IDS CERTIFICATE CO /MN/, POS AM, 1999-04-19

IDS CERTIFICATE CO /MN/
POS AM, 1999-04-19

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM S-1

POST-EFFECTIVE AMENDMENT NUMBER 24 TO

REGISTRATION STATEMENT NO. 2-95577

IDS FLEXIBLE SAVINGS CERTIFICATE

UNDER

THE SECURITIES ACT OF 1933

IDS CERTIFICATE COMPANY
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)

DELAWARE
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)

6725
- -------------------------------------------------------------------------------
(Primary Standard Industrial Classification Code Number)

41-6009975
- -------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)

IDS Tower 10, Minneapolis, MN 55440-0010, (612) 671-3131
- -------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

Bruce A. Kohn, IDS Tower 10, Minneapolis, MN 55440-0010 (612) 671-2221
- -------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

<PAGE>

Explanatory Note

The first prospectus contained in Part I of the Registration Statement will be
used, with minor variations, in connection with the following Registration
Statements: 33-22503, No. 2-68296, No. 2-76193, No. 333-46683 and No. 333-9611.
In each case, the first several pages of the prospectuses vary to describe the
unique attributes of each certificate. In the case of the AEFD and SAI versions
of prospectuses, certain information related to client servicing has been
omitted. The balance of the prospectus is almost identical for all certificates.

<PAGE>

CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 24 TO REGISTRATION STATEMENT No.
2-95577

Cover Page

Explanatory Note

Prospectus

Part II Information

Signatures

Exhibits

<PAGE>

IDS
Flexible Savings
Certificate
Prospectus April 28, 1999

Earn competitive rates
guaranteed by IDS Certificate
Company for the term you choose.

IDS Certificate Company (IDSC), a subsidiary of American Express Financial
Corporation, issues IDS Flexible Savings Certificates. You can:

o Purchase this certificate in any amount from $1,000 through $1 million.

o Select a term of six, 12, 18, 24, 30 or 36 months.

o Invest in successive terms up to a total of 20 years from the issue date of
the certificate.

This certificate is backed solely by the assets of IDSC. See "Risk factors" on
page 2p.

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.

The distributor is not required to sell any specific amount of certificates.

Issuer:
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-3133 (toll free)

Distributor:
American Express Financial Advisors Inc.
An American Express company
<PAGE>
Initial Interest Rates

IDSC guarantees a fixed rate of interest for each term. For the initial term,
the rate will be within a specified range of certain average certificates of
deposit interest rates, as published in the most recent BANK RATE MONITOR Top 25
Market AverageTM North Palm Beach, FL 33408. See "About the certificate" for
more explanation.

Here are the interest rates in effect April 28, 1999:

Simple Effective
interest annualized
Term rate* yield**
6-month 4.12% 4.19%

12-month 4.34 4.42

18-month 4.39 4.47

24-month 4.44 4.53

30-month 4.47 4.56

36-month 4.50 4.59

* These are the rates for investments under $100,000. Rates may depend on the
factors described in "Rates for new purchases" and "Promotions and pricing
flexibility" under "About the certificate."

** Assuming monthly compounding.

These rates may or may not have changed when you apply to purchase your
certificate. Rates for future terms are set at the discretion of IDSC and may
also differ from the rates shown here. See "Rates for new purchases" under
"About the certificate" for more explanation.

Risk factors

You should consider the following when investing in this certificate.

This certificate is backed solely by the assets of IDSC. Most of our assets are
debt securities whose price generally falls as interest rates increase, and
rises as interest rates decrease. Credit ratings of the issuers of securities in
our portfolio vary. See "Invested and guaranteed by IDSC," "Regulated by
government," "Backed by our investments" and "Investment policies" under "How
your money is used and protected."

American Express Financial Corporation (AEFC), the parent company of IDSC,
maintains the major computer systems used by IDSC. The Year 2000 (Y2K) issue is
the result of computer programs that may recognize a date using "00" as the year
1900 rather than 2000. This could result in the failure of major systems. AEFC
and its parent company, American Express Company, began addressing the Y2K issue
in 1995 and have established a plan for resolution. See "Management's discussion
and analysis of financial condition and results of operation."
<PAGE>
Table of contents

Initial interest rates 2p
Risk factors 2p

About the certificate 5p

Read and keep this prospectus 5p

Investment amounts and terms 5p
Face amount and principal 5p
Value at maturity 6p
Receiving cash during the term 6p
Interest 7p
Rates for new purchases 7p
Promotions and pricing flexibility 12p
Additional investments 13p

How to invest and withdraw funds 14p
Buying your certificate 14p
Two ways to make investments 15p
Full and partial withdrawals 16p
When your certificate term ends 19p
Transfers to other accounts 19p
Two ways to request a withdrawal or transfer 20p
Three ways to receive payment when you withdraw funds 21p
Retirement plans: special policies 22p
Withdrawal at death 22p
Transfer of ownership 23p
For more information 23p

Taxes on your earnings 24p
Retirement accounts 24p
Gifts to minors 24p
How to determine the correct TIN 26p
Foreign investors 27p
Trusts 28p

How your money is used and protected 29p
Invested and guaranteed by the Issuer 29p
Regulated by government 29p
Backed by our investments 30p
Investment policies 31p

<PAGE>

How your money is managed 35p
Relationship between IDSC and American
Express Financial Corporation 35p
Capital structure and certificates issued 36p
Investment management and services 36p
Distribution 39p
About American Express Service Corporation 40p
Transfer agent 40p
Employment of other American Express affiliates 40p
Directors and officers 40p
Independent auditors 43p
IDS Certificates 44p

Appendix 45p

Annual financial information 47p
Summary of selected financial information 47p
Management's discussion and analysis of financial
condition and results of operations 48p
Report of independent auditors 63p

Financial statements 64p

Notes to financial statements 72p

<PAGE>

About the certificate

Read and keep this prospectus

This prospectus describes terms and conditions of your IDS Flexible Savings
Certificate. It contains facts that can help you decide if the certificate is
the right investment for you. Read the prospectus before you invest and keep it
for future reference. No one has the authority to change the terms and
conditions of the IDS Flexible Savings Certificate as described in the
prospectus, or to bind IDSC by any statement not in it.

Investment amounts and terms

You may purchase the IDS Flexible Savings Certificate in any amount from $1,000
payable in U.S. currency. Unless you receive prior approval from IDSC, your
total amount paid in over the life of the certificate, less withdrawals, cannot
exceed $1 million.

After determining the amount you wish to invest, you select a term of six, 12,
18, 24, 30 or 36 months for which IDSC will guarantee an interest rate. IDSC
guarantees your principal and interest. Generally, you will be able to select
any of the terms offered. But if your certificate is nearing its 20-year
maturity, you will not be allowed to select a term that would carry the
certificate past its maturity date.

The certificate may be used as an investment for your Individual Retirement
Account (IRA), 401(k) plan account or other qualified retirement plan account.
If so used, the amount of your contribution (investment) will be subject to any
limitations of the plan and applicable federal law.

Face amount and principal

The face amount of the certificate is the amount of your initial investment, and
will remain the same over the life of the certificate. Any investment or
withdrawal within 15 days of the end of a term will be added on or deducted to
determine principal for the new term. A withdrawal at any other time is taken
first from interest credited to your investment during that term. The principal
is the amount that is reinvested at the beginning of each subsequent term, and
is calculated as follows:

<PAGE>

Principal equals Face amount (initial investment)

plus At the end of a term, interest credited to your account

during the term

minus Any interest paid to you in cash

plus Any additional investments to your certificate

minus Any withdrawals, fees and applicable penalties.

Principal may change during a term as described in "Add-on feature" under
"Additional investments" and "Full and partial withdrawals."

For example: Assume your initial investment (face amount) of $5,000 has earned
$75 of interest during the term. You have not taken any interest as cash, or
made any withdrawals. You have invested an additional $2,500 prior to the
beginning of the next term. Your principal for the next term will equal:

$5,000.00 Face amount (initial investment)

plus $75.00 Interest credited to your account

minus ($0.00) Interest paid to you in cash

plus $2,500.00 Additional investment to your certificate

minus ($0.00) Withdrawals and applicable penalties or fees

$7,575.00 Principal at the beginning of the next term.

Value at maturity

You may continue to invest for successive terms for up to a total of 20 years.
Your certificate matures at 20 years from its issue date. At maturity, you will
receive a distribution for the value of your certificate. This will be the total
of your purchase price, plus additional investments and any credited interest
not paid to you in cash, less any withdrawals and penalties. Certain other fees
may apply as described in "How to invest and withdraw funds."

Receiving cash during the term

If you need your money before your certificate term ends, you may withdraw part
or all of its value at any time, less any penalties that apply. Procedures for
withdrawing money, as well as conditions under which penalties apply, are
described in "How to invest and withdraw funds."

<PAGE>

Interest

Your investments earn interest from the date they are credited to your account.
Interest is compounded and credited at the end of each certificate month (on the
monthly anniversary of the issue date).

IDSC declares and guarantees a fixed rate of interest for each term during the
life of your certificate. We calculate the amount of interest you earn each
certificate month by:

o applying the interest rate then in effect to your balance each day;

o adding these daily amounts to get a monthly total; and

o subtracting interest accrued on any amount you withdraw during the
certificate month.

Interest is calculated on a 30-day month and 360-day year basis.

This certificate may be available through other distributors or selling agents
with different interest rates or related features and consequently with
different returns. You may obtain information about any such other distributors
or selling agents by calling 800-437-3133.

Rates for new purchases

When your application is accepted and we have received your initial investment,
we will send you a confirmation of your purchase showing the rate that your
investment will earn. IDSC guarantees that when rates for new purchases take
effect, the rates will be within a range based on the average interest rates
then published in the BANK RATE MONITOR Top 25 Market AverageTM (the BRM
Average).

In the case of the six-, 12-, 24- and 30-month terms IDSC guarantees that, for
purchases of certificates for less than $100,000, your rate for your initial
term will be 15 basis points (.15%) below to 85 basis points (.85%) above such
rates for comparable length certificates of deposit (CDs). In the case of these
terms, for purchases of certificates for $100,000 or more, IDSC guarantees that
your rate for your initial term will be within a range of zero-100 basis points
above such rates for comparable length certificates of deposit.

<PAGE>

In the case of the 18-month term, because the BRM Average doesn't typically
publish rates for comparable length CDs, IDSC guarantees that, for purchases of
certificates for less than $100,000, the rate for your initial term will be
within a range of five below to 95 basis points above the rates for the 12-month
certificates of deposit. In the case of the 18-month term, for purchases of
certificates of $100,000 or more, IDSC guarantees that your rate for your
initial term will be within a range of 10-110 basis points above the rates for
12-month CDs.

In the case of the 36-month term, because the BRM Average doesn't typically
publish rates for comparable length CDs, IDSC guarantees that, for purchases of
certificates for less than $100,000, the rate for your initial term will be
within five below to 95 basis points above the rates for 30-month CDs. In the
case of the 36-month term, for purchases of certificates of $100,000 or more,
IDSC guarantees that your rate for your initial term will be within 10-110 basis
points above the rates for 30-month CDs. For example, if the rate most recently
published in the BRM Average with respect to the 30-month CD is 4.80% our rates
in effect for that week for 36-month terms would be between 4.75% and 5.75% for
purchases for less than $100,000.

<PAGE>

respectively, in the BRM Average. For example, the coupon may require that you
make a minimum investment and that you are not an existing client of AEFC,
American Express Financial Advisors Inc., or another subsidiary of AEFC. AEFC
will select persons to receive the coupon based on a business strategy to build
relationships with new clients in selected market segments who AEFC believes
meet threshold requirements for such factors as household income and home
values. Coupons may be sent only to persons who both fit this strategy and live
in particular parts of the country or are affiliated with particular
organizations such as an automobile club.

For your initial term, IDSC may offer certificates with different terms than
those described above. Such terms may be from seven, 11, 13, 19, 25, 31 or 37
months. For these terms, IDSC guarantees that, for purchases of certificates for
less than $100,000, your rate for your initial term will be within a range of
50-150 basis points above the rates published in the BRM Average for the CDs
specified above that have the maturity that is closest to the term of the IDS
certificate in question. If two different BRM Averages have the closest
maturities, we will use the longest maturity that is shorter than the term of
the IDS certificate in question. For purchases of certificates of $100,000 or
more, the range for your initial term will be 65-165 basis points above the same
rate. For example, in the case of a seven-month term, IDSC guarantees that, for
purchases of certificates less than $100,000, your rate for your initial term
will be within a range of 50-150 basis points above the rates for the six-month
CDs, and for purchases of certificates for $100,000 or more, your rate for your
initial term will be within a range of 65-165 basis points above the rates for
the six-month CDs. Purchase of a certificate in one of these special offers may
result in a later term of less than six months in order to permit your
certificate to mature 20 years from its issue date. IDSC may limit the offering
of these certificates to persons who have received a coupon as a promotion,
based on a business strategy to build relationships with new clients in related
market segments or persons who AEFC believes meet threshold requirements for
such factors as household income and home values or persons who fit this
strategy and live in particular areas of

<PAGE>

the country or are affiliated with particular organizations. IDSC may also offer
different rates or terms to new clients, existing clients, or to individuals who
have purchased other products or used other services of American Express Company
or its subsidiaries, and may offer some terms only in selected distribution
channels. We also may offer different rates based on your amount invested, your
geographic location and whether the certificate is purchased for an IRA or for a
qualified retirement account.

The BANK RATE MONITOR is a weekly magazine published in North Palm Beach, FL
33408, by Advertising News Service Inc., an independent national news
organization that collects and disseminates information about bank products and
interest rates. Advertising News Service Inc. has no connection with IDSC, 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. CDs 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 on current BRM Average rates, 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.

Rates for new purchases are reviewed and may change weekly. Normally, the rate
you receive will be the higher of:

o the rate in effect for your chosen term on the date of your application; or

o the rate in effect on the date your application is accepted by IDSC.

However, if your application bears a date more than seven days before its
receipt by IDSC, the rate you receive will be the higher of:

o the rate in effect on the date your application is accepted by IDSC; or

o the rate in effect seven days before receipt.

<PAGE>

Except for specific promotions, IDSC guarantees an initial rate 25 basis points
above the rate offered to the general public on this IDS certificate if it is
purchased by using the CD transfer service offered by American Express Financial
Advisors Inc. to help you transfer money from a bank or thrift CD account into
IDSC investments. Consequently, the highest and lowest rate in the range of
rates for initial terms of such certificates purchased using the CD transfer
service will be 25 basis points higher than the comparable rates described at
the beginning of this section for ranges of rates for initial terms. To be
eligible for this rate, you must transfer at least $10,000 from a CD account to
IDSC to purchase one or more IDS Cash Reserve Certificates and/or IDS Flexible
Saving Certificates, and this rate will only apply to those certificates.

Except for specific promotions, IDSC guarantees active or retired AEFC
employees, IDSC's directors, American Express financial advisors, their
immediate families and any U.S. employee of any affiliated company of IDSC an
initial rate 75 basis points above the rate offered to the general public,
reflecting the lower distribution costs associated with such sales.
Consequently, the highest and lowest rate in the range of rates for initial
terms of such certificates purchased at the employee rate will be 75 basis
points higher than the comparable rates described at the beginning of this
section for ranges of rates for initial terms.

Rates for future terms: Interest on your certificate for future terms may be
greater or less than the rates you receive during your first term. In setting
future interest rates, a primary consideration will be the prevailing investment
climate, including CD yields as reflected in the BRM Average. Nevertheless, we
have complete discretion as to what interest rate shall be declared beyond the
initial term. At least six days in advance of each term, we will send you notice
of the rate that your certificate will earn for that term. If the BRM Average is
no longer publicly available or feasible to use, IDSC may use another, similar
index as a guide for setting rates.

<PAGE>

Performance: From February 1994 through February 1999, IDS Flexible Savings
Certificate one year yields were generally higher than average bank and thrift
one year CD yields and Super NOW accounts, as measured by the BRM Average.

Yields from February 1994 through February 1999

6%
IDS Flexible
Savings Certificate

4% Certificate of Deposit

2% Two lines comparing the yields for one-year IDS Flexible Savings
Certificate against those of one-year certificates of deposit with
Flexible's yield generally above the CD's

'94 '95 '96 '97 '98

The graph compares past yields and should not be considered a prediction of
future performance.

Promotions and pricing flexibility

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.

These promotions will generally be for a specified period of time. If we offer a
promotion, the rates for new purchases will be within the range of rates
described under "Rates for new purchases."

<PAGE>

Additional investments

You may make investments within 15 calendar days after the end of a term (the
grace period). Investments added to your certificate during the grace period
will increase the principal balance for purposes of the 25% add-on feature
described below and the 10% withdrawal feature described under "Full and partial
withdrawals." Additional investments may be in any amount so long as your total
investment, less withdrawals, does not exceed $1 million (unless you receive
prior approval from IDSC to invest more). You will earn interest on additional
investments from the date we accept them. IDSC will send a confirmation of
additional investments.

Add-on feature: You may also add to your certificate during the term. These
additional investments may not exceed 25% of the certificate's initial principal
balance at the end of the grace period. This principal includes the balance at
the end of the previous term, plus or minus any deposits or withdrawals during
the grace period.

Any add-on or withdrawal during the grace period will change the principal
amount used to determine the amount available for the 25% add-on feature.

For example, suppose your original balance is $9,000. During the grace period,
you add $1,000. At any time during the current term, you could add up to 25% of
principal ($9,000 + $1,000 = $10,000), or $2,500 to your certificate.

The interest rate for these additional investments is the rate then in effect
for your account. If your additional investment increases the principal of your
certificate so that your certificate's principal has exceeded a break point for
a higher interest rate, the certificate will earn this higher interest rate for
the remainder of the term, from the date the additional investment is accepted.

<PAGE>
How to invest and withdraw funds

Buying your certificate

Important: When you open an account, you must provide IDSC with your correct
Taxpayer Identification Number (TIN), which is either your Social Security or
Employer Identification number. See "Taxes on your earnings."

Purchase policies:

o 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.

o You have 15 days from the date of purchase to cancel your investment
without penalty by either writing or calling the Client Service
Organization at the address or phone number on the back of this prospectus.
If you decide to cancel your certificate within this 15-day period, you
will not earn any interest.

o If you purchase a certificate with a personal check or other non-guaranteed
funds, 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.

o 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

By mail

Send your check along with your name and account number to:

Regular mail:

American Express
Financial Advisors Inc.
Client Service Organization
P.O. Box 74
Minneapolis, MN 55440-0074

Express mail:

American Express
Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55440-0010

By wire

If you have an established account, you may wire money to:

Norwest Bank Minnesota Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit American Express Financial Advisors Account
#0000030015 for personal account # (your account number) for (your name).

If this information is not included, the order may be rejected and all money
received, less any costs IDSC incurs, will be returned promptly.

o Minimum amount you may wire: $1,000.

o Wire orders can be accepted only on days when your bank, AEFC, IDSC and
Norwest Bank Minnesota are open for business.

o Wire purchases are completed when wired payment is received and we accept
the purchase.

o Bank wire purchases are not sent until the next business day.

o Wire investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be credited
that day. Otherwise your purchase will be processed the next business day.

o IDSC, AEFC and its other subsidiaries are not responsible for any delays
that occur in wiring funds, including delays in processing by the bank.

o You must pay any fee the bank charges for wiring.

<PAGE>

Full and partial withdrawals

You may withdraw your certificate for its full value or make a partial
withdrawal of $100 or more at any time. If you purchase this certificate for an
IRA, 401(k) or other retirement plan account, early withdrawals or cash payments
of interest taken prematurely may be subject to IRS penalty taxes.

o Complete withdrawal of your certificate is made by giving us proper
instructions.

To complete these transactions, see "Two ways to request a withdrawal or
transfer."

o 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.

o Full and partial withdrawals of principal are subject to penalties,
described below.

o Interest payments in cash may be sent to you at the end of each certificate
month, quarter, or on a semiannual or annual basis.

o If a withdrawal reduces your account value to a point where we pay a lower
interest rate, you will earn the lower rate from the date of the
withdrawal.

o You may not otherwise make a partial withdrawal if it would reduce your
certificate balance to less than $1,000. If you request such a withdrawal,
we will contact you for revised instructions.

o Scheduled partial withdrawals may be made monthly, quarterly, semiannually,
annually and at term end.

o Withdrawals before the end of the certificate month will result in loss of
accrued interest on the amount withdrawn. You'll get the best result by
timing a withdrawal at the end of the certificate month.

Penalties for early withdrawal during a term: When you request a full or
partial withdrawal, we pay the amount you request:

o first from interest credited during the current term;

o then from the principal of your certificate.

<PAGE>

Any additional investments or withdrawals during a term are added to or deducted
from the principal and are used in determining any withdrawal charges.

You may not make a partial withdrawal if it would reduce your certificate
balance to less than $1,000. If you request such a withdrawal, we will contact
you for revised instructions.

Withdrawal penalties: For withdrawals during the term of more than the interest
credited that term and over 10% of the certificate's principal, a 2% withdrawal
penalty will be deducted from the account's remaining balance.

For example, assume you invest $20,000 in a certificate and select a two-year
term. A little over a year later assume you have earned $1,600 in interest. The
following demonstrates how the withdrawal charge is deducted:

When you withdraw a specific amount of money, we would have to withdraw somewhat
more from your account to cover the withdrawal charge. For instance, suppose you
request a $5,000 check. The first $1,600 paid to you is interest earned that
term, the next $2,000 is 10% of principal, and not subject to the withdrawal
penalty, and the remaining $1,400 paid to you is principal over the 10% limit.
We would send you a check for $5,000 and deduct a withdrawal charge of $28.00
($1,400 x 2%) from the remaining balance of your certificate account. Your new
balance would be $16,572 ($21,600 - $5,028).

Total investments $20,000.00
Interest credited $ 1,600.00
Total balance $21,600.00

Requested check $ 5,000.00
Credited interest withdrawn $(1,600.00)
10 percent of principal -- not subject to penalty $(2,000.00)

<PAGE>

Remaining portion of requested withdrawal - subject to penalty $ 1,400.00
Withdrawal penalty percent 2.00%
Actual withdrawal penalty $ 28.00

Balance prior to withdrawal $21,600.00
Requested withdrawal check $(5,000.00)
Withdrawal penalty $( 28.00)
Total balance after withdrawal $16,572.00

Additionally, if you withdraw during a certificate month, you will not earn
interest for the month on the amount withdrawn.

Penalty exceptions: There is never a penalty for withdrawal of interest. In
addition, you may withdraw up to 10% of your principal during the term without a
withdrawal penalty. The principal available for the 10% no-penalty withdrawal
feature is the balance in the certificate at the beginning of the term plus or
minus any deposits or withdrawals made during the grace period.

The following example demonstrates how this feature works:

Suppose your certificate balance is $1,000. During the grace period you add
$500, bringing the principal to $1,500. At any time during the term you could
withdraw up to $150 of principal with no penalty.

Any additional investments or withdrawals following the grace period will not
change the principal amount used to determine the amount available for the 10%
no-penalty withdrawal feature.

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.

For more information on withdrawal charges, talk with your American Express
financial advisor or call the Client Service Organization at the number on the
back cover.

<PAGE>

When your certificate term ends

Shortly before the end of the term you have selected for your certificate, we
will send you a notice indicating the interest rate that will apply to the
certificate for the new term. When your certificate term ends we will
automatically renew your certificate for the standard term (six, 12, 24, 30 or
36 month) nearest in length to your initial term. If your initial term is
equidistant from two standard terms, we will automatically renew your
certificate to the term with the longest maturity that is shorter than your
initial term. If you wish to select a different term, you must notify us in
writing before the end of the grace period. You will not be allowed to select a
term that would carry the certificate past its maturity date.

The interest rates that will apply to your new term will be those in effect on
the day the new term begins. We will send you a confirmation showing the rate of
interest that will apply to the new term you have selected. This rate of
interest will not be changed during that term.

If you want to withdraw your certificate without a withdrawal charge, you must
notify us within 15 calendar days following the end of a term. However, you will
lose any interest accrued since the end of the term.

You may also add to your investment within the 15 calendar days following the
end of your term. See "Additional investments" under "About the certificate."

Other full and partial withdrawal policies:

o If you request a partial or full withdrawal of a certificate recently
purchased or added to by a check or money order that is not guaranteed, we
will wait for your check to clear. Please expect a minimum of 10 days from
the date of your payment before IDSC mails a check to you. We may mail a
check earlier if the bank provides evidence that your check has cleared.

o If your certificate is pledged as collateral, any withdrawal will be
delayed until we get approval from the secured party.

o Any payments to you may be delayed under applicable rules, regulations or
orders of the Securities and Exchange Commission (SEC).

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).

<PAGE>

Two ways to request a withdrawal or transfer

By phone

o Call the Client Service Organization at the telephone numbers listed on the
back cover.

o Maximum phone request: $50,000.

o Transfers into an American Express Financial Advisors Inc. account with the
same ownership.

o A telephone withdrawal request will not be allowed within 30 days of a
phoned-in address change.

o We will honor any telephone withdrawal or transfer request and will use
reasonable procedures to confirm authenticity.

You may request that telephone withdrawals not be authorized from your account
by writing the Client Service Organization.

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
P.O. Box 534
Minneapolis, MN 55440-0534

Express mail:

American Express
Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55440-00100

Written requests are required for:

o Transactions over $50,000.

o Pension plans and custodial accounts where the minor has reached the age at
which custodianship should terminate.

o Transfers to another American Express Financial Advisors Inc. account with
different ownership (all current registered owners must sign the request).

<PAGE>

Three ways to receive payment when you withdraw funds

By regular or express mail

o Mailed to address on record; please allow seven days for mailing.

o Payable to name(s) you requested.

o We will charge 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, we
will deduct the fee from the proceeds of the withdrawal.

By wire

o Minimum wire withdrawal: $1,000.

o Request that money be wired to your bank.

o Bank account must be in same ownership as IDSC account.

o Pre-authorization required. Complete the bank wire authorization section in
the application or use a form supplied by your American Express financial
advisor. All registered owners must sign.

o We may deduct a service fee from your balance (for partial withdrawals) or
from the proceeds of a full withdrawal.

By electronic transfer

o Available only for pre-authorized scheduled partial withdrawals and other
full or partial withdrawals.

o No charge.

o Deposited electronically in your bank account.

o Allow two to five business days from request to deposit.

<PAGE>

Retirement plans: special policies

o If the certificate is purchased for a 401(k) plan or other qualified
retirement plan account, the terms and conditions of the certificate apply
to the plan as the owner of this certificate. However, the terms of the
plan, as interpreted by the plan trustee or administrator, will determine
how a participant's individual account under the plan is administered.
These terms may differ from the terms of the certificate.

o If your certificate is held in a Custodial Retirement Plan (or Keogh plan),
special rules may apply at maturity. If no other investment instructions
are provided directing how to handle your certificate at maturity, the full
value of the certificate will automatically transfer to a new or existing
cash management account according to rules outlined in the Custodial
Retirement Plan document.

o The annual custodial fee for IRA or non-401(k) qualified retirement plans
may be deducted from your certificate account. It may reduce the amount
payable at maturity or the amount received upon an early withdrawal.

o Retirement plan withdrawals may be subject to withdrawal penalties or loss
of interest even if they are not subject to federal tax penalties.

o We will waive withdrawal penalties on withdrawals for IRA certificate
accounts for your required distributions.

o 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.

o The IRA termination fee will be waived if a withdrawal occurs after you
have reached age 701/2 or upon the owner's death.

Withdrawal at death

If a certificate is surrendered upon the client's death, any applicable
surrender charge will be waived. In addition, if an IRA termination fee is
applicable, it will also be waived.

<PAGE>

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.

<PAGE>
Taxes on your earnings

Interest on your certificate is taxable when credited to your account. 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 account owner and the IRS on Form 1099-B, Proceeds from Broker
Transactions.

Retirement accounts

If you are using the certificate as an investment for an IRA, 401(k) plan
account or other qualified retirement plan account, income tax rules for your
IRA or qualified plan apply. Generally, you will pay no income taxes on your
investment's earnings -- and, in many cases, on part or all of the investment
itself -- until you begin to make withdrawals.

IDSC will withhold federal income taxes of 10% on IRA withdrawals unless you
tell us not to. IDSC is required to withhold federal income taxes of 20% on most
other qualified plan distributions, unless the distribution is directly rolled
over to another qualified plan or IRA.

Withdrawals from retirement accounts are generally subject to a penalty tax of
10% by the IRS if you make them before age 591/2, unless you are disabled or if
they are made by your beneficiary in the event of your death. Other exceptions
may also apply. Also, withdrawals of principal during a certificate month may be
subject to the certificate's provision for loss of interest.

Consult your tax advisor to see how these rules apply to you before you request
a distribution from your plan or IRA.

Gifts to minors

The certificate may be given to a minor under either the Uniform Gifts or
Uniform Transfers to Minors Act (UGMA/UTMA), whichever applies in your state.
UGMAs/UTMAs are irrevocable. Generally, under federal tax laws, income over
$1,200 on property owned by children under age 14 will be taxed at the parents'
marginal tax rate, while income on property owned by children 14 or older will
be taxed at the child's rate.

<PAGE>

Your TIN and backup withholding: As with any financial account you open, you
must list your current and correct TIN, which is either your Social Security or
Employer Identification number. You must certify your TIN under penalties of
perjury on your application when you open an account.

If you don't provide the correct TIN, you could be subject to backup withholding
of 31% of your interest earnings. You could also be subject to further
penalties, such as:

o a $50 penalty for each failure to supply your correct TIN;

o a civil penalty of $500 if you make a false statement that results in no
backup withholding; and

o criminal penalties for falsifying information.

You could also be subject to backup withholding because you failed to report
interest on your tax return as required.

<PAGE>

To help you determine the correct TIN to use on various types of accounts,
please use this chart:

How to determine the correct TIN

For this type of account: Use the Social Security or
Employer Identification Number of:

Individual or joint account The individual or one of the
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, The legal entity (not the personal
pension trust or estate representative or trustee, unless no
legal entity is designated in the
account title)

Sole proprietorship The owner

Partnership The partnership

Corporate The corporation

Association, club or The organization
tax-exempt organization

For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors Inc. office for federal Form W-9, "Request for
Taxpayer Identification Number and Certification."

<PAGE>

Foreign investors

If you are not a citizen or resident of the United States (nonresident alien),
you must supply IDSC with Form W-8, Certificate of Foreign Status when you
purchase your certificate. You must resupply it every three years. You must also
supply both a current mailing address and an address of foreign residency, if
different. IDSC will not accept purchases of certificates by nonresident aliens
without an appropriately certified Form W-8 (or approved substitute). Also, if
you do not supply Form W-8 you will be subject to backup withholding on interest
payments and withdrawals.

Interest on the certificate is "portfolio interest" as defined in U.S. Internal
Revenue Code Section 871(h) if earned by a nonresident alien. Even though your
interest income is not taxed by the U.S. government, it will be reported at year
end to you and to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States participates in various
tax treaties with foreign countries, which provide for sharing of tax
information.

Estate tax: If you are a nonresident alien and you die while owning a
certificate, 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.

<PAGE>

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.

Important: The information in this prospectus is a brief and selective summary
of certain federal tax rules that apply to this certificate and is based on
current law and practice. Tax matters are highly individual and complex.
Investors should consult a qualified tax advisor about their own position.

<PAGE>

How your money is used and protected

Invested and guaranteed by the Issuer

IDSC, a wholly owned subsidiary of AEFC, issues and guarantees the IDS Flexible
Savings Certificate. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than $3.8 billion
and a net worth in excess of $222 million on Dec. 31, 1998.

We back our certificates by investing the money received and keeping the
invested assets on deposit. Our investments generate interest and dividends, out
of which we pay:

o interest to certificate owners; and

o various expenses, including taxes, fees to AEFC for advisory and other
services, distribution fees to American Express Financial Advisors Inc. and
American Express Service Corporation (AESC), and selling agent fees to
selling agents.

For a review of significant events relating to our business, see "Management's
discussion and analysis of financial condition and results of operations." No
national rating agency rates our certificates.

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 Flexible Savings Certificate is a security, its offer and sale
are subject to regulation under federal and state securities laws. (The IDS
Flexible Savings Certificate is a face-amount certificate. It is not a bank
product, an equity investment, a form of life insurance or an investment trust.)

<PAGE>

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, 1998, the
amortized cost of these investments exceeded the required carrying value of our
outstanding certificates by more than $226 million. The law requires us to use
amortized cost for these regulatory purposes. In general, amortized cost is
determined by systematically increasing the carrying value of a security if
acquired at a discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the maturity date.

Backed by our investments

Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1998:

Type of investment Net amount invested
Corporate and other bonds 50%
Government agency bonds 24
Preferred stocks 16
Mortgages 9
Municipal bonds 1

As of Dec. 31, 1998 about 90% of our securities portfolio (including bonds and
preferred stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B to 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, 1998 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments regarding the
valuation, carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial statements.

<PAGE>

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 whether a company can 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 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, 1998, IDSC held about 10% of its investment portfolio (including
bonds, preferred stocks and mortgages) 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.

<PAGE>

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 (selling securities for others) under
federal securities laws.

Borrowing money --

From time to time we have established a line of credit with banks 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 secured by real estate. We expect that investments in real estate, either
directly or through a subsidiary of IDSC, will be less than five percent of
IDSC's assets.

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. We
expect that outstanding securities loans will not exceed 10% of IDSC's assets.

<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 available for sale, 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.

<PAGE>

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.

IDSC files reports on Forms 10-K and 10-Q with the SEC. The public may read and
copy materials we file with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC.

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, 1998, AEFC managed or
administered investments, including its own, of more than $212 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 180 offices and more than 9,000
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.

<PAGE>

o travel related services (including American Express(R) Card and Travelers
Cheque operations through American Express Travel Related Services Company,
Inc. and its subsidiaries); and

o international banking services (through American Express Bank Ltd. and its
subsidiaries.)

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.

As of the fiscal year ended Dec. 31, 1998, IDSC had issued (in face amount)
$99,499,694 of installment certificates and $1,092,517,052 of single payment
certificates. As of Dec. 31, 1998, IDSC had issued (in face amount)
$13,593,267,561 of installment certificates and $18,351,877,659 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:

o providing investment research;

o making specific investment recommendations; and

o executing purchase and sale orders according to our policy of obtaining the
best price and execution.

<PAGE>

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).

Advisory and services fee computation:
Percentage of
Included assets total book value

First $250 million 0.750%

Next 250 million 0.650

Next 250 million 0.550

Next 250 million 0.500

Any amount over 1 billion 0.107

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.

Advisory and services fee for the past three years:

Percentage of
Year Total fees included assets

1998 $ 9,084,332 0.24%

1997 $17,232,602 0.50

1996 $16,989,093 0.50

Estimated advisory and services fees for 1999 are $8,651,000.

<PAGE>

Other expenses payable by IDSC: The Investment Advisory and Services Agreement
provides that we will pay:

o costs incurred by us in connection with real estate and mortgages;

o taxes;

o depository and custodian fees;

o brokerage commissions;

o fees and expenses for services not covered by other agreements and provided
to us at our request, or by requirement, by attorneys, auditors, examiners
and professional consultants who are not officers or employees of AEFC;

o fees and expenses of our directors who are not officers or employees of
AEFC;

o provision for certificate reserves (interest accrued on certificate owner
accounts); and

o expenses of customer settlements not attributable to sales function.

<PAGE>

Distribution

Under a Distribution Agreement with American Express Financial Advisors Inc. we
pay for the distribution of this certificate as follows:

o 0.20% of the initial payment on the issue date of the certificate; and

o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

Under a Distribution Agreement with AESC, for certificates sold through American
Express Financial Direct, we pay AESC for the distribution of this certificate
as follows:

o 0.20% of the initial payment of the issue date of the certificate; and

o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

This fee is not assessed to your certificate account.

For certificates paying a special promotional coupon rate described in "Rates
for new purchases" under "About the certificate," American Express Financial
Advisors Inc. waives its distribution fee.

Total distribution fees paid to American Express Financial Advisors Inc. for all
series of certificates amounted to $28,472,007 during the year ended Dec. 31,
1998. We expect to pay American Express Financial Advisors Inc. distribution
fees amounting to $26,147,000 during 1999.

See Note 1 to financial statements regarding deferral of distribution fee
expense.

In addition, IDSCmay pay distributors additional compensation for distribution
activities under certain circumstances. From time to time, IDSC may pay or
permit other promotional incentives, in cash or credit or other compensation.

American Express Financial Advisors Inc. pays commissions to its financial
advisors and pays other selling expenses in connection with services to us. Our
board of directors, including a majority of directors who are not interested
persons of American Express Financial Advisors Inc., AESC or IDSC, approved
these distribution agreements.

<PAGE>

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.

Employment of other American Express affiliates

AEFC may employ an affiliate of American Express Company as executing broker for
our portfolio transactions only if:

o we receive prices and executions at least as favorable as those offered by
qualified independent brokers performing similar services;

o the affiliate charges us commissions consistent with those charged to
comparable unaffiliated customers for similar transactions; and

o the affiliate's employment is consistent with the terms of the current
Investment Advisory and Services Agreement and federal securities laws.

Directors and officers

IDSC's sole shareholder, AEFC, elects the board of directors that oversees
IDSC's operations. The board annually elects the directors, chairman, president
and controller for a term of one year. The president appoints the other
executive officers.

We paid a total of $37,000 during 1998 to directors not employed by AEFC.

<PAGE>

Board of directors

Rodney P. Burwell

Born in 1939. Director beginning in 1999. Chairman, Xerxes Corporation
(fiberglass storage tanks). Director, Fairview Corporation.

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.
Acting president of Fisk University from 1998 to 1999. Former vice president and
group executive, Industrial Systems, with Honeywell, Inc. Retired 1989.

Jean B. Keffeler

Born in 1945. Director beginning in 1999. Independent management consultant.

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.

Thomas R. McBurney

Born in 1938. Director beginning in 1999. President, McBurney Management
Advisors. Director, The Valspar Corporation (paints), Wenger Corporation,
Allina, Space Center Enterprises and Greenspring Corporation.

Paula R. Meyer*

Born in 1954. President since June 1998. Piper Capital Management (PCM)
President from October 1997 to May 1998. PCM Director of Marketing from June
1995 to October 1997. PCM Director of Retail Marketing from December 1993 to
June 1995.

*" Interested Person" of IDSC as that term is defined in Investment Company
Act of 1940.

<PAGE>

Executive officers

Paula R. Meyer

Born in 1954. President since June 1998.

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.

<PAGE>

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.

Independent 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, 1998. 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.

<PAGE>

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 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 Market Strategy Certificate -- A certificate that pays interest at a fixed
rate or linked to one-year stock market performance, as measured by a broad
market index, for a series of one-year terms starting every month or at other
intervals the client selects.

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 calculates all
or part of your interest based on stock market performance, as measured by a
broad market index, with IDSC's guarantee of return of principal.

<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.

<PAGE>

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>

Quick telephone reference*

Client Service Withdrawals, National/Minnesota:
Organization transfers, 800-437-3133

TTY Service For the hearing impaired 800-846-4852

American Express Account value, cash National/Minnesota:
Easy Access Line transaction information, 800-862-7919
current rate information
(automated response, Mpls./St. Paul area:
Touchtone phones only) 800-862-7919

*You may experience delays when call volumes are high.

IDS Flexible Savings Certificate
IDS Tower 10
Minneapolis, MN 55440-0010

Web site address: http://www.americanexpress.com/advisors

Distributed by American Express Financial Advisors

S-6013 M (4/99)

<PAGE>

Summary of selected financial information
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------

The following selected financial information has been derived from the audited financial statements and should be
read in conjunction with those statements and the related notes to financial statements. Also see "Management's
discussion and analysis of financial condition and results of operations" for additional comments.
<S> <C> <C> <C> <C> <C>
Year Ended Dec. 31, 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Statement of Operations Data
Investment income $273,135 $258,232 $251,481 $256,913 $207,975
Investment expenses 76,811 70,137 62,851 62,817 58,690
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income before provision for
certificate reserves and income tax benefit 196,324 188,095 188,630 194,096 149,285
Net provision for certificate reserves 167,108 165,136 171,968 176,407 107,288
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income before income
tax benefit 29,216 22,959 16,662 17,689 41,997
Income tax benefit 265 3,682 6,537 9,097 2,663
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income 29,481 26,641 23,199 26,786 44,660
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments:
Securities of unaffiliated issuers 5,143 980 (444) 452 (7,514)
Other - unaffiliated - - 101 (120) 1,638
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments
before income taxes 5,143 980 (343) 332 (5,876)
Income tax (expense) benefit (1,800) (343) 120 (117) 2,047
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments 3,343 637 (223) 215 (3,829)
Net income - wholly owned subsidiary 1,646 328 1,251 373 241
- ------------------------------------------------------------------------------------------------------------------------------------

Net income $34,470 $27,606 $24,227 $27,374 $41,072
- ------------------------------------------------------------------------------------------------------------------------------------

Cash Dividends Declared $29,500 $- $65,000 $- $40,200
- ------------------------------------------------------------------------------------------------------------------------------------

Balance Sheet Data
Total assets $3,834,244 $4,053,648 $3,563,234 $3,912,131 $3,040,857
Certificate loans 32,343 37,098 43,509 51,147 58,203
Certificate reserves 3,404,883 3,724,978 3,283,191 3,628,574 2,887,405
Stockholder's equity 222,033 239,510 194,550 250,307 141,852
- ------------------------------------------------------------------------------------------------------------------------------------

IDS Certificate Company (IDSC) is 100% owned by American Express Financial
Corporation (Parent).
</TABLE>

<PAGE>

Management's discussion and analysis of financial condition and results
of operations

Results of operations:

IDS Certificate Company's (IDSC) earnings are derived primarily from the
after-tax yield on invested assets less investment expenses and interest
credited on certificate reserve liabilities. Changes in earnings' trends occur
largely due to changes in the rates of return on investments and the rates of
interest credited to certificate owner accounts and also, the mix of fully
taxable and tax-advantaged investments in the IDSC portfolio.

During the year 1998, total assets and certificate reserves decreased due
primarily to certificate maturities and surrenders exceeding certificate sales.
The excess of certificate maturities and surrenders over certificate sales
resulted primarily from lower accrual rates declared by IDSC during the year.
The decrease in total assets in 1998 reflects also, a decrease in net unrealized
appreciation on investment securities classified as available for sale of $35
million and cash dividends paid to Parent of $30 million.

During the year 1997, total assets and certificate reserves increased due to
certificate sales exceeding certificate maturities and surrenders. The excess of
certificate sales over maturities and surrenders resulted primarily from a
special introductory offer of the seven- and 13-month term IDS Flexible Savings
Certificate. The increase in total assets in 1997 reflects also, an increase of
$27 million in net unrealized appreciation on investment securities classified
as available for sale.

1998 Compared to 1997:

Gross investment income increased 5.8% due primarily to a higher average balance
of invested assets partially offset by slightly lower yields.

Investment expenses increased 9.5% in 1998. The increase resulted primarily from
higher amortization of premiums paid for index options of $6.4 million, higher
interest expense on reverse repurchase and interest rate swap agreements of $5.2
million, and $3.9 million of fees paid under a transfer agent agreement with
American Express Client Service Corporation effective Jan. 1, 1998. Prior to
Jan. 1, 1998, transfer agent services were provided by AEFC under the investment
advisory and services fee agreement. These higher expenses were partially offset
by lower investment advisory and services fees of $8.1 million and lower
distribution fees of $.7 million.

Net provision for certificate reserves increased 1.2% due primarily to the net
of a higher average balance of certificate reserves and lower accrual rates
during 1998.

The decrease in income tax benefit resulted primarily from a lesser portion of
net investment income before income tax benefit being attributable to
tax-advantaged income.

1997 Compared to 1996:

Gross investment income increased 2.7% due primarily to a higher average balance
of invested assets.

<PAGE>

Investment expenses increased 12% in 1997. The increase resulted primarily from
higher amortization of premiums paid for index options of $4.4 million, higher
distribution fees of $1.8 million and $3.2 million of interest expense on
reverse repurchase and interest rate swap agreements entered into in 1997. These
higher expenses were partially offset by $2.3 million lower amortization of
premiums paid for interest rate caps, corridors and floors due primarily to the
expiration of the cap and corridor agreements in 1996 and early 1997.

Net provision for certificate reserves decreased 4.0% due primarily to the net
of lower accrual rates and a higher average balance of certificate reserves
during 1997.

The decrease in income tax benefit resulted primarily from a lesser portion of
net investment income before income tax benefit being attributable to
tax-advantaged income.

Liquidity and cash flow:

IDSC's principal sources of cash are payments from sales of face-amount
certificates and cash flows from investments. In turn, IDSC's principal uses of
cash are payments to certificate owners for matured and surrendered
certificates, purchase of investments and payments of dividends to its Parent.

Certificate sales remained strong in 1998 reflecting clients' ongoing desire for
safety of principal. Sales of certificates totaled $1.1 billion in 1998 compared
to $1.5 billion in 1997 and $1.0 billion in 1996. The higher certificate sales
in 1997 over 1996 resulted primarily from a special introductory promotion of
the seven- and 13-month term IDS Flexible Savings Certificate which produced
sales of $238 million. Certificate sales in 1997 benefited also, from higher
sales of the IDS Preferred Investors Certificate of $113 million and sales of
the American Express Special Deposits Certificate of $85 million. The IDS
Preferred Investors Certificate was first offered for sale early in the last
quarter of 1996. The American Express Special Deposits Certificate was first
offered for sale to private banking clients of American Express Bank Ltd. in
Hong Kong late in the third quarter of 1997.

The special promotion of the seven- and 13-month term IDS Flexible Savings
Certificate was offered from Sept. 10, 1997 to Nov. 25, 1997, and applied only
to sales of new certificate accounts during the promotion period. Certificates
sold during the promotion period received a special interest rate, determined on
a weekly basis, of one percentage point above the Bank Rate Monitor Top 25
Market AverageTM of comparable length certificates of deposit.

Certificate maturities and surrenders totaled $1.7 billion during 1998 compared
to $1.3 billion in 1997 and $1.7 billion in 1996. The higher certificate
maturities and surrenders in 1998 resulted primarily from $242 million of
surrenders of the seven- and 13-month IDS Flexible Savings Certificate. The
higher certificate maturities and surrenders in 1996 resulted primarily from
$461 million of surrenders of the 11-month IDS Flexible Savings Certificate.
These surrenders resulted primarily from lower accrual rates declared by IDSC at
term renewal, reflecting interest rates available in the marketplace.

IDSC, as an issuer of face-amount certificates, is affected whenever there is a
significant change in interest rates. In view of the uncertainty in the
investment markets and due to the short-term repricing nature of certificate
reserve liabilities, IDSC continues to invest in securities that provide for
more immediate, periodic interest/principal payments, resulting in improved
liquidity. To accomplish this, IDSC continues to invest much of its cash flow in
intermediate-term bonds and mortgage-backed securities.

<PAGE>

IDSC's investment program is designed to maintain an investment portfolio that
will produce the highest possible after-tax yield within acceptable risk
standards with additional emphasis on liquidity. The program considers
investment securities as investments acquired to meet anticipated certificate
owner obligations.

Under Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities", debt securities that
IDSC has both the positive intent and ability to hold to maturity are carried at
amortized cost. Debt securities IDSC does not have the positive intent to hold
to maturity, as well as all marketable equity securities, are classified as
available for sale and carried at fair value. The available-for-sale
classification does not mean that IDSC expects to sell these securities, but
that under SFAS No. 115 positive intent criteria, these securities are available
to meet possible liquidity needs should there be significant changes in market
interest rates or certificate owner demand. See notes 1 and 3 to the financial
statements for additional information relating to SFAS No. 115.

At Dec. 31, 1998, securities classified as held to maturity and carried at
amortized cost were $.6 billion. Securities classified as available for sale and
carried at fair value were $2.7 billion. These securities, which comprise 88% of
IDSC's total invested assets, are well diversified. Of these securities, 97%
have fixed maturities of which 90% are of investment grade. Other than U.S.
Government Agency mortgage- backed securities, no one issuer represents more
than 1% of total securities. See note 3 to financial statements for additional
information on ratings and diversification.

During the year ended Dec. 31, 1998, IDSC accepted a tender offer of a
held-to-maturity security with an amortized cost and fair value of $6.2 million.
During the same period in 1998, securities classified as available for sale were
sold with an amortized cost and fair value of $343 million and $346 million,
respectively. The securities were sold in general management of the investment
portfolio.

There were no transfers of available-for-sale or held-to-maturity securities
during the years ended Dec. 31, 1998 and 1997.

Market risk and derivative financial instruments:

The sensitivity analysis of two different tests of market risk discussed below
estimate the effects of hypothetical sudden and sustained changes in the
applicable market conditions on the ensuing year's earnings based on year-end
positions. The market changes, assumed to occur as of year-end, are a 100 basis
point increase in market interest rates and a 10% decline in a major stock
market index. Computation of the prospective effects of hypothetical interest
rate and major stock market index changes are based on numerous assumptions,
including relative levels of market interest rates and the major stock market
index level, as well as the levels of assets and liabilities. The hypothetical
changes and assumptions will be different than what actually occurs in the
future. Furthermore, the computations do not anticipate actions that may be
taken by management if the hypothetical market changes actually occurred over
time. As a result, actual earnings affects in the future will differ from those
quantified below.

<PAGE>

IDSC primarily invests in intermediate-term and long-term fixed income
securities to provide its certificate owners with a competitive rate of return
on their certificates while managing risk. These investment securities provide
IDSC with a historically dependable and targeted margin between the interest
rate earned on investments and the interest rate credited to certificate owners'
accounts. IDSC does not invest in securities to generate trading profits for its
own account.

IDSC's Investment Committee, which comprises senior business managers, meets
regularly to review models projecting different interest rate scenarios and
their impact on IDSC's profitability. The committee's objective is to structure
IDSC's portfolio of investment securities based upon the type and behavior of
the certificates in the certificate reserve liabilities, to achieve targeted
levels of profitability and meet certificate contractual obligations.

Rates credited to certificate owners' accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, IDSC's margins
may be negatively impacted by increases in the general level of interest rates.
Part of the committee's strategies include the purchase of derivatives, such as
interest rate caps, corridors, floors and swaps, for hedging purposes. On two
series of certificates, interest is credited to the certificate owners' accounts
based upon the relative change in a major stock market index between the
beginning and end of the certificates' terms. As a means of hedging its
obligations under the provisions of these certificates, the committee purchases
and writes call options on the major stock market index. See note 9 to the
financial statements for additional information regarding derivative financial
instruments.

The negative impact on IDSC's pretax earnings of the 100 basis point increase in
interest rates, which assumes repricings and customer behavior based on the
application of proprietary models to the book of business at Dec. 31, 1998 and
1997, would be approximately $7.5 million and $5.9 million for 1998 and 1997,
respectively. The 10% decrease in a major stock market index level would have a
minimal impact on IDSC's pretax earnings as of Dec. 31, 1998 and 1997, because
the income effect is a decrease in option income and a corresponding decrease in
interest credited to the IDS and American Express Stock Market Certificate
owners' accounts.

Year 2000 Issue:

IDSC is a wholly owned subsidiary of American Express Financial Corporation
(AEFC), which is a wholly owned subsidiary of American Express Company (American
Express). All of the major systems used by IDSC are maintained by AEFC and are
utilized by multiple subsidiaries and affiliates of AEFC. American Express is
coordinating Year 2000 (Y2K) efforts on behalf of all of its businesses and
subsidiaries. Representatives of AEFC are participating in these efforts. The
Y2K issue is the result of computer programs having been written using two
digits rather than four to define a year. Some programs may recognize a date
using "00" as the year 1900 rather than 2000. This misinterpretation could
result in the failure of major systems or miscalculations, which could have a
material impact on American Express and its businesses and subsidiaries through
business interruption or shutdown, financial loss, reputation damage and legal
liability to third parties. American Express and AEFC began addressing the Y2K
issue in 1995 and have established a plan for resolution, which involves the
remediation, decommissioning and replacement of relevant systems, including
mainframe, mid-range and desktop computers, application software, operating
systems, systems software, date back-up archival and retrieval services,
telephone and other communications systems, and hardware peripherals and
facilities dependent on embedded technology. As part of their plan, American
Express has generally followed and utilized the specific policies and guidelines
established by the

<PAGE>

Federal Financial Institutions Examination Council, as well as other U.S. and
international regulatory agencies. Additionally, American Express continues to
participate in Y2K related industry consortia sponsored by various partners and
suppliers. Progress is reviewed regularly with IDSC's senior management and
American Express' senior management and Board of Directors.

American Express' and AEFC's Y2K compliance effort related to information
technology (IT) systems is divided into two initiatives. The first, which is the
much larger initiative, is known internally as "Millenniax," and relates to
mainframe and other technological systems maintained by the American Express
Technologies organization. The second, known as "Business T," relates to the
technological assets that are owned, managed or maintained by American Express'
individual business units, including AEFC. Business T also encompasses the
remediation of non-IT systems. These initiatives involve a substantial number of
employees and external consultants. This multiple sourcing approach is intended
to mitigate the risk of becoming dependent on any one vendor or resource. While
the vast majority of American Express' and AEFC's systems that require
modification are being remediated, in some cases they have chosen to migrate to
new applications that are already Y2K compliant.

American Express's and AEFC's plans for remediation with respect to Millenniax
and Business T include the following program phases: (i) employee awareness and
mobilization, (ii) inventory collection and assessment, (iii) impact analysis,
(iv) remediation/decommission, (v) testing and (vi) implementation. As part of
the first three phases, American Express and AEFC have identified their
mission-critical systems for purposes of prioritization. American Express' and
AEFC's goals are to complete testing of critical systems by early 1999, and to
continue compliance efforts, including but not limited to, the testing of
systems on an integrated basis and independent validation of such testing,
through 1999.** American Express and AEFC are currently on schedule to meet
these goals. With respect to systems maintained by American Express and AEFC,
the first three phases referred to above have been substantially completed for
both Millenniax and Business T. In addition, remediation of critical systems is
substantially complete. As of Dec. 31, 1998, for Millenniax for American
Express, the remediation/decommission, testing and implementation phases for
critical and non-critical systems in total are 82%, 75% and 60% complete,
respectively. For Millenniax for AEFC, such phases are 99%, 97% and 97%
complete, respectively. For Business T for American Express, such phases are
85%, 70% and 69% complete, respectively. For Business T for AEFC, such phases
are 74%, 62% and 62% complete, respectively.

American Express' most commonly used methodology for remediation is the sliding
window. Once an application/system has been remediated, American Express applies
specific types of tests, such as stress, regression, unit, future date and
baseline to ensure that the remediation process has achieved Y2K compliance
while maintaining the fundamental data processing integrity of the particular
system. To assist with remediation and testing, American Express is using
various standardized tools obtained from a variety of vendors.

American Express's cumulative costs since inception of the Y2K initiatives were
$383 million through Dec. 31, 1998 and are estimated to be in the range of
$135-$160 million for the remainder through 2000.** AEFC's cumulative costs
since inception of the Y2K initiative were $56 million through Dec. 31, 1998 and
are estimated to be in the range of $13-$19 million for the remainder through
2000.** These include both remediation costs and costs related to replacements
that were or will be required as a result of Y2K. These costs, which are
expensed as incurred, relate to both Millenniax and Business T, and have not
had, nor are they expected to have, a material adverse impact on American
Express', AEFC's or IDSC's results of operations or financial condition.**
Costs related to Millenniax, which represent most of the total Y2K costs of
American

<PAGE>

Express, are managed by and included in the American Express corporate level
financial results; costs related to Business T are included in American
Express' individual business segment's financial results, including AEFC's.
American Express and AEFC have not deferred other critical technology projects
or investment spending as a result of Y2K. However, because American Express and
AEFC must continually prioritize the allocation of finite financial and human
resources, certain non-critical spending initiatives have been deferred.

American Express' and AEFC's major businesses are heavily dependent upon
internal computer systems, and all have significant interaction with systems of
third parties, both domestically and internationally. American Express and AEFC
are working with key external parties, including merchants, clients,
counterparties, vendors, exchanges, utilities, suppliers, agents and regulatory
agencies to mitigate the potential risks to American Express and AEFC of Y2K.
The failure of external parties to resolve their own Y2K issues in a timely
manner could result in a material financial risk to American Express or AEFC. As
part of their overall compliance program, American Express and AEFC are actively
communicating with third parties through face-to-face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness.
Although numerous third parties have indicated to American Express and AEFC in
writing that they are addressing their Y2K issues on a timely basis, the
readiness of third parties overall varies across the spectrum. Because American
Express' and AEFC's Y2K compliance is dependent on key third parties being
compliant on a timely basis, there can be no assurances that American Express'
and AEFC's efforts alone will resolve all Y2K issues.

At this point, American Express and AEFC are in the process of performing an
assessment of reasonably likely Y2K systems failures and related consequences.
American Express is also preparing specific Y2K contingency plans for all key
American Express business units, including AEFC, to mitigate the potential
impact of such failures. This effort is a full-scale initiative that includes
both internal and external experts under the guidance of an American
Express-wide steering committee. The contingency plans, which will be based in
part on an assessment of the magnitude and probability of potential risks, will
primarily focus on proactive steps to prevent Y2K failures from occurring, or if
they should occur, to detect them quickly, minimize their impact and expedite
their repair. The Y2K contingency plans will supplement disaster recovery and
business continuity plans already in place, and are expected to include measures
such as selecting alternative suppliers and channels of distribution, and
developing American Express' and AEFC's own technology infrastructure in lieu
of those provided by third parties. Development of the Y2K contingency plans is
expected to be substantially complete by the end of the first quarter of 1999,
and will continue to be refined throughout 1999 as additional information
related to American Express' and AEFC's exposures is gathered.**

** Statements in this Y2K discussion marked with two asterisks are
forward-looking statements which are subject to risks and uncertainties.
Important factors that could cause results to differ materially from these
forward-looking statements include, among other things, the ability of American
Express or AEFC to successfully identify systems containing two-digit codes, the
nature and amount of programming required to fix the affected systems, the costs
of labor and consultants related to such efforts, the continued availability of
such resources, and the ability of third parties that interface with American
Express and AEFC to successfully address their Y2K issues.

Ratios:

The ratio of stockholder's equity, excluding accumulated other comprehensive
income net of tax, to total assets less certificate loans and net unrealized
holding gains on investment securities at Dec. 31, 1998 and 1997 was 5.6% and
5.2%, respectively. IDSC's current regulatory requirement is a ratio of 5.0%.

<PAGE>

Annual Financial Information

IDS Certificate Company

Responsibility for Preparation of Financial Statements

The management of IDS Certificate Company (IDSC) is responsible for the
preparation and fair presentation of its financial statements. The financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate in the circumstances, and include amounts based on the
best judgment of management. IDSC's management is also responsible for the
accuracy and consistency of other financial information included in the
prospectus.

In recognition of its responsibility for the integrity and objectivity of data
in the financial statements, IDSC maintains a system of internal control over
financial reporting. The system is designed to provide reasonable, but not
absolute, assurance with respect to the reliability of IDSC's financial
statements. The concept of reasonable assurance is based on the notion that the
cost of the internal control system should not exceed the benefits derived.

The internal control system is founded on an ethical climate and includes an
organizational structure with clearly defined lines of responsibility, policies
and procedures, a Code of Conduct, and the careful selection and training of
employees. Internal auditors monitor and assess the effectiveness of the
internal control system and report their findings to management throughout the
year. IDSC's independent auditors are engaged to express an opinion on the
year-end financial statements and, with the coordinated support of the internal
auditors, review the financial records and related data and test the internal
control system over financial reporting.

<PAGE>

Report of Independent Auditors

The Board of Directors and Security Holders
IDS Certificate Company:

We have audited the accompanying balance sheets of IDS Certificate Company, a
wholly owned subsidiary of American Express Financial Corporation, as of
December 31, 1998 and 1997, and the related statements of operations,
comprehensive income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the management of IDS Certificate Company. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned as of December 31, 1998 and 1997 by
correspondence with custodians and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IDS Certificate Company at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.

ERNST & YOUNG LLP
Minneapolis, Minnesota
February 4, 1999

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Balance Sheets, Dec. 31,
- ------------------------------------------------------------------------------------------------------------------------------------

Assets

Qualified Assets (note 2) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Held-to-maturity securities $592,815 $758,143
Available-for-sale securities 2,710,545 2,911,524
First mortgage loans on real estate 334,280 212,433
Certificate loans - secured by certificate reserves 32,343 37,098
Investments in and advances to affiliates 418 6,772
- ------------------------------------------------------------------------------------------------------------------------------------

Total investments 3,670,401 3,925,970
- ------------------------------------------------------------------------------------------------------------------------------------

Receivables:
Dividends and interest 46,579 48,817
Investment securities sold 3,085 1,635
- ------------------------------------------------------------------------------------------------------------------------------------

Total receivables 49,664 50,452
- ------------------------------------------------------------------------------------------------------------------------------------

Other (notes 9 and 10) 96,213 56,127
- ------------------------------------------------------------------------------------------------------------------------------------

Total qualified assets 3,816,278 4,032,549
- ------------------------------------------------------------------------------------------------------------------------------------

Other Assets
- ------------------------------------------------------------------------------------------------------------------------------------

Deferred federal income taxes (note 8) 1,095 -
Due from affiliate 1,082 -
Deferred distribution fees and other 15,789 21,099
- ------------------------------------------------------------------------------------------------------------------------------------

Total other assets 17,966 21,099
- ------------------------------------------------------------------------------------------------------------------------------------

Total assets $3,834,244 $4,053,648
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Balance Sheets, Dec. 31, (continued)
- ------------------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholder's Equity

Liabilities 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Certificate Reserves (notes 5 and 10):
Installment certificates:
Reserves to mature $309,110 $343,219
Additional credits and accrued interest 15,062 19,554
Advance payments and accrued interest 894 968
Other 55 56
Fully paid certificates:
Reserves to mature 2,909,891 3,186,191
Additional credits and accrued interest 169,514 174,699
Due to unlocated certificate holders 357 291
- ------------------------------------------------------------------------------------------------------------------------------------

Total certificate reserves 3,404,883 3,724,978
- ------------------------------------------------------------------------------------------------------------------------------------

Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 771 1,639
Due to Parent for federal income taxes 7,381 495
Due to affiliates (note 7B, 7C, 7D and 7E) 426 331
Reverse repurchase agreements 141,000 22,000
Payable for investment securities purchased 2,211 19,601
Accounts payable, accrued expenses and other (notes 9 and 10) 55,539 29,919
- ------------------------------------------------------------------------------------------------------------------------------------

Total accounts payable and accrued liabilities 207,328 73,985
- ------------------------------------------------------------------------------------------------------------------------------------

Deferred federal income taxes (note 8) - 15,175
- ------------------------------------------------------------------------------------------------------------------------------------

Total liabilities 3,612,211 3,814,138
- ------------------------------------------------------------------------------------------------------------------------------------

Commitments (note 4)
- ------------------------------------------------------------------------------------------------------------------------------------

Stockholder's Equity (notes 5B, 5C, and 6)
- ------------------------------------------------------------------------------------------------------------------------------------

Common stock, $10 par - authorized and issued 150,000 shares 1,500 1,500
Additional paid-in capital 143,844 143,844
Retained earnings:
Appropriated for predeclared additional credits/interest 3,710 6,375
Appropriated for additional interest on advance payments 10 50
Unappropriated 63,623 55,948
Accumulated other comprehensive income - net of tax (note 1) 9,346 31,793
- ------------------------------------------------------------------------------------------------------------------------------------

Total stockholder's equity 222,033 239,510
- ------------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholder's equity $3,834,244 $4,053,648
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Statements of Operations
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Investment Income
Interest income from investments:
Bonds and notes:
Unaffiliated issuers $209,408 $191,190 $184,653
Mortgage loans on real estate:
Unaffiliated 18,173 18,053 19,583
Affiliated - - 36
Certificate loans 1,896 2,200 2,533
Dividends 40,856 44,543 44,100
Other 2,802 2,246 576
- ------------------------------------------------------------------------------------------------------------------------------------

Total investment income 273,135 258,232 251,481
- ------------------------------------------------------------------------------------------------------------------------------------

Investment Expenses
Parent and affiliated company fees (note 7):
Distribution 33,783 34,507 32,732
Investment advisory and services 9,084 17,233 16,989
Transfer agent 3,932 - -
Depositary 250 238 228
Options (note 9) 21,012 14,597 10,156
Interest rate caps, corridors and floors (note 9) - 35 2,351
Reverse repurchase agreements 3,689 1,217 -
Interest rate swap agreements (note 9) 4,676 1,956 -
Other 385 354 395
- ------------------------------------------------------------------------------------------------------------------------------------

Total investment expenses 76,811 70,137 62,851
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income before provision
for certificate reserves and income tax benefit $196,324 $188,095 $188,630
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Statements of Operations (continued)
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Provision for Certificate Reserves (notes 5 and 9)
According to the terms of the certificates:
Provision for certificate reserves $9,623 $9,796 $10,445
Interest on additional credits 1,032 1,244 1,487
Interest on advance payments 44 50 61
Additional credits/interest authorized by IDSC:
On fully paid certificates 146,434 141,515 146,474
On installment certificates 11,001 13,560 14,574
- ------------------------------------------------------------------------------------------------------------------------------------

Total provision for certificate reserves before reserve recoveries 168,134 166,165 173,041
Reserve recoveries from terminations prior to maturity (1,026) (1,029) (1,073)
- ------------------------------------------------------------------------------------------------------------------------------------

Net provision for certificate reserves 167,108 165,136 171,968
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income before income tax benefit 29,216 22,959 16,662
Income tax benefit (note 8) 265 3,682 6,537
- ------------------------------------------------------------------------------------------------------------------------------------

Net investment income 29,481 26,641 23,199
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments
Securities of unaffiliated issuers 5,143 980 (444)
Other-unaffiliated - - 101
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments before income taxes 5,143 980 (343)
- ------------------------------------------------------------------------------------------------------------------------------------

Income tax (expense) benefit (note 8):
Current (1,800) (304) 772
Deferred - (39) (652)
- ------------------------------------------------------------------------------------------------------------------------------------

Total income tax (expense) benefit (1,800) (343) 120
- ------------------------------------------------------------------------------------------------------------------------------------

Net realized gain (loss) on investments 3,343 637 (223)
- ------------------------------------------------------------------------------------------------------------------------------------

Net income - wholly owned subsidiary 1,646 328 1,251
- ------------------------------------------------------------------------------------------------------------------------------------

Net income $34,470 $27,606 $24,227
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Statements of Comprehensive Income
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)

Net income $34,470 $27,606 $24,227
- ------------------------------------------------------------------------------------------------------------------------------------

Other comprehensive (loss) income (note 1)
Unrealized (losses) gains on available-for-sale
securities:
Unrealized holding (losses) gains arising during year (32,020) 26,639 (25,853)
Income tax benefit (expense) 11,207 (9,324) 9,048
- ------------------------------------------------------------------------------------------------------------------------------------

Net unrealized holding (losses) gains arising during period (20,813) 17,315 (16,805)
- ------------------------------------------------------------------------------------------------------------------------------------

Reclassification adjustment for (gains) losses included in net income (2,514) 59 2,802
Income tax expense (benefit) 880 (20) (981)
- ------------------------------------------------------------------------------------------------------------------------------------

Net reclassification adjustment for (gains) losses included in net income (1,634) 39 1,821
- ------------------------------------------------------------------------------------------------------------------------------------

Net other comprehensive (loss) income (22,447) 17,354 (14,984)
- ------------------------------------------------------------------------------------------------------------------------------------

Total comprehensive income $12,023 $44,960 $9,243
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Statements of Stockholder's Equity
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)

Common Stock
Balance at beginning and end of year $1,500 $1,500 $1,500
- ------------------------------------------------------------------------------------------------------------------------------------

Additional Paid-in Capital
Balance at beginning of year $143,844 $143,844 $168,844
Cash dividends declared - - (25,000)
- ------------------------------------------------------------------------------------------------------------------------------------

Balance at end of year $143,844 $143,844 $143,844
- ------------------------------------------------------------------------------------------------------------------------------------

Retained Earnings
Appropriated for predeclared additional credits/interest (note 5B)
Balance at beginning of year $6,375 $11,989 $18,878
Transferred to unappropriated retained earnings (2,665) (5,614) (6,889)
- ------------------------------------------------------------------------------------------------------------------------------------

Balance at end of year $3,710 $6,375 $11,989
- ------------------------------------------------------------------------------------------------------------------------------------

Appropriated for additional interest on advance payments (note 5C)
Balance at beginning of year $50 $50 $50
Transferred to unappropriated retained earnings (40) - -
- ------------------------------------------------------------------------------------------------------------------------------------

Balance at end of year $10 $50 $50
- ------------------------------------------------------------------------------------------------------------------------------------

Unappropriated (note 6)
Balance at beginning of year $55,948 $22,728 $31,612
Net income 34,470 27,606 24,227
Transferred from appropriated retained earnings 2,705 5,614 6,889
Cash dividends declared (29,500) - (40,000)
- ------------------------------------------------------------------------------------------------------------------------------------

Balance at end of year $63,623 $55,948 $22,728
- ------------------------------------------------------------------------------------------------------------------------------------

Accumulated other comprehensive income -
net of tax (note 1)
Balance at beginning of year $31,793 $14,439 $29,423
Net other comprehensive (loss) income (22,447) 17,354 (14,984)
- ------------------------------------------------------------------------------------------------------------------------------------

Balance at end of year $9,346 $31,793 $14,439
- ------------------------------------------------------------------------------------------------------------------------------------

Total stockholder's equity $222,033 $239,510 $194,550
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Statements of Cash Flows
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)
Cash Flows from Operating Activities
Net income $34,470 $27,606 $24,227
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary (1,646) (328) (1,251)
Net provision for certificate reserves 167,108 165,136 171,968
Interest income added to certificate loans (1,180) (1,414) (1,631)
Amortization of premiums/discounts-net 22,620 15,484 14,039
Provision for deferred federal income taxes (3,088) (2,266) (1,124)
Net realized (gain) loss on investments before income taxes (5,143) (980) 343
Decrease (increase) in dividends and interest receivable 2,238 (4,804) 5,619
Decrease in deferred distribution fees 5,310 4,434 2,761
Increase in other assets (1,082) - -
Increase (decrease) in other liabilities 16,814 443 (679)
- ------------------------------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities 236,421 203,311 214,272
- ------------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Investing Activities
Maturity and redemption of investments:
Held-to-maturity securities 161,649 76,678 163,066
Available-for-sale securities 468,218 408,019 537,565
Other investments 76,894 79,929 52,189
Sale of investments:
Held-to-maturity securities 6,245 33,910 24,984
Available-for-sale securities 344,901 160,207 356,194
Other investments - - 385
Certificate loan payments 4,006 4,814 6,003
Purchase of investments:
Held-to-maturity securities (1,034) (4,565) (49,984)
Available-for-sale securities (663,347) (1,283,620) (617,138)
Other investments (189,905) (62,831) (28,617)
Certificate loan fundings (3,703) (5,021) (5,288)
- ------------------------------------------------------------------------------------------------------------------------------------

Net cash provided by (used in) investing activities $203,924 ($592,480) $439,359
- ------------------------------------------------------------------------------------------------------------------------------------

See notes to financial statements.

<PAGE>

Statements of Cash Flows (continued)
- ------------------------------------------------------------------------------------------------------------------------------------

Year ended Dec. 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
($ thousands)

Cash Flows from Financing Activities
Payments from certificate owners $1,192,026 $1,580,013 $1,129,023
Proceeds from reverse repurchase agreements 919,500 433,000 -
Dividend from wholly owned subsidiary 8,000 - -
Certificate maturities and cash surrenders (1,729,871) (1,324,175) (1,663,196)
Payments under reverse repurchase agreements (800,500) (411,000) -
Dividends paid (29,500) - (65,000)
- ------------------------------------------------------------------------------------------------------------------------------------

Net cash (used in) provided by financing activities (440,345) 277,838 (599,173)
- ------------------------------------------------------------------------------------------------------------------------------------

Net (decrease) increase in cash and cash equivalents - (111,331) 54,458
Cash and cash equivalents beginning of year - 111,331 56,873
- ------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents end of year $- $- $111,331
- ------------------------------------------------------------------------------------------------------------------------------------

Supplemental Disclosures Including Non-cash Transactions
Cash received (paid) for income taxes $1,217 ($104) $7,195
Certificate maturities and surrenders through
loan reductions 5,632 8,032 8,554

See notes to financial statements.

</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

1. Nature of business and summary of significant accounting policies

Nature of business

IDS Certificate Company (IDSC) is a wholly owned subsidiary of American Express
Financial Corporation (Parent), which is a wholly owned subsidiary of American
Express Company. IDSC is registered as an investment company under the
Investment Company Act of 1940 ("the 1940 Act") and is in the business of
issuing face-amount investment certificates. The certificates issued by IDSC are
not insured by any government agency. IDSC's certificates are sold primarily by
American Express Financial Advisors Inc.'s (an affiliate) field force operating
in 50 states, the District of Columbia and Puerto Rico. IDSC's Parent acts as
investment advisor for IDSC.

IDSC currently offers nine types of certificates with specified maturities
ranging from ten to twenty years. Within their specified maturity, most
certificates have interest rate terms of one- to 36-months. In addition, two
types of certificates have interest tied, in whole or in part, to any upward
movement in a broad-based stock market index. Except for two types of
certificates, all of the certificates are available as qualified investments for
Individual Retirement Accounts or 401(k) plans and other qualified retirement
plans.

IDSC's gross income is derived primarily from interest and dividends generated
by its investments. IDSC's net income is determined by deducting from such gross
income its provision for certificate reserves, and other expenses, including
taxes, the fee paid to Parent for investment advisory and other services, and
the distribution fees paid to American Express Financial Advisors, Inc.

Described below are certain accounting policies that are important to an
understanding of the accompanying financial statements.

Basis of financial statement presentation

The accompanying financial statements are presented in accordance with generally
accepted accounting principles. IDSC uses the equity method of accounting for
its wholly owned unconsolidated subsidiary, which is the method prescribed by
the Securities and Exchange Commission (SEC) for non-investment company
subsidiaries of issuers of face-amount certificates. Certain amounts from prior
years have been reclassified to conform to the current year presentation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities and the reported amounts of income and
expenses during the year then ended. Actual results could differ from those
estimates.

Fair values of financial instruments

The fair values of financial instruments disclosed in the notes to financial
statements are estimates based upon current market conditions and perceived
risks, and require varying degrees of management judgment.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

Preferred stock dividend income

IDSC recognizes dividend income from cumulative redeemable preferred stocks with
fixed maturity amounts on an accrual basis similar to that used for recognizing
interest income on debt securities. Dividend income from perpetual preferred
stock is recognized on an ex-dividend basis.

Comprehensive Income

Effective Jan. 1, 1998, IDSC adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income." SFAS No. 130 requires the
reporting and display of comprehensive income and its components. Comprehensive
income is defined as the aggregate change in stockholder's equity excluding
changes in ownership interests. For IDSC, comprehensive income consists of net
income and unrealized gains or losses on available-for-sale securities net of
taxes. Prior year amounts have been reclassified to conform to the requirements
of the new Statement.

Securities

Cash equivalents are carried at amortized cost, which approximates fair value.
IDSC has defined cash and cash equivalents as cash in banks and highly liquid
investments with a maturity of three months or less at acquisition and are not
interest rate sensitive.

Debt securities that IDSC has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities IDSC does not have the
positive intent to hold to maturity, as well as all marketable equity
securities, are classified as available for sale and carried at fair value.
Unrealized holding gains and losses on securities classified as available for
sale are carried, net of deferred income taxes, as accumulated other
comprehensive income in stockholder's equity.

The basis for determining cost in computing realized gains and losses on
securities is specific identification. When there is a decline in value that is
other than temporary, the securities are carried at estimated realizable value
with the amount of adjustment included in income.

First mortgage loans on real estate

Mortgage loans are carried at amortized cost, less reserves for losses, which is
the basis for determining any realized gains or losses. The estimated fair value
of the mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar maturities.

Impairment is measured as the excess of the loan's recorded investment over its
present value of expected principal and interest payments discounted at the
loan's effective interest rate, or the fair value of collateral. The amount of
the impairment is recorded in a reserve for mortgage loan losses.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

The reserve for mortgage loan losses is maintained at a level that management
believes is adequate to absorb estimated losses in the portfolio. The level of
the reserve account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve for
mortgage loan losses.

IDSC generally stops accruing interest on mortgage loans for which interest
payments are delinquent more than three months. Based on Management's judgment
as to the ultimate collectibility of principal, interest payments received are
either recognized as income or applied to the recorded investment in the loan.

Certificates

Investment certificates may be purchased either with a lump-sum payment or by
installment payments. Certificate owners are entitled to receive at maturity a
definite sum of money. Payments from certificate owners are credited to
investment certificate reserves. Investment certificate reserves accumulate at
specified percentage rates as declared by IDSC. Reserves also are maintained for
advance payments made by certificate owners, accrued interest thereon, and for
additional credits in excess of minimum guaranteed rates and accrued interest
thereon. On certificates allowing for the deduction of a surrender charge, the
cash surrender values may be less than accumulated investment certificate
reserves prior to maturity dates. Cash surrender values on certificates allowing
for no surrender charge are equal to certificate reserves. The payment
distribution, reserve accumulation rates, cash surrender values, reserve values
and other matters are governed by the 1940 Act.

Deferred distribution fee expense

On certain series of certificates, distribution fees are deferred and amortized
over the estimated lives of the related certificates, which is approximately 10
years. Upon surrender prior to maturity, unamortized deferred distribution fees
are recognized in expense and any related surrender charges are recognized as a
reduction in provision for certificate reserves.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

Federal income taxes

IDSC's taxable income or loss is included in the consolidated federal income tax
return of American Express Company. IDSC provides for income taxes on a separate
return basis, except that, under an agreement between Parent and American
Express Company, tax benefits are recognized for losses to the extent they can
be used in the consolidated return. It is the policy of Parent and its
subsidiaries that Parent will reimburse a subsidiary for any tax benefits
recorded.

Accounting developments

In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP, which is effective
Jan. 1, 1999, requires the capitalization of certain costs incurred to develop
or obtain software for internal use. Software utilized by IDSC is owned by
Parent and will be capitalized on Parent's financial statements. As a result,
the new rule will not have a material impact on IDSC's results of operations or
financial condition.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective Jan. 1, 2000. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the balance sheet and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
Earlier application of all of the provisions of this Statement is encouraged,
but it is permitted only as of the beginning of any fiscal quarter that begins
after issuance of the Statement. This Statement cannot be applied retroactively.
The ultimate financial impact of the new rule will be measured based on the
derivatives in place at adoption and cannot be estimated at this time.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

2. Deposit of assets and maintenance of qualified assets

A) Under the provisions of its certificates and the 1940 Act, IDSC was required
to have qualified assets (as that term is defined in Section 28(b) of the 1940
Act) in the amount of $3,353,920 and $3,694,204 at Dec. 31, 1998 and 1997,
respectively. IDSC had qualified assets of $3,799,689 at Dec. 31, 1998 and
$3,964,036 at Dec. 31, 1997, excluding net unrealized appreciation on
available-for-sale securities of $14,378 and $48,912 at Dec. 31, 1998 and 1997,
respectively and payable for securities purchased of $2,211 and $19,601 at Dec.
31, 1998 and 1997, respectively.

Qualified assets are valued in accordance with such provisions of Minnesota
Statutes as are applicable to investments of life insurance companies. Qualified
assets for which no provision for valuation is made in such statutes are valued
in accordance with rules, regulations or orders prescribed by the SEC. These
values are the same as financial statement carrying values, except for debt
securities classified as available for sale and all marketable equity
securities, which are carried at fair value in the financial statements but are
valued at amortized cost for qualified asset and deposit maintenance purposes.

B) Pursuant to provisions of the certificates, the 1940 Act, the central
depositary agreement and to requirements of various states, qualified assets of
IDSC were deposited as follows:

Dec. 31, 1998
-----------------------------------------------

Required
Deposits deposits Excess
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits to meet certificate
liability requirements:
States $364 $327 $37
Central Depositary 3,543,964 3,317,295 226,669
- -----------------------------------------------------------------------------------------------------

Total $3,544,328 $3,317,622 $226,706
- -----------------------------------------------------------------------------------------------------

Dec. 31, 1997
-----------------------------------------------

Required
Deposits deposits Excess
- -----------------------------------------------------------------------------------------------------
Deposits to meet certificate
liability requirements:
States $363 $328 $35
Central Depositary 3,826,505 3,650,121 176,384
- -----------------------------------------------------------------------------------------------------

Total $3,826,868 $3,650,449 $176,419
- -----------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

The assets on deposit at Dec. 31, 1998 and 1997 consisted of securities having a
deposit value of $3,153,038 and $3,580,866, respectively; mortgage loans of
$334,280 and $212,433, respectively; and other assets of $57,010 and $33,569,
respectively.

American Express Trust Company is the central depositary for IDSC. See note 7C.

3. Investments in securities

A) Fair values of investments in securities represent market prices or estimated
fair values when quoted prices are not available. Estimated fair values are
determined by IDSC using established procedures, involving review of market
indexes, price levels of current offerings and comparable issues, price
estimates and market data from independent brokers and financial files. The
procedures are reviewed annually. IDSC's vice president, investments, reports to
the board of directors on an annual basis regarding such pricing sources and
procedures to provide assurance that fair value is being achieved.

The following is a summary of securities held to maturity and securities
available for sale at Dec. 31, 1998 and 1997.
<TABLE>
<CAPTION>

Dec. 31, 1998
---------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Held to maturity
U.S. Government and
agencies obligations $363 $373 $10 $-
Mortgage-backed securities 22,366 22,986 620 -
Corporate debt securities 168,191 172,941 4,750 -
Stated maturity preferred stock 401,895 428,689 26,802 8
- ---------------------------------------------------------------------------------------------------------------------

Total $592,815 $624,989 $32,182 $8
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Mortgage-backed securities $831,677 $846,864 $15,787 $600
State and municipal obligations 32,075 33,437 1,362 -
Corporate debt securities 1,674,932 1,667,264 29,197 36,865
Stated maturity preferred stock 63,257 65,822 2,637 72
Perpetual preferred stock 94,226 97,158 2,947 15
- ---------------------------------------------------------------------------------------------------------------------

Total $2,696,167 $2,710,545 $51,930 $37,552
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- ------------------------------------------------------------------------------------------------------------------------------------

Dec. 31, 1997
---------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to maturity
U.S. Government and
agencies obligations $363 $369 $6 $-
Mortgage-backed securities 29,340 29,969 629 -
Corporate debt securities 242,050 248,455 6,493 88
Stated maturity preferred stock 486,390 505,522 19,332 200
- ---------------------------------------------------------------------------------------------------------------------

Total $758,143 $784,315 $26,460 $288
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Mortgage-backed securities $1,251,283 $1,274,417 $23,336 $202
State and municipal obligations 41,116 42,526 1,410 -
Corporate debt securities 1,417,668 1,438,640 22,636 1,664
Stated maturity preferred stock 63,214 64,444 1,284 54
Perpetual preferred stock 88,726 91,497 2,771 -
Common stock 605 - - 605
- ---------------------------------------------------------------------------------------------------------------------

Total $2,862,612 $2,911,524 $51,437 $2,525
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

The amortized cost and fair value of securities held to maturity and available
for sale, by contractual maturity, at Dec. 31, 1998, are shown below. Cash flows
will differ from contractual maturities because issuers may have the right to
call or prepay obligations.
<TABLE>
<CAPTION>

Amortized Fair
cost value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Held to maturity
Due within 1 year $99,718 $100,336
Due after 1 year through 5 years 274,565 288,415
Due after 5 years through 10 years 179,098 194,280
Due after 10 years 17,068 18,972
- ---------------------------------------------------------------------------------------------------------------------
570,449 602,003
Mortgage-backed securities 22,366 22,986
- ---------------------------------------------------------------------------------------------------------------------

Total $592,815 $624,989
- ---------------------------------------------------------------------------------------------------------------------
Available for sale
Due within 1 year $76,383 $76,569
Due after 1 year through 5 years 825,032 841,426
Due after 5 years through 10 years 506,693 508,301
Due after 10 years 362,156 340,227
- ---------------------------------------------------------------------------------------------------------------------
1,770,264 1,766,523
Mortgage-backed securities 831,677 846,864
Perpetual preferred stock 94,226 97,158
- ---------------------------------------------------------------------------------------------------------------------

Total $2,696,167 $2,710,545
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

During the years ended Dec. 31, 1998 and 1997, there were no securities
classified as trading securities.

The proceeds from sales of available-for-sale securities and the gross realized
gains and gross realized losses on those sales during the years ended Dec. 31,
1998, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>

1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

Proceeds $346,353 $161,188 $313,976
Gross realized gains 4,487 1,292 456
Gross realized losses 1,461 1,637 5,836
- ---------------------------------------------------------------------------------------------------------------------

Sales of held-to-maturity securities resulting from acceptance of a tender offer during the year ended
Dec. 31, 1998 and significant credit deterioration during the years ended Dec. 31, 1997 and 1996,
were as follows:

1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------

Amortized cost $6,182 $32,969 $22,297
Gross realized gains 63 1,621 3,200
Gross realized losses - 680 513
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

During the years ended Dec. 31, 1998 and 1997, no securities were reclassified
from held to maturity to available for sale.

B) Investments in securities with fixed maturities comprised 85% and 89% of
IDSC's total invested assets at Dec. 31, 1998 and 1997, respectively. Securities
are rated by Moody's and Standard & Poors (S&P), or by Parent's internal
analysts, using criteria similar to Moody's and S&P, when a public rating does
not exist. A summary of investments in securities with fixed maturities by
rating of investment is as follows:

Rating 1998 1997
- ---------------------------------------------------------------------

Aaa/AAA 37% 44%
Aa/AA 1 1
Aa/A 1 1
A/A 13 14
A/BBB 5 6
Baa/BBB 33 25
Below investment grade 10 9
- ---------------------------------------------------------------------

100% 100%
- ---------------------------------------------------------------------

Of the securities rated Aaa/AAA, 84% and 83% at Dec. 31, 1998 and 1997,
respectively, are U.S. Government Agency mortgage-backed securities that are not
rated by a public rating

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

agency. Approximately 11% and 9% at Dec. 31, 1998 and 1997, respectively, of
securities with fixed maturities, other than U.S. Government Agency
mortgage-backed securities, are rated by Parent's internal analysts. At Dec. 31,
1998 and 1997 no one issuer, other than U.S. Government Agency mortgage-backed
securities, is greater than 1% of IDSC's total investment in securities with
fixed maturities.

C) IDSC reserves freedom of action with respect to its acquisition of restricted
securities that offer advantageous and desirable investment opportunities. In a
private negotiation, IDSC may purchase for its portfolio all or part of an issue
of restricted securities. Since IDSC would intend to purchase such securities
for investment and not for distribution, it would not be "acting as a
distributor" if such securities are resold by IDSC at a later date.

The fair values of restricted securities are determined by the board of
directors using the procedures and factors described in note 3A.

In the event IDSC were to be deemed to be a distributor of the restricted
securities, it is possible that IDSC would be required to bear the costs of
registering those securities under the Securities Act of 1933, although in most
cases such costs would be incurred by the issuer of the restricted securities.

4. Investments in first mortgage loans on real estate

At Dec. 31, 1998 and 1997, IDSC's recorded investment in impaired mortgage loans
was $296 and $363, respectively, and the reserve for loss on those amounts was
$261 in both years. During 1998, 1997 and 1996, the average recorded investment
in impaired mortgage loans was $331, $743 and $925, respectively.

IDSC recognized $31, $37 and $88 of interest income related to impaired mortgage
loans for the years ended Dec. 31, 1998, 1997 and 1996, respectively.

During the years ended Dec. 31, 1998, 1997 and 1996, there were no changes in
the reserve for loss on mortgage loans of $611.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

At Dec. 31, 1998 and 1997, approximately 9% and 5%, respectively, of IDSC's
invested assets were first mortgage loans on real estate. A summary of first
mortgage loans by region and type of real estate is as follows:

Region 1998 1997
- ---------------------------------------------------------------------

West North Central 21% 21%
South Atlantic 18 23
East North Central 17 18
Mountain 14 13
West South Central 12 6
Pacific 7 3
New England 6 5
Middle Atlantic 5 11
- ---------------------------------------------------------------------

Total 100% 100%
- ---------------------------------------------------------------------

Property Type 1998 1997
- ---------------------------------------------------------------------

Retail/shopping centers 28% 31%
Office buildings 25 20
Apartments 19 23
Industrial buildings 12 17
Other 16 9
- ---------------------------------------------------------------------

Total 100% 100%
- ---------------------------------------------------------------------

The carrying amounts and fair values of first mortgage loans on real estate are
as follows at Dec. 31. The fair values are estimated using discounted cash flow
analysis, using market interest rates currently being offered for loans with
similar maturities.
<TABLE>
<CAPTION>

Dec. 31, 1998 Dec. 31, 1997
---------------------------------------------------------------

Carrying Fair Carrying Fair
amount value amount value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First mortgage loans on real estate $334,891 $343,406 $213,044 $216,951
Reserve for losses (611) - (611) -
- ---------------------------------------------------------------------------------------------------------------------

Net first mortgage loans on
real estate $334,280 $343,406 $212,433 $216,951
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

At Dec. 31, 1998 and 1997, commitments for fundings of first mortgage loans, at
market interest rates, aggregated $60,828 and $9,375, respectively. IDSC employs
policies and procedures to ensure the creditworthiness of the borrowers and that
funds will be available on the funding date. IDSC's loan fundings are restricted
to 80% or less of the market value of the real estate at the time of the loan
funding. Management believes there is no fair value for these commitments.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

5. Certificate reserves

Reserves maintained on outstanding certificates have been computed in accordance
with the provisions of the certificates and Section 28 of the 1940 Act. The
average rates of accumulation on certificate reserves at Dec. 31, 1998 and 1997
were:
<TABLE>
<CAPTION>

1998
------------------------------------------------
Average Average
gross additional
Reserve accumulation credit
balance rate rate
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Installment certificates
Reserves to mature:
With guaranteed rates $21,018 3.50% .50%
Without guaranteed rates (A) 288,092 - 2.92
Additional credits and accrued interest 15,061 3.16 -
Advance payments and accrued interest (C) 894 3.18 .82
Other 55 - -
Fully paid certificates
Reserves to mature:
With guaranteed rates 146,437 3.20 1.47
Without guaranteed rates (A) and (D) 2,763,454 - 4.29
Additional credits and accrued interest 169,515 3.18 -
Due to unlocated certificate holders 357 - -
- ---------------------------------------------------------------------------------------------------------------------

Total $3,404,883
- ---------------------------------------------------------------------------------------------------------------------

1997
------------------------------------------------
Average Average
gross additional
Reserve accumulation credit
balance rate rate
- ---------------------------------------------------------------------------------------------------------------------

Installment certificates
Reserves to mature:
With guaranteed rates $24,316 3.50% 1.35%
Without guaranteed rates (A) 318,903 - 2.96
Additional credits and accrued interest 19,554 3.17 -
Advance payments and accrued interest (C) 968 3.17 1.68
Other 56 - -
Fully paid certificates
Reserves to mature:
With guaranteed rates 165,258 3.21 1.83
Without guaranteed rates (A) and (D) 3,020,933 - 5.03
Additional credits and accrued interest 174,699 3.21 -
Due to unlocated certificate holders 291 -
- ---------------------------------------------------------------------------------------------------------------------

Total $3,724,978
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

A) There is no minimum rate of accrual on these reserves. Interest is declared
periodically, quarterly or annually, in accordance with the terms of the
separate series of certificates.

B) On certain series of single payment certificates, additional interest is
predeclared for periods greater than one year. At Dec. 31, 1998, $3,710 of
retained earnings had been appropriated for the predeclared additional interest,
which represents the difference between certificate reserves on these series,
calculated on a statutory basis, and the reserves maintained per books.

C) Certain series of installment certificates guarantee accrual of interest on
advance payments at an average of 3.18%. IDSC has increased the rate of accrual
to 4.00% through April 30, 2000. An appropriation of retained earnings amounting
to $10 has been made, which represents the estimated additional accrual that
will result from the increase granted by IDSC.

D) IDS Stock Market Certificate, American Express Stock Market Certificate and
IDS Market Strategy Certificate enable the certificate owner to participate in
any relative rise in a major stock market index without risking loss of
principal. Generally the certificates have a term of 12 months and may continue
for up to 20 successive terms. The reserve balance on these certificates at Dec.
31, 1998 and 1997 was $622,409 and $416,485, respectively.

E) The carrying amounts and fair values of certificate reserves consisted of the
following at Dec. 31, 1998 and 1997. Fair values of certificate reserves with
interest rate terms of one year or less approximated the carrying values less
any applicable surrender charges.

The fair values for other certificate reserves are determined by a discounted
cash flow analysis using interest rates currently offered for certificates with
similar remaining terms, less any applicable surrender charges.
<TABLE>
<CAPTION>

1998 1997
---------------------------------------------------------------

Carrying Fair Carrying Fair
amount value amount value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserves with terms of one year or less $3,070,001 $3,068,463 $3,186,971 $3,185,396
Other 334,882 350,509 538,007 551,988
- ------------------------------------------------------------------------------------------------------------------------------------

Total certificate reserves 3,404,883 3,418,972 3,724,978 3,737,384
Unapplied certificate transactions 853 853 868 868
Certificate loans and accrued interest (32,703) (32,703) (37,495) (37,495)
- ------------------------------------------------------------------------------------------------------------------------------------

Total $3,373,033 $3,387,122 $3,688,351 $3,700,757
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

6. Dividend restriction

Certain series of installment certificates outstanding provide that cash
dividends may be paid by IDSC only in calendar years for which additional
credits of at least one-half of 1% on such series of certificates have been
authorized by IDSC. This restriction has been removed for 1999 and 2000 by
IDSC's declaration of additional credits in excess of this requirement.

7. Fees paid to Parent and affiliated companies ($ not in thousands)

A) The basis of computing fees paid or payable to Parent for investment
advisory, joint facilities, technology support and treasury services is:

The investment advisory and services agreement with Parent provides for a
graduated scale of fees equal on an annual basis to 0.750% on the first $250
million of total book value of assets of IDSC, 0.650% on the next $250 million,
0.550% on the next $250 million, 0.500% on the next $250 million and 0.107% on
the amount in excess of $1 billion. Effective Jan. 1, 1998, the fee on the
amount in excess of $1 billion was changed from 0.450% to 0.107%. The fee is
payable monthly in an amount equal to one-twelfth of each of the percentages set
forth above. Excluded from assets for purposes of this computation are first
mortgage loans, real estate and any other asset on which IDSC pays an outside
service fee.

B) The basis of computing fees paid or payable to American Express Financial
Advisors, Inc. (an affiliate) for distribution services is:

Fees payable to American Express Financial Advisors, Inc. on sales of IDSC's
certificates are based upon terms of agreements giving American Express
Financial Advisors, Inc. the exclusive right to distribute the certificates
covered under the agreements. The agreements provide for payment of fees over a
period of time.

From time to time, IDSC may sponsor or participate in sales promotions involving
one or more of the certificates and their respective terms. These promotions may
offer a special interest rate to attract new clients or retain existing clients.
To cover the cost of these promotions, distribution fees paid to American
Express Financial Advisors may be lowered. For the promotion of the seven- and
13-month term IDS Flexible Savings Certificate which occurred Sept. 10, 1997 to
Nov. 25, 1997, the distribution fee for sales of these certificates was lowered
to 0.067%.

The aggregate fees payable under the agreements per $1,000 face amount of
installment certificates and a summary of the periods over which the fees are
payable are:

Number of
certificate
years over
Aggregate fees payable which
-----------------------------------------------
subsequent
First Subsequent years' fees
Total year years are payable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

On sales effective April 30, 1997 $25.00 $ 2.50 $22.50 9

On sales prior to April 30, 1997(a) 30.00 6.00 24.00 4
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

(a) At the end of the sixth through the 10th year, an additional fee of 0.5% is
payable on the daily average balance of the certificate reserve maintained
during the sixth through the 10th year, respectively.

Effective April 30, 1997, fees on the IDS Cash Reserve and IDS Flexible Savings
Certificates are paid at a rate of 0.20% of the purchase price at the time of
issuance and 0.20% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date. For
certificates sold prior to April 30, 1997, fees were paid at a rate of 0.25% of
the purchase price at the time of issuance and 0.25% of the reserves maintained
for these certificates at the beginning of the second and subsequent quarters
from issue date.

Fees on the IDS Future Value Certificate were paid at the rate of 5% of the
purchase price at time of issuance. Effective May 1, 1997, the IDS Future Value
Certificate is no longer being offered for sale.

Fees on the American Express Investors Certificate are paid at an annualized
rate of 1% of the reserves maintained for the certificates. Fees are paid at the
end of each term on certificates with a one-, two- or three-month term. Fees are
paid each quarter from date of issuance on certificates with a six-, 12-, 24- or
36-month term.

Fees on the IDS Preferred Investors Certificate are paid at an annualized rate
of 0.66% of the reserves maintained for the certificates. Fees are paid at the
end of each term on certificates with a one-, two- or three-month term. Fees are
paid each quarter from date of issuance on certificates with a six-, 12-, 24- or
36-month term.

Effective April 30, 1997, fees on the IDS and American Express Stock Market
Certificates, and IDS Market Strategy Certificate are paid at the rate of 0.70%
of the purchase price on the first day of the certificate's term and 0.70% of
the reserves maintained for these certificates at the beginning of each
subsequent term. For certificates sold prior to April 30, 1997, fees were paid
at a rate of 1.25% of the purchase price on the first day of the certificate's
term and 1.25% of the reserves maintained for these certificates at the
beginning of each subsequent term.

C) The basis of computing depositary fees paid or payable to American Express
Trust Company (an affiliate) is:

- -------------------------------------------------------------------------------
Maintenance charge per account 5 cents per $1,000 of assets on deposit

Transaction charge $20 per transaction

Security loan activity:
Depositary Trust Company
receive/deliver $20 per transaction
Physical receive/deliver $25 per transaction
Exchange collateral $15 per transaction
- -------------------------------------------------------------------------------

A transaction consists of the receipt or withdrawal of securities and commercial
paper and/or a change in the security position. The charges are payable
quarterly except for maintenance, which is an annual fee.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

D) The basis for computing fees paid or payable to American Express Bank Ltd.
(an affiliate) for the distribution of the American Express Special
Deposits Certificate on an annualized basis is:

1.25% of the reserves maintained for the certificates on an amount from $100,000
to $249,000, 0.80% on an amount from $250,000 to $499,000, 0.65% on an amount
from $500,000 to $999,000 and 0.50% on an amount $1,000,000 or more. Fees are
paid at the end of each term on certificates with a one-, two- or three-month
term. Fees are paid at the end of each quarter from date of issuance on
certificates with a six-, 12-, 24- or 36-month term.

E) The basis of computing transfer agent fees paid or payable to American
Express Client Service Corporation (AECSC) (an affiliate) is:

Under a Transfer Agency Agreement effective Jan. 1, 1998, AECSC 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. Prior to
Jan. 1, 1998, AEFC provided this service to IDSC under the investment advisory
and services agreement.

8. Income taxes

Income tax (expense) benefit as shown in the statement of operations for the
three years ended Dec. 31, consists of:
<TABLE>
<CAPTION>

1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal
Current ($5,668) $1,138 $5,560
Deferred 4,183 2,266 1,124
- ---------------------------------------------------------------------------------------------------------------------
(1,485) 3,404 6,684
State (50) (65) (27)
- ---------------------------------------------------------------------------------------------------------------------

Total income tax (expense) benefit ($1,535) $3,339 $6,657
- ---------------------------------------------------------------------------------------------------------------------

Income tax (expense) benefit differs from that computed by using the U.S. Statutory rate
of 35%. The principal causes of the difference in each year are shown below:

1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------

Federal tax expense at U.S. statutory rate ($12,026) ($8,378) ($5,711)
Tax-exempt interest 394 724 1,517
Dividend exclusion 10,121 11,044 10,865
Other, net 26 14 13
- ---------------------------------------------------------------------------------------------------------------------

Federal tax (expense) benefit ($1,485) $3,404 $6,684
- ---------------------------------------------------------------------------------------------------------------------

Deferred income taxes result from the net tax effects of temporary differences. Temporary differences
are differences between the tax bases of assets and liabilities and their reported amounts in the financial
statements that will result in differences between income for tax purposes and income for financial statement
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

purposes in future years. Principal components of IDSC's deferred tax assets and
liabilities as of Dec. 31, are as follows.

Deferred tax assets 1998 1997
- ---------------------------------------------------------------------

Certificate reserves $19,423 $13,488
Investment reserves 502 502
Other, net 18 19
- ---------------------------------------------------------------------

Total deferred tax assets $19,943 $14,009
- ---------------------------------------------------------------------

Deferred tax liabilities 1998 1997
- ---------------------------------------------------------------------

Deferred distribution fees $5,523 $7,382
Investment unrealized gains 5,032 17,119
Purchased/written call options 7,417 3,557
Dividends receivable 553 654
Investments 280 429
Return of capital dividends 43 43
- ---------------------------------------------------------------------

Total deferred tax liabilities 18,848 29,184
- ---------------------------------------------------------------------

Net deferred tax assets (liabilities) $1,095 ($15,175)
- ---------------------------------------------------------------------

9. Derivative financial instruments

IDSC enters into transactions involving derivative financial instruments as an
end user (nontrading). IDSC uses these instruments to manage its exposure to
interest rate risk and equity price risk, including hedging specific
transactions. IDSC manages risks associated with these instruments as described
below.

Market risk is the possibility that the value of the derivative financial
instrument will change due to fluctuations in a factor from which the instrument
derives its value, primarily an interest rate or a major market index. IDSC is
not impacted by market risk related to derivatives held because derivatives are
largely used to manage risk and, therefore, the cash flows and income effects of
the derivatives are inverse to the effects of the underlying hedged
transactions.

Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. IDSC monitors credit risk related to derivative financial
instruments through established approval procedures, including setting
concentration limits by counterparty, reviewing credit ratings and requiring
collateral where appropriate. At Dec. 31, 1998, IDSC's counterparties to the
interest rate floors and swaps are rated AA by nationally recognized rating
agencies. The counterparties to the purchased call options are seven major
broker/dealers.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over the
life of the agreement. Notional amounts do not represent market or credit risk
and are not recorded on the balance sheet.

Credit risk related to derivative financial instruments is measured by the
replacement cost of those contracts at the balance sheet date. The replacement
cost represents the fair value of the instrument, and is determined by market
values, dealer quotes or pricing models.

IDSC's holdings of derivative financial instruments were as follows at Dec. 31,
1998 and 1997.

1998
---------------------------------------------------------------
Notional Total
or contract Carrying Fair credit
amount value value risk
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Interest rate floors $500,000 $37 $348 $348
Purchased call options 448 96,176 92,357 92,357
- ---------------------------------------------------------------------------------------------------------------------
Total $500,448 $96,213 $92,705 $92,705
- ---------------------------------------------------------------------------------------------------------------------

Liabilities
Interest rate swaps $500,000 $- $1,488 $-
Written call options 448 38,071 54,181 -
- ---------------------------------------------------------------------------------------------------------------------
Total $500,448 $38,071 $55,669 $-
- ---------------------------------------------------------------------------------------------------------------------

1997
---------------------------------------------------------------
Notional Total
or contract Carrying Fair credit
amount value value risk
- ---------------------------------------------------------------------------------------------------------------------

Assets
Interest rate floors $500,000 $205 $251 $251
Purchased call options 389 55,922 54,609 54,609
- ---------------------------------------------------------------------------------------------------------------------
Total $500,389 $56,127 $54,860 $54,860
- ---------------------------------------------------------------------------------------------------------------------

Liabilities
Interest rate swaps $1,000,000 $- $2,138 $-
Written call options 376 24,739 32,990 -
- ---------------------------------------------------------------------------------------------------------------------
Total $1,000,376 $24,739 $35,128 $-
- ---------------------------------------------------------------------------------------------------------------------

The fair values of derivative financial instruments are based on market values, dealer quotes or
pricing models. The interest rate floors and swaps at Dec. 31, 1998, expire in April of 1999. The
options at Dec. 31, 1998, expire throughout 1999.
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

Interest rate caps, corridors, floors and swaps, and options are used to manage
IDSC's exposure to rising interest rates. These instruments are used primarily
to protect the margin between the interest earned on investments and the
interest rate credited to related investment certificate owners.

The interest rate floors are reset monthly and IDSC earns interest on the
notional amount to the extent the U.S. Treasury securities at "constant
maturity" for a period of one year exceed the reference rates specified in the
floor agreements. These reference rates range from 4.6% to 4.7%. The cost of
interest rate floors is amortized over the terms of the agreements on a straight
line basis and is included in other qualified assets. The amortization, net of
any interest earned, is included in investment expenses or other investment
income, as appropriate.

The interest rate caps and corridors were reset quarterly and IDSC earned
interest on the notional amount to the extent the London Interbank Offering Rate
exceeded the reference rates specified in the cap and corridor agreements. These
reference rates ranged from 4% to 9%. The cost of interest rate caps and
corridors is amortized over the terms of the agreements on a straight line basis
and is included in other qualified assets. The amortization, net of any interest
earned, is included in investment expenses or other investment income, as
appropriate.

The interest rate swaps are reset monthly. IDSC pays a fixed rate on the
notional amount ranging from 5.46% to 5.66% and receives a floating rate on the
notional amount tied to the U.S. Treasury securities at "constant maturity" for
a period of one year. There is no cost carried on the balance sheet. Interest
earned and interest expensed under the agreements is shown net in investment
expenses or other investment income, as appropriate.

IDSC offers a series of certificates which pays interest based upon the relative
change in a major stock market index between the beginning and end of the
certificates' term. The certificate owners have the option of participating in
the full amount of increase in the index during the term (subject to a specified
maximum) or a lesser percentage of the increase plus a guaranteed minimum rate
of interest. As a means of hedging its obligations under the provisions of these
certificates, IDSC purchases and writes call options on the major market index.
The options are cash settlement options, that is, there is no underlying
security to deliver at the time the contract is closed out.

Each purchased (written) call option contract confers upon the holder the right
(obligation) to receive (pay) an amount equal to one hundred dollars times the
difference between the level of the major stock market index on the date the
call option is exercised and the strike price of the option.

The option contracts are less than one year in term. The premiums paid or
received on these index options are reported in other qualified assets or other
liabilities, as appropriate, and are amortized into investment expense over the
life of the option. The intrinsic value of these index options is also reported
in other qualified assets or other liabilities, as appropriate. Changes in the
intrinsic value of these options are recognized currently in provision for
certificate reserves.

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
- -------------------------------------------------------------------------------

Following is a summary of open option contracts at Dec. 31, 1998 and 1997.

1998
-----------------------------------------------
Contract Average Index at
amount strike price Dec.31,1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased call options $448 1,088 1,229
Written call options 448 1,206 1,229
- -----------------------------------------------------------------------------------------------------

1997
-----------------------------------------------
Contract Average Index at
amount strike price Dec.31,1997
- -----------------------------------------------------------------------------------------------------

Purchased call options $389 876 970
Written call options 376 969 970
- -----------------------------------------------------------------------------------------------------
</TABLE>

10. Fair values of financial instruments

IDSC discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. The
fair value of the financial instruments presented may not be indicative of their
future fair values. The estimated fair value of certain financial instruments
such as cash and cash equivalents, receivables for dividends and interest,
investment securities sold and other trade receivables, accounts payable due to
Parent and affiliates, payable for investment securities purchased and other
accounts payable and accrued expenses are approximated to be the carrying
amounts disclosed in the balance sheets. Non-financial instruments, such as
deferred distribution fees, are excluded from required disclosure. IDSC's
off-balance sheet intangible assets, such as IDSC's name and future earnings of
the core business are also excluded. IDSC's management believes the value of
these excluded assets is significant. The fair value of IDSC, therefore, cannot
be estimated by aggregating the amounts presented.

A summary of fair values of financial instruments as of Dec. 31, is as follows:
<TABLE>
<CAPTION>

1998 1997
---------------------------------------------------------------

Carrying Fair Carrying Fair
value value value value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets
Assets for which carrying values
approximate fair values $50,288 $50,288 $49,940 $49,940
Investment securities (note 3) 3,303,360 3,335,534 3,669,667 3,695,839
First mortgage loans on real estate (note 4) 334,280 343,406 212,433 216,951
Derivative financial instruments (note 9) 96,213 92,705 56,127 54,860
Financial liabilities
Liabilities for which carrying values
approximate fair values 154,964 154,964 48,255 48,255
Certificate reserves (note 5) 3,373,033 3,387,122 3,688,351 3,700,757
Derivative financial instruments (note 9) 38,071 55,669 24,739 35,128
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

IDS Flexible Savings Certificate
Prospectus
April 28, 1999

Earn competitive rates guaranteed by IDS Certificate Company for the term you
choose.

IDS Certificate Company (IDSC), a subsidiary of American Express Financial
Corporation, issues IDS Flexible Savings Certificates. You can:

o Purchase this certificate in any amount from $1,000 through $1 million.

o Select a term of six, 12, 18, 24, 30, or 36 months.

o Invest in successive terms up to a total of 20 years from the issue date of
the certificate.

This certificate is backed solely by the assets of IDSC. See "Risk factors" on
page 2p.

The distributor is not required to sell any specific amount of certificates.

Issuer: Distributor:
IDS Certificate Company American Express Service Corporation
IDS Tower 10
Minneapolis, MN 55440-0010 An American Express company
800-297-7378 (toll free)

<PAGE>

Initial interest rates

IDSC guarantees a fixed rate of interest for each term. For the initial term,
the rate will be within a specified range of certain average certificates of
deposit interest rates, as published in the most recent BANK RATE MONITOR Top 25
Market AverageTM, North Palm Beach, FL 33408. See "About the certificate" for
more explanation.

Here are the interest rates in effect on April 28, 1999:
<TABLE>
<CAPTION>
<S> <C> <C>
Simple Effective
interest annualized
Term rate* yield**
- ------------------------------------- ----------------------------------- -----------------------------------
6-month 4.12% 4.19%
- ------------------------------------- ----------------------------------- -----------------------------------
12-month 4.34 4.42
- ------------------------------------- ----------------------------------- -----------------------------------
18-month 4.39 4.47
- ------------------------------------- ----------------------------------- -----------------------------------
24-month 4.44 4.53
- ------------------------------------- ----------------------------------- -----------------------------------
30-month 4.47 4.56
- ------------------------------------- ----------------------------------- -----------------------------------
36-month 4.50 4.59
- ------------------------------------- ----------------------------------- -----------------------------------

* These are the rates for investments under $100,000. Rates may depend on the factors described in "Rates for new purchases" and
"Promotions and pricing flexibility" under "About the certificate."

** Assuming monthly compounding.
</TABLE>

<PAGE>

Risk factors

You should consider the following when investing in this certificate.

<PAGE>

Table of contents

Initial interest rates p
Risk factors p

About the certificate p

Read and keep this prospectus p

Investment amounts and terms p
Face amount and principal p
Value at maturity p
Receiving cash during the term p
Interest p
Rates for new purchases p
Promotions and pricing flexibility p
Additional investments p

How to invest your funds p
Buying your certificate p
When your certificate term ends p
IRAs: special policies 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

<PAGE>

Transfer agent p
Employment of other American Express affiliates p
Directors and officers p
Independent 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

Read and keep this prospectus

Investment amounts and terms

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 any limitations of the plan and applicable federal law.

Face amount and principal

Principal equals Face amount (initial investment)
plus At the end of a term, interest credited to your account during the term
minus Any interest paid to you in cash plus Any additional investments to your
certificate minus Any withdrawals, fees and applicable penalties.

Principal may change during a term as described in "Add-on feature" under
"Additional investments" and "Full and partial withdrawals."

<PAGE>

$5,000.00 Face amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties or fees
============
$7,575.00 Principal at the beginning of the next term.

Value at maturity

Receiving cash during the term

Interest

IDSC declares and guarantees a fixed rate of interest for each term during the
life of your certificate. We calculate the amount of interest you earn each
certificate month by:

o applying the interest rate then in effect to your balance each day;

o adding these daily amounts to get a monthly total; and

<PAGE>

o subtracting interest accrued on any amount you withdraw during the
certificate month.

Interest is calculated on a 30-day month and 360-day year basis.

Rates for new purchases

When your application is accepted and we have received your initial investment,
we will send you a confirmation of your purchase showing the rate that your
investment will earn. IDSC guarantees that when rates for new purchases take
effect, the rates will be within a range based on the average interest rates
then published in the BANK RATE MONITOR Top 25 Market AverageTM (the BRM
Average).

In the case of the 18-month term, because the BRM Average doesn't typically
publish rates for comparable length CDs, IDSC guarantees that, for purchases of
certificates for less than $100,000, the rate for your initial term will be
within a range of five below to 95 basis points above the rates for the 12-month
CDs. In the case of the 18-month term, for purchases of certificates of $100,000
or more, IDSC guarantees that your rate for your initial term will be within a
range of 10-110 basis points above the rates for the 12-month CDs.

In the case of the 36-month term, because the BRM Average doesn't typically
publish rates for comparable length CDs, IDSC guarantees that, for purchases of
certificates for less than $100,000, the rate for your initial term will be
within five below to 95 basis points above the rates for 30-month CDs. In the
case of the 36-month term, for purchases of certificates of $100,000 or more,
IDSC guarantees that your rate for your initial term will be within 10-110 basis
points above the rates for the 30-month CDs. For example, if the rate most
recently published in the BRM Average with respect to the 30-month CDs is 4.80%
our rates in effect for that week for 36-month terms would be between 4.75% and
5.75% for purchases for less than $100,000.

<PAGE>

However, IDSC guarantees that, for persons who have received a special
promotional coupon from IDSC for purchase of a Flexible Savings Certificate with
an initial term of six, 12, 24 or 30 months and have satisfied any requirement
stated in the coupon, when rates for new purchases take effect, the rate for the
initial term will be within a range from 100 basis points (1%) to 200 basis
points (2%) above the average interest rate published for comparable length CDs
in the BRM Average. Similarly, IDSC guarantees that, for persons who have
received a special promotional coupon from IDSC for purchase of a Flexible
Savings Certificate with an initial term of 18 or 36 months and have satisfied
the conditions in the coupon, when rates for new purchases take effect, the rate
for an initial term of 18 or 36 months will be within a range from 100 basis
points (1%) to 200 basis points (2%) above the average interest rate published
for 12-month CDs or 30-month CDs, respectively, in the BRM Average. For example,
the coupon may require that you make a minimum investment and that you are not
an existing client of AEFC, American Express Financial Advisors Inc., or another
subsidiary of AEFC. AEFC will select persons to receive the coupon based on a
business strategy to build relationships with new clients in selected market
segments who AEFC believes meet threshold requirements for such factors as
household income and home values. Coupons may be sent only to persons who both
fit this strategy and live in particular parts of the country or are affiliated
with particular organizations such as an automobile club.

<PAGE>

may offer some terms only in selected distribution channels. We also may offer
different rates based on your amount invested, your geographic location and
whether the certificate is purchased for an IRA or for a qualified retirement
account.

The BRM Average is an index of rates and annual effective yields offered on
various length CDs by large banks and thrifts in 25 metropolitan areas. The
frequency of compounding varies among the banks and thrifts. CDs 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 on current BRM Average rates, call the [Client Service
Organization/American Express Financial Direct (AEFD)] at the telephone numbers
listed on the back cover between 8 a.m. and 6 p.m. your local time.

Rates for new purchases are reviewed and may change weekly. Normally, the rate
you receive will be the higher of:

o the rate in effect for your chosen term on the date of your application; or

o the rate in effect on the date your application is accepted by IDSC.

However, if your application bears a date more than seven days before its
receipt by IDSC, the rate you receive will be the higher of:

o the rate in effect on the date your application is accepted by IDSC; or

o the rate in effect seven days before receipt.

<PAGE>

Yields from February 1994 through February 1999

6% _________IDS Flexible Savings Certificate - 1 year

4% .........Certificate of Deposit - 1 year

Two lines comparing the yields for one-year IDS Flexible
Savings Certificate against those of one-year certificates
of deposit with Flexible's yield generally above the CD's

`94 `95 `96 `97 `98 `99

The graph compares past yields and should not be considered a prediction of
future performance.

Promotions and pricing flexibility

We also may offer different rates based on the amount invested, geographic
location whether the certificate is purchased for an IRA.

These promotions will generally be for a specified period of time. If we offer a
promotion, the rates for new purchases will be within the range of rates
described under "Rates for new purchases."

<PAGE>

Additional investments

Any add-on or withdrawal during the grace period will change the principal
amount used to determine the amount available for the 25% add-on feature.

How to invest your funds

Buying your certificate

<PAGE>

If you wire your investment into an established account, you must pay any fee
the bank charges for wiring.

Penalties for early withdrawal during a term: When you request a full or partial
withdrawal, we pay the amount you request:

o first from interest credited during the current term;

o then from the principal of your certificate.

Any additional investments or withdrawals during a term are added to or deducted
from the principal and are used in determining any withdrawal charges.

You may not make a partial withdrawal if it would reduce your certificate
balance to less than $1,000. If you request such a withdrawal, we will contact
you for revised instructions.

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Total investments $20,000.00
Interest credited $ 1,600.00
-----------
Total balance $21,600.00

Requested check $5,000.00
Credited interest withdrawn ($1,600.00)
10 percent of principal -- not subject to penalty ($2,000.00)
-----------

Remaining portion of requested withdrawal - subject to penalty $1,400.00
Withdrawal penalty percent 2.00%
Actual withdrawal penalty $ 28.00

Balance prior to withdrawal $21,600.00
Requested withdrawal check ($5,000.00)
Withdrawal penalty ($ 28.00)
-------------
Total balance after withdrawal $16,572.00
</TABLE>

Additionally, if you withdraw during a certificate month, you will not earn
interest for the month on the amount withdrawn.

The following example demonstrates how this feature works:

Any additional investments or withdrawals following the grace period will not
change the principal amount used to determine the amount available for the 10%
no-penalty withdrawal feature.

For more information on withdrawal charges, contact AEFD at the number on the
back cover.

<PAGE>

When your certificate term ends

You may also add to your investment within the 15 calendar days following the
end of your term. See "Additional investments" under "About the certificate."

Other full and partial withdrawal policies:

o If your certificate is pledged as collateral, any withdrawal will be
delayed until we get approval from the secured party.

o Any payments to you may be delayed under applicable rules, regulations or
orders of the Securities and Exchange Commission (SEC).

o 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 $1000. If t he balance would be less than
$1000, the fee is deducted from the proceeds of the withdrawal.

<PAGE>

o A service fee, if any, may be deducted from your balance (for
partial withdrawals) or from the proceeds of a full withdrawal.

IRAs: special policies

o If the certificate is purchased for an IRA, the terms and conditions of the
certificate apply to the IRA as the owner of this certificate. However, the
terms of the IRA, as interpreted by the trustee, will determine how a
participant's individual IRA is administered. These terms may differ from
the terms of the certificate.

o The annual custodial fee for an IRA may be deducted from your certificate
account. It may reduce the amount payable at maturity or the amount
received upon an early withdrawal.

o IRA withdrawals may be subject to withdrawal penalties or loss of interest
even if they are not subject to federal tax penalties.

o We will waive withdrawal penalties on withdrawals for IRA certificate accounts
for your required distributions.

o 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.

Withdrawal at death

If a certificate is surrendered upon the client's death, any applicable
surrender charge will be waived. In addition, if an IRA termination fee is
applicable, it will also be waived.

Taxes on your earnings

<PAGE>

Retirement accounts

If you are using the certificate as an investment for an IRA, income tax rules
for your IRA 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.

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. Also, withdrawals of principal during a certificate month may be
subject to the certificates provisions for loss of interest.

Consult your tax advisor to see how these rules apply to you before you request
a distribution from your plan or IRA.

Gifts to minors

Your TIN and backup withholding: As with any financial account you open, you
must list your current and correct TIN either your Social Security or Employer
Identification number. You must certify your TIN under penalties of perjury on
your application when you open an account.

If you don't provide the correct TIN, you could be subject to backup withholding
of 31% of your interest earnings. You could also be subject to further
penalties, such as:

o a $50 penalty for each failure to supply your correct TIN;

<PAGE>

o a civil penalty of $500 if you make a false statement that results in
no backup withholding; and

o criminal penalties for falsifying information.

You could also be subject to backup withholding because you failed to report
interest on your tax return as required.

To help you determine the correct TIN to use on various types of accounts,
please use this chart:
<TABLE>
<CAPTION>
<S> <C>
How to determine the correct TIN

For this type of account: Use the Social Security or Employer Identification
Number of:

- ------------------------------------------------------- -----------------------------------------------------

Individual or joint account The individual or one of the individuals listed on
the joint 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

- ------------------------------------------------------- -----------------------------------------------------

<PAGE>

- ------------------------------------------------------- -----------------------------------------------------

Corporate The corporation

Association, club or tax-exempt organization The organization

- ------------------------------------------------------- -----------------------------------------------------
</TABLE>

For details on TIN requirements, ask your financial consultant for federal Form
W-9, "Request for Taxpayer Identification Number and Certification."

Foreign investors

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

We back our certificates by investing the money received and keeping the
invested assets on deposit. Our investments generate interest and dividends, out
of which we pay:

o interest to certificate owners; and

Regulated by government

<PAGE>

Backed by our investments

Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1998:

Type of investment Net amount invested

Corporate and other bonds 50%
Government agency bonds 24
Preferred stocks 16
Mortgages 9
Municipal bonds 1

Investment policies

<PAGE>

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."

As of Dec. 31, 1998, IDSC held about 10% of its investment portfolio (including
bonds, preferred stocks and mortgages) 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 (selling securities for others) under
federal securities laws.

Borrowing money -
From time to time we have established a line of credit with banks 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.

<PAGE>

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 secured by real estate. We expect that investments in real estate, either
directly or through a subsidiary of IDSC, will be less than five percent of
IDSC's assets.

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. We
expect that outstanding securities loans will not exceed 10% of IDSC's assets.

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 available for sale, 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.

<PAGE>

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.

How your money is managed

Relationship between IDSC and American Express Financial Corporation

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,
AEFC changed its name from IDS Financial Corporation. IDSC and AEFC have never
failed to meet their certificate payments.

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.

<PAGE>

American Express Company is a financial services company engaged through
subsidiaries in other businesses including:

o travel related services (including American Express(R) Card and Travelers
Cheque operations through American Express Travel Related Services
Company, Inc. and its subsidiaries); and

o international banking services (through American Express Bank Ltd. and its
subsidiaries).

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.

Investment management and services

Under an Investment Advisory and Services Agreement, AEFC acts as our investment
advisor and is responsible for:

o providing investment research;

o making specific investment recommendations; and

o executing purchase and sale orders according to our policy of
obtaining the best price and execution.

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).

<PAGE>

Advisory and services fee computation:

Included assets Percentage of total book value

First $250 million 0.750%
Next 250 million 0.650
Next 250 million 0.550
Next 250 million 0.500
Any amount over 1 billion 0.107

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.

Advisory and services fee for the past three years:

Percentage of
Year Total fees included assets
1998 $ 9,084,332 0.24%
1997 $17,232,602 0.50
1996 $16,989,093 0.50

Estimated advisory and services fees for 1999 are $8,651,000.

Other expenses payable by IDSC: The Investment Advisory and Services Agreement
provides that we will pay:

o costs incurred by us in connection with real estate and mortgages;

o taxes;

o depository and custodian fees;

o brokerage commissions;

o fees and expenses of our directors who are not officers or employees of
AEFC;

o provision for certificate reserves (interest accrued on certificate owner
accounts); and

o expenses of customer settlements not attributable to sales function.

<PAGE>

Distribution

Under a Distribution Agreement with AESC, for certificates sold through AEFD, we
pay AESC for the distribution of this certificate as follows:

o 0.20% of the initial payment on the issue date of the certificate; and

o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

Under a Distribution Agreement with American Express Financial Advisors Inc., a
wholly-owned subsidiary of AEFC, we pay for the distribution of this certificate
by American Express Financial Advisors Inc. as follows:

o 0.20% of the initial payment of the issue date of the certificate; and

o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from the issue date.

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.

See Note 1 to financial statements regarding deferral of distribution fee
expense.

In addition, IDSC may pay distributors additional compensation for distribution
activities under certain circumstances. From time to time, IDSC may pay or
permit other promotional incentives, in cash or credit or other compensation.

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.

<PAGE>

Other selling agents

This certificate may be sold through other selling agents, under arrangements
with American Express Financial Advisors or AESC, at commissions of up to:

o 0.20% of the initial payment on the issue date of the certificate; and

o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

This fee is not assessed to your certificate account.

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

Employment of other American Express affiliates

AEFC may employ an affiliate of American Express Company as executing broker for
our portfolio transactions only if:

o we receive prices and executions at least as favorable as those offered by
qualified independent brokers performing similar services;

o the affiliate charges us commissions consistent with those charged to
comparable unaffiliated customers for similar transactions; and

o the affiliate's employment is consistent with the terms of the current
Investment Advisory and Services Agreement and federal securities laws.

<PAGE>

Directors and officers

We paid a total of $37,000 during 1998 to directors not employed by AEFC.

Board of directors

Rodney P. Burwell
Born in 1939. Director beginning in 1999.
Chairman, Xerxes Corporation (fiberglass storage tanks). Director, Fairview
Corporation.

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. Acting president of Fisk University
from 1998 to 1999. Former vice president and group
executive, Industrial Systems, with Honeywell, Inc. Retired 1989.

Jean B. Keffeler
Born in 1945. Director beginning in 1999.
Independent management consultant.

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.

Thomas R. McBurney
Born in 1938. Director beginning in 1999.
President, McBurney Management Advisors. Director, The Valspar Corporation
(paints), Wenger Corporation, Allina, Space Center Enterprises and Greenspring
Corporation.

<PAGE>

Paula R. Meyer*
Born in 1954. President since June 1998.
Piper Capital Management (PCM) President from October 1997 to May 1998. PCM
Director of Marketing from June 1995 to October 1997. PCM Director of Retail
Marketing from December 1993 to June 1995.

*"Interested Person" of IDSC as that term is defined in Investment Company Act
of 1940.

Executive officers

Paula R. Meyer
Born in 1954. President since June 1998.

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.

<PAGE>

The officers and directors as a group beneficially own less than 1% of the
common stock of American Express Company.

Independent auditors

IDS Certificates

Other certificates issued by IDSC include:

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 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 Market Strategy Certificate-A certificate that pays interest at a fixed rate
or linked to one-year stock market performance, as measured by a broad market
index, for a series of one-year terms starting every month or at other intervals
the client selects.

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 calculates all
or part of your interest based on stock market performance, as measured by a
broad market index, with IDSC's guarantee of return of principal.

<PAGE>

Appendix

Description of corporate bond ratings

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.

<PAGE>

(back cover)

Quick telephone reference*

American Express Financial Direct Service Team
Withdrawals, transfers, inquiries
National: 800-297-7378

TTY Service
For the hearing impaired
800-710-5260

*You may experience delays when call volumes are high.

Distributed by American Express Financial Direct

IDS Flexible Savings Certificate
IDS Tower 10
Minneapolis, MN 55440-0010

<PAGE>

IDS
Cash Reserve Certificate
Prospectus April 28, 1999

Earn attractive rates with ready access to your cash reserves.

IDS Certificate Company (IDSC), a subsidiary of American Express Financial
Corporation, issues IDS Cash Reserve Certificates. You may:

o Purchase this certificate in any amount from $1,000 through $1 million or with
monthly investments of at least $50.
o Earn a fixed rate of interest declared every three months.
o Invest in successive three-month terms up to a total of 20 years from the
issue date of the certificate.

This certificate is backed solely by the assets of IDSC. See "Risk factors" on
page 2p.

The distributor is not required to sell any specific amount of
certificates.

IDS Certificate Company Distributor:
IDS Tower 10 American Express Financial Advisors Inc.
Minneapolis, MN 55440-0010 An American Express company
800-437-3133 (toll free)

<PAGE>

Initial interest rates

IDSC guarantees a fixed interest rate for each three-month term during the
life of the certificate. For your initial term, IDSC guarantees that when
the rate for new purchases takes effect, the rate will be within a
specified range of the average rate for three-month certificates of deposit
as published in the most recent BANK RATE MONITOR Top 25 Market AverageTM,
North Palm Beach, FL 33408. See "About the certificate" for more
explanation.

Here are the interest rates in effect April 28, 1999:

Investment Simple Effective
amount interest rate* annualized yield**

$50 to $999 2.96% 3.00%
$1,000 to $24,999 3.74 3.80
$25,000 or more 3.94 4.01

* Rates may depend on factors described in "Rates for new purchases" under
"About the certificate."
** Assuming monthly compounding.

These rates may or may not have changed when you apply to purchase your
certificate. Rates for later three-month terms are set at the discretion of
IDSC and may also differ from the rates shown here. See "Rates for new
purchases" Under "About the certificate" for further information.

Risk factors

You should consider the following when investing in this certificate.

This certificate is backed solely by the assets of IDSC. Most of our assets
are debt securities whose price generally falls as interest rates increase,
and rises as interest rates decrease. Credit ratings of the issuers of
securities in our portfolio vary. See "Invested and guaranteed by IDSC,"
"Regulated by government," "Backed by our investments" and "Investment
policies" under "How your money is used and protected."

American Express Financial Corporation (AEFC), the parent company of IDSC,
maintains the major computer systems used by IDSC. The Year 2000 (Y2K)
issue is the result of computer programs that may recognize a date using
"00" as the year 1900 rather than 2000. This could result in the failure of
major systems. AEFC and its parent company, American Express Company, began
addressing the Y2K issue in 1995 and have established a plan for
resolution. See "Management's discussion and analysis of financial
condition and results of operation."

<PAGE>

Table of Contents

Initial interest rates 2p
Risk factors 2p

About the certificate 4p

Read and keep this prospectus 4p

Investment amounts and terms 4p
Face amount and principal 4p
Value at maturity 5p
Receiving cash during the term 5p
Interest 6p
Rates for new purchases 6p
Promotions and pricing flexibility 8p
How to invest and withdraw funds 9p

Buying your certificate 9p
Additional investments 9p
Three ways to make investments 11p
Full and partial withdrawals 12p
When your certificate term ends 13p
Transfers to other accounts 13p
Two ways to request a withdrawal or transfer 14p
Three ways to receive payment when you withdraw funds 15p
Retirement plans: special policies 16p
Transfer of ownership 16p
For more information 16p
Taxes on your earnings 17p

Retirement accounts 17p
Gifts to minors 17p
How to determine the correct TIN 19p
Foreign investors 20p
Trusts 21p
How your money is used and protected 22p

Invested and guaranteed by IDSC 22p
Regulated by government 22p
Backed by our investments 23p
Investment policies 24p
How your money is managed 28p

Relationship between IDSC and American 28p
Express Financial Corporation
Capital structure and certificates issued 30p
Investment management and services 30p
Distribution 32p
About American Express Service Corporation 33p
Transfer agent 33p
Employment of other American Express affiliates 33p
Directors and officers 33p
Independent auditors 36p
IDS Certificates 37p
Appendix 38p

Annual financial information 40p
Summary of selected financial information 40p
Management's discussion and analysis of financial
condition and results of operations 41p
Report of independent auditors 56p
Financial statements 57p

Notes to financial statements 65p

<PAGE>

About the certificate

Read and keep this prospectus

This prospectus describes terms and conditions of your
IDS Cash Reserve Certificate. It contains facts that can help you decide if
the certificate is the right investment for you. Read the prospectus before
you invest and keep it for future reference. No one has the authority to
change the terms and conditions of the IDS Cash Reserve Certificate as
described in the prospectus, or to bind IDSC by any statement not in it.

Investment amounts and terms

You may purchase the IDS Cash Reserve Certificate in any amount from $1,000
or monthly investments of at least $50 through scheduled bank authorization
or payroll deduction. Your total investments over the life of the
certificate may not exceed $1 million unless you receive prior approval
from IDSC. IDSC guarantees your principal and interest.

The certificate may be used as an investment for your Individual Retirement
Account (IRA), 401(k) plan account or other qualified retirement plan
account. A minimum investment of $50 per month is required for these types
of accounts. If so used, the amount of your contribution (investment) will
be subject to any limitations of the plan and applicable federal law.

Face amount and principal

The face amount of the certificate is the amount of your initial
investment, and will remain the same over the life of the certificate.

The principal is the amount that is reinvested at the beginning of each
subsequent term, and is calculated as follows:

<TABLE>
<CAPTION>
<S> <C>
Principal equals Face amount (initial investment)

plus At the end of a term, interest credited to your account during
the term
minus Any interest paid to you in cash
plus Any additional investments to your certificate
minus Any withdrawals, fees and applicable penalties.

</TABLE>

<PAGE>

For example: Assume your initial investment (face amount) of $5,000 has
earned $75 of interest during the term. You have not taken any interest as
cash, or made any withdrawals. You have invested an additional $2,500 at
the beginning of the next term.

Your principal for the next term will equal:
$5,000.00 Face amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties or fees
$7,575.00 Principal at the beginning of the next term.

Value at maturity

Your certificate matures 20 years from its issue date. At maturity, the
value of your certificate will be the total of your actual investment, plus
credited interest not paid to you in cash, less withdrawals, penalties and
fees. When your certificate matures, you will receive a distribution for
your principal, plus any credited interest, less any withdrawals, penalties
and fees. Bank authorizations will automatically be stopped at maturity or
full withdrawal.

Receiving cash during the term

If you need your money before your certificate 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."

<PAGE>

Interest

Your investments earn interest from the date they are credited to your
account. Interest is compounded and credited at the end of each certificate
month (on the monthly anniversary of the issue date).

IDSC declares and guarantees a fixed rate of interest for each three month
term during the life of your certificate. We calculate the amount of
interest you earn each certificate month by:

o applying the interest rate then in effect to your balance
each day;
o adding these daily amounts to get a monthly total; and
o subtracting interest accrued on any amount you withdraw during the
certificate month.

Interest is calculated on a 30-day month and 360-day year basis.

This certificate may be available through other distributors or selling
agents with different interest rates or related features and consequently
with different returns. You may obtain information about any such other
distributors or selling agents by calling 800-437-3133.

Rates for new purchases

When your application is accepted, and we have received your initial
investment, we will send you a confirmation showing the rate that your
investment will earn for the first term. For accounts of $1,000 to
$24,999.99 IDSC guarantees that this rate will be within a range from 30
basis points (0.30%) below to 70 basis points (0.70%) above the average
interest rate published for three-month certificates of deposit (CDs) in
the BANK RATE MONITOR Top 25 Market AverageTM (the BRM Average). For
example, if the average rate most recently published is 4.00%, our rate in
effect for that week for amounts of $1,000 to $24,999.99 would be between
3.70% to 4.70%. For accounts of $25,000 or more, this rate will be within a
range from 10 basis points (0.10%) below to 90 basis points (0.90%) above
the same index rate. For accounts of less than $1,000, this rate will be
within a range of 135 basis points (1.35%) below to 35 basis points (0.35%)
below this average interest rate.

<PAGE>

The BANK RATE MONITOR is a weekly magazine published in North Palm Beach,
FL 33408, by Advertising News Service Inc., an independent national news
organization that collects and disseminates information about bank products
and interest rates. Advertising News Service Inc. has no connection with
IDSC, American Express Financial Corporation (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 on the current BRM Average rates, 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.

Rates for new purchases are reviewed and may change weekly. Normally, the
rate you receive will be the higher of:

o the rate in effect on the date of your application; or
o the rate in effect on the date your application is accepted by IDSC.

However if your application bears a date more than seven days before its
receipt by IDSC, the rate you receive will be the higher of:

o the rate in effect on the date your application is accepted by IDSC; or
o the rate in effect seven days prior to receipt.

Except for specific promotions, IDSC guarantees an initial rate 25 basis
points above the rate offered to the general public on this IDS certificate
if it is purchased by using the CD transfer service offered by American
Express Financial Advisors Inc. to help you transfer money from a bank or
thrift CD account to American Express Financial Advisors Inc. investments.
Consequently, the highest and lowest rate in the range of rates for initial
terms of such certificates purchased using the CD transfer service will be
25 basis points higher than the comparable rates described at the beginning
of this section for ranges of rates for initial terms. To be eligible for
this rate, you must transfer at least $10,000 from a CD account to IDSC to
purchase one or more IDS Cash Reserve Certificates and/or IDS
Flexible Savings Certificates, and this rate will only apply to those
certificates.

<PAGE>

Promotions and pricing flexibility

IDSC may sponsor or participate in promotions involving the certificate and
its 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.
Rates also may vary depending on the amount invested, your geographic
location and whether the certificate is purchased for an IRA or qualified
retirement plan account.

These promotions will generally be for a specified period of time. If we
offer a promotion, the rates for new purchases will be within the range of
rates described under "Rates for new purchases," above.

Rates for future terms: Interest on your certificate for future three-month
terms may be greater or less than the rates you receive during the first
three months. In setting future interest rates, a primary consideration
will be the prevailing investment climate, including three-month CD rates
as reflected in the BRM Average. Nevertheless, we have complete discretion
as to what interest shall be declared beyond the initial three-month term.
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.

Performance: From February 1994 through February 1999, IDS Cash Reserve
yields were generally higher than average bank and thrift three-month CD
yields, as measured by the BRM Average.

Yields from February 1994 through February 1999

IDS Cash Reserve
Certificate
4% Certificate
of Deposit

2% Money Market
Deposit Account

Three lines comparing the yields for IDS Cash Reserve
Certificate versus money market deposit accounts and
three-month certificates of deposit, with IDS Cash
Reserve's line generally above the other two.

'94 '95 '96 '97 '98 '99

This graph compares past yields offered on IDS Cash Reserve Certificate
to those of three-month CDs and money market deposit accounts and
should not be considered a prediction of future performance.

<PAGE>

How to invest and withdraw funds

Buying your certificate

Additional investments

You may make additional investments at any time. Additional investments can
be in any amount from $50 and your total investment, less withdrawals, may
not exceed $1 million (unless you receive prior approval from IDSC to
invest more). You will earn interest on additional investments from the
date we accept them. IDSC will send a confirmation of additional
investments.

Important: When you open an account, you must provide IDSC with your
correct Taxpayer Identification Number (TIN), which is your Social Security
or Employer Identification number. See "Taxes on your earnings."

Purchase policies:
o 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.
o You have 15 days from the date of purchase to cancel your investment
without penalty by either writing or calling the Client Service
Organization at the address or phone number on the back of this prospectus.
If you decide to cancel your certificate within this 15-day period you will
not earn any interest.
o If you purchase a certificate with a personal check or other non-guaranteed
funds, AEFC will wait one day for the process of converting your check to
federal funds (e.g., monies of member banks with the Federal Reserve
Bank) before your purchase will be accepted and you begin earning interest.

<PAGE>

o IDSC has complete discretion to determine whether to accept an application
and sell a certificate.
o You must maintain a balance of at least $1,000 in your Cash Reserve
Certificate account unless you are using an authorized systematic pay-in
or payout arrangement. If you use a scheduled pay-in arrangement, your
minimum balance requirement is $50.
o If you make no investments for a period of at least 12 consecutive months
and your principal is less than $1,000, we will send you a notice of our
intent to cancel the certificate. After the notice, if an investment is
not made within 60 days your certificate will be canceled, and we will send
you a check for its full value.

A number of special policies apply to purchases, withdrawals and exchanges
within IRAs, 401(k) plans and other qualified retirement plans. See
"Retirement plans: special policies."

<PAGE>

Three ways to make investments

1
By scheduled
investment
plan

Contact your financial advisor to set up one of the following scheduled
plans for monthly investments:
o bank authorization (automatic deduction from your account)
o automatic payroll deduction o direct deposit of social security check
o other plan approved by IDSC
o monthly minimum investment must be $50

To cancel a bank authorization, you must instruct IDSC in writing or over the
phone. We must receive notice at least three business days before the date
funds would normally be withdrawn from your bank account.

- -------------------------------------------------------------------------------
2
By mail

For monthly or lump sum investments, send your check along with your name
and account number to:

Regular mail:
American Express Financial Advisors Inc.
Client Service Organization
P.O. Box 74
Minneapolis, MN 55440-0074

Express mail:
American Express
Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN 55402

- -------------------------------------------------------------------------------
3
By wire

If you have an established account, you may wire money to:

Norwest Bank Minnesota
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit American Express Financial Advisors Account
#0000030015 for personal account # (your personal number) for (your name).

If this information is not included, the order may be rejected and all
money received, less any costs AEFC incurs, will be returned promptly.
o Minimum amounts each wire investment: $1,000.

o Wire orders can be accepted only on days when your bank, AEFC, IDSC and
Norwest Bank Minnesota are open for business.

o Wire purchases are completed when wired payment is received and we accept
the purchase.
o Bank wire purchases are not sent until the next day.
o Wire investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be credited
that day. Otherwise your purchase will be processed the next business day.
o IDSC, AEFC and its other subsidiaries are not responsible for any delays
that occur in wiring funds, including delays in processing by the bank.
o You must pay for any fee the bank charges for wiring.

<PAGE>

Full and partial withdrawals

You may withdraw your certificate for its full value or make a partial
withdrawal of $100 or more at any time. If you purchase this certificate
for an IRA, 401(k), or other retirement plan account, early withdrawals or
cash payments of interest taken prematurely may be subject to IRS penalty
taxes.
o Complete withdrawal of your certificate is made by giving us proper
instructions.
To complete these transactions, see "Two ways to request a withdrawal or
transfer."
o 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.
o Interest payments in cash may be sent to you at the end of each certificate
month, quarter, or on a semiannual or annual basis.
o Scheduled partial withdrawals may be sent to you monthly, quarterly,
semiannually or annually. The minimum withdrawal amount is $50.
o Withdrawals before the end of the certificate month will result in loss of
interest on the amount withdrawn. You'll get the best result by timing a
withdrawal at the end of the certificate month.
o Withdrawals that reduce your certificate's principal below a break point
for a lower interest rate will cause the remaining principal to earn the
lower interest rate for the rest of the term from the date of the
withdrawal.
o You may not make a withdrawal from your certificate if that withdrawal
causes your balance to fall below $1,000 unless you are making bank
authorization or payroll deduction payments or taking systematic payments
from your certificate. In these instances, the remaining balance will earn
the lower interest rate in effect for balances of less than $1,000.

<PAGE>

When your certificate term ends

Shortly before the end of your certificate's term we will send you a notice
indicating the interest rate that will apply to the new term. Unless you
tell us otherwise, your certificate will automatically continue for another
term. The interest rate that will apply to your new term will be the rate
in effect on the day the new term begins. This rate of interest will not be
changed during that term unless your certificate's principal falls below a
break point for a lower interest rate.

o Any payments to you may be delayed under applicable rules,
regulations or orders of the Securities and Exchange Commission (SEC).

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).

<PAGE>

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.
o Maximum phone request: $50,000.
o Transfers into an American Express Financial Advisors Inc. account with the
same ownership.
o A telephone withdrawal request will not be allowed within 30 days of a
phoned-in address change.
o We will honor any telephone withdrawal or transfer request believed to be
authentic and will use reasonable procedures to confirm authenticity.

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
P.O. Box 534
Minneapolis, MN
55440-0534

Express mail:

American Express Financial Advisors Inc.
Client Service Organization
733 Marquette Ave.
Minneapolis, MN
55440-0010

Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has reached the age at
which custodianship should terminate.
o Transfers to another American Express Financial Advisors Inc. account with
different ownership (all current registered owners must sign the request).

<PAGE>

Three ways to receive payment when you withdraw funds

1
By regular or
express mail

o Mailed to address on record; please allow seven days for mailing.
o Payable to name(s) you requested.
o We will charge 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, we
will deduct the fee from the proceeds of the withdrawal.

- -------------------------------------------------------------------------------
2
By wire

o Minimum wire withdrawal: $1,000.
o Request that money be wired to your bank.
o Bank account must be in same ownership as IDSC account.
o Pre-authorization required. Complete the bank wire authorization section in
the application or use a form supplied by your American Express financial
advisor. All registered owners must sign.
o We may deduct a service fee from your balance (for partial withdrawals) or
from the proceeds of a full withdrawal.

- -------------------------------------------------------------------------------
3
By electronic
transfer

o Available only for pre-authorized scheduled partial withdrawals and other
full or partial withdrawals.
o No charge.
o Deposited electronically in your bank account.
o Allow two to five business days from request to deposit.

<PAGE>

Retirement plans: special policies
o If the certificate is purchased for a 401(k) plan or other qualified
retirement plan account, the terms and conditions of the certificate apply
to the plan as the owner of this certificate. However, the terms of the
plan, as interpreted by the plan trustee or administrator, will determine
how a participant's individual account under the plan is administered.
These terms may differ from the terms of the certificate.
o If your certificate is held in a Custodial Retirement Plan (or Keogh plan),
special rules may apply at maturity. If no other investment instructions
are provided directing how to handle your certificate at maturity, the full
value of the certificate will automatically transfer to a new or existing
cash management account according to the rules outlined in the Custodial
Retirement Plan document.
o The annual custodial fee for IRA or non-401(k) qualified retirement plans
may be deducted from your certificate account. It may reduce the amount
payable at maturity or the amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal penalties or loss
of interest even if they are not subject to federal tax penalties.
o 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.
o The IRA termination fee will be waived if a withdrawal occurs after you
have reached age 701/2 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.

<PAGE>

Interest on your certificate is taxable when credited to your account. 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 account owner and the IRS on Form 1099-B, Proceeds from
Broker Transactions.

Retirement accounts

If you are using the certificate as an investment for an IRA, 401(k) plan
account or other qualified retirement plan account, income tax rules for
your IRA or qualified plan apply. Generally, you will pay no income taxes
on your investment's earnings -- and, in many cases, on part or all of
the investment itself -- until you begin to make withdrawals.

IDSC will withhold federal income taxes of 10% on IRA withdrawals unless
you tell us not to. IDSC is required to withhold federal income taxes of
20% on most other qualified plan distributions, unless the distribution is
directly rolled over to another qualified plan or IRA.

Withdrawals from retirement accounts are generally subject to a penalty tax
of 10% by the IRS if you make them before age 591/2, unless you are
disabled or if they are made by your beneficiary in the event of your
death. Other exceptions may also apply. Also, withdrawals of principal
during a certificate month may be subject to the certificate's provision
for loss of interest.

Consult your tax advisor to see how these rules apply to you before you
request a distribution from your plan or IRA.

Gifts to minors

The certificate may be given to a minor under either the Uniform Gifts or
Uniform Transfers to Minors Act (UGMA/UTMA), whichever applies in your
state. UGMAs/UTMAs are irrevocable. Generally, under federal tax laws,
income over $1,200 on property owned by children under age 14 will be taxed
at the parents' marginal tax rate, while income on property owned by
children 14 or older will be taxed at the child's rate.

<PAGE>

Your TIN and backup withholding: As with any financial account you open,
you must list your current and correct TIN, which is either your Social
Security or Employer Identification number. You must certify your TIN under
penalties of perjury on your application when you open an account.

If you don't provide the correct TIN, you could be subject to backup
withholding of 31% of your interest earnings. You could also be subject to
further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN;
o a civil penalty of $500 if you make a false statement that results in no
backup withholding; and
o criminal penalties for falsifying information.

You could also be subject to backup withholding because you failed to
report interest on your tax return as required.

<PAGE>

To help you determine the correct TIN to use on various types of accounts,
please use this chart:

How to determine the correct TIN
For this type of account:

Use the Social Security or
Employer Identification Number of:

- -------------------------------------------------------------------------------
Individual or joint account The individual or one of the individuals
listed on the joint 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 The legal entity
trust or estate (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 The organization
tax-exempt organization

For details on TIN requirements, ask your financial advisor or local
American Express Financial Advisors Inc. office for federal Form W-9,
"Request for Taxpayer Identification Number and Certification."

<PAGE>
Taxes on your earnings

Foreign investors

If you are not a citizen or resident of the United States (nonresident
alien), you must supply IDSC with Form W-8, Certificate of Foreign Status
when you purchase your certificate. You must resupply it every three years.
You must also supply both a current mailing address and an address of
foreign residency, if different. IDSC will not accept purchases of
certificates by nonresident aliens without an appropriately certified Form
W-8 (or approved substitute). Also, if you do not supply Form W-8 you will
be subject to backup withholding on interest payments and withdrawals.

Interest on the certificate is "portfolio interest" as defined in U.S.
Internal Revenue Code Section 871(h) if earned by a nonresident alien. Even
though your interest income is not taxed by the U.S. government, it will be
reported at year end to you and to the U.S. government on a Form 1042S,
Foreign Person's U.S. Source Income Subject to Withholding. The United
States participates in various tax treaties with foreign countries, which
provide for sharing of tax information.

<PAGE>

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 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.

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.

Important: The information in this prospectus is a brief and selective
summary of certain federal tax rules that apply to this certificate and is
based on current law and practice. Tax matters are highly individual and
complex. Investors should consult a qualified tax advisor about their own
position.

<PAGE>

How your money is used and protected

Invested and guaranteed by IDSC

IDSC, a wholly owned subsidiary of AEFC, issues and guarantees the IDS Cash
Reserve Certificate. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than $3.8
billion and a net worth in excess of $222 million on Dec. 31, 1998.

We back our certificates by investing the money received and keeping the
invested assets on deposit. Our investments generate interest and
dividends, out of which we pay:
o interest to certificate owners; and
o various expenses, including taxes, fees to AEFC for
advisory and other services, distribution fees to American Express
Financial Advisors Inc. and American Express Service Corporation (AESC),
and selling agent fees to selling agents.

For a review of significant events relating to our business, see
"Management's discussion and analysis of financial condition and results of
operations." No national rating agency rates our certificates.

Most banks and thrifts offer investments known as 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 Cash Reserve Certificate is a security, its offer and sale
are subject to regulation under federal and state securities laws. (The IDS
Cash Reserve Certificate is a face-amount certificate. It is not a bank
product, an equity investment, a form of life insurance or an investment
trust.)

<PAGE>

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,
1998, the amortized cost of these investments exceeded the required
carrying value of our outstanding certificates by more than $226 million.
The law requires us to use amortized cost for these regulatory purposes. In
general, amortized cost is determined by systematically increasing the
carrying value of a security if acquired at a discount, or reducing the
carrying value if acquired at a premium, so that the carrying value is
equal to maturity value on the maturity date.

Backed by our investments

Our investments are varied and of high quality. This was the composition of
our portfolio as of Dec. 31, 1998:

Type of investment Net amount invested

Corporate and other bonds 50%
Government agency bonds 24
Preferred stocks 16
Mortgages 9
Municipal bonds 1

As of Dec. 31, 1998 about 90% of our securities portfolio (including bonds
and preferred stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B to 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, 1998 schedule of Investments in Securities
of Unaffiliated Issuers are available upon request. For comments regarding
the valuation, carrying values and unrealized appreciation (depreciation)
of investment securities, see Notes 1, 2 and 3 to the financial statements.

<PAGE>

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 whether a company can 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 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, 1998, IDSC held about 10% of its investment portfolio
(including bonds, preferred stocks and mortgages) in investments rated
below investment grade.

<PAGE>

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 (selling securities for others)
under federal securities laws.

Borrowing money --
From time to time we have established a line of credit with banks 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 secured by real estate. We expect that investments in real
estate, either directly or through a subsidiary of IDSC, will be less than
five percent of IDSC's assets.

<PAGE>

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. We expect that outstanding securities loans will not exceed
10% of IDSC's assets.

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 available for sale, 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.

<PAGE>

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>

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.

IDSC files reports on Forms 10-K and 10-Q with the SEC. The public may read
and copy materials we file with the SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the public reference room by calling the
SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC.

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.

<PAGE>

During its many years in operation, AEFC has become a leading manager of
investments in mortgages and securities. As of Dec. 31, 1998, AEFC managed
or administered investments, including its own, of more than $212 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 180 offices and
more than 9,000 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:
o travel related services (including American Express(R)
Card and Travelers Cheque operations through American Express Travel
Related Services Company, Inc. and its subsidiaries); and
o international banking services (through American Express Bank Ltd. and its
subsidiaries).

<PAGE>

How your money is managed

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.

As of the fiscal year ended Dec. 31, 1998, IDSC had issued (in face
amount) $99,499,694 of installment certificates and $1,092,517,052 of
single payment certificates. As of Dec. 31, 1998, IDSC had issued
(in face amount) $13,593,267,561 of installment certificates and
$18,351,877,659 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:
o providing investment research;
o making specific investment recommendations; and
o executing purchase and sale orders according to our policy of obtaining the
best price and execution.

All these activities are subject to direction and control by our board of
directors and officers. Our agreement with 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).

<PAGE>

Advisory and services fee computation:
Included assets Percentage of total book value
First $250 million 0.750%
Next 250 million 0.650
Next 250 million 0.550
Next 250 million 0.500
Any amount over 1 billion 0.107

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.

Advisory and services fee for the past three years:

Percentage of
Year Total fees included assets
1998 $ 9,084,332 0.24%
1997 $17,232,602 0.50
1996 $16,989,093 0.50

Estimated advisory and services fees for 1999 are $8,651,000.

Other expenses payable by IDSC: The Investment Advisory and Services
Agreement provides that we will pay:
o costs incurred by us in connection with real estate and mortgages;
o taxes;
o depository and custodian fees;
o brokerage commissions;
o fees and expenses for services not covered by other agreements and provided
to us at our request, or by requirement, by attorneys, auditors, examiners
and professional consultants who are not officers or employees of AEFC;
o fees and expenses of our directors who are not officers or employees of AEFC;
o provision for certificate reserves (interest accrued on certificate owner
accounts); and
o expenses of customer settlements not attributable to sales function.

<PAGE>

How your money is managed

Distribution

Under a Distribution Agreement with American Express Financial Advisors
Inc., we pay for the distribution of this certificate as follows:
o 0.20% of the initial payment on the issue date of the certificate; and
o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

Under a Distribution Agreement with AESC, for certificates sold through
American Express Financial Direct, we pay AESC for the distribution of this
certificate as follows:
o 0.20% of the initial payment of the issue date of the certificate; and
o 0.20% of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.

This fee is not assessed to your certificate account.

Total distribution fees paid to American Express Financial Advisors Inc.
for all series of certificates amounted to $28,472,007 during the year
ended Dec. 31, 1998. We expect to pay American Express Financial Advisors
Inc. distribution fees amounting to $26,147,000 during 1999.

See Note 1 to financial statements regarding deferral of distribution fee
expense.

In addition, IDSC may pay distributors additional compensation for
distribution activities under certain circumstances. From time to time,
IDSC may pay or permit other promotional incentives, in cash or credit or
other compensation.

American Express Financial Advisors Inc. pays commissions to its financial
advisors and pays other selling expenses in connection with services to us.
Our board of directors, including a majority of directors who are not
interested persons of American Express Financial Advisors Inc., AESC or
IDSC, approved these distribution agreements.

<PAGE>

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.

Employment of other American Express affiliates

AEFC may employ an affiliate of American Express Company as executing
broker for our portfolio transactions only if:
o we receive prices and
executions at least as favorable as those offered by qualified
independent brokers performing similar services;
o the affiliate charges us commissions consistent with those charged to
comparable unaffiliated customers for similar transactions;
and
o the affiliate's employment is consistent with the terms of the current
Investment Advisory and Services Agreement and federal securities laws.

Directors and officers

IDSC's sole shareholder, AEFC, elects the board of directors that oversees
IDSC's operations. The board annually elects the directors, chairman,
president and controller for a term of one year. The president appoints the
other executive officers.

We paid a total of $37,000 during 1998 to directors not employed by AEFC.

<PAGE>

Board of directors

Rodney P. Burwell
Born in 1939. Director beginning in 1999.
Chairman, Xerxes Corporation (fiberglass storage tanks). Director, Fairview
Corporation.

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. Acting president of Fisk University
from 1998 to 1999. Former vice president and group executive, Industrial
Systems, with Honeywell, Inc. Retired 1989.

Jean B. Keffeler
Born in 1945. Director beginning in 1999.
Independent management consultant.

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.

*" Interested Person" of IDSC as that term is defined in Investment Company
Act of 1940.

<PAGE>

Executive officers

Paula R. Meyer
Born in 1954. President since June 1998.

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.

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.

The officers and directors as a group beneficially own less than 1% of the
common stock of American Express Company.

<PAGE>

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.

Independent 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, 1998. 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.

<PAGE>

IDS Certificates

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 Market Strategy Certificate -- A certificate that pays interest at a
fixed rate or linked to one-year stock market performance, as measured by a
broad market index, for a series of one-year terms starting every month or
at other intervals the client selects.

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
calculates all or part of your interest based on stock market performance,
as measured by a broad market index, with IDSC's guarantee of return of
principal.

<PAGE>

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.

<PAGE>

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>

Quick telephone reference*

- -------------------------------------------------------------------------------
Client Service
Organization

Withdrawals,
transfers,
inquiries

National/Minnesota:
800-437-3133

- -------------------------------------------------------------------------------
TTY Service

For the hearing impaired
800-846-4852

American Express
Easy Access Line

Account value, cash transaction information, current rate information (automated
response, Touchtone(R) phones only) National/Minnesota:

National/Minnesota:
800-862-7919

Mpls./St. Paul area:
800-862-7919

*You may experience delays when call volumes are high.

IDS Cash Reserve Certificate
IDS Tower 10
Minneapolis, MN 55440-0010

Web site address: http://www.americanexpress.com/advisors

Distributed by
American Express
Financial Advisors Inc.

S-6005 N (4/99)

<PAGE>

IDS Cash Reserve Certificate
Prospectus
April 28, 1999

Earn attractive rates with ready access to your cash reserves.

IDS Certificate Company (IDSC), a subsidiary of American Express Financial
Corporation, issues IDS Cash Reserve Certificate. You may:

o Purchase this certificate in any amount from $1,000 through $1 million
or with monthly investments of at least $50.

o Earn a fixed rate of interest declared every three months.

o Invest in successive three-month terms up to a total of 20 years from
the issue date of the certificate.

This certificate is backed solely by the assets of IDSC. See "Risk factors" on
page 2.

The distributor is not required to sell any specific amount of certificates.

Issuer: Distributor:
IDS Certificate Company American Express Service Corporation
IDS Tower 10 An American Express company
Minneapolis, MN 55440-0010
800-297-7378 (toll free)

<PAGE>

Initial interest rates

IDSC guarantees a fixed interest rate for each three-month term during the life
of the certificate. For your initial term, IDSC guarantees that when the rate
for new purchases takes effect, the rate will be within a specified range of the
average rate for three-month certificates of deposit as published in the most
recent BANK RATE MONITOR Top 25 Market AverageTM, North Palm Beach, FL 33408.
See "About the certificate" for more explanation.

Here are the interest rates in effect April 28, 1999:
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Simple Effective
amount interest rate* annualized yield**
- ------------------------------------- ----------------------------------- -----------------------------------
$50 to $999 2.96% 3.00%
- ------------------------------------- ----------------------------------- -----------------------------------
$1,000 to $24,999 3.74 3.80
- ------------------------------------- ----------------------------------- -----------------------------------
$25,000 or more 3.94 4.01
- ------------------------------------- ----------------------------------- -----------------------------------

* Rates may depend on factors described in "Rates for new purchases" under "About the certificate."

** Assuming monthly compounding.
</TABLE>

These rates may or may not have changed when you apply to purchase your
certificate. Rates for later three-month terms are set at the discretion of IDSC
and may also differ from the rates shown here. See "Rates for new purchases"
Under "About the certificate" for further information.

Risk factors

You should consider the following when investing in this certificate.

<PAGE>

Table of contents

Initial interest and participation rates p
Risk factors p

About the certificate p

Read and keep this prospectus p

Investment amounts and terms p
Face amount and principal p
Value at maturity p
Receiving cash during the term p
Interest p
Rates for new purchases p
Promotions and pricing flexibility p

How to invest your funds p
Buying your certificate p
Additional investments p
When your certificate term ends p
IRAs: special policies 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

<PAGE>

Transfer agent p
Employment of other American Express affiliates p
Directors and officers p
Independent 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

Read and keep this prospectus

This prospectus describes terms and conditions of your IDS Cash Reserve
Certificate. It contains facts that can help you decide if the certificate is
the right investment for you. Read the prospectus before you invest and keep it
for future reference. No one has the authority to change the terms and
conditions of the IDS Cash Reserve Certificate as described in the prospectus,
or to bind IDSC by any statement not in it.

Investment amounts and terms

You may purchase the IDS Cash Reserve Certificate in any amount from $1,000 or
monthly investments of at least $50 through scheduled bank authorization or
payroll deduction. Your total investments over the life of the certificate may
not exceed $1 million unless you receive prior approval from IDSC. IDSC
guarantees your principal and interest.

The certificate may be used as an investment for your Individual Retirement
Account (IRA). A minimum investment of $50 per month is required for these types
of accounts. If so used, the amount of your contribution (investment) will be
subject to any limitations of the plan and applicable federal law.

Face amount and principal

The face amount of the certificate is the amount of your initial investment, and
will remain the same over the life of the certificate.

The principal is the amount that is reinvested at the beginning of each
subsequent term, and is calculated as follows:

<PAGE>

For example: Assume your initial investment (face amount) of $5,000 has earned
$75 of interest during the term. You have not taken any interest as cash, or
made any withdrawals. You have invested an additional $2,500 at the beginning of
the next term. Your principal for the next term will equal:

$5,000.00 Face amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties or fees
=============
$7,575.00 Principal at the beginning of the next term.

Value at maturity

Your certificate matures 20 years from its issue date. At maturity, the value of
your certificate will be the total of your actual investment, plus credited
interest not paid to you in cash, less withdrawals, penalties and fees. When
your certificate matures, you will receive a distribution for your principal,
plus any credited interest, less any withdrawals, penalties and fees. Bank
authorizations will automatically be stopped at maturity or full withdrawal.

Receiving cash during the term

If you need your money before your certificate term ends, you may withdraw part
or all of its value at any time, less any penalties that apply. The service
document describes procedures for withdrawing money, as well as conditions under
which penalties apply.

Interest

IDSC declares and guarantees a fixed rate of interest for each three month term
during the life of your certificate. We calculate the amount of interest you
earn each certificate month by:

o applying the interest rate then in effect to your balance each day;

o adding these daily amounts to get a monthly total; and

<PAGE>

o subtracting interest accrued on any amount you withdraw during the
certificate month.

Interest is calculated on a 30-day month and 360-day year basis.

Rates for new purchases

When your application is accepted, and we have received your initial investment,
we will send you a confirmation showing the rate that your investment will earn
for the first term. For accounts of $1,000 to $24,999.99 IDSC guarantees that
this rate will be within a range from 30 basis points (0.30%) below to 70 basis
points (0.70%) above the average interest rate published for three-month
certificates of deposit (CDs) in the BANK RATE MONITOR Top 25 Market AverageTM
(the BRM Average). For example, if the average rate most recently published is
4.00%, our rate in effect for that week for amounts of $1,000 to $24,999.99
would be between 3.70% to 4.70%. For accounts of $25,000 or more, this rate will
be within a range from 10 basis points (0.10%) below to 90 basis points (0.90%)
above the same index rate. For accounts of less than $1,000, this rate will be
within a range of 135 basis points (1.35%) below to 35 basis points (0.35%)
below this average interest rate.

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 on the current BRM Average rates, call the American Express
Financial Direct (AEFD) at the telephone numbers listed on the back cover
between 8 a.m. and 6 p.m. your local time.

<PAGE>

Rates for new purchases are reviewed and may change weekly. Normally, the rate
you receive will be the higher of:

o the rate in effect on the date of your application; or

o the rate in effect on the date your application is accepted by IDSC.

However if your application bears a date more than seven days before its receipt
by IDSC, the rate you receive will be the higher of:

o the rate in effect on the date your application is accepted by IDSC; or

o the rate in effect seven days prior to receipt.

Promotions and pricing flexibility

IDSC may sponsor or participate in promotions involving the certificate and its
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. Rates also may
vary depending on the amount invested, geographic location and whether the
certificate is purchased for an IRA.

These promotions will generally be for a specified period of time. If we offer a
promotion, the rates for new purchases will be within the range of rates
described under "Rates for new purchases," above.

Rates for future terms: Interest on your certificate for future three-month
terms may be greater or less than the rates you receive during the first three
months. In setting future rates, a primary consideration will be the prevailing
investment climate, including three-month CD rates as reflected in the BRM
Average. Nevertheless, we have complete discretion as to what interest shall be
declared beyond the initial three-month term. 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.

Performance: From February 1994 through February 1999, IDS Cash Reserve yields
were generally higher than average bank and thrift three-month CD yields, as
measured by the BRM Average.

<PAGE>

Yields from February 1994 through February 1999

4% _________IDS Cash Reserve Certificate

3% .........Certificate of Deposit - Three Month

2% ---------Money Market Deposit Account

`94 `95 `96 `97 `98 `99

This graph compares past yields offered on IDS Cash Reserve Certificate to those
of three-month CDs and money market deposit accounts and should not be
considered a prediction of future performance.

How to invest your funds

Buying your certificate

Additional investments

You may make additional investments at any time. Additional investments can be
in any amount from $50 and your total investment, less withdrawals, may not
exceed $1 million (unless you receive prior approval from IDSC to invest more).
You will earn interest on additional investments from the date we accept them.
IDSC will send a confirmation of additional investments.

Important: When you open an account, you must provide IDSC with your correct
Taxpayer Identification Number (TIN), which is your Social Security or Employer
Identification number. See "Taxes on your earnings."

If you wire your investment into an established account, you must pay any fee
the bank charges for wiring.

<PAGE>

When your certificate term ends

Shortly before the end of your certificate's term we will send you a notice
indicating the interest rate that will apply to the new term. Unless you tell us
otherwise, your certificate will automatically continue for another term. The
interest rate that will apply to your new term will be the rate in effect on the
day the new term begins. This rate of interest will not be changed during that
term unless your certificate's principal falls below a break point for a lower
interest rate.

Other full and partial withdrawal policies:

o If your certificate is pledged as collateral, any withdrawal will be
delayed until we get approval from the secured party.

o Any payments to you may be delayed under applicable rules, regulations or
orders of the Securities and Exchange Commission (SEC).

o We may deduct a service fee from your balance (for partial withdrawals)
or from the proceeds of a full withdrawal.

IRAs: special policies

o The annual custodial fee for an IRA may be deducted from your certificate
account. It may reduce the amount payable at maturity or the amount
received upon an early withdrawal.

o IRA withdrawals may be subject to withdrawal penalties or loss of interest
even if they are not subject to federal tax penalties.

<PAGE>

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.

o 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.

Taxes on your earnings

Retirement accounts

IDSC will withhold federal income taxes of 10% on IRA withdrawals unless you
tell us not to.

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. Also, withdrawals of principal during a certificate month may be
subject to the certificate's provision for loss of interest.