1997 ANNUAL REPORT
IDS
Cash
Management
Fund
(prospectus enclosed)
(icon of) piggy bank
The goal of IDS Cash Management Fund is to provide maximum current income
consistent with liquidity and stability of principal. The Fund invests in money
market securities.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment policies, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
American Express Financial Advisors
Distributed by American Express Financial Advisors Inc.
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(icon of) piggy bank
A cache for cash
Keeping a portion of your investment portfolio in a cash reserve is a
cornerstone of a sound financial strategy. And a money market mutual fund that
stresses stability of your investment principal and easy access when you need it
is an excellent way to meet that need. That's what Cash Management Fund is all
about.
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The purpose of this annual report is to tell investors how the Fund performed.
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
Contents
1997 annual report
From the president 4
From the portfolio manager 4
Making the most of the Fund 6
Independent auditors' report 7
Financial statements 8
Notes to financial statements 11
Investments in securities 14
IDS mutual funds 18
Federal income tax information 22
1997 prospectus
The Fund in brief 3p
Goal 3p
Investment policies and risks 3p
Manager and distributor 3p
Portfolio manager 3p
Purchases 3p
Sales charge and Fund expenses 4p
Performance 6p
Financial highlights 6p
Yield 8p
Investment policies and risks 9p
Facts about investments and their risks 9p
Alternative investment option 13p
Valuing Fund shares 13p
How to purchase, exchange or redeem shares 14p
Purchases 14p
How to purchase shares 16p
How to exchange shares 19p
How to redeem shares 21p
Class B -- contingent deferred sales
charge alternative 27p
Waivers of the contingent deferred sales charge 28p
Special shareholder services 29p
Services 29p
Quick telephone reference 29p
Distributions and taxes 30p
Dividend and capital gain distributions 30p
Reinvestments 31p
Taxes 32p
How to determine the correct TIN 33p
How the Fund is organized 34p
Shares 34p
Voting rights 34p
Shareholder meetings 35p
Board members and officers 35p
Investment manager 37p
Administrator and transfer agent 37p
Distributor 38p
About American Express Financial Corporation 39p
General information 39p
(This annual report is not part of the prospectus)
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many financial markets. Perhaps just as
important, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
President of the Fund
(This annual report is not part of the prospectus)
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From the portfolio manager
IDS Cash Management Fund's yield was little changed during the past fiscal
year (August 1996 through July 1997), reflecting mostly stable short-term
interest rates over the period.
For the seven-day period ended July 31, 1997, the Fund's compound
annualized yield was 5.19%, and the simple annualized yield was 5.07% for
Class Ashares. In keeping with its objective, the Fund maintained a $1 per
share price throughout the 12 months. (Although the Fund seeks to maintain
a stable $1 per share price, there is no assurance that it will be able to
do so. An investment in the fund is neither insured nor guaranteed by the
U.S. government.)
Fed pushes rates higher
With inflation remaining subdued and the economy showing no signs of
either overheating or falling into recession, the Federal Reserve Board --
or, simply, the Fed -- elected to leave short-term interest rates
unchanged through last fall and winter. By late March, though, the Fed
evidently believed that inflationary pressures had reached the point that
a rate increase was necessary, so it raised the federal funds rate -- the
interest rate banks pay on overnight loans -- by a quarter percent. The
increase marked the first rate adjustment by the Fed since 1994 and, as it
turned out, the only one in the past 12 months.
(By way of background, the Fed adjusts short-term interest rates based on
the condition of the economy and the inflation outlook. When the economy
appears weak and inflation is low, the Fed usually lowers rates to
stimulate economic growth. When the economy is strong, the Fed usually
raises rates to reign in economic growth and thereby keep inflation in
check.)
Because I was expecting the Fed to raise rates, I kept the average
maturity of the Fund's investments somewhat shorter than normal -- mostly
between 35 and 40 days. This strategy is based on the fact that the longer
the Fund's average maturity, the longer it takes the Fund's yield to
respond to a change in interest rates. Therefore, when rates rise, a
shorter maturity allows me to more quickly add new, higher-yielding
investments, which modestly increases the income paid to shareholders. On
the other hand, should rates decline, a shorter maturity results in
slightly less income. As always, the entire portfolio remained invested in
first-rated commercial paper, bank letters of credit and certificates of
deposit.
Looking to the current fiscal year, I think the odds continue to favor
somewhat higher interest rates. At this writing (mid-August), the economy
is still showing positive momentum, and, with unemployment at an
uncommonly low level, I think it's likely that upward pressure on wages
will ultimately push inflation up a bit. If that forecast is reasonably
accurate, the Fed will probably deem it necessary to raise short-term
rates, in which case the Fund's yield would rise as well.
Terry Fettig
(picture of) Terry Fettig
Portfolio manager
(This annual report is not part of the prospectus)
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Class A
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $1.00
July 31, 1996 $1.00
Increase $ --
Distributions
Aug. 1, 1996 - July 31, 1997
From income $ 0.05
From capital gains $ --
Total distributions $ 0.05
Total return* +5.1%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $1.00
July 31, 1996 $1.00
Increase $ --
Distributions
Aug. 1, 1996 - July 31, 1997
From income $0.04
From capital gains $ --
Total distributions $0.04
Total return* +4.3%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
July 31, 1997 $1.00
July 31, 1996 $1.00
Increase $ --
Distributions
Aug. 1, 1996 - July 31, 1997
From income $0.05
From capital gains $ --
Total distributions $0.05
Total return* +5.1%**
*The prospectus discusses the effect of sales charges, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus)
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Making the most of the Fund
Average annual total return
(as of July 31, 1997)
1 year Since 5 years 10 years
inception*
Class A +5.06% --% +4.02% +5.37%
Class B +0.27% +2.91% --% --%
Class Y +5.06% +5.29% --% --%
*Inception date was March 20, 1995.
The performance of Class B and Class Y will vary from the performance of
Class A based on differences in sales charges and fees.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. Figures for
Class B reflect the impact of the applicable sales charge up to a maximum
of 5%. This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
(This annual report is not part of the prospectus)
<PAGE>
The financial statements contained in Post-Effective Amendment # 47 to
Registration Statement No. 2-54516 filed on or about September 26, 1997, are
incorporated herein by reference.
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IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
(This annual report is not part of the prospectus)
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IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
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IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
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IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
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IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
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(This annual report is not part of the prospectus)
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Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
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IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
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IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
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IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
(This annual report is not part of the prospectus)
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Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
(This annual report is not part of the prospectus)
<PAGE>
Federal income tax information
IDS Cash Management Fund
The Fund is required by the Internal Revenue
Code of 1986 to tell its shareholders about the tax treatment of the
dividends it pays during its fiscal year. Some of the dividends listed
below were reported to you on a Form 1099-DIV, Dividends and
Distributions, last January. Dividends paid to you since the end of last
year will be reported to you on a tax statement sent in January.
Shareholders should consult a tax advisor on how to report distributions
for state and local purposes.
IDS Cash Management Fund
Fiscal year ended July 31, 1997
Class A
Income distributions -- taxable as dividend income, none qualifying for
deduction by corporations.
Payable date Per share
Aug. 28, 1996 $0.00434
Sept. 26, 1996 0.00385
Oct. 29, 1996 0.00438
Nov. 27, 1996 0.00386
Dec. 27, 1996 0.00407
Jan. 30, 1997 0.00454
Feb. 27, 1997 0.00371
March 27, 1997 0.00376
April 29, 1997 0.00448
May 29, 1997 0.00426
June 27, 1997 0.00407
July 28, 1997 0.00410
Total distributions $0.04942
(This annual report is not part of the prospectus)
<PAGE>
Class B
Income distributions -- taxable as dividend income, none qualifying for
deduction by corporations.
Payable date Per share
Aug. 28, 1996 $0.00368
Sept. 26, 1996 0.00325
Oct. 29, 1996 0.00369
Nov. 27, 1996 0.00325
Dec. 27, 1996 0.00345
Jan. 30, 1997 0.00383
Feb. 27, 1997 0.00313
March 27, 1997 0.00318
April 29, 1997 0.00379
May 29, 1997 0.00364
June 27, 1997 0.00347
July 28, 1997 0.00349
Total distributions $0.04185
Class Y
Income distributions -- taxable as dividend income, none qualifying for
deduction by corporations.
Payable date Per share
Aug. 28, 1996 $0.00434
Sept. 26, 1996 0.00385
Oct. 29, 1996 0.00438
Nov. 27, 1996 0.00386
Dec. 27, 1996 0.00407
Jan. 30, 1997 0.00454
Feb. 27, 1997 0.00371
March 27, 1997 0.00376
April 29, 1997 0.00448
May 29, 1997 0.00426
June 27, 1997 0.00407
July 28, 1997 0.00410
Total distributions $0.04942
(This annual report is not part of the prospectus)
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN
EXPRESS
Financial
Advisors
IDS Cash Management Fund
IDS Tower 10
Minneapolis, MN 55440-0010
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STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
