IDS CERTIFICATE CO /MN/, POS AM, 1999-03-04

IDS CERTIFICATE CO /MN/
POS AM, 1999-03-04

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM S-1

POST-EFFECTIVE AMENDMENT NUMBER 24 TO

REGISTRATION STATEMENT NO. 33-22503

IDS STOCK MARKET 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>

CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 24 TO REGISTRATION STATEMENT No.
33-22503

Cover Page

Prospectus

Part II Information

Signatures

Exhibits

<PAGE>

IDS Stock Market Certificate
Prospectus
March 10, 1999

Potential for stock market growth with safety of principal.

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

o Purchase this certificate in any amount from $2,000 through $1 million.
o Participate in any increase of the stock market based on the S&P 500 Index
while protecting your principal.
o Decide whether IDSC will guarantee part of your return or whether to link all
of it to the market.
o Keep your certificate for up to 14 terms.

Like all investment companies, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

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 and selling agent are not required to sell any specific amount
of securities.

Issuer: Distributor:
IDS Certificate Company American Express Financial Advisors Inc.
IDS Tower 10
Minneapolis, MN 55440-0010 Selling Agent:
800-437-3133 (toll free) Securities America, Inc.

American Express companies

<PAGE>

Initial interest and participation rates

IDSC guarantees return of your principal. The interest on your certificate is
linked to stock market performance as measured by the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index). See "About the certificate" for
more explanation.

Here are the interest rates and market participation percentages in effect on
March 10, 1999:

<TABLE>
<CAPTION>
<S> <C> <C>
Maximum Market participation percentage Minimum
return interest
- ------------------------------------- ----------------------------------- -----------------------------------

9% 100% (full) None
- ------------------------------------- ----------------------------------- -----------------------------------

9% 25% (partial) Currently 2.50%
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

These rates may or may not have changed when you apply to purchase your
certificate. For your first term, if you choose the partial participation option
for your certificate, your minimum interest rate will be between 2.00% and
3.00%. Rates for later terms are set at the discretion of IDSC and may differ
from the rates shown here.

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."

If you choose to link all of your return on this certificate to the S&P 500
Index, you earn interest only if the value of the S&P 500 Index is higher on the
last day of your term than it was on the first day of your term. See "Interest"
under "About the certificate."

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 and participation rates 2p
Risk factors 2p

About the certificate 4p

Read and keep this prospectus 4p

Investment amounts 4p
Face amount and principal 4p
Certificate term 5p
Value at maturity 5p
Receiving cash before end of term 5p
Interest 6p
Promotions and pricing flexibility 9p
Historical data on the S&P 500 Index 10p
Calculation of return 13p
About the S&P 500 Index 16p
Opportunities at the end of a term 19p

How to invest your funds 21p
Buying your certificate 21p
Transfer of ownership 23p

Taxes on your earnings 24p
Gifts to minors 25p
How to determine the correct TIN 26p
Foreign investors 27p
Trusts 28p

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

How your money is managed 35p
Relationship between IDSC and American
Express Financial Corporation 35p
About Securities America 36p
Capital structure and certificates issued 36p
Investment management and services 36p
Distribution 38p

Selling Agent Agreements with AEBI, Coutts and SAI 39p

Selling agents 41p

<PAGE>

Transfer agent 41p
Employment of other American Express affiliates 41p
Directors and officers 42p
Independent auditors 45p

Appendix 46p

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 66p

Financial statements 63p

Notes to financial statements 82p

<PAGE>

About the certificate

Read and keep this prospectus

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

Investment amounts

You may purchase the IDS Stock Market Certificate in any amount from $2,000
through $1 million (unless you receive prior approval from IDSC to invest more)
payable in U.S. currency. You may also make additional lump-sum investments in
any amount at the end of any term as long as your total amount paid in is not
more than the $1 million (unless you receive prior approval from IDSC to invest
more).

Face amount and principal

The face amount of your certificate is the amount of your initial investment.
Your principal is the value of your certificate at the beginning of each
subsequent term. IDSC guarantees your principal. It consists of the amount you
actually invest plus interest credited to your account and any additional
investment you make less withdrawals, penalties and any interest paid to you in
cash.

For example: Assume your initial investment (face amount) of $10,000 has earned
a return of 7.25%. IDSC credits interest to your account at the end of the term.
You have not taken any interest as cash, or made any withdrawals. You have
invested an additional $2,500 prior to the beginning of the next term. Your
principal for the next term will equal:

$10,000.00 Face amount (initial investment)
plus 725.00 Interest credited to your account at the end of
the term
plus 5.00 Interim interest (See "Interim interest")
minus ($0.00) Interest paid to you in cash
plus 2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties
===============
$13,230.00 Principal at the beginning of the next term.

<PAGE>

Certificate term

Your first certificate term is a 52-week period. It begins on the Wednesday
after IDSC accepts your application and ends the Tuesday before the 52-week
anniversary of its acceptance. For example, if IDSC accepts your application on
a Wednesday, your first term would begin the next Wednesday. Your certificate
will earn interest at the interim interest rate then in effect until the term
begins. It will not earn any participation interest until the term begins. If
you choose to continue to receive participation interest, subsequent terms are
52-week periods that begin on the Wednesday following the 14-day grace period at
the end of the prior 52-week term. You may begin your next term on any Wednesday
during the 14-day period by providing prior written instructions to IDSC. If you
choose to receive fixed interest, subsequent terms will be up to 52 weeks as
described in "Fixed interest" under "Interest" below.

Value at maturity

Your certificate matures after 14 terms. Then you will receive a distribution
for its value. Participation terms are always 52 weeks. Fixed interest terms may
be less than 52 weeks if you change to participation before the end of the
52-week period. At maturity, the value of your certificate will be the total of
your actual investments, plus credited interest not paid to you in cash, less
any withdrawals and withdrawal penalties. Certain other fees may apply.

Receiving cash before end of term

If you need money before your certificate term ends, you may withdraw part or
all of its value at any time, less any penalties that apply. The service
document describes procedures for withdrawing money, as well as conditions under
which penalties apply.

Interest

You choose from two types of participation interest for your first term: 1) full
participation, or 2) partial participation together with minimum interest.
Interest earned under both of these options has an upper limit which is the
maximum annual return explained below. After your first term, you may choose
full or partial participation, or not to participate in any market movement and
receive a fixed rate of interest.

<PAGE>

Full participation interest: With this option:
o You participate 100% in any percentage increase in the S&P 500 Index up to
the maximum return.
o You earn interest only if the value of the S&P 500 Index is higher on the
last day of your term than it was on the first day of your term.
o Your return is linked to stock market performance.

The S&P 500 Index is frequently used to measure the relative performance of the
stock market. For a more detailed discussion of the S&P 500 Index, see "About
the S&P 500 Index."

Partial participation and minimum interest: This option allows you to
participate in a specified part (market participation rate) of any increase in
the S&P 500 Index together with a rate of interest guaranteed by IDSC in advance
for each term (minimum interest).
Your return consists of two parts:

o A percentage of any increase in the S&P 500 Index, and

o A rate of interest guaranteed by IDSC in advance for each term.

Together, they cannot exceed the maximum return.

If you choose the partial participation option for your first term, the minimum
interest paid on your certificate will be between 2.00% and 3.00%.

The market participation rate and the minimum interest rate on the date of this
prospectus are listed on the inside cover under "Initial interest and
participation rates."

Fixed interest: After your first term, this fixed interest option allows you to
stop participating in the market entirely for some period of time. A fixed
interest term is 52 weeks unless you choose to start a new participation term
before your 52-week term ends. You may choose to receive a fixed rate of
interest for any term after the first term. During the term when you are
receiving fixed interest, you can change from your fixed interest selection to
again participate in the market. If you make the change from fixed interest to
participation interest, your next term would begin on the Wednesday following
our receipt of notice of your new selection. In this way, you may have a term
(during which you would earn fixed interest) that is less than 52 weeks. You may
not change from participation interest to fixed interest during a term.

Maximum annual return: This is the cap, or upper limit, of your return. Your
total return, including both participation and minimum interest for a term for
which you have chosen participation interest, will be limited to this maximum
return percentage.

<PAGE>

Determining the S&P 500 Index value: The stock market closes at 3 p.m. Central
time. The S&P 500 Index value is available at approximately 4:30 p.m. This is
the value we currently use to determine participation interest. Occasionally,
Standard & Poor's (S&P) makes minor adjustments to the closing value after 4:30
p.m., and the value we use may not be exactly the one that is published the next
business day. In the future, we may use a later time cut-off if it becomes
feasible to do so. If the stock market is not open or the S&P 500 Index is
unavailable as of the last day of your term, the preceding business day for
which a value is available will be used instead. Each Tuesday's closing value of
the S&P 500 Index is used for establishing the term start and the term end
values each week.

Interim interest: When we accept your application, we pay interim interest to
your account for the time before your first term begins. We also pay interim
interest for the 14-day period between terms unless you write or call to ask us
to begin your next term earlier. You may withdraw this interest in cash at any
time before it becomes part of your certificate's principal without a withdrawal
penalty. If it is not withdrawn, the interest will become part of your
certificate's principal at the start of the next succeeding term. For example,
the interest you earn between the end of the first and the beginning of the
second term will become part of the principal at the start of your third term.
Interim interest rates for the time before your first term begins will be within
a range 15 basis points (.15%) below to 85 basis points (.85%) above the average
interest rate published for 12-month certificates of deposit in the BANK RATE
MONITOR Top 25 Market AverageTM (the BRM Average), North Palm Beach, FL 33408.
If the BRM Average is no longer publicly available or feasible to use, IDSC may
use another, similar index as a guide for setting rates.

The BANK RATE MONITOR is a weekly magazine published in North Palm Beach, FL
33408, by Advertising News Service Inc., an independent national news
organization that collects and disseminates information about bank products and
interest rates. Advertising News Service has no connection with IDSC, American
Express Financial Corporation (AEFC) or any of their affiliates.

The BRM Average is an index of rates and annual effective yields offered on
various length certificates of deposit by large banks and thrifts in 25
metropolitan areas. The frequency of compounding varies among the banks and
thrifts. Certificates of deposit in the BRM Average are government insured
fixed-rate time deposits.

The BANK RATE MONITOR may be available in your local library. To obtain
information or current BRM Average rates, call the Client Service Organization
at the telephone numbers listed on the back cover.

<PAGE>

Earning interest: IDSC calculates, credits and compounds participation interest
at the end of your certificate term. Minimum interest accrues daily and is
credited and compounded at the end of your certificate term. Fixed interest
accrues and is credited daily and compounds at the end of your term. Both
minimum and fixed interest are calculated on a 30-day month and 360-day year
basis. Interim interest accrues and is credited daily and compounds at the end
of your term immediately following the period in which interim interest is
credited.

Rates for future periods: After the initial term, the maximum return, market
participation percentage or minimum interest rate on your certificate may be
greater or less than those shown on the front of this prospectus. We review
rates weekly and have complete discretion to decide what interest rate will be
declared.

To find out what your certificate's new maximum return, market participation
percentage and minimum interest rate will be for your next term, please consult
your registered representative or the Client Service Organization at the
telephone numbers listed on the back cover.

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.

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. These promotions
will generally be for a specified period of time.

We also may offer different rates based on the amount invested and geographic
location.

<PAGE>

Historical Data on the S&P 500 Index

The following chart illustrates the month-end closing values of the index from
Dec. 31, 1983 through Oct. 27, 1998. The values of the S&P 500 Index are
reprinted with the permission of S&P.

S&P 500 Index values -- December 1983 to October 1998

1000 Chart shows closing values of the S&P from above 100 in
Dec. 1983 to near 800 in Oct. 1998.

900

800

700

600

500

400

300

200

100

`83 `84 `85 `86 `87 `88 `89 `90 `91 `92 `93 `94 `95 `96 `97 `98

<PAGE>

S&P 500 Index Average Annual Return
<S> <C> <C>
Beginning date Period held Average annual
Dec. 31, in Years return
- ------------------------------------- ----------------------------------- -----------------------------------

1987 10 14.66%
- ------------------------------------- ----------------------------------- -----------------------------------

1992 5 17.37
- ------------------------------------- ----------------------------------- -----------------------------------

1996 1 31.01
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

The next chart illustrates, on a moving 52-week basis, the price return of the
S&P 500 Index measured for every 52-week period beginning with the period ended
Dec. 31, 1984. The price return is the percentage return for each period using
month-end closing prices of the S&P 500 Index. Dividends and other distributions
on the securities comprising the S&P 500 Index are not included in calculating
the price return.

S&P 500 Index - December 1984 to October 1998

40% Chart shows 52-week Moving Price Return of the S&P from a high
of 40% to a low of -20%
30%
Label of "Y" axis reads: 52-week return
20%

10%

- -10%

- -20%

`84 `85 `86 `87 `88 `89 `90 `91 `92 `93 `94 `95 `96

Using the same data on price returns described above, the next graph expands on
the information in the preceding chart by illustrating the distribution of all
the 52-week price returns of the S&P 500 Index beginning with the 52-week period
ending Dec. 31, 1984. The graph also shows the number of times these price
returns fell within certain ranges.

<PAGE>

S&P 500 Index - December 1984 to October 1998

30 Chart shows the distribution of all of the 52-week price
returns of the S&P 500 from 1/7/92 through 10/27/98 with a
high of just over 20 and a low between 0 and 5.
25

20 Label of "Y" axis reads: Observations

-15 -10 -5 0 5 10 15 20 25 29.9 >=30

The last chart illustrates, on a moving weekly basis, the actual 52-week return
of the Stock Market Certificate at full and partial participation compared to
the price return of the NYSE Composite Index(R) through October 1992 and the S&P
500 Index after October 1992. For non-guaranteed funds received before Nov. 3,
1992, and guaranteed funds received before Nov. 4, 1992, Stock Market
Certificate participation interest was based on the NYSE Composite Index(R)
rather than the S&P 500 Index.

Actual 52-week return 1/22/92 to 10/27/98

35% Chart shows actual returns of the certificate at full and 25%
participation with the full participation generally tracking the
market indexes over the.
30% period and 25% level of participation tracking at the 25% level of
return.
25%

20%

15%

10%

1/91 5/91 9/91 1/92 5/92 9/92 1/93 5/93 8/93 1/94 5/94 9/94 1/95 5/95
9/95 1/96 5/96 9/96 1/97

The Stock Market Certificate was first available on Jan. 24, 1990. The
performance reflects the returns on the 52-week anniversary date, falling on a
Wednesday, of each of the weeks shown.

Your interest earnings are tied to the movement of the Index. They will be based
on any increase in the Index as measured on the beginning and ending date of
each 52-week term. Of course, if the Index is not higher on the last day of your
term than it was on the first day, your principal will be secure but you will
earn no participation interest.

<PAGE>

The NYSE Composite Index(R) is a registered service mark of the New York Stock
Exchange, Inc. (NYSE) and is a composite covering price movements of all common
stocks listed on the NYSE.

How the index has performed in the past does not indicate how the stock market
or the certificate will perform in the future. There is no assurance that
certificate owners will receive interest on their accounts beyond any minimum
interest or fixed interest selected. The index could decline.

Calculation of return

The increase or decrease in the S&P 500 Index, as well as the actual return paid
to you, is calculated as follows:

Rate of return on S&P 500 Index

Term ending value of S&P 500 Index minus Term beginning value of S&P 500 Index
divided by Term beginning value of S&P 500 Index equals Rate of return on S&P
500 Index

The actual return paid to you will depend on your interest participation
selection.

For example, assume:

Term ending value of S&P 500 Index 968
Term beginning value of S&P 500 Index 890
Maximum return 9%
Minimum return 2.50%
Partial participation rate 25%

968 Term ending value of S&P 500 Index
minus 890 Term beginning value of S&P 500 Index
-------
equals 78 Difference between beginning and ending values

78 Difference between beginning and ending values
divided by 890 Term beginning value of S&P 500 Index
equals 8.76% Percent increase - full participation return

<PAGE>

8.76% Percent increase or decrease
times 25.00% Partial participation rate
------
equals 2.19%
plus 2.50% 2.50% minimum interest rate
-------
equals 4.69% Partial participation return

In both cases in the example, the return would be less than the 9% maximum.

Maximum Return and Partial Participation Minimum Rate History - The following
table illustrates the maximum annual returns and partial participation minimum
rates that have been in effect since the Stock Market Certificate was
introduced.
<TABLE>
<CAPTION>
<S> <C> <C>
Partial participation minimum rate
Start of Term Maximum annual return
- ------------------------------------- ----------------------------------- -----------------------------------

Jan. 24, 1990 18.00% 5.00%
- ------------------------------------- ----------------------------------- -----------------------------------

Feb. 5, 1992 18.00 4.00
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

May 13, 1992 15.00 4.00
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Sept. 9, 1992 12.00 3.00
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Nov. 11, 1992 10.00 2.50
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Nov. 2, 1994 10.00 2.75
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

April 26, 1995 12.00 3.50
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Jan. 17, 1996 10.00 3.25
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Feb. 26, 1997 10.00 3.00
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

May 7, 1997 10.00 2.75
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Oct. 8, 1997 10.00 2.50
- ------------------------------------- ----------------------------------- -----------------------------------
- ------------------------------------- ----------------------------------- -----------------------------------

Dec. 16, 1998 9.00 2.50
- ------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

Examples:

To help you understand the way this certificate works, here are some
hypothetical examples. The following are three different examples of market
scenarios and how they affect the certificate's return. Assume for all examples
that:

<PAGE>

o you purchased the certificate with a $10,000 original investment,

o the partial participation rate is 25%,

o the minimum interest rate for partial participation is 2.50%,

o the maximum total return for full and partial participation is 9%.

1. If the S&P 500 Index value rises
<S> <C> <C>
Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 1000 8% increase in the S&P 500 Index Index 1080
- -----------------------------------------------------------------------------------------------------------------------------------
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000Original investment
+ 800 8% x $10,000 + 250 2.50% (Minimum interest rate) x $10,000
Participation interest + 200 25% x 8% x $10,000 Participation interest
- -------- -------
$10,800 Ending balance $10,450 Ending balance
(8% Total return) (4.50% Total return)

2. If the Market and the S&P 500 Index value fall

Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 1000 4% decrease in the S&P 500 Index Index 961
- -----------------------------------------------------------------------------------------------------------------------------------
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000Original investment
+ 0 Participation interest + 250 2.50% (Minimum interest rate) x $10,000
- --------
$10,000 Ending balance + 0 Participation interest
-------
(0% Total return) $10,250 Ending balance
(2.50% Total return)

3. If the Market and the S&P 500 Index value rise above the maximum return

Week 1/Wed Week 52/Tues
S&P 500 S&P 500
Index 1000 16% increase in the S&P 500 Index Index 1160
- ----------------------------------------------------------------------------------------------------------------------------------
Full participation interest Partial participation interest and minimum interest
$10,000 Original investment $10,000Original investment
+ 900 9% x $10,000 + 250 2.50% (Minimum interest rate) x $10,000
Maximum interest + 400 25% x 16% x $10,000 Participation interest
- -------- -------
$10,900 Ending balance $10,650 Ending balance
(9% Total return) (6.50% Total return)
</TABLE>

About the S&P 500 Index

The description in this prospectus of the S&P 500 Index including its make-up,
method of calculation and changes in its components are derived from publicly
available information regarding the S&P 500 Index. IDSC does not assume any
responsibility for the accuracy or completeness of such information.

<PAGE>

The S&P 500 Index is composed of 500 common stocks, most of which are listed on
the New York Stock Exchange. The S&P 500 Index is published by S&P and is
intended to provide an indication of the pattern of common stock movement.
Standard & Poor's (S&P) chooses the 500 stocks to be included in the S&P 500
Index with the aim of achieving a distribution by broad industry groupings that
approximates the distribution of these groupings in the U.S. common stock
population. Changes in the S&P 500 Index are reported daily in the financial
pages of many major newspapers. The index used for IDS Stock Market Certificate
excludes dividends on the 500 stocks.

"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500" and
"500" are trademarks of The McGraw-Hill Companies Inc. and have been licensed
for use by IDSC. The certificate is not sponsored, endorsed, sold or promoted by
S&P. S&P makes no representation or warranty, express or implied, to the owners
of the certificate or any member of the public regarding the advisability of
investing in securities generally or in the certificate particularly or the
ability of the S&P 500 Index to track general stock market performance. S&P's
only relationship to IDSC is the licensing of certain trademarks and trade names
of S&P and of the S&P 500 Index, which is determined, composed and calculated by
S&P without regard to IDSC or the certificate. S&P has no obligation to take the
needs of IDSC or the owners of the certificate into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the certificate to be issued or in the determination or
calculation of the equation by which the certificate is to be converted into
cash. S&P has no obligation or liability in connection with the administration,
marketing or trading of the certificate.

S&P does not guarantee the accuracy and/or the completeness of the S&P 500 Index
or any data included therein and S&P shall have no liability for any errors,
omissions, or interruptions therein. S&P makes no warranty, express or implied,
as to the results to be obtained by IDSC, owners of the certificate, or any
person or entity from the use of the S&P 500 Index or any data included therein.
S&P makes no express or implied warranties, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein. Without limiting any
of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect, or consequential damages (including lost profits), even if
notified of the possibility of such damages.

If for any reason the S&P 500 Index were to become unavailable or not reasonably
feasible to use, we would use a comparable stock market index for determining
participation interest. If this were to occur, we would send you a notice
indicating the comparable index that will be used and give you the option to
surrender your certificate, if desired, and receive your principal, without
being assessed a surrender charge.

<PAGE>

Opportunities at the end of a term

Grace period: When your certificate term ends, you have 14 days before a new
term automatically begins. During this 14-day grace period you can:

o change your interest selection;

o add money to your certificate;

o change your term start date;

o withdraw part or all of your money without a withdrawal penalty or loss
of interest; or

o receive your interest in cash.

Fixed interest only: The grace period does not apply if you made the change from
fixed interest back to participation interest during a term as discussed in
"Fixed interest" under "Interest" above. Instead, your new 52-week term will
begin on the Wednesday following our receipt of your notice of your new interest
selection.

New term: If you do not make changes, your certificate will continue with your
current selections when the new term begins 14 days later. You will earn interim
interest during this 14-day grace period. If you don't want to wait 14 days
before starting your next market participation term, you must phone or send
written instructions before your current term ends. You can tell us to start
your next term on any Wednesday that is during the grace period and immediately
following the date on which we receive your notice. Your notice may also tell us
to change your interest selection, add to your certificate or withdraw part of
your money. The notification that we send you at the end of the term cannot be
sent before the term ends because indexing information and interest (if any) are
included in the notice and are not known until the term ends. Any additional
payments received during the current term will be applied at the end of the
current term. By starting your new term early and waiving the 14-day grace
period, you are choosing to start your next term without knowing the ending
value of your current term.

How to invest your funds

Buying your certificate

Your registered representative will help you fill out and submit an application
to open an account with us and purchase a certificate. We will process the
application at our corporate offices in Minneapolis. When we have accepted your
application and we have received your initial investment, we will send you a
confirmation showing the acceptance

<PAGE>

date, the date your term begins and the interest selection you have made
detailing your market participation percentage and, if applicable, the minimum
interest rate for your first term. After your term begins, we will send you
notice of the value of the S&P 500 Index on the day your term began. The rates
in effect on the date we accept your application are the rates that apply to
your certificate. See "Purchase policies" below.

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."

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

Penalties for withdrawal during a term: If you withdraw money during a term, you
will pay a penalty of 2% of the principal withdrawn. The 2% penalty is waived
upon death of the certificate owner.

You may not make a partial withdrawal if it would reduce your certificate
balance to less than $2,000. If you request such a withdrawal, we will contact
you for revised instructions.

When you request a full or partial withdrawal during a term, we pay you from the
principal of your certificate.

Loss of interest: If you make a withdrawal at any time other than at the end of
the term, you will lose any interest accrued on the withdrawal amount since we
credit minimum and participation interest only at the end of a term. However, we
will pay accrued fixed and interim interest to the date of the withdrawal.

Following are examples describing a $2,000 withdrawal during a term for
participation and fixed interest:

Participation interest:

Account balance $ 10,000.00
Interest (interest is credited at the end of the term) 0.00
Withdrawal of principal (2,000.00)
2% withdrawal penalty (40.00)
==============
Balance after withdrawal $ 7,960.00

You will forfeit any accrued interest on the withdrawal amount.

<PAGE>

Fixed interest:

Account balance $ 10,000.00
Interest credited to date 100.00
Withdrawal of credited interest (100.00)
Withdrawal of principal (1,900.00)
2% withdrawal penalty (on $1,900 principal withdrawn) (38.00)
==============
Balance after withdrawal $ 8,062.00

Other full and partial withdrawal policies:

o If you request a partial or full withdrawal of a certificate recently
purchased or added to by a check or money order that is not guaranteed, we
will wait for your check to clear. Please expect a minimum of 10 days from
the date of your payment before 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 SEC.

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 $2,000. If the balance would be less than $2,000, we
will deduct the fee from the proceeds of the withdrawal.

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

Transfer of ownership

While this certificate is not negotiable, IDSC will transfer ownership upon
written notification to our Client Service Organization.

Taxes on your earnings

Participation and minimum interest on your certificate is taxable when credited
to your account. Fixed and interim interest are fully taxable as earned. Each
calendar year we provide the certificate account owner and the IRS with reports
of all earnings over $10 (Form 1099). Withdrawals are reported to the
certificate owner and the IRS on Form 1099-B, Proceeds from Broker Transactions.

<PAGE>

Revised proposed regulations: The IRS has issued revised proposed regulations
governing the tax treatment of debt instruments which provide for variable rates
of interest. This includes interest based on the price of property that is
actively traded or on an index of the prices of such property. Under these
revised proposed regulations, the Stock Market Certificate is likely to
constitute a debt instrument that would be treated as a variable rate debt
instrument (VRDI) rather than a contingent debt instrument (CDI). If the Stock
Market Certificate constitutes a VRDI, then the income earned on the certificate
will be treated as original issue discount and reported when credited to the
owner's account. If the certificate is not treated as a VRDI, but rather is
treated as a CDI, then the owner may have taxable income to report, even though
the account owner has not received any cash distributions. Furthermore, the
timing and character of the income may be different from that of a VRDI. IDSC
cannot guarantee whether the revised proposed regulations will be adopted as
final in this present form or will again be modified. As always, you should
consult your tax advisor for information regarding the tax implications of your
certificate.

Gifts to minors

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

Your 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;

<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

Corporate The corporation

Association, club or tax-exempt organization The organization

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

<PAGE>

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

Foreign investors

If you are not a citizen or resident of the United States (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.

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

Estate tax: If you are a nonresident alien and you die while owning a
certificate, then, depending on the circumstances, IDSC generally will not act
on instructions with regard to the certificate unless IDSC first receives, at a
minimum, a statement from persons IDSC believes are knowledgeable about your
estate. The statement must be 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 Stock
Market 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 $268 million on Sept. 30, 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 Stock Market Certificate is a security, its offer and sale are
subject to regulation under federal and state securities laws. (The American
Express Stock Market Certificate is a face-amount certificate. It is not a bank
product, an equity investment, a form of life insurance or an investment trust.)

The federal Investment Company Act of 1940 requires us to keep investments on
deposit in a segregated custodial account to protect all of our outstanding
certificates. These investments back the entire value of your certificate
account. Their amortized cost must exceed the required carrying value of the
outstanding certificates by at least $250,000. As of Sept. 30, 1998, the
amortized cost of these investments exceeded the required carrying value of our
outstanding certificates by more than $218 million. The law requires us to

<PAGE>

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 Sept. 30, 1998:

Type of investment Net amount invested

Corporate and other bonds 49%
Government agency bonds 26
Preferred stocks 16
Mortgages 6
Cash and cash equivalents 2
Municipal bonds 1

As of Sept. 30, 1998 about 89% 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 Dec. 31, 1997,
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 June 30, 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 Dec. 31, 1997, financial
statements.

Investment policies

In deciding how to diversify the portfolio -- among what types of investments in
what amounts -- the officers and directors of IDSC use their best judgment,
subject to applicable law. The following policies currently govern our
investment decisions:

Debt securities-
Most of our investments are in debt securities as referenced in the table in
"Backed by our investments" under "How your money is used and protected."

The price of bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of a bond also fluctuates if its credit
rating is upgraded or downgraded. The price of bonds below investment grade may
react more to whether a company can pay interest and principal when due than to
changes in interest rates. They

<PAGE>

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 Sept. 30, 1998, IDSC held about 11% 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.

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 percent 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.

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.

<PAGE>

Restrictions -
There are no restrictions on concentration of investments in any particular
industry or group of industries or on rates of portfolio turnover.

How your money is managed

Relationship between IDSC and American Express Financial Corporation

IDSC was originally organized as Investors Syndicate of America, Inc., a
Minnesota corporation, on Oct. 15, 1940, and began business as an issuer of face
amount investment certificates on Jan. 1, 1941. The company became a Delaware
corporation on Dec. 31, 1977, and changed its name to IDS Certificate Company on
April 2, 1984.

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,
AEFC changed its name from IDS Financial Corporation. 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 Sept. 30, 1998, AEFC managed or
administered investments, including its own, of more than $188 billion.

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>

About Securities America

Securities America Inc. is a wholly owned subsidiary of Securities America
Financial Corporation (formerly Financial Dynamics Inc.). American Express
Financial Corporation acquired Financial Dynamics Inc. in March 1998. Securities
America Inc. operates as a fee-based broker dealer. As of November 6, 1998
Securities America Inc. had 1109 registered representatives.

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, 1997, IDSC had issued (in face amount)
$165,818,152 of installment certificates and $1,470,915,530 of single payment
certificates. As of Dec. 31, 1997, IDSC had issued (in face amount)
$13,493,767,867 of installment certificates and $17,259,360,607 of single
payment certificates since its inception in 1941.

Investment management and services

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

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
1997 $17,232,602 0.50%
1996 16,989,093 0.50
1995 16,472,458 0.50

Estimated advisory and services fees for 1998 are $9,361,000.

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

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

o 0.70% of the initial investment on the first day of the certificate's term,
and

o 0.70% of the certificate's reserve at the beginning of each subsequent term,

for certificates sold through American Express Financial Advisors, but not for
certificates sold through American Express Bank International (AEBI), Coutts &
Co. (USA) International (Coutts) representatives, or Securities America Inc.
(SAI).

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 1.00% of the initial investment on the first day of the certificate's term;
and

o 1.00% of the certificate's reserve at the beginning of each subsequent term.

This fee is not assessed to your certificate account.

American Express Financial Direct is a channel for direct marketing of financial
services to American Express card members and others.

Total distribution fees paid to American Express Financial Advisors Inc. for all
series of certificates amounted to $30,072,811 during the year ended Dec. 31,
1997. We expect to pay American Express Financial Advisors Inc. distribution
fees amounting to $27,916,000 during 1998.

See note 1 to the Dec. 31, 1997, financial statements regarding deferral of
distribution fee expense.

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>

Selling Agent Agreements with AEBI, Coutts and SAI

In turn, under Selling Agent Agreements with American Express Financial Advisors
Inc., AEBI, Coutts and SAI receive compensation for their services as Selling
Agents for this certificate as follows:

o AEBI receives a fee equal to 1.0% per term of the principal amount of each
certificate for which AEBI is the selling agent.

o Coutts receives a fee equal to 0.80% per term of the principal amount of each
certificate for which Coutts is the selling agent.

o SAI receives a sales commission equal to 0.80%, and marketing support fees
and other compensation equal to 0.10%, per term of the principal amount of
each certificate for which SAI is the selling agent.

Coutts is compensated on additional investments made by its clients who are
former clients of AEBI. These clients must have continuously owned a certificate
since Nov. 10, 1994. Coutts is also compensated on exchanges made by such
clients to other certificates only to the extent that a client has the right to
make additional investments or exchanges.

American Express Financial Advisors Inc. has entered into a consulting agreement
with AEBI under which AEBI provides consulting services related to any selling
agent agreements between American Express Financial Advisors Inc. and other Edge
Act corporations. For these services, American Express Financial Advisors Inc.
pays AEBI a fee for this certificate equal to 0.20% per term of the principal
amount of each certificate for which another Edge Act corporation is the selling
agent.

Such payments will be made quarterly in arrears.

These fees are not assessed to your certificate account.

AEBI and Coutts are Edge Act corporations organized under the provisions of
Section 25(a) of the Federal Reserve Act. AEBI is a wholly owned subsidiary of
American Express Bank Ltd. (AEBL).

Coutts is an indirect wholly owned subsidiary of National Westminster Bank PLC.
As Edge Act corporations, AEBI and Coutts are subject to the provisions of
Section 25(a) of the Federal Reserve Act and Regulation K of the Board of
Governors of the Federal Reserve System (the Federal Reserve). They are
supervised and regulated by the Federal Reserve.

<PAGE>

Although AEBI and Coutts are banking entities, the Stock Market Certificate is
not a bank product, nor is it backed or guaranteed by AEBI, by AEBL, by Coutts,
by NatWest PLC or by any other bank, nor is it guaranteed or insured by the FDIC
or any other federal agency. AEBI is registered where necessary as a securities
broker-dealer.

Selling agents

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

o 1.00% of the initial investment on the first day of the certificate's term;
and

o 1.00% of the certificate's reserve at the beginning of each subsequent term.

This fee is not assessed to your certificate account.

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 AESC 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.

<PAGE>

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 $38,000 during 1997 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 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. Director since 1998.
President since 1998.
Vice president - Assured Assets of AEFC since 1998. President of Piper Capital
Management (PCM) from 1997 to 1998. Director of Marketing of PCM from 1995 to
1997. Director of Retail Marketing of PCM from 1993 to 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 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>

F. Dale Simmons
Born in 1937. Vice president - Real Estate Loan Management since 1993.
Vice president of AEFC since 1992. Senior portfolio manager of AEFC since 1989.
Assistant vice president from 1987 to 1992.

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

IDSC has provisions in its bylaws relating to the indemnification of its
officers and directors against liability, as permitted by law. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.

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, 1997. These statements are
included in this prospectus. Ernst & Young LLP is also the auditor for American
Express Company, the parent company of AEFC and IDSC.

<PAGE>

Appendix

Description of corporate bond ratings

Bond ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price. Ratings by Moody's Investors Service,
Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.

Aaa/AAA - Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.

Aa/AA - Judged to be high-grade although margins of protection for interest and
principal may not be quite as good as Aaa or AAA rated securities.

A - Considered upper-medium grade. Protection for interest and principal is
deemed adequate but may be susceptible to future impairment.

Baa/BBB - Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these obligations may have
certain speculative characteristics.

Ba/BB - Considered to have speculative elements. The protection of interest and
principal payments may be very moderate.

B - Lack characteristics of more desirable investments. There may be small
assurance over any long period of time of the payment of interest and principal.

Caa/CCC - Are of poor standing. Such issues may be in default or there may be
risk with respect to principal or interest.

Ca/CC - Represent obligations that are highly speculative. Such issues are often
in default or have other marked shortcomings.

C - Are obligations with a higher degree of speculation. These securities have
major risk exposures to default.

D - Are in payment default. The D rating is used when interest payments or
principal payments are not made on the due date.

Non-rated securities will be considered for investment. When assessing each
non-rated security, IDSC will consider the financial condition of the issuer or
the protection afforded by the terms of the security.

<PAGE>

(back cover)

Quick telephone reference*

Selling Agent
Securities America, Inc.
800-747-6111
Omaha area: 402-399-9111

*You may experience delays when call volumes are high.

IDS Stock Market Certificate
IDS Tower 10
Minneapolis, MN 55440-0010

<PAGE>

Summary of selected financial information

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.
<TABLE><CAPTION>
Year Ended Dec. 31, 1997 1996 1995 1994 1993
($ thousands)
Statement of Operations Data:
<S> <C> <C> <C> <C> <C>
Investment income $258,232 $251,481 $256,913 $207,975 $236,859
Investment expenses 70,137 62,851 62,817 58,690 65,404

Net investment income before provision for
certificate reserves and income t 188,095 188,630 194,096 149,285 171,455
Net provision for certificate reser 165,136 171,968 176,407 107,288 123,516

Net investment income before income
tax benefit 22,959 16,662 17,689 41,997 47,939
Income tax benefit 3,682 6,537 9,097 2,663 3,365

Net investment income 26,641 23,199 26,786 44,660 51,304

Realized gain (loss) on investments - net:
Securities of unaffiliated issuers 980 (444) 452 (7,514) (9,870)
Other - unaffiliated - 101 (120) 1,638 (418)

Net realized gain (loss) on investments
before income taxes 980 (343) 332 (5,876) (10,288)
Income tax (expense) benefit (343) 120 (117) 2,047 4,617

Net realized gain (loss) on investm 637 (223) 215 (3,829) (5,671)
Net income - wholly owned subsidiar 328 1,251 373 241 120

Net income $27,606 $24,227 $27,374 $41,072 $45,753

Cash dividends declared $- $65,000 $- $40,200 $64,500

Balance Sheet Data:
Total assets $4,053,648 $3,563,234 $3,912,131 $3,040,857 $2,951,405
Certificate loans 37,098 43,509 51,147 58,203 67,429
Certificate reserves 3,724,978 3,283,191 3,628,574 2,887,405 2,777,451
Stockholder's equity 239,510 194,550 250,307 141,852 161,138

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

For the Nine Months Ended Sept. 30, 1998

Results of operations:

As of Sept. 30, 1998, total assets and certificate reserves decreased $154
million and $136 million, respectively, from Dec. 31, 1997. The decreases
resulted primarily from certificate maturities and surrenders exceeding
certificate sales. The decrease in accounts payable and accrued liabilities
resulted primarily from net repayments of $22 million under reverse repurchase
agreements and a decrease in payable for investment securities purchased of $18
million.

Sales of face-amount certificates totaled $307 million and $273 million during
the second and third quarters of 1998, respectively, compared to $327 million
and $387 million during the comparable periods in 1997, respectively.
Certificate sales during the second and third quarters of 1998 include $19
million and $31 million, respectively, of sales of IDS Certificate Company's
(IDSC) Market Strategy certificate which was first offered for sale April 29,
1998.

Certificate maturities and surrenders totaled $469 million and $353 million
during the second and third quarters of 1998, respectively, compared to $344
million and $350 million during the comparable periods in 1997, respectively.
The higher certificate maturities and surrenders during the second quarter of
1998 resulted primarily from $59 million in surrenders of IDSC's 7-month term
Flexible Savings certificate. Surrenders of the 7-month Flexible Savings
certificate resulted primarily from lower accrual rates declared by IDSC at term
renewal, reflecting interest rates available in the marketplace.

For the nine months of 1998 and 1997, sales of face-amount certificates totaled
$837 million and $982 million, respectively. Certificate maturities and
surrenders for the first nine months of 1998 and 1997 totaled $1,187 million and
$998 million, respectively.

Investment income increased 8.5% during the first nine months of 1998 from the
prior year's period primarily reflecting a higher average balance of invested
assets.

Investment expenses increased 16% during the first nine months of 1998 from the
prior year's period. The increase resulted primarily from $4.3 million higher
amortization of premiums paid for index options and $4.7 million of interest
expense on reverse repurchase and interest rate swap agreements entered into
after the first quarter of 1997.

Net provision for certificate reserves increased 6.1% during the first nine
months of 1998 from the prior year's period reflecting a higher average balance
of certificate reserves.

The $1.1 million decrease in income tax benefit on net investment income
resulted primarily from a lesser portion of net investment income before income
tax benefit being attributable to tax-advantaged income.

During the third quarter of 1998, IDSC accepted a tender offer of a
hold-to-maturity security with an amortized cost and fair value of $6.2 million.

Net certificate reserve financing activities used cash of $272 million during
the first nine months of 1998 compared to cash provided of $61 million during
the prior year's period. The change resulted from lower certificate payments
received of $143 million and higher maturities and surrenders of $190 million
during the first nine months of 1998 compared to the prior year's period.

During the first nine months of 1998, IDSC paid a cash dividend to its Parent of
$4.5 million.

<PAGE>

Year 2000:

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, reputational 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 a part of their plan, American
Express has generally followed and utilized the specific policies and guidelines
established by the 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's senior management and Board of
Directors.

American Express's 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's
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's 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's and
AEFC's goals are to substantially complete remediation of critical systems by
the end of 1998, complete testing of those 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. As of Oct. 31, 1998, for Millenniax for American
Express, the remediation/decommission, testing and implementation phases are
approximately 80%, 65% and 55% complete, respectively. For Business T for
American Express, such phases are approximately 70%, 55% and 55% complete,
respectively.

American Express's 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.

<PAGE>

American Express's cumulative costs since inception of the Y2K initiatives were
$311 million through Sept. 30, 1998 and are estimated to be in the range of
$210-$235 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 expected to have, a
material adverse impact on American Express's, 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 Express, are managed by and
included in the American Express corporate level financial results; costs
related to Business T are included in American Express's 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's 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 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's 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's
and AEFC's efforts alone will resolve all Y2K issues.

At this point, American Express and AEFC have not completed their assessment of
reasonably likely Y2K systems failures and related consequences. However,
American Express is in the process of 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's 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's 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.

<PAGE>

For the Year Ended Dec. 31, 1997

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 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 7- and 13-month term 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.

During the year 1996, 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 1996 reflects also, a decrease in unrealized
appreciation on investment securities classified as available for sale of $23
million and cash dividends paid to Parent of $65 million. The decrease in total
assets in 1996 was tempered by an increase in payable for securities purchased
of $62 million that settled in early 1997.

1997 Compared to 1996:

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

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.

<PAGE>

1996 Compared to 1995:

Gross investment income decreased 2.1% due primarily to lower investment yields.

Investment expenses increased slightly in 1996. The increase resulted
primarily from higher amortization of premiums paid for index options of $2.1
million and higher investment advisory and services fee of $.5 million due to a
slightly higher average asset base on which the fee is calculated. These
increases were offset by lower distribution fees of $1.2 million due to lower
certificate sales, and lower amortization of premiums paid for interest rate
caps/corridors of $1.4 million. The lower amortization of interest rate
caps/corridors reflects the net of $8.2 million lower amortization and $6.8
million less interest earned under the cap/corridor agreements.

Net provision for certificate reserves decreased 2.5% due primarily to the
net of lower accrual rates and a slightly higher average balance of certificate
reserves during 1996.

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 1997 reflecting clients' ongoing
desire for safety of principal. Sales of certificates totaled $1.5 billion in
1997 compared to $1.0 billion in 1996 and $1.8 billion in 1995. The higher
certificate sales in 1997 over 1996 resulted primarily from a special
introductory promotion of IDSC's 7- and 13-month term Flexible Savings
certificate which produced sales of $238 million. Certificate sales in 1997
benefited also, from higher sales of the Preferred Investors certificate of $113
and sales of the Special Deposits certificate of $85 million. The Preferred
Investors certificate was first offered for sale early in the last quarter of
1996. The 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. Certificate sales in 1995 benefited from a special introductory
promotion of IDSC's 11-month term Flexible Savings certificate which produced
sales of $562 million.

The special promotion of the 7- and 13-month term 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 Average of comparable length certificates of deposit.

<PAGE>

The special promotion of the 11-month term Flexible Savings
certificate was offered from May 10, 1995 to July 3, 1995, and applied only to
sales of new certificate accounts during the promotion period. Certificates sold
during the promotion period received a special interest rate of 7.0% for the
11-month term.

Certificate maturities and surrenders totaled $1.3 billion during 1997
compared to $1.7 billion in 1996 and $1.0 billion in 1995. The higher
certificate maturities and surrenders in 1996 resulted primarily from $461
million of surrenders of the 11-month Flexible Savings certificate. The
surrenders of the 11-month Flexible Savings certificate 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
mortgage-backed securities and intermediate-term bonds.

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, 1997, securities classified as held to maturity and carried at
amortized cost were $.8 billion. Securities classified as available for sale and
carried at fair value were $2.9 billion. These securities, which comprise 92% of
IDSC's total invested assets, are well diversified. Of these securities, 98%
have fixed maturities of which 91% 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.

<PAGE>

During the year ended Dec. 31, 1997, IDSC sold held-to-maturity
securities with an amortized cost and fair value of $33.0 million and $33.9
million, respectively. The securities were sold due to significant deterioration
in the issuers' creditworthiness. During the same period in 1997, securities
classified as available for sale were sold with an amortized cost and fair value
of $161 million. 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, 1997 and 1996. During the year ended
Dec. 31, 1995, investment securities, primarily municipal bonds, with an
amortized cost and fair value of $112 million and $117 million, respectively,
were reclassified from held to maturity to available for sale. The
reclassification was made on Dec. 4, 1995, as a result of IDSC adopting the FASB
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities".

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 one year's earnings. The market
changes, assumed to occur as of Dec. 31, 1997, 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.

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 a certain series of certificates, interest is credited to the certificate
owners' accounts based upon the relative change in

<PAGE>

a major stock market index between the beginning and end of the
certificates' term. 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 earnings of the 100 basis point increase in
interest rates described above would be approximately $5.9 million pretax. It
assumes repricings and customer behavior based on the application of proprietary
models to the book of business at Dec. 31, 1997. The 10% decrease in a major
stock market index level would have a minimal impact on IDSC's earnings because
the income effect is a decrease in option income and a corresponding decrease in
interest credited to the Stock Market certificate owners' accounts.

Year 2000 Issue:

The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in a major system failure or miscalculations which
could have a material impact on IDSC's operations. A comprehensive review of
computer systems and business processes used by IDSC has been conducted to
identify the major systems that could be affected by the Year 2000 issue. Steps
are being taken to resolve any potential problems. IDSC believes that with
modifications to existing software and the purchase of new software, the Year
2000 issue will not pose material operational problems for computer systems used
in IDSC's business, including computer systems used by IDSC's Parent and other
affiliates to provide services to IDSC. These modifications are scheduled to be
completed and tested on a timely basis. The cost related to the Year 2000 issue
are to be borne by American Express Company and IDSC's Parent. IDSC is also
evaluating the Year 2000 readiness of merchants, customers and other third
parties whose systems failures could have an impact on its operations. The
potential materiality of any such impact is not known at this time.

Ratios:

The ratio of stockholder's equity, excluding net unrealized holding gains
on investment securities, to total assets less certificate loans and net
unrealized holding gains on investment securities at Dec. 31, 1997 and 1996 was
5.2%. IDSC's current regulatory requirement is a ratio of 5.0%.

<PAGE>

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

Financial Statements
- -------------------------------------------------------------------------------

The condensed balance sheet of IDS Certificate Company as of Sept. 30, 1998 and
the condensed statements of operations and cash flows for the nine months ended
Sept. 30, 1998 and 1997 and the related condensed notes thereto appearing on
pages 00 through 00 are unaudited. Management of IDS Certificate Company
believes that all adjustments (none of which were other than of a normal
recurring nature) necessary to present fairly the financial position of IDS
Certificate Company at Sept. 30, 1998 and the results of operations and cash
flows for the nine months ended Sept. 30, 1998 and 1997, respectively, have been
included. The results of operations for the interim periods presented may not be
indicative of the results of operations on an annual basis. The condensed
financial statements and notes thereto should be read in conjunction with the
audited financial statements as of and for the three years ended Dec. 31, 1997.

The financial statements of IDS Certificate Company as of and for the three
years ended Dec. 31, 1997 and the related notes to financial statements
appearing on pages 00 through 00 have been audited by Ernst & Young LLP,
independent auditors, whose report thereon appears on page 00.

<PAGE>

IDS Certificate Company

Condensed Balance Sheet
Sept. 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------

Assets

Qualified Assets (note 1)
- -------------------------------------------------------------------------------
($ thousands)

Investments in unaffiliated issuers:
Cash and cash equivalents $81,627
Held-to-maturity securities (note 2) 633,838
Available-for-sale securities (note 2) 2,795,690
First mortgage loans on real estate 249,089
Certificate loans-secured by certificate reserves 33,565
Investments in and advances to affiliates 3,966
- -----------------------------------------------------------------------------

Total investments 3,797,775
- -----------------------------------------------------------------------------

Receivables:
Dividends and interest 42,630
Investment securities sold 1,387
- -----------------------------------------------------------------------------

Total receivables 44,017
- -----------------------------------------------------------------------------

Other (note 4) 36,214
- -----------------------------------------------------------------------------

Total qualified assets 3,878,006
- -----------------------------------------------------------------------------

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

Deferred distribution fees 16,972
Receivable from Parent for federal income taxes 4,200
- -----------------------------------------------------------------------------

Total other assets 21,172
- -----------------------------------------------------------------------------

Total assets $3,899,178
- -----------------------------------------------------------------------------

See condensed notes to condensed financial statements.

<PAGE>

IDS Certificate Company

Condensed Balance Sheet
Sept. 30, 1998 (Unaudited)
- -----------------------------------------------------------------------------

Liabilities and Stockholder's Equity

Liabilities
- -----------------------------------------------------------------------------
($ thousands)

Certificate reserves $3,589,369
Accounts payable and accrued liabilities (note 4) 19,736
Deferred federal income taxes 21,946
- -----------------------------------------------------------------------------

Total liabilities 3,631,051
- -----------------------------------------------------------------------------

Stockholder's Equity:
- -----------------------------------------------------------------------------

Common stock 1,500
Additional paid-in capital 143,844
Retained earnings:
Appropriated for predeclared additional credits/interest 4,194
Appropriated for additional interest on advance payments 50
Unappropriated 76,937
Accumulated other comprehensive income-net of tax (note 5) 41,602
- -----------------------------------------------------------------------------

Total stockholder's equity 268,127
- -----------------------------------------------------------------------------

Total liabilities and stockholder's equity $3,899,178
- -----------------------------------------------------------------------------

See condensed notes to condensed financial statements.

<PAGE>

IDS Certificate Company

Condensed Statements of Operations (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>

Nine months ended Sept. 30, 1998 1997
- ----------------------------------------------------------------------------------------------------------------
($ thousands)

Investment income $206,268 $190,130
Investment expenses (note 4) 58,302 50,146
- ----------------------------------------------------------------------------------------------------------------

Net investment income before provision for
certificate reserves and income tax benefit 147,966 139,984
Net provision for certificate reserves (note 4) 128,729 121,280
- ----------------------------------------------------------------------------------------------------------------

Net investment income before income tax benefit 19,237 18,704
Income tax benefit (note 3) 1,202 2,323
- ----------------------------------------------------------------------------------------------------------------

Net investment income 20,439 21,027
- ----------------------------------------------------------------------------------------------------------------

Realized gain on investments-net 4,116 472
Income tax expense (1,441) (165)
- ----------------------------------------------------------------------------------------------------------------

Net realized gain on investments 2,675 307
- ----------------------------------------------------------------------------------------------------------------

Net income - wholly owned subsidiary 194 202
- ----------------------------------------------------------------------------------------------------------------

Net income $23,308 $21,536
- ----------------------------------------------------------------------------------------------------------------
See condensed notes to condensed financial statements.
</TABLE>

<PAGE>

IDS Certificate Company
<TABLE>
<CAPTION>

Condensed Statements of Cash Flows (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nine months ended Sept. 30, 1998 1997
- ----------------------------------------------------------------------------------------------------------------
($ thousands)
Cash flows from operating activities:
Net income $23,308 $21,536
Adjustments to reconcile net income to net cash
provided by operating activities:
Net income of wholly owned subsidiary (194) (202)
Net provision for certificate reserves 128,729 121,280
Interest income added to certificate loans (900) (1,063)
Amortization of premiums/discounts-net 16,100 11,093
Provision for deferred federal income taxes 1,489 (2,749)
Net realized gain on investments before income taxes (4,116) (472)
Decrease in dividends and interest receivable 6,188 2,826
Decrease in deferred distribution fees 4,131 2,490
Increase in other assets (4,200) (1,747)
Decrease in other liabilities (3,383) (360)
- ----------------------------------------------------------------------------------------------------------------

Net cash provided by operating activities 167,152 152,632
- ----------------------------------------------------------------------------------------------------------------

Cash flows from investing activities: Maturity and redemption of investments:
Held-to-maturity securities 120,291 62,265
Available-for-sale securities 362,523 306,066
Other investments 64,156 55,705
Sale of investments:
Held-to-maturity securities 6,245 29,391
Available-for-sale securities 342,100 156,841
Certificate loan payments 2,941 3,670
Purchase of investments:
Held-to-maturity securities (1,034) (4,565)
Available-for-sale securities (590,182) (828,812)
Other investments (94,030) (45,801)
Certificate loan fundings (2,925) (3,884)
- ----------------------------------------------------------------------------------------------------------------

Net cash provided by (used in) investing activities $210,085 ($269,124)
- ----------------------------------------------------------------------------------------------------------------

See condensed notes to condensed financial statements.
</TABLE>

<PAGE>

IDS Certificate Company
<TABLE>
<CAPTION>

Condensed Statements of Cash Flows (Continued) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nine months ended Sept. 30, 1998 1997
- ----------------------------------------------------------------------------------------------------------------
($ thousands)

Cash flows from financing activities:
Payments from certificate owners $910,515 $1,053,364
Proceeds from reverse repurchase agreements 650,500 374,000
Dividend from wholly-owned subsidiary 3,000 -
Certificate maturities and cash surrenders (1,182,625) (991,985)
Payments under reverse repurchase agreements (672,500) (355,000)
Dividend paid (4,500) -
- ----------------------------------------------------------------------------------------------------------------

Net cash (used in) provided by financing activities (295,610) 80,379
- ----------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents 81,627 (36,113)
Cash and cash equivalents beginning of period - 111,331
- ----------------------------------------------------------------------------------------------------------------

Cash and cash equivalents end of period $81,627 $75,218
- ----------------------------------------------------------------------------------------------------------------

Supplemental disclosures including non-cash transactions:
Cash paid for income taxes $3,405 $4,030
Certificate maturities and surrenders through loan
reductions 4,417 5,565

See condensed notes to condensed financial statements.
</TABLE>

<PAGE>

IDS Certificate Company

Condensed Notes to Condensed Financial Statements,
Sept. 30, 1998 ($ thousands) (Unaudited)
- -------------------------------------------------------------------------------

1. Deposit of assets and maintenance of qualified assets

At Sept. 30, 1998 IDSC was required to have qualified assets in the amount of
$3,573,730. IDSC had qualified assets of $3,812,864 at Sept. 30, 1998, excluding
net unrealized appreciation on available-for-sale securities of $64,002 and
payable for securities purchased of $1,140.

Qualified assets of IDSC were deposited at Sept. 30, 1998 as follows:
<TABLE>
<CAPTION>

Required
Deposits deposits Excess
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits to meet
certificate liability
requirements:
States $363 $327 $36
Central Depositary 3,754,245 3,535,370 218,875
- ----------------------------------------------------------------------------------------------------------------

Total $3,754,608 $3,535,697 $218,911
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

The assets on deposit at Sept. 30, 1998 consisted of securities having a deposit
value of $3,459,957, mortgage loans of $245,897 and other assets of $48,754.

2. Investments in securities

The following is a summary of securities held to maturity and securities
available for sale at Sept. 30, 1998.
<TABLE>
<CAPTION>

Securities Held to Maturity
- ----------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government and
agencies obligations $363 $376 $13 $-
Mortgage-backed securities 23,975 24,826 851 -
Corporate debt securities 183,234 189,142 5,908 -
Stated maturity preferred stock 426,266 460,950 34,701 17
- ----------------------------------------------------------------------------------------------------------------

Total $633,838 $675,294 $41,473 $17
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

IDS Certificate Company
<TABLE>
<CAPTION>

Condensed Notes to Condensed Financial Statements,
Sept. 30, 1998 ($ thousands) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------

Securities Available for Sale
- ----------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed securities $916,907 $941,665 $25,044 $286
State and municipal obligations 32,134 33,791 1,657 -
Corporate debt securities 1,625,121 1,653,472 44,048 15,697
Stated maturity preferred stock 63,299 66,545 3,246 -
Perpetual preferred stock 94,227 100,217 5,990 -
- ----------------------------------------------------------------------------------------------------------------

Total $2,731,688 $2,795,690 $79,985 $15,983
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

At Sept. 30, 1998, there were no securities classified as trading securities.

During the nine months ended Sept. 30, 1998, debt securities classified as
available for sale were sold with proceeds of $341,853 and gross realized gains
of $3,884 and gross realized losses of $1,461 on such sales.

During the nine months ended Sept. 30, 1998, a held-to-maturity security was
tendered with proceeds of $6,245 and a gross realized gain of $64 on such sale.

There were no transfers from securities classified as held to maturity during
the nine months ended Sept. 30, 1998.

3. Income taxes

The income tax benefit related to net investment income as shown on the
statement of operations resulted primarily from tax-exempt interest and dividend
exclusion. Benefit is recognized for taxable loss used on the consolidated tax
return of American Express Company.

<PAGE>

IDS Certificate Company

Condensed Notes to Condensed Financial Statements,
Sept. 30, 1998 ($ thousands) (Unaudited)
- -------------------------------------------------------------------------------

4. Derivative financial instruments

IDSC's holdings of derivative financial instruments were as follows at
Sept. 30, 1998.
<TABLE>
<CAPTION>

Notional Total
or contract Carrying Fair credit
amount value value exposure
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate floors $500,000 $85 $696 $696
Purchased call options 419 36,129 36,319 36,319
- ----------------------------------------------------------------------------------------------------------------

Total $500,419 $36,214 $37,015 $37,015
- ----------------------------------------------------------------------------------------------------------------

Liabilities:
Interest rate swaps $500,000 $325 $2,341 $-
Written call options 419 15,535 16,433 -
- ----------------------------------------------------------------------------------------------------------------

Total $500,419 $15,860 $18,774 $-
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

The interest rate floors expire in April of 1999. The cost of these floors of
$85 at Sept. 30, 1998, is being amortized on a straight line basis and is
included in other qualified assets. The amortization, net of any interest
earned, is included in investment expenses.

The interest rate swaps expire in April of 1999. There is no cost carried on the
balance sheet. The carrying amount shown above represents the net interest
receivable/ payable under the swap agreements. Interest earned and interest
expensed under the agreements is included net, in investment expenses.

The index options expire in 1998 and 1999. The premiums paid or received on
these options are reported in other qualified assets or other liabilities, as
appropriate, and are amortized into investment expenses 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. The unrealized gains and
losses related to the changes in the intrinsic value of these options are
recognized currently in provision for certificate reserves.

<PAGE>

IDS Certificate Company

Condensed Notes to Condensed Financial Statements,
Sept. 30, 1998 ($ thousands) (Unaudited)
- -------------------------------------------------------------------------------

5. 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, it is net income and the 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. The components of comprehensive income, net of related tax, for the
three-month and nine-month periods ended Sept. 30, 1998 and 1997 were:
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended Sept. 30, 1998 1997
- ----------------------------------------------------------------------------------------------------------------

Net income $7,739 $7,428
Unrealized gains on available-for-sale securities-net 10,201 13,838
- ----------------------------------------------------------------------------------------------------------------

Total comprehensive income $17,940 $21,266
- ----------------------------------------------------------------------------------------------------------------

Nine months ended Sept. 30, 1998 1997
- ----------------------------------------------------------------------------------------------------------------

Net income $23,308 $21,536
Unrealized gains on available-for-sale securities-net 9,809 14,019
- ----------------------------------------------------------------------------------------------------------------

Total comprehensive income $33,117 $35,555
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

<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, 1997 and 1996, and the related statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1997. 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, 1997 and 1996 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, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.

ERNST & YOUNG LLP
Minneapolis, Minnesota
February 5, 1998

<PAGE>

<TABLE><CAPTION>
Balance Sheets, Dec. 31,

Assets
<S> <C> <C>
Qualified Assets (note 2) 1997 1996
($ thousands)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Cash and cash equivalents $- $111,331
Held-to-maturity securities 758,143 863,921
Available-for-sale securities 2,911,524 2,212,968
First mortgage loans on real estate 212,433 218,697
Certificate loans - secured by certificate reserves 37,098 43,509
Investments in and advances to affiliates 6,772 6,444

Total investments 3,925,970 3,456,870

Receivables:
Dividends and interest 48,817 44,013
Investment securities sold 1,635 654

Total receivables 50,452 44,667

Other (notes 9 and 10) 56,127 36,164

Total qualified assets 4,032,549 3,537,701

Other Assets

Deferred distribution fees and other 21,099 25,533

Total assets $4,053,648 $3,563,234

See notes to financial statements.

<PAGE>

Balance Sheets, Dec. 31, (continued)

Liabilities and Stockholder's Equity

Liabilities 1997 1996
($ thousands)
Certificate Reserves (notes 5 and 10):
Installment certificates:
Reserves to mature $343,219 $344,344
Additional credits and accrued interest 19,554 21,931
Advance payments and accrued interest 968 1,198
Other 56 55
Fully paid certificates:
Reserves to mature 3,186,191 2,747,690
Additional credits and accrued interest 174,699 167,673
Due to unlocated certificate holders 291 300

Total certificate reserves 3,724,978 3,283,191

Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 1,639 1,424
Due to Parent for federal income taxes 495 1,737
Due to affiliates (note 7B, 7C and 7D) 331 279
Reverse repurchase agreements 22,000 -
Payable for investment securities purchased 19,601 61,979
Accounts payable, accrued expenses and other (notes 9 and 10) 29,919 11,977

Total accounts payable and accrued liabilities 73,985 77,396

Deferred federal income taxes (note 8) 15,175 8,097

Total liabilities 3,814,138 3,368,684

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 6,375 11,989
Appropriated for additional interest on advance payments 50 50
Unappropriated 55,948 22,728
Unrealized holding gains on investment
securities - net (note 3A) 31,793 14,439

Total stockholder's equity 239,510 194,550

Total liabilities and stockholder's equity $4,053,648 $3,563,234

See notes to financial statements.
</TABLE>

<PAGE>

<TABLE><CAPTION>
Statements of Operations

Year ended Dec. 31, 1997 1996 1995
($ thousands)
<S> <C> <C> <C>
Investment Income:
Interest income from investments:
Bonds and notes:
Unaffiliated issuers $191,190 $184,653 $181,902
Mortgage loans on real estate:
Unaffiliated 18,053 19,583 22,171
Affiliated - 36 56
Certificate loans 2,200 2,533 2,963
Dividends 44,543 44,100 48,614
Other 2,246 576 1,207

Total investment income 258,232 251,481 256,913

Investment Expenses:
Parent and affiliated company fees (note 7):
Distribution 34,507 32,732 33,977
Investment advisory and services 17,233 16,989 16,472
Depositary 238 228 242
Options (note 9) 14,597 10,156 8,038
Interest rate caps, corridors and floors (note 9) 35 2,351 3,725
Reverse repurchase agreements 1,217 - -
Interest rate swap agreements (note 9) 1,956 - -
Other 354 395 363

Total investment expenses 70,137 62,851 62,817

Net investment income before provision
for certificate reserves and income tax benefit $188,095 $188,630 $194,096

See notes to financial statements.

<PAGE>

Statements of Operations (continued)

Year ended Dec. 31, 1997 1996 1995
($ thousands)
Provision for Certificate Reserves (notes 5 and 9):
According to the terms of the certificates:
Provision for certificate reserves $9,796 $10,445 $11,009
Interest on additional credits 1,244 1,487 2,300
Interest on advance payments 50 61 73
Additional credits/interest authorized by IDSC:
On fully paid certificates 150,752 155,411 157,857
On installment certificates 4,323 5,637 6,288

Total provision for certificate reserves before reserve 166,165 173,041 177,527
Reserve recoveries from terminations
prior to maturity (1,029) (1,073) (1,120)

Net provision for certificate reserves 165,136 171,968 176,407

Net investment income before income tax benefit 22,959 16,662 17,689
Income tax benefit (note 8) 3,682 6,537 9,097

Net investment income 26,641 23,199 26,786

Realized gain (loss) on investments - net:
Securities of unaffiliated issuers 980 (444) 452
Other-unaffiliated - 101 (120)

Net realized gain (loss) on investments before income t 980 (343) 332

Income tax (expense) benefit (note 8):
Current (304) 772 160
Deferred (39) (652) (277)

Total income tax (expense) benefit (343) 120 (117)

Net realized gain (loss) on investments 637 (223) 215

Net income - wholly owned subsidiary 328 1,251 373

Net income $27,606 $24,227 $27,374

See notes to financial statements.

<PAGE>

Statements of Stockholder's Equity

Year ended Dec. 31, 1997 1996 1995
($ 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 $168,844 $140,344
Contribution from Parent - - 28,500
Cash dividends declared - (25,000) -

Balance at end of year $143,844 $143,844 $168,844

Retained Earnings:
Appropriated for predeclared additional credits/interest (note 5B):
Balance at beginning of year $11,989 $18,878 $18,398
Transferred (to) from unappropriated retained earnings (5,614) (6,889) 480

Balance at end of year $6,375 $11,989 $18,878

Appropriated for additional interest on advance payments (note 5C):
Balance at beginning and end of year $50 $50 $50

Unappropriated (note 6):
Balance at beginning of year $22,728 $31,612 $4,718
Net income 27,606 24,227 27,374
Transferred from (to) appropriated retained earnings 5,614 6,889 (480)
Cash dividends declared - (40,000) -

Balance at end of year $55,948 $22,728 $31,612

Unrealized holding gains and losses on investment securities -
net (notes 1 and 3A):
Balance at beginning of year $14,439 $29,423 ($23,158)
Change during year 17,354 (14,984) 52,581

Balance at end of year $31,793 $14,439 $29,423

Total stockholder's equity $239,510 $194,550 $250,307

See notes to financial statements.

<PAGE>

Statements of Cash Flows

Year ended Dec. 31, 1997 1996 1995
($ thousands)
Cash flows from operating activities:
Net income $27,606 $24,227 $27,374
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary (328) (1,251) (373)
Net provision for certificate reserves 165,136 171,968 176,407
Interest income added to certificate loans (1,414) (1,631) (1,902)
Amortization of premiums/discounts-net 15,484 14,039 19,232
Provision for deferred federal income taxes (2,266) (1,124) (2,652)
Net realized (gain) loss on investments before income (980) 343 (332)
(Increase) decrease in dividends and interest receiva (4,804) 5,619 (7,371)
Decrease (increase) in deferred distribution fees 4,434 2,761 (1,144)
Decrease in other assets - - 466
Increase (decrease) in other liabilities 443 (679) (1,549)

Net cash provided by operating activities 203,311 214,272 208,156

Cash flows from investing activities:
Maturity and redemption of investments:
Held-to-maturity securities 76,678 163,066 315,766
Available-for-sale securities 408,019 537,565 325,521
Other investments 79,929 52,189 46,004
Sale of investments:
Held-to-maturity securities 33,910 24,984 22,305
Available-for-sale securities 160,207 356,194 48,372
Other investments - 385 21
Certificate loan payments 4,814 6,003 6,061
Purchase of investments:
Held-to-maturity securities (4,565) (49,984) (208,140)
Available-for-sale securities (1,283,620) (617,138)(1,397,983)
Other investments (62,831) (28,617) (17,234)
Certificate loan fundings (5,021) (5,288) (7,776)

Net cash (used in) provided by investing activities ($592,480) $439,359 ($867,083)

See notes to financial statements.

<PAGE>

Statements of Cash Flows (continued)

Year ended Dec. 31, 1997 1996 1995
($ thousands)

Cash flows from financing activities:
Payments from certificate owners $1,580,013 $1,129,023 $1,577,884
Capital contribution from Parent - - 28,500
Proceeds from reverse repurchase agreements 433,000 - -
Certificate maturities and cash surrenders (1,324,175) (1,663,196) (1,030,712)
Payments under reverse repurchase agreements (411,000) - -
Dividends paid - (65,000) -

Net cash provided by (used in) financing activities 277,838 (599,173) 575,672

Net (decrease) increase in cash and cash equivalents (111,331) 54,458 (83,255)
Cash and cash equivalents beginning of year 111,331 56,873 140,128

Cash and cash equivalents end of year $- $111,331 $56,873

Supplemental disclosures including non-cash transactions:
Cash (paid) received for income taxes ($104) $7,195 $6,854
Certificate maturities and surrenders through
loan reductions 8,032 8,554 10,673

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 eight 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 thirty-six months. In addition,
one type of certificate has 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.

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 a separate component of
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.

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.

<PAGE>

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

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.

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.

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 $3,694,204 and $3,295,260 at Dec. 31, 1997 and
1996, respectively. IDSC had qualified assets of $3,964,036 at Dec. 31, 1997 and
$3,453,508 at Dec. 31, 1996, excluding net unrealized appreciation on
available-for-sale securities of $48,912 and $22,214 at Dec. 31, 1997 and 1996,
respectively and payable for securities purchased of $19,601 and $61,979 at Dec.
31, 1997 and 1996, 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.

<PAGE>

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

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:
<TABLE><CAPTION>
Dec. 31, 1997

Required
Deposits deposits Excess
<S> <C> <C> <C>
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

Dec. 31, 1996

Required
Deposits deposits Excess
Deposits to meet certificate
liability requirements:
States $362 $330 $32
Central Depositary 3,355,041 3,203,076 151,965

Total $3,355,403 $3,203,406 $151,997
</TABLE>
The assets on deposit at Dec. 31, 1997 and 1996 consisted of securities
having a deposit value of $3,580,866 and $3,117,715, respectively; mortgage
loans of $212,433 and $218,697, respectively; and other assets of $33,569 and
$18,991, 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.

<PAGE>

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

The following is a summary of securities held to maturity and securities
available for sale at Dec. 31, 1997 and Dec. 31, 1996.
<TABLE><CAPTION>
Dec. 31, 1997
Gross Gross
Amortized Fair unrealizedunrealized
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

$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

$2,862,612 $2,911,524 $51,437 $2,525

Dec. 31, 1996
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
HELD TO MATURITY
U.S. Government and
agencies obligations $362 $365 $4 $1
Mortgage-backed securities 38,435 38,834 743 344
Corporate debt securities 266,642 274,235 8,447 854
Stated maturity preferred stock 558,482 576,603 19,513 1,392

$863,921 $890,037 $28,707 $2,591
AVAILABLE FOR SALE
Mortgage-backed securities $1,009,738 $1,021,603 $14,164 $2,299
State and municipal obligations 55,876 57,726 1,850 -
Corporate debt securities 1,000,316 1,008,077 10,808 3,047
Stated maturity preferred stock 52,458 52,139 109 428
Perpetual preferred stock 68,000 68,282 317 35
Common stock 4,366 5,141 775 -

$2,190,754 $2,212,968 $28,023 $5,809
</TABLE>

<PAGE>

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

The amortized cost and fair value of securities held to maturity and
available for sale, by contractual maturity, at Dec. 31, 1997, 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 $78,343 $78,991
Due after 1 through 5 years 381,844 393,317
Due after 5 years through 10 years 168,247 175,540
Due after 10 years 100,369 106,498
728,803 754,346
Mortgage-backed securities 29,340 29,969

$758,143 $784,315
AVAILABLE FOR SALE
Due within 1 year $53,744 $54,074
Due after 1 through 5 years 785,191 794,535
Due after 5 years through 10 years 469,792 480,813
Due after 10 years 213,271 216,188
1,521,998 1,545,610
Mortgage-backed securities 1,251,283 1,274,417
Perpetual preferred stock 88,726 91,497
Common stock 605 -

$2,862,612 $2,911,524
</TABLE>
During the years ended Dec. 31, 1997 and 1996, 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, 1997, 1996 and 1995, were as follows:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Proceeds $161,188 $313,976 $83,970
Gross realized gains 1,292 456 36
Gross realized losses 1,637 5,836 1,854
</TABLE>
Sales of held-to-maturity securities, due to significant credit
deterioration, during the years ended Dec. 31, 1997, 1996 and 1995, were as
follows:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Amortized cost $32,969 $22,297 $22,782
Gross realized gains 1,621 3,200 2
Gross realized losses 680 513 479
</TABLE>

<PAGE>

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

During the years ended Dec. 31, 1997 and 1996, no securities were
reclassified from held to maturity to available for sale. During the year ended
Dec. 31, 1995, securities with an amortized cost and fair value of $111,967 and
$116,882, respectively, were reclassified from held to maturity to available for
sale. The reclassification was made on Dec. 4, 1995, as a result of adopting the
FASB Special Report, "A Guide to Implementation of Statement 115 on Accounting
for Certain Investments in Debt and Equity Securities".

B) Investments in securities with fixed maturities comprised 89% and 85% of
IDSC's total invested assets at Dec. 31, 1997 and 1996, 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:
<TABLE><CAPTION>
Rating 1997 1996
<S> <C> <C>
Aaa/AAA 44% 41%
Aa/AA 1 1
Aa/A 1 1
A/A 14 20
A/BBB 6 6
Baa/BBB 25 24
Below investment grade 9 7

100% 100%
</TABLE>
Of the securities rated Aaa/AAA, 83% at Dec. 31, 1997 and 87% at Dec. 31,
1996 are U.S. Government Agency mortgage-backed securities that are not rated by
a public rating agency. Approximately 9% at Dec. 31, 1997 and 11% at Dec. 31,
1996 of other securities with fixed maturities are rated by Parent's internal
analysts. At Dec. 31, 1997 and 1996 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.

<PAGE>

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

4. Investments in first mortgage loans on real estate

At Dec. 31, 1997 and 1996, IDSC's recorded investment in impaired mortgage
loans was $363 and $847, respectively, and the reserve for loss on those amounts
was $261 and $611, respectively. During 1997, 1996 and 1995, the average
recorded investment in impaired mortgage loans was $743, $925 and $1,052,
respectively.

IDSC recognized $37, $88 and $53 of interest income related to impaired
mortgage loans for the years ended Dec. 31, 1997, 1996 and 1995, respectively.

During the years ended Dec. 31, 1997, 1996 and 1995, there were no changes
in the reserve for loss on mortgage loans of $611.

At Dec. 31, 1997 and 1996, approximately 5% and 6%, 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:
<TABLE><CAPTION>
Region 1997 1996
<S> <C> <C>
South Atlantic 23% 22%
West North Central 21 17
East North Central 18 21
Mountain 13 15
Middle Atlantic 11 14
West South Central 6 5
New England 5 3
Pacific 3 3

100% 100%

Property Type 1997 1996

Retail/shopping centers 31% 36%
Apartments 23 33
Office buildings 20 9
Industrial buildings 17 13
Other 9 9

100% 100%
</TABLE>

<PAGE>

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

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, 1997 Dec. 31, 1996

Carrying Fair Carrying Fair
amount value amount value
<S> <C> <C> <C> <C>
First mortgage loans on real estate $213,044 $216,951 $219,308 $221,253
Reserve for losses (611) - (611) -

Net first mortgage loans on
real estate $212,433 $216,951 $218,697 $221,253
</TABLE>
At Dec. 31, 1997 and 1996, commitments for fundings of first mortgage
loans, at market interest rates, aggregated $9,375 and $9,300, 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.

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, 1997
and 1996 were:
<TABLE><CAPTION>
1997
Average Average
gross additional
Reserve accumulati credit
balance rate rate
<S> <C> <C> <C>
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 -

$3,724,978
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
<TABLE><CAPTION>
1996
Average Average
gross additional
Reserve accumulati credit
balance rate rate
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
With guaranteed rates $32,512 3.50 1.35%
Without guaranteed rates (A) 311,832 2.97
Additional credits and accrued interest 21,931 3.14 -
Advance payments and accrued interest 1,198 3.15 1.70
Other 55 -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 187,272 3.23 1.79
Without guaranteed rates (A) and (D) 2,560,418 5.03
Additional credits and accrued interest 167,673 3.23 -
Due to unlocated certificate holders 300 -

$3,283,191
</TABLE>
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, 1997, $6,375 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 3.17%. IDSC has increased the rate of
accrual to 4.85% through April 30, 1999. An appropriation of retained earnings
amounting to $50 has been made, which represents the estimated additional
accrual that will result from the increase granted by IDSC.

D) IDS Stock Market Certificate enables the certificate owner to
participate in any relative rise in a major stock market index without risking
loss of principal. Generally the certificate has a term of 12 months and may
continue for up to 14 successive terms. The reserve balance at Dec. 31, 1997 and
1996 was $416,485 and $309,570, respectively.

E) The carrying amounts and fair values of certificate reserves consisted
of the following at Dec. 31, 1997 and 1996. Fair values of certificate reserves
with interest rate terms of one year or less approximated the carrying values
less any applicable surrender charges.

<PAGE>

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

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>
1997 1996

Carrying Fair Carrying Fair
amount value amount value
<S> <C> <C> <C> <C>
Reserves with terms of one year or less $3,186,971 $3,185,396 $2,637,144 $2,635,835
Other 538,007 551,988 646,047 673,772

Total certificate reserves 3,724,978 3,737,384 3,283,191 3,309,607
Unapplied certificate transactions 868 868 1,217 1,217
Certificate loans and accrued interest (37,495) (37,495) (43,980) (43,980)

Total $3,688,351 $3,700,757 $3,240,428 $3,266,844
</TABLE>
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 1998 and 1999 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 and other general and administrative services is:

The investment advisory and services agreement with Parent provides for a
graduated scale of fees equal on an annual basis to 0.75% on the first $250
million of total book value of assets of IDSC, 0.65% on the next $250 million,
0.55% on the next $250 million, 0.50% on the next $250 million and 0.45% on the
amount in excess of $1 billion. Effective Jan. 1, 1998, the fee on the amount in
excess of $1 billion will be 0.11%. 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.

<PAGE>

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

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
IDSC's 7-month and 13-month term 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:
<TABLE><CAPTION>
Number of
certificate
years over
Aggregate fees payable which
subsequent
First Subsequentyears' 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>
(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 Cash Reserve and 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 are paid at the rate of 0.25% of
the reserves maintained for these certificates at the beginning of the second
and subsequent quarters from issue date.

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

Fees on the 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.

<PAGE>

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

Fees on the 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 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 are paid at a rate of 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.

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 will
maintain certificate owner accounts and records. IDSC will pay AECSC a monthly
fee of one-twelfth of $10.353 per certificate owner account.

<PAGE>

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

8. Income taxes

Income tax benefit (expense) as shown in the statement of operations for
the three years ended Dec. 31, consists of:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Federal:
Current $1,138 $5,560 $6,285
Deferred 2,266 1,124 2,652
3,404 6,684 8,937
State (65) (27) 43

Total income tax benefit $3,339 $6,657 $8,980
</TABLE>
Income tax benefit (expense) 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:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Federal tax expense at U.S. statutory rate ($8,378) ($5,711) ($6,307)
Tax-exempt interest 724 1,517 3,339
Dividend exclusion 11,044 10,865 12,166
Other, net 14 13 (261)

Federal tax benefit $3,404 $6,684 $8,937
</TABLE>
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 purposes in future years. Principal components of IDSC's
deferred tax assets and liabilities as of Dec. 31, are as follows.
<TABLE><CAPTION>

Deferred tax assets: 1997 1996
<S> <C> <C>
Certificate reserves $13,488 $13,028
Investment reserves 502 540
Other, net 19 19

Total deferred tax assets $14,009 $13,587

Deferred tax liabilities: 1997 1996

Deferred distribution fees $7,382 $8,934
Investment unrealized gains 17,119 7,775
Purchased/written call options 3,557 3,429
Dividends receivable 654 745
Investments 429 714
Return of capital dividends 43 87

Total deferred tax liabilities $29,184 $21,684

Net deferred tax liabilities $15,175 $8,097
</TABLE>

<PAGE>

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

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, 1997, IDSC's counterparties to the
interest rate floors and swaps are rated A or better by nationally recognized
rating agencies. The counterparties to the purchased call options are seven
major broker/dealers.

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, 1997 and 1996.
<TABLE><CAPTION>
1997
Notional Total
or contrac Carrying Fair credit
amount value value risk
<S> <C> <C> <C> <C>
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 $416 $2,138 $-
Written call options 376 24,739 32,990 -
Total $1,000,376 $25,155 $35,128 $-
</TABLE>

<PAGE>

Notes to Financial Statements ($ in thousands unless indicated otherwise)
<TABLE><CAPTION>
1996
Notional Total
or contrac Carrying Fair credit
amount value value risk
<S> <C> <C> <C> <C>
Assets:
Interest rate caps and corridors $200,000 $- $188 $188
Purchased call options 362 36,164 34,987 34,987
Total $200,362 $36,164 $35,175 $35,175

Liabilities:
Written call options $337 $9,552 $17,571 $-
</TABLE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate floors expire in
April of 1999 and $500,000 notional amount of the interest rate swaps expires in
May of 1998 and $500,000 expire in April of 1999. The options expire throughout
1998.

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.

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.

The interest rate swaps are reset monthly. IDSC pays a fixed rate on the
notional amount ranging from 5.46% to 6.72% 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. The
carrying amount shown above represents the net interest receivable/payable under
the swap agreements. Interest earned and interest expensed under the agreements
is shown net in investment expenses.

<PAGE>

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

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. The unrealized
gains and losses related to the changes in the intrinsic value of these options
are recognized currently in provision for certificate reserves.

Following is a summary of open option contracts at Dec. 31, 1997 and 1996.
<TABLE><CAPTION>
1997
Contract Average Index at
amount strike pri Dec.31,1997
<S> <C> <C> <C>
Purchased call options $389 876 970
Written call options 376 969 970

1996
Contract Average Index at
amount strike pri Dec.31,1996

Purchased call options $362 669 741
Written call options 337 736 741
</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

<PAGE>

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

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>
1997 1996

Carrying Fair Carrying Fair
value value value value
<S> <C> <C> <C> <C>
Financial assets:
Assets for which carrying values
approximate fair values $49,940 $49,940 $155,396 $155,396
Investment securities (note 3) 3,669,667 3,695,839 3,076,889 3,103,005
First mortgage loans on real estate (note 4 212,433 216,951 218,697 221,253
Derivative financial instruments (note 9) 56,127 54,860 36,164 35,175
Financial liabilities:
Liabilities for which carrying values
approximate fair values 48,255 48,255 76,040 76,040
Certificate reserves (note 5) 3,688,351 3,700,757 3,240,428 3,266,844
Derivative financial instruments (note 9) 25,155 35,128 9,552 17,571
</TABLE>

<PAGE>

11. Year 2000 issue (Unaudited)

A comprehensive review of the Parent's computer systems and business
processes, including those specific to IDSC, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. The Parent's goal is to complete
internal remediation and testing of each system by the end of 1998 and to
continue compliance efforts through 1999.

The Parent is evaluating the Year 2000 readiness of advisors and other
third parties whose system failures could have an impact on IDSC's operations.
The potential materiality of any such impact is not known at this time.

<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item
Number

Item 13. Other Expenses of Issuance and Distribution.

The expenses in connection with the issuance and
distribution of the securities being registered are to be
borne by the registrant.

Item 14. Indemnification of Directors and Officers.

The By-Laws of IDS Certificate Company provide that
it shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that he
was or is a director, officer, employee or agent of the
company, or is or was serving at the direction of the company,
or any predecessor corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, to any threatened, pending
or completed action, suit or proceeding, wherever brought, to
the fullest extent permitted by the laws of the state of
Delaware, as now existing or hereafter amended.

The By-Laws further provide that indemnification
questions applicable to a corporation which has been merged
into the company relating to causes of action arising prior to
the date of such merger shall be governed exclusively by the
applicable laws of the state of incorporation and by the
by-laws of such merged corporation then in effect. See also
Item 17.

Item 15. Recent Sales of Unregistered Securities.

(a) Securities Sold

1995 IDS Special Deposits $56,855,953.53
1996 IDS Special Deposits* 41,064,486.74
1997 American Express Special Deposits 182,788,631.00
1998 American Express Special Deposits 91,416,078.00

*Renamed American Express Special Deposits in April, 1996.

<PAGE>

(b) Underwriters and other purchasers

American Express Special Deposits are marketed by American Express Bank Ltd.
(AEB), an affiliate of IDS Certificate Company, to private banking clients of
AEB through the United Kingdom and Hong Kong.

All American Express Special Deposits were sold for cash. The aggregate offering
price was the same as the amount sold in the table above. Aggregate marketing
fees to AEB were $88,686.14 in 1994, $172,633.41 in 1995, $301,946.44 in 1996,
$592,068.70 in 1997 and $967,791.95 in 1998.

(d) Exemption from registration claimed

American Express Special Deposits are marketed, pursuant to the exemption in
Regulation S under the Securities Act of 1933, by AEB outside the United States
to persons who are not U.S. persons, as defined in Regulation S.

Item 16. Exhibits

(a) Exhibits

1. (a) Copy of Distribution Agreement dated November
18, 1988, between Registrant and IDS Financial
Services Inc., filed electronically as Exhibit 1(a)
to the Registration Statement for the American
Express International Investment Certificate (now
called, the IDS Investors Certificate), is
incorporated herein by reference.

(b) Copy of Distribution Agreement dated March
29, 1996 between Registrant and American Express
Service Corporation filed electronically as Exhibit
1(b) to Post-Effective Amendment No. 17 to
Registration Statement No. 2-95577 is incorporated
herein by reference.

2. Not Applicable.

3. (a) Certificate of Incorporation, dated
December 31, 1977, filed electronically as
Exhibit 3(a) to Post-Effective Amendment No.
2 to Registration Statement No. 2-95577, is
incorporated herein by reference.

<PAGE>

(b) Certificate of Amendment, dated February 9, l984, filed
electronically as Exhibit 3(b) to Post-Effective
Amendment No. 2 to Registration Statement No. 2-95577,
is incorporated herein by reference.

(c) By-Laws, dated December 31, 1977, filed electronically
as Exhibit 3(c) to Post-Effective Amendment No. 2 to
Registration Statement No. 2-95577, are incorporated
herein by reference.

4. Not Applicable.

5. An opinion and consent of counsel as to the
legality of the securities being registered is filed
electronically herewith.

6. through 9. -- None.

10. (a) Investment Advisory and Services Agreement between
Registrant and IDS/American Express Inc., dated January 12,
1984, filed electronically as Exhibit 10(a) to Post-
Effective Amendment No. 2 to Registration Statement No.
2-95577, is incorporated herein by reference.

(b) Depository and Custodial Agreement, between IDS Certificate
Company and IDS Trust Company dated September 30, 1985,
filed electronically as Exhibit 10(b) to Post-Effective
Amendment No. 2 to Registration Statement No. 2-95577, is
incorporated herein by reference.

(c) Foreign Deposit Agreement dated November 21, 1990, between
Registrant and IDS Bank & Trust, filed electronically as
Exhibit 10(h) to Post-Effective Amendment No. 5 to
Registration Statement No. 33-26844, is incorporated herein
by reference.

(d) Selling Agent Agreement dated June 1, 1990, between American
Express Bank International and IDS Financial Services Inc.
for the American Express Investors and American Express
Stock Market Certificates, filed electronically as Exhibit
1(c) to the Post-Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein by reference.

<PAGE>

(e) Marketing Agreement dated October 10,
1991, between Registrant and American Express Bank
Ltd., filed electronically as Exhibit 1(d) to
Post-Effective Amendment No. 31 to Registration
Statement 2-55252, is incorporated herein by
reference.

(f) Amendment to the Selling Agent Agreement
dated December 12, 1994 between IDS Financial
Services Inc. and American Express Bank
International, filed electronically as Exhibit 1(d)
to Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577, is incorporated herein by
reference.

(g) Selling Agent Agreement dated December
12, 1994 between IDS Financial Services Inc. and
Coutts & Co. (USA) International filed electronically
as Exhibit 1(e) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is incorporated
herein by reference.

(h) Consulting Agreement dated December
12, 1994 between IDS Financial Services Inc. and
Coutts & Co. (USA) filed electronically as Exhibit
1(f) to Post-Effective Amendment No. 13 to
Registration Statement No. 2-95577, is incorporated
herein by reference.

(i) Letter amendment dated January 9, 1997
to the Marketing Agreement dated October 10, 1991,
between Registrant and American Express Bank Ltd.,
filed electronically as Exhibit 10(j) to
Post-Effective Amendment No. 40 to Registration
Statement 2-55252, is incorporated herein by
reference.

(j) Form of Letter amendment dated April 7,
1997 to the Selling Agent Agreement dated June 1,
1990, between American Express Financial Advisors
Inc. and American Express Bank International, filed
electronically as Exhibit 10(j) to Post-Effective
Amendment No. 14 to Registration Statement 33-26844,
is incorporated herein by reference.

(k) Form of Selling Agent Agreement, dated
March __, 1999 between American Express Financial
Advisors Inc. and Securities America Inc., is filed
electronically herewith.

<PAGE>

11. through 22. -- None.

23. Consent of Independent Auditors Report is
filed electronically herewith.

24. (a) Officers' Power of Attorney, dated
Sept. 8, 1998 filed electronically as
Exhibit 24 (a) to Post-Effective Amendment
No. 22 to Registration Statement No.
33-22503, is incorporated herein by
reference.

(b) Directors' Power of Attorney, dated
Oct. 14, 1998 filed electronically as
Exhibit 24 (b) to Post-Effective Amendment
No. 22 to Registration Statement No.
33-22503, is incorporated herein by
reference.

25. through 27. -- None.

(b) The financial statement schedules for IDS Certificate Company filed
electronically as Exhibit 16(b) in Post-Effective Amendment No. 42 to
Registration Statement No. 2-55252 for Series D-1 Investment Certificate, are
incorporated herein by reference.

Item 17. Undertakings.

Without limiting or restricting any liability on the
part of the other, American Express Financial Advisors Inc.,
(formerly IDS Financial Services Inc.) as underwriter, will
assume any actionable civil liability which may arise under
the Federal Securities Act of 1933, the Federal Securities
Exchange Act of 1934 or the Federal Investment Company Act of
1940, in addition to any such liability arising at law or in
equity, out of any untrue statement of a material fact made by
its agents in the due course of their business in selling or
offering for sale, or soliciting applications for, securities
issued by the Company or any omission on the part of its
agents to state a material fact necessary in order to make the
statements so made, in the light of the circumstances in which
they were made, not misleading (no such untrue statements or
omissions, however, being admitted or contemplated), but such
liability shall be subject to the conditions and limitations
described in said Acts. American Express

<PAGE>

Financial Advisors Inc. will also assume any liability of the Company for any
amount or amounts which the Company legally may be compelled to pay to any
purchaser under said Acts because of any untrue statements of a material fact,
or any omission to state a material fact, on the part of the agents of American
Express Financial Advisors Inc. to the extent of any actual loss to, or expense
of, the Company in connection therewith. The By-Laws of the Registrant contain a
provision relating to Indemnification of Officers and Directors as permitted by
applicable law.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this amendment to this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis
and State of Minnesota, on the 4th day of March, 1999.

IDS CERTIFICATE COMPANY

By /s/ Paula R. Meyer*
Paula R. Meyer, President

Pursuant to the requirements of the Securities Act of 1933, this amendment has
been signed below by the following persons in the following capacities on 4th
day of March, 1999.

Signature Capacity

/s/ Paula R. Meyer* ** President and Director
Paula R. Meyer (Principal Executive Officer)

/s/ Jeffrey S. Horton* Vice President and Treasurer
Jeffrey S. Horton (Principal Financial Officer)

/s/ Jay C. Hatlestad* Vice President and Controller
Jay C. Hatlestad (Principal Accounting Officer)

/s/ David R. Hubers** Director
David R. Hubers

/s/ Charles W. Johnson** Director
Charles W. Johnson

/s/ Richard W. Kling** Chairman of the Board of Directors
Richard W. Kling and Director

<PAGE>

*Signed pursuant to Officers' Power of Attorney dated September 8, 1998 filed
electronically as Exhibit 24(a) to Post-Effective Amendment No. 22 to
Registration Statement No. 33-22503 and incorporated herein by reference.

/s/Bruce A. Kohn
Bruce A. Kohn

**Signed pursuant to Directors' Power of Attorney dated October 14, 1998 filed
electronically as Exhibit 24(b) to Post-Effective Amendment No. 22 to
Registration Statement No. 33-22503 and incorporated herein by reference.

/s/Bruce A. Kohn
Bruce A. Kohn

<PAGE>

Exhibit Index

IDS Stock Market Certificate
File No. 33-22503

Exhibit Description

5: Opinion and Consent of Counsel.

10(k): Form of Selling Agent Agreement

23: Consent of Independent Auditors.

<PAGE>

March 4, 1999

IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010

Ladies and Gentlemen:

Reference is made to your Registration Statement, No. 33-22503, Form S-1, under
the Securities Act of 1933, registering an indefinite number of face-amount
certificates pursuant to Rule 24f-2 under the Securities Act of 1933.

I have examined the Certificate of Incorporation and the By-Laws of IDS
Certificate Company (the "Company") and all necessary certificates, permits,
minute books, documents and records of the Company, and the applicable statutes
of the State of Delaware and such other matters of fact and law as I have deemed
necessary, and it is my opinion:

(a) That the Company is a corporation duly organized and existing under the laws
of the State of Delaware.

(b) That the face-amount certificates registered under the above-referenced
registration number and issued by the Company since April 1, 1998, until today,
when sold in accordance with the prospectus contained in the above-referenced
Registration Statement and with applicable law, were legal and non-assessable
and were fully-paid face-amount certificates as that term is used in section
2(a)(15) of the Investment Company Act of 1940 and were binding obligations of
the Company.

(c) That other face-amount certificates registered under the above-referenced
registration number and issued by the Company, when sold in accordance with the
prospectus contained in the above-referenced Registration Statement and with
applicable law, will be legal and non-assessable and will be fully-paid
face-amount certificates as that term is used in section 2(a)(15) of the
Investment Company Act of 1940 and will binding obligations of the Company.

I hereby consent that the foregoing opinion may be used in connection with
Post-Effective Amendment No. 24 to the above-referenced Registration Statement.

Very truly yours,

/s/Bruce A. Kohn
Bruce A. Kohn
Vice President and General Counsel
IDS Certificate Company

SELLING AGENT AGREEMENT

This Agreement is made as of March 10, 1999, by and between American Express
Financial Advisors Inc., a Delaware corporation (the "Company"), distributor for
certain registered face-amount certificates offered by IDS Certificate Company
(the "Issuer"), and Securities America Inc., a Delaware corporation (the
"Agent").

I. ACTIVITIES

(1) During the term of this Agreement, the Agent and persons
designated by it shall have the non-exclusive right to
solicit applications for and to distribute those face-amount
certificates issued by the Issuer that the Company may from
time to time agree to permit the Agent to offer to the
AgentOs clients ("Certificates"). The Agent and the Company
agree to be bound by the terms of this Agreement in
connection with any such offers of Certificates. Each
Certificate that the Company may permit the Agent to offer
shall be described in Schedules attached hereto, which
Schedules may be amended or supplemented by the Company from
time to time by mailing a revised Schedule to the Agent.

(2) It is the Agent's responsibility to insure that any
investments in Certificates by its clients are suitable for
those clients. Therefore, the Agent shall cause applications
for Certificates to be made available to its clients if the
Agent, in its sole discretion, determines that such products
are appropriate or suitable for its clients. The Company and
the Issuer shall each have the right, in its sole
discretion, to the extent not inconsistent with the
Certificates, to decline to accept investments by clients of
the Agent in Certificates.

(3) The Agent agrees that all applications for Certificates
shall be made in writing on forms acceptable to the Company
and the Issuer; provided however, that the Agent may accept
telex or telephone purchase instructions from its clients in
accordance with Section V(3) hereof. Every application shall
be subject to acceptance or rejection by the Issuer
according to the terms thereof. The Agent shall handle
applications in accordance with instructions forwarded by
the Company to the Agent from time to time and shall obtain,
keep on file and provide copies to the Company and the
Issuer of any and all tax related documentation as required
by law or requested by the Company or the Issuer from time
to time. The Agent shall promptly remit to the Issuer the
payment tendered with each application, such payment to be
in conformity with the provisions of the Certificate for
which such application is made. Prior to the

<PAGE>

acceptance by the Company or the Issuer of instructions from the Agent with
regard to a Certificate or prospective investment in a Certificate, the
Agent shall provide the Company and the Issuer with written authorization
from the owner of or prospective investor in the Certificate, as the case
may be, that the Company and the Issuer may accept such instructions from
the Agent in the form in which the Agent provides them.

(4) Company reserves the right in its discretion to suspend
sales or withdraw the offering of any Certificate in whole
or in part, without notice. Upon notice to the Agent that
the Company has so suspended sales or withdrawn an offering,
or of the suspension of the effectiveness of a registration
statement or amendment or that a prospectus is not on file
as described below in this Section I(4), Certificates shall
not be offered by the Agent under any of the provisions of
this Agreement and no application for the purchase or sale
of Certificates hereunder shall be accepted if and so long
as the effectiveness of the current registration statement
or any necessary amendments thereto shall be suspended under
any of the provisions of the Securities Act of 1933 (the
"1933 Act") or any applicable state securities laws or if
and so long as a current prospectus as required by Section
5(b)(2) of the 1933 Act or any applicable state securities
laws is not on file with the Securities and Exchange
Commission (the "SEC") or any applicable state securities
regulator, as the case may be.

(5) The Agent and its personnel shall not make any
representations concerning a Certificate except those
contained in the prospectus therefor or any applicable
written sales literature approved by Company in accordance
with Section IV(4).

(6) The Agent and its personnel shall be responsible for
determining the suitability of each sale, and of any other
transaction recommended by the Agent to one or more of its
clients, and for servicing its client accounts.
Servicing client accounts shall include the following:

i) serving as the primary contact for the Agent's clients
and prospects regarding Certificates;
ii)receiving from clients and prospects and timely
transmitting to Company instructions as to sales,
surrenders, ownership changes, term changes and
other actions sought with respect to Certificates;
iii)answering client questions and inquiries regarding
Certificates;

<PAGE>

iv) determining whether the actions sought by clients
concerning Certificate ownership, transfer,
surrender and the like are legally permissible or
advisable in all applicable jurisdictions;
v) delivering to clients in a timely fashion all of
the documentation described in Section I(7) hereof;
provided, however, that the Agent has received such
documentation in a timely fashion; and, if the
Agent has not received such documentation in a
timely fashion, delivering such documentation to
clients promptly after the Agent receives it;
vi) keeping and maintaining such records as
required pursuant to this agreement or by law; and
vii) carrying out such other activities and
responsibilities as are described in this Agreement
and/or may be agreed to between the Agent and
Company from time to time.

II. COMPANY'S RESPONSIBILITY

The Company shall promptly provide the Agent with current
prospectuses, sales materials and other literature and information
legally required or reasonably requested by the Agent; provided,
however, that the Company and the Issuer shall not be obligated to
disclose proprietary information, trade secrets or other confidential
information. The Company shall arrange with the Issuer for
confirmations and quarterly statements of account that identify the
Agent to be sent to Certificate owners with regard to whom the Agent
is entitled to compensation under Exhibit A.

III. COMPENSATION

The Company shall pay the Agent and the Agent accepts in full payment
for its activities hereunder, compensation with respect to each
Certificate as described in the Schedule(s) attached hereto. Such
Schedule(s) may be amended or supplemented by the Company from time
to time by mailing a revised Schedule to the Agent.

IV. FURTHER LEGAL COMPLIANCE

(1) This Agreement and any transaction through, or payment to,
the Agent pursuant to the terms of this Agreement is
conditioned on the Agent's representation to the Company and
the Issuer that, as of the date of this Agreement, the Agent
is, and at all times during its effectiveness the Agent will
be, a registered broker-dealer under the Securities Exchange
Act of 1934 and qualified under applicable state securities
laws in each jurisdiction in which the Agent is required to
be qualified to act as a broker-dealer in securities, and a
member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"). The Agent agrees to
immediately notify the Company and the Issuer promptly in
writing and immediately suspend sales of Certificates if this
representation ceases to be true. The Agent agrees that it
will comply with the rules of the NASD.

<PAGE>

(2) The Company and the Issuer shall have no obligation or
responsibility with respect to the Agent's right to sell
Certificates in any state or jurisdiction. From time to time
the Company may furnish the Agent with information
identifying the states and jurisdictions under the securities
laws of which it is believed Certificates may be sold. The
Agent shall not transact applications for Certificates in
states or jurisdictions in which the Company or the Issuer
indicates Certificates may not be sold.

(3) The Agent represents and warrants that it will observe and
comply with all applicable laws, rules and regulations
("Laws") with respect to the distribution, sale and
servicing of the Certificates and the conduct of its
business in relation thereto, including but not limited to
Laws relating to currency transactions, transporting funds
or monetary instruments in or out of the United States, wire
transfers and other financial transactions.

(4) The Company or the Issuer will furnish the Agent with copies
of the prospectus and sales literature for each Certificate
identified in a Schedule hereto, in reasonable quantities
upon the Agent's request. The Agent agrees to deliver a copy
of the current prospectus in accordance with the provisions
of the 1933 Act to each purchaser of such a Certificate for
whom the Agent acts as broker. The Company shall file sales
literature and promotional material for such Certificates
with the NASD and the SEC as required. The Agent may not
publish or use any sales literature or promotional materials
with respect to Certificates without the Company's prior
review and written approval.

(5) The Agent shall provide the Company and the Issuer with true,
accurate and complete information about the Agent for
inclusion in the prospectuses and periodic reports, including
reports on Forms 10-K and 10-Q, of the Issuer.

V. MISCELLANEOUS

(1) The Agent for all purposes herein shall be deemed to be an
independent contractor, and except as expressly provided or
authorized in this Agreement, shall have no authority to act
for, represent or bind the Company, the Issuer or its
transfer agent.

(2) Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed postpaid to the party to
this Agreement entitled to receive the same, (a) if to the
Company, at American Express Financial Advisors Inc., IDS
Tower 10, Minneapolis, Minnesota 55440, Attn: Vice
President-Assured Assets, and (b) if to the Agent, at
Securities America Inc., 7100 West Center Road, Suite 500,
Omaha, Nebraska 68106, Attn: Legal Department, or to such
other address as either party may designate by such written
notice to the other.

<PAGE>

(3) The Agent may at its own risk accept telex or telephone
purchase, withdrawal or transfer instructions from its
clients in accordance with the Agent's internal procedures.
All such instructions shall nevertheless be communicated in
written form to the Company and shall be subject to
acceptance or rejection by the Issuer.

(4) This Agreement may be amended only by written instrument
executed by both parties hereto.

(5) This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an
original but all together only one Agreement.

(6) All references in this Agreement to the prospectus refer to
the then current version of the relevant prospectus and
include any stickers or supplements thereto.

VI. TERMINATION

(1) This Agreement shall continue in effect until December, 1999
and shall continue from year to year thereafter unless and
until terminated by either party as hereinafter provided.

(2) This Agreement may be terminated without penalty by either
the Company or the Agent at any time whether prior to, at or
after the date hereof by giving the other party at least
sixty (60) days' prior written notice of such intention to
terminate.

(3) This Agreement will terminate automatically in the event of
its assignment (as defined in the Investment Company Act of
1940.)

VII. INDEMNIFICATION

In the event the Agent breaches any of the terms and conditions of
this Agreement, the Agent shall indemnify the Company, the Issuer and
their affiliates for any damages, losses, costs and expenses
(including reasonable attorneys' fees) arising out of or relating to
such breach. The Company and the Issuer may offset any such damages,
losses, costs and expenses against any amounts due to the Agent
hereunder.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

AMERICAN EXPRESS FINANCIAL
ADVISORS INC.

------------------------------------
Print name:
Title: Vice President

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Print name:
Title: Secretary

SECURITIES AMERICA INC.

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Print name:
Print title:

<PAGE>

Schedule A
Effective as of March 10, 1999

1. Pursuant to Section I(1) of the Selling Agent Agreement, dated as of
March 10, 1999, the Agent may offer the American Express Stock Market
Certificate ("Market Certificate"), which Market Certificate bears
interest that may be tied in whole or in part to any upward movement in
a stock market index.

2. The Agent shall be compensated as follows on the basis of the principal
amount of the Market Certificates, if the client has purchased a Market
Certificate through the Agent and has not designated another selling
agent, distributor or servicing agent for the account, or if the client
has designated the Agent as selling agent or servicing agent for the
account, or if the Company, the Issuer and the Agent agree in writing
that the Agent should be compensated with regard to the client's Market
Certificate account.

The Agent shall receive a sales commission equal to 0.80% per term of
the principal amount of each such Market Certificate and shall receive
marketing support fees and other compensation equal to 0.10% of the
principal amount of each such Market Certificate. For the purposes of
this Schedule A, "principal amount" shall be equal to the amount
invested, plus additional investments and interest when credited to the
account but less withdrawals and penalties.

Provided, however, that no payment shall be made to the Agent, or to
any other selling agent or distributor (except the Company) with whom
the Company or the Issuer has a selling agent or distribution
agreement, of compensation as to which the Company or the Issuer has
actually received at its principal office written notice of a competing
claim to such compensation from the Agent or such a selling agent or
distributor, until the parties disputing the payment resolve their
dispute or such payment is ordered by a court, panel of arbitrators, or
similar authority with jurisdiction over the matter.

The Agent shall be paid quarterly in arrears, so that the Agent shall
be paid after the end of each of the first three quarterly
anniversaries of the beginning of each one-year term and then after the
end of each such term. Compensation shall be calculated on a 90 day per
term quarter basis; provided, however, that compensation shall not be
earned during any period in which the Market Certificate is earning
only interim interest. Notwithstanding the foregoing, during any term
in which a client is receiving fixed interest, if she/he elects to
again participate in the market, the fee shall be prorated for such
partial quarter and paid after the client's new term begins.

3. The compensation payable to the Agent for term quarters, or prorated
quarters, as the case may be, ending during any given calendar month
shall be aggregated and paid to the Agent in a lump sum within 15 days
after each calendar month end.

<PAGE>

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Independent auditors"
and to the use of our report dated February 5, 1998 in the Post-Effective
Amendment Number 24 to Registration Statement Number 33-22503 on Form S-1 and
related prospectus of IDS Certificate Company for the registration of its IDS
Stock Market Certificate.

Our audits also included the financial statements schedules of IDS Certificate
Company referred to in Item 16(b) of this Registration Statement. These
schedules are the responsibility of the management of the IDS Certificate
Company. Our responsibility is to express an opinion based on our audits. In our
opinion, the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.

Minneapolis, Minnesota
February 26, 1999