
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation
must convert your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
This could take up to two business days.
o IDSC has the authority to determine whether to accept an
application.
o If you make no investments for a period of at least 12
consecutive months and your principal is less than $100, we
may send you a notice of our intent to cancel the certificate.
After the notice, if an investment is not made within 60 days,
your certificate will be canceled, and we will send you a
check for its full value.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
<TABLE><CAPTION>
Two ways to make monthly investments
<S> <C> <C>
1 Contact your financial advisor To cancel a bank
By scheduled to set up one of the following authorization, you must
investment scheduled plans: instruct IDSC in
plan writing or over the phone.
We must receive notice at
- bank authorization (automatic least three business
deduction from your bank days before the date
account) funds would normally
be withdrawn
- automatic payroll deduction from your bank account.
Bank authorizations will
- direct deposit of Social automatically be stopped
Security check at maturity or full
withdrawal.
- other plan approved by
IDSC<PAGE>
PAGE 74
2
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
</TABLE>
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
o Full and partial withdrawals of principal in the first
three years are subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce
your certificate balance to less than $250. If you
request such a withdrawal, we will contact you for
revised instructions.
o As noted earlier, withdrawals during the first six years
will affect the amount of your bonus payments and may
make you ineligible for a bonus. See "Bonus payments."
Penalties for early withdrawal: If you withdraw money within three
years after the certificate was purchased, you will pay a penalty
of 2% of the principal withdrawn. (The 2% penalty is waived upon
death of the certificate holder, or if it is for an IRA and you
have reached age 70 1/2. See "Retirement plans: special policies"
below for additional exceptions.)
When you request a full or partial withdrawal, we pay the amount
you request:
o first from interest and bonus payments credited to your
account
o then from the principal of your certificate.
For example, suppose this is your balance at the end of the second
year:
Total investments $7,200.00
Interest and bonus credited $488.61
Total balance $7,688.61
If you request a $1,000 check, we would withdraw funds in this
order:<PAGE>
PAGE 75
Credited interest and bonus $ 488.61
Withdrawal of principal $ 511.39
Total requested withdrawal $1,000.00
In addition, we would have to withdraw funds to cover the full
withdrawal penalty:
Principal withdrawn $511.39
Withdrawal penalty % 2%
Withdrawal penalty $ 10.23
The total transaction would be:
Beginning balance $7,688.61
Credited interest and bonus withdrawn ($488.61)
Principal withdrawn ($511.39)
Withdrawal penalty (also from principal) ($10.23)
Remaining balance $6,678.38
Loss of Interest: If you make a withdrawal at any time other than
the last day of the certificate month, you will lose interest
accrued on the withdrawal amount since the end of the last
certificate month.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of purchase
before IDSC mails a check to you. (A check may be mailed
earlier if the bank provides evidence that your check has
cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate for any other IDSC
certificate or into another existing American Express Financial
Advisors Inc. account that has the same ownership (subject to any
terms and conditions that may apply).<PAGE>
PAGE 76
Two ways to request a withdrawal or transfer
1
By phone
Call between 8 a.m. and 6 p.m. your local time:
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o Transferring into an American Express Financial Advisors Inc.
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither IDSC nor American Express
Financial Corporation will be liable for any loss resulting
from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transfers to another American Express Financial Advisors
Inc. account with different ownership. (All current
registered owners must sign the request.)
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis, MN
55440-0010<PAGE>
PAGE 77
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Three ways to receive payment when you withdraw funds
1
By regular or
express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary
depending on the courier you select. Cost for partial
withdrawals is deducted from the remaining balance, or
from the proceeds for full withdrawals.
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank.
o Bank account must be in same ownership as American
Express Financial Advisors Inc. account.
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o A service fee, if any, may be deducted from your balance
(for partial withdrawals) or from the proceeds of a full
withdrawal.
3
Electronic transfer
o Only for preauthorized, recurring payments
o No charge
o Deposited electronically in your bank account
o Three to five days from request to first deposit<PAGE>
PAGE 78
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the owner of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle
your certificate at maturity, full value of the certificate
will automatically transfer to a new or existing cash
management account according to the rules outlined in the
Custodial Retirement Plan document.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o We will waive withdrawal charges on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Withdrawal at death
If a certificate is surrendered upon the client's death, any
applicable surrender charge will be waived. In addition, if an IRA
termination fee is applicable, it will also be waived.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to our Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.<PAGE>
PAGE 79
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your American Express
financial advisor or call IDSC's toll free client service number:
800-437-3133 or
TTY: 800-846-4293.
Taxes on your earnings
The bonus payments and interest on your certificate, including
interest on bonus payments, are taxable when credited to your
account. Each calendar year we provide certificate account owners
and the IRS with reports of all earnings over $10 (Form 1099).
Withdrawals are reported to the certificate account owner and the
IRS on Form 1099-B, Proceeds from Broker Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings -- and,
in many cases, on part or all of the investment itself -- until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions also may apply.)
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/ UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN) -- either your<PAGE>
PAGE 80
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement
that results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
How to determine the correct TIN
For this type of account:
Individual or joint account
Custodian account of a minor
(Uniform Gifts/Transfers
to Minors Act)
A living trust
An irrevocable trust,
pension trust or estate
Sole proprietorship
or partnership
Corporate
Association, club or
tax-exempt organization
Use the Social Security or
Employer Identification Number of:
The individual or first person listed on the account
The minor
The grantor-trustee
(the person who puts the money into the trust)<PAGE>
PAGE 81
The legal entity
(not the personal representative or trustee, unless no legal entity
is designated in the account title)
The owner or partnership
The corporation
The organization
For details on TIN requirements, ask your American Express
financial advisor or local American Express Financial Advisors Inc.
office for Federal Form W-9, Request for Taxpayer Identification
Number and Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest on the certificate is "portfolio interest" as defined in
U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your IDS certificate to satisfy estate taxes.
Important: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.<PAGE>
PAGE 82
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Installment Certificate is issued and guaranteed by IDSC, a
wholly owned subsidiary of American Express Financial Corporation.
We are by far the largest issuer of face amount certificates in the
United States, with total assets of more than $___ billion and a
net worth in excess of $___ million on Dec. 31, 1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American
Express Financial Corporation for advisory and other
services and distribution fees to American Express
Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
Most banks and thrifts offer investments known as certificates of
deposit that are similar to our certificates in many ways. Early
withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Installment Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate -- not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $_______. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
<PAGE>
PAGE 83
Type of investment Net amount invested
Preferred stocks __%
Government agency bonds __
Corporate and other bonds __
Mortgages __
Municipal bonds __
Cash and cash equivalents __
More than 95% of our securities portfolio (bonds and preferred
stocks) are rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of American
Express Financial Corporation. Copies of our Dec. 31, 1993,
schedule of Investments in Securities of Unaffiliated Issuers are
available upon request. For comments regarding the valuation,
carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial
statements.
Investment policies
In deciding how to diversify the portfolio -- among what types of
investments in what amounts -- the officers and directors of IDSC
use their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public distribution
of securities issued by others. However, if we purchase
unregistered securities and later resell them, we may be considered
an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.<PAGE>
PAGE 84
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and American Express Financial
Corporation
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, American Express Financial Corporation
(formerly known as IDS Financial Corporation) our parent company
and organizer, had issued similar certificates since 1894. As of
January 1, 1995, IDS Financial Corporation changed its name to
American Express Financial Corporation. IDSC, IDS, and now
American Express Financial Corporation have never failed to meet
their certificate payments.
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. American Express Financial Advisors
Inc., a wholly owned subsidiary of American Express Financial
Corporation, provides a broad range of financial advising services
for individuals and businesses through its nationwide network of
more than ___ offices and more than _____ financial advisors.
American Express Financial Corporation's financial advising
services are comprehensive, beginning with a detailed written
analysis that's tailored to your needs. Your analysis may address
<PAGE>
PAGE 85
one or all of these six essential areas: financial position,
protection planning, investment planning, income tax planning,
retirement planning and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other business including:
o travel related services (including American ExpressR Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
American Express Financial Corporation has authorized, issued and
has outstanding _______ shares of common stock, par value of $10
per share. American Express Company owns all of the outstanding
shares.
As of Dec. 31, 1994, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment advisor and is
responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our
policy of obtaining the best price and execution
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Advisors Inc. or IDSC as defined in the
federal Investment Company Act of 1940.
<PAGE>
PAGE 86
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets).
Advisory and services fee computation:
Included assets Percentage of total book value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay a service fee.
Advisory and services fees for past three years:
Percentage of
Year Total fees included assets
1994 $
1993 $
1992 $
Estimated advisory and services fees for 1995 are $____________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate holder accounts), and
o expenses of customer settlements not attributable to sales
function.<PAGE>
PAGE 87
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 6% of the first 60 monthly scheduled payments, or the
equivalent, received during the first five years after the
issue date of the certificate; and
o 0.5 % of the average daily certificate balance during the
sixth through the 10th year.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1994. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1995.
See Note 1 to Financial Statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
financial advisors and pays other selling expenses in connection
with services to us. Our board of directors, including a majority
of directors who are not interested persons of American Express
Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
American Express Financial Corporation may employ an affiliate of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.<PAGE>
PAGE 88
We paid a total of $______ during 1994 to directors not employed by
American Express Financial Corporation.
Board of directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968
<PAGE>
PAGE 89
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.<PAGE>
PAGE 90
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The Officers and Directors as a group beneficially own less than 1%
of the common stock of American Express.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1994.
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express, the parent company of
American Express Financial Corporation and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
<PAGE>
PAGE 91
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments and guarantees interest in advance
for a three-month term.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and guarantees interest in
advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Future Value Certificate - A single payment certificate that
guarantees interest in advance for four, five, six, seven, eight,
nine or ten-year maturity.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with a guaranteed
return of principal.
<PAGE>
PAGE 92
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS FUTURE VALUE CERTIFICATE
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 93
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 94
IDS Future Value Certificate
Prospectus April 26, 1995
Earn attractive rates with an assured amount at the maturity date
you select
IDS Future Value Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with any amount from
$1,000 to $1 million (unless you receive prior authorization from
IDSC to invest more). Your certificate earns a fixed interest rate
for maturities of four through ten years. At maturity, IDSC
guarantees you will receive your principal plus interest less any
withdrawals or penalties. Your interest rate will be determined as
described in "Interest" under "About the certificate."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Future
Value Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Future Value Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
An American Express company
<PAGE>
PAGE 95
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest rates
IDSC guarantees for the maturity you choose:
o A fixed rate of interest
o This rate will be within a specified range of the average of
5-year certificates of deposit as published in the most recent
BANK RATE MONITOR National Index (TM), North Palm Beach, FL,
33408, as explained under "About the Certificate."
Here are the interest rates in effect on the date of this
prospectus, April 26, 1995:
Future Value
of $1.00
Simple Effective invested today
interest annualized payable at
Maturity rate* yield** maturity
_________________________________________________________________
4 year
5 year
6 year
7 year
8 year
9 year
10 year
__________________________________________________________________
*This is the rate in effect for investments under $25,000. Rates
may depend on the factors described in "Interest" under "About the
certificate."
**Assuming monthly compounding.<PAGE>
PAGE 96
These rates may or may not be in effect when you apply to purchase
your certificate. Rates for later periods are set at the
discretion of IDSC and may also differ from the rates shown here.
This investment is intended to be held to maturity. We reserve the
right to issue other securities with different terms.<PAGE>
PAGE 97
Table of contents
About the certificate
Investment amounts....................................... 5p
Maturities............................................... 5p
Face amount and future value............................. 5p
Value at maturity........................................ 5p
Receiving cash before maturity........................... 5p
Interest................................................. 6p
Rates for new purchases.................................. 6p
How to invest and withdraw funds
Buying your certificate.................................. 8p
Full and partial withdrawals............................. 9p
Retirement plans: special policies...................... 13p
Transfer of ownership.................................... 14p
For more information..................................... 14p
Taxes on your earnings
Retirement accounts...................................... 14p
Gifts to minors.......................................... 15p
Foreign investors........................................ 16p
How your money is used and protected
Invested and guaranteed by IDSC.......................... 17p
Regulated by government.................................. 17p
Backed by our investments................................ 18p
Investment policies...................................... 18p
How your money is managed
Relationship between IDSC and American Express
Financial Corporation................................. 19p
Capital structure and certificates issued................ 20p
Investment management and services....................... 21p
Distribution............................................. 22p
Employment of other American Express affiliates.......... 22p
Directors and officers................................... 22p
Auditors................................................. 26p
Annual Financial information
Summary of selected financial information................ p
Management's discussion and analysis of
financial condition and results of operations
Report of independent auditors
Financial statements
Notes to financial statements
<PAGE>
PAGE 98
About the certificate
Investment amounts
You may purchase the IDS Future Value Certificate with a single
payment of at least $1,000 but not more than $1 million payable in
U.S. currency. Your investment may exceed $1 million only if you
receive prior authorization from IDSC.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Maturities
You may choose a maturity term in one-year increments from four to
ten years. We guarantee your interest rate in advance for the
maturity you select.
Face amount and future value
Both the face amount and future value of your certificate are
determined when you purchase your certificate. The face amount is
the amount of your initial investment. The future value is the
face amount plus the interest to be credited at maturity. Your
future value is guaranteed by IDSC when you hold your certificate
to maturity. For example, if you purchase this certificate with
$10,000 at 7% interest with a seven-year maturity, the face amount
would be equal to $10,000. Over the term of the certificate,
$6,300 of interest would accrue and be credited at maturity. The
face amount would remain at $10,000 and the future value payable to
you at maturity would be $16,300.
Value at maturity
When your certificate matures, you will receive a check for the
value of your certificate, which is the future value less any
withdrawal, discounts or fees.
Receiving cash before maturity
Interest on this investment is credited and paid at maturity.
However, if you unexpectedly find that you need your money prior to
maturity, you may withdraw all or part of your certificate subject
to a discounting formula. Partial withdrawals cannot be made
within one year of purchase. Procedures for withdrawing money, as
well as discount rates which apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
<PAGE>
PAGE 99
Interest
Your certificate accrues interest from the issue date. Interest is
compounded at the end of each certificate month (on the monthly
anniversary of the issue date), and is accrued to your account at
the end of each year. Interest is credited to your certificate at
maturity. We calculate the amount of interest you earn each
certificate month by applying the interest rate on your certificate
to your balance each day and adding these daily amounts to get a
monthly total. Interest is calculated on a 30-day month and 360-
day year basis.
Promotions and pricing flexibility: From time to time, IDSC may
sponsor or participate in promotions involving one or more of the
certificates and their respective terms. For example, we may offer
different rates to new clients, to existing clients, or to
individuals who purchase or use other products or services offered
by American Express Financial Corporation or its subsidiaries.
These promotions will generally be for a specified period of time.
We also may offer different rates based on your amount invested,
maturity selected, geographic location and whether the certificate
is purchased for an IRA or a qualified retirement account. These
rates for new purchases will always be within the 1% range of rates
described below.
Rates for new purchases
When your application is accepted, you will receive a confirmation
of your purchase showing the rate that your investment will earn.
This rate will not be changed during the term of your certificate.
The certificate rate will be determined using the BANK RATE MONITOR
National Index (TM) (the BRM Index) rate for 5-year certificates of
deposit (the index).
For deposits of less than $25,000, the following rates will be
guaranteed:
In the case of the 4-year certificate, IDSC guarantees that the
rate will be from 20 basis points below to 80 basis points above
the index.
In the case of the 5-year certificate, IDSC guarantees that the
rate will be from 0 basis points below to 100 basis points above
the index.
In the case of the 6-year certificate, IDSC guarantees that the
rate will range within 25-125 basis points above the index.
In the case of the 7-year certificate, IDSC guarantees that the
rate will range within 30-130 basis points above the index.<PAGE>
PAGE 100
In the case of the 8-year certificate, IDSC guarantees that the
rate will range within 40-140 basis points above the index.
In the case of the 9-year certificate, IDSC guarantees that the
rate will range within 50-150 basis points above the index.
In the case of the 10-year certificate, IDSC guarantees that the
rate will range within 60-160 basis points above the index.
For example, if the index published in the prior week for 5-year
certificates of deposit, the rate on the 7-year maturity
certificate for a deposit under $25,000, would be between 6.20% and
7.20%.
For deposits of $25,000 or more IDSC guarantees that the rate will
be within ranges that are 20 basis points higher than the
respective ranges described above. For example, in the case of the
10-year certificate, IDSC guarantees that the rate will be within
80-180 basis points above the BRM index.
The BRM Index is an index of rates and annual effective yields
offered on various length certificates of deposit by large banks
and thrifts in large metropolitan areas. The frequency of
compounding varies among the banks and thrifts. Certificates of
deposit in the BRM Index are government-insured fixed-rate time
deposits.
The BANK RATE MONITOR is available in your local library. To
obtain information on current BRM Index rates call the Client
Service Organization between 8 a.m. to 6 p.m. your local time at
1-800-437-3133 or
TTY: 1-800-846-4293
Rates for new purchases are reviewed and may change weekly. Rates
for new purchases currently take effect on Wednesday and are within
the range of rates described above in the BRM Index, published on
Monday of the same week. Normally, the rate you receive for your
chosen maturity will be the higher of:
o the rate in effect on the date of your application
o the rate in effect on the date your application is
accepted by IDSC.
However, if your application bears a date more than seven days
before its receipt by IDSC, the rate you receive will be the higher
of:
o the rate in effect on the date your application is
accepted by IDSC
o the rate in effect seven days before receipt.
Active or retired American Express Financial Corporation employees,
IDSC directors, American Express financial advisors, their
immediate families and any U.S. employee of any affiliated company
<PAGE>
PAGE 101
of IDSC are guaranteed an initial rate 75 basis points above the
rate offered to the general public, reflecting the lower
distribution costs associated with such sales.
Performance: From February 1989 through February 1994, IDS Future
Value Certificate yields for a 5-year term were higher than average
5-year bank and thrift certificate of deposit yields as measured by
the BRM Index. [Insert graph here of Future Value Certificate and
CD yields.]
* The graph compares past yields and should not be considered a
prediction of future performance.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor will help you fill out and
submit an application to open an account with us and purchase a
certificate. We will process the application at our corporate
offices in Minneapolis. When your application is accepted, you
will receive a confirmation of your purchase showing the date of
issue, verifying the maturity you selected, the applicable rate of
interest as described under "Rates for new purchases", and the
future value of your certificate.
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification Number). See "Taxes on your earnings."
Purchase policies
o You have 15 days from the date of purchase to cancel your
investment without penalty by either writing or calling the
Client Service Organization at the address or phone number on
the back of this prospectus. If you decide to cancel your
certificate within this 15-day period, you will not earn any
interest.
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation
must convert your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
This could take up to two business days.
o IDSC has the authority to determine whether to accept an
application.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."
Two ways to invest
<PAGE>
PAGE 102
1
By mail
Send your check along with your application to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
2
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions:
Credit IDS Account #00-30-015 for personal account # (your
personal account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs IDSC incurs, will be returned
promptly.
o Minimum amount you may wire: $1000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, IDSC and Norwest Bank
Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, American Express Financial Corporation and its other
subsidiaries are not responsible for any delays that occur in
wiring funds, including delays in processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
If you need your money before maturity, you may withdraw your
certificate for its full value, or make a partial withdrawal of
$500 or more after the first year. However:
<PAGE>
PAGE 103
o Interest on full and partial withdrawals of principal is
subject to discounting, described below.
o You may not otherwise make a partial withdrawal if it would
reduce your certificate balance to less than $1,000. If you
request such a withdrawal, we will contact you for revised
instructions.
o If a withdrawal reduces your account value to a point where we
pay a lower interest rate, you will earn the lower rate from
the time of withdrawal until maturity.
Return of principal: You will always receive an amount no less
than your original investment (the "face amount") and no more than
your face amount plus accrued interest. This is still true of the
total amount you will receive even if you make a series of partial
withdrawals.
Discount rate: If you request a full or partial withdrawal, the
amount you receive will be calculated by discounting your
certificate's future value at maturity over the time remaining
until it would have matured. The discount rate for each term
during a given period is 50 basis points (0.50%) higher than the
rate in effect for new deposits for the same term during that
period. The discount rate will differ for certificates purchased
by active or retired American Express Financial Corporation
employees, IDSC's directors, American Express financial advisors,
their immediate families and any U.S. employee of any affiliated
company of IDSC.
We use the future value (principal and interest through maturity)
as the starting point in the calculation. Using a discount rate
that is a function of new business rates at the time of the
withdrawal, we discount this future value on a monthly basis for
the number of months remaining to maturity. If the result is lower
than principal, you will receive principal; if the discounted
amount is more than principal and accrued interest for the time
completed, you will receive principal and accrued interest only.
You can calculate the surrender value on a calculator using the
present value function using the following assumptions:
Calculator Value Certificate Value
Future value Future (maturity) value
Interest Discount rate divided by 12
Periods Number of months remaining
If the discount rate at the time of withdrawal is higher than your
interest rate, you will lose interest. The loss of interest would
be more substantial the earlier you withdraw the money from your
certificate.
Examples:
<PAGE>
PAGE 104
To help you understand the way the withdrawal value is calculated,
here are some examples. Assume for all examples the following:
The face amount will be $10,000. Maturity is 10 years. Interest
rate is 6.50%, and the yield is 6.69%. The future value payable at
maturity is $19,122. The withdrawal will occur in year six. The
face amount plus accrued interest in year six is $14,754.
The following chart shows the withdrawal values in year six,
assuming discount rates of 5.5%, 7.5%, and 9.5%. The examples
assume the withdrawal occurs in year six.
*Note that in this scenario, if you withdraw from your certificate
in any year and the discount rate is at 5.5%, you will receive the
face amount plus accrued interest.
The following table provides information for a withdrawal in year
six:
__________________________________________________________________
Rate Environment Discount Rate Withdrawal Value
Interest rates generally 7.5% $14,179
unchanged from time of ($19,122 discounted at
purchase 7.5% for the four
years remaining until
maturity)
Interest rates are higher 9.5% $13,096
at withdrawal than when ($19,122 discounted at
purchased 9.5% for the four
years remaining until
maturity)
Interest rates are lower 5.5% $14,754
at withdrawal than when (The amount you
purchased receive is equal to
your face amount plus
accrued interest)
___________________________________________________________________
In the above examples, you would never receive less than your
$10,000 original investment or more than $14,754, which is the face
amount plus accrued interest.
Because the discount rate can change periodically, the withdrawal
value of your account changes periodically as well. Should an
emergency arise and you need to know your withdrawal value, it is
readily available by contacting your American Express financial
advisor or calling IDSC toll free at 1-800-437-3133.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased by a check or money order that is not
guaranteed, we will wait for your check to clear. Please<PAGE>
PAGE 105
expect a minimum of 10 days from the date of your payment
before IDSC mails a check to you. (A check may be mailed
earlier if your bank provides evidence that your check has
cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Two ways to request a withdrawal
1
By phone
Call between 8 a.m. and 6 p.m. your local time:
1-800-437-3133 (toll free) or
(612) 671-4737 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1630 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither IDSC nor American Express
Financial Corporation or its subsidiaries will be liable for
any loss resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis MN 55440-0010
<PAGE>
PAGE 106
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Avenue
Minneapolis MN 55402
Written requests are required for:
o Transactions over $50,000
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
Two ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC's account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express Financial Corporation
financial advisor. All registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the holder of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a<PAGE>
PAGE 107
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to the Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please contact your tax advisor.
For more information
For information on purchases, withdrawals, transfers of ownership,
proper instructions and other service questions regarding your
certificate, please consult your personal financial advisor or call
IDSC's toll free Client Service Organization number:
1-800-437-3133 or
TTY: 1-800-846-4293.
Taxes on your earnings
Interest that has been compounded on your account at the end of
each year is taxable each year. Each calendar year we provide
certificate account owner and the IRS with reports of all earnings
over $10 (Form 1099). Withdrawals are reported to the certificate
owner and the IRS on Form 1099-B, Proceeds from Broker
Transactions.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.<PAGE>
PAGE 108
If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle your
certificate at maturity, the full value of the certificate will
automatically transfer to a new or existing cash management account
according to the rules outlined in the Custodial Retirement Plan
document.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59-1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions also may apply.)
Consult your tax advisor to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN) -- either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
<PAGE>
PAGE 109
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
A living trust The grantor-trustee (the person
who puts the money into the trust)
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Corporation office for Federal
Form W-9, Request for Taxpayer Identification Number and
Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
Interest paid on the certificate is "portfolio interest" as defined
in U.S. Internal Revenue Code Section 871(h) if earned by a
nonresident alien. Even though your interest income is not taxed
by the U.S. government, it will be reported at year end to you and
to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States
participates in various tax treaties with foreign countries, which
provide for sharing of tax information.<PAGE>
PAGE 110
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your certificate to satisfy estate taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Future Value Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of American Express Financial
Corporation. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than
$___ billion and a net worth in excess of $___ million on Dec. 31,
1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American Express
Financial Corporation for advisory and other services and
distribution fees to American Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
Most banks and thrifts offer investments known as certificates of
deposit that are similar to our certificates in many ways. Early
withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money you deposit to individuals, businesses
and other enterprises. Other financial institutions may offer
investments with comparable combinations of safety and return on
investment.
Regulated by government
Because the IDS Future Value Certificate is a security, its offer
and sale are subject to regulation under federal and state<PAGE>
PAGE 111
securities laws. (It is a face-amount certificate -- not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
__% preferred stocks
__ government agency bonds
__ corporate and other bonds
__ mortgages
__ municipal bonds
__ cash and cash equivalents
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of American
Express Financial Corporation. Copies of our Dec. 31, 1994
schedule of Investments in Securities of Unaffiliated Issuers are
available upon request. For comments regarding the valuation,
carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial
statements.
Investment policies
In deciding how to diversify the portfolio -- among what types of
investments in what amounts -- the officers and directors of IDSC
use their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.<PAGE>
PAGE 112
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your money is managed
Relationship between IDSC and American Express Financial
Corporation
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,<PAGE>
PAGE 113
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, American Express Financial Corporation
(formerly known as IDS Financial Corporation) our parent company
and organizer, had issued similar certificates since 1894. As of
January 1, 1995, IDS changed its name to American Express Financial
Corporation. IDSC, IDS and now American Express Financial
Corporation have never failed to meet their certificate payments.
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. As of Dec. 31, 1994, American Express
Financial Corporation managed investments, including its own, of
more than $__ billion. American Express Financial Advisors Inc., a
wholly owned subsidiary of American Express Financial Corporation,
provides a broad range of financial advising services for
individuals and businesses through its nationwide network of more
than ___ offices and more than _______ financial advisors.
American Express Financial Corporation financial advising services
are comprehensive, beginning with a detailed written analysis
that's tailored to your needs. Your analysis may address one or
all of these six essential areas: financial position, protection
planning, investment planning, income tax planning, retirement
planning and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other business including:
o travel related services (including American Express Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding ________ shares of
common stock, par value of $10 per share. American Express
Financial Corporation owns all of the outstanding shares.
As of Dec. 31, 1994, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates. <PAGE>
PAGE 114
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment advisor and is
responsible for:
o providing investment research,
o making specific investment recommendations, and
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Corporation or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets).
Advisory and services fee computation:
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years:
Percentage of
Year Total fees included assets
1994 $
1993 $
1992 $
Estimated advisory and services fees for 1995 are $___________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,<PAGE>
PAGE 115
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate owner accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay 5% of the purchase price for the distribution
of this certificate. This fee is not assessed to your certificate
account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1994. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1995.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
personal financial advisors and pays other selling expenses in
connection with services to us. Our board of directors, including
a majority of directors who are not interested persons of American
Express Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Employment of other American Express affiliates
American Express Financial Corporation may employ an affiliate of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
American Express Financial Corporation's directors, chairman,
president and controller are elected annually for a term of one
year. The other executive officers are appointed by the president.
<PAGE>
PAGE 116
We paid a total of $________ during 1994 to directors not employed
by American Express Financial Corporation.
Board of Directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968
<PAGE>
PAGE 117
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.
<PAGE>
PAGE 118
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
<PAGE>
PAGE 119
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1994.
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express, the parent company of
American Express Financial Corporation and IDSC.
Other certificates issued by IDSC: Your American Express financial
advisor can give you more information on four other certificates
issued by IDSC. These certificates offer a wide range of
investment terms and features.
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments and guarantees interest in advance
for a three-month term.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and guarantees interest in
advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
IDS Stock Market Certificate - A single payment certificate that
calculates all or part of your interest based on stock market
performance, as measured by a broad market index, with a guaranteed
return of principal.
<PAGE>
PAGE 120
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS STOCK MARKET CERTIFICATE - US
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 121
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 122
IDS Stock Market Certificate
Prospectus April 26, 1995
Potential for stock market growth with safety of principal
IDS Stock Market Certificates are issued by IDS Certificate Company
(IDSC). You can purchase this certificate with a single investment
of at least $1,000 but not more than $1 million (unless you receive
prior authorization from IDSC to invest more). As long as you stay
within this limit, you can make additional investments at the end
of a term. Your principal is guaranteed by IDSC. You can
participate in any increase of the stock market based on the S&P
500 Index while protecting your principal. In addition, you decide
whether part of your return will be guaranteed or whether all of it
will be tied to the market. You can keep your certificate for up
to 14 terms.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Stock
Market Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Stock Market Certificate as described in the prospectus, or to bind
IDSC by any statement not in it.
Issuer: Distributor:
IDS Certificate Company American Express
IDS Tower 10 Financial Advisors Inc.
Minneapolis, MN 55440-0010 IDS Tower 10
1-800-437-3133 (toll free) or Minneapolis, MN 55440-0010
(612) 671-3800 (Minneapolis/
St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/
St. Paul area)
American Express companies<PAGE>
PAGE 123
Where to get information about IDSC
IDSC is subject to the reporting requirements of the Securities
Exchange Act of 1934. Reports and other information on IDSC are
filed with the Securities and Exchange Commission (SEC). Copies
can be obtained from the Public Reference Section of the SEC, 450
5th St., N.W., Washington, D.C. 20549, at prescribed rates. Or you
can inspect and copy information in person at the SEC's Public
Reference Section and at the following regional offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest and participation rates
IDSC guarantees return of your principal. The interest on your
certificate is linked to stock market performance as measured by
the Standard & Poor's 500 Stock Index (S&P 500 Index) as explained
under "About the certificate" below.
Here are the interest rates and market participation percentages in
effect on the date of this prospectus, April 26, 1995:
Maximum Market participation Minimum
return percentage interest
10% 100% (full) None
10% 25% (partial) currently 2.5%
These rates may or may not be in effect when you apply to purchase
your certificate. If you choose the partial participation option
for your certificate, your minimum interest rate will be between
2.5% and 3.5%. Rates for later terms are set at the discretion of
IDSC and may differ from the rates shown here. We reserve the
right to issue other securities with different provisions.
<PAGE>
PAGE 124
Table of contents
About the certificate
Investment amounts p
Face amount and principal p
Certificate term p
Value at maturity p
Receiving cash before end of the term p
Interest p
Promotions and pricing flexibility p
Historical data on the S&P 500 Index p
Calculation of return p
About the S&P 500 index p
Opportunities at the end of a term p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
Transfers to other accounts p
Retirement plans: special policies p
Transfer of ownership p
For more information p
Taxes on your earnings
Retirement accounts p
Gifts to minors p
Foreign investors p
How your money is used and protected
Invested and guaranteed by IDSC p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between IDSC and American Express
Financial Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
About American Express Bank International p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Annual Financial information
Summary of selected financial information
Management's discussion and analysis of
financial condition and results of operations
Report of independent auditors
Financial statements
Notes to financial statements
<PAGE>
PAGE 125
About the certificate
Investment amounts
You may purchase the IDS Stock Market Certificate with a single
investment of at least $1,000 but not more than $1 million payable
in U.S. currency. You may also make additional lump-sum
investments in any amount at the end of any term as long as your
total amount paid in is not more than the $1 million.
The certificate may be used as an investment for your Individual
Retirement Account (IRA), 401(k) plan account or other qualified
retirement plan account. If so used, the amount of your
contribution (investment) will be subject to any limitations of the
plan and applicable federal law.
Face amount and principal
The face amount of your certificate is the amount of your initial
investment. Your principal is the value of your certificate at the
beginning of each subsequent term. Your principal is guaranteed by
IDSC. It consists of the amount you actually invest plus interest
and any additional investment you make less withdrawals, penalties
and any interest paid to you in cash.
For example: Assume your initial investment (face amount) of
$10,000 has earned a return of 7.25%. Interest is credited to your
account at the end of the term. You have not taken any interest as
cash, or made any withdrawals. You have invested an additional
$2,500 prior to the beginning of the next term. Your principal for
the next term will equal:
$10,000.00 Face Amount (initial investment)
plus 725.00 Interest credited to your account at the
end of the term
plus 5.00 Interim interest (See "Interim interest")
minus ($0.00) Interest paid to you in cash
plus 2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
$13,230.00 Principal at the beginning of the next
term.
Certificate term
Your first certificate term is a 12-month period that begins on the
Wednesday after your application is accepted and ends the Tuesday
before the one-year anniversary of its acceptance. For example, if
your application is accepted on a Wednesday, your first term would
begin the next Wednesday. Your certificate will earn interest at
the interim interest rate then in effect until the term begins. It
will not earn any participation interest until the term begins. If
you choose to continue to receive participation interest,
subsequent terms are 12-month periods that begin on the Wednesday
following the 14-day grace period at the end of the prior 12-month <PAGE>
PAGE 126
term. You may begin your next term on any Wednesday during the
14-day period by providing prior written instructions to IDSC. If
you choose to receive fixed interest, subsequent terms will be up
to 12 months as described in "Fixed interest" under "Interest"
below.
Value at maturity
Your certificate matures after 14 terms, and you will receive a
check for its value. At maturity, the value of your certificate
will be the total of your actual investments, plus credited
interest not paid to you in cash, less any withdrawals and
withdrawal penalties. Certain other fees may apply.
Receiving cash before end of term
If you need money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
You may select from two types of participation interest for your
first term. The two types are 1) full participation, or 2) partial
participation together with minimum interest. Both of these
options have an upper limit which is the maximum annual return
explained below. After your first term, you may choose not to
participate in any market movement and receive a fixed rate of
interest.
Full participation interest: With this option you participate 100%
in any percentage increase in the S&P 500 Index up to the maximum
return. You earn interest only if the value of the S&P 500 Index
is higher on the last day of your term than it was on the first day
of your term. Thus, your return is linked to stock market
performance. The S&P 500 Index is frequently used to measure the
relative performance of the stock market. For a more detailed
discussion of the Index, see "About the S&P 500 Index".
Partial participation and minimum interest: This option allows you
to participate in a certain part (market participation rate) of any
increase in the S&P 500 Index together with a rate of interest
guaranteed in advance for each term (minimum interest). Your
return is composed of two parts:
1. A percentage of any increase in the S&P 500 Index, and
2. A rate of interest guaranteed in advance for each term.
Together, they cannot exceed the maximum return.
If you choose the partial participation option for your first term,
the minimum interest paid on your certificate will be between 2.5%
and 3.5%.
The market participation rate and the minimum interest rate on the
date of this prospectus are listed on the inside cover under
"Initial interest and participation rates." <PAGE>
PAGE 127
Fixed interest: After your first term, this option allows you to
stop participating in the market entirely for one or more terms.
You may choose to receive a fixed rate of interest for any term
after the first term. During the term when you are receiving fixed
interest, you can change from your fixed interest selection to
again participate in the market. If you make the change from fixed
interest to participation interest, your next term would begin on
the Wednesday following our receipt of notice of your new
selection. In this way, you may have a term (during which you
would earn fixed interest) that is less than 12 months. You may
not change from participation interest to fixed interest during a
term.
Maximum annual return: This is the cap, or upper limit, of your
return. Your total return including both participation and minimum
interest for a term for which you have chosen participation
interest will be limited to this maximum return percentage.
Determining the S&P 500 index value: The stock market closes at 3
p.m. Central time and the S&P 500 Index value is available at
approximately 4:30 p.m. This is the value we currently use to
determine participation interest. Occasionally, Standard & Poor's
Corporation (S&P) makes minor adjustments to the closing value
after 4:30 p.m. and the value we use may not be exactly the one
that is published the next business day. In the future, we may use
a later time cut-off if it becomes feasible to do so. If the stock
market is not open or the S&P 500 Index is unavailable as of the
last day of your term, the preceding business day for which a value
is available will be used instead.
Interim interest: When we accept your application, we pay interim
interest to your account for the time before your first term
begins. We also pay interim interest for the 14-day period between
terms unless you write to ask us to begin your next term earlier.
You may withdraw this interest in cash at any time before it
becomes part of your certificate's principal without a withdrawal
penalty. If it is not withdrawn, the interest will become part of
your certificate's principal at the start of the next succeeding
term. For example, the interest you earn between the end of the
first and the beginning of the second term will become part of the
principal at the start of your third term. Interim interest rates
for the time before your first term begins will be within a range
10 to 110 basis points (0.10% to 1.10%) above the average interest
rate published for 12-month certificates of deposit in the BANK
RATE MONITORTM National Index (the BRM Index). If the BRM Index is
no longer publicly available or feasible to use, IDSC may use
another, similar index as a guide for setting rates.
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service has no connection with IDSC, IDS or any of their
affiliates. The BRM Index used by IDSC is a 25-city index.<PAGE>
PAGE 128
The BANK RATE MONITOR may be available in your local library. To
obtain information or current BRM Index rates, call the Client
Service Organization at 1-800-437-3133 or TTY: 1-800-846-4293.
Earning interest: Participation interest is calculated, credited
and compounded at the end of your certificate term. Minimum and
fixed interest accrue daily and are credited and compounded at the
end of your certificate term. Both minimum and fixed interest are
calculated on a 30-day month and 360-day year basis. Interim
interest accrues and is credited daily.
Rates for future periods: After the initial term, the maximum
return, market participation percentage or minimum interest rate on
your certificate may be greater or less than those shown on the
front of this prospectus. In setting future interest rates, a
primary consideration will be the prevailing investment climate.
Rates are reviewed weekly, and we have complete discretion as to
what interest rate will be declared.
To find out what your certificate's new maximum return, market
participation percentage and minimum interest rate will be for your
next term, please consult the following:
o Your local American Express personal financial advisor, or
o Our Client Service Organization at 1-800-437-3133
Promotions and pricing flexibility
From time to time, IDSC may sponsor or participate in promotions
involving one or more of the certificates and their respective
terms. For example, we may offer different rates to new clients,
to existing clients, or to individuals who purchase or use products
or services offered by American Express Financial Advisors Inc. or
its affiliates. These promotions will generally be for a specified
period of time.
We also may offer different rates based on your amount invested,
maturity selected, geographic location and whether the certificate
is purchased for an IRA or a qualified retirement account.<PAGE>
PAGE 129
Historical Data on the S&P 500 Index
The following chart illustrates the month-end closing values of the
index from Dec. 31, 1983 through Feb. 28, 1995. The values of the
S&P 500 Index are reprinted with the permission of S&P.
S&P 500 Index Average Annual Return
Beginning date Period held Average annual
Dec. 31, in years return
___________________________________________________________________
1983 10 ____%
1988 5 ____
1992 1 ____<PAGE>
PAGE 130
The next chart illustrates, on a moving 12-month basis, the price
return of the S&P 500 Index measured for every 12-month period
beginning with the period ended Dec. 31, 1984. The price return is
the percentage return for each period using month-end closing
prices of the S&P 500 Index. Dividends and other distributions on
the securities comprising the S&P 500 Index are not included in
calculating the price return.
Using the same data on price returns described above, the next
graph expands on the information in the preceding chart by
illustrating the distribution of all of the 12-month price returns
of the S&P 500 Index beginning with the 12-month period ending Dec.
31, 1984. The graph also shows the number of times these price
returns fell within certain ranges.<PAGE>
PAGE 131
The last chart illustrates, on a moving weekly basis, the actual
12-month return of the IDS Stock Market Certificate at full and
partial participation compared to the price return of the NYSE
Composite IndexR through October 1992 and the S&P 500 Index after
October 1992. For non-guaranteed funds received before Nov. 3,
1992, and guaranteed funds received before Nov. 4, 1992, IDS Stock
Market Certificate participation interest was based on the NYSE
Composite IndexR rather than the S&P 500 Index.
The NYSE Composite IndexR is a registered service mark of the New
York Stock Exchange, Inc. (NYSE) and is a composite covering price
movements of all common stocks listed on the NYSE. Because the IDS
Stock Market Certificate was first available on Jan. 24, 1990, the
performance reflects the returns on the one-year anniversary date,
falling on a Wednesday, of each of the weeks shown.
The recent historical experience of an index should not be taken as
an indication of future performance of the stock market or the
certificate. No assurance can be given that an index will not
decline or that certificate holders will receive interest on their
accounts beyond any minimum interest or fixed interest selected.
Calculation of return
The increase or decrease in the S&P 500 Index, as well as the
actual return paid to you, is calculated as follows:
Rate of return on S&P 500 Index
Term ending value of S&P 500 Index minus
Term beginning value of S&P 500 Index divided by
Term beginning value of S&P 500 Index equals
Rate of return on S&P 500 Index
The actual return paid to you will depend on your interest
participation selection.<PAGE>
PAGE 132
For example, assume:
Term ending value of S&P 500 Index 458
Term beginning value of S&P 500 Index 422
Maximum return 10%
Minimum return 2.5%
Partial participation rate 25%
458 Term ending value of S&P 500 Index
minus 422 Term beginning value of S&P 500 Index
equals 36 Difference between beginning and ending values
36 Difference between beginning and ending values
divided by 422 Term beginning value of S&P 500 Index
equals 8.53% Percent increase - full participation return
8.53% Percent increase or decrease
times 25.00% Partial participation rate
equals 2.13%
plus 2.50% 2.50% minimum interest rate
equals 4.63% Partial participation return
In both cases in the example, the return would be less than the 10%
maximum.
Maximum Return and Partial Participation Minimum Rate History - The
following table illustrates the maximum annual returns and partial
participation minimum rates that have been in effect since the
Stock Market Certificate was introduced.
Partial
Maximum participation
Purchase date annual return minimum rate
Jan. 24, 1990 18.00% 5.00%
Feb. 5, 1992 18.00 4.00
May 13, 1992 15.00 4.00
Sept. 9, 1992 12.00 3.00
Nov. 11, 1992 10.00 2.50
On Nov. 2, 1994, the partial participation rate increased to 2.75%
while the maximum annual return remained 10%.
Examples
To help you understand the way this certificate works, here are
some hypothetical examples. The following are three different
examples of market scenarios and how they affect the certificate's
return. Assume for all examples that you purchased the certificate
with a $10,000 original investment. Also assume that the partial
participation rate is 25%, the minimum interest rate for partial
participation is 2.5%, and the maximum total return for full and
partial participation is 10%.<PAGE>
PAGE 133
<TABLE><CAPTION>
- ------------------------------------------------------------------------------------------
1. If the Market and the S&P 500 Index value rise
<S> <C> <C>
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 8% Increase in the S&P 500 Index Index 459
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 800 (8% x $10,000) + 250 2.5% (Minimum interest rate) x $10,000
Participation interest + 200 25% x 8% x $10,000 participation interest
$10,800 Ending balance $10,450 Ending balance
(8% total return) (4.5% total return)
- ------------------------------------------------------------------------------------------
2. If the Market and the S&P 500 Index value fall
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 4% Decrease in the S&P 500 Index Index 408
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 0 Participation interest + 250 2.5% (Minimum interest rate) x $10,000
$10,000 Ending balance + 0 Participation interest
(0% Total return) $10,250 Ending balance
(2.5% Total return)
- ----------------------------------------------------------------------------------------
3. If the Market and the S&P 500 Index value rise above maximum return
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 16% Increase in the S&P 500 Index Index 493
Full participation interest Partial participation interest and Minimum interest
$10,000 Original investment $10,000 Original investment
+ 1,000 (10% x $10,000) + 250 2.5% (Minimum interest rate) x $10,000
Maximum interest + 400 (25% x 16% x $10,000) Participation interest
$11,000 Ending balance $10,650 Ending balance
(10% Total return) (6.5% Total return)
</TABLE>
About the S&P 500 Index
The description in this prospectus of the S&P 500 Index including
its make-up, method of calculation and changes in its components
are derived from publicly available information regarding the S&P
500 Index. IDS Certificate Company (IDSC) does not assume any
responsibility for the accuracy or completeness of such
information.
The S&P 500 Index is composed of 500 common stocks, most of which
are listed on the New York Stock Exchange. The S&P 500 Index is
published by S&P and is intended to provide an indication of the
pattern of common stock movement. S&P chooses the 500 stocks to be
included in the S&P 500 Index with the aim of achieving a
distribution by broad industry groupings that approximates the
distribution of these groupings in the common stock population of
the New York Stock Exchange. Changes in the S&P 500 Index are
reported daily in the financial pages of many major newspapers.
"Standard & Poor's ", "S&P ", "S&P 500 ", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been
licensed for use by IDSC. The certificate is not sponsored,
endorsed, sold or promoted by S&P. S&P makes no representation or
warranty, express or implied, to the owners of the certificate or
any member of the public regarding the advisability of investing in
securities generally or in the certificate particularly or the
ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to IDSC is the licensing of <PAGE>
PAGE 134
certain trademarks and trade names of S&P and of the S&P 500 Index
which is determined, composed and calculated by S&P without regard
to IDSC or the certificate. S&P has no obligation to take the
needs of IDSC or the owners of the certificate into consideration
in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination
of the timing of, prices at, or quantities of the certificate to be
issued or in the determination or calculation of the equation by
which the certificate is to be converted into cash. S&P has no
obligation or liability in connection with the administration,
marketing or trading of the certificate.
S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to the results to be
obtained by IDSC, owners of the certificate, or any person or
entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any
data included therein. Without limiting any of the foregoing, in
no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even
if notified of the possibility of such damages.
If for any reason the S&P 500 Index were to become unavailable or
not reasonably feasible to use, we would use a comparable stock
market index for determining participation interest. If this were
to occur, you would be sent a notice indicating the comparable
index that will be used and be given the option to surrender your
certificate, if desired, and receive your principal, without being
assessed a surrender charge.
Opportunities at the end of a term
Grace period: When your certificate term ends, you have 14 days
before a new term automatically begins. During this 14-day grace
period you can:
o change your interest selection,
o add money to your certificate,
o withdraw part or all of your money without a withdrawal
penalty or loss of interest, or
o receive your interest in cash.
Fixed interest only: The grace period does not apply if you made
the change from fixed interest back to participation interest
during a term as discussed in "Fixed interest" under "Interest"
above. Instead, your new 12-month term will begin on the Wednesday
following our receipt of your notice of your new interest
selection.<PAGE>
PAGE 135
New term: If you do not make changes, your certificate will
continue with your current selections when the new term begins 14
days later. You will earn interim interest during this 14-day
grace period. If you don't want to wait 14 days before starting
your next market participation term, you must give us written
instructions before your current term ends. Or, you may phone in
your instructions and follow up the call with written verification.
You can tell us to start your next term on any Wednesday during the
grace period following our receipt of your notice. Your notice may
also tell us to change your interest selection, add to your
certificate or withdraw part of your money. Term end notification
cannot be sent in advance because indexing information and interest
(if any) are included. Any additional payments received during the
current term will be applied at the end of the current term. By
starting your new term early and waiving the 14-day grace period,
you are choosing to start your next term without knowing the ending
value of your current term.
How to invest and withdraw funds
Buying your certificate
Your American Express Financial financial advisor will help you
fill out and submit an application to open an account with us and
purchase a certificate. We will process the application at our
corporate offices in Minneapolis. When your application is
accepted, you will receive a confirmation showing the acceptance
date, the date your term begins and the interest selection you have
made detailing your market participation percentage and/or the
guaranteed minimum interest rate for your first term. After your
term begins, we will send you notice of the value of the S&P 500
Index on the day your term began. The rates in effect on the date
we accept your application are the rates that apply to your
certificate.
IMPORTANT: When opening an account, you must provide IDSC with
your correct Taxpayer Identification Number (Social Security Number
or Employer Identification Number). See "Taxes on your earnings."
Purchase policies:
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation must
convert your check to federal funds (e.g., monies of member banks
within the Federal Reserve Bank) before your purchase will be
accepted and you begin earning interest. This could take up to two
business days.
o IDSC has the authority to determine whether to accept an
application.
A number of special policies apply to purchases, withdrawals and
exchanges within IRAs, 401(k) plans and other qualified retirement
plans. See "Retirement plans: special policies."<PAGE>
PAGE 136
Two ways to make additional investments at term end
1
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
2
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions: Credit IDS Account #00-30-015 for
personal account # (your account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs IDSC incurs will be returned
promptly.
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, IDSC and Norwest Bank
Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Bank wire purchases are not sent until the next business day.
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o IDSC, American Express Financial Corporation and its
subsidiaries are not responsible for any delays that occur in
wiring funds, including delays in processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:<PAGE>
PAGE 137
o Full and partial withdrawals of principal during a term are
subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce your
certificate balance to less than $1,000. If you request such
a withdrawal, we will contact you for revised instructions.
Penalties for withdrawal during a term: If you withdraw money
during a term, you will pay a penalty of 2% of the principal
withdrawn. (The 2% penalty is waived upon death of the certificate
holder or if it is for an IRA and you have reached age 70 1/2.)
When you request a full or partial withdrawal during a term, we pay
you from the principal of your certificate.
Loss of interest: If you make a withdrawal at any time other than
at the end of the term, you will lose interest accrued on the
withdrawal amount since minimum and participation interest is
credited only at the end of a term. However, accrued fixed and
interim interest will be paid to the date of the withdrawal.
Following are examples describing a $2,000 withdrawal during a term
for participation and fixed interest:
Participation interest
$10,000.00 Account balance
0.00 Interest (interest is credited at the end of
the term)
( 2,000.00) Withdrawal of principal
(40.00) 2% withdrawal penalty
$ 7,960.00 Balance after withdrawal.
You will forfeit any accrued interest on the
withdrawal amount.
Fixed interest
$10,000.00 Account balance
100.00 Interest credited to date
(100.00) Withdrawal of credited interest
(1,900.00) Withdrawal of principal
(38.00) 2% withdrawal penalty (on $1,900
principal withdrawn)
$ 8,062.00 Balance after withdrawal.
Retirement plans: In addition, you may be subject to IRS penalties
for early withdrawals if your certificate is in an IRA, 401(k) or
other qualified retirement plan account.
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear. <PAGE>
PAGE 138
Please expect a minimum of 10 days from the date of your
payment before IDSC mails a check to you. (A check may be
mailed earlier if your bank provides evidence that your check
has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate to any other IDS
certificate or into another existing American Express Financial
Advisors Inc. account (subject to any terms and conditions that may
apply).
Two ways to request a withdrawal or transfer
1
By phone
Call between 8 a.m. and 6 p.m. your local time:
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither IDSC nor American Express
Financial Corporation will be liable for any loss resulting
from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
<PAGE>
PAGE 139
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Written requests are required for:
o Transactions over $50,000
o Pension plans and custodial accounts where the minor has
reached the age at which custodianship should terminate.
o Transfers to another American Express Financial Advisors Inc.
account with different ownership. (All current registered
owners must sign the request.)
Two ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank
o Bank account must be in same ownership as IDSC account
<PAGE>
PAGE 140
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your American Express financial advisor. All
registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other
qualified retirement plan account, the terms and conditions of
the certificate apply to the plan as the holder of this
certificate. However, the terms of the plan, as interpreted
by the plan trustee or administrator, will determine how a
participant's individual account under the plan is
administered. These terms may differ from the terms of the
certificate.
o If your certificate is held in a Custodial Retirement Plan (or
Keogh plan), special rules may apply at maturity. If we
receive no instructions directing us how to handle your
certificate at maturity, the full value of the certificate
will automatically transfer to a new or existing IDS Cash
Management account according to rules outlined in the
Custodial Retirement Plan Document.
o The annual custodial fee for IRA or non-401(k) qualified
retirement plans may be deducted from your certificate
account. It may reduce the amount payable at maturity or the
amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal
penalties or loss of interest even if they are not subject to
federal tax penalties.
o We will waive withdrawal penalties on withdrawals for IRA
accounts of clients who have reached age 70 1/2.
o If you withdraw all funds from your last account in an IRA
plan, a $25 termination fee will apply.
o The IRA termination fee will be waived if withdrawal occurs
upon the holder's death.
Transfer of ownership
While the certificate is not negotiable, IDSC will transfer
ownership upon written notification to IDSC Client Service
Organization. However, if you have purchased your certificate for
an IRA, 401(k) plan or other qualified retirement plan, you may be
unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax adviser.<PAGE>
PAGE 141
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your American Express
financial advisor or call American Express Financial Corporation's
toll free client service number:
1-800-437-3133 or
TTY: 1-800-846-4293.
Taxes on your earnings
Participation and minimum interest on your certificate is taxable
when credited to your account. Fixed and interim interest are
fully taxable as earned. Each calendar year we provide certificate
owners and the IRS with reports of all earnings over $10 (Form
1099). Withdrawals are reported to the certificate owner and the
IRS on Form 1099-B, Proceeds from Broker Transactions.
Revised proposed regulations: The IRS has issued revised proposed
regulations governing the tax treatment of debt instruments which
provide for variable rates of interest, including interest based on
the price of property that is actively traded or on an index of the
prices of such property. Under these revised proposed regulations,
the IDS Stock Market Certificate is likely to constitute a debt
instrument that would be treated as a variable rate debt instrument
(VRDI) rather than a contingent debt instrument (CDI). If the
Stock Market Certificate constitutes a VRDI, then the income earned
on the certificate will be treated as original issue discount and
reported when credited to the holder's account. If the certificate
is not treated as a VRDI, but rather is treated as a CDI, then the
holder may have taxable income to report, even though the holder
has not received any cash distributions. Furthermore, the timing
and character of the income may be different from that of a VRDI.
IDSC cannot guarantee whether the revised proposed regulations will
be adopted as final in this present form or will again be modified.
As always, you should consult your tax adviser for information
regarding the tax implications of your certificate.
Retirement accounts
If you are using the certificate as an investment for an IRA,
401(k) plan account or other qualified retirement plan account,
income tax rules for your IRA or qualified plan apply. Generally,
you will pay no income taxes on your investment's earnings--and, in
many cases, on part or all of the investment itself--until you
begin to make withdrawals.
IDSC will withhold federal income taxes of 10% on IRA withdrawals
unless you tell us not to. IDSC is required to withhold federal
income taxes of 20% on most other qualified plan distributions,
unless the distribution is directly rolled over to another
qualified plan or IRA.
<PAGE>
PAGE 142
Withdrawals from retirement accounts are generally subject to a
penalty tax of 10% by the IRS if you make them before age 59 1/2,
unless you are disabled or if they are made by your beneficiary in
the event of your death. (Other exceptions also may apply.)
Consult your tax adviser to see how these rules apply to you before
you request a distribution from your plan or IRA.
Gifts to minors
The certificate may be given to a minor under either the Uniform
Gifts or Uniform Transfers to Minors Act (UGMA/UTMA), whichever
applies in your state. UGMAs/UTMAs are irrevocable. Generally,
under federal tax laws, income over $1,200 on property owned by
children under age 14 will be taxed at the parents' marginal tax
rate, while income on property owned by children 14 or older will
be taxed at the child's rate.
Your Taxpayer Identification Number (TIN) and backup withholding:
As with any financial account you open, you must list your current
and correct Taxpayer Identification Number (TIN)--either your
Social Security or Employer Identification Number. The TIN must be
certified under penalties of perjury on your application when you
open an account with IDSC.
If you don't provide the TIN to IDSC, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
your interest earnings. You could also be subject to further
penalties, such as:
o $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed
to report interest on your tax return as required.
To help you determine the correct TIN to use on various types of
accounts, please use this chart:
Use the Social Security or
For this type of account Employer Identification Number of
Individual or joint The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
A living trust The grantor-trustee (the person
who puts the money into the trust)
<PAGE>
PAGE 143
An irrevocable trust, The legal entity (not the personal
pension trust or estate representative or trustee, unless
no legal entity is designated in
the account title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your personal financial
advisor or local American Express Financial Advisors Inc. office
for Federal Form W-9, Request for Taxpayer Identification Number
and Certification.
Foreign investors
If you are not a citizen or resident of the United States, you must
supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. IDSC will not accept
purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
It is most likely that interest on the certificate is "portfolio
interest" as defined in U.S. Internal Revenue Code Section 871(h)
if earned by a nonresident alien. However, if the certificate is
treated as a CDI, part of the earned income may be treated as
capital gain instead of portfolio interest. Even though your
interest income or capital gain is not taxed by the U.S.
government, it will be reported at year end to you and to the U.S.
government on a Form 1042S, Foreign Person's U.S. Source Income
Subject to Withholding. The United States participates in various
tax treaties with foreign countries, which provide for sharing of
tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, IDSC will need a statement from persons IDSC
believes are knowledgeable about your estate. The statement must
be in a form satisfactory to IDSC and must tell us that, on your
date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. If we do not receive
the statement, we generally will not take action regarding your
certificate until we receive a transfer certificate from the IRS.
In general, a transfer certificate requires the opening of an
estate in the United States and provides assurance that the IRS
will not claim your IDS certificate to satisfy estate taxes.
<PAGE>
PAGE 144
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Stock Market Certificate is issued and guaranteed by IDSC,
a wholly owned subsidiary of American Express Financial
Corporation. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than
$___ billion and a net worth in excess of $___ million on Dec. 31,
1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American Express
Financial Corporation for advisory and other services and
distribution fees to American Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
Most banks and thrifts offer investments known as certificates of
deposit CDs that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money deposited to individuals, businesses and
other enterprises. Other financial institutions and some insurance
companies may offer investments with comparable combinations of
safety and return on investment.
Regulated by government
Because the IDS Stock Market Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
<PAGE>
PAGE 145
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
Type of investment Net amount invested
preferred stocks __%
government agency bonds __
corporate and other bonds __
mortgages __
municipal bonds __
cash and cash equivalents __
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of American
Express Financial Corporation. Copies of our Dec. 31, 1994
schedule of Investments in Securities of Unaffiliated Issuers are
available upon request. For comments regarding the valuation,
carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial
statements.
Investment policies
In deciding how to diversify the portfolio--among what types of
investments in what amounts--the officers and directors of IDSC use
their best judgment, subject to applicable law. The following
policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt <PAGE>
PAGE 146
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your certificate is managed
Relationship between IDSC and American Express Financial
Corporation
IDSC was originally organized as Investors Syndicate of America,
Inc., a Minnesota corporation, on Oct. 15, 1940, and began business
as an issuer of face amount investment certificates on Jan. 1,
1941. The company became a Delaware corporation on Dec. 31, 1977,
and changed its name to IDS Certificate Company on April 2, 1984.
Before IDSC was created, American Express Financial Corporation
(formerly known as IDS Financial Corporation) had issued similar
certificates since 1894. On January 1, 1995, IDS Financial
Corporation Inc. has become American Express Financial Corporation.
IDSC and American Express Financial Corporation have never failed
to meet their certificate payments.
<PAGE>
PAGE 147
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. As of Dec. 31, 1994, American Express
Financial Corporation managed investments, including its own, of
more than $ ___ billion. American Express Financial Advisors Inc.,
a wholly owned subsidiary of American Express Financial
Corporation, provides a broad range of financial advising services
for individuals and businesses through its nationwide network of
more than ___ offices and more than _____ personal financial
advisors. American Express Financial Advisors' financial advising
services are comprehensive, beginning with a detailed written
analysis that's tailored to your needs. Your analysis may address
one or all of these six essential areas: financial position,
protection planning, investment planning, income tax planning,
retirement planning, and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other business including:
o travel related services (including American Express Card and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by IDSC, are not backed or guaranteed by any bank, nor are they
insured by the FDIC.
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding _______ shares of
common stock, par value of $10 per share. American Express
Financial Corporation owns all of the outstanding shares.
As of Dec. 31, 1994, IDSC had issued (in face amount)
$______________ of installment certificates and $______________ of
single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment adviser and is
responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
<PAGE>
PAGE 148
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Corporation or IDSC as defined in the
federal Investment Company Act of 1940.
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets):
Advisory and Services Fee Computation:
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of IDSC except mortgage loans, real
estate, and any other asset on which we pay an advisory or service
fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1994 $
1993 $
1992 $
Estimated advisory and services fees for 1994 are $__________.
Other expenses payable by IDSC: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate holder accounts), and
<PAGE>
PAGE 149
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc. we pay for the distribution of this certificate as
follows:
o 1.25% of the initial investment on the first day of the
certificate's term, and
o 1.25% of the certificate's reserve at the beginning of each
subsequent term,
for certificates sold through American Express Financial Advisors
Inc. or through AEBI or Coutts.
For certificates sold through the Virtual Bank name, we pay
American Express Financial Advisors Inc. $ _____ per certificate
account.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1994. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1995.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
personal financial advisors and pays other selling expenses in
connection with services to us. our board of directors, including
a majority of directors who are not interested persons of American
Express Financial Advisors Inc. or IDSC, approved this distribution
agreement.
Selling Agent Agreements with American Express Bank International
(AEBI) and Coutts & Co. (USA) International (Coutts): In turn,
under Selling Agent Agreements with AEBI and Coutts, American
Express Financial Advisors Inc. compensates each for their services
as Selling Agents of this certificate as follows:
o AEBI is paid a fee equal to 1.0% per term of the principal
amount of each certificate for which AEBI is the selling
agent.
o Coutts is paid fee equal to 0.80% per term of the principal
amount of each certificate for which Coutts is the selling
agent.
Coutts is compensated on certificates owned by its clients who are
former clients of AEBI. These clients must have continuously owned
a certificate since Nov. 10, 1994. Coutts is also compensated on
additional investments and exchanges made by such clients to other<PAGE>
PAGE 150
certificates only to the extent that a client has the right to make
additional investments or exchanges.
American Express Financial Advisors Inc. has entered into a
consulting agreement with AEBI under which AEBI provides consulting
services related to any selling agent agreements between American
Express Financial Advisors Inc. and other Edge Act corporations.
For these services, American Express Financial Advisors Inc. pays
AEBI a fee for this certificate equal to 0.20% per term of the
principal amount of each certificate for which another Edge Act
corporation is the selling agent.
Such payments will be made quarterly in arrears.
These fees are not assessed to your certificate account.
About AEBI and Coutts
AEBI is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is a wholly owned
subsidiary of American Express Bank Ltd. (AEBL) As an Edge Act
corporation, AEBI is subject to the provisions of Section 25(a) of
the Federal Reserve Act and Regulation K of the Board of Governors
of the Federal Reserve System (the Federal Reserve). It is
supervised and regulated by the Federal Reserve.
AEBI has an extensive international high net-worth client base that
is served by a marketing staff in New York and Florida. The
banking and financial products offered by AEBI include checking,
money-market and time deposits, credit services, check collection
services, foreign exchange, funds transfer, investment advisory
services and securities brokerage services. As of Dec. 31, 1994,
AEBI had total assets of $___ million and total equity of $___
million.
Coutts is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is an indirect wholly
owned subsidiary of NatWest PLC. As an Edge Act corporation,
Coutts is subject to the provisions of Section 25(a) if the Federal
Reserve Act and Regulation K of the Board of Governors of the
Federal Reserve. Coutts is supervised and regulated by the Federal
Reserve.
Although AEBI and Coutts are banking entities, the Stock Market
Certificate is not a bank product, nor is it backed or guaranteed
by AEBI or Coutts, by AEBL, by NatWest PLC or by any other bank,
nor is it guaranteed or insured by the FDIC or any other federal
agency. AEBI is registered where necessary as a securities broker-
dealer.
<PAGE>
PAGE 151
Employment of other American Express affiliates
American Express Financial Corporation may employ an affiliate of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected
annually for a term of one year. The other executive officers are
appointed by the president.
We paid a total of $_______ during 1994 to directors not employed
by American Express Financial Corporation.
Board of directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
<PAGE>
PAGE 152
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
<PAGE>
PAGE 153
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989. Chief financial officer and
treasurer of American Express Bank & Trust from 1988 to 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
<PAGE>
PAGE 154
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The officers and directors as a group beneficially own less than 1%
of the common stock of American Express.
IDSC has provisions in its bylaws relating to the indemnification
of its officers and directors against liability, as permitted by
law. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1994
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express Company, the parent company
of American Express Financial Corporation and IDSC.
Other certificates issued by IDSC: Your American Express personal
financial advisor can give you more information on four other
certificates issued by IDSC. These certificates offer a wide range
of investment terms and features.
IDS Cash Reserve Certificate - A single payment certificate that
permits additional investments and guarantees interest in advance
for a three-month term.
IDS Flexible Savings Certificate - A single payment certificate
that permits additional investments and guarantees interest in
advance for a term of 6, 12, 18, 24, 30 or 36 months.
IDS Future Value Certificate - A single payment certificate that
guarantees interest in advance for four, five, six, seven, eight,
nine or ten-year maturity.
IDS Installment Certificate - An installment payment certificate
that declares interest in advance for a three-month period and
offers bonuses in the third through sixth years for regular
investments.
<PAGE>
PAGE 155
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c)
IDS STOCK MARKET CERTIFICATE - AEBI
AND VARIATIONS
Item Caption in
Number Prospectus
Item 1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus.
Item 2. Inside Front and Where to get information about
Outside Back Cover Pages IDSC; Table of Contents.
of Prospectus.
Item 3. Summary Informa- About the certificate
tion, Risk Factors
and Ratio of Earnings
to Fixed Charges.
Item 4. Use of Proceeds. How your money is used and
protected; Investment policies
Item 5. Determination of Not Applicable.
Offering Price.
Item 6. Dilution. Not Applicable.
Item 7. Selling Security Not Applicable.
Holders
Item 8. Plan of How your certificate
Distribution. is managed.
Item 9. Description of About the Certificate;
Securities to Be How to invest and withdraw
Registered. funds.
Taxes on your earnings.
Item 10. Interests of Not Applicable.
Named Experts and Counsel.
<PAGE>
PAGE 156
PART I. CROSS REFERENCE SHEET FOR PROSPECTUS
PURSUANT TO RULE 404(c) (Continued)
Item Caption in
Number Prospectus
Item 11. Information with Invested and guaranteed by
Respect to the Registrant. IDSC; Regulated by government;
Relationship between IDSC and
American Express Financial
Corporation; Capital structure
and certificates issued;
Directors and Officers.
Item 12. Disclosure of Directors and Officers
Commission Position on
Indemnification for
Securities Act Liabilities.
<PAGE>
PAGE 157
IDS Stock Market Certificate
Prospectus April 26, 1995
Potential for stock market growth with safety of principal
IDS Stock Market Certificates are issued by IDS Certificate Company
(IDSC) (the Issuer). You can purchase this certificate with a
single investment of at least $1,000 but not more than $1 million
(unless you receive prior authorization from the Issuer to invest
more). As long as you stay within this limit, you can make
additional investments at the end of a term. Your principal is
guaranteed by the Issuer. You can participate in any increase of
the stock market based on the S&P 500 Index while protecting your
principal. In addition, you decide whether part of your return
will be guaranteed or whether all of it will be tied to the market.
You can keep your certificate for up to 14 terms.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This prospectus describes terms and conditions of your IDS Stock
Market Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the
prospectus before you invest and keep it for future reference. No
one has the authority to change the terms and conditions of the IDS
Stock Market Certificate as described in the prospectus, or to bind
the Issuer by any statement not in it.
Issuer: Distributor:
IDS Certificate Company American Express
IDS Tower 10 Financial Advisors Inc.
Minneapolis, MN 55440-0010 IDS Tower 10
1-800-437-3133 (toll free) or Minneapolis, MN 55440-0010
(612) 671-3800 (Minneapolis/
St. Paul area)
Selling Agents:
American Express
TTY numbers: Bank International
1-800-846-4293 (toll free) or American Express Tower
(612) 671-1112 (Minneapolis/ World Financial Center
St. Paul area) New York, NY 10285-2300
Coutts & Co (USA) International
421 North Rodeo Drive
Penthouse 1
Beverly Hills, CA 90210-4539
<PAGE>
PAGE 158
Where to get information about the Issuer
The Issuer is subject to the reporting requirements of the
Securities Exchange Act of 1934. Reports and other information on
the Issuer are filed with the Securities and Exchange Commission
(SEC). Copies can be obtained from the Public Reference Section of
the SEC, 450 5th St., N.W., Washington, D.C. 20549, at prescribed
rates. Or you can inspect and copy information in person at the
SEC's Public Reference Section and at the following regional
offices:
Northeast Regional Office
7 World Trade Center, Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St., Suite 1400
Chicago, IL 60611
Pacific Regional Office
5670 Wilshire Blvd., 11th Floor
Los Angeles, CA 90036
Initial interest and participation rates
The Issuer guarantees return of your principal. The interest on
your certificate is linked to stock market performance as measured
by the Standard & Poor's 500 Stock Index (S&P 500 Index) as
explained under "About the certificate," below.
Here are the interest rates and market participation percentages in
effect on the date of this prospectus, April 26, 1995:
Maximum return Market participation percentage Minimum interest
10% 100% (full) None
10% 25% (partial) Currently 2.75%
These rates may or may not be in effect when you apply to purchase
your certificate. For your first term, if you choose the partial
participation option for your certificate, your minimum interest
rate will be between 2.5% and 3.5%. Rates for later terms are set
at the discretion of the Issuer and may differ from the rates shown
here. We reserve the right to issue other securities with
different provisions.
<PAGE>
PAGE 159
Table of contents
About the certificate
Investment amounts p
Face amount and principal p
Certificate term p
Value at maturity p
Receiving cash before end of the term p
Interest p
Promotions and pricing flexibility p
Historical data on the S&P 500 Index p
Calculation of return p
About the S&P 500 Index p
Opportunities at the end of a term p
How to invest and withdraw funds
Buying your certificate p
Full and partial withdrawals p
Transfers to other accounts p
Transfer of ownership p
For more information p
Taxes on your earnings
Foreign investors p
How your money is used and protected
Invested and guaranteed by the Issuer p
Regulated by government p
Backed by our investments p
Investment policies p
How your money is managed
Relationship between the Issuer
and American Express Financial Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
About American Express Bank International p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
Annual Financial information
Summary of selected financial information p
Management's discussion and analysis of financial condition
and results of operations
Report of independent auditor's
Financial statements
Notes to financial statements
<PAGE>
PAGE 160
About the certificate
Investment amounts
You may purchase the IDS Stock Market Certificate with a single
investment of at least $1,000 but not more than $1 million payable
in U.S. currency. You may also make additional lump-sum
investments in any amount at the end of any term as long as your
total amount paid in is not more than the $1 million.
Face amount and principal
The face amount of your certificate is the amount of your initial
investment. Your principal is the value of your certificate at the
beginning of each subsequent term. Your principal is guaranteed by
the Issuer. It consists of the amount you actually invest plus
interest and any additional investment you make less withdrawals,
penalties and any interest paid to you in cash.
For example: Assume your initial investment (face amount) of
$10,000 has earned a return of 7.25%. Interest is credited to your
account at the end of the term. You have not taken any interest as
cash, or made any withdrawals. You have invested an additional
$2,500 prior to the beginning of the next term. Your principal for
the next term will equal:
$10,000.00 Face Amount (initial investment)
plus 725.00 Interest credited to your account at the
end of the term
plus 5.00 Interim interest (See "Interim interest")
minus ($0.00) Interest paid to you in cash
plus 2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
$13,230.00 Principal at the beginning of the next
term.
Certificate term
Your first certificate term is a 12-month period that begins on the
Wednesday after your application is accepted and ends the Tuesday
before the one-year anniversary of its acceptance. For example, if
your application is accepted on a Wednesday, your first term would
begin the next Wednesday. Your certificate will earn interest at
the interim interest rate then in effect until the term begins. It
will not earn any participation interest until the term begins. If
you choose to continue to receive participation interest,
subsequent terms are 12-month periods that begin on the Wednesday
following the 14-day grace period at the end of the prior 12-month
term. You may begin your next term on any Wednesday during the 14-
day period by providing prior written instructions to the Issuer.
If you choose to receive fixed interest, subsequent terms will be
up to 12 months as described in "Fixed interest" under "Interest"
below.<PAGE>
PAGE 161
Value at maturity
Your certificate matures after 14 terms, and you will receive a
check for its value. At maturity, the value of your certificate
will be the total of your actual investments, plus credited
interest not paid to you in cash, less any withdrawals and
withdrawal penalties. Certain other fees may apply.
Receiving cash before end of the term
If you need money before your certificate term ends, you may
withdraw part or all of its value at any time, less any penalties
that apply. Procedures for withdrawing money, as well as
conditions under which penalties apply, are described in "Full and
partial withdrawals" under "How to invest and withdraw funds."
Interest
You may select from two types of participation interest for your
first term. The two types are 1) full participation, or 2) partial
participation together with minimum interest. Both of these
options have an upper limit which is the maximum annual return
explained below. After your first term, you may choose not to
participate in any market movement and receive a fixed rate of
interest.
Full participation interest: With this option you participate 100%
in any percentage increase in the S&P 500 Index up to the maximum
return. You earn interest only if the value of the S&P 500 Index
is higher on the last day of your term than it was on the first day
of your term. Thus, your return is linked to stock market
performance. The S&P 500 Index is frequently used to measure the
relative performance of the stock market. For a more detailed
discussion of the Index, see "About the S&P 500 Index."
Partial participation and minimum interest: This option allows you
to participate in a certain part (market participation rate) of any
increase in the S&P 500 Index together with a rate of interest
guaranteed in advance for each term (minimum interest). Your
return is composed of two parts:
1. A percentage of any increase in the S&P 500 Index, and
2. A rate of interest guaranteed in advance for each term.
Together, they cannot exceed the maximum return.
If you choose the partial participation option for your first term,
the minimum interest paid on your certificate will be between 2.5%
and 3.5%
The market participation rate and the minimum interest rate on the
date of this prospectus are listed on the inside cover under
"Initial interest and participation rates."
Fixed interest: After your first term, this option allows you to
stop participating in the market entirely for one or more terms.
You may choose to receive a fixed rate of interest for any term
after the first term. During the term when you are receiving fixed
interest, you can change from your fixed interest selection to <PAGE>
PAGE 162
again participate in the market. If you make the change from fixed
interest to participation interest, your next term would begin on
the Wednesday following our receipt of notice of your new
selection. In this way, you may have a term (during which you
would earn fixed interest) that is less than 12 months. You may
not change from participation interest to fixed interest during a
term.
Maximum annual return: This is the cap, or upper limit, of your
return. Your total return including both participation and minimum
interest for a term for which you have chosen participation
interest will be limited to this maximum return percentage.
Determining the S&P 500 Index value: The stock market closes at 3
p.m. Central time and the S&P 500 Index value is available at
approximately 4:30 p.m. This is the value we currently use to
determine participation interest. Occasionally, Standard & Poor's
Corporation (S&P) makes minor adjustments to the closing value
after 4:30 p.m. and the value we use may not be exactly the one
that is published the next business day. In the future, we may use
a later time cut-off if it becomes feasible to do so. If the stock
market is not open or the S&P 500 Index is unavailable as of the
last day of your term, the preceding business day for which a value
is available will be used instead.
Interim interest: When we accept your application, we pay interim
interest to your account for the time before your first term
begins. We also pay interim interest for the 14-day period between
terms unless you write to ask us to begin your next term earlier.
You may withdraw this interest in cash at any time before it
becomes part of your certificate's principal without withdrawal
penalty. If it is not withdrawn, the interest will become part of
your certificate's principal at the start of the next succeeding
term. For example, the interest you earn between the end of the
first and the beginning of the second term will become part of the
principal at the start of your third term. Interim interest rates
for the time before your first term begins will be within a range
10 to 110 basis points (0.10% to 1.10%) above the average interest
rate published for 12-month certificates of deposit in the BANK
RATE MONITORTM National Index (the BRM Index). If the BRM Index is
no longer publicly available or feasible to use, IDSC may use
another, similar index as a guide for setting rates.
The BANK RATE MONITOR is a weekly magazine published in North Palm
Beach, FL 33408 by Advertising News Service Inc., an independent
national news organization that collects and disseminates
information about bank products and interest rates. Advertising
News Service has no connection with the Issuer, American Express
Financial Corporation or any of their affiliates. The BRM Index
used by the Issuer is a 25-city index.
The BANK RATE MONITOR may be available in your local library. To
obtain information or current BRM Index rates, call the Client
Service Organization at 1-800-437-3133 or TTY: 1-800-846-4293.
<PAGE>
PAGE 163
Earning interest: Participation interest is calculated, credited
and compounded at the end of your certificate term. Minimum and
fixed interest accrue daily and are credited and compounded at the
end of your certificate term. Both minimum and fixed interest are
calculated on a 30-day month and 360-day year basis. Interim
interest accrues and is credited daily.
Rates for future periods: After the initial term, the maximum
return, market participation percentage or minimum interest rate on
your certificate may be greater or less than those shown on the
front of this prospectus. In setting future interest rates, a
primary consideration will be the prevailing investment climate.
Rates are reviewed weekly, and we have complete discretion as to
what interest rate will be declared.
To find out what your certificate's new maximum return, market
participation percentage and minimum interest rate will be for your
next term, please consult:
o Your American Express Bank International (AEBI) relationship
manager.
o Your Coutts & Co (USA) International (Coutts) relationship
officer.
o The Issuer's Client Service Organization at 1-800-437-3133.
Promotions and pricing flexibility
From time to time, the Issuer may sponsor or participate in
promotions involving one or more of the certificates and their
respective terms. For example, we may offer different rates to new
clients, to existing clients, or to individuals who purchase or use
products or services offered by American Express Financial Advisors
Inc. or its affiliates. These promotions will generally be for a
specified period of time. We also may offer different rates based
on your amount invested, maturity selected, geographic location and
whether the certificate is purchased for an IRA or a qualified
retirement account.
Historical Data on the S&P 500 Index
The following chart illustrates the month-end closing values of the
index from Dec. 31, 1983 through Feb. 28, 1995. The values of the
S&P 500 Index are reprinted with the permission of S&P.
<PAGE>
PAGE 164
S&P 500 Index Average Annual Return
Beginning date Period held Average annual
Dec. 31, in years return
___________________________________________________________________
1983 10 ____%
1988 5 ____
1992 1 ____
The next chart illustrates, on a moving 12-month basis, the price
return of the S&P 500 Index measured for every 12-month period
beginning with the period ended Dec. 31, 1984. The price return is
the percentage return for each period using month-end closing
prices of the S&P 500 Index. Dividends and other distributions on
the securities comprising the S&P 500 Index are not included in
calculating the price return.
Using the same data on price returns described above, the next
graph expands on the information in the preceding chart by
illustrating the distribution of all of the 12-month price returns
of the S&P 500 Index beginning with the 12-month period ending Dec.
31, 1984. The graph also shows the number of times these price
returns fell within certain ranges.
<PAGE>
PAGE 165
The last chart illustrates, on a moving weekly basis, the actual
12-month return of the IDS Stock Market Certificate at full and
partial participation compared to the price return of the NYSE
Composite IndexR through October 1992 and the S&P 500 Index after
October 1992. For non-guaranteed funds received before Nov. 3,
1992, and guaranteed funds received before Nov. 4, 1992, IDS Stock
Market Certificate participation interest was based on the NYSE
Composite IndexR rather than the S&P 500 Index.
The NYSE Composite IndexR is a registered service mark of the New
York Stock Exchange, Inc. (NYSE) and is a composite covering price
movements of all common stocks listed on the NYSE. Because the IDS
Stock Market Certificate was first available on Jan. 24, 1990, the
performance reflects the returns on the one-year anniversary date,
falling on a Wednesday, of each of the weeks shown.
The recent historical experience of an index should not be taken as
an indication of future performance of the stock market or the
certificate. No assurance can be given that an index will not
decline or that certificate holders will receive interest on their
accounts beyond any minimum interest or fixed interest selected.
<PAGE>
PAGE 166
Calculation of return
The increase or decrease in the S&P 500 Index, as well as the
actual return paid to you, is calculated as follows:
Rate of return on S&P 500 Index
Term ending value of S&P 500 Index minus
Term beginning value of S&P 500 Index divided by
Term beginning value of S&P 500 Index equals
Rate of return on S&P 500 Index
The actual return paid to you will depend on your interest
participation selection.
For example, assume:
Term ending value of S&P 500 Index 458
Term beginning value of S&P 500 Index 422
Maximum return 10%
Minimum return 2.5%
Partial participation rate 25%
458 Term ending value of S&P 500 Index
minus 422 Term beginning value of S&P 500 Index
equals 36 Difference between beginning and ending values
36 Difference between beginning and ending values
divided by 422 Term beginning value of S&P 500 Index
equals 8.53% Percent increase - full participation return
8.53% Percent increase or decrease
times 25.00% Partial participation rate
equals 2.13%
plus 2.50% 2.50% minimum interest rate
equals 4.63% Partial participation return
In both cases in the example, the return would be less than the 10%
maximum.
Maximum Return and Partial Participation Minimum Rate History - The
following table illustrates the maximum annual returns and partial
participation minimum rates that have been in effect since the
Stock Market Certificate was introduced.
Partial
Maximum participation
Purchase date annual return minimum rate
Jan. 24, 1990 18.00% 5.00%
Feb. 5, 1992 18.00 4.00
May 13, 1992 15.00 4.00
Sept. 9, 1992 12.00 3.00
Nov. 11, 1992 10.00 2.50
On Nov. 2, 1994, the partial participation rate increased to 2.75%
while the maximum annual return remained 10%.
<PAGE>
PAGE 167
Examples: To help you understand the way this certificate works,
here are some hypothetical examples. The following are three
different examples of market scenarios and how they affect the
certificate's return. Assume for all examples that you purchased
the certificate with a $10,000 original investment. Also assume
that the partial participation rate is 25%, the minimum interest
rate for partial participation is 2.5%, and the maximum total
return for full and partial participation is 10%.
<TABLE><CAPTION>
- ------------------------------------------------------------------------------------------
1. If the Market and the S&P 500 Index value rise
<S> <C> <C>
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 8% increase in the S&P 500 Index Index 459
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 800 (8% x $10,000) + 250 2.5% (minimum interest rate) x $10,000
Participation interest + 200 25% x (8% x $10,000) participation interest
$10,800 Ending balance $10,450 Ending balance
(8% total return) (4.5% total return)
- ------------------------------------------------------------------------------------------
2. If the Market and the S&P 500 Index value fall
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 4% decrease in the S&P 500 Index Index 408
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 0 Participation interest + 250 2.5% (Minimum interest rate) x $10,000
$10,000 Ending balance + 0 Participation interest
(0% total return) $10,250 Ending balance
(2.5% total return)
- ----------------------------------------------------------------------------------------
3. If the Market and the S&P 500 Index value rise above maximum return
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 16% increase in the S&P 500 Index Index 493
Full Participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000 Original investment
+ 1,000 (10% x $10,000) + 250 2.5% (Minimum interest rate) x $10,000
Maximum interest + 400 (25% x 16% x $10,000) participation interest
$11,000 Ending balance $10,650 Ending balance
(10% Total return) (6.5% total return)
</TABLE>
About the S&P 500 Index
The description in this prospectus of the S&P 500 Index including
its make-up, method of calculation and changes in its components
are derived from publicly available information regarding the S&P
500 Index. The Issuer does not assume any responsibility for the
accuracy or completeness of such information.
The S&P 500 Index is composed of 500 common stocks, most of which
are listed on the New York Stock Exchange. The S&P 500 Index is
published by S&P and is intended to provide an indication of the
pattern of common stock movement. S&P chooses the 500 stocks to be
included in the S&P 500 Index with the aim of achieving a
distribution by broad industry groupings that approximates the
distribution of these groupings in the common stock population of
the New York Stock Exchange. Changes in the S&P 500 Index are
reported daily in the financial pages of many major newspapers.
<PAGE>
PAGE 168
"Standard & Poor's ", "S&P ", "S&P 500 ", "Standard & Poor's 500",
and "500" are trademarks of McGraw-Hill, Inc. and have been
licensed for use by the Issuer. The certificate is not sponsored,
endorsed, sold or promoted by S&P. S&P makes no representation or
warranty, express or implied, to the owners of the certificate or
any member of the public regarding the advisability of investing in
securities generally or in the certificate particularly or the
ability of the S&P 500 Index to track general stock market
performance. S&P's only relationship to the Issuer is the
licensing of certain trademarks and trade names of S&P and of the
S&P 500 Index which is determined, composed and calculated by S&P
without regard to the Issuer or the certificate. S&P has no
obligation to take the needs of the Issuer or the owners of the
certificate into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has
not participated in the determination of the timing of, prices at,
or quantities of the certificate to be issued or in the
determination or calculation of the equation by which the
certificate is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or
trading of the certificate.
S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 Index or any data included therein and S&P shall have no
liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to the results to be
obtained by the Issuer, owners of the certificate, or any person or
entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any
data included therein. Without limiting any of the foregoing, in
no event shall S&P have any liability for any special, punitive,
indirect, or consequential damages (including lost profits), even
if notified of the possibility of such damages.
If for any reason the S&P 500 Index were to become unavailable or
not reasonably feasible to use, we would use a comparable stock
market index for determining participation interest. If this were
to occur, you would be sent a notice indicating the comparable
index that will be used and be given the option to surrender your
certificate, if desired, and receive your principal, without being
assessed a surrender charge.
Opportunities at the end of a term
Grace period: When your certificate term ends, you have 14 days
before a new term automatically begins. During this 14-day grace
period you can:
o change your interest selection,
o add money to your certificate,
<PAGE>
PAGE 169
o withdraw part or all of your money without a withdrawal
penalty or loss of interest, or
o receive your interest in cash.
Fixed interest only: The grace period does not apply if you made
the change from fixed interest back to participation interest
during a term as discussed in "Fixed interest" under "Interest"
above. Instead, your new 12-month term will begin on the Wednesday
following our receipt of your notice of your new interest
selection.
New term: If you do not make changes, your certificate will
continue with your current selections when the new term begins 14
days later. You will earn interim interest during this 14-day
grace period. If you don't want to wait 14 days before starting
your next market participation term, you must give us written
instructions before your current term ends. Or, you may phone in
your instructions and follow up the call with written verification.
You can tell us to start your next term on any Wednesday during the
grace period following our receipt of your notice. Your notice may
also tell us to change your interest selection, add to your
certificate or withdraw part of your money. Term end notification
cannot be sent in advance because indexing information and interest
(if any) are included. Any additional payments received during the
current term will be applied at the end of the current term. By
starting your new term early and waiving the 14-day grace period,
you are choosing to start your next term without knowing the ending
value of your current term.
How to invest and withdraw funds
Buying your certificate
An AEBI relationship manager or Coutts client relationship officer
will help you fill out and submit an application to open an account
with us and purchase a certificate. We will process the
application at our corporate offices in Minneapolis. When your
application is accepted, you will receive a confirmation showing
the acceptance date, the date your term begins and the interest
selection you have made detailing your market participation
percentage and/or the guaranteed minimum interest rate for your
first term. After your term begins, we will send you notice of the
value of the S&P 500 Index on the day your term began. The rates
in effect on the date we accept your application are the rates that
apply to your certificate.
IMPORTANT: When opening an account, you must provide the Issuer
with a Form W-8 or approved substitute. See "Taxes on your
earnings."
<PAGE>
PAGE 170
Purchase policies:
o If you purchase a certificate with a personal check or other
non-guaranteed funds, American Express Financial Corporation
must convert your check to federal funds (e.g., monies of
member banks within the Federal Reserve Bank) before your
purchase will be accepted and you begin earning interest.
This could take up to two business days.
o The Issuer has the authority to determine whether to accept an
application.
Two ways to make additional investments at term end
1
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
IDS Certificate Company IDS Certificate Company
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55402
2
By wire
If you have an established account, you may wire money to:
Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions: Credit IDS Account #00-30-015 for
personal account # (your account number) for (your name).
If this information is not included, the order may be rejected and
all money received less any costs the Issuer incurs will be
returned promptly.
o Minimum amount you may wire: $1,000
o Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, the Issuer and Norwest
Bank Minneapolis are open for business.
o Purchases made by wire are accepted by American Express
Financial Corporation only from banks located in the United
States.
o Wire purchases are completed when wired payment is received
and we accept the purchase.
o Wire purchases are not sent until the next business day.
<PAGE>
PAGE 171
o Wire investments must be received and accepted in the
Minneapolis headquarters on a business day before 3 p.m.
Central time to be credited that day. Otherwise your purchase
will be processed the next business day.
o The Issuer, American Express Financial Corporation, its
subsidiaries, AEBI, and Coutts are not responsible for any
delays that occur in wiring funds, including delays in
processing by the bank.
o You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may withdraw your certificate for its full value or make a
partial withdrawal of $100 or more at any time. However:
o Full and partial withdrawals of principal during a term are
subject to penalties, described below.
o You may not make a partial withdrawal if it would reduce your
certificate balance to less than $1,000. If you request such
a withdrawal, we will contact you for revised instructions.
Penalties for withdrawal during a term: If you withdraw money
during a term, you will pay a penalty of 2% of the principal
withdrawn. (The 2% penalty is waived upon death of the certificate
holder.)
When you request a full or partial withdrawal during a term, we pay
you from the principal of your certificate.
Loss of interest: If you make a withdrawal at any time other than
at the end of the term, you will lose interest accrued on the
withdrawal amount since minimum and participation interest is
credited only at the end of a term. However, accrued fixed and
interim interest will be paid to the date of the withdrawal.
Following are examples describing a $2,000 withdrawal during a term
for participation and fixed interest:
Participation interest
Account balance $10,000.00
Interest (interest is credited at 0.00
the end of the term)
Withdrawal of principal ( 2,000.00)
2% withdrawal penalty (40.00)
Balance after withdrawal. $ 7,960.00
You will forfeit any accrued
interest on the withdrawal amount.
<PAGE>
PAGE 172
Fixed interest
Account balance $10,000.00
Interest credited to date 100.00
Withdrawal of credited interest (100.00)
Withdrawal of principal (1,900.00)
2% withdrawal penalty (on $1,900 (38.00)
principal withdrawn)
Balance after withdrawal. $ 8,062.00
Other full and partial withdrawal policies:
o If you request a partial or full withdrawal of a certificate
recently purchased or added to by a check or money order that
is not guaranteed, we will wait for your check to clear.
Please expect a minimum of 10 days from the date of your
payment before the Issuer mails a check to you. (A check may
be mailed earlier if your bank provides evidence that your
check has cleared.)
o If your certificate is pledged as collateral, any withdrawal
will be delayed until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules,
regulations or orders of the SEC.
Transfers to other accounts
You may transfer part or all of your certificate to any other IDS
certificate or into another existing American Express Financial
Advisors Inc. account (subject to any terms and conditions that may
apply).
Two ways to request a withdrawal or transfer
Your AEBI relationship manager or Coutts relationship officer will
assist you with these transactions. You may also call the Client
Service Organization between 8 a.m. and 6 p.m. your local time at:
1-800-437-3133 (toll free) or
(612) 671-3800 (Minneapolis/St. Paul area)
TTY numbers:
1-800-846-4293 (toll free) or
(612) 671-1112 (Minneapolis/St. Paul area)
o Maximum phone request: $50,000
o Transfers into an American Express Financial Corporation
account with the same ownership.
<PAGE>
PAGE 173
o A telephone withdrawal request will not be allowed within 30
days of a phoned-in address change.
o We will honor any telephone request believed to be authentic
and will use reasonable procedures to confirm that they are,
such as asking identifying questions. As long as the
procedures are followed, neither the Issuer or American
Express Financial Corporation will be liable for any loss
resulting from fraudulent requests.
You may request that telephone withdrawals not be authorized from
your account by writing the Client Service Organization.
2
By mail
Send your name, account number and request for a withdrawal or
transfer to:
Regular mail:
IDS Certificate Company
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Certificate Company
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402
Written requests are required for:
o Transactions over $50,000
o Transfers to another American Express Financial Advisors Inc.
account with different ownership. (All current registered
owners must sign the request.)
Two ways to receive payment when you withdraw funds
1
By regular or express mail
o Mailed to address on record; please allow seven days for
mailing
o Payable to name(s) you requested
<PAGE>
PAGE 174
o For express mail, you will pay charges that vary depending on
the courier you select. For a partial withdrawal leaving a
remaining balance of more than $1,000, these charges will be
deducted from the remaining balance. If the remaining balance
is less than $1,000, or if it is a full withdrawal, charges
are deducted from proceeds of the withdrawal.
2
By wire
o Minimum wire withdrawal: $500
o Request that money be wired to your bank
o Bank account must be in same ownership as the Issuer's account
o Pre-authorization required. Complete the bank wire
authorization section in the application or use a form
supplied by your AEBI relationship manager or Coutts client
relationship officer. All registered owners must sign.
o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full
withdrawal.
Transfer of ownership
While the certificate is not negotiable, the Issuer will transfer
ownership upon written notification to IDSC Client Service
Organization.
For more information
For information on purchases, withdrawals, exchanges, transfers of
ownership, proper instructions and other service questions
regarding your certificate, please consult your AEBI relationship
manager or Coutts client relationship officer, or call the Issuer's
toll free client service number:
1-800-437-3133 or
TTY: 1-800-846-4293.
Taxes on your earnings
Foreign investors
If you are not a citizen or resident of the United States, you must
supply the Issuer with Form W-8, Certificate of Foreign Status when
you purchase your certificate, and you must resupply it every three
years. You must also supply both a current mailing address and an
address of foreign residency, if different. The Issuer will not
accept purchases of certificates by nonresident aliens without an
appropriately certified Form W-8 (or approved substitute). Also,
if you do not supply Form W-8 you will be subject to backup
withholding on interest payments and withdrawals.
<PAGE>
PAGE 175
It is most likely that the interest on the certificate is
"portfolio interest" as defined in U.S. Internal Revenue Code
Section 871(h) if earned by a nonresident alien. However, if the
certificate is treated as a contingent debt instrument (CDI), part
of the earned income may be treated as capital gain instead of
portfolio interest. Even though your interest income or capital
gain is not taxed by the U.S. government, it will be reported at
year end to you and to the U.S. government on a Form 1042S, Foreign
Person's U.S. Source Income Subject to Withholding. The United
States participates in various tax treaties with foreign countries,
which provide for sharing of tax information.
Estate tax: If you are a nonresident alien and you die while
owning a certificate, the Issuer will need a statement from persons
the Issuer believes are knowledgeable about your estate. The
statement must be in a form satisfactory to the Issuer and must
tell us that, on your date of death, your estate did not include
any property in the United States for U.S. estate tax purposes. If
we do not receive the statement, we generally will not take action
regarding your certificate until we receive a transfer certificate
from the IRS. In general, a transfer certificate requires the
opening of an estate in the United States and provides assurance
that the IRS will not claim your IDS certificate to satisfy estate
taxes.
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this certificate. Tax
matters are highly individual and complex, and you should consult a
qualified tax adviser about your personal situation.
How your money is used and protected
Invested and guaranteed by the Issuer
The IDS Stock Market Certificate is issued and guaranteed by the
Issuer, a wholly owned subsidiary of American Express Financial
Corporation. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than
$___ billion and a net worth in excess of $___ million on Dec. 31,
1994.
We back our certificates by investing the money received and
keeping the invested assets on deposit. Our investments generate
interest and dividends, out of which we pay:
o interest to certificate holders
o various expenses, including taxes, fees to American Express
Financial Corporation for advisory and other services and
distribution fees to American Express Financial Advisors Inc.
For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and
results of operations."
<PAGE>
PAGE 176
Most banks and thrifts offer investments known as certificates of
deposit (CDs) that are similar to our certificates in many ways.
Early withdrawal of bank CDs often results in penalties. Banks and
thrifts generally have federal deposit insurance for their deposits
and lend much of the money deposited to individuals, businesses and
other enterprises. Other financial institutions and some insurance
companies may offer investments with comparable combinations of
safety and return on investment.
Regulated by government
Because the IDS Stock Market Certificate is a security, its offer
and sale are subject to regulation under federal and state
securities laws. (It is a face-amount certificate--not a bank
product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep
investments on deposit in a segregated custodial account to protect
all of our outstanding certificates. These investments back the
entire value of your certificate account. Their carrying value
must exceed the required carrying value of the outstanding
certificates by at least $250,000. As of Dec. 31, 1994, the
carrying value of these investments exceeded the required carrying
value of our outstanding certificates by more than $___ million.
Backed by our investments
Our investments are varied and of high quality. This was the
composition of our portfolio as of Dec. 31, 1994:
Type of investment Net amount invested
preferred stocks ___%
government agency bonds ___
corporate and other bonds ___
mortgages ___
municipal bonds ___
cash and cash equivalents ___
More than 95% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the
financial statements.
Most of our investments are on deposit with American Express Trust
Company (formerly IDS Trust Company), Minneapolis, although we also
maintain separate deposits as required by certain states. American
Express Trust Company is a wholly owned subsidiary of American
Express Financial Corporation. Copies of our Dec. 31, 1994
schedule of Investments in Securities of Unaffiliated Issuers are
available upon request. For comments regarding the valuation,
carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial
statements.
<PAGE>
PAGE 177
Investment policies
In deciding how to diversify the portfolio-- among what types of
investments in what amounts--the officers and directors of the
Issuer use their best judgment, subject to applicable law. The
following policies currently govern our investment decisions:
Purchasing securities on margin: We will not purchase any
securities on margin or participate on a joint basis or a joint-
and-several basis in any trading account in securities.
Commodities: We have not and do not intend to purchase or sell
commodities or commodity contracts.
Underwriting: We do not intend to engage in the public
distribution of securities issued by others. However, if we
purchase unregistered securities and later resell them, we may be
considered an underwriter under federal securities laws.
Borrowing money: From time to time we have established a line of
credit if management believed borrowing was necessary or desirable.
While a line of credit does not currently exist, it may be
established again in the future. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a
way to borrow money. Under these agreements, we sell debt
securities to our lender, and repurchase them at the sales price
plus an agreed-upon interest rate within a specified period of
time.
Real estate: We may invest directly in real estate, though we have
not generally done so in the past. We do invest in mortgage loans.
Lending securities: We may lend some of our securities to broker-
dealers and receive cash equal to the market value of the
securities as collateral. We invest this cash in short-term
securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest,
dividends and other distributions paid on the loaned securities.
We will try to vote these securities if a major event affecting our
investment is under consideration.
When-issued securities: Most of our investments are in debt
securities, some of which are purchased on a when-issued basis. It
may take as long as 45 days before these securities are issued and
delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established
procedures to ensure that sufficient cash is available to meet
when-issued commitments.
Options: We buy or sell various types of options contracts for
hedging purposes or as a trading technique to facilitate securities
purchases or sales. We buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a
specified level.<PAGE>
PAGE 178
Restrictions: There are no restrictions on concentration of
investments in any particular industry or group of industries or on
rates of portfolio turnover.
How your certificate is managed
Relationship between the Issuer and IDS
The Issuer was originally organized as Investors Syndicate of
America, Inc., a Minnesota corporation, on Oct. 15, 1940, and began
business as an issuer of face amount investment certificates on
Jan. 1, 1941. The company became a Delaware corporation on Dec.
31, 1977, and changed its name to IDS Certificate Company on April
2, 1984.
Before the Issuer was created, American Express Financial
Corporation (formerly known as IDS Financial Corporation) had
issued similar certificates since 1894. On January 1, 1995, IDS
Financial Corporation became American Express Financial
Corporation. IDSC and American Express Financial Corporation have
never failed to meet their certificate payments.
During its many years in operation, American Express Financial
Corporation has become a leading manager of investments in
mortgages and securities. As of Dec. 31, 1994, American Express
Financial Corporation managed investments, including its own, of
more than $__ billion. American Express Financial Advisors Inc., a
wholly owned subsidiary of American Express Financial Corporation,
provides a broad range of financial advising services for
individuals and businesses through its nationwide network of more
than ___ offices and more than ____ personal financial advisors.
American Express Financial Advisors Inc. financial advising
services are comprehensive, beginning with a detailed written
analysis that's tailored to your needs. Your analysis may address
one or all of these six essential areas: financial position,
protection planning, investment planning, income tax planning,
retirement planning, and estate planning.
American Express Financial Corporation itself is a wholly owned
subsidiary of American Express Company (American Express), a
financial services company with executive offices at American
Express Tower, World Financial Center, New York, NY 10285.
American Express is a financial services company engaged through
subsidiaries in other business including:
o travel related services (including American Express CardR and
Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries), and
o international banking services (through American Express Bank
Ltd. and its subsidiaries).
American Express Financial Advisors Inc. is not a bank, and the
securities offered by it, such as face amount certificates issued
by the Issuer, are not backed or guaranteed by any bank, nor are
they insured by the FDIC.
<PAGE>
PAGE 179
Capital structure and certificates issued
The Issuer has authorized, issued and has outstanding 150,000
shares of common stock, par value of $10 per share. American
Express Financial Corporation owns all of the outstanding shares.
As of Dec. 31, 1994, the Issuer had issued (in face amount)
$_______________ of installment certificates and $_______________
of single payment certificates.
Investment management and services
Under an Investment Advisory and Services Agreement, American
Express Financial Corporation acts as our investment adviser and is
responsible for:
o providing investment research,
o making specific investment recommendations
o executing purchase and sale orders according to our policy of
obtaining the best price and execution.
All these activities are subject to direction and control by our
board of directors and officers. Our agreement with American
Express Financial Corporation requires annual renewal by our board,
including a majority of directors who are not interested persons of
American Express Financial Corporation or the Issuer as defined in
the federal Investment Company Act of 1940.
For its services, we pay American Express Financial Corporation a
monthly fee, equal on an annual basis to a percentage of the total
book value of certain assets (included assets):
Advisory and Services Fee Computation
Included Assets Percentage of Total Book Value
First $250 million 0.75%
Next 250 million 0.65
Next 250 million 0.55
Next 250 million 0.50
Any amount over $1 billion 0.45
Included assets are all assets of the Issuer except mortgage loans,
real estate, and any other asset on which we pay an advisory or
service fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1994 $ %
1993 $
1992 $
<PAGE>
PAGE 180
Estimated advisory and services fees for 1994 are $13,867,000.
Other expenses payable by the Issuer: The Investment Advisory and
Services Agreement provides that we will pay:
o costs incurred by us in connection with real estate and
mortgages,
o taxes,
o depository and custodian fees,
o brokerage commissions,
o fees and expenses for services not covered by other agreements
and provided to us at our request, or by requirement, by
attorneys, auditors, examiners and professional consultants
who are not officers or employees of American Express
Financial Corporation,
o fees and expenses of our directors who are not officers or
employees of American Express Financial Corporation,
o provision for certificate reserves (interest accrued on
certificate holder accounts), and
o expenses of customer settlements not attributable to sales
function.
Distribution
Under a Distribution Agreement with American Express Financial
Advisors Inc., we pay for the distribution of this certificate as
follows:
o 1.25% of the initial investment on the first day of the
certificate's term, and
o 1.25% of the certificate's reserve at the beginning of each
subsequent term,
for certificates sold through American Express Financial Advisors
Inc. or through AEBI or Coutts.
For certificates sold through the Virtual Bank name we pay American
Express Financial Advisors Inc. $ _____ per certificate account.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors
Inc. for all series of certificates amounted to $__________ during
the year ended Dec. 31, 1994. We expect to pay American Express
Financial Advisors Inc. distribution fees amounting to $__________
during 1995.
See Note 1 to financial statements regarding deferral of
distribution fee expense.
American Express Financial Advisors Inc. pays commissions to its
personal financial advisors and pays other selling expenses in
connection with services to us. our board of directors, including
a majority of directors who are not interested persons of American
Express Financial Advisors Inc. or the Issuer, approved this
distribution agreement.<PAGE>
PAGE 181
Selling Agent Agreements with AEBI and Coutts: In turn, under
Selling Agent Agreements with AEBI and Coutts, American Express
Financial Advisors Inc. compensates each for their services as
Selling Agents of this certificate as follows:
o AEBI is paid a fee equal to 1.0% per term of the principal
amount of each certificate for which AEBI is the selling
agent.
o Coutts is paid fee equal to 0.80% per term of the principal
amount of each certificate for which Coutts is the selling
agent.
Coutts is compensated on certificates owned by its clients who are
former clients of AEBI. These clients must have continuously owned
a certificate since Nov. 10, 1994. Coutts is also compensated on
additional investments and exchanges made by such clients to other
certificates only to the extent that a client has the right to make
additional investments or exchanges.
American Express Financial Advisors Inc. has entered into a
consulting agreement with AEBI under which AEBI provides consulting
services related to any selling agent agreements between American
Express Financial Advisors Inc. and other Edge Act corporations.
For these services, American Express Financial Advisors Inc. pays
AEBI a fee for this certificate equal to 0.20% per term of the
principal amount of each certificate for which another Edge Act
corporation is the selling agent.
Such payments will be made quarterly in arrears.
These fees are not assessed to your certificate account.
About AEBI and Coutts
AEBI is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is a wholly owned
subsidiary of American Express Bank Ltd. (AEBL). As an Edge Act
corporation, AEBI is subject to the provisions of Section 25(a) of
the Federal Reserve Act and Regulation K of the Board of Governors
of the Federal Reserve System (the Federal Reserve). It is
supervised and regulated by the Federal Reserve.
AEBI has an extensive international high net-worth client base that
is served by a marketing staff in New York and Florida. The
banking and financial products offered by AEBI include checking,
money-market and time deposits, credit services, check collection
services, foreign exchange, funds transfer, investment advisory
services and securities brokerage services. As of Dec. 31, 1994,
AEBI had total assets of $___ million and total equity of $___
million.
<PAGE>
PAGE 182
Coutts is an Edge Act corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act. It is an indirect wholly
owned subsidiary of NatWest PLC. As an Edge Act corporation,
Coutts is subject to the provisions of Section 25(a) if the Federal
Reserve Act and Regulation K of the Board of Governors of the
Federal Reserve. Coutts is supervised and regulated by the Federal
Reserve.
Although AEBI and Coutts are banking entities, the Stock Market
Certificate is not a bank product, nor is it backed or guaranteed
by AEBI or Coutts, by AEBL, by NatWest PLC or by any other bank, or
is it guaranteed or insured by the FDIC or any other federal
agency. AEBI is registered where necessary as a securities broker-
dealer.
Employment of other American Express Affiliates
American Express Financial Corporation may employ an affiliate of
American Express as executing broker for our portfolio transactions
only if:
o we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing
similar services;
o the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar
transactions; and
o the affiliate's employment is consistent with the terms of the
current Investment Advisory and Services Agreement and federal
securities laws.
Directors and officers
The Issuer's directors, chairman, president and controller are
elected annually for a term of one year. The other executive
officers are appointed by the president.
We paid a total of $______ during 1994 to directors not employed by
American Express Financial Corporation.
Board of directors
David R. Hubers*
Age 52
Director since April 1987
President and chief executive officer of American Express Financial
Corporation since 1993. Senior vice president and chief financial
officer of American Express Financial Corporation from 1984 to
1993.
<PAGE>
PAGE 183
Charles W. Johnson
Age 65
Director since August 1989
Former vice president and group executive, Industrial Systems, with
Honeywell Inc. Retired 1989.
Edward Landes
Age 75
Director since May 1984
Development consultant. Former sales manager - Supplies Division
and district manager - Data Processing Division of IBM Corporation.
Retired 1983.
John V. Luck
Ph.D. Age 69
Director since April 1987
Former senior vice president - Science and Technology with General
Mills, Inc. Employed with General Mills Inc. since 1970. Retired
1987.
James A. Mitchell*
Age 53
Director since January 1994
Chairman of the board of directors since February, 1994. Executive
vice president - marketing and products of American Express
Financial Corporation since February 1994. Senior vice president -
insurance operations of American Express Financial Corporation and
president and chief executive officer of IDS Life Insurance Company
from 1986 to 1994.
Harrison Randolph
Age 79
Director since 1968
Gordon H. Ritz
Age 67
Director since 1968
President, Con Rad Broadcasting Corp. Director, Sunstar Foods and
Mid-America Publishing.
<PAGE>
PAGE 184
Stuart A. Sedlacek*
Age 37
Director since January 1994
President since February 1994. Vice president - assured assets of
American Express Financial Corporation since March 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice
president - assured assets of IDS Life Insurance Company since
March 1994.
*"Interested Person" of IDSC as that term is defined in Investment
Company Act of 1940.
Executive officers
Stuart A. Sedlacek*
Age 37
President since February 1994
Louis C. Fornetti
Age 45
Vice president since January 1990
Chief financial officer of American Express Financial Corporation
since 1993 and senior vice president, corporate controller and
director of American Express Financial Corporation since 1988.
Morris Goodwin Jr.
Age 43
Vice president and treasurer since 1989.
Vice president and corporate treasurer of American Express
Financial Corporation since 1989. Chief financial officer and
treasurer of American Express Bank & Trust from 1988 to 1989.
Colleen Curran
Age 41
Secretary since 1990
Secretary and assistant vice president of American Express
Financial Corporation since 1990. Senior counsel to American
Express Financial Corporation since 1990. Counsel from 1985 to
1990.
Lorraine R. Hart
Age 43
Vice president-investments since February 1994.
Vice President - insurance investments of American Express
Financial Corporation since 1989. Vice president, investments of
IDS Life Insurance Company since 1992.
<PAGE>
PAGE 185
Jay C. Hatlestad
Age 37
Vice president and controller of IDS Certificate Company since
1994.
Manager of investment accounting of IDS Life Insurance Company from
1986 to 1994.
Bruce A. Kohn
Age 43
Vice president and general counsel since 1993
Counsel to American Express Financial Corporation since 1992.
Associate counsel from 1987 to 1992.
F. Dale Simmons
Age 56
Vice president - Real Estate Loan Management since 1993
Vice president of American Express Financial Corporation since
1992. Senior portfolio manager of American Express Financial
Corporation since 1989. Assistant vice president from 1987 to
1992.
The Officers and Directors as a group beneficially own less than 1%
of the common stock of American Express.
The Issuer has provisions in its bylaws relating to the
indemnification of its officers and directors against liability, as
permitted by law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
Auditors
A firm of independent auditors audits our financial statements at
the close of each fiscal year (Dec. 31). Copies of our annual
financial statements (audited) and semiannual financial statements
(unaudited) are available to any certificate holder upon request.
Ernst & Young, Minneapolis, has audited the financial statements
for each of the years in the three-year period ended Dec. 31, 1993.
These statements are included in this prospectus. Ernst & Young is
also the auditor for American Express Company, the parent company
of IDS and IDSC.
<PAGE>
PAGE 186
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
Item 13. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and
distribution of the securities being registered are to be
borne by the registrant.
Item 14. Indemnification of Directors and Officers.
The By-Laws of IDS Certificate Company provide that it
shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that
he was or is a director, officer, employee or agent of
the company, or is or was serving at the direction of the
company, or any predecessor corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to
any threatened, pending or completed action, suit or
proceeding, wherever brought, to the fullest extent
permitted by the laws of the state of Delaware, as now
existing or hereafter amended.
The By-Laws further provide that indemnification
questions applicable to a corporation which has been
merged into the company relating to causes of action
arising prior to the date of such merger shall be
governed exclusively by the applicable laws of the state
of incorporation and by the by-laws of such merged
corporation then in effect. See also Item 17.
Item 15. Recent Sales of Unregistered Securities.
[To be furnished.]
Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits to this Post-Effective Amendment
No. 10 to Registration Statement No. 2-95577 are
incorporated herein by reference or attached hereto:
1. (a) Copy of Distribution Agreement dated November
18, 1988, between Registrant and IDS Financial
Services Inc., filed electronically as Exhibit
1(a) to the Registration Statement for the
American Express International Investment
Certificate (now called, the IDS Investors
Certificate), is incorporated herein by
reference.
(b) Selling Agent Agreement dated June 1, 1990,
between American Express Bank International and
IDS Financial Services Inc. for the IDS
Investors and IDS Stock Market Certificates,
filed electronically as Exhibit 1(c) to the
Post-Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein
by reference.<PAGE>
PAGE 187
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. (a) Continued
(c) Marketing Agreement dated October 10, 1991,
between Registrant and American Express Bank
Ltd., filed electronically as Exhibit 1(d) to
Post-Effective Amendment No. 31 to Registration
Statement 2-55252, is incorporated herein by
reference.
(d) Amendment to the Selling Agent Agreement dated
December 12, 1994 between IDS Financial
Services Inc. and American Express Bank
International filed electronically herewith.
(e) Selling Agent Agreement dated December 12, 1994
between IDS Financial Services Inc. and Coutts
& Co. (USA) International filed electronically
herewith.
(f) Consulting Agreement dated December 12, 1994
between IDS Financial Services Inc. and Coutts
& Co. (USA) filed electronically herewith.
2. Not Applicable.
3. (a) Certificate of Incorporation, dated December
31, 1977, filed electronically as Exhibit 3(a)
to Post-Effective Amendment No. 2 to
Registration Statement No. 2-95577, is
incorporated herein by reference.
(b) Certificate of Amendment, dated February 9,
l984, filed electronically as Exhibit 3(b) to
Post-Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(c) By-Laws, dated December 31, 1977, filed
electronically as Exhibit 3(c) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
4. Not applicable.
5. Not applicable.
6 through 9. -- None.
10. (a) Investment Advisory and Services Agreement
between Registrant and IDS/American Express
Inc., dated January 12, 1984, filed
electronically as Exhibit 10(a) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.<PAGE>
PAGE 188
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. (a) Continued
(b) Depository and Custodial Agreement, between IDS
Certificate Company and IDS Trust Company dated
September 30, 1985, filed electronically as
Exhibit 10(b) to Post-Effective Amendment No. 2
to Registration Statement No. 2-95577, is
incorporated herein by reference.
(c) Loan Agreement between Registrant and Investors
Syndicate Development Corporation, dated
October 13, 1970, filed electronically as
Exhibit 10(c) to Post-Effective Amendment No. 2
to Registration Statement No. 2-95577, is
incorporated herein by reference.
(d) Agreement for the servicing of Residential
Mortgage Loans between ISA and Advance Mortgage
Company, Ltd., dated August 31, 1980, filed
electronically as Exhibit 10(d) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(e) Agreement for the servicing of Commercial
Mortgage Loans, between ISA and FBS Mortgage
Corporation, dated October 1, 1980, filed
electronically as Exhibit 10(e) to Post-
Effective Amendment No. 2 to Registration
Statement No. 2-95577, is incorporated herein
by reference.
(f) Agreement by and between Registrant and
Investors Diversified Services, Inc. (now IDS
Financial Services Inc.) providing for the
purchase by IDS of a block of portfolio
securities from Registrant, filed as Exhibit -
10.5 to the September 30, 1981 quarterly report
on Form 10-Q of Alleghany Corporation, is
incorporated herein by reference.
(g) Transfer Agent Agreements for the servicing of
the American Express Savings Certificate filed
electronically as Exhibit 10(g) to Pre-
Effective Amendment No. 1 to Registration
Statement No. 33-25385, are incorporated herein
by reference.
(h) Foreign Deposit Agreement dated November 21,
1990, between Registrant and IDS Bank & Trust,
filed electronically as Exhibit 10(h) to Post-
Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein
by reference.
11 through 24. -- None.
<PAGE>
PAGE 189
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. (a) Continued
25. (a) Officers' Power of Attorney, dated May 17,
1994 is filed electronically herewith.
(b) Directors' Power of Attorney, dated May
13, 1994 is filed electronically herewith.
26 through 28. None.
(b) The financial statement schedules for IDS
Certificate Company filed electronically
as Exhibit 16(b) in Post-Effective
Amendment No. 35 to Registration Statement
No. 2-55252 for Series D-1 Investment
Certificate, are incorporated by reference
herewith.
Item 17. Undertakings.
Without limiting or restricting any liability on the part
of the other, American Express Financial Advisors Inc.,
as underwriter, will assume any actionable civil
liability which may arise under the Federal Securities
Act of 1933, the Federal Securities Exchange Act of 1934
or the Federal Investment Company Act of 1940, in
addition to any such liability arising at law or in
equity, out of any untrue statement of a material fact
made by its agents in the due course of their business in
selling or offering for sale, or soliciting applications
for, securities issued by the Company or any omission on
the part of its agents to state a material fact necessary
in order to make the statements so made, in the light of
the circumstances in which they were made, not misleading
(no such untrue statements or omissions, however, being
admitted or contemplated), but such liability shall be
subject to the conditions and limitations described in
said Acts. American Express Financial Advisors Inc. will
also assume any liability of the Company for any amount
or amounts which the Company legally may be compelled to
pay to any purchaser under said Acts because of any
untrue statements of a material fact, or any omission to
state a material fact, on the part of the agents of
American Express Financial Advisors Inc. to the extent of
any actual loss to, or expense of, the Company in
connection therewith. The By-Laws of the Registrant
contain a provision relating to Indemnification of
Officers and Directors as permitted by applicable law.
<PAGE>
PAGE 190
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Minneapolis and State of Minnesota, on the 25th day of January
1995.
IDS CERTIFICATE COMPANY
By /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek, President
Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed below by the following persons in their
capacities on January 25th, 1995.
Signature Capacity
/s/ Stuart A. Sedlacek* ** President and Director
Stuart A. Sedlacek
/s/ Morris Goodwin* Treasurer and Principal
Morris Goodwin Financial Officer
/s/ Jay C. Hatlestad* Controller and
Jay C. Hatlestad Principal Accounting Officer
/s/ David R. Hubers** Director
David R. Hubers
/s/ Charles W. Johnson** Director
Charles W. Johnson
/s/ Edward Landes** Director
Edward Landes
/s/ John V. Luck** Director
John V. Luck
Signatures continued on next page.
<PAGE>
PAGE 191
Signatures continued from previous page.
Signature Capacity
/s/ James A. Mitchell** Director
James A. Mitchell
/s/ Harrison Randolph** Director
Harrison Randolph
/s/ Gordon H. Ritz** Director
Gordon H. Ritz
*Signed pursuant to Officers' Power of Attorney dated May 17, 1994
filed electronically herewith.
______________________.
Bruce A. Kohn
**Signed pursuant to Directors' Power of Attorney dated May 13,
1994 filed electronically herewith.
_________________________.
Bruce A. Kohn
<PAGE>
PAGE 192
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 13 TO REGISTRATION
STATEMENT NO. 2-95577
Cover Page
Explanatory Note
Cross-reference sheet
Prospectus
Part II Information
Signatures
<PAGE>
PAGE 1
EXHIBIT INDEX
IDS CERTIFICATE COMPANY
16(a) 1(d) Amendment to the Selling Agent Agreement date
December 12, 1994 between IDS Financial Services
Inc. and American Express Bank International.
16(a) 1(e) Selling Agent Agreement dated December 12, 1994
between IDS Financial Services and Coutts & Co.
(USA) International.
16(a) 1(f) Consulting Agreement dated December 12, 1994 between
IDS Financial Services Inc. and American Express
Bank International.
16(a) 25(a) Officers' Power of Attorney, dated May 17, 1994.
16(a) 25(b) Directors' Power of Attorney, dated May 13, 1994.
<PAGE>
PAGE 1
Amendment to Selling Agent Agreement
WHEREAS, IDS Financial Services Inc. (the "Company") and American
Express Bank International ("AEBI") entered into a Selling Agent
Agreement made as of June 1, 1990 (the "Agreement"), with regard to
marketing of certain registered face-amount certificates offered by
IDS Certificate Company (the "Issuer"), and
WHEREAS, the parties thereto wish to amend that Agreement to
facilitate creation of an additional rate tier for the IDS
Investors Certificate,
NOW THEREFORE the parties thereto agree as follows:
1. The following is added to the end of Section 2(i) of Schedule
A to the Agreement:
provided, however, that for each Certificate with an amount
outstanding of $5 million or more, when the aggregate reserve
balance for that Certificate, and any other Certificate with
identical registered ownership and an amount outstanding of
$5 million or more, is greater than $15 million, the fee shall
be equal to .30% per annum of the amount outstanding.
2. The following is added to the end of Section VI
("Miscellaneous") of the Agreement:
(9) AEBI shall notify the Company and the Issuer of any
Certificate with an amount outstanding of $5 million or
more, when the aggregate reserve balance for that
Certificate, and any other Certificate with identical
registered ownership and an amount outstanding of $5
million or more, is greater than $15 million. Such
notice shall include sufficient detail to identify such
Certificates, including the name of the registered owner
and the account number of the Issuer for the account in
which each such Certificate is owned.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the 12th day of December, 1994.
IDS FINANCIAL SERVICES INC.
By: /s/ Scott A. Hawkinson
Scott A. Hawkinson
Vice President
Attest: /s/ Colleen Curran
Colleen Curran
Secretary
AMERICAN EXPRESS BANK
INTERNATIONAL
By: /s/ Sergio Masvidal
Sergio Masvidal
Vice President
Attest: /s/ L. M. Abboud
L. M. Abboud
Assistant Secretary
<PAGE>
PAGE 1
SELLING AGENT AGREEMENT
This Agreement is made as of December 12, 1994, by and between IDS
Financial Services Inc., a Delaware corporation (the "Company"),
the principal distributor for certain registered face-amount
certificates offered by IDS Certificate Company (the "Issuer"), and
Coutts & Co (USA) International, a United States corporation
organized under the provisions of Section 25(a) of the Federal
Reserve Act (the "Agent").
I. ACTIVITIES
(1) During the term of this Agreement, the Agent and persons
designated by it shall have the non-exclusive right to
solicit applications for and to distribute those
face-amount certificates issued by the Issuer that the
Company may from time to time agree to permit the Agent
to offer to the Agent's clients ("Certificates"). The
Agent and the Company agree to be bound by the terms of
this Agreement in connection with any such offers of
Certificates. Each Certificate that the Company may
permit the Agent to offer shall be described in
Schedules attached hereto, which Schedules may be amended
or supplemented by the Company from time to time by
mailing a revised Schedule to the Agent. The Agent's
right to solicit applications for and to distribute
Certificates shall be limited to soliciting additional
investments in Existing Certificates and Exchange
Certificates and soliciting exchanges to Exchange
Certificates by clients of the Agent who have owned
Existing Certificates or Exchange Certificates
continuously since November 10, 1994, and who are former
clients of American Express Bank International, a United
States corporation organized under the provisions of
Section 25(a) of the Federal Reserve Act ("AEBI").
Provided, however, that such additional investments and
exchanges shall be permitted only to the extent that such
a client has the right to make them under the client's
Existing Certificate or Exchange Certificate, as the case
may be. "Existing Certificates" are Certificates owned
by such clients on November 10, 1994. "Exchange
Certificates" are Certificates received in exchange for
Existing Certificates or in one or more subsequent
exchanges from one Certificate to another Certificate, so
long as each exchange is by the same client or clients
who owned the Existing Certificate.
(2) It is the Agent's responsibility to insure that any
investments in Certificates by its clients are suitable
for those clients. Therefore, the Agent shall cause
applications for Certificates to be made available to its
clients if the Agent, in its sole discretion, determines
that such products are appropriate or suitable for its
clients. The Company and the Issuer shall each have the
right, in its sole discretion, to the extent not
inconsistent with the Certificates, to decline to accept
investments by clients of the Agent in Certificates.
<PAGE>
PAGE 2
(3) The Agent agrees that all applications for Certificates
shall be made in writing on forms acceptable to the
Company and the Issuer; provided however, that the Agent
may accept telex or telephone purchase instructions from
its clients in accordance with Section VI(5) hereof.
Every application shall be subject to acceptance or
rejection by the Issuer according to the terms thereof.
The Agent shall handle applications in accordance with
instructions forwarded by the Company to the Agent from
time to time and shall obtain, keep on file and provide
copies to the Company and the Issuer of any and all tax
related documentation as required by law or requested by
the Company or the Issuer from time to time. The Agent
shall promptly remit to the Company or, upon the
Company's instructions, to the Issuer, the payment
tendered with each application, such payment to be in
conformity with the provisions of the Certificate for
which such application is made. Prior to the acceptance
by the Company or the Issuer of instructions from the
Agent with regard to a Certificate or prospective
investment in a Certificate, the Agent shall provide the
Company and the Issuer with written authorization from
the owner of or prospective investor in the Certificate,
as the case may be, that the Company and the Issuer may
accept such instructions from the Agent in the form in
which the Agent provides them.
(4) Company reserves the right in its discretion to suspend
sales or withdraw the offering of any Certificate in
whole or in part, without notice. Upon notice to the
Agent that the Company has so suspended sales or
withdrawn an offering, or of the suspension of the
effectiveness of a registration statement or amendment or
that a prospectus is not on file as described below in
this Section I(4), Certificates shall not be offered by
the Agent under any of the provisions of this Agreement
and no application for the purchase or sale of
Certificates hereunder shall be accepted if and so long
as the effectiveness of the current registration
statement or any necessary amendments thereto shall be
suspended under any of the provisions of the Securities
Act of 1933 (the "1933 Act") or any applicable state
securities laws or if and so long as a current prospectus
as required by Section 5(b)(2) of the 1933 Act or any
applicable state securities laws is not on file with the
Securities and Exchange Commission (the "SEC") or any
applicable state securities regulator, as the case may
be.
(5) The Agent and its personnel shall not make any
representations concerning a Certificate except
those contained in the prospectus therefor or any
applicable written sales literature approved by
Company in accordance with Section VI(2).
<PAGE>
PAGE 3
(6) The Agent and its personnel shall be responsible for
determining the suitability of each sale, and of any
other transaction recommended by the Agent to one or
more of its clients, and for servicing its client
accounts. Servicing client accounts shall include
the following:
i) serving as the primary contact for the Agent's
clients and prospects regarding Certificates;
ii) receiving from clients and prospects and timely
transmitting to Company instructions as to
sales, surrenders, ownership changes, term
changes and other actions sought with respect
to Certificates;
iii) answering client questions and inquiries
regarding Certificates;
iv) determining whether the actions sought by
clients concerning Certificate ownership,
transfer, surrender and the like are legally
permissible or advisable in all applicable
jurisdictions;
v) delivering to clients in a timely fashion all
of the documentation described in Section I(7)
hereof; provided, however, that the Agent has
received such documentation in a timely
fashion; and, if the Agent has not received
such documentation in a timely fashion,
delivering such documentation to clients
promptly after the Agent receives it;
vi) keeping and maintaining the records described
in Section I(8) hereof; and
vii) carrying out such other activities and
responsibilities as are described in this
Agreement and/or may be agreed to between the
Agent and Company from time to time.
(7) To the extent authorized by clients in writing to
the Company and the Issuer (or authorized by clients
by other means authorized in writing by the clients
and acceptable to the Company and the Issuer),
confirmations, tax statements, periodic statements
and other documentation required or permitted to be
sent to clients by the Issuer or the Company from
time to time shall be sent to the Agent for delivery
to clients per such client's instructions to the
Agent. The Agent shall be solely responsible for
delivering such documentation to its clients on a
timely basis and in accordance with clients'
instructions to the Agent.
(8) In connection with its activities hereunder, the
Agent shall keep, maintain and preserve such records
as and to the extent required by Section 31 of the
Investment Company Act of 1940 and Rule 31a-2(c)
thereunder. Any and all such records shall be
provided promptly upon the request of the Company or
the Issuer.
<PAGE>
PAGE 4
(9) If Certificates are registered in the name Coutts &
Co (USA) International or otherwise in street name,
or if the client has designated the Agent as selling
agent or servicing agent for the account, or if the
client has given the Issuer an instruction to
register a pledge of the account to the Agent and
the client is an appropriate person to give such an
instruction, or if the Agent is being compensated
for the account under this Agreement, then the Agent
shall be responsible for all confirmations, tax
statements, periodic statements and other
documentation, records and tax or other reporting
required to be sent to or made with regard to the
clients who are the beneficial owners of the
Certificates so registered, including but not be
limited to reporting requirements with regard to
1042, 1042S and W-8, and any withholding that would
be necessary and any other requirement applied by
the Internal Revenue Service; provided, however,
that the Company shall be responsible for tax
reporting to the Internal Revenue Service for
calendar year 1994, and the Company may discharge
this responsibility itself or through the services
of an affiliate or another service provider. At the
time that the Certificates are so registered, and at
the time of any change in the beneficial ownership
of any Certificate or in the amount of any
Certificate beneficially owned by any beneficial
owner, the Agent shall provide the Issuer and the
Company with the identities of and account
information about clients who are the beneficial
owners of the Certificates so registered. In any
event, if Certificates are registered in the name
Coutts & Co (USA) International or otherwise in
street name, the Agent shall provide the Issuer with
the names of the beneficial owners and the amount of
each Certificate beneficially owned by them at the
beginning of each calendar quarter. The Agent shall
provide the Issuer with copies of all tax statements
and other tax reporting documents, including but not
limited to documents prepared to meet the reporting
requirements with regard to 1042, 1042S and W-8, and
any withholding that would be necessary and any
other requirement applied by the Internal Revenue
Service.
II. COMPANY'S RESPONSIBILITY
The Company shall promptly provide the Agent with current
prospectuses, sales materials and other literature and information
legally required or reasonably requested by the Agent; provided,
however, that the Company and the Issuer shall not be obligated to
disclose proprietary information, trade secrets or other
confidential information.
<PAGE>
PAGE 5
III. COMPENSATION
The Company shall pay the Agent and the Agent accepts in full
payment for its activities hereunder, selling fees with respect to
each Certificate as described in the Schedule(s) attached hereto.
Such Schedule(s) may be amended or supplemented by the Company from
time to time by mailing a revised Schedule to the Agent.
IV. SELLING AGENT REPRESENTATIONS
The Agent represents and warrants that:
(1) It is legally permitted under applicable state and
federal laws, rules and regulations to offer
securities for sale to its customers;
(2) It is registered as a broker/dealer in those
jurisdictions in which it is required to be
registered and agrees to comply with all state and
federal laws, rules and regulations applicable to
transactions hereunder or applicable to the Agent
and with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. as may be
applicable to the Agent;
(3) It will not offer to sell the Certificates in any
state or other jurisdiction in which such products
may not lawfully be offered for sale;
(4) It will take the steps necessary to adequately train
and supervise its personnel in order to assure that
the Certificates are properly offered and advertised
for sale;
(5) It will deliver the appropriate current Certificate
prospectus (if it has been furnished to the Agent)
to each purchaser at or prior to the time of the
first offering or sale of a Certificate and, if a
more current appropriate Certificate prospectus has
become available since the last delivery of a
prospectus, at or prior to the time of any
subsequent offering or sale of a Certificate; and
(6) It will observe and comply with all applicable laws,
rules and regulations ("Laws") with respect to the
distribution, sale and servicing of the Certificates
and the conduct of its business in relation thereto,
including but not limited to Laws relating to
currency transactions, transporting funds or
monetary instruments in or out of the United States,
wire transfers and other financial transactions.
The foregoing warranties and representations shall be true and
accurate on the date hereof and shall continue to be true and
accurate during the term of this Agreement.
<PAGE>
PAGE 6
V. INDEMNIFICATION
(1) The Company authorizes the Agent, with respect to
Certificates described in Schedule A or B, to use
any current prospectuses furnished by the Company to
the Agent from time to time, in connection with the
sale of such Certificates. The Company agrees to
indemnify, defend and hold the Agent, its several
officers and directors, and any person who controls
the Agent within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and
all claims, demands, liabilities and expenses
(including the cost of investigating or defending
such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the
Agent, its officers and directors, or any such
controlling person, may incur under the 1933 Act,
the Investment Company Act of 1940 or common law or
otherwise, arising out of or based upon:
(a) any untrue statement or alleged untrue
statement of a material fact contained in any
registration statement or any prospectus for
Certificates described in Schedule A or B;
(b) any omission or alleged omission to state a
material fact required to be stated in any
registration statement or any prospectus for
Certificates described in Schedule A or B, or
necessary to make the statements in any of them
not misleading (no such untrue statements or
omissions however being hereby admitted or
contemplated); or
(c) any violation by the Company of any provision
of this Agreement.
Provided, however, that the Company's agreement to indemnify
the Agent, its officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands,
liabilities or expenses (including cost of investigating or
defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) arising out of or based
upon any statements or representations made by the Agent or
its representatives or agents other than such statements and
representations as are contained in any registration statement
or prospectus and in such financial and other statements and
materials that had been furnished to the Agent by the Company
and were current at the time of such statements and
representations; and further provided that the Company's
agreement to indemnify the Agent shall not be deemed to cover
any liability to the Company or its shareholders or
certificateholders or to the Issuer or its shareholders or
certificateholders to which the Agent would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or negligence in the performance of the Agent's
duties, or by reason of the Agent's reckless disregard of its
obligations and duties under this Agreement or otherwise. The
Company's agreement to indemnify the Agent, its officers and <PAGE>
PAGE 7
directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Company's being notified of any
action brought against the Agent, its officers or directors,
or any such controlling person, such notification to be given
by letter or by telegram addressed to the Company at its
principal office in Minneapolis, Minnesota, and sent to the
Company by the person against whom such action is brought,
within forty-five (45) days after the summons or other first
legal process shall have been served. The failure so to
notify the Company of any such action shall not relieve the
Company from any liability that the Company may have to the
person against whom such action is brought by reason of any
such untrue or alleged untrue statement or omission or alleged
omission otherwise than on account of the Company's indemnity
agreement contained in this Section V(1).
The Company's indemnification agreement contained in this
Section V(1) (except so far as such indemnification agreement
is expressly limited as set forth herein) shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of the Agent, its
officers and directors, or any controlling person, and shall
survive the delivery of any Certificates. This agreement of
indemnity will inure exclusively to the Agent's benefit,
to the benefit of its several officers and directors, and
their respective estates, and to the benefit of the
controlling persons and their successors.
(2) The Agent agrees to indemnify, defend and hold the Company,
the Issuer and its transfer agent, their several officers and
directors, and any person who controls the Company, the Issuer
or its transfer agent within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and all
claims, demands, interest or penalties, liabilities and
expenses (including the costs of investigating or defending
such claims, demands or liabilities and any counsel fees
incurred in connection therewith) that the Company, the Issuer
or its transfer agent, their officers or directors or any such
controlling person may incur under the 1933 Act, the
Securities Exchange Act of 1934, the Investment Company Act of
1940, federal, state, local or foreign tax law or regulation,
common law or otherwise, but only to the extent that such
liability or expense incurred shall arise out of or be based
upon:
(a) the use of any unauthorized sales literature,
advertisement or other information or materials;
(b) any untrue statement of material fact made by the Agent's
personnel or agents in selling or offering for sale, or
soliciting applications for, the Certificates or any
omission to state a material fact necessary in order to
make the statements so made, in the light of the
circumstances in which they were made, not misleading (no
such untrue statements or omissions however being hereby
admitted or contemplated);
(c) the offer or sale of Certificates in any state or other
jurisdiction in which such products may not be so offered
or sold;<PAGE>
PAGE 8
(d) any error, omission or other problem associated with the
Agent's performance of its activities under this
Agreement, including but not limited to such activities
as servicing client accounts and communicating to the
Company, the Issuer or its transfer agent any
instructions from a client or prospective client, whether
such instructions are provided to the Agent by telephone,
telex or otherwise;
(e) any misstatement, omission or other defect in any
tax-related documentation or form, including without
limitation Form W-8, or any failure to obtain or maintain
any such tax-related documentation or form;
(f) any untrue or alleged untrue statement of a material fact
contained in information furnished by the Agent to the
Company, the Issuer or its transfer agent and used in the
answers to any of the items of the registration statement
or in corresponding statements made in the prospectus, or
shall arise out of or be based upon any omission or
alleged omission to state a material fact in connection
with such information furnished by the Agent to the
Company, the Issuer or its transfer agent and required to
be stated in such answers or necessary to make such
information not misleading; provided, however, that the
Agent's agreement to indemnify the Company, the Issuer
and its transfer agent shall not be deemed to cover any
liability to the Agent or its shareholders to which the
Company would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or negligence
in the performance of the Company's duties, or by reason
of the Company's reckless disregard of its obligations
and duties under this Agreement or otherwise; or
(g) any violation of any provision of this Agreement or any
warranty or representation that was untrue when made or
became untrue during the term of this Agreement.
The agent's agreement to indemnify the Company, the Issuer and
its transfer agent, their officers and directors, and any
controlling person, as aforesaid, is expressly conditioned
upon the Agent's being notified of any action brought against
such parties, such notification to be given by letter or
telegram addressed to the Agent at its principal office in New
York, New York and sent to the Agent by the person against
whom such action is brought, within forty-five (45) days after
the summons or other first legal process shall have been
served. The failure so to notify the Agent of any action
shall not relieve the Agent from any liability that the Agent
may have by reason of any such untrue or alleged untrue
statement or omission or alleged omission otherwise than on
account of the Agent's indemnity agreement contained in this
Section V(2).
The Agent's indemnification agreement contained in this
Section V(2) (except so far as such indemnification agreement
is expressly limited as set forth herein) shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, the Issuer,<PAGE>
PAGE 9
its transfer agent, their officers and directors, or any
controlling person, and shall survive the delivery of any
Certificates. This agreement of indemnity will inure
exclusively to the benefit of the Company, the Issuer and its
transfer agent, to the benefit of their several officers and
directors, and their respective estates, and to the benefit of
the controlling persons and their successors.
(3) In case any action shall be brought against any indemnified
party under Sections V(1) or V(2), and the indemnified party
shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish to do
so, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. If the indemnifying
party opts to assume the defense of such action, the
indemnifying party will not be liable to the indemnified party
for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other
than:
(a) reasonable costs of investigation or the furnishing of
documents or witnesses; and
(b) all reasonable fees and expenses of separate counsel to
such indemnified party if (i) the indemnifying party and
the indemnified party shall have agreed to the retention
of such counsel or (ii) the indemnified party shall have
concluded reasonably that representation of the
indemnifying party and the indemnified party by the same
counsel would be inappropriate due to actual or potential
differing interests between them in the conduct of the
defense of such action.
VI. MISCELLANEOUS
(1) The Agent for all purposes herein shall be deemed to be
an independent contractor, and except as expressly
provided or authorized in this Agreement, shall have no
authority to act for, represent or bind the Company, the
Issuer or its transfer agent.
(2) The Agent shall use no advertisement, sales literature or
other materials with respect to a Certificate without
prior written approval by the Company. The Agent shall
submit any such advertisement, sales literature or
material to the Company for its prior review and
approval, which approval shall be in the Company's sole
discretion (subject to any direction to the Company by
the Issuer).
(3) The Agent shall be free to render to other persons, firms
and corporations services similar or dissimilar to those
herein described.
(4) Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid to
the party to this Agreement entitled to receive the same,
(a) if to the Company, at IDS Tower 10, Minneapolis, <PAGE>
PAGE 10
Minnesota 55440, Attn: Vice President-Assured Assets, and
(b) if to the Agent, at Suite 2600, 300 South Grand
Avenue, Los Angeles, California 90071, Attn: Operations
Manager, or to such other address as either party may
designate in writing to the other.
(5) The Agent may, at its own risk and subject to the
provisions of Section V(2)(d) hereof, accept telex or
telephone purchase, withdrawal or transfer instructions
from its clients in accordance with the Agent's internal
procedures. All such instructions shall nevertheless be
communicated in written form to the Company and shall be
subject to acceptance or rejection by the Issuer.
(6) The Company acknowledges that the Agent's clients are a
proprietary asset of the Agent. Unless the Company shall
have received prior approval from the Agent, the Company
shall not initiate any contact with any client of the
Agent who is permitted to purchase Certificates except i)
in connection with any administrative or servicing
activities normally incident to Certificates, ii) to the
extent a client of the Agent has requested that the
Company do so, or iii) as may be required by law or
regulation. The Company shall not disclose to third
parties the identities of any client of the Agent, unless
required to do so by authorized legal authorities,
including but not limited to U.S. or foreign tax
authorities, without prior approval from the Agent.
These provisions shall not preclude the Company from
initiating contact with any person who has ceased to be a
client of the Agent or who the Company does not know to
be a client of the Agent.
(7) This Agreement may be amended only by written instrument
executed by both parties hereto.
(8) This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an
original but all together only one Agreement.
VII. TERMINATION
(1) This Agreement shall continue in effect until December
12, 1995 and shall continue from year to year thereafter
unless and until terminated by either party as
hereinafter provided.
(2) This Agreement may be terminated without penalty by
either the Company or the Agent at any time whether prior
to, at or after the date hereof by giving the other party
at least sixty (60) days' prior written notice of such
intention to terminate.
(3) This Agreement will terminate automatically in the event
of its assignment (as defined in the Investment Company
Act of 1940.)
<PAGE>
PAGE 11
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
IDS FINANCIAL SERVICES INC.
/s/ Scott A. Hawkinson
Scott A. Hawkinson
Print name:
Title: Vice President
/s/ Colleen Curran
Colleen Curran
Print name:
Title: Secretary
COUTTS & CO (USA) INTERNATIONAL
/s/ Victor M. Echevarria
Victor M. Echevarria
Print name:
Title: Senior Vice President
/s/ Mark McCluskey
Mark McCluskey
Print name:
Title: Senior Vice President<PAGE>
PAGE 12
Schedule A
Effective as of December 12, 1994
1. Pursuant to Section I(1) of the Selling Agent Agreement dated
as of December 12, 1994, Coutts & Co (USA) International may
offer the IDS Investors Certificate ("Investors Certificate"),
which Investors Certificate guarantees interest in advance for
a term of 1, 2, 3, 6, 12, 24 or 36 months, at the client's
option, bearing LIBOR-based interest rates.
2. The Agent shall be compensated as follows on the basis of the
reserve balance of the Investors Certificates, if such
Investors Certificates are registered in the name Coutts & Co
(USA) International (or otherwise in street name with the
Agent as selling agent or servicing agent), or if the client
has designated the Agent as selling agent or servicing agent
for the account, or if the client has given the Issuer an
instruction to register a pledge of the account to the Agent
and the client is an appropriate person to give such an
instruction, or if the Company, the Issuer, the Agent and AEBI
agree in writing that the Agent should be compensated with
regard to the client's Investors Certificate account:
(a) For Investors Certificates with a reserve balance of
$1 million or more, a fee equal to .425% per annum
of the amount outstanding for each Investors
Certificate;
(b) For Investors Certificates with a reserve balance of
$500,000 to $999,999, a fee equal to .5525% per
annum of the amount outstanding for each Investors
Certificate; and
(c) For Investors Certificates with a reserve balance of
$250,000 to $499,999, a fee equal to .68% per annum
of the amount outstanding for each Investors
Certificate.
Provided, however, that no payment shall be made to the Agent,
or to any other selling agent or distributor (except the
Company) with whom the Company or the Issuer has a selling
agent or distribution agreement, of compensation as to which
the Company or the Issuer has actually received at its
principal office written notice of a competing claim to such
compensation from the Agent or such a selling agent or
distributor, until the parties disputing the payment resolve
their dispute or such payment is ordered by a court, panel of
arbitrators, or similar authority with jurisdiction over the
matter. Provided further, that the Agent shall be
compensated only for Certificates owned by clients of the
Agent who owned Certificates on November 10, 1994, who have
continuously owned an Existing Certificate or an Exchange
Certificate since that date, and who are former clients of
AEBI.
<PAGE>
PAGE 13
3. The amount outstanding shall be calculated as of the end of
each term or Investors Certificate quarter, as the case may
be. The calculations shall take into account any additions to
or withdrawals from an Investors Certificate. Compensation
shall be calculated on a 360-day year (30-day month) basis.
The Agent shall be paid after the end of each term for the 1,
2 and 3 month term Investors Certificates and after the end of
each Investors certificate quarter for the 6, 12, 24 and 36
month term Investors Certificates. The compensation payable
to the Agent for Certificate terms and quarters ending during
any given calendar month shall be aggregated and paid to the
Agent in a lump sum within 15 days after each calendar month
end.
Compensation calculated as described herein shall be paid on a
prorated basis from the date the Agent becomes entitled
thereto by (among other things) satisfying one of the four
conditions specified in the four clauses beginning with "if"
in the introductory language of Section 2 of this Schedule;
provided, however, that the Company, the Issuer, the Agent and
AEBI may agree in writing that, as to accounts specified in
writing, the Agent shall be entitled thereto commencing on
December 12, 1994.
<PAGE>
PAGE 14
SCHEDULE B
Effective as of December 12, 1994
1. Pursuant to Section I(1) of the Selling Agent Agreement, dated
as of December 12, 1994, the Agent may offer the IDS Stock
Market Certificate ("Market Certificate"), which Market
Certificate bears interest that may be tied in whole or in
part to any upward movement in a stock market index.
2. The Agent shall be compensated as follows on the basis of the
principal amount of the Market Certificates, if such
Certificates are registered in the name Coutts & Co (USA)
International (or otherwise in street name with the Agent as
selling agent or servicing agent), or if the client has
designated the Agent as selling agent or servicing agent for
the account, or if the client has given the Issuer an
instruction to register a pledge of the account to the Agent
and the client is an appropriate person to give such an
instruction, or if the Company, the Issuer, the Agent and AEBI
agree in writing that the Agent should be compensated with
regard to the client's Market Certificate account.
The Agent shall be paid a fee equal to 0.80% per term of the
principal amount of each such Market Certificate. For the
purposes of this Schedule B, "principal amount" shall be equal
to the amount invested, plus additional investments and
interest when credited to the account but less withdrawals and
penalties.
Provided, however, that no payment shall be made to the Agent,
or to any other selling agent or distributor (except the
Company) with whom the Company or the Issuer has a selling
agent or distribution agreement, of compensation as to which
the Company or the Issuer has actually received at its
principal office written notice of a competing claim to such
compensation from the Agent or such a selling agent or
distributor, until the parties disputing the payment resolve
their dispute or such payment is ordered by a court, panel of
arbitrators, or similar authority with jurisdiction over the
matter. Provided further, that the Agent shall be
compensated only for Certificates owned by clients of the
Agent who owned Certificates on November 10, 1994, who have
continuously owned an Existing Certificate or an Exchange
Certificate since that date, and who are former clients of
AEBI.
The Agent shall be paid quarterly in arrears, meaning that the
Agent shall be paid after the end of each of the the first
three quarterly anniversaries of the beginning of each term
and then after the end of each such term. For example, if a
term began on Wednesday, November 30, 1994, the Agent would be
paid after February 28, 1995; May 30, 1995; and August 30,
1995 and again after the term end on Tuesday, November 28,
1995. Compensation shall be calculated on a 90 day per term
quarter basis; provided, however, that compensation shall not
be earned during any period in which the Market Certificate is<PAGE>
PAGE 15
earning only interim interest. Notwithstanding the foregoing,
during any term in which a client is receiving fixed interest,
if she/he elects to again participate in the market, the fee
shall be prorated for such partial quarter and paid after the
client's new term begins.
3. The compensation payable to the Agent for term quarters, or
prorated quarters, as the case may be, ending during any given
calendar month shall be aggregated and paid to the Agent in a
lump sum within 15 days after each calendar month end.
Compensation calculated as described herein shall be paid on a
prorated basis from the date the Agent becomes entitled
thereto by (among other things) satisfying one of the four
conditions specified in the four clauses beginning with "if"
in the introductory language of Section 2 of this Schedule;
provided, however, that the Company, the Issuer, the Agent and
AEBI may agree in writing that, as to accounts specified in
writing, the Agent shall be entitled thereto commencing on
December 12, 1994.
<PAGE>
PAGE 1
CONSULTING AGREEMENT
This Agreement is made as of December 12, 1994, by and between IDS
Financial Services Inc., a Delaware corporation (the "Company"),
the principal distributor for certain registered face-amount
certificates offered by IDS Certificate Company (the "Issuer"), and
American Express Bank International, a United States corporation
organized under the provisions of Section 25(a) of the Federal
Reserve Act (the "Consultant"). A corporation organized under said
provisions is sometimes referred to herein as an "Edge Act Bank."
WHEREAS the Company wishes to enter into selling agent agreements
from time to time with one or more other Edge Act Banks (the
"Agent" or "Agents");
WHEREAS in connection with such agreements the Company wishes to
obtain consulting services with regard to regulatory, compliance,
operational and other matters concerning Edge Act Banks, and
WHEREAS the Consultant is able to provide such consulting services,
NOW THEREFOR the Company and the Consultant agree to enter into
this Consulting Agreement as of the date first above written.
I. SERVICES
The Consultant shall, from time to time, upon request of the
Company or at the initiative of the Consultant, provide the Company
with advice and other consulting services with regard to
regulatory, compliance, operational and other matters concerning
Edge Act Banks and the sale of face-amount certificates through
Edge Act Banks, including such certificates issued by the Issuer
that the Company may from time to time agree to permit an Agent to
offer to the Agent's clients pursuant to a selling agent
agreement ("Certificates").
II. COMPENSATION
The Company shall pay the Consultant, and the Consultant accepts in
full payment for its services hereunder, consulting fees based on
Certificates held by clients of Agents, as described in the
Schedule(s) attached hereto. Such Schedule(s) may be amended or
supplemented by the Company from time to time by mailing a revised
Schedule to the Consultant.
III. MISCELLANEOUS
(1) The Consultant for all purposes herein shall be
deemed to be an independent contractor, and except
as expressly provided or authorized in this
Agreement, shall have no authority to act for,
represent or bind the Company, the Issuer or its
transfer agent.
(2) The Consultant shall be free to render to other
persons, firms and corporations services similar or
dissimilar to those herein described.
<PAGE>
PAGE 2
(3) Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid
to the party to this Agreement entitled to receive
the same, (a) if to the Company, at IDS Tower 10,
Minneapolis, Minnesota 55440, Attn: Vice
President-Assured Assets, and (b) if to the
Consultant, at 1221 Brickell Avenue, 8th Floor,
Miami, Florida 33131, Attn: President, or to such
other address as either party may designate in
writing to the other.
(4) This Agreement may be amended only by written
instrument executed by both parties hereto.
(5) This Agreement may be executed in any number of
counterparts, each executed counterpart constituting
an original but all together only one Agreement.
IV. TERMINATION
(1) This Agreement shall continue in effect until
December 12, 1995 and shall continue from year to
year thereafter unless and until terminated by
either party as hereinafter provided.
(2) This Agreement may be terminated without penalty by
either the Company or the Consultant at any time
whether prior to, at or after the date hereof by
giving the other party at least thirty (30) days'
prior written notice of such intention to terminate.
(3) This Agreement will terminate automatically in the
event of its assignment (as defined in the
Investment Company Act of 1940).
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
IDS FINANCIAL SERVICES INC.
/s/ Scott A. Hawkinson
Scott A. Hawkinson
Vice President
/s/ Colleen Curran
Colleen Curran
Secretary
AMERICAN EXPRESS BANK
INTERNATIONAL
/s/ Sergio Masvidal
Sergio Masvidal
President
/s/ L. M. Abboud
L. M. Abboud
Assistant Secretary<PAGE>
PAGE 3
Schedule A
to Consulting Agreement dated as of December 12, 1994, between IDS
Financial Services Inc. and American Express Bank International.
Schedule effective as of December 12, 1994
1. If an Agent offers the IDS Investors Certificate ("Investors
Certificate"), which Investors Certificate guarantees interest in
advance for a term of 1, 2, 3, 6, 12, 24 or 36 months, at the
client's option, bearing LIBOR-based interest rates, then the
consultant shall be compensated as follows:
The Consultant shall be compensated on the basis of the
reserve balance of the Investors Certificate held by clients of the
Agent and for the periods as to which the Agent is receiving
compensation. Such compensation to the Consultant shall be as
follows:
(a) For each such Investors Certificate with a reserve
balance of $1 million or more, a fee equal to 0.075% per
annum of the amount outstanding for such Investors
Certificate;
(b) For each such Investors Certificate with a reserve
balance of $500,000 to $999,999, a fee equal to 0.0975%
per annum of the amount outstanding for such Investors
Certificate; and
(c) For each such Investors Certificate with a reserve
balance of $250,000 to $499,999, a fee equal to 0.120%
per annum of the amount outstanding for such Investors
Certificate.
Provided, however, that no payment shall be made to the Consultant,
or to any selling agent or distributor (except the Company) with
whom the Company or the Issuer has a selling agent or distribution
agreement, of compensation as to which the Company or the Issuer
has actually received at its principal office written notice of a
competing claim to such compensation from the Consultant or such a
selling agent or distributor, until the parties disputing the
payment resolve their dispute or such payment is ordered by a
court, panel of arbitrators, or similar authority with jurisdiction
over the matter.
2. The amount outstanding shall be calculated as of the end of
each term or Investors Certificate quarter, as the case may
be. The calculations shall take into account any additions to
or withdrawals from an Investors Certificate. Compensation
shall be calculated on a 360-day year (30-day month) basis.
The Consultant shall be paid after the end of each term for
the 1, 2 and 3 month term Investors Certificates and after the
end of each Investors Certificate quarter for the 6, 12, 24
and 36 month term Investors Certificates. The compensation
payable to the Consultant for Certificate terms and quarters
ending during any given calendar month shall be aggregated and
paid to the Consultant in a lump sum within 15 days after each
calendar month end.
<PAGE>
PAGE 4
SCHEDULE B
to Consulting Agreement dated as of December 12, 1994, between IDS
Financial Services Inc. and American Express Bank International.
Schedule effective as of December 12, 1994
1. If an Agent offers the IDS Stock Market Certificate ("Market
Certificate"), which Market Certificate bears interest that
may be tied in whole or in part to any upward movement in a
stock market index, then the Consultant shall be compensated
as follows:
The Consultant shall be compensated on the basis of the
reserve balance of the Stock Market Certificate held by
clients of the Agent and for the periods as to which the
Agent is receiving compensation. Such compensation to the
Consultant shall be as follows:
The Consultant shall be paid a fee equal to 0.20% per term of
the principal amount of each such Market Certificate. For the
purposes of this Schedule B, "principal amount" shall be equal
to the amount invested, plus additional investments and
interest when credited to the account but less withdrawals and
penalties.
Provided, however, that no payment shall be made to the
Consultant, or to any selling agent or distributor (except the
Company) with whom the Company or the Issuer has a selling
agent or distribution agreement, of compensation as to which
the Company or the Issuer has actually received at its
principal office written notice of a competing claim to such
compensation from the Consultant or such a selling agent or
distributor, until the parties disputing the payment resolve
their dispute or such payment is ordered by a court, panel of
arbitrators, or similar authority with jurisdiction over the
matter.
The Consultant shall be paid quarterly in arrears, meaning
that the Consultant shall be paid after the end of the first
three quarterly anniversaries of the beginning of each term
and then after the end of each such term. For example, if a
term began on Wednesday, November 30, 1994, the Agent would be
paid after February 28, 1995; May 30, 1995; and August 30,
1995 and again after the term end on Tuesday, November 28,
1995. Compensation shall be calculated on a 90 day per term
quarter basis; provided, however, that compensation shall not
be earned during any period in which the Market certificate is
earning only interim interest. Notwithstanding the foregoing,
during any term in which a client is receiving fixed interest,
if she/he elects to again participate in the market, the fee
shall be prorated for such partial quarter and paid after the
client's new term begins.
2. The compensation payable to the Consultant for term quarters,
or prorated quarters, as the case may be, ending during any
given calendar month shall be aggregated and paid to the
Consultant in a lump sum within 15 days after each calendar
month end.
<PAGE>
PAGE 1
IDS CERTIFICATE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned as an officer of IDS Certificate Company, a
face-amount certificate company registered under the Investment
Company Act of 1940, hereby constitutes and appoints James A.
Mitchell, Stuart A. Sedlacek, Jay C. Hatlestad, Colleen Curran,
Bruce A. Kohn and Morris Goodwin Jr., or any one of them, as his or
her attorney-in-fact and agent, to sign for him or her in his or
her name, place and stead any and all registration statements and
amendments thereto (with all exhibits and other documents required
or desirable in connection therewith) that may be prepared from
time to time in connection with said Company's existing or future
face-amount certificate products, and periodic reports on Form 10-
K, Form 10-Q and Form 8-K required pursuant to provisions of the
Securities Exchange Act of 1934, and any necessary or appropriate
states or other jurisdictions, and grants to any or all of them the
full power and authority to do and perform each and every act
required or necessary or appropriate in connection with such
signatures or filings.
Signed on this 17th day of May, 1994.
/s/ Stuart A. Sedlacek
Stuart A. Sedlacek
/s/ Morris Goodwin, Jr.
Morris Goodwin, Jr.
/s/ Jay C. Hatlestad
Jay C. Hatlestad
<PAGE>
PAGE 1
IDS CERTIFICATE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned as a director of IDS Certificate Company, a
face-amount certificate company registered under the Investment
Company Act of 1940, hereby constitutes and appoints James A.
Mitchell, Stuart A. Sedlacek, Jay C. Hatlestad, Colleen Curran,
Bruce A. Kohn and Morris Goodwin Jr., or any one of them, as his
attorney-in-fact and agent, to sign for him in his name, place and
stead any and all registration statements and amendments thereto
(with all exhibits and other documents required or desirable in
connection therewith) that may be prepared from time to time in
connection with said Company's existing or future face-amount
certificate products, and periodic reports on Form 10-K, Form 10-Q
and Form 8-K required pursuant to provisions of the Securities
Exchange Act of 1934, and any necessary or appropriate states or
other jurisdictions, and grants to any or all of them the full
power and authority to do and perform each and every act required
or necessary or appropriate in connection with such signatures or
filings.
Signed on this 13th day of May, 1994.
/s/ David R. Hubers /s/ John V. Luck
David R. Hubers John V. Luck
/s/ Charles W. Johnson /s/ James A. Mitchell
Charles W. Johnson James A. Mitchell
/s/ Edward Landes /s/ Harrison Randolph
Edward Landes Harrison Randolph
/s/ Gordon H. Ritz /s/ Stuart A. Sedlacek
Gordon H. Ritz Stuart A. Sedlacek
