SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-1
POST-EFFECTIVE AMENDMENT NUMBER 27 TO
REGISTRATION STATEMENT NUMBER 2-68296
American Express Cash Reserve Certificate
UNDER
THE SECURITIES ACT OF 1933
AMERICAN EXPRESS CERTIFICATE COMPANY
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(Exact name of registrant as specified in charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
6725
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(Primary Standard Industrial Classification Code Number)
41-6009975
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(I.R.S. Employer Identification No.)
70100 AXP Financial Center, Minneapolis, MN 55474, (612) 671-3131
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Monica P. Vickman - 50605 AXP Financial Center, Minneapolis, MN 55474,
(612) 671-4085
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 27 TO
REGISTRATION STATEMENT NO. 2-68296
Cover Page
Prospectus
Part II Information
Signatures
American Express Cash Reserve Certificate
Prospectus April 25, 2001
Earn attractive rates with ready access to your cash reserves.
American Express Certificate Company (AECC), formerly IDS Certificate Company,
issues American Express Cash Reserve Certificates. You may:
o Purchase this certificate in any amount from $1,000 through $1 million or
with monthly investments of at least $50.
o Earn a fixed rate of interest declared every three months.
o Invest in successive three-month terms up to a total of 20 years from the
issue date of the certificate.
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 AECC. See "Risk Factors" on
page 2p.
AECC 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 (FDIC), the Federal Reserve Board or any other agency.
The distributor is not required to sell any specific amount of certificates.
Issuer:
American Express Certificate Company
70100 AXP Financial Center
Minneapolis, MN 55474
(800) 862-7919 (toll free)
Distributor:
American Express Financial Advisors Inc.
American Express companies
AMERICAN
EXPRESS(R)
Initial Interest Rates
AECC guarantees a fixed interest rate for each three-month term during the life
of the certificate. For your initial term, AECC guarantees that when the rate
for new purchases takes effect, the rate will be within a specified range of the
U.S. 90 day Treasury Bill rate. See "About the Certificate" for more
explanation.
Here are the interest rates in effect April 25, 2001:
Investment amount Simple interest rate* Effective annualized
yield**
$50 to $9,999 ____% ____%
$10,000 to $24,999 ____% ____%
$25,000 or more ____% ____%
* Rates may depend on factors described in "Rates for New Purchases" under
"About the Certificate."
** Assuming monthly compounding.
These rates may or may not have changed when you apply to purchase your
certificate. Rates for later three-month terms are set at the discretion of AECC
and may also differ from the rates shown here. See "Rates for New Purchases"
under "About the Certificate" for further information.
AECC may offer different rates for different distribution channels. For more
information call (800) 862-7919. Certificates of deposits (CDs) with different
rates may be available from American Express Centurion Bank, an affiliate of
AECC, including high rate CDs through Membership B@nking(SM).
RISK FACTORS
You should consider the following when investing in this certificate:
This certificate is backed solely by the assets of AECC. Most of our assets are
debt securities and are subject to the following risks:
Interest rate risk: The price of debt securities generally falls as interest
rates increase, and rises as interest rates decrease. In general, the longer the
maturity of a bond, the greater its loss of value as interest rates increase,
and the greater its gain in value as interest rates decrease. See "How Your
Money Is Used and Protected."
Credit risk: This is the risk that the issuer of a security, or the counterparty
to a contract, will default or otherwise become unable to honor a financial
obligation (such as payments due on a bond or note). Credit ratings of the
issuers of securities in our portfolio vary. See "How Your Money Is Used and
Protected."
Table of Contents
Initial Interest Rates 2p
Risk Factors 2p
About the Certificate 4p
Read and Keep This Prospectus 4p
Investment Amounts and Terms 4p
Face Amount and Principal 4p
Value at Maturity 4p
Receiving Cash During the Term 5p
Interest 5p
Rates for New Purchases 5p
Promotions and Pricing Flexibility 6p
How to Invest and Withdraw Funds 7p
Buying Your Certificate 7p
Bonus Payment 8p
Additional Investments 8p
Three Ways to Make Investments 9p
Full and Partial Withdrawals 10p
When Your Certificate Term Ends 11p
Transfers to Other Accounts 11p
Two Ways to Request a Withdrawal
or Transfer 11p
Three Ways to Receive Payment When
You Withdraw Funds 12p
Retirement Plans: Special Policies 13p
Transfer of Ownership 13p
For More Information 13p
Taxes on Your Earnings 13p
Retirement Accounts 13p
Gifts to Minors 14p
Your TIN and Backup Withholding 14p
Foreign Investors 15p
How Your Money Is Used
and Protected 16p
Invested and Guaranteed by AECC 16p
Regulated by Government 16p
Backed by Our Investments 17p
Investment Policies 17p
How Your Money Is Managed 19p
Relationship Between AECC and
American Express Financial
Corporation 19p
Capital Structure and Certificates Issued 20p
Investment Management
and Services 20p
Distribution 21p
Transfer Agent 22p
Employment of Other American Express
Affiliates 22p
Directors and Officers 22p
Independent Auditors 24p
American Express Certificates 24p
Appendix 25p
Annual Financial Information p
Summary of Selected
Financial Information p
Management's Discussion and Analysis
of Financial Condition and Results
of Operations p
American Express Certificate Company
Responsibility for Preparation
of Financial Statements p
Report of Independent Auditors p
Financial Statements p
Notes to Financial Statements p
About the Certificate
READ AND KEEP THIS PROSPECTUS
This prospectus describes terms and conditions of your American Express Cash
Reserve Certificate. It contains facts that can help you decide if the
certificate is the right investment for you. Read the prospectus before you
invest and keep it for future reference. No one has the authority to change the
terms and conditions of the American Express Cash Reserve Certificate as
described in the prospectus, or to bind AECC by any statement not in it.
INVESTMENT AMOUNTS AND TERMS
You may purchase the American Express Cash Reserve Certificate in any amount
from $1,000 or monthly investments of at least $50 through scheduled bank
authorization or payroll deduction. Your total investments over the life of the
certificate may not exceed $1 million unless you receive prior approval from
AECC. AECC guarantees your principal and interest.
The certificate may be used as an investment for your Individual Retirement
Account (IRA), 401(k) plan account or other qualified retirement plan account. A
minimum investment of $50 per month is required for these types of accounts. If
so used, the amount of your contribution (investment) will be subject to any
limitations of the plan and applicable federal law.
FACE AMOUNT AND PRINCIPAL
The face amount of the certificate is the amount of your initial investment, and
will remain the same over the life of the certificate.
The principal is the amount that is reinvested at the beginning of each
subsequent term, and is calculated as follows:
Principal equals Face amount (initial investment)
plus At the end of a term, interest credited to your account
during the term
minus Any interest paid to you in cash
plus Any additional investments to your certificate
minus Any withdrawals, fees and applicable penalties
For example: Assume your initial investment (face amount) of $5,000 has earned
$75 of interest during the term. You have not taken any interest as cash, or
made any withdrawals. You have invested an additional $2,500 at the beginning of
the next term. Your principal for the next term will equal:
$5,000 Face amount (initial investment)
plus $ 75 Interest credited to your account
minus $ (0) Interest paid to you in cash
plus $2,500Additional investment to your certificate
minus $ (0) Withdrawals and applicable penalties or fees
$7,575 Principal at the beginning of the next term
VALUE AT MATURITY
Your certificate matures 20 years from its issue date. At maturity, you will
receive a distribution for the value of your certificate. This will be the total
of your purchase price, plus additional investments and any credited interest
not paid to you in cash, less any withdrawals, penalties and fees. Bank
authorizations will automatically be stopped at maturity or full withdrawal.
RECEIVING CASH DURING THE TERM
If you need your money before your certificate term ends, you may withdraw part
or all of its value at any time, less any penalties that apply. Procedures for
withdrawing money, as well as conditions under which penalties apply, are
described in "How to Invest and Withdraw Funds."
INTEREST
Your investments earn interest from the date they are credited to your account.
Interest is compounded and credited at the end of each certificate month (on the
monthly anniversary of the issue date).
AECC declares and guarantees a fixed rate of interest for each three-month
period during the life of your certificate. We calculate the amount of interest
you earn each certificate month by:
o applying the interest rate then in effect to your balance each day,
o adding these daily amounts to get a monthly total, and
o subtracting interest accrued on any amount you withdraw during the
certificate month.
Interest is calculated on a 30-day month and 360-day year basis.
This certificate may be available through other distributors or selling agents
with different interest rates or related features and consequently with
different returns. You may obtain information about other such distributors or
selling agents by calling the Client Service Organization at the telephone
numbers listed on the back cover.
RATES FOR NEW PURCHASES
AECC has complete discretion to determine whether to accept an application and
sell a certificate. When your application is accepted, and we have received your
initial investment, we will send you a confirmation showing the rate that your
investment will earn for the first term. For accounts of less than $10,000 AECC
guarantees that this rate will be within a range of 225 basis points (2.25%)
below to 125 basis points (1.25%) below the rate published for a U.S. 90 day
Treasury Bill. For accounts of $10,000 to $24,999 this rate will be within a
range from 50 basis points (0.50%) below to 50 basis points (0.50%) above the
rate published for a U.S. 90 day Treasury Bill. For accounts of $25,000 or more,
this rate will be within a range from 25 basis points (0.25%) below to 75 basis
points (0.75%) above the rate published for a U.S. 90 day Treasury Bill. For
example, if the average rate most recently published is 4.00%, our rate in
effect for that week for amounts of $10,000 to $24,999 would be between 3.50% to
4.50%.
The U.S. 90 day Treasury Bill is a debt instrument issued by the U.S. Treasury.
The U.S. 90 day Treasury Bill is published on the Chicago Mercantile Exchange
Website at www.cme.com. The stock market closes at 3 p.m. Central time. The U.S.
90 day Treasury Bill rate is available at approximately 4:30 p.m. In the future,
we may use a later time cut-off if it becomes feasible to do so. We will use
this rate to determine the rates for new certificates. If the stock market is
not open or the U.S. 90 day Treasury Bill is unavailable as of the last day of
your term, the preceding business day for which a rate is available will be used
instead. Each Wednesday the U.S. 90 day Treasury Bill closing rate is used for
establishing the rates starting the following Wednesday.
Rates for new purchases are reviewed and may change weekly. Normally, the rate
you receive will be the higher of:
o the rate in effect on the date of your application, or
o the rate in effect on the date your application is accepted by AECC.
However if your application bears a date more than seven days before its receipt
by AECC, the rate you receive will be the higher of:
o the rate in effect on the date your application is accepted by AECC, or
o the rate in effect seven days prior to receipt.
Except for specific promotions, AECC guarantees an initial rate 25 basis points
above the rate offered to the general public on this American Express
Certificate if it is purchased by using the CD transfer service offered by
American Express Financial Advisors Inc. to help you transfer money from a bank
or thrift CD account to American Express Financial Advisors Inc. investments.
Consequently, the highest and lowest rate in the range of rates for initial
terms of such certificates purchased using the CD transfer service will be 25
basis points higher than the comparable rates described at the beginning of this
section for ranges of rates for initial terms. To be eligible for this rate, you
must transfer at least $10,000 from a CD account to AECC to purchase one or more
American Express Cash Reserve Certificates and/or American Express Flexible
Savings Certificates, and this rate will only apply to those certificates.
PROMOTIONS AND PRICING FLEXIBILITY
AECC may sponsor or participate in promotions involving the certificate and its
respective terms. For example, we may offer different rates to new clients, to
existing clients, or to individuals who purchase or use other products or
services offered by American Express Company or its affiliates. Rates also may
vary depending on the amount invested, geographic location and whether the
certificate is purchased for an IRA or qualified retirement plan account.
These promotions will generally be for a specified period of time. If we offer a
promotion, the rates will be set as follows: For accounts of less than $10,000
the rate will be 200 basis points (2.00%) below to 100 basis points (1.00%)
below the rate published for a U.S. 90 day Treasury Bill. For accounts from
$10,000 to $24,999 the rate will be from 25 basis points (0.25%) below to 75
basis points (0.75%) above the rate published for a U.S. 90 day Treasury Bill.
For accounts of $25,000 and more the rate will be 0 basis points (.00%) above to
100 basis points (1.00%) above the rate published for a U.S. 90 day Treasury
Bill.
Rates for future terms: Interest on your certificate for future three-month
terms may be greater or less than the rates you receive during the first three
months. In setting future rates, a primary consideration will be the prevailing
investment climate, including the U.S. 90 day Treasury Bill rate. Nevertheless,
we have complete discretion as to what interest shall be declared beyond the
initial three-month term. If the U.S. 90 day Treasury Bill rate is no longer
publicly available or feasible to use, AECC may use another similar source as a
guide for setting rates.
Performance: From February 1996 through February 2001, American Express Cash
Reserve yields were generally higher than average bank and thrift three-month CD
yields, as measured by the BANKRATE MONITOR(R)(BRM) Top 25 Market Average(R).
BANKRATE MONITOR and National Index are marks owned by BANKRATE.COM(SM), a
division of ilife.com, Inc, N. Palm Beach, FL, 33408.
The BRM is a weekly magazine published by Advertising News Service Inc., an
independent national news organization that collects and disseminates
information about bank products and interest rates. Advertising News Service
Inc. has no connection with AECC, AEFC, or any of their affiliates. The BRM Top
25 Market Average(R) is an index of rates and annual effective yields offered on
various length certificates of deposit by large banks and thrifts in 25
metropolitan areas. The frequency of compounding varies among the banks and
thrifts. CDs in the BRM Top 25 Market Average(R) are government insured
fixed-rate time deposits.
Yields from February 1996 through February 2001
6% AXP Cash Reserve
Certificate
x x
4% Certificate
of Deposit
2% x
Money Market
Deposit Account
'96 '97 '98 '99 '00 '01
This graph compares past yields offered on American Express Cash Reserve
Certificate to those of three-month CDs and money market deposit accounts as
measured by the BRM Top 25 Market Average(R) and should not be considered a
prediction of future performance.
Future performance will not be compared to the BRM Top 25 Market Average(R), but
will instead be compared to the U.S. 90 day Treasury Bill.
How to Invest and Withdraw Funds
BUYING YOUR CERTIFICATE
Your American Express financial advisor will help you fill out and submit an
application to open an account with us and purchase a certificate. If you
purchase your certificate other than through an American Express financial
advisor -- for example, through a direct marketing channel -- you may be given
different purchase instructions. We will process the application at our
corporate offices in Minneapolis, Minnesota. When we have accepted your
application and we have received your initial investment, we will send you a
confirmation of your purchase, indicating your account number and applicable
rate of interest for your first term, as described under "Rates for New
Purchases." See "Purchase policies" below.
BONUS PAYMENT
AECC will pay a persistency bonus on your Cash Reserve Certificate. In order for
you to be eligible for the bonus, you must keep your certificate for 12 months.
The issue date of your certificate will be used for determining when your bonus
payment will be made. The bonus will be calculated based on the amount invested
minus any withdrawals made during the 12-month period. Any additional payments
or credited interest paid during the 12-month period will not be used towards
calculating your bonus payment.
For example, you open a new account with a $50,000 balance. During the following
12-month period you withdraw $10,000. The bonus payment is calculated based on
the remaining $40,000 balance. Also, if during the same 12-month period you add
$15,000 to your certificate and your certificate earns $2,500 of interest, your
bonus payment is still calculated based on your original investment of $50,000
minus $10,000 withdrawn during the 12-month period. Based on the 0.50% bonus
rate, your principal at the end of the 12-month period will equal:
$ 50,000 Face amount (initial payment)
plus $ 15,000 Additional payment
plus $ 2,500 Credited interest
minus $(10,000) Withdrawal
plus $ 200 Credited bonus interest (Beginning Balance less
withdrawals throughout the year times bonus rate
($50,000-$10,000)*0.005 = $200
$ 57,700 Principal at the end of the 12-month period
Your next year bonus will be based on the principal at the end of your first
12-month period minus any withdrawals made during the second 12-month period.
Any additional payments and credited interest earned during the second 12-month
period will not be counted towards the second 12-month period bonus payment. The
subsequent years' bonus payments are calculated in the same manner.
There is no assurance these rates will be in effect or that these results will
be achieved at the time you invest.
ADDITIONAL INVESTMENTS
You may make additional investments at any time. Additional investments can be
in any amount from $50, and your total investment, less withdrawals, may not
exceed $1 million (unless you receive prior approval from AECC to invest more).
You will earn interest on additional investments from the date we accept them.
AECC will send a confirmation of additional investments.
If you add to a certificate purchased other than through an American Express
financial advisor, you may be given different instructions regarding additional
investments.
Important: When you open an account, you must provide AECC with your correct
Taxpayer Identification Number (TIN), which is either your Social Security or
Employer Identification number. See "Taxes on Your Earnings."
Purchase policies:
o Investments must be received and accepted in the Minneapolis headquarters on
a business day before 3 p.m. Central time to be included in your account that
day. Otherwise your purchase will be processed the next business day.
o You have 15 days from the date of purchase to cancel your investment without
penalty by either writing or calling the Client Service Organization at the
address or phone number on the back of this prospectus. If you decide to
cancel your certificate within this 15-day period you will not earn any
interest.
o If you purchase a certificate with a personal check or other non-guaranteed
funds, AEFC will wait one day for the process of converting your check to
federal funds (e.g., monies of member banks with the Federal Reserve Bank)
before your purchase will be accepted and you begin earning interest.
o AECC has complete discretion to determine whether to accept an application
and sell a certificate.
o You must maintain a balance of at least $1,000 in your Cash Reserve
Certificate account unless you are using an authorized systematic pay-in or
payout arrangement. If you use a scheduled pay-in arrangement, your minimum
balance requirement is $50.
o If you make no investments for a period of at least 12 consecutive months and
your principal is less than $1,000, we will send you a notice of our intent
to cancel the certificate. After the notice, if an investment is not made
within 60 days your certificate will be canceled, and we will send you a
check for its full value.
A number of special policies apply to purchases, withdrawals and exchanges
within IRAs, 401(k) plans and other qualified retirement plans. See "Retirement
Plans: Special Policies."
THREE WAYS TO MAKE INVESTMENTS
1 By scheduled investment plan:
Contact your financial advisor to set up one of the following scheduled plans
for monthly investments:
o Bank authorization (automatic deduction from your account)
o Automatic payroll deduction
o Direct deposit of social security check
o Other plan approved by AECC
o Monthly minimum investment must be $50
To cancel a bank authorization, you must instruct AECC in writing or over the
phone. We must receive notice at least three business days before the date funds
would normally be withdrawn from your bank account.
2 By mail:
For monthly or lump sum investments, send your check, by regular or express
mail, along with your name and account number to:
American Express Financial Advisors Inc.
70200 AXP Financial Center
Minneapolis, MN 55474
3 By wire:
If you have an established account, you may wire money to:
Wells Fargo Bank Minnesota, N.A.
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.
Give these instructions: Credit American Express Financial Advisors Account
#0000030015 for personal account # (your personal number) for (your name).
If this information is not included, the order may be rejected and all money
received, less any costs AEFC incurs, will be returned promptly.
o Minimum amounts each wire investment: $1,000.
o Wire orders can be accepted only on days when your bank, AEFC, AECC and Wells
Fargo Bank Minnesota, N.A. are open for business.
o Wire purchases are completed when wired payment is received and we accept
the purchase.
o Wire investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be credited that
day. Otherwise your purchase will be processed the next business day.
o AECC, AEFC and its other subsidiaries are not responsible for any delays that
occur in wiring funds, including delays in processing by the bank.
o You must pay for any fee the bank charges for wiring.
FULL AND PARTIAL WITHDRAWALS
You may withdraw your certificate for its full value or make a partial
withdrawal of $100 or more at any time. If you purchase this certificate for an
IRA, 401(k), or other retirement plan account, early withdrawals or cash
payments of interest taken prematurely may be subject to IRS penalty taxes.
o Complete withdrawal of your certificate is made by giving us proper
instructions. To complete these transactions, see "Two Ways to Request a
Withdrawal or Transfer."
o If your withdrawal request is received in the Minneapolis headquarters on a
business day before 3 p.m. Central time, it will be processed that day and
payment will be sent the next business day. Otherwise, your request will be
processed one business day later.
o Interest payments in cash may be sent to you at the end of each certificate
month, quarter, or on a semiannual or annual basis.
o Scheduled partial withdrawals may be sent to you monthly, quarterly,
semiannually or annually. The minimum withdrawal amount is $50.
o Because we credit interest on your certificate's monthly anniversary,
withdrawals before the end of the certificate month will result in loss of
interest on the amount withdrawn. You'll get the best result by timing a
withdrawal at the end of the certificate month -- that is, on an interest
crediting date.
o Withdrawals that reduce your certificate's principal below a break point for
a lower interest rate will cause the remaining principal to earn the lower
interest rate for the rest of the term from the date of the withdrawal.
o You may not make a withdrawal from your certificate if that withdrawal causes
your balance to fall below $1,000 unless you are making bank authorization or
payroll deduction payments or taking systematic payments from your
certificate. In these instances, the remaining balance will earn the lower
interest rate in effect for balances of less than $1,000.
WHEN YOUR CERTIFICATE TERM ENDS
Shortly before the end of your certificate's term we will send you a notice
indicating the interest rate that will apply to the new term. Unless you tell us
otherwise, your certificate will automatically continue for another term. The
interest rate that will apply to your new term will be the rate in effect on the
day the new term begins. This rate of interest will not be changed during that
term unless your certificate's principal falls below a break point for a lower
interest rate.
Other full and partial withdrawal policies:
o If 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 AECC mails a check to you. We may mail a
check earlier if the bank provides evidence that your check has cleared.
o If your certificate is pledged as collateral, any withdrawal will be delayed
until we get approval from the secured party.
o Any payments to you may be delayed under applicable rules, regulations or
orders of the Securities and Exchange Commission (SEC).
TRANSFERS TO OTHER ACCOUNTS
You may transfer part or all of your certificate to any other American Express
Certificate or into another new or existing American Express Financial Advisors
Inc. account that has the same ownership (subject to any terms and conditions
that may apply).
TWO WAYS TO REQUEST A WITHDRAWAL OR TRANSFER
1 By phone:
Call the Client Service Organization at the telephone numbers listed on the back
cover.
o Maximum phone request: $50,000.
o Transfers into an American Express Financial Advisors Inc. account with the
same ownership.
o A telephone withdrawal request will not be allowed within 30 days of a
phoned-in address change.
o We will honor any telephone withdrawal or transfer request believed to be
authentic and will use reasonable procedures to confirm authenticity.
You may request that telephone withdrawals not be authorized from your account
by writing the Client Service Organization.
2 By mail:
Send your name, account number and request for a withdrawal or transfer, by
regular or express mail, to:
American Express Financial Advisors Inc.
70100 AXP Financial Center
Minneapolis, MN 55474
Written requests are required for:
o Transactions over $50,000.
o Pension plans and custodial accounts where the minor has reached the age
at which custodianship should terminate.
o Transfers to another American Express Financial Advisors Inc. account with
different ownership (all current registered owners must sign the request).
THREE WAYS TO RECEIVE PAYMENT WHEN YOU WITHDRAW FUNDS
1 By regular or express mail:
o Mailed to address on record; please allow seven days for mailing.
o Payable to name(s) you requested.
o We will charge a fee if you request express mail delivery. We will deduct the
fee from your remaining certificate balance, provided that balance would not
be less than $1,000. If the balance would be less than $1,000, we will deduct
the fee from the proceeds of the withdrawal.
2 By wire:
o Minimum wire withdrawal: $1,000.
o Request that money be wired to your bank.
o Bank account must be in same ownership as AECC account.
o Pre-authorization required. Complete the bank wire authorization section in
the application or use a form supplied by your American Express financial
advisor. All registered owners must sign.
o We may deduct a service fee from your balance (for partial withdrawals) or
from the proceeds of a full withdrawal.
3 By electronic transfer:
o Available only for pre-authorized scheduled partial withdrawals and other
full or partial withdrawals.
o No charge.
o Deposited electronically in your bank account.
o Allow two to five business days from request to deposit.
RETIREMENT PLANS: SPECIAL POLICIES
o If the certificate is purchased for a 401(k) plan or other qualified
retirement plan account, the terms and conditions of the certificate apply to
the plan as the owner of this certificate. However, the terms of the plan, as
interpreted by the plan trustee or administrator, will determine how a
participant's benefit under the plan is administered. These terms may differ
from the terms of the certificate.
o If your certificate is held in a custodial or trusteed retirement plan
(including a Keogh plan), special rules may apply at maturity. If no other
investment instructions are provided directing how to handle your certificate
at maturity, the full value of the certificate will automatically transfer to
a new or existing cash management account according to the rules outlined in
the plan document or as otherwise provided in the plan document.
o The annual custodial fee for non-401(k) qualified retirement plans or IRAs
may be deducted from your certificate account. It may reduce the amount
payable at maturity or the amount received upon an early withdrawal.
o Retirement plan withdrawals may be subject to withdrawal penalties or loss of
interest even if they are not subject to federal tax penalties.
o If you withdraw all funds from your last account in an IRA at American
Express Trust Company, a termination fee will apply as set out in Your Guide
to IRAs, the IRS disclosure information received when you opened your
account.
o The IRA termination fee will be waived if a withdrawal occurs after you have
reached age 701/2 or upon the owner's death.
TRANSFER OF OWNERSHIP
While this certificate is not negotiable, AECC will transfer ownership upon
written notification to our Client Service Organization. However, if you have
purchased your certificate for a 401(k) plan or other qualified retirement plan,
or an IRA you may be unable to transfer or assign the certificate without losing
the account's favorable tax status. Please consult your tax advisor.
FOR MORE INFORMATION
For information on purchases, withdrawals, exchanges, transfers of ownership,
proper instructions and other service questions regarding your certificate,
please consult your American Express financial advisor or call the Client
Service Organization at the telephone numbers listed on the back cover.
If you purchase your certificate other than through a financial advisor, you may
be given different purchase and withdrawal instructions.
Taxes on Your Earnings
Interest on your certificate is taxable when credited to your account. Each
calendar year we provide the certificate account owner and the IRS with reports
of all earnings equal to and over $10 (Form 1099). Withdrawals are reported to
the certificate account owner and the IRS on Form 1099-B, "Proceeds from Broker
and Barter Exchange Transactions."
RETIREMENT ACCOUNTS
If you are using the certificate as an investment for a 401(k) plan account or
other qualified retirement plan account or an IRA, income tax rules for your
qualified plan or IRA apply. Generally, you will pay no income taxes on your
investment's earnings -- and, in many cases, on part or all of the investment
itself -- until you begin to make withdrawals.
AECC will withhold federal income taxes of 10% on a qualified plan or IRA
withdrawals unless you tell us not to. AECC is required to withhold federal
income taxes of 20% on most qualified plan distributions, unless the
distribution is directly rolled over to another qualified plan or IRA.
Withdrawals from retirement accounts are generally subject to a 10% early
withdrawal penalty by the IRS if you make them before age 591/2, unless you are
disabled or if they are made by your beneficiary in the event of your death.
Other exceptions may also apply. (Also, withdrawals of principal during a
certificate month may be subject to the certificate's provision for loss of
interest.)
Consult your tax advisor to see how these rules apply to you before you request
a distribution from your plan or IRA.
GIFTS TO MINORS
The certificate may be given to a minor under either the Uniform Gifts or
Uniform Transfers to Minors Act (UGMA/UTMA), whichever applies in your state.
UGMAs/UTMAs are irrevocable. Generally, under federal tax laws, income over
$1,500 for the year 2001 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 and certify the correct TIN, you could be subject to backup
withholding of 31% of your interest earnings. You could also be subject to
further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN;
o a civil penalty of $500 if you make a false statement that results in no
backup withholding; and
o criminal penalties for falsifying information.
You could also be subject to backup withholding because you failed to report
interest on your tax return as required.
To help you determine the correct TIN to use on various types of accounts,
please use this chart:
How to Determine the Correct TIN
- --------------------------------------------------- ---------------------------------------------------------------------------
For this type of account: Use the Social Security or Employer Identification Number of:
- --------------------------------------------------- ---------------------------------------------------------------------------
Individual or joint account The individual or one of the owners listed on the joint account
- --------------------------------------------------- ---------------------------------------------------------------------------
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors Act)
- --------------------------------------------------- ---------------------------------------------------------------------------
A revocable 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
- --------------------------------------------------- ---------------------------------------------------------------------------
For details on TIN requirements, ask your financial advisor or contact your
local American Express Financial Advisors Inc. office for federal Form W-9,
Request for Taxpayer Identification Number and Certification. You also may
obtain the form on the Internet at (http://www.irs.gov/prod/forms_pubs/).
FOREIGN INVESTORS
If you are not a citizen or resident of the United States (nonresident alien),
you must supply AECC with Form W-8, Certificate of Foreign Status, when you
purchase your certificate. You must also supply both a current mailing address
and an address of foreign residency, if different. AECC will not accept
purchases of certificates by nonresident aliens without an appropriately
certified Form W-8 (or approved substitute). The Form W-8 in effect before
January 1, 2001, must be resupplied by you every three calendar years.
Interest on the certificate is "portfolio interest" as defined in U.S. Internal
Revenue Code Section 871(h) if earned by a nonresident alien. Even though your
interest income is not taxed by the U.S. government, it will be reported at year
end to you and to the U.S. government on a Form 1042S, Foreign Person's U.S.
Source Income Subject to Withholding. The United States participates in various
tax treaties with foreign countries, which provide for sharing of tax
information.
Changes in Tax Regulation: The U.S. Internal Revenue Service has issued new
regulations changing the certification requirements for nonresident aliens. As a
result of the changes, new Forms W-8 have been designed and are available for
use. AECC will need the new forms on file for all clients by January 1, 2001.
Depending on your status, you may provide us with any one of four new Forms W-8.
Most clients will use Form W-8BEN, Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding, but consult your tax advisor to ensure
that you are using the correct form. The new Forms W-8 must be resupplied every
four calendar years, up from three years with the current form.
A few other changes may affect you. Foreign trusts must apply for a permanent
U.S. individual tax identification number (ITIN). Individuals applying for
benefits under a tax treaty will have additional requirements.
Withholding taxes: If you fail to provide a Form W-8 as required above, you will
be subject to 31% backup withholding on interest payments and withdrawals from
certificates.
Estate tax: If you are a nonresident alien and you die while owning a
certificate, then, depending on the circumstances, AECC generally will not act
on instructions with regard to the certificate unless AECC first receives, at a
minimum, a statement from persons AECC believes are knowledgeable about your
estate. The statement must be satisfactory to AECC 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 AECC 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.
How Your Money Is Used and Protected
INVESTED AND GUARANTEED BY AECC
AECC, a wholly owned subsidiary of AEFC, issues and guarantees the American
Express Cash Reserve Certificate. We are by far the largest issuer of face
amount certificates in the United States, with total assets of more than $4.0
billion and a net worth in excess of $166 million on Dec. 31, 2000.
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,
o and various expenses, including taxes, fees to AEFC for advisory and other
services, distribution fees to American Express Financial Advisors Inc.,
selling agent fees to selling agents, and transfer agent fees to American
Express Client Service Corporation (AECSC).
For a review of significant events relating to our business, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations." No
national rating agency rates our certificates.
Most banks and thrifts offer investments known as CDs that are similar to our
certificates in many ways. Early withdrawals of bank CDs often result in
penalties. Banks and thrifts generally have federal deposit insurance for their
deposits and lend much of the money deposited to individuals, businesses and
other enterprises. Other financial institutions and some insurance companies may
offer investments with comparable combinations of safety and return on
investment.
REGULATED BY GOVERNMENT
Because the American Express Cash Reserve Certificate is a security, its offer
and sale are subject to regulation under federal and state securities laws. (The
American Express Cash Reserve Certificate is a face-amount certificate. It is
not a bank product, an equity investment, a form of life insurance or an
investment trust.)
The federal Investment Company Act of 1940 requires us to keep investments on
deposit in a segregated custodial account to protect all of our outstanding
certificates. These investments back the entire value of your certificate
account. Their amortized cost must exceed the required carrying value of the
outstanding certificates by at least $250,000. As of Dec. 31, 2000, the
amortized cost of these investments exceeded the required carrying value of our
outstanding certificates by more than $250 million. The law requires us to use
amortized cost for these regulatory purposes. Among other things, the law
permits Minnesota statutes to govern qualified assets of AECC as described in
Note 2 to the financial statements. 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.
As a condition to regulatory relief from the SEC, AECC has agreed to maintain
capital and surplus equal to 5% of outstanding liabilities on certificates (not
including loans made on certificates in accordance with terms of some
certificates that no longer are offered by AECC). AECC is not obligated to
continue to rely on the relief and continue to comply with the conditions of the
relief. Similarly, AECC has entered into a written informal understanding with
the Minnesota Commerce Department that AECC will maintain capital equal to 5% of
the assets of AECC (less any loans on outstanding certificates). When computing
its capital for these purposes, AECC values its assets on the basis of statutory
accounting for insurance companies rather than generally accepted accounting
principles.
BACKED BY OUR INVESTMENTS
Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 2000:
Type of investment Net amount invested
Corporate and other bonds 48%
Government agency bonds 29
Preferred stocks 12
Mortgages 9
Cash and cash equivalents 2
As of Dec. 31, 2000, about 90% of our securities portfolio (including bonds and
preferred stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B to the financial
statements.
Most of our investments are on deposit with American Express Trust Company,
Minneapolis, although we also maintain separate deposits as required by certain
states. American Express Trust Company is a wholly owned subsidiary of AEFC.
Copies of our Dec. 31, 2000, schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments regarding the
valuation, carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial statements.
INVESTMENT POLICIES
In deciding how to diversify the portfolio -- among what types of investments in
what amounts -- the officers and directors of AECC use their best judgment,
subject to applicable law. The following policies currently govern our
investment decisions:
Debt securities
Most of our investments are in debt securities as referenced in the table in
"Backed by Our Investments" under "How Your Money is Used and Protected."
The price of bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of a bond also fluctuates if its credit
rating is upgraded or downgraded. The price of bonds below investment grade may
react more to whether a company can pay interest and principal when due than to
changes in interest rates. They have greater price fluctuations, are more likely
to experience a default, and sometimes are referred to as junk bonds. Reduced
market liquidity for these bonds may occasionally make it more difficult to
value them. In valuing bonds, AECC relies both on independent rating agencies
and the investment manager's credit analysis. Under normal circumstances, at
least 85% of the securities in AECC's portfolio will be rated investment grade,
or in the opinion of AECC's investment advisor will be the equivalent of
investment grade. Under normal circumstances, AECC will not purchase any
security rated below B- by Moody's Investors Service, Inc. or Standard & Poor's.
Securities that are subsequently downgraded in quality may continue to be held
by AECC and will be sold only when AECC believes it is advantageous to do so.
As of Dec. 31, 2000, AECC held about 10% of its investment portfolio (including
bonds, preferred stocks and mortgages) in investments rated below investment
grade.
Purchasing securities on margin
We will not purchase any securities on margin or participate on a joint basis or
a joint-and-several basis in any trading account in securities.
Commodities
We have not and do not intend to purchase or sell commodities or commodity
contracts except to the extent that transactions described in "Financial
transactions including hedges" in this section may be considered commodity
contracts.
Underwriting
We do not intend to engage in the public distribution of securities issued by
others. However, if we purchase unregistered securities and later resell them,
we may be considered an underwriter (selling securities for others) under
federal securities laws.
Borrowing money
From time to time we have established a line of credit with banks if management
believed borrowing was necessary or desirable. We may pledge some of our assets
as security. We may occasionally use repurchase agreements as a way to borrow
money. Under these agreements, we sell debt securities to our lender, and
repurchase them at the sales price plus an agreed-upon interest rate within a
specified period of time. There is no limit on the extent to which we may borrow
money, except that borrowing must be through the sale of certificates, or must
be short-term and privately arranged and not intended to be publicly offered.
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 equity investments in real estate,
either directly or through a subsidiary of AECC, will be less than 5% of AECC's
assets.
Lending securities
We may lend some of our securities to broker-dealers and receive cash equal to
the market value of the securities as collateral. We invest this cash in
short-term securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan, the borrower
makes cash payments to us equal to all interest, dividends and other
distributions paid on the loaned securities. We will try to vote these
securities if a major event affecting our investment is under consideration. We
expect that outstanding securities loans will not exceed 10% of AECC'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. AECC's ability to invest in when-issued securities is not limited
except by its ability to set aside cash or high quality investments to meet
when-issued commitments. When-issued securities are subject to market
fluctuations and they may affect AECC'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. AECC may enter into other
financial transactions, including futures and other derivatives, for the purpose
of managing the interest rate exposures associated with AECC'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. There is
no limit on the AECC's ability to enter into financial transactions to manage
the interest rate risk associated with the AECC's assets and liabilities, but
the AECC does not foresee a likelihood that it will be feasible to hedge most or
all of its assets or liabilities. 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. AECC'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
AECC's investment portfolio will be held in securities that are illiquid. In
valuing its investment portfolio to determine this 15% limit, AECC will use
statutory accounting under an SEC order. This means that, for this purpose, the
portfolio will be valued in accordance with applicable Minnesota law governing
investments of life insurance companies, rather than generally accepted
accounting principles.
Restrictions
There are no restrictions on concentration of investments in any particular
industry or group of industries or on rates of portfolio turnover.
How Your Money Is Managed
RELATIONSHIP BETWEEN AECC AND AMERICAN EXPRESS FINANCIAL CORPORATION
AECC 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, changed its name to IDS Certificate
Company on April 2, 1984, and to American Express Certificate Company on April
26, 2000.
AECC files reports on Form 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 AECC was created, AEFC (formerly known as IDS Financial Corporation), our
parent company, had issued similar certificates since 1894. As of Jan. 1, 1995,
IDS Financial Corporation changed its name to AEFC. AECC and AEFC have never
failed to meet their certificate payments.
During its many years in operation, AEFC has become a leading manager of
investments in mortgages and securities. As of Dec. 31, 2000, AEFC managed or
administered investments, including its own, of more than $___ billion. American
Express Financial Advisors Inc., a wholly owned subsidiary of AEFC, provides a
broad range of financial planning services for individuals and businesses
through its nationwide network of more than ____ supervisory offices, and more
than ____ branch offices and more than ____ financial advisors. American Express
Financial Advisors' financial planning services are comprehensive, beginning
with a detailed written analysis that's tailored to your needs. Your analysis
may address one or all of these six essential areas: financial position,
protection planning, investment planning, income tax planning, retirement
planning and estate planning.
AEFC itself is a wholly owned subsidiary of American Express Company, a
financial services company with executive offices at American Express Tower,
World Financial Center, New York, NY 10285. American Express Company is a
financial services company engaged through subsidiaries in other businesses
including:
o travel related services (including American Express(R)Card and 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) and Travelers Cheque and related services.
CAPITAL STRUCTURE AND CERTIFICATES ISSUED
AECC 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, 2000, AECC had issued (in face amount)
$61,053,427 of installment certificates and $1,523,260,374 of single payment
certificates. As of Dec. 31, 2000, AECC had issued (in face amount)
$13,745,260,263 of installment certificates and $21,383,643,748 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,
o and executing purchase and sale orders according to our policy of obtaining
the best price and execution.
All these activities are subject to direction and control by our board of
directors and officers. Our agreement with AEFC requires annual renewal by our
board, including a majority of directors who are not interested persons of AEFC
or AECC as defined in the federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual basis to a
percentage of the total book value of certain assets (included assets).
Advisory and services fee computation
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 AECC 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
Year Total fees Percentage of included assets
2000 $8,778,883 0.25%
1999 8,691,974 0.26
1998 9,084,332 0.24
Estimated advisory and services fees for 2001 are $__________.
Other expenses payable by AECC: 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.
DISTRIBUTION
Under a Distribution Agreement with American Express Financial Advisors Inc., we
pay for the distribution of this certificate as follows:
o 0.0625% of the initial payment on the issue date of the certificate, and
o 0.0625% of the certificate's reserve at the beginning of the second
and subsequent quarters from issue date.
This fee is not assessed to your certificate account.
Total distribution fees paid to American Express Financial Advisors Inc. for all
series of certificates amounted to $28,262,084 during the year ended Dec. 31,
2000. We expect to pay American Express Financial Advisors Inc. distribution
fees amounting to $_________ during 2001.
See Note 1 to financial statements regarding deferral of distribution fee
expense.
In addition, AECC may pay distributors additional compensation for distribution
activities under certain circumstances. From time to time, AECC may pay or
permit other promotional incentives, in cash or credit or other compensation.
American Express Financial Advisors Inc. pays commissions to its financial
advisors and pays other selling expenses in connection with services to us. Our
board of directors, including a majority of directors who are not interested
persons of American Express Financial Advisors Inc., or AECC, approved these
distribution agreements.
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. AECC pays AECSC a monthly fee of one-twelfth of $10.353 per
certificate owner account for this service.
EMPLOYMENT OF OTHER AMERICAN EXPRESS AFFILIATES
AEFC may employ an affiliate of American Express Company as executing broker for
our portfolio transactions only if:
o we receive prices and executions at least as favorable as those offered by
qualified independent brokers performing similar services;
o the affiliate charges us commissions consistent with those charged to
comparable unaffiliated customers for similar transactions; and
o the affiliate's employment is consistent with the terms of the current
Investment Advisory and Services Agreement and federal securities laws.
DIRECTORS AND OFFICERS
AECC's sole shareholder, AEFC, elects the board of directors that oversees
AECC'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 $29,000 during 2000 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.
Charles W. Johnson
Born in 1929. Director since 1989. Director, Communications Holdings, Inc.
Acting president of Fisk University from 1998 to 1999. Former vice president and
group executive, Industrial Systems, with Honeywell, Inc. Retired 1989.
Jean B. Keffeler
Born in 1945. Director beginning in 1999. Independent management consultant.
Richard W. Kling*
Born in 1940. Director since 1996. Chairman of the board of directors from 1996
to 2000. Director of IDS Life Insurance Company since 1984; president since
1994. Executive vice president of Marketing and Products of AEFC from 1988 to
1994. Senior vice president of AEFC since 1994. Director of IDS Life Series Fund
Inc. and member of the board of managers of IDS Life Variable Annuity Funds A
and B.
Thomas R. McBurney
Born in 1938. Director beginning in 1999. President, McBurney Management
Advisors. Director, The Valspar Corporation (paints), Wenger Corporation,
Allina, Space Center Enterprises and Greenspring Corporation.
Paula R. Meyer*
Born in 1954. Director since 1998. President since 1998. Vice president and
Managing Director - American Express Funds since June 2000. Vice president 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.
Pamela J. Moret*
Born in 1956. Director since December 1999. Chair of the board of directors
since January 2000. Senior vice president - Products Group of AEFC since October
1999. Vice president - Variable Assets & Services from 1997 to 1999. Executive
vice president - Variable Assets of IDS Life Insurance Company from 1997 to
1999. Vice president - Retail Services Group from 1996 to 1997. Vice president -
Communications from 1993 to 1996.
* "Interested Person" of AECC as that term is defined in Investment Company Act
of 1940.
Executive officers
Paula R. Meyer
Born in 1954. President since 1998.
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.
Monica P. Vickman
Born in 1969. Vice president, general counsel, and secretary since February
2001. Associate counsel to AEFC since 2000. Various attorney positions in
American Express General Counsel's Office from 1996 to 2000.
Philip C. Wentzel
Born in 1961. Vice president and controller of AECC since January 2000. Vice
president - Finance, Insurance Products of AEFC since 1997. Vice president and
controller of IDS Life since 1998. Director, Financial Reporting and Analysis -
IDS Life from 1992 to 1997.
The officers and directors as a group beneficially own less than 1% of the
common stock of American Express Company.
AECC 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 (the
1933 Act) 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 1933 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 our financial statements at Dec. 31,
2000 and 1999 and for each of the years in the three-year period ended Dec. 31,
2000. These statements are included in this prospectus. Ernst & Young LLP is
also the auditor for American Express Company, the parent company of AEFC and
AECC.
AMERICAN EXPRESS CERTIFICATES
Other certificates issued by AECC: Your American Express financial advisor can
give you more information on five other certificates issued by AECC. These
certificates offer a wide range of investment terms and features.
American Express Flexible Savings Certificate -- A single payment certificate
that permits additional investments and on which AECC guarantees interest in
advance for a term of six, 12, 18, 24, 30 or 36 months.
American Express Installment Certificate -- An installment payment certificate
that declares interest in advance for a three-month period and offers bonuses in
the third through sixth years for regular investments.
American Express Market Strategy Certificate -- A certificate that pays interest
at a fixed rate or linked to one-year stock market performance, as measured by a
broad market index, for a series of one-year terms starting every month or at
other intervals the client selects.
American Express Preferred Investors Certificate -- A single payment certificate
that combines a competitive fixed rate of return with AECC's guarantee of
principal for large investments of $250,000 to $5 million.
American Express Stock Market Certificate -- A single payment certificate that
calculates all or part of your interest based on stock market performance, as
measured by a broad market index, with AECC's guarantee of return of principal.
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 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, AECC will consider the financial condition of the issuer or
the protection afforded by the terms of the security.
Quick telephone reference*
(800) 862-7919 American Express Easy Access Line
Account value, cash transaction information, current
rate information (automated response for Touchtone(R)
phones only)
(800) 862-7919 Client Service Organization
Withdrawals, transfers, inquiries
(800) 846-4852 TTY Service
For the hearing impaired
* You may experience delays when call volumes are high.
American Express Certificate Company
70100 AXP Financial Center
Minneapolis, MN 55474
Web site address:
http://www.americanexpress.com/advisors
Distributed by
American Express
Financial Advisors Inc.
S-6005 R (4/01)
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 (now called, the
American Express 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
1996 IDS Special Deposits* 41,064,846.74
1997 American Express Special Deposits 182,788,631.00
1998 American Express Special Deposits 91,416,078.00
1999 American Express Special Deposits 50,132,542.00
* Renamed American Express Special Deposits in April 1996.
(b) Underwriters and other purchasers
American Express Special Deposits are marketed by American Express Bank Ltd.
(AEB), an affiliate of American Express Certificate Company, to private banking
clients of AEB in the United Kingdom and Hong Kong.
(c) Consideration
All American Express Special Deposits were sold for cash. The aggregate offering
price was the same as the amount sold in the table above. Aggregate marketing
fees to AEB were $301,946.44 in 1996, $592,068.70 in 1997, $967,791.95 in 1998
and $877,981.60 in 1999.
(d) Exemption from registration claimed
American Express Special Deposits are marketed, pursuant to the exemption in
Regulation S under the Securities Act of 1933, by AEB in the United Kingdom and
Hong Kong to persons who are not U.S. persons, as defined in Regulation S.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1. (a) Distribution Agreement dated November 18, 1988,
between Registrant and IDS Financial Services Inc.,
filed electronically as Exhibit 1(a) to the
Registration Statement No. 33-26844, for the
American Express International Investment Certificate
(now called, the American Express Investors Certificate)
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. 10 to Registration Statement No. 2-89507,
is incorporated herein by reference.
(b) Certificate of Amendment, dated April 2, 1984 filed
electronically as Exhibit 3(b) to Post-Effective
Amendment No. 10 to Registration Statement No. 2-89507,
is incorporated herein by reference.
(c) Certificate of Amendment, dated September 12, 1995, filed
electronically as Exhibit 3(c) to Post-Effective
Amendment No. 44 to Registration Statement No. 2-55252,
is incorporated herein by reference.
(d) Certificate of Amendment, dated April 30, 1999, filed
electronically as Exhibit 3(a) to Registrant's March
31, 1999 Quarterly Report on Form 10-Q is
incorporated herein by reference.
(e) Certificate of Amendment, dated January 28, 2000, filed
electronically as Exhibit 3(e) to Post-Effective
Amendment No. 47 to Registration Statement No. 2-55252,
is incorporated herein by reference.
(f) Current By-Laws, filed electronically as Exhibit 3(e)
to Post-Effective Amendment No. 19 to Registration
Statement No. 33-26844, are incorporated herein by
reference.
4. Not Applicable.
5. An opinion and consent of counsel as to the legality of
the securities being registered, filed electronically
as Exhibit 16(a)5 to Post-Effective Amendment No. 24 to
Registration Statement No. 2-95577 is incorporated by
reference.
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(b) to Registrant's Post-Effective Amendment No.
3 to Registration Statement No. 2-89507, is
incorporated herein by reference.
(b) Depositary and Custodial Agreement dated September 30,
1985 between IDS Certificate Company and IDS Trust
Company, filed electronically as Exhibit 10(b) to
Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 2-89507, is incorporated
herein by reference.
(c) Foreign Deposit Agreement dated November 21, 1990,
between IDS Certificate Company and IDS Bank & Trust,
filed electronically as Exhibit 10(h) to
Post-Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein by
reference.
(d) Selling Agent Agreement dated June 1, 1990, between
American Express Bank International and IDS Financial
Services Inc. for the American Express Investors and
American Express Stock Market Certificates, filed
electronically as Exhibit 1(c) to the Post-Effective
Amendment No. 5 to Registration Statement No. 33-26844,
is incorporated herein by reference.
(e) Second amendment to Selling Agent Agreement bewtween
American Express Financial Advisors Inc. and American
Express Bank International dated as of May 2, 1995,
filed electronically as Exhibit (1) to Registrant's
June 30, 1995, Quarterly Report of Form 10-Q, is
incorporated herein by reference.
(f) 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.
(g) 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.
(h) 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.
(i) Consulting Agreement dated December 12, 1994, between
IDS Financial Services Inc. and American Express Bank
International, filed electronically as Exhibit 16(f) to
Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577 is incorporated
herein by reference.
(j) 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 No.
2-55252, is incorporated herein by reference.
(k) 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.
(l) Letter Agreement dated July 28, 1999 amending the
Selling Agent Agreement dated June 1, 1990, or a
schedule thereto, as amended, between American
Express Financial Advisors Inc. (formerly IDS
Financial Services Inc.) and American Express Bank
International, filed electronically to Registrant's
June 30, 1999 Quarterly Report on Form 10-Q, is
incorporated herein by reference.
(m) Letter Agreement dated July 28, 1999, amending the
Marketing Agreement dated October 10, 1991, or a
schedule thereto, as amended, between IDS Certificate
Company and American Express Bank Ltd., filed
electronically to Registrant's June 30, 1999
Quarterly Report on Form 10-Q, is incorporated herein
by reference.
(n) Selling Agent Agreement, dated March 10, 1999 between
American Express Financial Advisors Inc. and
Securities America, Inc., filed electronically as
Exhibit 10 (l) to Post-Effective Amendment No. 18 to
Registration Statement 33-26844, is incorporated
herein by reference.
(o) Letter Agreement, dated April 10, 2000, amending the
Selling Agent Agreement, dated March 10, 1999,
between American Express Financial Advisors Inc. and
Securities America, Inc., filed electronically as
Exhibit 10(o) to Post-Effective Amendment No. 20 to
Registration Statement 33-26844, is incorporated
herein by reference.
(p) Form of Selling Dealer Agreement of American Express
Financial Advisors Inc., filed electronically as
Exhibit 10(o) to Pre-Effective Amendment No. 2 to
Registration Statement No. 333-34982, is incorporated
herein by reference.
(q)(1) Code of Ethics under rule 17j-1 for Registrant, filed
electronically as Exhibit 10(p)(1) to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-34982, is incorporated herein by reference.
(2) Code of Ethics under rule 17j-1 for Registrant's
investment advisor and principal underwriters, filed
electronically as Exhibit 10p(2) to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-34982, is incorporated herein by reference.
11. through 22. -- None.
23. Consent of Independent Auditors' Report to be filed
with a subsequent post-effective amendment to this
registration statement.
24 (a) Officers' Power of Attorney dated October 12,
2000, filed electronically as Exhibit 24(a) to
Registrant's September 30, 2000 Quarterly Report on
Form 10-Q, is incorporated herein by reference.
(b) Directors' Power of Attorney dated October 12, 2000,
filed electronically as Exhibit 24(b) to Registrant's
September 30, 2000 Quarterly Report on Form 10-Q, is
incorporated herein by reference.
25. through 27. -- None.
(b) The financial statement schedules for American Express
Certificate Company will be filed with a subsequent
post-effective amendment to Registration Statement No. 2-55252
for Series D-1 Investment Certificate.
Item 17. Undertakings.
Without limiting or restricting any liability on the part of
the other, American Express Financial Advisors Inc. (formerly,
IDS Financial Services Inc.), as underwriter, will assume any
actionable civil liability which may arise under the Federal
Securities Act of 1933, the Federal Securities Exchange Act of
1934 or the Federal Investment Company Act of 1940, in
addition to any such liability arising at law or in equity,
out of any untrue statement of a material fact made by its
agents in the due course of their business in selling or
offering for sale, or soliciting applications for, securities
issued by the Company or any omission on the part of its
agents to state a material fact necessary in order to make the
statements so made, in the light of the circumstances in which
they were made, not misleading (no such untrue statements or
omissions, however, being admitted or contemplated), but such
liability shall be subject to the conditions and limitations
described in said Acts. American Express Financial Advisors
Inc. will also assume any liability of the Company for any
amount or amounts which the Company legally may be compelled
to pay to any purchaser under said Acts because of any untrue
statements of a material fact, or any omission to state a
material fact, on the part of the agents of American Express
Financial Advisors Inc. to the extent of any actual loss to,
or expense of, the Company in connection therewith. The
By-Laws of the Registrant contain a provision relating to
Indemnification of Officers and Directors as permitted by
applicable law.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota, on
the 5th day, of March, 2001.
AMERICAN EXPRESS 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 capacities on the 5th day, of
March, 2001.
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/ Philip C. Wentzel Vice President and Controller
Philip C. Wentzel (Principal Accounting Officer)
/s/ Rodney P. Burwell** Director
Rodney P. Burwell
/s/ Charles W. Johnson** Director
Charles W. Johnson
/s/ Jean B. Keffeler** Director
Jean B. Keffeler
/s/ Richard W. Kling** Director
Richard W. Kling
/s/ Pamela J. Moret** Director
Pamela J. Moret
/s/ Thomas R. McBurney** Director
Thomas R. McBurney
*Signed pursuant to Officers' Power of Attorney dated October 12, 2000, filed
electronically as Exhibit 24(a) to Registrant's September 30, 2000 Quarterly
Report on Form 10-Q, incorporated herein by reference.
/s/ Monica P. Vickman
Monica P. Vickman
**Signed pursuant to Directors' Power of Attorney dated October 12, 2000, filed
electronically as Exhibit 24(a) to Registrant's September 30, 2000 Quarterly
Report on Form 10-Q, incorporated herein by reference.
/s/ Monica P. Vickman
Monica P. Vickman