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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-1
INITIAL REGISTRATION STATEMENT
IDS MARKET STRATEGY 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)
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The Registrant hereby elects to register an indefinite number of certificates
under this registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
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IDS Market Strategy Certificate
Prospectus
April 29, 1998
Potential for stock market growth with safety of principal.
IDS Market Strategy 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). When investing in this certificate, you have your choice of
ways to allocate your money: a fixed-interest subaccount in which you can make
additional investments at any time or participation terms in which you can make
periodic investments. At the time you purchase this certificate, you will set up
periodic investments from your fixed-interest subaccount to your participation
terms. 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 all or part of your return will be guaranteed by
IDSC or whether all of it will be tied to the market. Your certificate matures
20 years from the issue date of the certificate.
As is the case with other investment companies, 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 certificate is backed by IDSC's investments on deposit rather than
guaranteed or insured by the government or someone else. See "Invested and
guaranteed by IDSC" and "Regulated by government" under "How your money is used
and protected."
IDS Certificate Company is not a bank or financial institution, and the
securities it offers are not deposits or obligations of, or backed or guaranteed
or endorsed by, any bank or financial institution, nor are they insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency.
This prospectus describes terms and conditions of your IDS Market Strategy
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 Market Strategy Certificate as described in the
prospectus, or to bind IDSC by any statement not in it.
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IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-3133 (toll free) or (612) 671-3800
(Minneapolis/St. Paul area)
TTY numbers:
800-846-4293 (toll free) or (612) 671-1630
(Minneapolis/St. Paul area)
An American Express company
Web site address: http://www.americanexpress.com/advisors
Where to get information about IDSC
IDS Certificate Company 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) and are available on the SEC
Internet web site (http://www.sec.gov). Copies can be obtained from the Public
Reference Section of the SEC, 450 5th St., N.W., Room 1024, 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
500 West Madison St.
Suite 1400
Chicago, IL 60661
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 may
be fixed or may be 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.
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Here are the interest rates and market participation percentages in effect on
the date of this prospectus, April 29, 1998:
Fixed interest:
currently _____%
Participation terms:
Maximum Market participation Minimum
return percentage interest
- ------------------------------- ------------------------------ -----------------
10% 100% (full) None
- ------------------------------- ------------------------------ -----------------
10% 25% (partial) Currently 2.50%
- ------------------------------- ------------------------------ -----------------
These rates may or may not be in effect when you apply to purchase your
certificate. If you choose fixed interest, IDSC guarantees that, when the rate
for new purchases takes effect, the rate will be within a specified range of the
average rate for 12-month certificates of deposit as published in the most
recent BANK RATE MONITOR Top 25 Market AverageTM, North Palm Beach, FL 33408, as
explained under "About the certificate." For your first term, if you choose the
partial participation option for your certificate, your minimum interest rate
will be between 2.00% and 3.00%. Rates for future 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>
Contents
Table of contents
About the certificate p
Investment amounts p
Face amount and principal p
Participation term p
Value at maturity p
Receiving cash before end of 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 p
Buying your certificate p
Two ways to make investments p
Full and partial withdrawals p
Transfers to other accounts p
Two ways to request a withdrawal or transfer p
Three ways to receive payment when you withdraw funds p
Retirement plans: special policies p
Transfer of ownership p
For more information p
Taxes on your earnings p
Retirement accounts p
Gifts to minors p
How to determine the correct TIN p
Foreign investors p
Trusts p
How your money is used and protected p
Invested and guaranteed by IDSC p
Regulated by government p
Backed by our investments p
Investment policies p
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How your money is managed p
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 Service Corporation p
About American Express Bank International and Coutts p
Transfer Agent p
Employment of other American Express affiliates p
Directors and officers p
Auditors p
IDS Certificates p
Appendix p
Annual financial information p
Summary of selected financial information p
Management's discussion and analysis of financial
condition and results of operations p
Report of independent auditors p
Financial statements p
Notes to financial statements p
<PAGE>
About the certificate
Investment amounts
You may purchase the IDS Market Strategy 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) payable in U.S. currency. You may also
make additional lump-sum investments in any amount in the fixed-interest portion
of your investment at any time, as long as your total amount paid in is not more
than the $1 million (unless you receive prior authorization from IDSC to invest
more).
Your certificate is recorded as a certificate account on our books. Within this
account, you may allocate your investment among a subaccount that earns fixed
interest and other subaccounts that earn interest linked to the S&P 500 Index
during a participation term. Your investment always is placed initially in the
fixed-interest subaccount.
Consequently, your investment initially earns fixed interest.
After determining the initial amount you wish to invest, you must set up
periodic investments from the fixed-interest subaccount to participation terms.
When you make your investment, you must give instructions to move money from the
fixed-interest subaccount to participation terms monthly, quarterly, or semi
annually. Each participation term is 12 months and each has its own grace
period. The amount invested in each participation term must be at least $1,000.
If your certificate is nearing its 20-year maturity, you will not be able to
select a participation term that would carry the certificate past its maturity
date. Each account can have a maximum of 12 participation terms at one time. You
will be sent a confirmation at the time you purchase your certificate confirming
your instructions at the time you submitted your application.
This certificate provides the ability to make a single payment that can be
invested in individually staggered stock market participation terms in one
certificate that lets you select participation terms like those you might select
when staggering several IDS Stock Market Certificates. IDS Stock Market
Certificate is another certificate that offers interest linked to the S&P 500
Index, but permits only one participation term at a time. "Staggering" is the
strategy of purchasing several smaller certificates over a period of a year
instead of one larger certificate, as a method of increasing liquidity and
reducing the possibility of unfavorable market timing.
The certificate may be used as an investment for your Individual Retirement
Account (IRA). If so used, the amount of your contribution (investment) will be
subject to limitations in applicable federal law.
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Face amount and principal
The face amount of your certificate is the amount of your initial investment.
Your principal consists of the amount you actually have invested in your
certificate plus interest credited to your account and compounded less
withdrawals, penalties and any compounded interest paid to you in cash. Your
principal is guaranteed by IDSC.
Participation term
Each participation term in your certificate is a 12-month period that begins on
a Wednesday and ends the Tuesday before the one-year anniversary. 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. Each account can have a
maximum of 12 terms at one time including any term in a grace period. The
principal of your certificate that is not invested in participation terms will
earn fixed interest.
Value at maturity
Your certificate matures after 20 years and you will receive a distribution 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 "How to invest and withdraw funds."
Interest
Participation interest: Before the start of a participation term, you must
select from two types of interest: 1) full participation, or 2) partial
participation together with minimum interest. Interest earned under both of
these options has an upper limit which is the maximum annual return explained
below. Your selection is established at the time of purchase but can be changed
at anytime for participation terms that have not yet started. You may change
your participation interest selection at any time prior to any term start date
or during a 14 day grace period. The change will be in effect for any future
term unless we again receive instructions from you changing your selection.
<PAGE>
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
S&P 500 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 by IDSC 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 by IDSC 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 2.00% and 3.00%.
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: The fixed-interest subaccount allows you to earn interest on
your principal that is not invested in participation terms, including your
entire investment before the start of your first participation term, and amounts
in the 14 day grace period in between participation term end dates and start
dates. Your fixed interest accrues daily and is credited and compounded monthly.
Your fixed interest rates are reset quarterly, based on the original date of
your certificate.
Amounts in the fixed-interest subaccount, including compounded fixed interest,
can be withdrawn at any time without a withdrawal penalty. If these amounts are
not withdrawn, they will become part of a participation term according to the
instructions you've established with the company, unless you change your
instructions which can be changed at any time. Values in participation terms can
not be withdrawn without withdrawal penalties.
When your application is accepted and we have received your initial investment,
we will send you a confirmation of your purchase showing the initial rate that
your investment will earn as well as confirmation of your instructions for
moving your money to your participation terms. Instructions for moving your
money are given at the time you purchase your certificate. You choose the day of
the month for the movement of your
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money, as well as the amount, starting month, and full or partial participation.
Your term resulting from those instructions will begin on the Wednesday
following that date. If that date is a Wednesday, the term will begin on the
following Wednesday.
IDSC guarantees that when fixed-interest 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 Top 25 Market AverageTM (the BRM Average). In
the case of fixed interest, IDSC guarantees that your rate for your initial term
will be 40 basis points (.40%) below to 60 basis points (.60%) above the average
interest rate published for 12-month certificates of deposit in the BANK RATE
MONITOR Top 25 Market AverageTM (the BRM Average), North Palm Beach, FL 33408.
If the BRM Average 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, American
Express Financial Corporation (AEFC) or any of their affiliates.
The BRM Average is an index of rates and annual effective yields offered on
various length certificates of deposit by large banks and thrifts in 25
metropolitan areas. The frequency of compounding varies among the banks and
thrifts. Certificates of deposit in the BRM Average are government insured
fixed-rate time deposits.
The BANK RATE MONITOR may be available in your local library. To obtain
information or current BRM Average rates, call the Client Service Organization
at the telephone numbers listed on the back cover.
Rates for new purchases are reviewed and may change weekly. Normally, the
initial fixed-interest rate you receive will be the higher of:
the fixed-interest rate in effect on the date of your application; or
the fixed-interest rate in effect on the date your application is
accepted by IDSC.
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However, if your application bears a date more than seven days before its
receipt by IDSC, the initial fixed-interest rate you receive will be the higher
of:
the fixed-interest rate in effect on the date your application is accepted
by IDSC; or
the fixed-interest rate in effect seven days before receipt.
Maximum annual return: This is the cap, or upper limit, of your return on the
amount invested in each participation term, regardless of whether you choose
full or partial participation. Your total return, including both participation
interest and minimum interest for a term for which you have chosen partial
participation will be limited to this maximum return percentage.
Determining the S&P 500 Index value: The stock market generally closes at 3 p.m.
Central time and the S&P 500 Index value generally is available at approximately
4:30 p.m. This is the value we currently use to determine participation
interest. Occasionally, Standard & Poor's (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. Each Tuesday's closing value of the S&P 500 Index is used
for establishing the term start and the term end values each week.
Earning interest: Participation interest is calculated, credited and compounded
at the end of your participation term. Minimum interest accrues daily and is
credited and compounded at the end of your participation term. Fixed interest
accrues daily and is credited and compounded monthly, except that, if amounts
move from fixed interest to a participation term and the resulting balance in
the fixed-interest subaccount is zero, then fixed interest credited on the
principal moved will be compounded on the day the participation term begins.
Both minimum and fixed interest are calculated on a 30-day month and 360-day
year basis.
Moving between fixed and participation interest: You can move all or part of
your investment from the fixed-interest subaccount to a participation term. The
move from the fixed-interest subaccount to a participation term happens
according to your standing instructions unless you notify us separately. If you
make the change from fixed interest to participation interest either through a
scheduled or an unscheduled move, your participation term will begin on the
Wednesday following the move instructions. For further explanation of how we
apply your instructions, see "Fixed interest" above.
<PAGE>
You may not move from participation interest to fixed interest during a
participation term without incurring a surrender charge. At the end of a
participation term, you can elect to leave the money in the fixed-interest
subaccount.
Rates for future periods: After your certificate purchase date, the maximum
return, and the market participation percentage and minimum interest rate for
participation terms, may be greater or less than those shown on the front of or
elsewhere in this prospectus or its wrapper. Fixed interest may be greater or
lesser than that shown. Rates are reviewed weekly, and we have complete
discretion as to what interest rate will be declared.
If you plan to continue with a new participation term, to find out what your
certificate's new maximum return, market participation percentage and minimum
interest rate, if applicable, will be for your next term, please consult your
American Express financial advisor, or the Client Service Organization at the
telephone numbers listed on the back cover.
Your fixed interest rates are declared quarterly. You will be given notice of
the changes in interest rates in your periodic statements or you may call the
Client Service Organization at the numbers listed on the back cover to find out
your current rate.
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IDS Market Strategy Certificate - Example
The following example shows how the Market Strategy Certificate works assuming
an initial investment of $12,000 and moving $1,000 per month into a
participation term. The example is based on assumptions that the fixed interest
subaccount pays an interest rate of 5.00% while the yield earned for each
participation term is the maximum of 10.00%.
Full Participation in the Stock Market
Initial Investment $12,000.00
Maximum Return 10.00%
Minimum Return 0.00%
Fixed Interest Rate 5.00%
<TABLE>
<CAPTION>
1st Term Renewal
Beginning Fixed Staggered Staggered Market
of Interest Investment Investment Participation Total
Month Balance Amount Amount Balance Balance
<S> <C> <C> <C> <C> <C>
1 $11,000.00 $1,000.00 $1,000.00 $12,000.00
2 10,045.83 1,000.00 2,000.00 12,045.83
3 9,087.69 1,000.00 3,000.00 12,087.69
4 8,125.56 1,000.00 4,000.00 12,125.56
5 7,159.41 1,000.00 5,000.00 12,159.41
6 6,189.24 1,000.00 6,000.00 12,189.24
7 5,215.03 1,000.00 7,000.00 12,215.03
8 4,236.76 1,000.00 8,000.00 12,236.76
9 3,254.41 1,000.00 9,000.00 12,254.41
10 2,267.97 1,000.00 10,000.00 12,267.97
11 1,277.42 1,000.00 11,000.00 12,277.42
12 282.75 1,000.00 12,000.00 12,282.75
13 283.93 12,100.00 12,383.93
14 285.11 1,100.00 12,200.00 12,485.11
15 286.30 1,100.00 12,300.00 12,586.30
16 287.49 1,100.00 12,400.00 12,687.49
17 288.69 1,100.00 12,500.00 12,788.69
18 289.89 1,100.00 12,600.00 12,889.89
19 291.10 1,100.00 12,700.00 12,991.10
20 292.31 1,100.00 12,800.00 13,092.31
21 293.53 1,100.00 12,900.00 13,193.53
22 294.75 1,100.00 13,000.00 13,294.75
23 295.98 1,100.00 13,100.00 13,395.98
24 297.21 1,100.00 13,200.00 13,497.21
</TABLE>
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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 Company
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, 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, 1984 through Feb. 28, 1998. The values of the S&P 500 Index are
reprinted with the permission of S&P.
S&P 500 Index values -- December 1984 to February 1998
800 Chart shows closing values of the S&P from above ___ in Dec.
1984 to near ___ in Feb. 1998.
700
600
500
400
300
200
100
`84 `85 `86 `87 `88 `89 `90 `91 `92 `93 `94 `95 `96 `97
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S&P 500 Index Average Annual Return
Beginning date Period held Average annual
Dec. 31, in Years return
- ------------------------------- ------------------------------ -----------------
1987 10 ______%
- ------------------------------- ------------------------------ -----------------
1992 5 ______%
- ------------------------------- ------------------------------ -----------------
1996 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, 1985. 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.
S&P 500 Index - December 1985 to February 1998
40% Chart shows 12-month Moving Price Return of the S&P from
a high of 40% to a low of -20%
30%
Label of "Y" axis reads: 12-month return
20%
10%
0%
- -10%
- -20%
`85 `86 `87 `88 `89 `90 `92 `91 `93 `94 `95 `96 `97
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
the 12-month price returns of the S&P 500 Index beginning with the 12-month
period ending Dec. 31, 1985. The graph also shows the number of times these
price returns fell within certain ranges.
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S&P 500 Index - December 1985 to February 1998
25 Chart shows the distribution of all of the 12-month price returns of
the S&P 500 from 1/1/84 through 2/28/97 with a high of just over
20 and a low between 0 and 5.
20
15 Label of "Y" axis reads: Observations
10
5
-15 -10 -5 05 10 15 20 25 29.9 >=30
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 Index(R) 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 Index(R)
rather than the S&P 500 Index. Like IDS Stock Market Certificate, IDS Market
Strategy Certificate permits you to receive all or part of your interest based
on stock market performance, as measured by the S&P 500 Index, with IDSC's
guarantee of return of principal. In fact, the full and partial participation
terms of IDS Stock Market Certificate and IDS Market Strategy Certificate are
identical, assuming that the amount invested at the beginning of the term is the
same in both certificates and the certificate owner arranges to start a new term
on the Wednesday immediately after the Tuesday on which the prior term ends. For
IDS Market Strategy Certificate, such arrangements would require an instruction
before each term end because the certificate otherwise provides for a 14-day
grace period during which you can review your investment choices. IDS Market
Strategy Certificate increases your choices by allowing you to have up to 12
participation terms plus a fixed-interest alternative simultaneously within the
same certificate. The certificates also pay interest differently on amounts that
are invested at only a fixed rate.
<PAGE>
<TABLE>
<CAPTION>
Actual 12-month return 1/22/92 to _/__/97
<S> <C>
35% Chart shows actual returns of the certificate at full and
25% participation with the full participation generally
tracking the market indexes over the.
30% period and 25% level of participation tracking at the 25%
level of return.
25%
20%
15%
10%
5%
0%
1/91 5/91 9/91 1/92 5/92 9/92 1/93 5/93 8/93 1/94 5/94 9/94 1/95 5/95 9/95 1/96 5/96 9/96 1/97
</TABLE>
Your participation earnings are tied to the movement of the Index. They will be
based on any increase in the Index as measured on the beginning and ending date
of each 12-month term. Of course, if the Index is not higher on the last day of
your term than it was on the first day, your principal will be secure but you
will earn no participation interest.
The NYSE Composite Index(R) 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 owners
will receive interest on their accounts beyond any minimum interest or fixed
interest selected.
<PAGE>
Calculation of return
The increase or decrease in the S&P 500 Index, as well as the actual return paid
to you for a participation term, 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 2.50%
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.
<PAGE>
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 IDS Stock Market Certificate was
introduced. IDS Market Strategy Certificate was introduced on April 29, 1998.
Partial participation
Start of Term Maximum 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
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
Nov. 2, 1994 10.00 2.75
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
April 26, 1995 12.00 3.50
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
Jan. 17, 1996 10.00 3.25
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
Feb. 26, 1997 10.00 3.00
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
May 7, 1997 10.00 2.75
- ------------------------------- ------------------------------ -----------------
- ------------------------------- ------------------------------ -----------------
Oct. 8, 1997 10.00 2.50
- ------------------------------- ------------------------------ -----------------
Examples:
To help you understand the way a participation term of 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 2.50%, and the maximum total return for full
and partial participation is 10%.
<PAGE>
1. If the Market and the S&P 500 Index value rise
<TABLE>
<CAPTION>
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 425 8% increase in the S&P 500 Index Index 459
- --------------------------------------------------------------------------------------------------------------
<S> <C>
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) (4.50% 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
(2.50% Total return)
3. If the Market and the S&P 500 Index value rise above the minimum 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) (6.50% 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. 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.
Standard & Poor's (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
<PAGE>
groupings in the U.S. common stock population. Changes in the S&P 500 Index are
reported daily in the financial pages of many major newspapers. The index used
for IDS Market Strategy Certificate excludes dividends on the 500 stocks.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500" and
"500" are trademarks of The McGraw-Hill Companies 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 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.
<PAGE>
Opportunities at the end of a participation term
Grace period: When a participation term ends, we will notify you of the start of
a 14 day grace period before a new term automatically begins. During this 14-day
grace period you can:
change your participation selection;
add money to your certificate;
change your participation term to remain in fixed interest;
withdraw part or all of your money in your fixed term or the money in the
participation term that just ended without a withdrawal penalty or loss of
interest; or
receive your participation interest in cash.
Fixed interest only: Money can be withdrawn from the fixed interest subaccount
at any time without a surrender penalty. The fixed interest on these amounts
continues for the life of the certificate. You can add money to your
fixed-interest investment at any time. The money added will earn the same rate
as the rest of the money in the fixed term.
New term: If you do not make changes when a participation term ends, your
certificate will continue with your current selections when the new
participation term begins 14 days later as long as the minimum invested for the
participation term is $1,000. You will earn fixed interest during this 14-day
grace period. You can arrange to make periodic additional investments at each
participation term renewal. You can tell us to change your participation
selection, add money to your renewing participation term, change your interest
selection to remain in fixed interest or withdraw part of your money. To learn
indexing information and the amount of interest (if any) at the end of a
participation term, you can contact your American Express financial advisor or
call the Client Service Organization at the telephone numbers on the back of
this prospectus.
How to invest and withdraw funds
Buying your certificate
Your American Express financial advisor can 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 and we have received your initial investment and
instructions, we will send you a confirmation showing the acceptance date, the
initial interest rate for amounts invested at fixed interest, the date your
participation term begins and the participation interest selection you have
<PAGE>
made, detailing your market participation percentage, instructions for
participation terms and, if applicable, the minimum interest rate for your first
term. After the beginning of each participation term that includes an additional
investment sent to us by you, we will send you notice of the value of the S&P
500 Index on the day the term began. For a description of how we determine the
fixed interest rate that initially applies to a new investment, see the
paragraph on "Fixed interest" of "Interest" under "About your Certificate". For
additional considerations, see "Purchase policies" below. The participation
rates and maximum interest in effect at the time of movement from fixed-interest
to a participation term will apply to those participation terms.
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:
Investments must be received and accepted in the Minneapolis headquarters
on a business day before 3 p.m. Central time to be included in your account
that day. Otherwise your purchase will be processed the next business day.
If you purchase a certificate with a personal check or other non-guaranteed
funds, AEFC will wait one day for the process of converting 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.
IDSC has complete discretion to determine whether to accept an application
and sell a certificate.
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>
Two ways to make investments
1
By mail
Send your check along with your name and account number to:
Regular mail: Express mail:
American Express American Express
Financial Advisors Inc. Financial Advisors Inc.
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55440-0010
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 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.
Minimum amount you may wire: $1,000.
Wire orders can be accepted only on days when your bank, AEFC, IDSC and
Norwest Bank Minneapolis are open for business.
Wire purchases are completed when wired payment is received and we accept
the purchase.
Bank wire purchases are not sent until the next business day.
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.
<PAGE>
IDSC, AEFC and its other subsidiaries are not responsible for any delays
that occur in wiring funds, including delays in processing by the bank.
You must pay any fee the bank charges for wiring.
Full and partial withdrawals
You may make withdrawals at any time. However:
Source of withdrawals: If you request a withdrawal, the dollars will be removed
from credited fixed-interest first, then from principal in your fixed-interest
subaccount, then from any renewing participation terms in the grace period, and
then from principal in participation terms beginning with the most recent term
start date and continuing with such subsequent terms in order of term start
dates.
If your withdrawal request is received in the Minneapolis headquarters on a
business day before 3 p.m. Central time, it will be processed that day and
payment will be sent the next business day. Otherwise, your request will be
processed one business day later.
Full and partial withdrawals may result in loss of interest, depending upon
the timing of your withdrawal.
You may not make a partial withdrawal if it would reduce your certificate
balance to less than $1,000 or if it would reduce the amount in a
participation term to less than $1,000. If you request such a withdrawal, we
will contact you for revised instructions.
Penalties for withdrawal from your participation terms: If you withdraw money
from a participation term, you will pay a penalty of 2% of the principal
withdrawn. The 2% penalty is waived upon death of the certificate owner. We will
also waive withdrawal penalties on withdrawals for IRA certificate accounts for
your required distributions. See "Retirement plans: special policies" below.
Loss of interest: If you make a withdrawal from a participation term at any time
other than at the end of the term, you will lose interest, if any, accrued on
the withdrawal amount since participation interest is credited only at the end
of a term.
Withdrawals from the fixed-interest subaccount before the end of the certificate
month (the monthly anniversary of the issue date of your certificate) will
result in loss of interest on the amount withdrawn. You will get the best result
by timing a withdrawal at the end of the certificate month.
<PAGE>
Following are examples describing a $2,000 withdrawal during a participation
term and from a fixed-interest investment:
Participation term:
Balance in participation term $ 10,000.00
Interest (interest is credited at the end of the term) 0.00
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.
Fixed interest subaccount:
Balance earning fixed interest 10,000.00
Interest credited to date 100.00
Withdrawal of credited interest (100.00)
Withdrawal of principal (1,900.00)
Balance after withdrawal $ 8,100.00
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:
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 the bank provides evidence that your check has cleared.
If your certificate is pledged as collateral, any withdrawal will be
delayed until we get approval from the secured party.
Any payments to you may be delayed under applicable rules, regulations or
orders of the SEC.
<PAGE>
Transfers to other accounts
You may transfer part or all of your certificate to any other IDS certificate or
into another new or existing American Express Financial Advisors Inc. account
that has the same ownership (subject to any terms and conditions that may
apply).
Two ways to request a withdrawal or transfer
1
By phone
Call the Client Service Organization at the telephone numbers listed on the back
cover between 8 a.m. and 6 p.m. your local time.
Maximum phone request: $50,000.
Transfers into an American Express Financial Advisors Inc.
account with the same ownership.
A telephone withdrawal request will not be allowed within 30 days of a
phoned-in address change.
We will honor any telephone request believed to be authentic and will use
reasonable procedures to confirm that it is. This includes asking
identifying questions and tape recording telephone calls. If reasonable
procedures are followed, IDSC or AEFC will not 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:
American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
Express mail:
American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55440-0010
Written requests are required for:
Transactions over $50,000
Pension plans and custodial accounts where the minor has reached the age at
which custodianship should terminate.
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
Mailed to address on record; please allow seven days for mailing.
Payable to name(s) you requested.
You will be charged a fee if you request express mail delivery. We will
deduct the fee from your remaining certificate balance, provided that
balance would not be less than $1,000. If the balance would be less than
$1,000, the fee is deducted from the proceeds of the withdrawal.
2
By wire
Minimum wire withdrawal: $1,000.
Request that money be wired to your bank.
Bank account must be in same ownership as IDSC account.
<PAGE>
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.
A service fee, if any, may be deducted from your balance (for partial
withdrawals) or from the proceeds of a full withdrawal.
3
By electronic transfer
Available only for pre-authorized scheduled partial withdrawals and other
full or partial withdrawals.
No charge.
Deposited electronically in your bank account.
Allow two to five business days from request to deposit.
Retirement plans: special policies
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.
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 rules outlined in the Custodial
Retirement Plan document.
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.
Retirement plan withdrawals may be subject to withdrawal penalties or loss
of interest even if they are not subject to federal tax penalties.
<PAGE>
We will waive withdrawal penalties on withdrawals for IRA certificate
accounts for your required distributions.
If you withdraw all funds from your last account in an IRA at American
Express Trust Company, a termination fee will apply as set out in Your Guide
to IRAs, the IRS disclosure information received when you opened your
account.
The IRA termination fee will be waived if a withdrawal occurs after you
have reached age 70 1/2 or upon the owner's death.
Transfer of ownership
While this 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 American Express financial advisor or call the Client
Service Organization at the telephone numbers listed on the back cover.
Taxes on your earnings
Participation and minimum interest on your certificate is taxable when credited
to your account. Fixed interest is fully taxable as earned. Each calendar year
we provide the 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.
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 Market Strategy 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 Market
Strategy Certificate constitutes a VRDI, then the income earned on the
certificate will be treated as original issue discount and reported when
credited to the owner's account. If the certificate is not treated as a VRDI,
but rather is treated as a CDI,
<PAGE>
then the owner may have taxable income to report, even though the account owner
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
advisor 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.
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 also 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.
<PAGE>
If you don't provide the TIN, 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:
a $50 penalty for each failure to supply your correct TIN;
a civil penalty of $500 if you make a false statement that results in no
backup withholding; and
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:
<PAGE>
How to determine the correct TIN
<TABLE>
<CAPTION>
For this type of account: Use the Social Security or Employer
Identification Number of:
- ---------------------------------------------- ----------------------------------------------
<S> <C>
Individual or joint account The individual or individuals 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, pension trust or estate The legal entity
(not the personal representative or trustee,
unless no legal entity is designated in the
account title)
- ---------------------------------------------- ----------------------------------------------
- ---------------------------------------------- ----------------------------------------------
Sole proprietorship The owner
- ---------------------------------------------- ----------------------------------------------
- ---------------------------------------------- ----------------------------------------------
Partnership The partnership
- ---------------------------------------------- ----------------------------------------------
- ---------------------------------------------- ----------------------------------------------
Corporate The corporation
- ---------------------------------------------- ----------------------------------------------
- ---------------------------------------------- ----------------------------------------------
Association, club or tax-exempt The organization
organization
- ---------------------------------------------- ----------------------------------------------
</TABLE>
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 both a current
mailing address and an
<PAGE>
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, then, depending on the circumstances, IDSC generally will not act
on instructions with regard to the certificate unless IDSC first receives, at a
minimum, 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. In other cases, we generally will
not take action regarding your certificate until we receive a transfer
certificate from the IRS or evidence satisfactory to IDSC that the estate is
being administered by an executor or administrator appointed, qualified and
acting within the United States. 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: The information in this prospectus is a brief and selective summary
of certain federal tax rules that apply to this certificate and is given on the
basis of current law and practice. Tax matters are highly individual and
complex. Investors should consult a qualified tax advisor regarding their own
position.
Trusts
If the investor is a trust, the policies and procedures described above will
apply with regard to each grantor who is a nonresident alien.
<PAGE>
How your money is used and protected
Invested and guaranteed by IDSC
The IDS Market Strategy Certificate is issued and guaranteed by IDSC, a wholly
owned subsidiary of AEFC. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than $4.0 billion
and a net worth in excess of $239 million on Dec. 31, 1997.
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:
interest to certificate owners; and
various expenses, including taxes, fees to AEFC for advisory
and other services and distribution fees to American Express Financial
Advisors Inc. and American Express Service Corporation (AESC).
For a review of significant events relating to our business, see "Management's
discussion and analysis of financial condition and results of operations." Our
certificates are not rated by a national rating agency.
Most banks and thrifts offer investments known as certificates of deposit (CDs)
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 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 Market Strategy 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 amortized cost must exceed
the required carrying value of the outstanding certificates by at least
$250,000. As of Dec. 31, 1997, the amortized cost of these investments exceeded
the required carrying value of our outstanding certificates by more than $176
million.
<PAGE>
Backed by our investments
Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1997:
Type of investment Net amount invested
Government agency bonds 34%
Corporate and other bonds 43
Preferred stocks 17
Mortgages 5
Municipal bonds 1
As of Dec. 31, 1997 about 91% of our securities portfolio (including 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,
Minneapolis, although we also maintain separate deposits as required by certain
states. American Express Trust Company is a wholly owned subsidiary of AEFC.
Copies of our Dec. 31, 1997 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:
Debt securities-
Most of our investments are in debt securities as referenced in the table in
"Backed by our investments" under "How your money is used and protected."
The price of bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of a bond also fluctuates if its credit
rating is upgraded or downgraded. The price of bonds below investment grade may
react more to the ability of a company to pay interest and principal when due
than to changes in interest rates. They have greater price fluctuations, are
more likely to experience a default, and sometimes are referred to as junk
bonds. Reduced market liquidity for these bonds may occasionally make it more
difficult to value them. In valuing bonds, IDSC relies both on independent
rating agencies and the investment manager's credit analysis. Under normal
circumstances, at least 85% of the securities in IDSC's portfolio will be rated
investment
<PAGE>
grade, or in the opinion of IDSC's investment advisor will be the equivalent of
investment grade. Under normal circumstances, IDSC will not purchase any
security rated below B- by Moody's Investors Service, Inc. or Standard & Poor's
Corporation. Securities that are subsequently downgraded in quality may continue
to be held by IDSC and will be sold only when IDSC believes it is advantageous
to do so.
As of Dec. 31, 1997, IDSC held about 9% of its investment portfolio (including
bonds, preferred stocks, mortgages and cash equivalents) in investments rated
below investment grade.
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 except to the extent that transactions described in "Financial
transactions including hedges" in this section may be considered 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. 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 in limited partnership interests in limited partnerships that
either directly, or indirectly through other limited partnerships, invest in
real estate. We may invest directly in real estate. We also 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.
<PAGE>
When-issued securities-
Some of our investments in debt securities are purchased on a when-issued or
similar basis. It may take as long as 45 days or more 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. When-issued
securities are subject to market fluctuations and they may affect IDSC's
investment portfolio the same as owned securities.
Financial transactions including hedges-
We buy or sell various types of options contracts for hedging purposes or as a
trading technique to facilitate securities purchases or sales. We may buy
interest rate caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. If interest rates do not rise above a specified
level, the interest rate caps do not pay us a return. IDSC may enter into other
financial transactions, including futures and other derivatives, for the purpose
of managing the interest rate exposures associated with IDSC's assets or
liabilities. Derivatives are financial instruments whose performance is derived,
at least in part, from the performance of an underlying asset, security or
index. A small change in the value of the underlying asset, security or index
may cause a sizable gain or loss in the fair value of the derivative. We do not
use derivatives for speculative purposes.
Illiquid securities -
A security is illiquid if it cannot be sold in the normal course of business
within seven days at approximately its current market value. Some investments
cannot be resold to the U.S. public because of their terms or government
regulations. All securities, however can be sold in private sales, and many may
be sold to other institutions and qualified buyers or on foreign markets. IDSC's
investment advisor will follow guidelines established by the board and consider
relevant factors such as the nature of the security and the number of likely
buyers when determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are illiquid. In
valuing its investment portfolio to determine this 15% limit, IDSC will use
statutory accounting under an SEC order. This means that, for this purpose, the
portfolio will be valued in accordance with applicable Minnesota law governing
investments of life insurance companies, rather than generally accepted
accounting principles.
Restrictions -
There are no restrictions on concentration of investments in any particular
industry or group of industries or on rates of portfolio turnover.
<PAGE>
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, AEFC (formerly known as IDS Financial Corporation), our
parent company, had issued similar certificates since 1894. As of Jan. 1, 1995,
IDS Financial Corporation changed its name to AEFC. IDSC and AEFC have never
failed to meet their certificate payments.
During its many years in operation, AEFC has become a leading manager of
investments in mortgages and securities. As of Dec. 31, 1997, AEFC managed
investments, including its own, of more than $173 billion. American Express
Financial Advisors Inc., a wholly owned subsidiary of AEFC, provides a broad
range of financial planning services for individuals and businesses through its
nationwide network of more than 175 offices and more than 8,500 financial
advisors. American Express Financial Advisors' financial planning 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.
AEFC itself is a wholly owned subsidiary of American Express Company, a
financial services company with executive offices at American Express Tower,
World Financial Center, New York, NY 10285. American Express Company is a
financial services company engaged through subsidiaries in other businesses
including:
travel related services (including American Express(R) Card
and Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries); and
international banking services (through American Express Bank Ltd. and its
subsidiaries including American Express Bank International).
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of common stock,
par value of $10 per share. AEFC owns all of the outstanding shares.
<PAGE>
As of the fiscal year ended Dec. 31, 1997, IDSC had issued (in face amount)
$165,818,152 of installment certificates and $1,470,915,530 of single payment
certificates. As of Dec. 31, 1997, IDSC had issued (in face amount)
$13,493,767,867 of installment certificates and $17,259,360,607 of single
payment certificates since its inception in 1941.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as our investment
advisor and is responsible for:
providing investment research;
making specific investment recommendations; and
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 AEFC requires annual renewal by our
board, including a majority of directors who are not interested persons of AEFC
or IDSC as defined in the federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual basis to a
percentage of the total book value of certain assets (included assets).
Effective Jan. 1, 1998, the fee on any amount over $1 billion will be 0.11%.
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 outside advisory or service fee.
<PAGE>
Advisory and services fee for the past three years:
Percentage of
Year Total fees included assets
1997 $17,232,602 0.50%
1996 $16,989,093 0.50
1995 $16,472,458 0.51
Estimated advisory and services fees for 1998 are $9,361,000.
Other expenses payable by IDSC: The Investment Advisory and Services Agreement
provides that we will pay:
costs incurred by us in connection with real estate and mortgages;
taxes;
depository and custodian fees;
brokerage commissions;
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 AEFC;
fees and expenses of our directors who are not officers or
employees of AEFC;
provision for certificate reserves (interest accrued on
certificate owner accounts); and
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 by American Express Financial
Advisors Inc. as described below.
For certificates sold through American Express Financial Advisors Inc. we pay
distribution fees as follows:
0.70% of the initial investment on the first day of the certificate's term;
and
0.70% of the certificate's reserve at the beginning of each subsequent
term.
<PAGE>
Under a Distribution Agreement with AESC, for certificates sold through American
Express Financial Direct (AEFD), we pay AESC the following:
1.00% of the initial investment on the first day of the certificate's term;
and
1.00% of the certificate's reserve at the beginning of each subsequent
term.
This fee is not assessed to your certificate account.
AEFD is a channel for direct marketing of financial services to American Express
card members and others.
Total distribution fees paid to American Express Financial Advisors Inc. for all
series of certificates amounted to $30,072,811 during the year ended Dec. 31,
1997. We expect to pay American Express Financial Advisors Inc. distribution
fees amounting to $27,916,000 during 1998.
See Note 1 to Financial statements regarding deferral of distribution fee
expense.
American Express Financial Advisors Inc. pays commissions to its financial
advisors. American Express Financial Advisors Inc. and AESC pay 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., AESC or IDSC, approved these distribution agreements.
About AESC
AESC is a wholly-owned subsidiary of American Express Travel Related Services
Inc., which in turn is a wholly-owned subsidiary of American Express Company.
Transfer Agent
Under a Transfer Agency Agreement American Express Client Service Corporation
(AECSC), a wholly-owned subsidiary of AEFC, maintains certificate owner accounts
and records. IDSC pays AECSC a monthly fee of one-twelfth of $10.353 per
certificate owner account for this service.
<PAGE>
Employment of other American Express affiliates
AEFC may employ an affiliate of American Express Company as executing broker for
our portfolio transactions only if:
we receive prices and executions at least as favorable as
those offered by qualified independent brokers performing similar
services;
the affiliate charges us commissions consistent with those
charged to comparable unaffiliated customers for similar transactions;
and
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 1997 to directors not employed by AEFC.
Board of directors
David R. Hubers*
Born in 1943. Director since 1987.
President and chief executive officer of AEFC since 1993. Senior vice president
and chief financial officer of AEFC from 1984 to 1993.
Charles W. Johnson
Born in 1929. Director since 1989.
Director, Communications Holdings, Inc. Former vice president and group
executive, Industrial Systems, with Honeywell, Inc. Retired 1989.
Richard W. Kling*
Born in 1940. Director since 1996.
Chairman of the board of directors since 1996. Director of IDS Life Insurance
Company since 1984; president since 1994. Executive vice president of Marketing
and Products of AEFC from 1988 to 1994. Senior vice president of AEFC since
1994. Director of IDS Life Series Fund, Inc. and member of the board of managers
of IDS Life Variable Annuity Funds A and B.
<PAGE>
Edward Landes
Born in 1919. Director since 1984.
Development consultant. Director of IDS Life Insurance Company of New York.
Director of Endowment Development, YMCA of Metropolitan Minneapolis. Vice
president for Financial Development, YMCA of Metropolitan Minneapolis from 1985
through 1995. Former sales manager - Supplies Division and district manager -
Data Processing Division of IBM Corporation. Retired 1983.
John V. Luck, Ph.D.
Born in 1926. Director since 1987.
Former senior vice president - Science and Technology with General Mills, Inc.
Employed with General Mills, Inc. since 1968. Retired 1988.
James A. Mitchell*
Born in 1941. Director since 1994.
Chairman of the board of directors from 1994 to 1996. Executive vice president
Marketing and Products of AEFC since 1994. Senior vice president - Insurance
Operations of AEFC and president and chief executive officer of IDS Life
Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916. Director since 1968.
Engineering, manufacturing and management consultant since 1978.
Gordon H. Ritz
Born in 1926. Director since 1968.
Director, Mid-America Publishing and Atrix International, Inc. Former president,
Com Rad Broadcasting Corp. Former director, Sunstar Foods.
Stuart A. Sedlacek*
Born in 1957. Director since 1994.
President since 1994. Vice president - Assured Assets of AEFC since 1994. Vice
president and portfolio manager from 1988 to 1993. Executive vice president -
Assured Assets of IDS Life Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment Company Act
of 1940.
<PAGE>
Executive officers
Stuart A. Sedlacek
Born in 1957. President since 1994.
Jeffrey S. Horton
Born in 1961. Vice president and treasurer since December 1997. Vice president
and corporate treasurer of AEFC since December 1997. Controller, American
Express Technologies - Financial Services of AEFC from July 1997 to December
1997. Controller, Risk Management Products of AEFC from May 1994 to July 1997.
Director of finance and analysis, Corporate Treasury of AEFC from June 1990 to
May 1994.
Timothy S. Meehan
Born in 1957. Secretary since 1995.
Secretary of AEFC and American Express Financial Advisors Inc. since 1995.
Senior counsel to AEFC since 1995. Counsel from 1990 to 1995.
Lorraine R. Hart
Born in 1951. Vice president - Investments since 1994.
Vice president - Insurance Investments of AEFC since 1989. Vice president
Investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957. Vice president and controller of IDSC since 1994. Manager of
Investment Accounting of IDS Life Insurance Company from 1986 to 1994.
Bruce A. Kohn
Born in 1951. Vice president and general counsel since 1993. Senior counsel to
AEFC since 1996. Counsel to AEFC from 1992 to 1996. Associate counsel from 1987
to 1992.
F. Dale Simmons
Born in 1937. Vice president - Real Estate Loan Management since 1993. Vice
president of AEFC since 1992. Senior portfolio manager of AEFC 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 Company.
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 SEC such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
<PAGE>
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
owner upon request.
Ernst & Young LLP, Minneapolis, has audited the financial statements for each of
the years in the three-year period ended Dec. 31, 1997. These statements are
included in this prospectus. Ernst & Young LLP is also the auditor for American
Express Company, the parent company of AEFC and IDSC.
IDS Certificates
Other certificates issued by IDSC: Your American Express financial advisor can
give you more information on five 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 on which IDSC guarantees interest in advance for a
three-month term.
IDS Flexible Savings Certificate - A single payment certificate that permits
additional investments and on which IDSC guarantees interest in advance for a
term of six, 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 Preferred Investors Certificate - A single payment certificate that combines
a competitive fixed rate of return with IDSC's guarantee of principal for large
investments of $250,000 to $5 million.
IDS Stock Market Certificate - A single payment certificate that pays interest
linked to one-year stock market performance for a series of one-year terms
starting every month or at other intervals the client selects.
<PAGE>
Appendix
Description of corporate bond ratings
Bond ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price. Ratings by Moody's Investors Service,
Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
Aaa/AAA - Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for interest and
principal may not be quite as good as Aaa or AAA rated securities.
A - Considered upper-medium grade. Protection for interest and principal is
deemed adequate but may be susceptible to future impairment.
Baa/BBB - Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these obligations may have
certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of interest and
principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may be small
assurance over any long period of time of the payment of interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or there may be
risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such issues are often
in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These securities have
major risk exposures to default.
D - Are in payment default. The D rating is used when interest payments or
principal payments are not made on the due date.
Non-rated securities will be considered for investment. When assessing each
non-rated security, IDSC will consider the financial condition of the issuer or
the protection afforded by the terms of the security.
<PAGE>
(Back Cover)
Quick telephone reference
Client Service Organization
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Easy Access Line
Account value, cash transaction information, current rate information (automated
response, Touchtone(R) phones only)
National/Minnesota: 800-862-7919
Mpls./St. Paul area: 800-862-7919
IDS Market Strategy Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
Distributed by American Express Financial Advisors Inc.
<PAGE>
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.
(a) Securities Sold
1994 IDS Special Deposits 18,013,424.38
1995 IDS Special Deposits 56,855,953.53
1996 IDS Special Deposits* 41,064,486.74
1997 American Express Special Deposits 182,788,631.00
*Renamed American Express Special Deposits in April, 1996.
(b) Underwriters and other purchasers
American Express Special Deposits are marketed by American Express Bank Ltd.
(AEB), an affiliate of IDS Certificate Company, to private banking clients of
AEB in the United Kingdom and Hong Kong.
(c) Consideration
All American Express Special Deposits were sold for cash. The aggregate offering
price was the same as the amount sold in the table above. Aggregate marketing
fees to AEB were $88,686.14 in 1994, and $172,633.41 in 1995, $301,946.44 in
1996 and $592,068.70 in 1997.
<PAGE>
(d) Exemption from registration claimed
American Express Special Deposits are marketed, pursuant to the exemption in
Regulation S under the Securities Act of 1933, by AEB in the United Kingdom and
Hong Kong to persons who are not U.S. persons, as defined in Regulation S.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
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) Copy of Distribution Agreement dated March 29, 1996 between Registrant
and American Express Service Corporation filed electronically as
Exhibit 1(b) to Post-Effective Amendment No. 17 to Registration
Statement No. 2-95577 is incorporated herein by reference.
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, are incorporated
herein by reference.
4. Not Applicable.
5. To be filed by amendment
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>
(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) 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.
(d) Selling Agent Agreement dated June 1, 1990, between
American Express Bank International and IDS Financial
Services Inc. for the American Express Investors and
American Express 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.
(e) 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.
(f) Amendment to the Selling Agent Agreement dated December
12, 1994 between IDS Financial Services Inc. and American
Express Bank International, filed electronically as
Exhibit 1(d) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is incorporated
herein by reference.
(g) Selling Agent Agreement dated December 12, 1994 between
IDS Financial Services Inc. and Coutts & Co. (USA)
International filed electronically as Exhibit 1(e) to
Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577, is incorporated herein by
reference.
(h) Consulting Agreement dated December 12, 1994 between
IDS Financial Services Inc. and Coutts & Co. (USA) filed
electronically as Exhibit 1(f) to Post-Effective
Amendment No. 13 to Registration Statement No. 2-95577,
is incorporated herein by reference.
(i) Letter amendment dated January 9, 1997 to the Marketing
Agreement dated October 10, 1991, between Registrant and
American Express Bank Ltd., filed electronically as
Exhibit 10(j) to Post-Effective Amendment No. 40 to
Registration Statement 2-55252, is incorporated herein by
reference.
<PAGE>
(j) Form of Letter amendment dated April 7, 1997 to the
Selling Agent Agreement dated June 1, 1990, between
American Express Financial Advisors Inc. and American
Express Bank International, filed electronically as
Exhibit 10(j) to Post-Effective Amendment No. 14 to
Registration Statement 33-26844, is incorporated herein
by reference.
11. through 23. -- None.
24. (a) Officers' Power of Attorney, dated May 17, 1994 filed
electronically as Exhibit 25(a) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is incorporated herein by
reference.
(b) Directors' Power of Attorney, dated February 29, 1996 filed
electronically as Exhibit 25(b) to Post-Effective Amendment No. 17 to
Registration Statement No. 2-95577 is incorporated herein by
reference.
(c) Officer's Power of Attorney, dated February 17, 1998 is
filed electronically herewith.
25. through 27. None.
(b) The financial statement schedules for IDS Certificate Company will be
filed with a subsequent Post-Effective Amendment 42 to Registration
Statement No.
2-55252 for Series D-1 Investment Certificate.
Item 17. Undertakings.
Without limiting or restricting any liability on the part of the
other, American Express Financial Advisors Inc., (formerly IDS
Financial Services 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this amendment to this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis
and State of Minnesota, on the 20th day of February, 1998.
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 the following capacities on 20th
day of February, 1998.
Signature Capacity
/s/ Stuart A. Sedlacek* ** President and Director
Stuart A. Sedlacek (Principal Executive Officer)
/s/ Jeffrey S. Horton*** Vice President and Treasurer
Jeffrey S. Horton (Principal Financial Officer)
/s/ Jay C. Hatlestad* Vice President and Controller
Jay C. Hatlestad (Principal Accounting Officer)
/s/ David R. Hubers** Director
David R. Hubers
/s/ Charles W. Johnson** Director
Charles W. Johnson
/s/ Richard W. Kling** Chairman of the Board of Directors
Richard W. Kling and Director
/s/ Edward Landes** Director
Edward Landes
/s/ John V. Luck** Director
John V. Luck
/s/ James A. Mitchell** Director
James A. Mitchell
/s/ Harrison Randolph** Director
Harrison Randolph
/s/ Gordon H. Ritz** Director
Gordon H. Ritz
<PAGE>
*Signed pursuant to Officers' Power of Attorney dated May 17, 1994 filed
electronically as Exhibit 25(a) to Post-Effective Amendment No. 13 to
Registration Statement No.
2-95577, incorporated herein by reference.
_________________________________
Bruce A. Kohn
**Signed pursuant to Directors' Power of Attorney dated February 29, 1996 filed
electronically as Exhibit 25(b) to Post-Effective Amendment No. 17 to
Registration Statement No. 2-95577, incorporated herein by reference.
__________________________________
Bruce A. Kohn
***Signed pursuant to Officer's Power of Attorney dated February 17, 1998 filed
electronically as Exhibit 25(c) herewith.
__________________________________
Bruce A. Kohn
<PAGE>
CONTENTS OF THIS INITIAL REGISTRATION STATEMENT
Cover Page
Prospectus
Part II Information
Exhibit
Signatures
<PAGE>
IDS MARKET STRATEGY CERTIFICATE
EXHIBIT INDEX
Exhibit 24(c): Officer's Power of Attorney, dated February 17, 1998.
<PAGE>
IDS CERTIFICATE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
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, Timothy S. Meehan and Bruce A. Kohn, 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 17th day of February, 1998.
/s/Jeffrey S. Horton
Jeffrey S. Horton
