SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM S-1

POST-EFFECTIVE AMENDMENT NUMBER 21 TO

REGISTRATION STATEMENT NO. 2-95577

IDS FLEXIBLE SAVINGS CERTIFICATE

UNDER

THE SECURITIES ACT OF 1933

IDS 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.)

IDS Tower 10, Minneapolis, MN 55440-0010, (612) 671-3131

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(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

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(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Explanatory Note

The first prospectus contained in Part I of the Registration Statement will
be used, with minor variations, in connection with the following Registration
Statements No. 2-68296, No. 2-76193, No. 33-3562, No. 333-9611 and No.33-22503.
In each case, the first several pages of the prospectuses vary to describe the
unique attributes of each certificate. The balance of the prospectus is almost
identical for all certificates.

IDS Flexible Savings Certificate
Prospectus

April 29, 1998

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

IDS Flexible Savings Certificates are issued by IDS Certificate Company (IDSC).
You may purchase this certificate by selecting a term of six, 12, 18, 24, 30 or
36 months and an initial investment of at least $1,000 but not more than $1
million (unless you receive prior authorization from IDSC to invest more). Your
principal and interest are guaranteed by IDSC. IDSC guarantees a fixed rate of
interest depending upon the term you select. You may make additional investments
during the term subject to certain limitations. You may invest in successive
terms up to a total of 20 years from the issue date of the certificate. Your
interest rate will be determined as described in "About the certificate."

AS IS THE CASE WITH OTHER INVESTMENT COMPANIES, THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This certificate is backed by IDSC's investments on deposit rather than
guaranteed or insured by the government or someone else. See "Invested and
guaranteed by IDSC" and "Regulated by government" under "How your money is used
and protected."

IDS Certificate Company is not a bank or financial institution, and the
securities it offers are not deposits or obligations of, or backed or guaranteed
or endorsed by, any bank or financial institution, nor are they insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency.

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

IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-3133 (toll free) or (612) 671-3800
(Minneapolis/St. Paul area)

TTY numbers:
800-846-4293 (toll free) or (612) 671-1630
(Minneapolis/St. Paul area)

An American Express company

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

Where to get information about IDSC

IDS Certificate Company is subject to the reporting requirements of the
Securities Exchange Act of 1934. Reports and other information on IDSC are filed
with the Securities and Exchange Commission (SEC) and are available on the SEC
Internet web site (http://www.sec.gov). Copies can be obtained from the Public
Reference Section of the SEC, 450 5th St., N.W., Room 1024, Washington, D.C.
20549, at prescribed rates. Or you can inspect and copy information in person at
the SEC's Public Reference Section and at the following regional offices:

Northeast Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048

Midwest Regional Office
500 West Madison St.
Suite 1400
Chicago, IL 60661

Pacific Regional Office
5670 Wilshire Blvd.
11th Floor
Los Angeles, CA 90036

Initial interest rates

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

Here are the interest rates in effect on the date of this prospectus, April 29,
1998:

Simple Effective

interest annualized

Term rate* yield**

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6-month 4.70% 4.80%

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12-month 4.96 5.07

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18-month 5.03 5.14

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24-month 5.11 5.23

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30-month 5.13 5.25

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36-month 5.17 5.29

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

** Assuming monthly compounding.

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

We reserve the right to issue other securities with different terms.

Contents

Table of contents

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

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

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

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

How your money is managed p

Relationship between IDSC and American

Express Financial Corporation p
About American Express Service Corporation p
Capital structure and certificates issued p
Investment management and services p
Distribution p
Transfer Agent p
Employment of other American Express affiliates p
Directors and officers p
Independent auditors p
IDS Certificates p

Appendix p

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

Financial statements p

Notes to financial statements p

About the certificate

Investment amounts and terms

You may purchase the IDS Flexible Savings Certificate with a single payment of
at least $1,000 payable in U.S. currency. Unless you receive prior
authorization, your total amount paid in over the life of the certificate, less
withdrawals, cannot exceed $1 million.

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

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

Face amount and principal

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

Principal equals Face amount (initial investment)

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

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

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

$5,000.00 Face amount (initial investment)
plus $75.00 Interest credited to your account
minus ($0.00) Interest paid to you in cash
plus $2,500.00 Additional investment to your certificate
minus ($0.00) Withdrawals and applicable penalties or fees

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

Value at maturity

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

Receiving cash during the term

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

Interest

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

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

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

adding these daily amounts to get a monthly total; and

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

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

Rates for new purchases

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

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

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

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

However, IDSC guarantees that, for persons who have received a special
promotional coupon from IDSC for purchase of a Flexible Savings Certificate with
an initial term of six, 12, 24 or 30 months and have satisfied any requirement
stated in the coupon, when rates for new purchases take effect, the rate for the
initial term will be within a range from 100 basis points (1%) to 200 basis
points (2%) above the average interest rate published for comparable length CDs
in the BRM Average. Similarly, IDSC guarantees that, for persons who have
received a special promotional coupon from IDSC for purchase of a Flexible
Savings Certificate with an initial term of 18 or 36 months and have satisfied

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

From time to time, for your initial term, IDSC may offer certificates with
different terms than those described above. Such terms may be from seven, 11,
13, 19, 25, 31 or 37 months. For these terms, IDSC guarantees that, for
purchases of certificates for less than $100,000, your rate for your initial
term will be within a range of 50-150 basis points above the rates published in
the BRM Average for the certificates of deposit specified above that have the
maturity that is closest to the term of the IDS certificate in question. If two
different BRM Averages have the closest maturities, we will use the longest
maturity that is shorter than the term of the IDS certificate in question. For
purchases of certificates of $100,000 or more, the range for your initial term
will be 65-165 basis points above the same rate. For example, in the case of a
seven-month term, IDSC guarantees that, for purchases of certificates less than
$100,000, your rate for your initial term will be within a range of 50-150 basis
points above the rates for the six-month certificates of deposit, and for
purchases of certificates for $100,000 or more, your rate for your initial term
will be within a range of 65-165 basis points above the rates for the six-month
certificates of deposit. Purchase of a certificate in one of these special
offers may result in a later term of less than six months in order to permit
your certificate to mature 20 years from its issue date. IDSC may limit the
offering of these certificates to persons who have received a coupon as a
promotion, based on a business strategy to build relationships with new clients
in related market segments or persons who AEFC believes meet threshold
requirements for such factors as household income and home values or persons who
fit this strategy and live in particular areas of the country or are affiliated
with particular organizations. IDSC may also offer different rates or terms to
new clients, existing clients, or to individuals who have purchased other
products or used other services of American Express Company or its subsidiaries,
and may offer some terms only in selected distribution channels. We also may
offer different rates based on your amount invested, your geographic location
and whether the certificate is purchased for an IRA or for a qualified
retirement account.

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

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

The BANK RATE MONITOR may be available in your local library. To obtain
information on current BRM Average rates, call the Client Service Organization
at the telephone numbers listed on the back cover between 8 a.m. and 6 p.m. your
local time.

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

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

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

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

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

the rate in effect seven days before receipt.

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

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

Promotions and pricing flexibility

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

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

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

Performance: From February 1993 through February 1998, IDS Flexible Savings
Certificate one year yields were generally higher than average bank and thrift
one year certificate of deposit yields and Super NOW accounts, as measured by
the BRM Average.

Yields from February 1993 through February 1998

6% IDS Flexible Savings Certificate -
1 year

4% Certificate of Deposit - 1 year

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

`93 `94 `95 `96 `97 `98

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

Additional investments

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

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

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

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

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

How to invest and withdraw funds

Buying your certificate

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

Purchase policies:

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

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.

If you purchase a certificate with a personal check or other non-guaranteed
funds, AEFC will wait one day for the process of converting your check to
federal funds (e.g., monies of member banks within the Federal Reserve Bank)
before your purchase will be accepted and you begin earning interest.

IDSC has complete discretion to determine whether to accept an application
and sell a certificate.

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

Two ways to make investments

By mail

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

Regular mail: Express mail:
American Express American Express
Financial Advisors Inc. Financial Advisors Inc.
Client Service Organization Client Service Organization
IDS Tower 10 733 Marquette Ave.
Minneapolis, MN 55440-0010 Minneapolis, MN 55440-0010

By wire

For investment into an established account, you may wire money to:

Norwest Bank Minneapolis
Routing No. 091000019

Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit Account #00-30-015 for personal account # (your
account number) for (your name).

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

Minimum amount you may wire: $1,000.

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

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

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

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

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

You must pay any fee the bank charges for wiring.

Full and partial withdrawals

You may 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.

If your withdrawal request is received in the Minneapolis headquarters on a
business day before 3 p.m. Central time, it will be processed that day and
payment will be sent the next business day. Otherwise, your request will be
processed one business day later.

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

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

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

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

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

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

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

first from interest credited during the current term;

then from the principal of your certificate.

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

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

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

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

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

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

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

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

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

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

The following example demonstrates how this feature works:

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

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

The 2% penalty is waived upon death of the certificate owner. We will also waive
withdrawal penalties on withdrawals for IRA certificate accounts for your
required distributions. See "Retirement plans: special policies" below.

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

When your certificate term ends

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

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

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

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

Other full and partial withdrawal policies:

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

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

Any payments to you may be delayed under applicable rules, regulations or
orders of the SEC.

Transfers to other accounts

You may transfer part or all of your certificate to any other IDS certificate or
into another new or existing American Express Financial Advisors Inc. account
that has the same ownership (subject to any terms and conditions that may
apply).

Two ways to request a withdrawal or transfer

By phone

Call the Client Service Organization at the telephone numbers listed on the
back cover between 8 a.m. and 6 p.m. your local time.

Maximum phone request: $50,000.

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

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

We will honor any telephone request believed to be authentic and will use
reasonable procedures to confirm that it is. This includes asking
identifying questions and tape recording telephone calls. If reasonable
procedures are followed, IDSC or AEFC will not be liable for any loss
resulting from fraudulent requests.

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

By mail

Send your name, account number and request for a withdrawal or transfer to:

Regular mail:

American Express Financial Advisors Inc.
Client Service Organization
IDS Tower 10
Minneapolis, MN 55440-0010

Express mail:

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

Written requests are required for:

Transactions over $50,000.

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

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

Three ways to receive payment when you withdraw funds

By regular or express mail

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

Payable to name(s) you requested.

You will be charged a fee if you request express mail delivery. We will
deduct the fee from your remaining certificate balance, provided that
balance would not be less than $1,000. If the balance would be less than
$1,000, the fee is deducted from the proceeds of the withdrawal.

By wire

Minimum wire withdrawal: $1,000.

Request that money be wired to your bank.

Bank account must be in same ownership as IDSC account.

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

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

By electronic transfer

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

No charge.

Deposited electronically in your bank account.

Allow two to five business days from request to deposit.

Retirement plans: special policies

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

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

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

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

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

If you withdraw all funds from your last account in an IRA at American
Express Trust Company, a termination fee will apply as set out in Your Guide
to IRAs, the IRS disclosure information received when you opened your
account.

The IRA termination fee will be waived if a withdrawal occurs after you
have reached age 70 1/2 or upon the owner's death.

Withdrawal at death

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

Transfer of ownership

While this certificate is not negotiable, IDSC will transfer ownership upon
written notification to our Client Service Organization. However, if you have
purchased your certificate for an IRA, 401(k) plan or other qualified retirement
plan, you may be unable to transfer or assign the certificate without losing the
account's favorable tax status. Please consult your tax advisor.

For more information

For information on purchases, withdrawals, exchanges, transfers of ownership,
proper instructions and other service questions regarding your certificate,
please consult your American Express financial advisor or call the Client
Service Organization at the telephone numbers listed on the back cover.

Taxes on your earnings

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

Retirement accounts

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

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

Withdrawals from retirement accounts are generally subject to a penalty tax of
10% by the IRS if you make them before age 59 1/2, unless you are disabled or if
they are made by your beneficiary in the event of your death. Other exceptions
may also apply. Also, withdrawals of principal during a certificate month may be
subject to the certificate's provision for loss of interest.

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

Gifts to minors

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

Your Taxpayer Identification Number (TIN) and backup withholding: As with any
financial account you open, you must list your current and correct Taxpayer
Identification Number (TIN) -- either your Social Security or Employer
Identification Number. The TIN must be certified under penalties of perjury on
your application when you open an account.

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

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

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

criminal penalties for falsifying information.

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

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

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 individuals listed on the

account

Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors Act)

A living trust The grantor-trustee
(the person who puts the money into the trust)

An irrevocable trust, pension trust or estate The legal entity
(not the personal representative or trustee,
unless no legal entity is designated in the
account title)

Sole proprietorship The owner

Partnership The partnership

Corporate The corporation

Association, club or tax-exempt The organization
organization

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

Foreign investors

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

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

Estate tax: If you are a nonresident alien and you die while owning a
certificate, then, depending on the circumstances, IDSC generally will not act
on instructions with regard to the certificate unless IDSC first receives, at a
minimum, a statement from persons IDSC believes are knowledgeable about your
estate. The statement must be in a form satisfactory to IDSC and must tell us
that, on your date of death, your estate did not include any property in the
United States for U.S. estate tax purposes. In other cases, we generally will
not take action regarding your certificate until we receive a transfer
certificate from the IRS or evidence satisfactory to IDSC that the estate is
being administered by an executor or administrator appointed, qualified and
acting within the United States. In general, a transfer certificate requires the
opening of an estate in the United States and provides assurance that the IRS
will not claim your certificate to satisfy estate taxes.

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

Trusts

If the investor is a trust, the policies and procedures described above will
apply with regard to each grantor who is a nonresident alien.

How your money is used and protected

Invested and guaranteed by IDSC

The IDS Flexible Savings Certificate is issued and guaranteed by IDSC, a wholly
owned subsidiary of AEFC. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than $4.0 billion
and a net worth in excess of $239 million on Dec. 31, 1997.

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

interest to certificate owners; and

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

For a review of significant events relating to our business, see "Management's
discussion and analysis of financial condition and results of operations." Our
certificates are not rated by a national rating agency.

Most banks and thrifts offer investments known as certificates of deposit (CDs)
that are similar to our certificates in many ways. Early withdrawals of bank CDs
often result in penalties. Banks and thrifts generally have federal deposit
insurance for their deposits and lend much of the money deposited to
individuals, businesses and other enterprises. Other financial institutions and
some insurance companies may offer investments with comparable combinations of
safety and return on investment.

Regulated by government

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

The federal Investment Company Act of 1940 requires us to keep investments on
deposit in a segregated custodial account to protect all of our outstanding
certificates. These investments back the entire value of your certificate
account. Their amortized cost must exceed the required carrying value of the
outstanding certificates by at least $250,000. As of Dec. 31, 1997, the
amortized cost of these investments exceeded the required carrying value of our
outstanding certificates by more than $176 million.

Backed by our investments

Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1997:

Type of investment Net amount invested

Corporate and other bonds 43%
Government agency bonds 34
Preferred stocks 17
Mortgages 5
Municipal bonds 1

As of Dec. 31, 1997 about 91% of our securities portfolio (including bonds and
preferred stocks) is rated investment grade. For additional information
regarding securities ratings, please refer to Note 3B in the financial
statements.

Most of our investments are on deposit with American Express Trust Company,
Minneapolis, although we also maintain separate deposits as required by certain
states. American Express Trust Company is a wholly owned subsidiary of AEFC.
Copies of our Dec. 31, 1997 schedule of Investments in Securities of
Unaffiliated Issuers are available upon request. For comments regarding the
valuation, carrying values and unrealized appreciation (depreciation) of
investment securities, see Notes 1, 2 and 3 to the financial statements.

Investment policies

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

Debt securities-

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

The price of bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of a bond also fluctuates if its credit
rating is upgraded or downgraded. The price of bonds below investment grade may
react more to the ability of a company to pay interest and principal when due
than to changes in interest rates. They have greater price fluctuations, are
more likely to experience a default, and sometimes are referred to as junk
bonds. Reduced market liquidity for these bonds may occasionally make it more
difficult to value them. In valuing bonds, IDSC relies both on independent
rating agencies and the investment manager's credit analysis. Under normal
circumstances, at least 85% of the securities in IDSC's portfolio will be rated
investment grade, or in the opinion of IDSC's investment advisor will be the

equivalent of investment grade. Under normal circumstances, IDSC will not
purchase any security rated below B- by Moody's Investors Service, Inc. or
Standard & Poor's Corporation. Securities that are subsequently downgraded in
quality may continue to be held by IDSC and will be sold only when IDSC believes
it is advantageous to do so.

As of Dec. 31, 1997, IDSC held about 9% of its investment portfolio (including
bonds, preferred stocks 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 under federal securities laws.

Borrowing money -

From time to time we have established a line of credit if management believed
borrowing was necessary or desirable. We may pledge some of our assets as
security. We may occasionally use repurchase agreements as a way to borrow
money. Under these agreements, we sell debt securities to our lender, and
repurchase them at the sales price plus an agreed-upon interest rate within a
specified period of time.

Real estate -

We may invest in limited partnership interests in limited partnerships that
either directly, or indirectly through other limited partnerships, invest in
real estate. We may invest directly in real estate. We also invest in mortgage
loans. We expect that investments in real estate, either directly or through a
subsidiary of IDSC, will be less than five percent of IDSC's assets.

Lending securities -

We may lend some of our securities to broker-dealers and receive cash equal to
the market value of the securities as collateral. We invest this cash in
short-term securities. If the market value of the securities goes up, the
borrower pays us additional cash. During the course of the loan, the borrower
makes cash payments to us equal to all interest, dividends and other
distributions paid on the loaned securities. We will try to vote these
securities if a major event affecting our investment is under consideration. We
expect that outstanding securities loans will not exceed 10 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 issued and delivered to us. We generally do not pay for these securities or
start earning on them until delivery. We have established procedures to ensure
that sufficient cash is available to meet when-issued commitments.

When-issued securities are subject to market fluctuations and they may affect
IDSC's investment portfolio the same as owned securities.

Financial transactions including hedges-

We buy or sell various types of options contracts for hedging purposes or as a
trading technique to facilitate securities purchases or sales. We may buy
interest rate caps for hedging purposes. These pay us a return if interest rates
rise above a specified level. If interest rates do not rise above a specified
level, the interest rate caps do not pay us a return. IDSC may enter into other
financial transactions, including futures and other derivatives, for the purpose
of managing the interest rate exposures associated with IDSC's assets or
liabilities. Derivatives are financial instruments whose performance is derived,
at least in part, from the performance of an underlying asset, security or
index. A small change in the value of the underlying asset, security or index
may cause a sizable gain or loss in the fair value of the derivative. We do not
use derivatives for speculative purposes.

Illiquid securities -

A security is illiquid if it cannot be sold in the normal course of business
within seven days at approximately its current market value. Some investments
cannot be resold to the U.S. public because of their terms or government
regulations. All securities, however can be sold in private sales, and many may
be sold to other institutions and qualified buyers or on foreign markets. IDSC's
investment advisor will follow guidelines established by the board and consider
relevant factors such as the nature of the security and the number of likely
buyers when determining whether a security is illiquid. No more than 15% of
IDSC's investment portfolio will be held in securities that are illiquid. In
valuing its investment portfolio to determine this 15% limit, IDSC will use
statutory accounting under an SEC order. This means that, for this purpose, the
portfolio will be valued in accordance with applicable Minnesota law governing
investments of life insurance companies, rather than generally accepted
accounting principles.

Restrictions -

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

How your money is managed

Relationship between IDSC and American Express Financial Corporation

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

Before IDSC was created, AEFC (formerly known as IDS Financial Corporation), our
parent company, had issued similar certificates since 1894. As of Jan. 1, 1995,
IDS Financial Corporation changed its name to AEFC. IDSC and AEFC have never
failed to meet their certificate payments.

During its many years in operation, AEFC has become a leading manager of
investments in mortgages and securities. As of Dec. 31, 1997, AEFC managed
investments, including its own, of more than $173 billion. American Express
Financial Advisors Inc., a wholly owned subsidiary of AEFC, provides a broad
range of financial planning services for individuals and businesses through its
nationwide network of more than 175 offices and more than 8,500 financial
advisors. American Express Financial Advisors' financial planning services are
comprehensive, beginning with a detailed written analysis that's tailored to
your needs. Your analysis may address one or all of these six essential areas:
financial position, protection planning, investment planning, income tax
planning, retirement planning and estate planning.

AEFC itself is a wholly owned subsidiary of American Express Company, a
financial services company with executive offices at American Express Tower,
World Financial Center, New York, NY 10285. American Express Company is a
financial services company engaged through subsidiaries in other businesses
including:

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

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

About AESC

AESC is a wholly-owned subsidiary of American Express Travel Related Services
Inc., which in turn is a wholly-owned subsidiary of American Express Company.

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:

providing investment research;

making specific investment recommendations; and

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

All these activities are subject to direction and control by our board of
directors and officers. Our agreement with AEFC requires annual renewal by our
board, including a majority of directors who are not interested persons of AEFC
or IDSC as defined in the federal Investment Company Act of 1940.

For its services, we pay AEFC a monthly fee, equal on an annual basis to a
percentage of the total book value of certain assets (included assets).
Effective Jan. 1, 1998, the fee on any amount over $1 billion will be 0.107%

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:

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

taxes;

depository and custodian fees;

brokerage commissions;

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

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

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

and

expenses of customer settlements not attributable to sales function.

Distribution

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

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

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

This fee is not assessed to your certificate account.

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:

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

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

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

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

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

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

Transfer Agent

Under a Transfer Agency Agreement, American Express Client Service Corporation
(AECSC), a wholly-owned subsidiary of AEFC, maintains certificate owner accounts
and records. IDSC pays AECSC a monthly fee of one-twelfth of $10.353 per
certificate owner account for this service.

Employment of other American Express affiliates

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

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

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

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

Directors and officers

IDSC's directors, chairman, president and controller are elected annually for a
term of one year. The other executive officers are appointed by the president.

We paid a total of $38,000 during 1997 to directors not employed by AEFC.

Board of directors

David R. Hubers*
Born in 1943. Director since 1987.

President and chief executive officer of AEFC since 1993. Senior vice president
and chief financial officer of AEFC from 1984 to 1993.

Charles W. Johnson
Born in 1929. Director since 1989.

Director, Communications Holdings,Inc.Former vice president and group executive,
Industrial Systems, with Honeywell, Inc. Retired 1989.

Richard W. Kling*
Born in 1940. Director since 1996.

Chairman of the board of directors since 1996. Director of IDS Life Insurance
Company since 1984; president since 1994. Executive vice president of Marketing
and Products of AEFC from 1988 to 1994. Senior vice president of AEFC since
1994. Director of IDS Life Series Fund, Inc. and member of the board of managers
of IDS Life Variable Annuity Funds A and B.

Edward Landes

Born in 1919. Director since 1984.

Development consultant. Director of IDS Life Insurance Company of New York.
Director of Endowment Development, YMCA of Metropolitan Minneapolis. Vice
president for Financial Development, YMCA of Metropolitan Minneapolis from 1985
through 1995. Former sales manager - Supplies Division and district manager -
Data Processing Division of IBM Corporation. Retired 1983.

John V. Luck, Ph.D.
Born in 1926. Director since 1987.

Former senior vice president - Science and Technology with General Mills, Inc.
Employed with General Mills, Inc. since 1968. Retired 1988.

James A. Mitchell*
Born in 1941. Director since 1994.

Chairman of the board of directors from 1994 to 1996. Executive vice president
Marketing and Products of AEFC since 1994. Senior vice president - Insurance
Operations of AEFC and president and chief executive officer of IDS Life
Insurance Company from 1986 to 1994.

Harrison Randolph
Born in 1916. Director since 1968.

Engineering, manufacturing and management consultant since 1978.

Gordon H. Ritz
Born in 1926. Director since 1968.

Director, Mid-America Publishing and Atrix International, Inc. Former president,
Com Rad Broadcasting Corp. Former director, Sunstar Foods.

Stuart A. Sedlacek*
Born in 1957. Director since 1994.

President since 1994. Vice president - Assured Assets of AEFC since 1994. Vice
president and portfolio manager from 1988 to 1993. Executive vice president -
Assured Assets of IDS Life Insurance Company since 1994.

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

Executive officers

Stuart A. Sedlacek
Born in 1957. President since 1994.

Jeffrey S. Horton

Born in 1961. Vice president and treasurer since December 1997. Vice president
and corporate treasurer of AEFC since December 1997. Controller, American
Express Technologies - Financial Services of AEFC from July 1997 to December
1997. Controller, Risk Management Products of AEFC from May 1994 to July 1997.
Director of finance and analysis, Corporate Treasury of AEFC from June 1990 to
May 1994.

Timothy S. Meehan
Born in 1957. Secretary since 1995.

Secretary of AEFC and American Express Financial Advisors Inc. since 1995.
Senior counsel to AEFC since 1995. Counsel from 1990 to 1995.

Lorraine R. Hart

Born in 1951. Vice president - Investments since 1994.

Vice president - Insurance Investments of AEFC since 1989. Vice president
Investments of IDS Life Insurance Company since 1992.

Jay C. Hatlestad

Born in 1957. Vice president and controller of IDSC since 1994. Manager of
Investment Accounting of IDS Life Insurance Company from 1986 to 1994.

Bruce A. Kohn

Born in 1951. Vice president and general counsel since 1993. Senior counsel to
AEFC since 1996. Counsel to AEFC from 1992 to 1996. Associate counsel from 1987
to 1992.

F. Dale Simmons

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

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

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

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.

IDS Certificates

Other certificates issued by IDSC: Your American Express financial advisor can
give you more information on five other certificates issued by IDSC. These
certificates offer a wide range of investment terms and features.

IDS Cash Reserve Certificate - A single payment certificate that permits
additional investments on which IDSC guarantees interest in advance for a
three-month term.

IDS Installment Certificate - An installment payment certificate that declares
interest in advance for a three-month period and offers bonuses in the third
through sixth years for regular investments.

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

IDS Preferred Investors Certificate - A single payment certificate that combines
a competitive fixed rate of return with IDSC's guarantee of principal for large
investments of $250,000 to $5 million.

IDS Stock Market Certificate - A single payment certificate that calculates all
or part of your interest based on stock market performance, as measured by a
broad market index, with IDSC's guarantee of return of principal.

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.

(Back Cover)

Quick telephone reference

Client Service Organization

Withdrawals, transfers, inquiries

National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800

TTY Service
For the hearing impaired

800-846-4293

American Express Easy Access Line

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

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

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

Distributed by American Express Financial Advisors Inc.

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.

Year Ended Dec. 31, 1997 1996 1995 1994 1993

($ thousands)

Statement of Operations Data:

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 tax benefit 188,095 188,630 194,096 149,285 171,455
Net provision for certificate reserves 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 investments 637 (223) 215 (3,829) (5,671)
Net income - wholly owned subsidiary 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).

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

Results of operations:

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

During the year 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.

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
million 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(TM) of comparable length certificates of deposit.

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.

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 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 the failure of major systems or miscalculations,
which could have a material impact on the operations of IDSC. All of the systems
used by IDSC are maintained by its Parent and are utilized by multiple
subsidiaries and affiliates of the Parent. IDSC's business is heavily dependent
upon the Parent's computer systems, and has significant interactions with
systems of third parties.

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.

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%.

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.

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

Balance Sheets, Dec. 31,

Assets

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.

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.

Statements of Operations

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

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.

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
recoveries 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 taxes 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.

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.

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 taxes (980) 343 (332)
(Increase) decrease in dividends and interest receivable (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.

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.

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.

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.

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 $3,259,260 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.

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:

Dec. 31, 1997

Required
Deposits deposits Excess

Deposits to meet certificate
liability requirements:

States $363 $328 $35
Central Depositary 3,826,505 3,650,121 176,384

Total $3,826,868 $3,650,449 $176,419

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

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.

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.

Dec. 31, 1997
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses

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

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.

Amortized Fair
cost value

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

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:

1997 1996 1995

Proceeds $161,188 $313,976 $83,970
Gross realized gains 1,292 456 36
Gross realized losses 1,637 5,836 1,854

Sales of held-to-maturity securities, due to significant credit
deterioration, during the years ended Dec. 31, 1997, 1996 and 1995, were as
follows:

1997 1996 1995

Amortized cost $32,969 $22,297 $22,782
Gross realized gains 1,621 3,200 2
Gross realized losses 680 513 479

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:

Rating 1997 1996
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%

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.

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:

Region 1997 1996
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%

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.

Dec. 31, 1997 Dec. 31, 1996

Carrying Fair Carrying Fair
amount value amount value

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

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:
1997

Average Average
Reserve gross additional
balance accumulation credit
rate rate
Installment certificates:

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

$3,724,978

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

1996

Average Average
Reserve gross additional
balance accumulation credit
rate rate

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

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.

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.

1997 1996

Carrying Fair Carrying Fair
amount value amount value

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

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

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

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

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:

Number of
certificate
years over
Aggregate fees payable which
subsequent
First Subsequent years' fees
Total year years are payable

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

(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.

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.

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:

1997 1996 1995
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

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:
1997 1996 1995

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

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.

Deferred tax assets: 1997 1996
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

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

Assets:

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

Liabilities:

Interest rate swaps $1,000,000 $416 $2,138 $-
Written call options 376 24,739 32,990 -
Total $1,000,376 $25,155 $35,128 $-

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

1996

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

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.

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.

1997

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

Purchased call options $389 876 970
Written call options 376 969 970

1996

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

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

10. Fair values of financial instruments

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

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

A summary of fair values of financial instruments as of Dec. 31, is as follows:

1997 1996

Carrying Fair Carrying Fair
value value value value

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

11. Year 2000 issue (Unaudited)

IDS Cash Reserve Certificate
Prospectus

April 29, 1998

Earn attractive rates with ready access to your cash reserves.

IDS Cash Reserve Certificates are issued by IDS Certificate Company (IDSC). You
can purchase this certificate with an initial investment of at least $1,000 or
monthly investments of at least $50. Your principal and interest are guaranteed
by IDSC. Your certificate earns a fixed rate of interest, declared every three
months. Investments in the certificate may continue for successive three-month
terms up to a total of 20 years from the issue date of the certificate. Unless
you receive prior authorization from IDSC, your total investment, excluding
interest earned, cannot exceed $1 million. Your interest rate will be determined
as described in "About the certificate."

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

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

800-437-3133 (toll free) or (612) 671-3800
(Minneapolis/St. Paul area)

TTY numbers:
800-846-4293 (toll free) or (612) 671-1630
(Minneapolis/St. Paul area)

An American Express company

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

Where to get information about IDSC

Northeast Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048

Midwest Regional Office
500 West Madison St.
Suite 1400
Chicago, IL 60661

Pacific Regional Office
5670 Wilshire Blvd.
11th Floor
Los Angeles, CA 90036

Initial interest rates

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

Here are the interest rates in effect on the date of this prospectus, April 29,
1998:

Investment Simple Effective
amount interest rate* annualized yield**

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

$50 to $999 2.96% 3.00%

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

$1,000 to $24,999 4.13 4.20

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

$25,000 or more 4.33 4.41

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

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

** Assuming monthly compounding.

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

We reserve the right to issue other securities with different terms.

Contents

Table of contents

About the certificate p
Investment amounts and terms p
Face amount and principal p
Value at maturity p
Receiving cash during the term p
Interest p
Rates for new purchases p

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

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

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

How your money is managed p

Relationship between IDSC and American

Express Financial Corporation p
About American Express Service Corporation
Capital structure and certificates issued p
Investment management and services p
Distribution p
Transfer Agent
Employment of other American Express affiliates p
Directors and officers p
Independent auditors p
IDS Certificates

Appendix p

Annual financial information p
Summary of selected financial information p
Management's discussion and analysis of financial

condition and results of operations p
Report of independent auditors p

Financial statements p

Notes to financial statements p

About the certificate

Investment amounts and terms

You may purchase the IDS Cash Reserve Certificate with an initial investment of
at least $1,000 or monthly investments of at least $50 through scheduled bank
authorization or payroll deduction. Your total investments over the life of the
certificate may not exceed $1 million unless you receive prior authorization
from IDSC.

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

Face amount and principal

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

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

Principal equals Face amount (initial investment)

Your principal for the next term will equal:

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

Value at maturity

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

Receiving cash during the term

Interest

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

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

adding these daily amounts to get a monthly total; and

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

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

Rates for new purchases

When your application is accepted, and we have received your initial investment,
we will send you a confirmation showing the rate that your investment will earn
for the first term. For accounts of $1,000 to $24,999.99 IDSC guarantees that
this rate will be within a range from 30 basis points (0.30%) below to 70 basis
points (0.70%) above the average interest rate published for three-month CDs in
the BANK RATE MONITOR Top 25 Market AverageTM (the BRM Average). For example, if
the average rate most recently published is 4.00%, our rate in effect for that

week for amounts of $1,000 to $24,999.99 would be between 3.70% to 4.70%. For
accounts of $25,000 or more, this rate will be within a range from 10 basis
points (0.10%) below to 90 basis points (.90%) above the same index rate. For
accounts of less than $1,000, this rate will be within a range of 135 basis
points (1.35%) below to 35 basis points (0.35%) below this average interest
rate.

The BANK RATE MONITOR may be available in your local library. To obtain
information on the current BRM Average rates, call the Client Service
Organization at the telephone numbers listed on the back cover between 8 a.m.
and 6 p.m. your local time.

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

the rate in effect on the date of your application; or

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

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

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

the rate in effect seven days prior to receipt.

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

Promotions and pricing flexibility

From time to time, IDSC may sponsor or participate in promotions involving one
or more of the certificates and their respective terms. For example, we may
offer different rates to new clients, to existing clients, or to individuals who
purchase or use other products or services offered by American Express Company
or its affiliates. Rates also may vary depending on the amount you invest, your
geographic location and whether the certificate is purchased for an IRA or
qualified retirement plan account.

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

Rates for future terms: Interest on your certificate for future three-month
terms may be greater or less than the rates you receive during the first three
months. In setting future rates, a primary consideration will be the prevailing
investment climate, including three-month CD rates as reflected in the BRM
Average. Nevertheless, we have complete discretion as to what interest shall be
declared beyond the initial three-month term. If the BRM Average is no longer
publicly available or feasible to use, IDSC may use another similar index as a
guide for setting rates.

Performance: From February 1993 through February 1998, IDS Cash Reserve yields
were generally higher than average bank and thrift three-month CD yields, as
measured by the BRM Average.

Yields from February 1993 through February 1998

4% IDS Cash Reserve Certificate

3% Certificate of Deposit - Three Month

2% Money Market Deposit Account

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

`93 `94 `95 `96 `97 `98

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

How to invest and withdraw funds

Buying your certificate

Additional investments

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

Important: When opening an account, you must provide IDSC with your correct
Taxpayer Identification Number (Social Security or Employer Identification
Number).

See "Taxes on your earnings."

Purchase policies:

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.

IDSC has complete discretion to determine whether to accept an application
and sell a certificate.

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.

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:

Bank authorization (automatic deduction from your account)

automatic payroll deduction

direct deposit of social security check

other plan approved by IDSC

monthly minimum investment must be $50

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

2. By mail

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

3. By wire

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

Norwest Bank Minneapolis
Routing No. 091000019

Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit IDS Account #00-30-015 for personal account #
(your personal 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.

Minimum amounts each wire investment: $1,000.

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

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

Bank wire purchases are not sent until the next day.

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

You must pay 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.

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."

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

Scheduled partial withdrawals may be sent to you monthly, quarterly,
semiannually or annually. The minimum withdrawal amount is $50.

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.

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.

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:

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

Any payments to you may be delayed under applicable rules, regulations or
orders of the SEC.

Transfers to other accounts

Two ways to request a withdrawal or transfer

By phone

Call the Client Service Organization at the telephone numbers listed
on the back cover between 8 a.m. and 6 p.m. your local time.

Maximum phone request: $50,000.

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

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

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

By mail

Send your name, account number and request for a withdrawal or transfer to:

Regular mail:

American Express Financial Advisors Inc.
Client Service Organization

IDS Tower 10
Minneapolis, MN 55440-0010

Express mail:

American Express Financial Advisors Inc.
Client Service Organization

733 Marquette Ave.
Minneapolis, MN 55440-0010

Written requests are required for:

Transactions over $50,000.

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

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

Three ways to receive payment when you withdraw funds

By regular or express mail

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

Payable to name(s) you requested.

By wire

Minimum wire withdrawal: $1,000.

Request that money be wired to your bank.

Bank account must be in same ownership as IDSC account.

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

registered owners must sign.

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

By electronic transfer

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

No charge.

Deposited electronically in your bank account.

Allow two to five business days from request to deposit.

Retirement plans: special policies

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

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

The IRA termination fee will be waived if a withdrawal occurs after you
have reached age 70 1/2 or upon the owner's death.

Transfer of ownership

Please consult your tax advisor.

For more information

Taxes on your earnings

Retirement accounts

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

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

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

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

criminal penalties for falsifying information.

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

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

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 individuals listed on the

account

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

Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors Act)

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

A living trust The grantor-trustee
(the person who puts the money
into the trust)

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

An irrevocable trust, pension trust or estate The legal entity
(not the personal representative or trustee,
unless no legal entity is designated in the
account title)

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

Sole proprietorship The owner

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

Partnership The partnership

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

Corporate The corporation

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

Association, club or tax-exempt The organization

organization

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

Foreign investors

Trusts

If the investor is a trust, the policies and procedures described above will
apply with regard to each grantor who is a nonresident alien.

How your money is used and protected

Invested and guaranteed by IDSC

The IDS Cash Reserve Certificate is issued and guaranteed by IDSC, a wholly
owned subsidiary of AEFC. We are by far the largest issuer of face amount
certificates in the United States, with total assets of more than $4.0 billion
and a net worth in excess of $239 million on Dec. 31, 1997.

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

interest to certificate owners; and

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

Regulated by government

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

Backed by our investments

Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1997:

Type of investment Net amount invested

Corporate and other bonds 43%
Government agency bonds 34
Preferred stocks 17
Mortgages 5
Municipal bonds 1

Investment policies

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."

rating agencies and the investment manager's credit analysis. Under normal
circumstances, at least 85% of the securities in IDSC's portfolio will be rated
investment grade, or in the opinion of IDSC's investment advisor will be the
equivalent of investment grade. Under normal circumstances, IDSC will not
purchase any security rated below B- by Moody's Investors Service, Inc. or
Standard & Poor's Corporation. Securities that are subsequently downgraded in
quality may continue to be held by IDSC and will be sold only when IDSC believes
it is advantageous to do so.

As of Dec. 31, 1997, IDSC held about 9% 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 -

Underwriting -

Borrowing money -

Real estate -

Lending securities -

When-issued securities-

Financial transactions including hedges-

Illiquid securities -

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

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

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

About AESC

AESC is a wholly-owned subsidiary of American Express Travel Related Services
Inc., which in turn is a wholly-owned subsidiary of American Express Company.

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.

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

Investment management and services

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

providing investment research;

making specific investment recommendations; and

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

For its services, we pay AEFC a monthly fee, equal on an annual basis to
a percentage of the total book value of certain assets (included
assets). Effective Jan. 1, 1998, the fee on any amount over $1 billion
will be 0.107%.

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:

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

taxes;

depository and custodian fees;

brokerage commissions;

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

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

and

expenses of customer settlements not attributable to sales function.

Distribution

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

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

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

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

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

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

This fee is not assessed to your certificate account.

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

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

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

Transfer Agent

Under a Transfer Agency Agreement, American Express Client Service Corporation
(AESC), 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:

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

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

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

Directors and officers

IDSC's directors, chairman, president and controller are elected annually for a
term of one year. The other executive officers are appointed by the president.

We paid a total of $38,000 during 1997 to directors not employed by AEFC.

Board of directors

David R. Hubers*
Born in 1943. Director since 1987.

President and chief executive officer of AEFC since 1993. Senior vice president
and chief financial officer of AEFC from 1984 to 1993.

Charles W. Johnson
Born in 1929. Director since 1989.

Director, Communications Holdings,Inc.Former vice president and group executive,
Industrial Systems, with Honeywell, Inc. Retired 1989.

Richard W. Kling*
Born in 1940. Director since 1996.

Edward Landes

Born in 1919. Director since 1984.

John V. Luck, Ph.D.
Born in 1926. Director since 1987.

Former senior vice president - Science and Technology with General Mills, Inc.
Employed with General Mills, Inc. since 1968. Retired 1988.

James A. Mitchell*
Born in 1941. Director since 1994.

Harrison Randolph
Born in 1916. Director since 1968.

Engineering, manufacturing and management consultant since 1978.

Gordon H. Ritz
Born in 1926. Director since 1968.

Director, Mid-America Publishing and Atrix International, Inc. Former president,
Com Rad Broadcasting Corp. Former director, Sunstar Foods.

Stuart A. Sedlacek*
Born in 1957. Director since 1994.

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

Executive officers

Stuart A. Sedlacek
Born in 1957. President since 1994.

Jeffrey S. Horton

Timothy S. Meehan
Born in 1957. Secretary since 1995.

Secretary of AEFC and American Express Financial Advisors Inc. since 1995.
Senior counsel to AEFC since 1995. Counsel from 1990 to 1995.

Lorraine R. Hart

Born in 1951. Vice president - Investments since 1994.

Vice president - Insurance Investments of AEFC since 1989. Vice president
Investments of IDS Life Insurance Company since 1992.

Jay C. Hatlestad

Born in 1957. Vice president and controller of IDSC since 1994. Manager of
Investment Accounting of IDS Life Insurance Company from 1986 to 1994.

Bruce A. Kohn

Born in 1951. Vice president and general counsel since 1993. Senior counsel to
AEFC since 1996. Counsel to AEFC from 1992 to 1996. Associate counsel from 1987
to 1992.

F. Dale Simmons

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

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

Independent auditors

IDS Certificates

IDS Flexible Savings Certificate - A single payment certificate that permits
additional investments and on which IDSC guarantees interest in advance for a
term of six, 12, 18, 24, 30 or 36 months.