IDS Life
Variable
Annuity
Fund A
Invests in a wide range of securities with the objective of long-term
capital appreciation for contract owners.
2000 SEMIANNUAL REPORT
Managed by IDS Life Insurance Company
<PAGE>
(picture of) Pamela J. Moret
Pamela J. Moret
Executive Vice President
Message from the Executive Vice President
If you're an experienced investor, you know that the past six months was a
volatile period for the stock market. But history tells us that substantial
market moves -- either up or down -- are nothing new and are often
unpredictable.
The potential for such volatility reinforces the need for investors to
periodically review their long-term financial 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.
Pamela J. Moret
Executive Vice President, Variable Assets
IDS Life Insurance Company
<PAGE>
(picture of) Anne Obermeyer
Anne Obermeyer
Portfolio Manager
From Your Portfolio Manager: A Perspective
The stock market experienced considerable volatility during the past six months,
but in the end it finished about where it began the year. By contrast, the Fund
enjoyed a productive period, as it generated a double-digit gain for the first
half of the fiscal year -- January through June 2000.
On June 30, 2000, the accumulation unit value of IDS Life Variable Fund A was
$36.90, compared with $32.26 at the beginning of the year. The increase
represented a gain of 14.38% for the six months. (If you purchased additional
accumulation units during the period, your return would have been affected by
the sales and administrative charges, as described in the Fund's prospectus.)
After slumping early in the period, the stock market staged a strong rally that
took it to an all-time high in mid-March. But with concerns about higher
interest rates and a potential run-up in inflation weighing on investors' minds,
stocks, particularly technology-related issues, quickly went into retreat until
mid-April. From that point, the market bobbed up and down, but eventually made
its way back to just below its level at the start of the year.
The Fund was not unaffected by the volatility, but good stock selection
ultimately allowed it to outperform the market as a whole. The technology sector
comprised the largest area of investment and provided some big winners,
including Intel, Corning, Sanmina, Maxim and Texas Instruments. The next-biggest
area of investment for the Fund was health care, with stocks such as Pfizer,
Pharmacia and Medtronic among the best performers.
On a related point, I made some notable changes to the portfolio during the six
months. I substantially reduced the investment in technology-related stocks and
beefed up holdings among healthcare issues. That proved to be a beneficial
shift, as healthcare was a strong-performing sector in the period and the Fund's
stocks were among the top gainers.
As the second half of the fiscal year begins, I think the investment environment
will enjoy some gradual improvement. Currently, the biggest hurdles for the
market are uncertainties regarding inflation, the presidential election and
government anti-trust efforts. But as the year progresses, and assuming
corporate profits remain reasonably good, I think those factors will lose
prominence. If so, I think the positive longer-term fundamentals for companies
with strong growth, especially in the technology and healthcare areas, will win
out in investors' minds and ultimately result in higher stock prices.
Anne Obermeyer
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of June 30, 2000)
Pfizer 4.67% $25,199,999
Microsoft 4.15 22,400,000
Cisco Systems 4.01 21,611,249
Tyco Intl 3.86 20,845,000
Intel 3.59 19,384,688
Citigroup 3.21 17,321,874
Nokia ADR Cl A 2.85 15,380,749
Texas Instruments 2.80 15,111,250
General Electric 2.80 15,105,000
Guidant 2.75 14,850,000
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
The 10 holdings listed here make up 34.69% of net assets
(icon of) pie chart
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<TABLE>
<CAPTION>
IDS Life Variable Annuity Fund A
Statement of assets, liabilities and contract owners' equity
June 30, 2000 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost, $294,348,440) $539,378,768
Cash in bank on demand deposit 93,280
Dividends and interest receivable 61,855
Receivable for investment securities sold 49,590
------
Total assets $539,583,493
------------
Liabilities
Payable for contract terminations $ 214,925
Payable to IDS Life Insurance Company for:
Mortality and expense assurance fee 14,479
Investment management fee 5,794
-----
Total liabilities $ 235,198
------------
Contract owners' equity
Contracts in accumulation period-- 14,344,025 units at $36.90 per unit (Note 5) $529,298,624
Contracts in payment period 10,049,671
----------
Total contract owners' equity 539,348,295
-----------
Total liabilities and contract owners' equity $539,583,493
------------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
IDS Life Variable Annuity Fund A
Statement of operations
Six months ended June 30, 2000 (Unaudited)
Investment income (loss) -- net Income:
<S> <C>
Dividends $ 931,631
Interest 1,102,406
Less foreign taxes withheld (421)
----
Total income 2,033,616
---------
Expenses:
Mortality and expense assurance fee (Note 2) 2,583,866
Investment management fee (Note 3) 1,033,545
---------
Total expenses 3,617,411
---------
Investment income (loss) -- net (1,583,795)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on investments 134,675,182
Net change in unrealized appreciation (depreciation) on investments (63,505,371)
-----------
Net gain (loss) on investments 71,169,811
----------
Net increase (decrease) in contract owners' equity from operations $ 69,586,016
------------
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
IDS Life Variable Annuity Fund A
Statements of changes in contract owners' equity
Six months ended Year ended
June 30, 2000 Dec. 31, 1999 (Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ (1,583,795) $ (3,175,854)
Net realized gain (loss) on investments 134,675,182 22,913,270
Net change in unrealized appreciation (depreciation) on investments (63,505,371) 103,607,534
----------- -----------
Net increase (decrease) in contract owners' equity from operations 69,586,016 123,344,950
---------- -----------
Contract transactions
Net contract purchase payments (Note 2) 762,476 1,522,089
Repayment of temporary withdrawals 3,320 10,586
Net transfers from (to) fixed annuities (361,357) (1,386,918)
Contract termination payments and temporary withdrawals (23,953,909) (35,426,811)
Annuity payments (654,477) (1,084,383)
-------- ----------
Net increase (decrease) from contract transactions (24,203,947) (36,365,437)
----------- -----------
Net increase (decrease) in contract owners' equity 45,382,069 86,979,513
---------- ----------
Contract owners' equity at beginning of period 493,966,226 406,986,713
----------- -----------
Contract owners' equity at end of period $539,348,295 $493,966,226
------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS Life Variable Annuity Fund A
(Unaudited as to June 30, 2000)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
IDS Life Variable Annuity Fund A (the Fund) is organized as a segregated asset
account of IDS Life Insurance Company (IDS Life) under Minnesota law and is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's assets are held for the exclusive
benefit of its variable annuity contract owners and are not chargeable with any
liabilities arising from the other business activities of IDS Life. The
significant accounting policies followed by the Fund are summarized as follows:
Use of estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ from
those estimates.
Investments in securities
Securities traded on national securities exchanges are valued at the last quoted
sales price on the principal exchange on which traded. Securities traded in the
over-the-counter market are valued at the mean of the last quoted bid and asked
price. Short-term securities that mature in 60 days or less are valued at
amortized cost. Those maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Short-term securities originally purchased with maturities of more than
60 days but which currently mature in 60 days or less are valued on an amortized
cost basis using the market value or approximate market value on the 61st day
before maturity. Bonds and other securities are valued at fair value as
determined by the Board of Managers when market quotations are not readily
available. Determination of fair value involves, among other things, references
to market indexes, matrices and data from independent brokers.
Security transactions are accounted for on the date the securities are purchased
and sold. Dividend income is recorded on the ex-dividend date.
Option contracts
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Fund may buy and sell put
and call options and write covered call options on portfolio securities. The
risk in writing a call option is that the Fund gives up the opportunity of
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of not being able to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss upon expiration or closing of the option transaction.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
During the six months ended June 30, 2000, the Fund did not buy or sell any put
or call options or write any covered call or put options. There were no option
contracts outstanding as of June 30, 2000.
Futures contracts
In order to gain exposure to or protect itself from changes in the market, the
Fund may buy and sell stock index futures contracts and related options. Risks
of entering into futures contracts and related options include the possibility
that there may be an illiquid market and that a change in the value of the
contract or option may not correlate with the changes in the value of the
underlying securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
During the six months ended June 30, 2000, the Fund did not buy or sell stock
index futures contracts and related options. There were no stock index futures
contracts outstanding as of June 30, 2000.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
rate of exchange on the transaction date. It is not practicable to identify that
portion of realized and unrealized gain or loss arising from changes in the
exchange rates from the portion arising from changes in the market value of
investments.
The Fund may also enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
There were no forward foreign currency exchange contracts outstanding as of June
30, 2000.
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities SFAS 133 establishes accounting
and reporting standards for derivative instruments. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure them at fair value. SFAS 133 is effective for the
Fund Jan. 1, 2000. The adoption of this statement is not expected to have a
material effect on the Fund's financial condition or results of operations.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Fund on a
forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuations, and they may affect the Fund's net assets the same as owned
securities. The Fund designates cash or liquid securities at least equal to the
amount of its commitment. As of June 30, 2000, the Fund has entered into
outstanding when-issued or forward-commitments of $51,296.
Federal income taxes
IDS Life is taxed as a life insurance company. The Fund is treated as part of
IDS Life for federal income tax purposes. Under current federal income tax law,
no taxes are payable with respect to any income of the Fund.
2. MORTALITY AND EXPENSE ASSURANCE FEE AND SALES CHARGES
IDS Life makes contractual assurances to the Fund that possible future adverse
changes in administrative expenses and mortality experience of the annuitants
and beneficiaries will not affect the Fund. The mortality and expense assurance
fee paid to IDS Life is computed daily and is equal on an annual basis to 1% of
the average daily net assets of the Fund.
Charges by IDS Life for its sales and administrative services applicable to the
variable annuity contracts amounted to $32,283 for the six months ended June 30,
2000 and $64,515 for the year ended Dec. 31, 1999. Such charges are not an
expense of the Fund. They are deducted from contract purchase payments and are
not included in the net contract purchase payments to the Fund.
3. INVESTMENT MANAGEMENT AGREEMENT
The Fund has an Investment Management Agreement with IDS Life. For its services,
IDS Life is paid a fee based on the aggregate average daily net assets of the
Fund. The investment management fee paid to IDS Life is computed daily and is
equal on an annual basis to 0.4% of the average daily net assets of the Fund.
In addition to paying its own management fee, the Fund also pays all brokerage
commissions and charges in the purchase and sale of assets. Brokerage charges
are paid to IDS Life for reimbursement of charges incurred in the purchase and
sale of foreign securities.
4. SECURITY TRANSACTIONS AND BASIS FOR DETERMINING REALIZED GAIN AND LOSS
Cost of purchases and proceeds from sales of securities, (other than short-term
obligations) aggregated $238,206,948 and $261,547,652 for the six months ended
June 30, 2000. Net realized gain on investments has been determined on the basis
of identified costs.
<PAGE>
<TABLE>
<CAPTION>
5. ACCUMULATION UNITS
The changes in number of outstanding units applicable to contracts in the
accumulation period were as follows:
Six months ended Year ended
June 30, 2000 Dec. 31, 1999
<S> <C> <C>
Units outstanding at beginning of period 15,045,073 16,299,010
Additions for contract purchase payments and repayments 22,136 54,334
Net transfers from (to) fixed annuities (8,867) (48,888)
Deductions for contract terminations and withdrawals (714,317) (1,259,383)
-------- ----------
Units outstanding at end of period 14,344,025 15,045,073
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Fund's results.
Fiscal period ended Dec. 31,
<S> <C> <C> <C> <C> <C>
2000a 1999 1998 1997 1996
Accumulation unit value at beginning of period $32.26 $24.53 $20.91 $17.04 $13.93
Income from investment operations:
Net investment income (loss) (.09) (.20) (.14) (.12) (.07)
Net gains (losses) (both realized and unrealized) 4.73 7.93 3.76 3.99 3.18
Total from investment operations 4.64 7.73 3.62 3.87 3.11
Accumulation unit value at end of period $36.90 $32.26 $24.53 $20.91 $17.04
Total returnb 14.38% 31.51% 17.31% 22.71% 22.33%
Ratios/supplemental data
Total contract owners' equity at end of period
(000 omitted) $539,348 $493,966 $406,987 $379,553 $327,778
Ratio of operating expenses to average
daily net assets 1.40%c 1.40% 1.40% 1.40% 1.40%
Ratio of net investment income (loss)
to average daily net assets (.61%)c (.71%) (.63%) (.62%) (.43%)
Portfolio turnover rate 49% 5% 19% 33% 13%
a Six months ended June 30, 2000 (Unaudited).
b Total return does not reflect payment of a sales charge.
c Adjusted to an annual basis.
The foregoing table pertains to accumulation units only. There are two kinds of
units. As long as contract holders are paying into the Fund they are called
"accumulation" units. When contract owners begin to receive the annuity, they
change to "annuity" units.
The value of an annuity unit (assuming a 3.5% investment rate) was $12.23
as of June 30, 2000, $10.88 as of Dec. 31, 1999, $8.56 as of Dec. 31, 1998,
$7.55 as of Dec. 31, 1997 and $6.37 as of Dec. 31, 1996. The value of an annuity
unit (assuming a 5% investment rate) was $7.68 as of June 30, 2000, $6.88 as of
Dec. 31, 1999, $5.49 as of Dec. 31, 1998, $4.92 as of Dec. 31, 1997 and $4.21 as
of Dec. 31, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
IDS Life Variable
Annuity Fund A June 30, 2000 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (94.0%)
Issuer Shares Value(a)
Banks and savings & loans (1.6%)
<S> <C> <C>
Wells Fargo 225,000 $8,718,750
Communications equipment & services (12.1%)
Corning 45,000 12,144,375
JDS Uniphase 40,000(b) 4,795,000
Lucent Technologies 140,000 8,295,000
Nokia ADR Cl A 308,000(c) 15,380,749
Nortel Networks 150,000(c) 10,237,500
Tellabs 210,000(b) 14,371,875
Total 65,224,499
Computer software & services (4.4%)
Microsoft 280,000(b) 22,400,000
RealNetworks 23,000(b) 1,162,938
Total 23,562,938
Computers & office equipment (17.4%)
3Com 45,000(b) 2,593,125
America Online 105,000(b) 5,538,750
Cisco Systems 340,000(b) 21,611,249
Dell Computer 150,000(b) 7,396,875
EMC 180,000(b) 13,848,750
First Data 150,000 7,443,750
Hewlett-Packard 50,000 6,243,750
Inktomi 10,000(b) 1,182,500
Intl Business Machines 45,000 4,930,313
Mercury Interactive 24,000(b) 2,322,000
Portal Software 35,000(b) 2,235,625
Sanmina 65,000(b) 5,557,500
Solectron 220,000(b) 9,212,500
Veritas Software 17,500(b) 1,977,773
Yahoo! 20,000(b) 2,477,500
Total 94,571,960
Electronics (10.5%)
Applied Materials 116,200(b) 10,530,625
Intel 145,000 19,384,688
Maxim Integrated Products 170,000(b) 11,549,375
Texas Instruments 220,000 15,111,250
Total 56,575,938
Energy (0.9%)
Anadarko Petroleum 100,000 4,931,250
Energy equipment & services (1.4%)
Halliburton 160,000 7,550,000
Financial services (6.3%)
Citigroup 287,500 17,321,874
Kansas City Southern Inds 27,400(b,e) 152,413
Merrill Lynch 95,000 10,925,000
Schwab (Charles) 167,500 5,632,188
Total 34,031,475
Health care (17.2%)
Amgen 140,000(b) 9,835,000
Boston Scientific 200,000(b) 4,387,500
Genentech 30,000(b) 5,160,000
Guidant 300,000(b) 14,850,000
Medtronic 240,000 11,955,000
Pfizer 525,000 25,199,999
Pharmacia 243,950 12,609,166
Schering-Plough 170,000 8,585,000
Total 92,581,665
Industrial equipment & services (0.8%)
Illinois Tool Works 75,000 4,275,000
Insurance (2.4%)
American Intl Group 112,500 13,218,750
Leisure time & entertainment (1.0%)
Viacom Cl B 75,950(b) 5,178,841
Miscellaneous (1.7%)
Akamai Technologies 25,500(b) 3,027,727
InterTrust Technologies 15,000(b) 308,438
Stilwell Financial 140,000(b) 6,028,749
Total 9,364,914
Multi-industry conglomerates (7.8%)
Danaher 125,000 6,179,688
General Electric 285,000 15,105,000
Tyco Intl 440,000(c) 20,845,000
Total 42,129,688
Retail (4.0%)
CVS 225,000 9,000,000
Gap 180,000 5,625,000
Safeway 150,000(b) 6,768,750
Total 21,393,750
Utilities -- gas (0.5%)
Enron 40,000 2,580,000
Utilities -- telephone (4.0%)
AT&T Wireless Group 150,000(b) 4,181,250
Sprint PCS 60,000(b) 3,570,000
WorldCom 300,000(b) 13,762,500
Total 21,513,750
Total common stocks
(Cost: $262,401,330) $507,403,168
Bond (0.1%)
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligation
U.S. Treasury
05-15-16 7.25% $250,000 $275,548
Total bond
(Cost: $240,313) $275,548
Short-term securities (5.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (5.2%)
Federal Home Loan Bank Disc Nts
07-21-00 6.41% $1,400,000 $1,394,618
08-02-00 6.51 600,000 596,337
08-18-00 6.47 5,300,000 5,253,723
Federal Home Loan Mtge Corp Disc Nts
07-11-00 6.45 2,400,000 2,395,395
08-01-00 6.47 8,700,000 8,650,235
Federal Natl Mtge Assn Disc Nts
07-27-00 6.46 3,000,000 2,985,126
08-01-00 6.53 6,600,000 6,561,925
Total 27,837,359
Commercial paper (0.7%)
BBV Finance (Delaware)
08-21-00 6.59 1,000,000 990,568
SBC Communications
08-07-00 6.57 1,200,000(d) 1,191,741
USAA Capital
08-31-00 6.62 1,700,000 1,680,384
Total 3,862,693
Total short-term securities
(Cost: $31,706,797) $31,700,052
Total investments in securities
(Cost: $294,348,440)(f) $539,378,768
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of June 30, 2000, the
value of foreign securities represented 8.61% of net assets.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) At June 30, 2000, the cost of securities purchased, including interest
purchased, on a when-issued basis was $51,296.
(f) At June 30, 2000, the cost of securities for federal income tax purposes was
approximately $294,348,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $252,316,000
Unrealized depreciation (7,285,000)
----------
Net unrealized appreciation $245,031,000
<PAGE>
MANAGERS AND OFFICERS
Board of Managers
Gumer C. Alvero
vice president, American Express Financial Corporation
Rodney P. Burwell
chairman, Xerxes Corporation (fiberglass storage tanks)
Jean B. Keffeler
independent management consultant
Richard W. Kling
chairman of the board and president
Thomas R. McBurney
president, McBurney Management Advisors
Principal Officers
Besides Mr. Kling, who is president, the Fund's other officers are:
Lorraine R. Hart
vice president, investments
Jeffrey S. Horton
vice president and treasurer
Timothy S. Meehan
secretary
Philip C. Wentzel
controller
ADDITIONAL INFORMATION
The investment objective of IDSLife Variable Annuity Fund A is to invest in
securities that offer opportunities for long-term capital appreciation
consistent with accumulating Fund value and providing annuity payments under
variable annuity contracts issued by IDSLife.
There is a sales and administrative charge to the contract owner included in the
purchase payment.
This report is for the information of contract owners of IDSLife Variable
Annuity Fund A, but it may be used as sales literature when preceded or
accompanied by the current prospectus. For details and other material
information, see the current prospectus.
Issuer and Investment Manager:
IDS Life Insurance Company, Minneapolis, Minn.
Custodian:
American Express Trust Company
Minneapolis, Minn.
Sub-Custodian:
Bank of New York
New York, New York.
<PAGE>
IDS Life
Variable
Annuity
Fund A
2000 SEMIANNUAL REPORT
American
Express(R)
Funds
PRSRT STD AUTO
U.S. POSTAGE
PAID
AMERICAN
EXPRESS
IDS Life Insurance Company
200 AXPFinancial Center
Minneapolis, MN 55474
S-6445 P(8/00)
