1998 SEMIANNUAL REPORT
IDS
International Fund
(icon of) three flags
The goal of IDS International Fund, Inc. is long-term growth of capital.
The Fund invests primarily in common stocks and securities convertible
into common stocks of foreign issuers.
American Express Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) three flags
A world of opportunity
There's a new recognition among investors that the stock market extends
beyond Wall Street. Opportunity abounds in other markets, from Tokyo,
London and Frankfurt to Singapore, Mexico and Hong Kong. Ignoring these
opportunities may mean missing out on tremendous world economic growth in
the years ahead. International Fund focuses on finding the markets that
offer the greatest current potential to investors. With about two-thirds
of the world's stock market value currently based outside of the United
States, American investors now have an even greater opportunity to
diversify their portfolios beyond our boundaries.
Contents
From the chairman 3
From the portfolio manager 3
The Fund's ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 22
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, 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. We saw
evidence of that in late October, when declines in certain Asian markets
spawned a sharp drop in several financial markets worldwide, including the
U.S.
The potential for such volatility reinforces the need for investors to
review periodically 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
William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
IDS International Fund took advantage of surging stock markets in Europe
during the first half of the fiscal year, which pushed the Fund's gain
well into double digits. For the period -- November 1997 through April
1998 -- the Fund's Class A shares generated a total return of 19.4%. (The
Fund paid a capital gain to shareholders in December 1997, which reduced
its net asset value by the same amount at that time.)
The period began on a weak note as, in the latter part of 1997, most
foreign markets declined because of the Asian financial crisis that arose
last fall. In January, many of the Asian markets rebounded off their lows,
but were still substantially below their levels of a year earlier. In
Japan, the stock market and the currency rose in January and February, but
then returned to a lower and narrower trading range in spite of artificial
support from the Japanese government.
The shining light during the period was Europe, where markets gained
substantial ground, particularly in March. To illustrate the strength of
the European rally, Italy recorded a gain of 35% from January through
April. To the Fund's considerable benefit, I kept most (about
three-fourths) of the portfolio invested in that part of the world.
Minimal exposure to Asia
Looking forward, in Southeast Asia the major problems lie at the corporate
level, and it will take many months before all the corporate bankruptcies
come to light, let alone whether their debt burdens can be restructured.
Thus, I expect the crisis there will last for some time. Adding to
Southeast Asia's woes is the fact that Japan, Asia's traditional economic
powerhouse, is in poor economic health. The authorities in Japan have
undertaken some fiscal stimuli, but are not addressing the root causes of
the problems. Japan is vital to the economic well-being of the whole
region, and, accordingly, I continue to regard the region with extreme
caution. At period-end, less than 10% of the portfolio was invested in
Asian markets, an amount that may be reduced even further.
Continental Europe is improving from a macro standpoint, but the real
story is again at the corporate level. In the past, many companies have
been sheltered from the real world by cozy protection environments.
However, in the global marketplace of the 1990s, they need to restructure
to become competitive. This they are doing. In addition, Europeans are
embracing the cult of investing in equities as never before in an effort
to generate retirement savings.
Given those conditions, the major portfolio commitment remains in
Continental Europe (excludes the United Kingdom). Although the markets are
not cheap, I see greater long-term earnings momentum and predictability
there than anywhere else in the world. I expect those markets to continue
to rise in the months ahead because of higher valuations and the quality
and quantity of earnings. As of the end of April, 59% of the portfolio was
invested in continental Europe, with the highest concentration in France.
Peter Lamaison
(picture of) Peter Lamaison
Peter Lamaison
Portfolio manager
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To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1998 $ 12.10
Oct. 31, 1997 $ 10.57
Increase $ 1.53
Distributions
Nov. 1, 1997 - April 30, 1998
From income $ 0.12
From capital gains $ 0.32
Total distributions$ 0.44
Total return* +19.4%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1998 $ 12.07
Oct. 31, 1997 $ 10.50
Increase $ 1.57
Distributions
Nov. 1, 1997 - April 30, 1998
From income $ 0.03
From capital gains $ 0.32
Total distributions$ 0.35
Total return* +19.0%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
April 30, 1998 $ 12.11
Oct. 31, 1997 $ 10.59
Increase $ 1.52
Distributions
Nov. 1, 1997 - April 30, 1998
From income $ 0.13
From capital gains $ 0.32
Total distributions$ 0.45
Total return* +19.5%**
*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.
<PAGE>
The Fund's ten largest holdings
Percent Value
(of Fund's net assets) (as of April 30, 1998)
Banque Natl de Paris (France) 5.76% $82,926,036
ING Groep (Netherlands) 4.05 58,259,297
Rhone-Poulenc Cl A (France) 3.98 57,288,429
Bayerische Vereinsbank (Germany) 3.28 47,274,029
Credito Italiano (Italy) 3.22 46,297,857
Novartis (Switzerland) 3.17 45,666,901
Telecom Italia (Italy) 3.07 44,267,792
Instituto Bancario
San Paolo di Torino (Italy) 2.97 42,707,500
Schweizer Bankgesellschaft
(Switzerland) 2.88 41,448,882
Great Universal Stores
(United Kingdom) 2.77 39,868,123
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 35.15% of the Fund's net assets
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities IDS International Fund, Inc.
April 30, 1998
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,304,300,205) $1,648,239,803
Dividends and accrued interest receivable 3,830,277
Receivable for investment securities sold 774,213
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 4,883
U.S. government securities held as collateral (Note 6) 27,043,263
----------
Total assets 1,679,892,439
-------------
Liabilities
Disbursements in excess of cash on demand deposit 6,838,691
Payable for investment securities purchased 12,520,790
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 3,541
Payable upon return of securities loaned (Note 6) 220,698,638
Accrued investment management services fee 43,424
Accrued distribution fee 8,778
Accrued service fee 6,524
Accrued transfer agency fee 7,091
Accrued administrative services fee 1,873
Other accrued expenses 163,082
-------
Total liabilities 240,292,432
-----------
Net assets applicable to outstanding capital stock $1,439,600,007
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,190,413
Additional paid-in capital 1,069,631,694
Excess of distributions over net investment income (4,971,395)
Accumulated net realized gain (loss) 29,886,094
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies 343,863,201
-----------
Total-- representing net assets applicable to outstanding capital stock $1,439,600,007
==============
Net assets applicable to outstanding shares: Class A $ 920,900,712
Class B $ 434,191,043
Class Y $ 84,508,252
Net asset value per share of outstanding capital stock: Class A shares 76,085,999 $ 12.10
Class B shares 35,977,932 $ 12.07
Class Y shares 6,977,386 $ 12.11
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations
IDS International Fund, Inc.
Six months ended April 30, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividends $ 6,586,387
Interest 3,283,467
Less foreign taxes withheld (769,901)
--------
Total income 9,099,953
---------
Expenses (Note 2):
Investment management services fee 4,688,375
Distribution fee -- Class B 1,489,495
Transfer agency fee 1,303,272
Incremental transfer agency fee-- Class B 29,549
Service fee
Class A 726,652
Class B 344,299
Class Y 37,786
Administrative services fees and expenses 333,267
Compensation of board members 7,538
Custodian fees 432,761
Postage 7,625
Registration fees 55,300
Audit fees 18,250
Other 20,072
------
Total expenses 9,494,241
Earnings credits on cash balances (Note 2) (119,185)
--------
Total net expenses 9,375,056
---------
Investment income (loss) -- net (275,103)
--------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 22,824,807
Foreign currency transactions 7,259,808
---------
Net realized gain (loss) on investments 30,084,615
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 211,043,625
-----------
Net gain (loss) on investments and foreign currencies 241,128,240
-----------
Net increase (decrease) in net assets resulting from operations $240,853,137
============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS International Fund, Inc.
Operations and distributions April 30, 1998 Oct. 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ (275,103) $ 9,280,242
Net realized gain (loss) on investments 30,084,615 40,735,178
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 211,043,625 37,224,133
----------- ----------
Net increase (decrease) in net assets resulting from operations 240,853,137 87,239,553
----------- ----------
Distributions to shareholders from:
Net investment income
Class A (9,650,110) (13,946,736)
Class B (1,365,500) (3,344,245)
Class Y (980,542) (1,371,425)
Net realized gain
Class A (24,556,487) (44,172,366)
Class B (11,617,611) (20,128,583)
Class Y (2,267,356) (3,903,808)
---------- ----------
Total distributions (50,437,606) (86,867,163)
----------- -----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 861,616,377 805,437,029
Class B shares 30,082,385 89,995,200
Class Y shares 29,021,897 59,821,386
Reinvestment of distributions at net asset value
Class A shares 33,310,451 57,415,602
Class B shares 12,901,591 23,374,981
Class Y shares 3,247,898 5,275,233
Payments for redemptions
Class A shares (954,662,205) (922,437,954)
Class B shares (Note 2) (62,217,120) (119,961,242)
Class Y shares (33,601,242) (66,210,299)
----------- -----------
Increase (decrease) in net assets from capital share transactions (80,299,968) (67,290,064)
----------- -----------
Total increase (decrease) in net assets 110,115,563 (66,917,674)
Net assets at beginning of period 1,329,484,444 1,396,402,118
------------- -------------
Net assets at end of period $1,439,600,007 $1,329,484,444
============== ==============
Undistributed (excess of distributions over) net investment income $ (4,971,395) $ 7,299,860
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS International Fund, Inc.
(Unaudited as to April 30, 1998)
1
Summary of
significant
accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. The
Fund has 10 billion authorized shares of capital stock. The Fund invests
primarily in common stocks and securities convertible into common stocks
of foreign issuers. The Fund offers Class A, Class B and Class Y shares.
Class A shares are sold with a front-end sales charge. Class B shares may
be subject to a contingent deferred sales charge and such shares
automatically convert to Class A shares during the ninth calendar year of
ownership. Class Y shares have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
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 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.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities 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; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate
buying and selling of securities for investment purposes, the Fund may buy
and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Fund also may
buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. 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.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Fund may buy and sell financial futures contracts traded on any U.S.
or foreign exchange. The Fund also may buy and write put and call options
on these futures contracts. 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 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.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Fund may 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.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of the deferral
of losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes and
losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year
that the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the
end of the calendar year, is reinvested in additional shares of the Fund
at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2
Expenses and
sales charges
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio and
providing administrative services. Under its Investment Management
Services Agreement, AEFC determines which securities will be purchased,
held or sold. The management fee is a percentage of the Fund's average
daily net assets in reducing percentages from 0.8% to 0.675% annually. The
fee is adjusted upward or downward by a performance incentive adjustment
based on the Fund's average daily net assets over a rolling twelve-month
period as measured against the change in the Lipper International Fund
Index. The maximum adjustment is 0.12% of the Fund's average daily net
assets after deducting 1% from the performance difference. If the
performance difference is less than 1%, the adjustment will be zero. The
adjustment decreased the fee by $219,028 for the six months ended April
30, 1998. From its fees, AEFC pays American Express Asset Management
International, Inc. a subadvisory fee equal to 0.35% of the Fund's average
daily net assets.
Under its Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's
average daily net assets in reducing percentages from 0.06% to 0.035%
annually. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, organizational expenses and any other
expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC an annual fee per shareholder account for this service
as follows:
oClass A $15
oClass B $16
oClass Y $15
Also effective March 20, 1995, the Fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services. Under a Plan and Agreement of Distribution,
the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the Fund's average daily net
assets attributable to Class A and Class B shares and commencing on May 9,
1997, the fee is calculated at a rate of 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $702,289 for Class A and $217,321 for Class
B for the six months ended April 30, 1998. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.
During the six months ended April 30, 1998, the Fund's custodian and
transfer agency fees were reduced by $119,185 as a result of earnings
credits from overnight cash balances.
3
Securities
transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $620,540,703 and $727,302,662,
respectively, for the six months ended April 30, 1998. Realized gains and
losses are determined on an identified cost basis.
4
Foreign currency
contracts
At April 30, 1998, the Fund had entered into foreign currency exchange
contracts that obligate the Fund to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation on these contracts
is included in the accompanying financial statements. See "Summary of
significant accounting policies." The terms of the open contracts are as
follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 4, 1998 12,515,907 22,466,053 $4,883 $ --
U S. Dollar Deutsche Mark
May 4, 1998 223,079 58,620 -- 1,347
Malaysian Ringgit U.S. Dollar
May 5, 1998 545,509 144,448 -- 2,194
Malaysian Ringgit U.S. Dollar
Total $4,883 $3,541
5
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended April 30, 1998
Class A Class B Class Y
Sold 78,548,915 2,748,529 2,648,143
Issued for reinvested 3,283,759 1,272,472 320,085
distributions
Redeemed (86,876,090) (5,774,106) (3,122,233)
Net increase (decrease) (5,043,416) (1,753,105) (154,005)
Year ended Oct. 31, 1997
Class A Class B Class Y
Sold 74,586,563 8,344,604 5,491,569
Issued for reinvested 5,534,036 2,255,401 508,309
distributions
Redeemed (84,983,840) (11,076,605) (6,068,105)
Net increase (decrease) (4,863,241) (476,600) (68,227)
6
Lending of
portfolio securities
At April 30, 1998, securities valued at $214,121,695 were on loan to
brokers. For collateral, the Fund received $193,655,375 in cash and U.S.
government securities valued at $27,043,263. Income from securities
lending amounted to $384,967 for the six months ended April 30, 1998. The
risks to the Fund of securities lending are that the borrower may not
provide additional collateral when required or return the securities when
due.
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<TABLE>
<CAPTION>
Notes to financial statements
IDS International Fund, Inc.
7
Financial
Highlights
The tables below show certain important financial information for
evaluating the Fund's results.
Fiscal period ended Oct. 31,
Per share income and capital changesa
Class A
1998(e) 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, 10.57 $10.65 $9.97 $10.84 $10.00 $7.94 $8.60 $8.99 $9.30 $8.66
beginning of period
Income from investment operations:
Net investment income .07 .08 .09 .10 .05 .04 .05 .07 .15 .06
(loss)
Net gains (losses) 1.90 .53 .88 (.31) 1.04 2.22 (.58) .42 .51 .60
(both realized
and unrealized)
Total from investment 1.97 .61 .97 (.21) 1.09 2.26 (.53) .49 .66 .66
operations
Less distributions:
Dividends from net (.12) (.17) (.15) -- (.09) -- (.05) (.16) (.10) (.02)
investment income
Distributions from (.32) (.52) (.14) (.64) (.16) (.19) (.08) (.72) (.87) --
realized gains
Excess distributions of -- -- -- (.02) -- (.01) -- -- -- --
realized gains
Total distributions (.44) (.69) (.29) (.66) (.25) (.20) (.13) (.88) (.97) (.02)
Net asset value, 12.10 $10.57 $10.65 $9.97 $10.84 $10.00 $7.94 $8.60 $8.99 $9.30
end of period
Ratios/supplemental data
Class A
1998(e) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $921 $858 $916 $768 $796 $440 $219 $232 $215 $198
period (in millions)
Ratio of expenses to 1.22%f 1.18% 1.31% 1.39% 1.33% 1.47% 1.45% 1.35% 1.35% 1.41%
average daily net assetsb
Ratio of net income (loss) .19% f .86% .95% 1.03% .68% .83% .65% .83% 1.67% .50%
to average daily net assets
Portfolio turnover rate 50% 87% 62% 52% 58% 63% 94% 66% 98% 95%
(excluding short-term securities)
Total returnc 19.4% 5.9% 9.9% (1.7%) 11.0% 29.2% (6.4%) 6.3% 7.1% 7.6%
Average brokerage $.0199 $.0197 $.0188 -- -- -- -- -- -- --
commission rated
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Effective fiscal year 1996, expense ratio is based on total
expenses of the Fund before reduction of earnings credits on cash
balances.
c Total return does not reflect payment of a sales charge.
d Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
e Six months ended April 30, 1998 (Unaudited).
f Adjusted to an annual basis.
</TABLE>
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<TABLE>
<CAPTION>
IDS International Fund, Inc.
Fiscal period ended Oct. 31,
Per share income and capital changes(a)
Class B Class Y
1998(g) 1997 1996 1995(b) 1998(g) 1997 1996 1995(b)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $10.50 $10.58 $9.92 $8.92 $10.59 $10.67 $9.98 $8.92
beginning of period
Income from investment operations:
Net investment income .02 .07 .03 .04 .07 .08 .10 .10
(loss)
Net gains (losses) 1.90 .46 .87 .96 1.90 .55 .90 .96
(both realized and unrealized)
Total from investment 1.92 .53 .90 1.00 1.97 .63 1.00 1.06
operations
Less distributions:
Dividends from net (.03) (.09) (.10) -- (.13) (.19) (.17) --
investment income
Distributions from (.32) (.52) (.14) -- (.32) (.52) (.14) --
realized gains
Total distributions (.35) (.61) (.24) -- (.45) (.71) (.31) --
Net asset value, $12.07 $10.50 $10.58 $9.92 $12.11 $10.59 $10.67 $9.98
end of period
Ratios/supplemental data
Class B Class Y
1998(g) 1997 1996 1995(b) 1998(g) 1997 1996 1995(b)
Net assets, end of $434 $396 $404 $354 $85 $76 $77 $58
period (in millions)
Ratio of expenses to 1.98%c 1.95% 2.07% 2.21% c 1.14%c 1.06% 1.13% 1.26%c
average daily net assets(d)
Ratio of net income (loss) (.58%)c .12% .15% .69% c .26%c 1.03% 1.13% 1.67% c
to average daily net assets
Portfolio turnover rate 50% 87% 62% 52% 50% 87% 62% 52%
(excluding short-term
securities)
Total return(e) 19.0% 5.1% 9.1% 11.2% 19.5% 6.0% 10.1% 11.9%
Average brokerage $.0199 $.0197 $.0188 -- $.0199 $.0197 $.0188 --
commission rate(f)
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Inception date was March 20, 1995.
c Adjusted to an annual basis.
d Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
e Total return does not reflect payment of a sales charge.
f Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
g Six months ended April 30, 1998 (Unaudited).
</TABLE>
<PAGE>
Investments in securities
IDS International Fund, Inc.
April 30, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks (93.1%)
Issuer Shares Value(a)
Brazil (0.8%)
Energy (0.5%)
Petroleo Brasileiro ADR 272,500(b,c) $6,895,749
Utilities -- electric (0.3%)
Centrais Eletricas
Brasileiras ADR 246,000(b) 5,106,985
Canada (6.6%)
Airlines (0.3%)
Air Canada 511,300(b) 4,773,826
Banks and savings & loans (1.4%)
Toronto-Dominion Bank 457,100(b) 20,875,358
Communications equipment & services (2.0%)
Newbridge Networks 137,700(b) 4,035,130
Northern Telecom 403,000 24,532,625
Total 28,567,755
Energy (1.7%)
Canadian Occidental
Petroleum 241,222(b) 4,900,863
Petro-Canada 1,133,000 19,096,619
Total 23,997,482
Multi-industry conglomerates (1.2%)
Bombardier Cl B 626,000(b,c) 16,899,395
France (15.3%)
Automotive & related (1.4%)
Michelin Cl B 321,000(b) 20,234,042
Banks and savings & loans (5.7%)
Banque Natl de Paris 983,172(b) 82,926,036
Energy (1.8%)
TOTAL Cl B 214,335(b) 25,494,848
Household products (4.0%)
Rhone-Poulenc Cl A 1,170,896(b) 57,288,429
Leisure time & entertainment (2.4%)
Accor 125,905(b) 34,330,113
Germany (8.6%)
Automotive & related (0.1%)
Volkswagen AG 2,442(b) 1,944,835
Banks and savings & loans (3.3%)
Bayerische Vereinsbank 621,420(b) 47,274,029
Chemicals (2.2%)
Henkel KGaA 407,200(b,c) 31,771,739
Industrial equipment & services (2.0%)
Mannesmann 35,955(b) 28,534,762
Textiles & apparel (1.0%)
Adidas 84,076 13,940,036
Hong Kong (1.9%)
Communications equipment & services (0.5%)
China Telecom 3,970,000(b,c) 7,534,266
Financial services (1.0%)
Cheung Kong Holdings 2,000,000(b) 13,297,200
Utilities -- telephone (0.4%)
Hong Kong
Telecommunications 3,200,000(b) 5,990,080
Italy (13.2%)
Banks and savings & loans (8.9%)
Banca Intesa 6,869,950(b,c) 38,783,616
Credito Italiano 8,808,740(b,c) 46,297,857
Instituto Bancario
San Paolo di Torino 2,955,066(b,c) 42,707,500
Total 127,788,973
Utilities -- telephone (4.3%)
Telecom Italia 8,395,500(b,c) 44,267,792
Telecom Italia (New) 2,441,111(b,c) 18,259,999
Total 62,527,791
Japan (5.9%)
Banks and savings & loans (0.8%)
Sakura Bank 3,456,000(b,c) 11,885,875
Electronics (3.0%)
Fujikura 1,570,000(b) 8,093,350
NEC1,212,000(b) 13,649,908
Rohm 107,000(b) 12,082,996
Tokyo Electron 247,000(b) 9,708,236
Total 43,534,490
Financial services (0.8%)
Sumitomo Realty
& Development 2,500,000(b) 11,999,250
Media (1.3%)
Sony 230,000(b) 19,140,600
Malaysia (0.2%)
Energy
Petronas Gas Berhad 937,000(b) 2,266,978
Mexico (1.5%)
Beverages & tobacco (1.1%)
Coca-Cola Femsa ADR 316,800(b) 5,385,600
Fomento Economico
Mexicano Cl B 818,000(b) 6,054,260
Panamerican Beverages Cl A 120,000 4,785,000
Total 16,224,860
Financial services (0.4%)
Grupo Financiero
Bancomer Cl B 8,566,700(b) 5,916,429
Netherlands (9.4%)
Computers & office equipment (0.8%)
Baan 267,690(b,c) 11,727,419
Household products (1.3%)
Unilever 1,751,904(b) 18,666,712
Industrial equipment & services (2.3%)
Philips Electronics 372,902(b) 32,858,036
Insurance (4.0%)
ING Groep 896,341(b) 58,259,297
Retail (1.0%)
Vendex Intl 225,000(b) 14,434,920
Russia (0.8%)
Energy (0.4%)
Lukoil Holding ADR 85,000(c) 5,602,095
Utilities -- electric (0.4%)
Mosenergo ADR 185,000(b,c) 6,567,500
Singapore (0.8%)
Banks and savings & loans (0.3%)
Oversea-Chinese Banking 886,600(b) 4,676,638
Building materials & construction (0.4%)
Singapore Technologies
Engineering 7,412,000(b) 6,367,649
Financial services (0.1%)
City Developments 276,000(b) 1,194,307
South Korea (0.5%)
Electronics
Samsung Electronics 126,500(b) 7,004,115
Spain (2.2%)
Banks and savings & loans
Argentaria 376,137(b) 31,365,312
Sweden (2.7%)
Banks and savings & loans (1.0%)
Nordbanken Holding 2,025,647(b,c) 14,913,623
Communications equipment & services (1.7%)
Ericsson (LM) Cl B 454,573(b) 23,955,815
Switzerland (8.2%)
Banks and savings & loans (5.0%)
Credit Suisse Group 142,652(b) 31,368,804
Schweizer Bankgesellschaft 25,746(b,c) 41,448,882
Total 72,817,686
Health care (3.2%)
Novartis 27,634(b,c) 45,666,901
United Kingdom (14.2%)
Banks and savings & loans (1.2%)
Barclays 610,193(b) 17,524,926
Chemicals (1.6%)
Imperial Chemical Inds 1,261,355(b) 22,871,015
Energy (1.2%)
Shell Transport & Trading2,294,397(b) 17,059,071
Health care (1.3%)
SmithKline Beecham 1,566,675(b) 18,776,443
Multi-industry conglomerates (2.3%)
General Electric 4,134,569(b) 33,801,342
Retail (2.8%)
Great Universal Stores 2,612,008(b) 39,868,123
Utilities -- telephone (3.8%)
Orange 4,392,144(b) 31,921,663
Vodafone 2,062,221 22,714,746
Total 54,636,409
Total common stocks
(Cost: $1,004,227,033) $1,339,577,565
Other (0.7%)
Issuer Shares Value(a)
France (0.1%)
Rhone-Poulenc
Warrants 220,209 $1,062,398
Italy (0.6%)
Banca Intesa
Warrants 6,869,950 8,881,472
South Korea (--%)
Samsung Electronics
Rights 10,064 194,277
Total other
(Cost: $1,549,081) $10,138,147
Short-term securities (20.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (1.9%)
Federal Home Loan Mtge Corp Disc Nts
05-15-98 5.46% $2,300,000 $2,295,143
05-18-98 5.42 10,000,000 9,974,500
05-28-98 5.44 5,400,000 5,378,089
05-29-98 5.45 6,500,000 6,472,624
Federal Natl Mtge Assn Disc Nt
05-14-98 5.43 3,800,000 3,792,576
Total 27,912,932
Commercial paper (17.4%)
ABB Treasury Center USA
05-04-98 5.54 10,000,000(d) 9,995,400
Albertson's
05-07-98 5.51 17,700,000 17,683,775
Becton Dickinson
05-07-98 5.51 10,000,000 9,990,833
Bell Atlantic Finance
05-21-98 5.52 14,100,000 14,056,917
BellSouth Capital Funding
05-22-98 5.52 15,200,000 15,151,233
BHP Finance
06-02-98 5.54 10,000,000 9,951,022
CAFCO
06-09-98 5.56 12,800,000(d) 12,723,317
Ciesco LP
06-09-98 5.55 14,800,000(d) 14,711,496
Colgate-Palmolive
05-07-98 5.52 5,300,000(d) 5,295,142
Daimler-Benz
05-29-98 5.53 6,500,000 6,472,194
06-01-98 5.52 6,200,000 6,170,690
Deutsche Bank Financial
05-01-98 5.51 2,600,000 2,600,000
Dresdner US Finance
05-04-98 5.53 7,400,000 7,396,602
05-21-98 5.52 8,300,000 8,274,639
Duke Energy
05-28-98 5.53 8,500,000 8,464,937
Fleet Funding
05-27-98 5.55 5,000,000(d) 4,980,067
Ford Motor Credit
05-20-98 5.57 9,200,000 9,173,149
Goldman Sachs Group
05-29-98 5.53 7,900,000 7,866,206
Glaxo Wellcome
05-20-98 5.53 6,900,000(d) 6,879,898
GTE Funding
06-02-98 5.54 8,900,000 8,856,410
Intl Lease Finance
05-01-98 5.54 19,200,000 19,200,000
Paccar Financial
05-05-98 5.52 2,200,000 2,198,656
05-26-98 5.54 15,100,000 15,042,117
Pfizer
06-03-98 5.54 9,700,000(d) 9,650,918
Reed Elsevier
05-11-98 5.54 3,800,000(d) 3,794,194
Toyota Motor Credit
05-19-98 5.55 5,100,000 5,085,924
05-21-98 5.53 9,000,000 8,972,450
Total 250,638,186
Letters of credit (1.4%)
Student Loan Marketing Assn-
Nebraska Higher Education
05-14-98 5.55 8,000,000 7,984,053
Credit Agricol-
Louis Dreyfus
05-07-98 5.54 12,000,000 11,988,920
Total 19,972,973
Total short-term securities
(Cost: $298,524,091) $298,524,091
Total investments in securities
(Cost: $1,304,300,205)(e) $1,648,239,803
See accompanying notes to investments in securities.
<PAGE>
Investments in securities
IDS International Fund, Inc.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements. Foreign security values are stated in U.S. dollars and are
classified according to country of risk.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 6 to financial statements.
(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 April 30, 1998, the cost of securities for federal income tax purposes
was approximately $1,304,300,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.........................................$375,964,000
Unrealized depreciation..........................................(32,024,000)
Net unrealized appreciation.....................................$343,940,000
<PAGE>
Board members and officers
Independent board members and officers
Chairman William R. Pearce*
of the board Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the
IDS and IDSLife funds and Master Trust portfolios).
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills,
Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Officer
Vice president, Leslie L. Ogg*
general counsel President, treasurer and corporate secretary of Board Services
and secretary Corporation.
Board members and officers associated with AEFC
President John R. Thomas*
Senior vice president, AEFC.
William H. Dudley*
Senior advisor to the chief executive officer, AEFC.
David R. Hubers*
President and chief executive officer, AEFC.
Officers associated with AEFC
Vice president Peter J. Anderson*
Senior vice president, AEFC
Vice president Frederick C. Quirsfeld*
Vice president, AEFC
Treasurer Matthew N. Karstetter*
Vice president, AEFC
* Interested person as defined by the Investment Company Act of 1940.
<PAGE>
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
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.
(icon of) trees
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.
(icon of) light bulb
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.
(icon of) two puzzle pieces
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.
(icon of) scale of justice
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.
(icon of) two coins
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.
(icon of) Greek column
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.
(icon of) skyline
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
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.
<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 Fund
IDS Tower 10
Minneapolis, MN 55440-0010
