<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 20 (File No. 2-97636) X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 (File No. 811-4299) X
------ ---
IDS LIFE SERIES FUND, INC.
- -------------------------------------------------------------------
IDS Tower 10, Minneapolis, Minnesota 55440-0010
- -------------------------------------------------------------------
(612) 671-7981
- -------------------------------------------------------------------
Colin M. Lancaster - IDS Tower 10, Minneapolis, MN 55440-0010
- -------------------------------------------------------------------
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check
appropriate box)
_____immediately upon filing pursuant to paragraph (b)
X on June 27, 1997 pursuant to paragraph (b) of rule 485
_____60 days after filing pursuant to paragraph (a)(1)
_____on (date) pursuant to paragraph (a)(1) of rule 485
_____75 days after filing pursuant to paragraph (a)(2)
_____on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
_____this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant filed its 24f-2 Notice for the fiscal year ending April 30, 1996 on
or about June 20, 1997.
<PAGE>
PAGE 2
Cross reference sheet for the IDS Life Series Fund showing location in the
prospectus and Statement of Additional Information of the information called for
by the items enumerated in Part A and Part B of Form N-1A.
Negative answers omitted from Part A or Part B are so indicated.
PART A
<TABLE>
<CAPTION>
Item No. Location in Prospectus
<S> <C>
1 Cover page of prospectus
2 The fund in brief; Sales charge and expenses
3(a) Financial highlights
(b) NA
(c) Performance
(d) Financial Highlights
4(a) The fund in brief; Investment policies and risks; How the fund is organized
(b) Investment policies and risks
(c) Investment policies and risks
5(a) How the fund is organized; Directors and officers; Directors and officers of the fund (listing)
(b) How the fund is organized; About IDS Life and AEFC
(b)(i) About IDS Life and AEFC
(b)(ii) Investment manager
(b)(iii) Investment manager
(c) Portfolio managers
(d) The fund in brief
(e) How the fund is organized: Investment manager
(f) NA
(g) How the fund is organized: Investment manager
5A(a) *
(b) *
6(a) How the fund is organized: Shares; Voting rights
(b) NA
(c) NA
(d) NA
(e) Cover page;
(f) Distributions and taxes: Dividend and capital gain distributions;
(g) Distributions and taxes: Taxes
(h) NA
7(a) How the fund is organized
(b) Performance: Key terms; Valuing assets
(c) NA
(d) NA
(e) NA
(f) NA
8(a) NA
(b) NA
(c) NA
(d) NA
9 None
<PAGE>
PAGE 3
PART B
Item No. Section in Statement of Additional Information
10 Cover page of SAI
11 Table of contents
12 NA
13(a) Additional Investment Policies; all appendices except Dollar Cost Averaging
(b) Additional Investment Policies
(c) "Unless changed by the board of directors, the fund may..." in Additional Investment Policies
(d) Portfolio Turnover, last paragraph of Portfolio Transactions
14(a) Directors and officers of the fund;** Directors and officers (SAI & prospectus)
(b) Directors and Officers
(c) Directors and Officers (last paragraph)
15(a) NA
(b) NA
(c) Directors and Officers (last paragraph)
16(a)(i) How the fund is organized;** About IDS Life and AEFC**
(a)(ii) Investment Management and other services;
(a)(iii) Investment Management and other services;
(b) Investment Management and other services;
(c) NA
(d) None
(e) NA
(f) NA
(g) NA
(h) Custodian; Independent Auditors
(i) Custodian
17(a) Portfolio Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with IDS Life
(c) Portfolio Transactions
(d) Portfolio Transactions
(e) Portfolio Transactions
18(a) How the fund is organized: Shares and Voting rights**
(b) NA
19(a) Investing in the Fund
(b) Valuing Fund Shares; Investing in the Fund
(c) NA
20 Taxes
21(a) NA
(b) NA
(c) NA
22(a) Performance Information: Calculation of Yield (money market funds) (NA for all other funds).
(b) Performance Information: Calculation of Total Return and/or Yield (all other funds) (NA for money market funds)
23 Financial Statements
</TABLE>
* Designates information is located in annual report.
**Designates location in prospectus.
<PAGE>
PAGE 4
IDS Life Series Fund
Prospectus
June 27, 1997
IDS Life Series Fund, Inc. (the fund) is a series mutual fund with
six portfolios, each with a different investment objective.
Equity Portfolio is a stock portfolio.
Income Portfolio is a bond portfolio.
Money Market Portfolio is a money market portfolio.
An investment in Money Market Portfolio is neither insured nor guaranteed by the
U.S. Government and there can be no assurance that the portfolio will be able to
maintain a stable net asset value of $1 per share.
Managed Portfolio is a managed portfolio.
Government Securities Portfolio is a government securities portfolio.
International Equity Portfolio is an international stock portfolio.
This prospectus contains information about the fund that you should know before
investing. Read it along with your variable life insurance policy prospectus
before you invest and keep them for future reference.
International Equity Portfolio is not available for investment under all life
insurance policies. Please see the prospectus for your policy to see if it is
available.
Additional facts about the fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The current SAI is incorporated herein by reference. For a
free copy, contact IDS Life Series Fund, Inc.
These securities have not been approved or disapproved by the SEC or any state
securities commission, nor has the SEC or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
IDS Life is not a bank or financial institution, and the securities it offers
are not deposits or obligations of, or guaranteed or endorsed by an bank or
financial institution nor are they insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
<PAGE>
PAGE 5
IDS Life Series Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
612-671-3733, 1-800-437-0602
or TTY: 800-285-8846
New York Service: 518-869-8613
<PAGE>
PAGE 6
Table of contents
The fund in brief
Goals and types of portfolio investments
Manager and distributor
Variable accounts
Sales charge
Expenses
Performance
Financial highlights
Total returns
Yield calculations
Key terms
Investment policies and risks
Facts about investments and their risks
Alternative investment option
Valuing assets
How to invest, transfer or redeem shares
How to invest
How to transfer among subaccounts
Redeeming shares
Distributions and taxes
Dividend and capital gain distributions
Taxes
How the fund is organized Shares Voting rights Shareholder meetings Portfolio
managers Directors and officers Investment manager Investment advisory agreement
About IDS Life and American Express Financial Corporation
General information
<PAGE>
PAGE 7
The fund in brief
Goals and types of portfolio investments
IDS Life Series Fund, Inc. is a series mutual fund. It has six
portfolios whose goals and types of investments are as follows:
Equity Portfolio's goal is capital appreciation. The portfolio
invests primarily in U.S. common stocks and securities convertible
into common stock.
Income Portfolio's goal is to maximize current income while attempting to
conserve the value of the investment and to continue the high level of income
for the longest period of time. The portfolio invests primarily in corporate
bonds of the four highest ratings.
Money Market Portfolio's goal is to provide maximum current income consistent
with liquidity and conservation of capital. The portfolio invests primarily in
high-quality, short-term debt securities.
Managed Portfolio's goal is to maximize total investment return through a
combination of capital appreciation and current income. The portfolio invests in
common and preferred stocks, convertible securities, debt securities and money
market instruments.
Government Securities Portfolio's goal is to provide a high level of current
income and safety of principal. The portfolio invests in debt obligations issued
or guaranteed by U.S. governmental units.
International Equity Portfolio's goal is capital appreciation and it invests
primarily in common stocks of foreign issuers.
Because any investment involves risk, achieving these goals cannot be
guaranteed. Only the shareholders can change the goals.
Manager and distributor
The fund is managed by IDS Life Insurance Company (IDS Life), a subsidiary of
American Express Financial Corporation (AEFC). AEFC has an agreement with IDS
Life to furnish investment advice for funds managed by IDS Life. IDS Life and
IDS Life Insurance Company of New York (IDS Life of New York) buy fund shares
for their variable accounts used in connection with their variable life
insurance policies. In the future, the fund may offer shares to the owners of
other variable life and variable annuity contracts and qualified plans.
Variable accounts
You may not buy (nor will you own) shares of the fund directly. You invest by
buying a variable life insurance policy from IDS Life or IDS Life of New York
and allocating your premium payments among different subaccounts of the variable
accounts that invest in these portfolios.
<PAGE>
PAGE 8
Sales charge
Cost of insurance charges, premium expense charges, surrender charges, mortality
and expense risk fees and other charges under your policy are described in the
variable life insurance policy prospectus. There is no sales charge for the sale
or redemption of fund shares.
Expenses
The fund pays IDS Life a fee for managing its investment portfolios and for
certain administrative services. The fund also pays certain nonadvisory
expenses. See "Investment manager" under "How the fund is organized."
<PAGE>
PAGE 9
Performance
Financial highlights
<TABLE>
<CAPTION>
Equity Portfolio
Financial highlights
The tables below show certain important financial information for evaluating
each portfolio's results.
Fiscal year ended April 30,
Per share income and capital changes*
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $29.34 $20.05 $18.10 $16.87 $16.01 $13.94 $12.77 $ 12.16 $10.79 $12.05
Income (loss from investment operations:
Net investment income .05 .03 .10 .06 .03 .03 .13 .35 .36 .15
Net gains (losses) on
securities (both realized
and unrealized (1.34) 9.30 2.40 3.26 1.40 2.90 2.09 .61 1.37 (1.13)
Total from investment
operations (1.29) 9.33 2.50 3.32 1.43 2.93 2.22 .96 1.73 (0.98)
Less distributions:
Dividends from net
investment income (.05) (.03) (.10) (.06) (.03) (.03) (.13) (.35) (.36) (.15)
Distributions from
realized gains (4.48) (.01) (.45) (2.03) (.54) (.83) (.92) - - (.13)
Total distributions (4.53) (.04) (.55) (2.09) (.57) (.86) (1.05) (.35) (.36) (.28)
Net asset value,
end of period $23.52 $ 29.34 $20.05 $18.10 $16.87 $16.01 $13.94 $12.77 $12.16 $10.79
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period
(in thousands) $551,518 $448,412 $241,032 $151,860 $87,742 $55,265 $33,933 $16,355 $11,620 $7,247
Ratio of expenses to average
daily net assets .76% .76% .77% .75% .79% .80% .80%+ .80%+ .80% 1.10%
Ratio of net income to average
daily net assets .21% .15% .56% .33% .21% .17% 1.03% 2.61% 3.32% 1.21%
Portfolio turnover rate
(excluding short-term
securities) 231% 184% 44% 109% 81% 52% 79% 190% 48% 57%
Total return++ (3.66%) 46.62% 13.87% 19.72% 8.92% 21.06% 18.55% 7.84% 16.18% (8.04)%
Average brokerage
commission rate+++ $.0421 -- -- -- -- -- -- -- -- --
* For a share outstanding throughout the period. Rounded to the nearest cent.
+ Commencing on May 1, 1989, IDS Life voluntarily limited total operating
expenses to 0.8% of average daily net assets. Had IDS Life not done so, the
ratio of expenses to average daily net assets would have been 0.86% and
0.90% for the years ended April 30, 1991 and 1990 respectively.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
+++ Effective fiscal year 1977, 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.
</TABLE>
<PAGE>
PAGE 10
<TABLE>
<CAPTION>
Income Portfolio
Financial highlights (continued)
Fiscal year ended April 30,
Per share income and capital changes*
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.93 $9.64 $9.71 $10.19 $9.40 $9.19 $8.55 $8.93 $9.05 $9.42
Income from investment operations:
Net investment income .68 .68 .69 .71 .76 .73 .75 .75 .70 .68
Net gains (losses)
(both realized
and unrealized) .10 .29 (.07) (.48) .80 .21 .64 (.40) (.12) (.37)
Total from investment
operations .78 .97 .62 .23 1.56 .94 1.39 .35 .58 .31
Less distributions:
Dividends from net
investment income (.68) (.68) (.69) (.71) (.77) (.73) (.75) (.73) (.70) (.68)
Net asset value,
end of period $10.03 $9.93 $9.64 $9.71 $10.19 $9.40 $9.19 $8.55 $8.93 $9.05
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period
(in thousands) $66,745 $54,976 $37,823 $33,770 $22,641 $16,306 $11,949 $8,831 $6,203 $4,456
Ratio of expenses to average
daily net assets .80% .80% .80% .80% .80%+ .80%+ .80%+ .80%+ 1.11% 1.13%
Ratio of net income to
average daily net assets 6.73% 6.72% 7.23% 6.83% 7.66% 7.86% 8.41% 8.02% 7.87% 7.50%
Portfolio turnover rate
(excluding short-term
securities) 106% 36% 55% 60% 47% 75% 55% 60% 99% 64%
Total return++ 8.05% 10.02% 6.67% 2.12% 17.17% 10.60% 16.77% 3.75% 6.70% 3.59%
* For a share outstanding throughout the period. Rounded to the nearest cent.
+ Commencing on May 1, 1989, IDS Life voluntarily limited total operating
expenses to 0.80% of average daily net assets. Had IDS Life not done so, the
ratio of expenses to average daily net assets would have been 0.83%, 0.88%,
0.93% and 0.96% for the years ended April 30, 1993, 1992, 1991 and 1990,
respectively.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
PAGE 11
<TABLE>
<CAPTION>
Money Market Portfolio
Financial highlights (continued)
Fiscal year ended April 30,
Per share income and capital changes*
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income .05 .05 .04 .03 .03 .05 .07 .08 .07 .06
Less distributions:
Dividends from net
investment income (.05) (.05) (.04) (.03) (.03) (.05) (.07) (.08) (.07) (.06)
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period
(in thousands) $28,546 $14,318 $9,885 $9,557 $8,181 $9,771 $9,596 $6,321 $4,721 $2,748
Ratio of expenses to
average daily net assets .60%+ .60%+ .60%+ .60%+ .60%+ .60%+ .60%+ .60%+ 1.10%+ .96%
Ratio of net income to
average daily net assets 4.81% 5.04% 4.45% 2.61% 3.00% 4.60% 7.06% 8.26% 7.38% 5.89%
Total return++ 4.86% 5.03% 4.50% 2.61% 3.04% 4.71% 7.41% 8.61% 7.52% 6.13%
* For a share outstanding throughout the period. Rounded to the nearest cent.
+ Commencing on April 5, 1989, IDS Life voluntarily limited total operating
expenses to 0.6% of average daily net assets. Had IDS Life not done so, the
ratio of expenses to average daily net assets would have been 0.64%, 0.73%,
0.77%, 0.71%, 0.74%, 0.75%, 0.86%, 0.96% and 1.35% for the years ended April
30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989, respectively.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
PAGE 12
<TABLE>
<CAPTION>
Managed Portfolio
Financial highlights (continued)
Fiscal year ended April 30,
Per share income and capital changes*
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $16.49 $14.11 $13.85 $13.84 $13.55 $13.29 $12.80 $11.22 $10.42 $11.40
Income from investment operation:
Net investment income .57 .57 .44 .42 .44 .48 .57 .57 .61 .42
Net gains (losses)
(both realized
and unrealized) 1.37 2.51 .30 1.40 1.44 1.87 1.90 1.58 .80 (.84)
Total from investment
operations 1.94 3.08 .74 1.82 1.88 2.35 2.47 2.15 1.41 (.42)
Less distributions:
Dividends from net
investment income (.57) (.57) (.44) (.42) (.44) (.48) (.57) (.57) (.61) (.42)
Distributions from
realized gains (.70) (.13) (.04) (1.39) (1.15) (1.61) (1.41) -- -- (.14)
Total distributions (1.27) (.70) (.48) (1.81) (1.59) (2.09) (1.98) (.57) (.61) (.56)
Net asset value,
end of period $17.16 $16.49 $14.11 $13.85 $13.84 $13.55 $13.29 $12.80 $11.22 $10.42
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period
(in thousands) $410,737 $316,732 $219,986 $160,706 $100,139 $72,366 $51,442 $32,725 $25,807 $21,901
Ratio of expenses to
average daily net assets .75% .78% .78% .77% .79% .80% .80%+ .80%+ .72%+ 1.03%
Ratio of net income to
average daily net assets 3.46% 3.73% 3.27% 2.83% 3.15% 3.40% 4.38% 4.54% 5.76% 3.86%
Portfolio turnover rate
(excluding short-term
securities) 100% 83% 143% 106% 118% 122% 71% 107% 58% 67%
Total return++ 12.46% 22.27% 5.47% 13.30% 14.03% 17.84% 20.18% 19.37% 13.88% (3.57%)
Average brokerage
commission rate+++ $.0543 -- -- -- -- -- -- -- -- --
* For a share outstanding throughout the period. Rounded to the nearest cent.
+ Commencing on April 5, 1989, IDS Life voluntarily limited total operating
expenses to 0.8% of average daily net assets. Had IDS Life not done so, the
ratio of expenses to average daily net assets would have been 0.81%, 0.82%
and 0.84% for the years ended April 30, 1991, 1990 and 1989 respectively.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
+++ Effective fiscal year 1997, 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.
</TABLE>
<PAGE>
PAGE 13
<TABLE>
<CAPTION>
Government Securities Portfolio
Financial highlights (continued)
Fiscal year ended April 30,
Per share income and capital changes*
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.98 $9.85 $9.88 $10.54 $9.69 $9.44 $8.88 $8.97 $9.00 $9.40
Income (loss) from investment operations:
Net investment income .59 .61 .59 .60 .63 .66 .67 .69 .64 .64
Net gains (losses)
(both realized
and unrealized) (.03) .13 (.03) (.56) .94 .28 .56 (.09) (.03) (.40)
Total from investment
operations .56 .74 .56 .04 1.57 .94 1.23 .60 .61 .24
Less distributions:
Dividends from net
investment income (.59) (.61) (.59) (.60) (.63) (.66) (.67) (.69) (.64) (.64)
Distributions from
realized gains (.08) -- -- (.10) (.09) (.03) -- -- -- --
Total distributions (.67) (.61) (.59) (.70) (.72) (.69) (.67) (.69) (.64) (.64)
Net asset value,
end of period $9.87 $9.98 $9.85 $9.88 $10.54 $9.69 $9.44 $8.88 $8.97 $9.00
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period
(in thousands) $13,377 $12,464 $11,440 $11,185 $9,619 $7,853 $6,314 $3,184 $2,773 $2,170
Ratio of expenses to
average daily net assets .80%+ .80%+ .80%+ .80%+ .80%+ .80%+ .80%+ .80%+ 1.12%+ 1.13%
Ratio of net income to
average daily net assets 5.88% 5.98% 6.02% 5.59% 6.10% 6.79% 7.24% 7.34% 7.19% 7.04%
Portfolio turnover rate
(excluding short-term
securities) 62% 38% 12% 32% 15% 11% 18% 18% 14% 13%
Total return++ 5.82% 7.45% 5.98% 0.16% 16.58% 10.20% 14.30% 6.50% 7.12% 2.77%
* For a share outstanding throughout the period. Rounded to the nearest cent.
+ Commencing on April 5, 1989, IDS Life voluntarily limited total operating
expenses to 0.8% of average daily net assets. Had IDS Life not done so, the
ratio of expenses to average daily net assets would have been 0.85%, 0.88%,
0.87, 0.85%, 0.88%, 0.92%, 1.08%, 1.12%, and 1.21% for the years ended April
30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 respectively.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
PAGE 14
<TABLE>
<CAPTION>
International Equity Portfolio
Financial highlights (continued)
Fiscal period ended April 30,
Per share income and capital changes*
1997 1996 1995**
<S> <C> <C> <C>
Net asset value, beginning of period $16.35 $10.29 $10.00
Income from investment operations:
Net investment income .14 .11 .15
Net gains (loss)(both
realized and unrealized) (.24) 6.08 .29
Total from investment operations (.10) 6.19 .44
Less distributions:
Dividends from net investment income (.15) (.13) (.15)
Distributions from realized gains (1.37) -- --
Total distributions (1.52) (.13) (.15)
Net asset value, end of period $14.73 $16.35 $10.29
Ratios/supplemental data
1997 1996 1995**
Net assets, end of period $125,874 $52,061 $ 8,497
(in thousands)
Ratio of expenses to average daily 1.05%*** 1.05%*** 1.00%+***
net assets
Ratio of net income to average daily
net assets .73% .92% 5.66%+
Portfolio turnover rate (excluding
short-term securities) 151% 172% 40%
Total return++ (.53%) 60.47% 4.38%
Average brokerage
commission rate+++ $0.0022 -- --
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Commencement of operations. Period from Oct. 28, 1994 to April 30, 1995.
***IDS Life voluntarily limited total operating expenses. Had IDS Life not done
so, the ratio of expenses to average daily net assets would have been 1.22%,
1.32% and 1.76% for the years ended April 30, 1997, 1996 and 1995,
respectively.
+ Adjusted to an annual basis.
++ Total return does not reflect the expenses that apply to the subaccounts or
the policies.
+++Effective fiscal year 1997, 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.
</TABLE>
The information in the preceding tables has been audited by KPMG Peat Marwick
LLP, independent auditors. The independent auditors' report and additional
information about the performance of the fund is contained in the fund's annual
report which may be obtained without charge.
<PAGE>
PAGE 15
Total returns
Average annual total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Equity Portfolio - 3.66% +15.97% +13.23%
S&P 500 +25.12% +17.06% +16.81%
Lipper Growth
and Income Fund
Index +18.52% +15.47% +12.50%
Cumulative total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Equity Portfolio - 3.66% +109.74% +246.81%
S&P 500 +25.12% +119.84% +372.85%
Lipper Growth
and Income Fund
Index +18.52% +105.27% +224.61%
Average annual total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Income Portfolio +8.05% +8.69% +8.43%
Lehman Aggregate
Bond Index +7.08% +7.35% +8.69%
Cumulative total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Income Portfolio +8.05% +51.73% +124.71%
Lehman Aggregate +7.08% +42.59% +130.14%
Bond Index
<PAGE>
PAGE 16
Average annual total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Managed Portfolio +12.46% +13.38% +13.26%
S&P 500 +25.12% +17.06% +16.81%
Lipper Balanced
Fund Index +13.60% +11.49% +10.37%
Cumulative total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Managed Portfolio +12.46% + 87.37% +247.84%
S&P 500 +25.12% +119.84% +372.85%
Lipper Balanced +13.60% + 72.25% +168.26%
Fund Index
Average annual total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Government
Securities Portfolio +5.82% +7.07% +7.59%
Merrill Lynch 1-3
Govt Index +6.09% +5.68% +7.28%
Cumulative total returns as of April 30, 1997
Purchase 1 year 5 years 10 years
made ago ago ago
Government
Securities Portfolio +5.82% +40.71% +107.79%
Merrill Lynch 1-3
Govt Index +6.09% +31.84% +102.00%
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Average annual total returns as of April 30, 1997
Purchase 1 year Since
made ago inception*
International Equity Portfolio -0.53% +22.59%
Goldman Sachs Extended Global
Market Index ex. U.S. -2.62% - 0.92%
Goldman Sachs Extended Global
Market Index ex. U.S. with
Japanese Modification +8.62% + 9.28%
Cumulative total returns as of April 30, 1997
Purchase 1 year Since
made ago inception*
International Equity Portfolio -0.53% +66.63%
Goldman Sachs Extended Global
Market Index ex. U.S. -2.62% - 2.29%
Goldman Sachs Extended Global
Market Index ex. U.S. with
Japanese Modification +8.62% +24.95%
*October 28, 1994
These examples show total returns from hypothetical investments in each
portfolio. These returns are compared to those of popular indexes for the same
periods. The results do not reflect the expenses that apply to the subaccounts
or the policies. Inclusion of these charges would reduce total return for all
periods shown.
For purposes of calculation, information about each portfolio assumes the
deduction of applicable portfolio expenses, makes no adjustments for taxes that
may have been paid on the reinvested income and capital gains, and covers a
period of widely fluctuating securities prices. Returns shown should not be
considered a representation of a portfolio's future performance.
The portfolios' investments may be different from those in the indexes. The
indexes reflect reinvestment of all distributions and changes in market prices,
but exclude brokerage commissions or other fees.
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of common stocks,
is frequently used as a general measure of market performance. However, the S&P
500 companies are generally larger than those in which the fund invests. The
index reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.
Lipper Growth and Income Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to
Equity Portfolio, although some funds in the
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PAGE 18
index may have somewhat different investment policies or
objectives.
Lehman Aggregate Bond Index is an unmanaged index made up of a representative
list of government and corporate bonds as well as asset-backed and
mortgage-backed securities. The index is frequently used as a general measure of
bond market performance. However, the securities used to create the index may
not be representative of the bonds held in the Income Portfolio. The index
reflects reinvestment of all distributions and changes in market prices, but
excludes brokerage commissions or other fees.
Lipper Balanced Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Managed
Portfolio, although some funds in the index may have somewhat different
investment policies or objectives.
Merrill Lynch 1-3 Year Government Index is an unmanaged list of all treasury and
agency securities. The index is used as a general measure of performance.
However, the securities used to create the index may not be representative of
the debt securities held in the Government Securities Portfolio.
The Goldman Sachs Extended Global Market Index ex. U.S. consists of market
capitalization-weighted combinations of the Financial Times/Standard & Poor's
(FT/S&P) Actuaries World Indices and the International Finance Corporation
Investable (IFCI) Indices. The FT/S&P Actuaries Indices include 26 primarily
developed countries and cover approximately 80% of the equity capitalization
within those countries. The IFCI Market Indices consist of an additional 46
primarily emerging market countries and covers between 60% and 70% of the total
capitalization in the markets included. The index is used here as a general
measure of performance. However, the securities used to create the index may not
be representative of the securities held in the International Equity Portfolio.
The Goldman Sachs Extended Global Market Index ex. U.S. with
Japanese Modification is calculated by Goldman, Sachs & Co. and is
based on the GS-EGMI World Index excluding U.S. region with Japan
included at 50% of its percentage weight. The weight of Japan is
reset each week and the weights of the remaining countries are
proportionally increased to make up for Japan's reduced weight.
The index is used here as a general measure of performance.
However, the securities used to create the index may not be
representative of the securities held in the International Equity
Portfolio.
Yield calculations
Income Portfolio and Government Securities Portfolio may calculate a 30-day
annualized yield by dividing:
o net investment income per share deemed earned during a 30-day
period by
o the net asset value per share on the last day of the period,
and
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PAGE 19
o converting the result to a yearly equivalent figure.
This yield calculation does not include any surrender charge or life insurance
policy charges, which would reduce the yield quoted.
A portfolio's yield varies from day to day, mainly because share values and net
asset values (which are calculated daily) vary in response to changes in
interest rates. Net investment income normally changes much less in the short
run. Thus, when interest rates rise and share values fall, yield tends to rise.
When interest rates fall, yield tends to follow.
Money Market Portfolio calculates annualized simple and compound yields based on
a seven-day period.
Past yields should not be considered an indicator of future yields.
Key terms
Average annual total return - The annually compounded rate of return over a
given time period (usually two or more years) - total return for the period
converted to an equivalent annual figure.
Capital gains or losses - Increase or decrease in value of the securities the
portfolio holds. Gains are realized when securities that have increased in value
are sold. A portfolio also may have unrealized gains or losses when securities
increase or decrease in value but are not sold.
Close of business - Normally 3 p.m. Central time each business day (any day the
New York Stock Exchange is open).
Distributions - Payments to the subaccounts of two types: investment income
(dividends) and realized net long-term capital gains (capital gains
distributions).
Investment income - Dividends and interest earned on securities held by the
portfolio.
Net asset value (NAV) - Value of a single share held by the portfolio. It is the
total market value of all of a portfolio's investments and other assets, less
any liabilities, divided by the number of shares outstanding.
The NAV is the price the subaccount receives when it sells shares. It usually
changes from day to day, and is calculated at the close of business. For the
Income and Government Securities Portfolios, NAV generally declines as interest
rates increase and rises as interest rates decline.
Total return - Sum of all returns for a given period, assuming reinvestment of
all distributions. Calculated by taking the total value of shares at the end of
the period (including shares acquired by reinvestment), less the price of shares
purchased at the beginning of the period.
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PAGE 20
Yield - Net investment income earned per share for a specified time period,
divided by the share price at the end of the period.
Investment policies and risks
Equity Portfolio - Under normal market conditions, Equity Portfolio invests
primarily in U.S. common stocks that the investment manager believes have
potential for capital appreciation. The companies in which the portfolio invests
may be well-seasoned or relatively new and lesser-known as long as the
investment manager believes the stock is attractive for capital growth.
The portfolio also may invest in convertible securities, derivative instruments,
money market instruments and foreign investments. Neither foreign investments
nor derivative instruments will exceed 25% of the portfolio's total assets.
Income Portfolio - Under normal market conditions, Income Portfolio primarily
invests in debt securities. At least 50% of its net assets are invested in
corporate bonds of the four highest ratings, in other corporate bonds the
investment manager believes have the same investment qualities, and in both U.S.
and foreign government bonds.
The portfolio also may invest in corporate bonds with lower ratings, convertible
securities, preferred stocks, derivative instruments, foreign investments and
money market instruments. Foreign investments are limited to 25% of the
portfolio's total assets.
Money Market Portfolio - Under normal market conditions, Money Market Portfolio
invests primarily in high-quality, short-term, marketable debt securities and
other money market instruments. For a description of money market securities,
see Appendix B in the SAI.
Because the portfolio seeks to maintain a constant net asset value of $1.00 per
share, capital appreciation is not expected to play a role in the portfolio's
returns, and dividend income alone will provide its entire investment return.
All money market instruments can change in value when interest rates or an
issuer's creditworthiness change dramatically. The portfolio cannot guarantee
that it will always be able to maintain a stable net asset value of $1.00 per
share. An investment in the portfolio is neither insured nor guaranteed by the
U.S. government.
Managed Portfolio - This portfolio invests in common and preferred stocks,
convertible securities, debt securities, derivative instruments, foreign
securities and money market instruments. The portfolio manager continuously will
adjust the mix of investments subject to the following three net asset limits:
1) up to 75% in equity securities (stocks), 2) up to 75% in bonds or other debt
securities, and 3) up to 100% in money market instruments. Stocks and debt
securities will be selected for capital appreciation, income or both. Money
market instruments will be selected for current income and safety of principal.
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PAGE 21
Of the assets invested in bonds, at least 50% will be in corporate bonds of the
four highest ratings, in other corporate bonds the investment manager believes
have the same investment qualities, and in government bonds. For the other 50%
invested in corporate bonds, there is no minimum rating requirement. Foreign
investments are limited to 25% of the portfolio's total assets.
Government Securities Portfolio - Under normal market conditions,
Government Securities Portfolio invests primarily in securities
that are issued or guaranteed by a U.S. governmental unit. The
portfolio also may invest in derivative instruments on U.S.
government securities. Shares of this portfolio are not insured or
guaranteed by the U.S. government or by any other person or entity.
International Equity Portfolio - Under normal market conditions, International
Equity Portfolio invests at least 65% of its total assets in foreign equity
securities having a potential for superior growth. Superior means portfolio
performance better than the Goldman Sachs Extended Global Market Index ex U.S.
The portfolio's investments will be primarily in common stocks and securities
convertible into common stocks of foreign issuers. However, if the investment
manager believes they have more potential for capital growth, the portfolio may
invest in bonds issued or guaranteed either by countries that are members of the
Organization for Economic Cooperation and Development (OECD) or by international
agencies such as the World Bank or the European Investment Bank. These bonds
will not be purchased unless, in the judgment of the investment manager, they
are comparable in quality to bonds rated AA by Standard & Poor's Corporation
(S&P).
The percentage of portfolio assets invested in particular countries or regions
of the world will change according to their political stability and economic
condition. Ordinarily, the portfolio will invest in companies domiciled in at
least three foreign countries. Please remember that the foreign securities
involve special risks.
Normally, investments in U.S. issuers will constitute less than 20%
of the portfolio's investments. However, as a temporary measure,
the portfolio may invest any portion of its assets in securities of
U.S. issuers that appear to have greater potential for superior
growth than foreign securities. U.S. investments would include
common stocks, convertible securities and corporate and government
bonds. The bonds must bear one of the four highest ratings given
by Moody's or S&P or must be of comparable quality.
The portfolio also may invest in money market instruments and derivative
instruments. No more than 5% of the portfolio's total assets may be invested in
options on individual securities.
The various types of investments the portfolio managers use to achieve
investment performance are described in more detail in the next section and in
the SAI.
<PAGE>
PAGE 22
Facts about investments and their risks
Common stocks: Stock prices are subject to market fluctuations. Stocks of
larger, established companies that pay dividends may be less volatile than the
stock market as a whole. Stocks of smaller or foreign companies or stocks of
companies experiencing significant growth and operating in areas of financial
and technological change may be subject to more abrupt or erratic price
movements than stocks of larger, established companies or the stock market as a
whole. Also, small companies often have limited product lines, smaller markets
or fewer financial resources. Therefore, some of the securities in which a
portfolio invests involve substantial risk and may be considered speculative.
Convertible securities: These securities generally are preferred stocks or bonds
that can be exchanged for other securities, usually common stock, at prestated
prices. When the trading price of the common stock makes the exchange likely,
the convertible securities trade more like common stock.
Debt securities: The price of bonds generally falls as interest rates increase,
and rises as interest rates decrease. The price of an investment grade bond also
fluctuates if its credit rating is upgraded or downgraded.
The price of bonds below investment grade may react more to the ability of a
company to pay interest and principal when due than to changes in interest
rates. They have greater price fluctuations, are more likely to experience a
default, and sometimes are referred to as "junk bonds." Reduced market liquidity
for these bonds may occasionally make it more difficult to value them. In
valuing bonds, a portfolio relies both on independent rating agencies and the
investment manager's credit analysis. Securities that are subsequently
downgraded in quality may continue to be held and will be sold only when the
portfolio's investment manager believes it is advantageous to do so.
Bond ratings of holdings for fiscal year ended
April 30, 1997 for Income Portfolio
S&P Rating Protection of Percent of net
Percent of (or Moody's principal and assets in unrated
net assets equivalent) interest securities*
42.02% AAA Highest quality 0.13%
4.22 AA High quality --
11.19 A Upper medium grade 0.07
16.90 BBB Medium grade 0.10
11.39 BB Moderately speculative --
6.39 B Speculative 0.04
0.31 CCC Highly speculative 0.02
-- CC Poor quality --
-- C Lowest quality --
-- D In default --
1.03 unrated Unrated securities 0.67
* AEFC's assessment of unrated securities.
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PAGE 23
Bond ratings of holdings for fiscal year ended
April 30, 1997 for Managed Portfolio
S&P Rating Protection of Percent of net
Percent of (or Moody's principal and assets in unrated
net assets equivalent) interest securities*
17.44% AAA Highest quality 0.09%
1.34 AA High quality --
3.33 A Upper medium grade 0.02
3.59 BBB Medium grade 0.03
6.17 BB Moderately speculative --
4.77 B Speculative 0.02
0.46 CCC Highly speculative 0.14
-- CC Poor quality --
-- C Lowest quality --
-- D In default --
0.79 unrated Unrated securities 0.49
* AEFC's assessment of unrated securities.
(See Appendix G to the SAI for further information regarding ratings.)
Debt securities sold at a deep discount: Some bonds are sold at deep discounts
because they do not pay interest until maturity. They include zero coupon bonds
and PIK (pay-in-kind) bonds. To comply with tax laws, a portfolio has to
recognize a computed amount of interest income and pay dividends to shareholders
even though no cash has been received. In some instances, a portfolio may have
to sell securities to have sufficient cash to pay the dividends.
Mortgage-backed securities: All portfolios except Money Market may invest in
U.S. government securities representing part ownership of pools of mortgage
loans. A pool, or group, of mortgage loans issued by such lenders as mortgage
bankers, commercial banks and savings and loan associations, is assembled and
mortgage pass-through certificates are offered to investors through securities
dealers. In pass-through certificates, both principal and interest payments,
including prepayments, are passed through to the holder of the certificate.
Prepayments on underlying mortgages result in a loss of anticipated interest,
and the actual yield (or total return) to the portfolio, which is influenced by
both stated interest rates and market conditions, may be different than the
quoted yield on the certificates.
Foreign investments: Securities of foreign companies and governments may be
traded in the United States, but often they are traded only on foreign markets.
Frequently, there is less information about foreign companies and less
government supervision of foreign markets. Foreign investments are subject to
currency fluctuations and political and economic risks of the countries in which
the investments are made including the possibility of seizure or nationalization
of companies, imposition of withholding taxes on income, establishment of
exchange controls or adoption of other restrictions that might affect an
investment adversely. If an investment is made in a foreign market, the local
currency must be purchased. This is done by using a forward contract in which
the price of the foreign currency in U.S. dollars is established on the
<PAGE>
PAGE 24
date the trade is made, but delivery of the currency is not made until the
securities are received. As long as a portfolio holds foreign currencies or
securities valued in foreign currencies, the price of a portfolio share will be
affected by changes in the value of the currencies relative to the U.S. dollar.
Because of the limited trading volume in some foreign markets, efforts to buy or
sell a security may change the price of the security, and it may be difficult to
complete the transaction. The limited liquidity and price fluctuations in
emerging markets could make investments in developing countries more volatile.
Derivative instruments: For all portfolios except Money Market, the portfolio
managers may use derivative instruments in addition to securities to achieve
investment performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash reserves while
remaining fully invested, to offset anticipated declines in values of
investments, to facilitate trading, to reduce transaction costs, or to pursue
higher investment returns. Derivative instruments are characterized by requiring
little or no initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies, or an index. A
number of strategies or combination of instruments can be used to achieve the
desired investment performance characteristics. A small change in the value of
the underlying security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments allow a portfolio
manager to change the investment performance characteristics very quickly and at
lower costs. Risks include losses of premiums, rapid changes in prices, defaults
by other parties, and inability to close such instruments. A portfolio will use
derivative instruments only to achieve the same investment performance
characteristics it could achieve by directly holding those securities and
currencies permitted under the investment policies. The portfolios' custodian
will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolios' obligations. No more than 5% of each portfolio's net assets can
be used at any one time for good faith deposits on futures and premiums for
options on futures that do not offset existing investment positions. For further
information, see the options and futures appendixes in the SAI.
Securities and derivative instruments that are illiquid: Illiquid means the
security or derivative instrument cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. All securities and derivative instruments,
however, can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. Each portfolio manager
will follow guidelines established by the board of directors and consider
relevant factors such as the nature of the security and the number of likely
buyers when determining whether a security is illiquid. No more than 10% of each
portfolio's net assets will be held in securities and derivative instruments
that are illiquid.
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PAGE 25
Money market instruments: Short-term debt securities rated in the top two grades
are used to meet daily cash needs and at various times to hold assets until
better investment opportunities arise. Generally less than 25% of each of
Equity, Income, Managed, Government Securities and International Equity
Portfolio's assets are in these money market instruments. However, for temporary
defensive purposes these investments could exceed that amount for a limited
period of time.
Securities of other investment companies: Equity, Income and International
Equity Portfolio may invest in securities of investment companies by purchase in
the open market where the dealer's or sponsor's profit is the regular
commission. If any such investment is made, not more than 5% of the portfolio's
net assets (10% for International Equity Portfolio) will be so invested. To the
extent the portfolio were to make such investments, you may be subject to
duplicative advisory, administrative and distribution fees.
The investment policies described above may be changed by the board of
directors.
Lending portfolio securities: Each portfolio may lend its securities to earn
income so long as borrowers provide collateral equal to the market value of the
loans. The risks are that borrowers will not provide collateral when required or
return securities when due. Unless shareholders approve otherwise, loans may not
exceed 30% of a portfolio's net assets.
Alternative investment option
In the future, the board of the fund may determine for operating efficiencies to
use a master/feeder structure. Under that structure, the fund's investment
portfolios would be managed by another investment company with the same goal as
the fund, rather than being invested directly in a portfolio of securities.
Valuing assets
Money Market Portfolio's securities are valued at amortized cost.
In valuing assets of Equity, Income, Managed, Government Securities and
International Equity Portfolios:
o Securities and assets with available market values are valued
on that basis.
o Securities maturing in 60 days or less are valued at amortized
cost.
o Securities and assets without readily available market values are valued
according to methods selected in good faith by the board of directors.
o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.
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PAGE 26
How to invest, transfer or redeem shares
How to invest
You may invest in the portfolios of the fund only by buying a variable life
insurance policy offered by IDS Life or IDS Life of New York. Your financial
advisor will help you fill out and submit an application. For further
information concerning acceptance of your application, see the variable life
insurance policy prospectus.
How to transfer among subaccounts
You can transfer all or part of your value in a subaccount to one or more of the
other subaccounts. That way, you transfer to a portfolio with a different
investment objective. Please refer to your variable life insurance policy
prospectus for more information about transfers among subaccounts.
Redeeming shares
The fund will buy (redeem) any shares presented by the subaccounts. Policy
surrender details are described in your variable life insurance policy
prospectus. Payment generally will be made within seven days of the surrender
request. The amount may be more or less than the amount invested. Shares will be
redeemed at net asset value at the close of business on the day the request is
accepted at the Minneapolis office for IDS Life or at the Albany office for IDS
Life of New York. If the request arrives after the close of business, the price
per share will be the net asset value at the close of business on the next
business day.
Distributions and taxes
The fund distributes to shareholders (the subaccounts) net investment income and
net capital gains. It does so to qualify as a regulated investment company and
to avoid paying corporate income and excise taxes.
Dividend and capital gain distributions
The fund distributes its net investment income (dividends and interest earned on
securities held by the fund, less operating expenses) to shareholders (the
subaccounts) at the end of each calendar quarter for Equity, Managed and
International Equity Portfolios. For Income, Money Market and Government
Securities Portfolios, net investment income is distributed monthly. Short- term
capital gains distributed are included in net investment income. Net realized
capital gains, if any, from selling securities are distributed at the end of the
calendar year. Before they are distributed, both net investment income and net
capital gains are included in the value of each share. After they are
distributed, the value of each share drops by the per-share amount of the
distribution. (Since the distributions are reinvested, the total value of the
holdings will not change.) The reinvestment price is the net asset value at
close of business on the day the distribution is paid.
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PAGE 27
Taxes
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under section 817(h) of the Internal Revenue Code.
Each portfolio intends to comply with these requirements.
Federal income taxation of separate accounts, life insurance companies and
variable life insurance policies is discussed in the variable life insurance
policy prospectus.
Income received by the International Equity Portfolio may be subject to foreign
tax and withholding. Tax conventions between certain countries and the United
States may reduce or eliminate these taxes.
How the fund is organized
IDS Life Series Fund, Inc. is a series mutual fund. The fund is a
diversified, open-end management investment company, as defined in
the Investment Company Act of 1940. It was incorporated in
Minnesota on May 8, 1985. All portfolios began operations on Jan.
20, 1986 except International Equity Portfolio which began
operations on Oct. 28, 1994. The fund headquarters are at IDS
Tower 10, Minneapolis, MN 55440-0010.
Shares
The fund is owned by the subaccounts, its shareholders. Each of the portfolios
issues its own series of common stock. All shares issued by each portfolio are
of the same class--capital stock. Par value is $.001 per share. Both full and
fractional shares can be issued. The shares of each portfolio making up IDS Life
Series Fund, Inc. represent an interest in that portfolio's assets only (and
profits or losses) and, in the event of liquidation, each share of a portfolio
would have the same rights to dividends and assets as every other share of that
portfolio.
Voting rights
For a discussion of the rights of policy owners concerning the voting of shares
held by the subaccounts, please see the variable life insurance policy
prospectus. Each share of a portfolio has one vote. On an issue affecting a
particular portfolio, its shares vote as a separate series. On some issues, all
shares of the fund vote together as one series. All shares have cumulative
voting when voting on the election of directors.
The goals of the portfolios can be changed only if the majority of the
outstanding shares agree. The vote of a majority of the outstanding voting
shares means the vote:
o of 67% or more of the voting shares present at such meeting, if the
holders of more than 50% of the outstanding voting shares are present or
represented by proxy; or
o of more than 50% of the outstanding voting shares, whichever
is less.
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PAGE 28
Shareholder meetings
The fund does not hold annual shareholder meetings. However, the directors may
call meetings at their discretion, or on demand by holders of 10% or more of the
outstanding shares, to elect or remove directors.
Portfolio managers
Equity Portfolio
Louis Giglio joined AEFC in January of 1994 and serves as portfolio manager. He
was appointed to manage this portfolio in April 1997. He also serves as
portfolio manager for Strategist World Technologies Fund. Prior to that, he had
eight years of experience as a financial analyst with Bear, Stearns & Co. Inc.,
covering the microcomputer software and computer services industries.
Income Portfolio
Lorraine Hart joined AEFC in 1984 and serves as vice president insurance
investments. She has managed this portfolio since 1991. She also manages the
invested asset portfolios of IDS Life, IDS Life of New York, and American
Enterprise Life Insurance Company.
Money Market Portfolio
Terry Fettig joined AEFC in 1986 and serves as portfolio manager. He has managed
this Fund since, 1996. From 1986 to 1992 he was a fixed income securities
analyst and from 1992 to 1993 he was an associate portfolio manager. He also
serves as portfolio manager of IDS Cash Management Fund, IDS Life Moneyshare
Fund, IDS Tax-Free Money Fund and IDS Intermediate Tax-Exempt Fund.
Managed Portfolio
Scott Schroepfer joined AEFC in 1990 and serves as portfolio manager. He has
managed the fixed income portfolio of Managed Portfolio since 1995 and as
associate portfolio manager since 1994. Prior to that he served as a high-yield
corporate bond analyst.
Anne Obermeyer joined AEFC in 1984 and currently serves as portfolio manager.
She served as an associate portfolio manager with the growth and income team
from 1996 to 1997 and served as an equity analyst since 1992.
Government Securities Portfolio
Colin Lundgren joined AEFC in 1986 and serves as portfolio manager. He has
managed this portfolio since January 1997. He served as Associate Portfolio
Manager for IDS Advisory and Wealth Management Service from 1995 to 1997. Prior
to that he has held various positions of responsibility for the development and
operation of enhanced equity index products, fixed income quantitative analysis,
and mortgage sector analysis.
International Equity Portfolio
Richard Lazarchic joined AEFC in 1979 and serves as portfolio manager. He was
associate portfolio manager of IDS Mutual from 1988 through 1989 and served as
portfolio manager of IDS Utilities Income Fund from 1989 through mid 1993 and
Diversified Equity
<PAGE>
PAGE 29
Income Fund from 1990 through mid 1994. He also serves as portfolio manager of
IDS Managed Retirement Fund.
Directors and officers
Shareholders elect a board of directors that oversees the operations of the fund
and chooses its officers. Its officers are responsible for day-to-day business
decisions based on policies set by the board. The board has named an executive
committee that has authority to act on its behalf between meetings.
On April 30, 1997 the fund's directors and officers did not own any shares of
the fund.
Investment manager
The fund pays IDS Life for managing its portfolio, providing administrative
services and serving as transfer agent.
Under its Investment Management and Services Agreement, IDS Life determines
which securities will be purchased, held or sold (subject to the direction and
control of the fund's board of directors). For these services the fund pays IDS
Life a fee based on the average daily net assets of the portfolios at the
following rates: 0.7% on an annual basis for Equity, Income, Managed and
Government Securities Portfolios, 0.5% for Money Market Portfolio, and 0.95% for
International Equity Portfolio.
Under the Agreement, the fund also pays taxes, brokerage commissions and
nonadvisory expenses. However, IDS Life has agreed to a voluntary limit of the
annual charge of 0.1% of the average daily net assets of the fund for these
nonadvisory expenses. Total net fees and expenses incurred after the limitations
by each portfolio amounted to .76%, .80%, .60%, .75%, .80% and 1.05% of average
daily net assets for Equity, Income, Money Market, Managed, Government
Securities and International Equity Portfolios; respectively for the period
ended April 30, 1997.
IDS Life reserves the right to discontinue limiting these nonadvisory expenses
at 0.1%. However, its present intention is to continue the limit until the time
that actual expenses are less than the limit.
Investment advisory agreement
IDS Life and AEFC have an Investment Advisory Agreement that calls for IDS Life
to pay AEFC a fee for investment advice about the fund's portfolios. The fee
paid by IDS Life is 0.25% of Equity, Income, Money Market, Managed and
Government Securities Portfolios' average net assets for the year. The fee paid
by IDS Life is 0.35% of International Equity Portfolio's average net assets for
the year. AEFC also executes purchases and sales and negotiates brokerage as
directed by IDS Life.
<PAGE>
PAGE 30
About IDS Life and American Express Financial Corporation
General information
IDS Life Series Fund is managed by IDS Life, a wholly owned subsidiary of AEFC,
which itself is a wholly owned subsidiary of the American Express Company
(American Express), a financial services company headquartered in New York City.
IDS Life is a stock life insurance company organized in 1957 under the laws of
the State of Minnesota and located at IDS Tower 10, Minneapolis, MN 55440-0010.
IDS Life conducts a conventional life insurance business in the District of
Columbia and all states except New York.
The AEFC family of companies offers not only insurance and annuities, but also
mutual funds, investment certificates and a broad range of financial management
services.
AEFC has been providing financial services since 1894. Besides managing
investments for all publicly offered funds in the IDS MUTUAL FUND GROUP, AEFC
also manages investments for itself and its subsidiaries, IDS Certificate
Company and IDS Life. Total assets under management on April 30, 1997 were more
than $149 billion.
American Express Financial Advisors Inc. serves individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 planners.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
<PAGE>
PAGE 31
STATEMENT OF ADDITIONAL INFORMATION
for
IDS LIFE SERIES FUND, INC.
Equity Portfolio
Government Securities Portfolio
Income Portfolio
International Equity Portfolio
Managed Portfolio
Money Market Portfolio
June 27, 1997
This Statement of Additional Information is not a prospectus. It should be read
together with the fund's prospectus which may be obtained from your financial
advisor, or by writing or calling IDS Life Series Fund, Inc. at the address or
telephone number below.
International Equity Portfolio is not available for investment under all life
insurance policies. Please see the prospectus for your policy to see if it is
available.
The date of this Statement of Additional Information is June 27, 1997, and is to
be used with the fund's Prospectus dated June 27, 1997 and the fund's Annual
Report for the fiscal year ended April 30, 1997.
IDS Life Series Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
(612) 671-3733
800-437-0602
TTY: 800-285-8846
New York Service:
(518) 869-8613
<PAGE>
PAGE 32
TABLE OF CONTENTS
Goals and Investment Policies........................See Prospectus
Additional Investment Policies................................p. 3
Portfolio Transactions........................................p. 22
Brokerage Commissions Paid to
Brokers Affiliated with IDS Life..............................p. 24
Calculation of Total Return...................................p. 25
Calculation of Yield..........................................p. 26
Valuing Each Portfolio's Shares...............................p. 27
Investing in the Fund.........................................p. 30
Redeeming Shares..............................................p. 30
Investment Management and Other Services......................p. 31
Management of the Fund........................................p. 32
Custodian.....................................................p. 34
Independent Auditors..........................................p. 35
Financial Statements..............................See Annual Report
Appendix A: Foreign Currency Transactions, for
Investments of Equity, Income, Managed
and International Equity Portfolios..............p. 36
Appendix B: Description of Money Market Securities, for
Investments of all Portfolios except
Government Securities............................p. 41
Appendix C: Options and Stock Index Futures Contracts,
for Investments of Equity, Managed and
International Equity Portfolios..................p. 43
Appendix D: Options and Interest Rate Futures Contracts,
for Investments of Income, Managed and
Government Securities Portfolios.................p. 51
Appendix E: Mortgage-Backed Securities and Additional
Information on Investment Policies for all
Portfolios except Money Market...................p. 57
Appendix F: Dollar-Cost Averaging............................p. 60
Appendix G: Description of Corporate Bond Ratings............p. 61
<PAGE>
PAGE 33
ADDITIONAL INVESTMENT POLICIES
In addition to the investment goals and policies presented in the prospectus,
each portfolio has the investment policies stated below.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of Equity Portfolio agree to
a change, Equity Portfolio will not:
'Underwrite securities of other issuers. However, this shall not preclude the
purchase of securities for investment, on original issue or otherwise, and shall
not preclude the acquisition of portfolio securities under circumstances where
the portfolio would not be free to sell them without being deemed an underwriter
for purposes of the Securities Act of 1933 (1933 Act) and without registration
of such securities or the filing of a notification under that Act, or the taking
of similar action under other securities laws relating to the sale of
securities.
'Buy securities of an issuer if the officers and directors of the portfolio,
American Express Financial Corporation (AEFC) and IDS Life Insurance Company
(IDS Life) hold more than a certain percent of the issuer's outstanding
securities. If the holdings of all officers and directors of the portfolio and
of AEFC who own more than 0.5% of an issuer's securities are added together and
if in total they own more than 5%, the portfolio will not purchase securities of
that issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business.
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Make cash loans if the total commitment amount exceeds 5% of the portfolio's
total assets.
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers. In making such loans, the portfolio gets
the market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities goes up, the
portfolio will get additional collateral on a daily basis. The risks are that
the borrower may not provide additional collateral when required or return the
securities when due. A loan will not be made unless the opportunity for
additional
<PAGE>
PAGE 34
income outweighs the risks. During the existence of the loan, the portfolio
receives cash payments equivalent to all interest or other distributions paid on
the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities. Up to 25% of the portfolio's total assets may be
invested without regard to this 5% limitation.
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
'Concentrate its investments in any particular industry, but reserves freedom of
action to do so provided that not more than 25% of its assets, taken at cost,
may be so invested at any one time.
'Purchase securities of any issuer if immediately after and as a result of such
purchase the Portfolio would own more than 10% of the outstanding voting
securities of such issuer.
Unless changed by the board of directors, the following policies apply to Equity
Portfolio:
The portfolio will not invest in companies for the purpose of, or with the
effect of, acquiring control.
The portfolio will not buy on margin or sell short.
The portfolio will not invest in securities of any investment company except in
the open market where no commission or profit to a sponsor or dealer results
from such purchase other than customary broker's commission. The portfolio does
not intend to invest in such securities but may do so to the extent of not more
than 5% of its total assets (taken at market or other current value). The
portfolio may acquire limited amounts of securities of one or more investment
companies as permitted by the Investment Company Act of 1940 (1940 Act), in
connection with the acquisition of or merger with such companies. Except for
these instances, the portfolio will not purchase securities of investment
companies.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities.
<PAGE>
PAGE 35
When-issued securities or forward commitments are subject to market fluctuations
and they may affect the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or the equivalent and may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934 and with
commercial banks. A risk of a repurchase agreement is that if the seller seeks
the protection of the bankruptcy laws, the portfolio's ability to liquidate the
security involved could be impaired.
The portfolio does not intend to invest more than 2% of its net assets in
warrants that are not listed on a national securities exchange. In no event will
the investment in warrants exceed 5% of the portfolio's net assets. A warrant is
a right to buy a certain security at a set price for a certain period of time
and is freely traded in the market.
The portfolio may invest in Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities. In determining
the liquidity of Rule 144A securities, IOs and POs, the investment manager,
under guidelines established by the board of directors, will consider any
relevant factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of marketplace trades.
The portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the investment
manager, under guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.
<PAGE>
PAGE 36
The portfolio will not invest in securities which are not readily marketable
(including restricted securities and repurchase agreements over 7 days) without
registration or the filing of a notification under the 1933 Act, or the taking
of similar action under other securities laws relating to the sale of
securities, if immediately after the making of any such investment more than 10%
of the portfolio's net assets (taken at market or other current value) are
invested in such securities.
The portfolio will not invest in interests in oil, gas and other mineral
exploration or development programs.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the purpose of having those assets managed as part of a combined
pool.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of Government Securities
Portfolio agree to a change, Government
Securities Portfolio will not:
'Act as an underwriter (sell securities for others). However, under the
securities laws, the portfolio may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them.
'Buy securities of an issuer if the officers and directors of the portfolio,
AEFC and IDS Life hold more than a certain percent of the issuer's outstanding
securities. If the holdings of all officers and directors of the portfolio and
of AEFC who own more than 0.5% of an issuer's securities are added together and
if in total they own more than 5%, the portfolio will not purchase securities of
that issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business.
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Make cash loans if the total commitment amount exceeds 5% of the portfolio's
total assets.
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers.
<PAGE>
PAGE 37
In making such loans, the portfolio gets the market price in cash, U.S.
government securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board of directors. If the
market price of the loaned securities goes up, the portfolio will get additional
collateral on a daily basis. The risks are that the borrower may not provide
additional collateral when required or return the securities when due. A loan
will not be made unless the opportunity for additional income outweighs the
risks. During the existence of the loan, the portfolio receives cash payments
equivalent to all interest or other distributions paid on the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities. Up to 25% of the portfolio's total assets may be
invested without regard to this 5% limitation.
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
'Make a loan of any part of its assets to AEFC, to the officers and directors of
AEFC or to its own officers and directors.
'Buy any property or security (other than securities issued by the portfolio)
from any officer or director of AEFC or the Fund, nor will the portfolio sell
any property or security to them.
'Issue senior securities, except that this restriction shall not be deemed to
prohibit the portfolio from borrowing money from banks, lending its securities,
or entering into repurchase agreements or options or futures contracts.
Unless changed by the board of directors, the following policies will apply to
Government Securities Portfolio:
The portfolio will not invest in illiquid securities if, immediately after
making such an investment, more than 10% of the portfolio's net assets, at
market, would be invested in such securities.
The portfolio will not invest for the purpose of exercising control or
management.
The portfolio will not buy on margin or sell short, except that it may enter
into interest rate futures contracts.
<PAGE>
PAGE 38
The portfolio will not invest in securities of investment companies except by
purchase in the open market where the dealer's or sponsor's profit is just the
regular commission.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities. When-issued securities
or forward commitments are subject to market fluctuations and they may affect
the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or the equivalent and may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934 and with
commercial banks. A risk of a repurchase agreement is that if the seller seeks
the protection of the bankruptcy laws, the portfolio's ability to liquidate the
security involved could be impaired.
The portfolio may invest in repurchase agreements. Repurchase agreements involve
investment in debt securities whereby the seller agrees to repurchase the
securities at cost plus an agreed to interest rate within a specified time. A
risk of a repurchase agreement is that if the party with whom this portfolio has
entered into such an agreement seeks the protection of bankruptcy laws, the
portfolio's ability to liquidate the security involved could be temporarily
impaired, and it subsequently may incur a loss if the value of the security
declines, or if the other party defaults on its obligation. There also is the
risk that the portfolio may be delayed or prevented from exercising its rights
to dispose of the collateral securities.
The portfolio may invest in Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities. In determining
the liquidity
<PAGE>
PAGE 39
of Rule 144A securities, IOs and POs, the investment manager, under guidelines
established by the board of directors, will consider any relevant factors
including the frequency of trades, the number of dealers willing to purchase or
sell the security and the nature of marketplace trades.
The portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the investment
manager, under guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.
The portfolio will not pledge or mortgage its assets beyond 15% of the cost of
its gross assets. For purposes of this restriction, collateral arrangements with
respect to margin for interest rate futures contracts are not deemed to be a
pledge of assets.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the same purpose of having those assets managed as part of a
combined pool.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of Income Portfolio agree to
a change, Income Portfolio will not:
'Underwrite securities of other issuers. However, this shall not preclude the
purchase of securities for investment, on original issue or otherwise, and shall
not preclude the acquisition of portfolio securities under circumstances where
the portfolio would not be free to sell them without being deemed an underwriter
for purposes of the Securities Act of 1933 (1933 Act) and without registration
of such securities or the filing of a notification under that Act, or the taking
of similar action under other securities laws relating to the sale of
securities.
'Buy securities of an issuer if the officers and directors of the portfolio,
AEFC and IDS Life hold more than a certain percent of the issuer's outstanding
securities. If the holdings of all officers and directors of the portfolio and
of AEFC who own more than 0.5% of an issuer's securities are added together and
if in total they own more than 5%, the portfolio will not purchase securities of
that issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business.
<PAGE>
PAGE 40
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Make cash loans if the total commitment amount exceeds 5% of the portfolio's
total assets.
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers. In making such loans, the portfolio gets
the market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities goes up, the
portfolio will get additional collateral on a daily basis. The risks are that
the borrower may not provide additional collateral when required or return the
securities when due. A loan will not be made unless the opportunity for
additional income outweighs the risks. During the existence of the loan, the
portfolio receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities. Up to 25% of the portfolio's total assets may be
invested without regard to this 5% limitation.
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
'Concentrate its investments in any particular industry, but reserves freedom of
action to do so provided that not more than 25% of its assets, taken at cost,
may be so invested at any one time.
'Purchase securities of any issuer if immediately after and as a result of such
purchase the portfolio would own more than 10% of the outstanding voting
securities of such issuer.
Unless changed by the board of directors, the following policies apply to Income
Portfolio:
The portfolio will not invest in companies for the purpose of, or with the
effect of, acquiring control.
The portfolio will not buy on margin or sell short.
<PAGE>
PAGE 41
The portfolio will not invest in securities of any investment company except in
the open market where no commission or profit to a sponsor or dealer results
from such purchase other than customary broker's commission. The portfolio does
not intend to invest in such securities but may do so to the extent of not more
than 5% of its total assets (taken at market or other current value). The
portfolio may acquire limited amounts of securities of one or more investment
companies as permitted by the Investment Company Act of 1940 (1940 Act), in
connection with the acquisition of or merger with such companies. Except for
these instances, the portfolio will not purchase securities of investment
companies.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities. When-issued securities
or forward commitments are subject to market fluctuations and they may affect
the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or the equivalent and may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934 and with
commercial banks. A risk of a repurchase agreement is that if the seller seeks
the protection of the bankruptcy laws, the portfolio's ability to liquidate the
security involved could be impaired.
The portfolio may invest in Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities. In determining
the liquidity of Rule 144A securities, IOs and POs, the investment manager,
under guidelines established by the board of directors, will consider any
relevant factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of marketplace trades.
<PAGE>
PAGE 42
The portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the investment
manager, under guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.
The portfolio will not invest in securities which are not readily marketable
(including restricted securities and repurchase agreements over 7 days) without
registration or the filing of a notification under the 1933 Act, or the taking
of similar action under other securities laws relating to the sale of
securities, if immediately after the making of any such investment more than 10%
of the portfolio's net assets (taken at market or other current value) are
invested in such securities.
The portfolio will not invest in interests in oil, gas and other mineral
exploration or development programs.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the purpose of having those assets managed as part of a combined
pool.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of International Equity
Portfolio agree to a change, International
Equity Portfolio will not:
'Act as an underwriter (sell securities for others). However, under the
securities laws, the portfolio may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them. It may be
considered an underwriter under securities laws when its sells restricted
securities.
'Buy securities of an issuer if the directors and officers of the portfolio,
AEFC and IDS Life hold more than a certain percentage of the issuer's
outstanding securities. If the holdings of all officers and directors of the
portfolio, AEFC and IDS Life who own more than 0.5% of an issuer's securities
are added together, and if in total they own more than 5%, the portfolio will
not purchase securities of that issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business.
<PAGE>
PAGE 43
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Make cash loans if the total commitment amount exceeds 5% of the portfolio's
total assets.
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers. In making such loans, the portfolio gets
the market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities goes up, the
portfolio will get additional collateral on a daily basis. The risks are that
the borrower may not provide additional collateral when required or return the
securities when due. A loan will not be made unless the opportunity for
additional income outweighs the risks. During the existence of the loan, the
portfolio receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities. Up to 25% of the portfolio's total assets may be
invested without regard to this 5% limitation.
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
'Concentrate in any one industry. According to the present interpretation by the
Securities and Exchange Commission (SEC), this means no more than 25% of a
portfolio's total assets, based on current market value at time of purchase, can
be invested in any one industry.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'Make a loan of any part of its assets to AEFC, to its directors
and officers or to its own directors and officers.
<PAGE>
PAGE 44
'Issue senior securities, except to the extent that borrowing from banks,
lending its securities, or entering into repurchase agreements or options or
futures contracts may be deemed to constitute issuing a senior security.
Unless changed by the board of directors, the following policies apply to
International Equity Portfolio:
The portfolio will not invest more than 10% of the portfolio's net assets in
illiquid securities and derivative instruments that are illiquid. For purposes
of this policy illiquid securities include some privately placed securities,
public securities and Rule 144A securities that for one reason or another may no
longer have a readily available market, repurchase agreements with maturities
greater than seven days, non-negotiable fixed-time deposits and over-the-counter
options.
The portfolio will not invest in a company to control or manage it.
The portfolio will not buy on margin or sell short, but the portfolio may make
margin payments in connection with transactions in stock index futures
contracts.
The portfolio will not invest more than 10% of its net assets, at market, in
securities of investment companies. To the extent the portfolio were to make
such investments, the shareholders may be subject to duplicate advisory,
administrative and distribution fees.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities. When-issued securities
or forward commitments are subject to market fluctuations and they may affect
the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or
<PAGE>
PAGE 45
Standard & Poor's Corporation or the equivalent and may use repurchase
agreements with broker-dealers registered under the Securities Exchange Act of
1934 and with commercial banks. A risk of a repurchase agreement is that if the
seller seeks the protection of the bankruptcy laws, the portfolio's ability to
liquidate the security involved could be impaired.
The portfolio will not pledge or mortgage its assets beyond 15% of the cost of
its total assets. If the portfolio were ever to do so, valuation of its assets
would be based on market value and the portfolio would comply with applicable
state laws, one of which requires 90% of the offering price to consist of net
assets that are not pledged or mortgaged. For the purpose of this restriction,
collateral arrangements with respect to margin for futures contracts are not
deemed to be a pledge of assets.
The portfolio may invest in Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities. In determining
the liquidity of Rule 144A securities, IOs and POs, the investment manager,
under guidelines established by the board of directors, will consider any
relevant factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of marketplace trades.
The portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the investment
manager, under guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the purpose of having those assets managed as part of a combined
pool.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of Managed Portfolio agree
to a change, Managed Portfolio will not:
'Act as an underwriter (sell securities for others). However, under the
securities laws, the portfolio may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
<PAGE>
PAGE 46
'Buy securities of an issuer if the officers and directors of the portfolio,
AEFC and IDS Life hold more than a certain percentage of the issuer's
outstanding securities. If the holdings of all officers and directors of the
portfolio and of AEFC who own more than 0.5% of an issuer's securities are added
together and if in total they own more than 5%, the portfolio will not purchase
securities of that issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business.
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Make cash loans if the total commitment amount exceeds 5% of the portfolio's
total assets.
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers. In making such loans, the portfolio gets
the market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities goes up, the
portfolio will get additional collateral on a daily basis. The risks are that
the borrower may not provide additional collateral when required or return the
securities when due. A loan will not be made unless the opportunity for
additional income outweighs the risks. During the existence of the loan, the
portfolio receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities. Up to 25% of this Portfolio's total assets may be
invested without regard to this 5% limitation.
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
<PAGE>
PAGE 47
'Concentrate in any one industry. (According to the present interpretation of
the staff of the Securities and Exchange Commission this means no more than 25%
of the portfolio's total assets, based on current market value at the time of
purchase, can be invested in any one industry).
'Make a loan of any part of its assets to AEFC, to the officers and directors of
AEFC or to its own officers and directors.
'Issue senior securities, except that this restriction shall not be deemed to
prohibit the portfolio from borrowing money from banks, lending its securities,
or entering into repurchase agreements or options or futures contracts.
Unless changed by the board of directors, the following policies apply to
Managed Portfolio:
The portfolio will not invest in a company to get control or manage it.
The portfolio will not buy on margin or sell short, but it may make margin
payments in connection with transactions in futures contracts.
The portfolio will not invest in securities of investment companies except by
purchases in the open market where the dealer's or sponsor's profit is just the
regular commission.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities. When-issued securities
or forward commitments are subject to market fluctuations and they may affect
the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or
<PAGE>
PAGE 48
Standard & Poor's Corporation or the equivalent and may use repurchase
agreements with broker-dealers registered under the Securities Exchange Act of
1934 and with commercial banks. A risk of a repurchase agreement is that if the
seller seeks the protection of the bankruptcy laws, the portfolio's ability to
liquidate the security involved could be impaired.
The portfolio will not invest more than 5% of its total assets, taken at cost,
in securities of companies, including any predecessor, which have a record of
less than three years continuous operations.
The portfolio does not intend to invest in exploration or development programs,
such as oil, gas or mineral programs.
The portfolio may invest in repurchase agreements. Repurchase agreements involve
investment in debt securities whereby the seller agrees to repurchase the
securities at cost plus an agreed to interest rate within a specified time. A
risk of a repurchase agreement is that if the party with whom this portfolio has
entered into such an agreement seeks the protection of bankruptcy laws, the
portfolio's ability to liquidate the security involved could be temporarily
impaired, and it subsequently may incur a loss if the value of the security
declines, or if the other party defaults on its obligation. There also is the
risk that the portfolio may be delayed or prevented from exercising its rights
to dispose of the collateral securities.
The portfolio may invest in Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities. In determining
the liquidity of Rule 144A securities, IOs and POs, the investment manager,
under guidelines established by the board of directors, will consider any
relevant factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of marketplace trades.
The portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the investment
manager, under guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.
The portfolio does not intend to invest in illiquid securities if, immediately
after making such an investment, more than 10% of the portfolio's net assets, at
market, would be invested in such securities.
<PAGE>
PAGE 49
The portfolio will not pledge or mortgage its assets beyond 15% of the cost of
its gross assets taken at cost. For the purposes of this restriction, collateral
arrangements with respect to margin for futures contracts are not deemed to be a
pledge of assets.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the purpose of having those assets managed as part of a combined
pool.
Unless the holders of a majority of the outstanding shares (as defined in the
section entitled "Voting rights" of the prospectus) of Money Market Portfolio
agree to a change, Money Market Portfolio
will not:
'Act as an underwriter (sell securities for others). However, under securities
laws the portfolio may be deemed to be an underwriter when it purchases
securities directly from the issuer and later resells them.
'Buy securities of an issuer if the directors and officers of the portfolio,
AEFC and IDS Life hold more than a certain percentage of the issuer's
outstanding securities. If the holdings of all directors and officers of the
portfolio and of AEFC who own more than 0.5% of an issuer's securities are added
together, and if in total they own more than 5%, the portfolio will not purchase
securities of that issuer.
'Buy or sell real estate, commodities, or commodity contracts.
'Make cash loans. However, it does make short-term investments which it may have
an agreement with the seller to reacquire (See Appendix B).
'Lend portfolio securities in excess of 30% of its net assets, at market value.
The current policy of the board of directors is to make these loans, either
long- or short-term, to broker-dealers. In making such loans the portfolio gets
the market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities goes up, the
portfolio will get additional collateral on a daily basis. The risks are that
the borrower may not provide additional collateral when required or return the
securities when due. A loan will not be made unless the opportunity for
additional income outweighs the risks. During the existence of the loan, the
portfolio receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities.
<PAGE>
PAGE 50
'Borrow money or property except as a temporary measure for extraordinary or
emergency purposes, and in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The portfolio will not purchase
additional portfolio securities at any time borrowing for temporary purposes
exceeds 5%. The portfolio has not borrowed in the past and has no present
intention to borrow.
'Buy on margin or sell short.
'Invest in exploration or development programs, such as oil, gas or
mineral programs.
'Purchase common stocks, preferred stocks, warrants, other equity securities,
corporate bonds or debentures, state bonds, municipal bonds, or industrial
revenue bonds.
'Pledge or mortgage portfolio assets beyond 15% of the cost of the portfolio's
gross assets. If the portfolio should engage in such transactions, valuation of
its assets for such purposes would be based on their market value.
'Invest in an investment company beyond 5% of its total assets taken at market
and then only on the open market where the dealer's or sponsor's profit is just
the regular commission. However, the portfolio will not purchase or retain the
securities of other open-end investment companies.
'Invest in a company to get control or manage it.
'Invest more than 25% of the portfolio's assets taken at market value in any
particular industry, except there is no limitation with respect to investing in
U.S. government or agency securities and bank obligations. Investments are
varied according to what is judged advantageous under different economic
conditions.
Unless changed by the board of directors, the following policies apply to Money
Market Portfolio:
The portfolio will not invest in illiquid securities if, immediately after
making such an investment, more than 10% of the portfolio's net assets, at
market, would be invested in such securities.
The portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when issued securities or forward
commitments). A portfolio does not pay for the securities or receive dividends
or interest on them until the contractual settlement date. The portfolio's
custodian will maintain, in a segregated account, cash or liquid high-grade debt
<PAGE>
PAGE 51
securities that are marked to market daily and are at least equal in value to
the portfolio's commitments to purchase the securities. When-issued securities
or forward commitments are subject to market fluctuations and they may affect
the portfolio's total assets the same as owned securities.
The portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. or Standard & Poor's
Corporation or the equivalent and may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934 and with
commercial banks. A risk of a repurchase agreement is that if the seller seeks
the protection of the bankruptcy laws, the portfolio's ability to liquidate the
security involved could be impaired.
The portfolio may invest in repurchase agreements. Repurchase agreements involve
investment in debt securities whereby the seller agrees to repurchase the
securities at cost plus an agreed to interest rate within a specified time. A
risk of a repurchase agreement is that if the party with whom this portfolio has
entered into such an agreement seeks the protection of bankruptcy laws, the
portfolio's ability to liquidate the security involved could be temporarily
impaired, and it subsequently may incur a loss if the value of the security
declines, or if the other party defaults on its obligation. There also is the
risk that the portfolio may be delayed or prevented from exercising its rights
to dispose of the collateral securities.
Notwithstanding any of the portfolio's other investment policies, the portfolio
may invest its assets in an open-end management investment company having
substantially the same investment objectives, policies and restrictions as the
portfolio for the purpose of having those assets managed as part of a combined
pool.
For a discussion on foreign currency transactions, see Appendix A. For a
discussion on money market securities, see Appendix B. For a discussion on
options and stock index futures contracts, see Appendix C. For a discussion on
options and interest rate futures contracts, see Appendix D. For a discussion on
mortgage-backed securities, see Appendix E. For a discussion on dollar-cost
averaging, see Appendix F. For a description of corporate bond ratings, see
Appendix G.
<PAGE>
PAGE 52
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, IDS Life is authorized to
determine, consistent with each portfolio's investment goals and policies, which
securities shall be purchased, held or sold. In determining where the buy and
sell orders are to be placed, IDS Life has been directed to use its best efforts
to obtain the best available price and the most favorable execution except where
otherwise authorized by the board of directors. IDS Life intends to direct AEFC
to execute trades and negotiate commissions on its behalf. In selecting
broker-dealers to execute transactions, AEFC may consider the price of the
security, including commission or mark-up, the size and difficulty of the order,
the reliability, integrity, financial soundness and general operation and
execution capabilities of the broker, the broker's expertise in particular
markets, and research services provided by the broker. These services are
covered by the Investment Advisory agreement between AEFC and IDS Life. When
AEFC acts on IDS Life's behalf for the fund, it follows the rules described here
for IDS Life.
AEFC has a strict Code of Ethics that prohibits its affiliated personnel from
engaging in personal investment activites that compete with or attempt to take
advantage of planned portfolio transactions for any fund or trust for which it
acts as investment manager. AEFC carefully monitors compliance with its Code of
Ethics.
Because Income Portfolio's investments are primarily in bonds, which are traded
in the over-the-counter market, IDS Life generally will deal through a dealer
acting as a principal. The price usually includes a dealer's mark-up without a
separate brokerage charge. When IDS Life believes that dealing through a broker
as agent for a commission will produce the best results, it will do so. The
portfolio also may buy securities directly from an issuing company which may be
resold only privately to other institutional investors.
On occasion it may be desirable to compensate a broker for research services or
for brokerage services, by paying a commission which might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board of directors has adopted a policy authorizing IDS Life to do so to the
extent authorized by law, if IDS Life determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light of that
transaction or IDS Life's or AEFC's overall responsibilities.
Research provided by brokers supplements IDS Life's own research activities.
Research services provided by brokers include economic data on, and analysis of,
U.S. and foreign economies; information on specific industries; information
about specific companies, including earnings estimates; purchase recommendations
for stock and bonds; portfolio strategy services; political, economic, business
and industry trend assessments; historical statistical
<PAGE>
PAGE 53
information; market data services providing information on specific issues and
prices; and technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of written
reports, computer software or personal contact by telephone or at seminars or
other meetings. IDS Life has obtained and, in the near future, may obtain
computer hardware from brokers, including but not limited to personal computers
that will be used exclusively for investment decision-making purposes, which
include the research, portfolio management and trading functions and other
services to the extent permitted under an interpretation by the Securities and
Exchange Commission.
When paying a commission that might not otherwise be charged or a commission in
excess of that which another broker might charge, IDS Life must follow
procedures authorized by the board of directors. To date, three procedures have
been authorized. One procedure permits IDS Life to direct an order to buy or
sell a security traded on a national securities exchange to a specific broker
for research services it has provided. The second procedure permits IDS Life, in
order to obtain research, to direct an order on an agency basis to buy or sell a
security traded only in the over-the-counter market to a firm that does not make
a market in the security. The commission paid generally includes compensation
for research services. The third procedure permits IDS Life, in order to obtain
research and brokerage services, to cause a Portfolio to pay a commission in
excess of the amount another broker might have charged. IDS Life has advised the
Fund that it is necessary to do business with a number of brokerage firms on a
continuous basis to obtain such services as: handling large orders; the
willingness of a broker to risk its own money by taking a position in a
security; and specialized handling of a particular group of securities that only
certain brokers may be able to offer. As a result of this arrangement, some
portfolio transactions may not be effected at the lowest commission, but IDS
Life believes it may obtain better overall execution. IDS Life has assured the
fund that under all three procedures the amount of commission paid will be
reasonable and competitive in relation to the value of the brokerage services
performed or research provided.
All other transactions shall be executed on the basis of the policy to obtain
the best available price and the most favorable execution. In so doing, if, in
the professional opinion of the person responsible for selecting the broker or
dealer, several firms can execute the transaction on the same basis,
consideration will be given by such person to those firms offering research
services. Such services may be used by IDS Life and AEFC in providing advice to
all the funds and other accounts advised by IDS Life even though it is not
possible to relate the benefits to any particular fund or account.
Each investment decision made for a portfolio is made independently from any
decision made for another portfolio or fund or other account advised by IDS Life
or any of its subsidiaries. When a portfolio buys or sells the same security as
another fund or account, IDS Life carries out the purchase or sale in a way the
fund agrees in advance is fair. Although sharing in large
<PAGE>
PAGE 54
transactions may adversely affect the price or volume purchased or sold by the
fund, the fund hopes to gain an overall advantage in execution. IDS Life has
assured the fund it will continue to seek ways to reduce brokerage costs.
On a periodic basis, IDS Life makes a comprehensive review of the broker-dealers
and the overall reasonableness of their commissions. The review evaluates
execution, back office efficiency and research services.
The portfolios paid total brokerage commissions of $947,711 for fiscal year
1995, $1,546,768 for fiscal year 1996 and $3,573,645 for fiscal year ended April
30, 1997. The majority of all firms through whom transactions were executed
provide research services. Transactions amounting to $75,930,000 with related
commissions of $247,186 were directed to brokers by the fund because of research
services received for the fiscal year ended April 30, 1997.
Equity, Income, Money Market and Managed Portfolios' acquisition during the
period ended April 30, 1997, of securities of its regular brokers or dealers or
of the parents of those brokers or dealers that derive more than 15% of gross
revenue from securities-related activities is presented below:
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
- -------------- -----------
Bank America $5,927,266
Salomon Brothers 475,980
Merrill Lynch 2,017,703
Charles Schwab 3,988,462
Dean Witter Reynolds 4,780,877
First Chicago Capital Markets 1,191,088
Goldman Sachs & Co. 796,796
J.P. Morgan Securities 1,953,000
Morgan Stanley 3,320,659
Travelers Group 6,195,500
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH IDS LIFE
Affiliates of American Express Company (of which IDS Life is a wholly owned
indirect subsidiary) may engage in brokerage and other securities transactions
on behalf of the fund in accordance with procedures adopted by the fund's Board
of Directors and to the extent consistent with applicable provisions of the
federal securities laws. IDS Life will use an American Express affiliate only if
(i) IDS Life determines that the fund will receive prices and executions at
least as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for the fund and (ii) if such use is
consistent with terms of the Investment Management and Services Agreement.
AEFC may direct brokerage to compensate an affiliate. AEFC will receive research
on South Africa from New Africa Advisors, a wholly-owned subsidiary of Sloan
Financial Group. AEFC owns 100%
<PAGE>
PAGE 55
of IDS Capital Holdings Inc. which in turn owns 40% of Sloan Financial Group.
New Africa Advisors will send research to AEFC and in turn AEFC will direct
trades to a particular broker. The broker will have an agreement to pay New
Africa Advisors. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.
Information about brokerage commissions paid by the fund for the last three
fiscal years to brokers affiliated with IDS Life is contained in the following
table:
<TABLE>
<CAPTION>
For the Fiscal Year Ended April 30,
1997 1996 1995
--------------------------------------------- ---------- -------
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
<S> <C> <C> <C> <C> <C> <C>
American (2) $24,523 0.69 1.06 $50,443 $31,425
Enterprise
Investment
Services Inc.
Lehman (1) $0 $0 $18,512
Brothers
Inc.
</TABLE>
(1) Under common control with AEFC as a subsidiary of American Express Company
(American Express) until July 30, 1993.
(2) Wholly owned subsidiary of AEFC.
PERFORMANCE INFORMATION
Each portfolio may quote various performance figures to illustrate past
performance. Average annual total return and current yield quotations used by a
fund are based on standardized methods of computing performance as required by
the SEC. An explanation of these and any other methods used by each portfolio to
compute performance follows below.
CALCULATION OF TOTAL RETURN
Each portfolio may calculate average annual total return for certain periods by
finding the average annual compounded rates of return over the period that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
at the beginning of a period, at the end of the period (or
fractional portion thereof)
<PAGE>
PAGE 56
Aggregate total return
Each portfolio may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in a portfolio
over a specified period of time according to the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment at the beginning of a period, at the end of
the period (or fractional portion thereof)
CALCULATION OF YIELD
Government Securities and Income Portfolios - These portfolios may calculate an
annualized yield by dividing the average net investment income per share earned
during a 30-day period by the net asset value per share on the last day of the
period and annualizing the results.
Yield is calculated according to the following formula:
Yield = 2[ (a-b + 1) 6 - 1]
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the
last day of the period
Government Securities Portfolio's yield was 5.84% for the 30-day period ended
April 30, 1996 and Income Portfolio's yield was 6.63%. IDS Life has agreed to a
voluntary limitation of non-advisory expenses at an annual charge not to exceed
0.1 percent of the average daily net assets of the Fund. If non-advisory
expenses had not been limited, Government Securities Portfolio's yield would
have been 5.79%. Income Portfolio's yield would have been 6.63*%.
*Expenses did not exceed .1% of average daily net assets.
Money Market Portfolio calculates annualized simple and compound yields based on
a seven-day period.
The simple yield is calculated by determining the net change in the value of a
hypothetical account having a balance of one share at the beginning of the seven
day period, dividing the net change in account value by the value of the account
at the beginning of the
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period to obtain the return for the period, and multiplying that return by 365/7
to obtain an annualized figure. The value of the hypothetical account includes
the amount of any declared dividends, the value of any shares purchased with any
dividend paid during the period and any dividends declared for such shares. The
portfolio's yield does not include any realized or unrealized gain or loss.
The portfolio calculates its compound yield according to the following formula:
Compound Yield = (return for seven day period + 1) 365/7 - 1
The portfolio's simple annualized yield was 5.02% and its compound yield was
5.15% on April 30, 1997, the last business day of the fund's fiscal year. If
direct expenses had not been limited, the simple annualized yield would have
been 5.00% and its compound yield would have been 5.13%.
Yield, or rate of return, on portfolio shares may fluctuate daily and does not
provide a basis for determining future yields. However, it may be used as one
element in assessing how the portfolio is meeting its goal. When comparing an
investment in the portfolio with savings accounts and similar investment
alternatives, you must consider that such alternatives often provide an agreed
to or guaranteed fixed yield for a stated period of time, whereas the
portfolio's yield fluctuates. In comparing the yield of one money market fund to
another, you should consider each fund's investment policies, including the
types of investments permitted.
In its sales material and other communications, each portfolio may quote
rankings, yields or returns as published by independent statistical services or
publishers and publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Shearson Lehman Aggregate Bond
Index, Stanger Report, Sylvia Porter's Personal Finance, USA Today, U.S. News
and World Report, The Wall Street Journal and Wiesenberger Investment Companies
Service.
VALUING EACH PORTFOLIO'S SHARES
The value of an individual share in the Equity, Income, Managed, Government
Securities and International Equity Portfolios, is determined by using the net
asset value before the shareholder transactions for the day. On April 30, 1997
the computation looked like this for Equity, Income, International Equity,
Managed and Government Securities Portfolios:
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<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset
shareholder transactions at end of previous day value of one share
<S> <C> <C> <C> <C>
Equity Portfolio 551,517,996 divided by 23,446,744 = 23.52
Income Portfolio 66,744,758 divided by 6,652,858 = 10.03
Managed Portfolio 410,736,891 divided by 23,934,725 = 17.16
Government Securities
Portfolio 13,377,242 divided by 1,354,893 = 9.87
International Equity
Portfolio 125,873,862 divided by 8,547,308 = 14.73
</TABLE>
The net asset value per share is determined by dividing the total market value
of a portfolio's investments and other assets, less any liabilities, by the
number of outstanding shares of each portfolio. To establish the net assets, all
securities are valued as of the close of each business day, which is the closing
time of the New York Stock Exchange (currently 3 p.m. Central time). A business
day for the Fund is any day the New York Stock Exchange is open. The portfolio
securities are valued at amortized cost, which approximates market value.
In determining net assets, securities are valued as follows:
`Stocks, convertible bonds, warrants, futures and options traded on major
exchanges are valued each day at their last quoted sales price on their primary
exchange as of the close of the New York Stock Exchange. If the last quoted
sales price is not readily available for a particular security, the value is the
average price between the last offer to buy and the last offer to sell.
`Stocks, convertible bonds and warrants with readily available market quotations
but without a listing on an exchange are also valued at the average between the
last bid (offer to buy) and asked (offer to sell) price at the time of the close
of the New York Stock Exchange.
`Short-term securities maturing in 60 days or less at the acquisition date are
valued at amortized cost. (Amortized cost is an approximation of market value
determined by systematically increasing the carrying value of a security if
acquired at a discount, or systematically reducing the carrying value if
acquired at a premium, so that the carrying value is equal to maturity value on
the maturity date.)
`Securities without a readily available market price, bonds other than
convertibles and other assets are valued at fair value. In valuing these, the
Fund directors are responsible for selecting methods which they believe give the
fair value. For nonconvertible bonds, the usual method is to use the pricing
service of an outside organization. Such pricing service may take into
consideration yield, quality, coupon, maturity, type of issue, trading
characteristics and other market data in determining valuations for normal
institutional-size trading units of debt securities and does not rely
exclusively on quoted prices.
`Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of the New
York Stock Exchange. The values of such securities used in
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determining the net asset value of the portfolio's shares are computed as of
such times. Occasionally, events affecting the value of such securities may
occur between such times and the close of the New York Stock Exchange which will
not be reflected in the computation of the portfolio's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value according to
procedures decided upon in good faith by the Fund's Board of Directors. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at the
current exchange rate.
Valuing Money Market portfolio's shares.
Money Market Portfolio intends to use its best efforts to maintain a constant
net asset value of $1 per share although there is no assurance it will be able
to do so. Accordingly, it uses the amortized cost method in valuing its
portfolio of securities.
Short-term securities maturing in 60 days or less are valued at amortized cost.
Amortized cost is an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a discount, or
reducing the carrying value if acquired at a premium, so that the carrying value
is equal to maturity value on the maturity date. It does not take into
consideration unrealized capital gains or losses. All of the securities in the
portfolio will be valued at their amortized cost.
In addition, the portfolio must abide by certain conditions. It must only invest
in securities of high quality which present minimal credit risks as determined
by the board of directors. This means that the rated commercial paper in the
portfolio will be issues that have been rated in the highest rating category by
at least two nationally recognized statistical rating organizations (or by one
if only one rating is assigned) and in unrated paper determined by the Fund's
board of directors to be comparable. The portfolio must also purchase securities
with original or remaining maturities of no more than 13 months or less, and
maintain a dollar-weighted average portfolio maturity of 90 days or less.
In addition, the board of directors must establish procedures designed to
stabilize the portfolio's price per share for purposes of sales and redemptions
at $1 to the extent that it is reasonably possible to do so. These procedures
include review of the portfolio securities by the board, at intervals deemed
appropriate by it, to determine whether the net asset value per share computed
by using the available market quotations deviates from a share value of $1 as
computed using the amortized cost method. The Board must consider any deviation
that appears, and if it exceeds 0.5 percent, it must determine what action, if
any, needs to be taken. If the board determines that a deviation exists that may
result in a material dilution of the holdings of current shareholders or
investors, or in other unfair consequences for such people, it must undertake
remedial action that it deems necessary and appropriate. Such action may include
withholding dividends, calculating net asset value per share for purposes of
sales and redemptions using
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available market quotations, making redemptions in kind, and selling portfolio
securities before maturity in order to realize capital gain or loss or to
shorten average portfolio maturity.
In other words, while the amortized cost method provides certainty and
consistency in portfolio valuation, it may, from time to time, result in
valuations of portfolio securities which are either somewhat higher or lower
than the prices at which the securities could be sold. This means that during
times of declining interest rates, the yield on the portfolio's shares may be
higher than if valuations of securities were made based on actual market prices
and estimates of market prices. Accordingly, if use of the amortized cost method
were to result in a lower portfolio value at a given time, a prospective
investor would be able to obtain a somewhat higher yield than he or she would
get if portfolio valuation were based on actual market values. Existing
shareholders, on the other hand, would receive a somewhat lower yield than they
would otherwise receive. The opposite would happen during a period of rising
interest rates.
INVESTING IN THE FUND
You cannot buy shares of the portfolios directly. The only way you can invest in
the portfolios at the present time is by buying a Variable Life Insurance Policy
from IDS Life or IDS Life of New York and directing the allocation of part or
all of your net purchase payment to the Variable Accounts which will invest in
shares of the portfolios. Read this prospectus along with your Variable Life
Insurance Policy prospectus.
Sales Charges and Surrender Charges
The portfolios do not assess any sales charge, either when they sell or when
they redeem securities. The surrender charges which may be assessed under your
Variable Life Insurance Policy are described in the Variable Life Insurance
Policy prospectus, as are mortality and expense risk fees and other charges.
Shares of the portfolios may not be held by persons who are residents of, or
domiciled in Brazil. The portfolios reserves the right to redeem policies of
policy owners who establish residence or domicile in Brazil.
REDEEMING SHARES
The portfolios will redeem any shares presented by the shareholders (the
Variable Accounts) for redemption. The Variable Accounts' policy on when or
whether to buy or redeem portfolio shares is described in the Variable Life
Insurance Policy prospectus.
During an emergency the board of directors can suspend the computation of net
asset value, stop accepting payments for purchase of shares, or suspend the duty
of the fund (or portfolios) to redeem shares for more than seven days. Such
emergency situations would occur if:
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`The New York Stock Exchange closes for reasons other than the usual weekend and
holiday closings, or trading on the Exchange is restricted,
`Disposal of the Fund's securities is not reasonably practicable,
or it is not reasonably practicable for the Fund to determine the
fair value of its net assets, or
`The Securities and Exchange Commission, under the provisions of the Investment
Company Act of 1940, declares a period of emergency to exist.
Should the Fund stop selling shares, the directors may make a deduction from the
value of the assets held by the Fund to cover the cost of future liquidations of
the assets so as to distribute fairly these costs among all contract owners.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Management and Services Agreement
The portfolios (or the fund) do not maintain their own research department or
record-keeping services. These are provided by IDS Life under the Investment
Management and Services Agreement.
For its services, IDS Life is paid a fee based on the net assets of the
portfolios. The asset charge is based on the aggregate average daily net assets
of each of the portfolios at the following rates:
0.7 percent, on an annual basis, for Equity Portfolio;
0.7 percent, on an annual basis, for Income Portfolio;
0.95 percent, on an annual basis, for International Equity Portfolio;
0.5 percent, on an annual basis, for Money Market Portfolio;
0.7 percent, on an annual basis, for Managed Portfolio; and
0.7 percent, on an annual basis, for Government Securities Portfolio.
The management fee is paid monthly. The total amount paid for fiscal year ended
April 30, 1997 was $3,629,237 for Equity Portfolio, $430,476 for Income
Portfolio, $98,580 for Money Market Portfolio, $2,555,556 for Managed Portfolio,
$862,518 for International Equity, and $91,353 for Government Securities
Portfolio. The total amount paid for fiscal year ended April 30, 1996 was
$2,334,846 for Equity Portfolio, $332,795 for Income Portfolio, $220,659 for
International Equity Portfolio, $64,350 for Money Market Portfolio, $1,894,796
for Managed Portfolio and $86,352 for Government Securities Portfolio. The total
amount paid for fiscal year ended April 30, 1995 was $1,326,220 for Equity
Portfolio, $242,049 for Income Portfolio, $18,559 for International Equity
Portfolio, $48,493 for Money Market Portfolio, $1,339,464 for Managed Portfolio
and $77,867 for Government Securities Portfolio.
All non-advisory expenses incurred by each portfolio will be paid at an annual
charge not to exceed 0.1 percent of the aggregate
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average daily net assets of the respective portfolio. The voluntary limitation
of 0.1 percent has been established by IDS Life at that figure and IDS Life
reserves the right to discontinue the voluntary limitation.
Investment Advisory Agreement
IDS Life and AEFC have an Investment Advisory Agreement. It calls for IDS Life
to pay AEFC a fee for investment advice about the Fund's Portfolios. AEFC also
executes purchases and sales and negotiates brokerage as directed by IDS Life.
The fee paid by IDS Life is 0.25 percent of the average net assets for the year
of all portfolios, except for International Equity. The fee paid by IDS Life is
0.35 percent of International Equity portfolio's average net assets.
IDS Life paid AEFC $2,761,994 for investment advice for the fiscal year ended
April 30, 1997. IDS Life paid AEFC $1,773,553 for investment advice for the
fiscal year ended April 30, 1996. IDS Life paid AEFC $1,119,466 for investment
advice for the fiscal year ended April 30, 1995.
Information concerning other funds advised by IDS Life or AEFC is contained in
the prospectus.
MANAGEMENT OF THE FUND
The fund has a Board of Directors elected by policyholders that oversees the
operations of each portfolio as required by state law. The Board has named an
executive committee of directors that has authority to act on its behalf between
meetings.
The fund's directors and officers do not own any of the outstanding shares of
the Fund.
Directors of the Fund
The following is a list of the fund's directors.
Carl N. Platou
President Emeritus and Chief Executive Officer, Fairview Hospital
and Healthcare Services. Director, St. Thomas University since
1990.
*Richard W. Kling
Director, IDS Life since 1984. President, IDS Life since March 1994. Executive
Vice President, Marketing and Products from January 1988 to March 1994. Senior
Vice President, American Express Financial Corporation, since 1994; Chairman of
the Board of Managers of IDS Life Variable Annuity Funds A&B.
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Edward Landes
Development consultant. Director of Endowment Development, YMCA of Metropolitan
Minneapolis since 1996. Vice President for Financial Development, YMCA of
Metropolitan Minneapolis from 1985 to 1995. Former sales manager -- Supplies
Division and district manager -- Data Processing Division of IBM Corporation.
Retired 1983.
Gordon H. Ritz
Director, Mid-America Publishing and Atrix International, Inc.
Former president, Com Rad Broadcasting Corp. Former director,
Sunstar Foods.
*Interested person of IDS Life and of the fund as the term "interested person"
is defined in the 1940 Act.
Officers of the Fund
Besides Mr. Kling, who is the President, the fund's other executive
officers are listed below:
Morris Goodwin, Jr.
IDS Tower 10
Minneapolis, MN
Vice President and Treasurer
Vice President and Treasurer, IDS Life since March 1994. Vice
President and Corporate Treasurer, American Express Financial
Corporation, since July 1989.
Lorraine R. Hart
IDS Tower 10
Minneapolis, MN
Vice President Investments
Vice President--Insurance Investments, American Express Financial
Corporation, since 1989. Vice President--Investments, IDS Life,
since 1992.
Jeffrey S. Horton
IDS Tower 10
Minneapolis, MN
Vice President and Controller
Vice President and Controller since July 1996.
Paul F. Kolkman
IDS Tower 10
Minneapolis, MN
Vice President and Chief Actuary
Director and Vice President--Finance, IDS Life. Vice President--
Insurance Finance, American Express Financial Corporation.
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Timothy S. Meehan
IDS Tower 10
Minneapolis, MN
Secretary
Secretary of American Express Financial Corporation, American
Express Financial Advisors, Inc. since October 1995. Senior
Counsel to American Express Financial Corporation since 1995.
Counsel from 1990 to 1995.
William A. Stoltzmann
IDS Tower 10
Minneapolis, MN
General Counsel and Assistant Secretary
Vice President and Assistant General Counsel, American Express Financial
Corporation, since November 1985, and Vice President General Counsel and
Secretary, IDS Life since December 1989.
Board Compensation Table for IDS Life Series Fund for fiscal
year ended April 30, 1997
The members of the IDS Life Series Fund board of directors also serve on the
boards for IDS Life Variable Annuity Fund A and IDS Life Variable Annuity Fund
B.
Aggregate Compensation
Board Member from IDS Life Series Fund Total Cash Compensation
Edward Landes $4,000 $8,000
Carl N. Platou 4,000 8,000
Gordon H. Ritz 4,000 8,000
Members of the fund who are not salaried employees of IDS Life or one of its
affiliates receive $2,000 per year plus $500 per meeting they attend and
expenses. All officers are salaried employees of IDS Life or AEFC and receive no
remuneration from the fund.
There are no pension or retirement benefits accrued as part of fund expenses.
CUSTODIAN
Each portfolios' securities and cash are held by American Express Trust Company,
1200 Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402, through a
custodian agreement. The custodian is permitted to deposit some or all of its
securities in central depository systems as allowed by federal law. The
custodian has entered into a sub-custodian arrangement with Morgan Stanley Trust
Co. (Morgan Stanley), One Pierrepont Plaza, 8th Floor, Brooklyn, NY, 11201-2775.
As part of this arrangement, portfolio securities purchased outside the United
States may be held in custody and deposit accounts that have been established by
Morgan Stanley with one or more domestic or foreign banks, or through the
facilities of one or more clearing agencies or central securities depositories
as may be permitted by law and by the Fund's sub-custodian agreement.
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INDEPENDENT AUDITORS
The fund's financial statements contained in its Annual Report to shareholders
at the end of its fiscal year are audited by independent auditors, KPMG Peat
Marwick LLP, 4200 Norwest Center, 90 South Seventh Street, Minneapolis, MN
55402-3900. IDS Life has agreed that it will send a copy of this report and the
unaudited Semi-Annual Report to every Variable Life Insurance policyowner having
an interest in the fund. The independent auditors also provide other accounting
and tax-related services as requested by the fund from time to time.
FINANCIAL STATEMENTS
The 1997 Annual Report to IDS Life Series Fund, Inc. shareholders, filed
pursuant to Section 30(d) of the 1940 Act, is hereby incorporated in this
Statement of Additional Information by reference.
The prospectus dated June 27, 1997, is hereby incorporated in this Statement of
Additional Information by reference.
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APPENDIX A
FOREIGN CURRENCY TRANSACTIONS, FOR INVESTMENTS OF EQUITY, INCOME,
MANAGED, AND INTERNATIONAL EQUITY PORTFOLIOS
Since investments in foreign countries usually involve currencies of foreign
countries, and since the portfolios referred to above may hold cash and
cash-equivalent investments in foreign currencies, the value of these
portfolios' assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency exchange rates and exchange control
regulations. Also, these Portfolios may incur costs in connection with
conversions between various currencies.
Spot Rates and Forward Contracts. These portfolios conduct their foreign
currency exchange transactions either at the spot (cash) rate prevailing in the
foreign currency exchange market or by entering into forward currency exchange
contracts (forward contracts) as a hedge against fluctuations in future foreign
exchange rates. A forward contract involves an obligation to buy or sell a
specific currency at a future date, which may be any fixed number of days from
the contract date, at a price set at the time of the contract. These contracts
are traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirements. No commissions are charged at any stage
for trades.
These portfolios may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When the portfolios
enter into a contract for the purchase or sale of a security denominated in a
foreign currency or has been notified of a dividend or interest payment, they
may desire to lock in the price of the security or the amount of the payment in
dollars. By entering into a forward contract, these portfolios will be able to
protect against a possible loss resulting from an adverse change in the
relationship between different currencies from the date the security is
purchased or sold to the date on which payment is made or received or when the
dividend or interest is actually received.
These portfolios also may enter into forward contracts when management believes
the currency of a particular foreign country may suffer a substantial decline
against another currency. It may enter into a forward contract to sell, for a
fixed amount of dollars, the amount of foreign currency approximating the value
of some or all of a portfolio's securities denominated in such foreign currency.
The precise matching of forward contract amounts and the value of securities
involved generally will not be possible since the future value of such
securities in foreign currencies more than likely will change between the date
the forward contract is entered into and the date it matures. The projection of
short-term currency market movements is extremely difficult and successful
execution of a short-term hedging strategy is highly uncertain.
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These portfolios will not enter into such forward contracts or maintain a net
exposure to such contracts when consummating the contracts would obligate the
portfolios to deliver an amount of foreign currency in excess of the value of
that portfolio's portfolio securities or other assets denominated in that
currency.
The portfolios will designate cash or securities in an amount equal to the value
of that portfolio's total assets committed to consummating forward contracts
entered into under the second circumstance set forth above. If the value of the
securities declines, additional cash or securities will be designated on a daily
basis so that the value of the cash or securities will equal the amount of the
portfolio's commitments on such contracts.
At maturity of a forward contract, these portfolios may either sell the
portfolio security and make delivery of the foreign currency or retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting contract with the same currency trader
obligating it to buy, on the same maturity date, the same amount of foreign
currency.
If a portfolio retains the portfolio security and engages in an offsetting
transaction, that portfolio will incur a gain or a loss (as described below) to
the extent there has been movement in forward contract prices. If the portfolio
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
between the date the portfolio enters into a forward contract for selling
foreign currency and the date it enters into an offsetting contract for
purchasing the foreign currency, the portfolio will realize a gain to the extent
that the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to buy. Should forward prices increase, the portfolio
will suffer a loss to the extent the price of the currency it has agreed to buy
exceeds the price of the currency it has agreed to sell.
It is impossible to forecast what the market value of portfolio securities will
be at the expiration of a contract. Accordingly, it may be necessary for a
portfolio to buy additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the portfolio is obligated to deliver and a decision
is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received on the sale of the portfolio security if its market value
exceeds the amount of foreign currency the portfolio is obligated to deliver.
The portfolios' dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the portfolios' portfolio securities against a decline in the
value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate
of exchange that can be achieved at some point in time. Although
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such forward contracts tend to minimize the risk of loss due to a decline in
value of hedged currency, they tend to limit any potential gain that might
result should the value of such currency increase.
Although each portfolio values its assets each business day in terms of U.S.
dollars, it does not intend to convert its foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and shareholders should be
aware of currency conversion costs. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a portfolio
at one rate, while offering a lesser rate of exchange should the portfolio
desire to resell that currency to the dealer.
Options on Foreign Currencies. The portfolios referred to above may buy put and
write covered call options on foreign currencies for hedging purposes. For
example, a decline in the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of portfolio securities, these portfolios
may buy put options on the foreign currency. If the value of the currency does
decline, a portfolio will have the right to sell such currency for a fixed
amount in dollars and will thereby offset, in whole or in part, the adverse
effect on its portfolio which otherwise would have resulted.
As in the case of other types of options, however, the benefit to a portfolio
derived from purchases of foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, a
portfolio could sustain losses on transactions in foreign currency options that
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.
These portfolios may write options on foreign currencies for the same types of
hedging purposes. For example, when a portfolio anticipates a decline in the
dollar value of foreign-denominated securities due to adverse fluctuations in
exchange rates, it could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs, the option will
most likely not be exercised and the diminution in value of portfolio securities
will be fully or partially offset by the amount of the premium received.
As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the portfolio would be required to buy or
sell the underlying
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currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on foreign currencies, a portfolio also may be required
to forego all or a portion of the benefits which might otherwise have been
obtained from favorable movements on exchange rates.
All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if a portfolio holds currency sufficient to cover
the option or has an absolute and immediate right to acquire that currency
without additional cash consideration upon conversion of assets denominated in
that currency or exchange of other currency held in its portfolio. An option
writer could lose amounts substantially in excess of its initial investments,
due to the margin and collateral requirements associated with such positions.
Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost.
Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the OCC, thereby reducing the risk of counterparty
default. Further, a liquid secondary market in options traded on a national
securities exchange may be more readily available than in the over-the-counter
market, potentially permitting a portfolio to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the event of
adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in certain foreign countries
for the purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose
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special procedures on exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
Foreign Currency Futures and Related Options. These portfolios also may enter
into currency futures contracts to sell currencies. They also may buy put and
write covered call options on currency futures.
Currency futures contracts are similar to currency forward contracts, except
that they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures call
for payment of delivery in U.S. dollars. These portfolios may use currency
futures for the same purposes as currency forward contracts, subject to CFTC
limitations, including the limitation on the percentage of assets that may be
used, described in the prospectus. All futures contracts are aggregated for
purposes of the percentage limitations.
Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the values of
a portfolios' investments. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect a
portfolio against price decline if the issuer's creditworthiness deteriorates.
Because the value of a portfolios' investments denominated in foreign currency
will change in response to many factors other than exchange rates, it may not be
possible to match the amount of a forward contract to the value of a portfolios'
investments denominated in that currency over time.
The portfolios will not use leverage in its options and futures strategies. They
will hold securities or other options or futures positions whose values are
expected to offset its obligations. A portfolio will not enter into an option or
futures position that exposes it to an obligation to another party unless it
owns either (i) an offsetting position in securities or (ii) cash, receivables
and short-term debt securities with a value sufficient to cover its potential
obligations.
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APPENDIX B
DESCRIPTION OF MONEY MARKET SECURITIES
Certificates of Deposit -- A certificate of deposit is a negotiable receipt
issued by a bank or savings and loan association in exchange for the deposit of
funds. The issuer agrees to pay the amount deposited, plus interest, on the date
specified on the certificate.
Time Deposit -- A time deposit is a non-negotiable deposit in a bank for a fixed
period of time.
Bankers' Acceptances -- A bankers' acceptance arises from a short-term credit
arrangement designed to enable businesses to obtain funds to finance commercial
transactions. It is a time draft drawn on a bank by an exporter or an importer
to obtain a stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees to pay the
face value of the instrument on its maturity date.
Commercial Paper -- Commercial paper is generally defined as unsecured
short-term notes issued in bearer form by large well-known corporations and
finance companies. Maturities on commercial paper range from one day to nine
months.
Commercial paper rated A by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are better than the industry average.
Long-term senior debt rating is "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowances made for unusual circumstances. Typically, the
issuer's industry is well established, the issuer has a strong position within
its industry and the reliability and quality of management is unquestioned.
Issuers rated A are further rated by use of numbers 1, 2 and 3 to denote
relative strength within this highest classification.
A Prime rating is the highest commercial paper rating assigned by Moody's
Investors Services Inc. Issuers rated Prime are further rated by use of numbers
1, 2 and 3 to denote relative strength within this highest classification. Among
the factors considered by Moody's in assigning ratings for an issuer are the
following: (1) management; (2) economic evaluation of the industry and an
appraisal of speculative type risks which may be inherent in certain areas; (3)
competition and customer acceptance of products; (4) liquidity; (5) amount and
quality of long-term debt; (6) ten year earnings trends; (7) financial strength
of a parent company and the relationships which exist with the issuer; and (8)
recognition by management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
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Letters of Credit -- A letter of credit is a short-term note issued in bearer
form with a bank letter of credit which provides that the bank pay to the bearer
the amount of the note upon presentation.
U.S. Treasury Bills -- Treasury bills are issued with maturities of any period
up to one year. Three-month and six-month bills are currently offered by the
Treasury on 13-week and 26-week cycles respectively and are auctioned each week
by the Treasury. Treasury bills are issued in book entry form and are sold only
on a discount basis, i.e. the difference between the purchase price and the
maturity value constitutes interest income for the investor. If they are sold
before maturity, a portion of the income received may be a short-term capital
gain.
U.S. Government Agency Securities -- Federal agency securities are debt
obligations which principally result from lending programs of the U.S.
government. Housing and agriculture have traditionally been the principal
beneficiaries of Federal credit programs, and agencies involved in providing
credit to agriculture and housing account for the bulk of the outstanding agency
securities.
Repurchase Agreements -- A repurchase agreement involves the acquisition of
securities by a portfolio, with the concurrent agreement by a bank (or
securities dealer if permitted by law or regulation), to reacquire the
securities at the portfolio's cost, plus interest, within a specified time. The
portfolio thereby receives a fixed rate of return on this investment, one that
is insulated from market and rate fluctuations during the holding period. In
these transactions, the securities acquired by the portfolio have a total value
equal to or in excess of the value of the repurchase agreement and are held by
the portfolio's custodian until required. Pursuant to guidelines established by
the portfolios' Board of Directors, the creditworthiness of the other party to
the transaction is considered and the value of those securities held as
collateral is monitored to ensure that such value is maintained at the required
level.
If IDS Life becomes aware that a security owned by a portfolio is downgraded
below the second highest rating, IDS Life will either sell the security or
recommend to the Board of Directors why it should not be sold.
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APPENDIX C
OPTIONS AND STOCK INDEX FUTURES CONTRACTS, FOR INVESTMENTS OF
EQUITY, MANAGED AND INTERNATIONAL EQUITY PORTFOLIOS
Each Portfolio may buy or write options traded on any U.S. or foreign exchange
or in the over-the-counter market. Each Portfolio may enter into stock index
futures contracts traded on any U.S. or foreign exchange. Each Portfolio also
may buy or write put and call options on these futures and on stock indexes.
Options in the over-the-counter market will be purchased only when the
investment manager believes a liquid secondary market exists for the options and
only from dealers and institutions the investment manager believes present a
minimal credit risk. Some options are exercisable only on a specific date. In
that case, or if a liquid secondary market does not exist, a Portfolio could be
required to buy or sell securities at disadvantageous prices, thereby incurring
losses. Managed Portfolio also may enter into interest rate futures contracts
(see Appendix D).
OPTIONS. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees to sell the security at the set price when the buyer wants to exercise
the option, no matter what the market price of the security is at that time. A
person who buys a put option has the right to sell a security at a set price for
the length of the contract. A person who writes a put option agrees to buy the
security at the set price if the purchaser wants to exercise the option, no
matter what the market price of the security is at that time. An option is
covered if the writer owns the security (in the case of a call) or sets aside
the cash or securities of equivalent value (in the case of a put) that would be
required upon exercise.
The price paid by the buyer for an option is called a premium. In addition, the
buyer generally pays a broker a commission. The writer receives a premium, less
another commission, at the time the option is written. The cash received is
retained by the writer whether or not the option is exercised. A writer of a
call option may have to sell the security for a below-market price if the market
price rises above the exercise price. A writer of a put option may have to pay
an above-market price for the security if its market price decreases below the
exercise price. The risk of the writer is potentially unlimited, unless the
option is covered.
Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options and futures contracts may benefit a Portfolio and its shareholders by
improving the Portfolio's liquidity and by helping to stabilize the value of its
net assets.
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Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. They also may
be used for investment. Options are used as a trading technique to take
advantage of any disparity between the price of the underlying security in the
securities market and its price on the options market. It is anticipated the
trading technique will be utilized only to effect a transaction when the price
of the security plus the option price will be as good or better than the price
at which the security could be bought or sold directly. When the option is
purchased, the Portfolio pays a premium and a commission. It then pays a second
commission on the purchase or sale of the underlying security when the option is
exercised. For record keeping and tax purposes, the price obtained on the
purchase of the underlying security will be the combination of the exercise
price, the premium and both commissions. When using options as a trading
technique, commissions on the option will be set as if only the underlying
securities were traded.
Put and call options also may be held by a Portfolio for investment purposes.
Options permit a Portfolio to experience the change in the value of a security
with a relatively small initial cash investment.
The risk a Portfolio assumes when it buys an option is the loss of the premium.
To be beneficial to a Portfolio, the price of the underlying security must
change within the time set by the option contract. Furthermore, the change must
be sufficient to cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the exercise of the
option and subsequent sale (in the case of a call) or purchase (in the case of a
put) of the underlying security. Even then, the price change in the underlying
security does not ensure a profit since prices in the option market may not
reflect such a change.
Writing covered options. Each Portfolio will write covered options when it feels
it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on the basis of
investment considerations consistent with each Portfolio's goal.
'All options written by a Portfolio will be covered. For covered call options,
if a decision is made to sell the security, each Portfolio will attempt to
terminate the option contract through a closing purchase transaction.
'Each Portfolio will deal only in standard option contracts traded on national
securities exchanges or those that may be quoted on NASDAQ (a system of price
quotations developed by the National Association of Securities Dealers, Inc.)
'Each Portfolio will write options only as permitted under federal laws or
regulations, such as those that limit the amount of total assets subject to the
options. Some regulations also affect the Custodian. When a covered option is
written, the Custodian
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segregates the underlying securities, and issues a receipt. There are certain
rules regarding banks issuing such receipts that may restrict the amount of
covered call options written. Furthermore, each Portfolio is limited to pledging
not more than 15 percent of the cost of its total assets.
Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains. Since each Portfolio is taxed as a
regulated investment company under the Internal Revenue Code, any gains on
options and other securities held less than three months must be limited to less
than 30 percent of its annual gross income.
If a covered call option is exercised, the security is sold by the Portfolio.
The premium received upon writing the option is added to the proceeds received
from the sale of the security. The Portfolio will recognize a capital gain or
loss based upon the difference between the proceeds and the security's basis.
Premiums received from writing outstanding options are included as a deferred
credit in the Statement of Assets and Liabilities and adjusted daily to the
current market value.
Options are valued at the close of the New York Stock Exchange. An option listed
on a national exchange, CBOE or NASDAQ will be valued at the last-quoted sales
price or, if such a price is not readily available, at the mean of the last bid
and asked prices.
STOCK INDEX FUTURES CONTRACTS. Stock index futures contracts are commodity
contracts listed on commodity exchanges. They currently include contracts on the
Standard & Poor's 500 Stock Index (S&P 500 Index) and other broad stock market
indexes such as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Index, as well as narrower sub-indexes such as the S&P 100
Energy Stock Index and the New York Stock Exchange Utilities Stock Index. A
stock index assigns relative values to common stocks included in the index and
the index fluctuates with the value of the common stocks so included.
A futures contract is a legal agreement between a buyer or seller and the
clearinghouse of a futures exchange in which the parties agree to make a cash
settlement on a specified future date in an amount determined by the stock index
on the last trading day of the contract. The amount is a specified dollar amount
(usually $100 or $500) multiplied by the difference between the index value on
the last trading day and the value on the day the contract was struck.
For example, the S&P 500 Index consists of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative weightings to the common stocks included in the Index, and the Index
fluctuates with changes in the market values of those stocks. In the case of S&P
500 Index futures contracts, the specified multiple is $500. Thus, if the value
of the S&P 500 Index were 150, the value of one contract would be $75,000 (150 x
$500). Unlike other futures contracts, a
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stock index futures contract specifies that no delivery of the actual stocks
making up the index will take place. Instead, settlement in cash must occur upon
the termination of the contract.
For example, excluding any transaction costs, if a Portfolio enters into one
futures contract to buy the S&P 500 Index at a specified future date at a
contract value of 150 and the S&P 500 Index is at 154 on that future date, the
Portfolio will gain $500 x (154-150) or $2,000. If the Portfolio enters into one
futures contract to sell the S&P 500 Index at a specified future date at a
contract value of 150 and the S&P 500 Index is at 152 on that future date, the
Portfolio will lose $500 x (152-150) or $1,000.
Unlike the purchase or sale of an equity security, no price would be paid or
received by the Portfolio upon entering into stock index futures contracts.
However, the Portfolio would be required to deposit with its custodian, in a
segregated account in the name of the futures broker, an amount of cash or U.S.
Treasury bills equal to approximately 5 percent of the contract value. This
amount is known as initial margin. The nature of initial margin in futures
transactions is different from that of margin in security transactions in that
futures contract margin does not involve borrowing funds by the Portfolio to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good-faith deposit on the contract that is returned to the
Portfolio upon termination of the contract, assuming all contractual obligations
have been satisfied.
Subsequent payments, called variation margin, to and from the broker would be
made on a daily basis as the price of the underlying stock index fluctuates,
making the long and short positions in the contract more or less valuable, a
process known as marking to market. For example, when a Portfolio enters into a
contract in which it benefits from a rise in the value of an index and the price
of the underlying stock index has risen, the Portfolio will receive from the
broker a variation margin payment equal to that increase in value. Conversely,
if the price of the underlying stock index declines, the Portfolio would be
required to make a variation margin payment to the broker equal to the decline
in value.
How These Portfolios Would Use Stock Index Futures Contracts. The Portfolios
intend to use stock index futures contracts and related options for hedging and
not for speculation. Hedging permits a Portfolio to gain rapid exposure to or
protect itself from changes in the market. For example, a Portfolio may find
itself with a high cash position at the beginning of a market rally.
Conventional procedures of purchasing a number of individual issues entail the
lapse of time and the possibility of missing a significant market movement. By
using futures contracts, the Portfolio can obtain immediate exposure to the
market and benefit from the beginning stages of a rally. The buying program can
then proceed and once it is completed (or as it proceeds), the contracts can be
closed. Conversely, in the early stages of a market decline, market exposure can
be promptly offset by entering into
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stock index futures contracts to sell units of an index and individual stocks
can be sold over a longer period under cover of the resulting short contract
position.
A Portfolio may enter into contracts with respect to any stock index or
sub-index. To hedge the Portfolio's investment portfolio successfully, however,
the Portfolio must enter into contracts with respect to indexes or sub-indexes
whose movements will have a significant correlation with movements in the prices
of the Portfolio's individual portfolio securities.
Special Risks of Transactions in Stock Index Futures Contracts.
1. Liquidity. Each Portfolio may elect to close some or all of its contracts
prior to expiration. The purpose of making such a move would be to reduce or
eliminate the hedge position held by the Portfolio. The Portfolio may close its
positions by taking opposite positions. Final determinations of variation margin
are then made, additional cash as required is paid by or to the Portfolio, and
the Portfolio realizes a gain or a loss.
Positions in stock index futures contracts may be closed only on an exchange or
board of trade providing a secondary market for such futures contracts. For
example, futures contracts transactions can currently be entered into with
respect to the S&P 500 Stock Index on the Chicago Mercantile Exchange, the New
York Stock Exchange Composite Stock Index on the New York Futures Exchange and
the Value Line Composite Stock Index on the Kansas City Board of Trade.
Although the Portfolios intend to enter into futures contracts only on exchanges
or boards of trade where there appears to be an active secondary market, there
is no assurance that a liquid secondary market will exist for any particular
contract at any particular time. In such event, it may not be possible to close
a futures contract position, and in the event of adverse price movements, the
Portfolio would have to make daily cash payments of variation margin. Such price
movements, however, will be offset all or in part by the price movements of the
securities subject to the hedge. Of course, there is no guarantee the price of
the securities will correlate with the price movements in the futures contract
and thus provide an offset to losses on a futures contract.
2. Hedging Risks. There are several risks in using stock index futures contracts
as a hedging device. One risk arises because the prices of futures contracts may
not correlate perfectly with movements in the underlying stock index due to
certain market distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements. Rather than making
additional variation margin payments, investors may close the contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, the margin requirements in the futures market
are lower than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in
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the futures market also may cause temporary price distortions. Because of price
distortion in the futures market and because of imperfect correlation between
movements in stock indexes and movements in prices of futures contracts, even a
correct forecast of general market trends may not result in a successful hedging
transaction over a short period.
Another risk arises because of imperfect correlation between movements in the
value of the stock index futures contracts and movements in the value of
securities subject to the hedge. If this occurred, a Portfolio could lose money
on the contracts and also experience a decline in the value of its portfolio
securities. While this could occur, IDS Life believes that over time the value
of the Portfolio's investment portfolio will tend to move in the same direction
as the market indexes and will attempt to reduce this risk, to the extent
possible, by entering into futures contracts on indexes whose movements it
believes will have a significant correlation with movements in the value of the
Portfolio's investment portfolio securities sought to be hedged. It is also
possible that if the Portfolio has hedged against a decline in the value of the
stocks held in its portfolio and stock prices increase instead, the Portfolio
will lose part or all of the benefit of the increased value of its stock which
it has hedged because it will have offsetting losses in its futures positions.
In addition, in such situations, if the Portfolio has insufficient cash, it may
have to sell securities to meet daily variation margin requirements. Such sales
of securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Portfolio may have to sell securities at a time
when it may be disadvantageous to do so.
OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index futures
contracts are similar to options on stock except that options on futures
contracts give the purchaser the right, in return for the premium paid, to
assume a position in a stock index futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. If the option is
closed instead of exercised, the holder of the option receives an amount that
represents the amount by which the market price of the contract exceeds (in the
case of a call) or is less than (in the case of a put) the exercise price of the
option on the futures contract. If the option does not appreciate in value prior
to the exercise date, the Portfolio will suffer a loss of the premium paid.
OPTIONS ON STOCK INDEXES. Options on stock indexes are securities traded on
national securities exchanges. An option on a stock index is similar to an
option on a futures contract except all settlements are in cash. A Portfolio
exercising a put, for example, would receive the difference between the exercise
price and the current index level. Such options would be used in the same manner
as options on futures contracts.
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SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES CONTRACTS AND
OPTIONS ON STOCK INDEXES. As with options on stocks, the holder of an option on
a stock index futures contract or on a stock index may terminate a position by
selling an option covering the same contract or index and having the same
exercise price and expiration date. The ability to establish and close out
positions on such options will be subject to the development and maintenance of
a liquid secondary market. The Portfolios will not purchase options unless the
market for such options has developed sufficiently, so that the risks in
connection with options are not greater than the risks in connection with stock
index futures contracts transactions themselves. Compared to using futures
contracts, purchasing options involves less risk to the Portfolios because the
maximum amount at risk is the premium paid for the options (plus transaction
costs). There may be circumstances, however, when using an option would result
in a greater loss to a Portfolio than using a futures contract, such as when
there is no movement in the level of the stock index.
TAX TREATMENT. As permitted under federal income tax laws, each Portfolio
intends to identify futures contracts as mixed straddles and not mark them to
market, that is, not treat them as having been sold at the end of the year at
market value. Such an election may result in the Portfolio being required to
defer recognizing losses incurred by entering into futures contracts and losses
on underlying securities identified as being hedged against.
Federal income tax treatment of gains or losses from transactions in options on
futures contracts and stock indexes is currently unclear, although the
Portfolios' tax advisors currently believe marking to market is not required.
Depending on developments, a Portfolio may seek IRS rulings clarifying questions
concerning such treatment. Certain provisions of the Code also may limit a
Portfolio's ability to engage in futures contracts and related options
transactions. For example, at the close of each quarter of the Portfolio's
taxable year, at least 50 percent of the value of its assets must consist of
cash, government securities and other securities, subject to certain
diversification requirements. Less than 30 percent of its gross income must be
derived from sales of securities held less than three months.
The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50-percent-of-assets test and that its issuer is the issuer of
the underlying security, not the writer of the option, for purposes of the
diversification requirements. In order to avoid realizing a gain within the
three-month period, a Portfolio may be required to defer closing out a contract
beyond the time when it might otherwise be advantageous to do so. The Portfolio
also may be restricted in purchasing put options for the purpose of hedging
underlying securities because of applying the short sale holding period rules
with respect to such underlying securities.
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Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (the Portfolio's agent in acquiring the futures position). During
the period the futures contract is open, changes in value of the contract will
be recognized as unrealized gains or losses by marking to market on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments will be made or received depending upon
whether gains or losses are incurred. All contracts and options will be valued
at the last-quoted sales price on their primary exchange.
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APPENDIX D
OPTIONS AND INTEREST RATE FUTURES CONTRACTS, FOR INVESTMENTS OF
INCOME, MANAGED AND GOVERNMENT SECURITIES PORTFOLIOS
Income and Managed Portfolios may buy or write options traded on any U.S. or
foreign exchange or in the over-the-counter market. Each Portfolio may enter
into interest rate futures contracts traded on any U.S. or foreign exchange.
Each Portfolio also may buy or write put and call options on these futures.
Options in the over-the-counter market will be purchased only when the
investment manager believes a liquid secondary market exists for the options and
only from dealers and institutions the investment manager believes present a
minimal credit risk. Some options are exercisable only on a specific date. In
that case, or if a liquid secondary market does not exist, a portfolio could be
required to buy or sell securities at disadvantageous prices, thereby incurring
losses. Managed Portfolio also may enter into stock index futures contracts (see
Appendix C).
Government Securities Portfolio may buy or write options traded on any U.S.
exchange or in the over-the-counter market. The portfolio may enter into
interest rate futures contracts traded on any U.S. exchange. The portfolio also
may buy or write put and call options on these futures. Options in the
over-the-counter market will be purchased only when the investment manager
believes a liquid secondary market exists for the options and only from dealers
and institutions the investment manager believes present a minimal credit risk.
Some options are exercisable only on a specific date. In that case, or if a
liquid secondary market does not exist, the portfolio could be required to buy
or sell securities at disadvantageous prices, thereby incurring losses.
OPTIONS. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees to sell the security at the set price when the buyer wants to exercise
the option, no matter what the market price of the security is at that time. A
person who buys a put option has the right to sell a security at a set price for
the length of the contract. A person who writes a put option agrees to buy the
security at the set price if the purchaser wants to exercise the option, no
matter what the market price of the security is at that time. An option is
covered if the writer owns the security (in the case of a call) or sets aside
the cash (in the case of a put) that would be required upon exercise.
The price paid by the buyer for an option is called a premium. In addition the
buyer generally pays a broker a commission. The writer receives a premium, less
a commission, at the time the option is written. The cash received is retained
by the writer whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
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market price rises above the exercise price. A writer of a put option may have
to pay an above-market price for the security if its market price decreases
below the exercise price.
Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options and futures contracts may benefit a Portfolio and its shareholders by
improving the portfolio's liquidity and by helping to stabilize the value of its
net assets.
Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. They also may
be used for investment. Options are used as a trading technique to take
advantage of any disparity between the price of the underlying security in the
securities market and its price on the options market. It is anticipated the
trading technique will be utilized only to effect a transaction when the price
of the security plus the option price will be as good or better than the price
at which the security could be bought or sold directly. When the option is
purchased, the portfolio pays a premium and a commission. It then pays a second
commission on the purchase or sale of the underlying security when the option is
exercised. For record keeping and tax purposes, the price obtained on the
purchase of the underlying security will be the combination of the exercise
price, the premium and both commissions. When using options as a trading
technique, commissions on the option will be set as if only the underlying
securities were traded.
Put and call options also may be held by a portfolio for investment purposes.
Options permit a portfolio to experience the change in the value of a security
with a relatively small initial cash investment. The risk a portfolio assumes
when it buys an option is the loss of the premium. To be beneficial to a
portfolio, the price of the underlying security must change within the time set
by the option contract. Furthermore, the change must be sufficient to cover the
premium paid, the commissions paid both in the acquisition of the option and in
a closing transaction or in the exercise of the option and sale (in the case of
a call) or purchase (in the case of a put) of the underlying security. Even then
the price change in the underlying security does not ensure a profit since
prices in the option market may not reflect such a change.
Writing covered options. A portfolio will write covered options when it feels it
is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on the basis of
investment considerations consistent with that portfolio's goal.
'All options written by a portfolio will be covered. For covered call options if
a decision is made to sell the security, a portfolio will attempt to terminate
the option contract through a closing purchase transaction.
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'The portfolio will write options only as permitted under federal laws or
regulations, such as those that limit the amount of total assets subject to the
options. Some regulations also affect the Custodian. When a covered call option
is written, the Custodian segregates the underlying securities and issues a
receipt. There are certain rules regarding banks issuing such receipts that may
restrict the amount of covered call options written. Furthermore, a portfolio is
limited to pledging not more than 15 percent of the cost of its total assets.
Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains. Since a portfolio is taxed as a regulated
investment company under the Code, any gains on options and other securities
held less than three months must be limited to less than 30 percent of its
annual gross income.
If a covered call option is exercised, the security is sold by the portfolio.
The portfolio will recognize a capital gain or loss based upon the difference
between the proceeds and the security's basis.
Options on many securities are listed on options exchanges. If a portfolio
writes listed options, it will follow the rules of the options exchange. Options
are valued at the close of the New York Stock Exchange. An option listed on a
national exchange, CBOE or NASDAQ will be valued at the last quoted sales price
or, if such a price is not readily available, at the mean of the last bid and
asked prices.
FUTURES CONTRACTS. A futures contract is an agreement between two parties to buy
and sell a security for a set price on a future date. They have been established
by boards of trade which have been designated contracts markets by the Commodity
Futures Trading Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and the boards of
trade, through their clearing corporations, guarantee performance of the
contracts. Currently, there are futures contracts based on such debt securities
as long-term U.S. Treasury bonds, Treasury notes, GNMA modified pass-through
mortgage-backed securities, three-month U.S. Treasury bills and bank
certificates of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such deliveries and
acceptances are very seldom made. Generally, the futures contract is terminated
by entering into an offsetting transaction. An offsetting transaction for a
futures contract sale is effected by a portfolio entering into a futures
contract purchase for the same aggregate amount of the specific type of
financial instrument and same delivery date. If the price in the sale exceeds
the price in the offsetting purchase, the portfolio immediately is paid the
difference and realizes a gain. If the offsetting purchase price exceeds the
sale price, the portfolio pays the difference and realizes a loss. Similarly,
closing out a futures contract purchase is effected by the portfolio entering
into a futures contract sale. If the offsetting sale price
<PAGE>
PAGE 84
exceeds the purchase price, the portfolio realizes a gain, and if the offsetting
sale price is less than the purchase price, the portfolio realizes a loss. At
the time a futures contract is made, a good-faith deposit called initial margin
is set up within a segregated account at the portfolio's custodian bank. The
initial margin deposit is approximately 1.5 percent of a contract's face value.
Daily thereafter, the futures contract is valued and the payment of variation
margin is required so that each day the portfolio would pay out cash in an
amount equal to any decline in the contract's value or receive cash equal to any
increase. At the time a futures contract is closed out, a nominal commission is
paid, which is generally lower than the commission on a comparable transaction
in the cash markets.
The purpose of a futures contract, in the case of a fund holding long-term debt
securities, is to gain the benefit of changes in interest rates without actually
buying or selling long-term debt securities. For example, if a portfolio owned
long-term bonds and interest rates were expected to increase, it might enter
into futures contracts to sell securities which would have much the same effect
as selling some of the long-term bonds it owned. Futures contracts are based on
types of debt securities referred to above, which have historically reacted to
an increase or decline in interest rates in a fashion similar to the debt
securities that portfolio owns. If interest rates did increase, the value of the
debt securities in the portfolio would decline, but the value of the portfolio's
futures contracts would increase at approximately the same rate, thereby keeping
the net asset value of the portfolio from declining as much as it otherwise
would have. If, on the other hand, a portfolio held cash reserves and interest
rates were expected to decline, that portfolio might enter into interest rate
futures contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these cash reserves
would have a very beneficial impact on the portfolio's earnings. Even if
short-term rates were not higher, the portfolio would still benefit from the
income earned by holding these short-term investments. At the same time, by
entering into futures contracts for the purchase of securities, a portfolio
could take advantage of the anticipated rise in the value of long-term bonds
without actually buying them until the market had stabilized. At that time, the
futures contracts could be liquidated and the portfolio's cash reserves could
then be used to buy long-term bonds on the cash market. A portfolio could
accomplish similar results by selling bonds with long maturities and investing
in bonds with short maturities when interest rates are expected to increase or
by buying bonds with long maturities and selling bonds with short maturities
when interest rates are expected to decline. But by using futures contracts as
an investment tool, given the greater liquidity in the futures market than in
the cash market, it might be possible to accomplish the same result more easily
and more quickly. Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest rates. If the
investment manager's prediction is incorrect, a portfolio would have been better
off had it not entered into futures contracts.
<PAGE>
PAGE 85
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to buy or sell
futures contracts in the future. Unlike a futures contract, which requires the
parties to the contract to buy and sell a security on a set date, an option on a
futures contract merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into such a contract.
If the holder decides not to enter into the contract, all that is lost is the
amount (premium) paid for the option. Furthermore, because the value of the
option is fixed at the point of sale, there are no daily payments of cash to
reflect the change in the value of the underlying contract.
However, since an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily and that
change is reflected in the net asset value of the Portfolio.
RISKS. There are risks in engaging in each of the management tools described
above. The risk a portfolio assumes when it buys an option is the loss of the
premium paid for the option. Purchasing options also limits the use of monies
that might otherwise be available for long-term investments.
The risk involved in writing options on futures contracts a portfolio owns, or
on securities held in its portfolio, is that there could be an increase in the
market value of such contracts or securities. If that occurred, the option would
be exercised and the asset sold at a lower price than the cash market price. To
some extent, the risk of not realizing a gain could be reduced by entering into
a closing transaction. A portfolio could enter into a closing transaction by
purchasing an option with the same terms as the one it had previously sold. The
cost to close the option and terminate the obligation, however, might be more or
less than the premium received when it originally wrote the option. Furthermore,
a portfolio might not be able to close the option because of insufficient
activity in the options market.
A risk in employing futures contracts to protect against the price volatility of
securities is that the prices of securities subject to futures contracts may not
correlate perfectly with the behavior of the cash prices of a portfolio's
securities. The correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the difference between a
contract or security price and their cost of borrowed funds. Such distortions
are generally minor and would diminish as the contract approached maturity.
Another risk is that a portfolio's investment manager could be incorrect in
anticipating as to the direction or extent of various interest rate movements or
the time span within which the movements take place. For example, if a portfolio
sold futures contracts for the sale of securities in anticipation of an increase
in interest rates, and interest rates declined instead, the portfolio would lose
money on the sale.
<PAGE>
PAGE 86
TAX TREATMENT. As permitted under federal income tax laws, each Portfolio
intends to identify futures contracts as mixed straddles and not mark them to
market, that is, not treat them as having been sold at the end of the year at
market value. Such an election may result in the portfolio being required to
defer recognizing losses incurred by entering into futures contracts and losses
on underlying securities identified as being hedged against.
Federal income tax treatment of gains or losses from transactions in options on
futures contracts and indexes currently is unclear, although the portfolios' tax
advisors currently believe marking to market is not required. Depending on
developments, a portfolio may seek IRS rulings clarifying questions concerning
such treatment. Certain provisions of the Code also may limit a portfolio's
ability to engage in futures contracts and related options transactions. For
example, at the close of each quarter of a portfolio's taxable year, at least 50
percent of the value of its assets must consist of cash, government securities
and other securities, subject to certain diversification requirements. Less than
30 percent of its gross income must be derived from sales of securities held
less than three months.
The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50-percent-of-assets test and that its issuer is the issuer of
the underlying security, not the writer of the option, for purposes of the
diversification requirements. In order to avoid realizing a gain within the
three-month period, a portfolio may be required to defer closing out a contract
beyond the time when it might otherwise be advantageous to do so. A portfolio
also may be restricted in purchasing put options for the purpose of hedging
underlying securities because of applying the short sale holding period rules
with respect to such underlying securities.
Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (a portfolio's agent in acquiring the futures position). During
the period the futures contract is open, changes in value of the contract will
be recognized as unrealized gains or losses by marking to market on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments will be made or received depending upon
whether gains or losses are incurred. All contracts and options will be valued
at the last-quoted sales price on their primary exchange.
<PAGE>
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APPENDIX E
MORTGAGE-BACKED SECURITIES AND ADDITIONAL INFORMATION ON INVESTMENT
POLICIES (FOR ALL PORTFOLIOS EXCEPT MONEY MARKET)
GNMA Certificates
The Government National Mortgage Association (GNMA) is a wholly owned corporate
instrumentality of the United States within the Department of Housing and Urban
Development. GNMA certificates are mortgage-backed securities of the modified
pass-through type, which means that both interest and principal payments
(including prepayments) are passed through monthly to the holder of the
certificate. Each certificate evidences an interest in a specific pool of
mortgage loans insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. The National
Housing Act provides that the full faith and credit of the United States is
pledged to the timely payment of principal and interest by GNMA of amounts due
on these certificates. GNMA is empowered to borrow without limitation from the
U.S. Treasury, if necessary, to make such payments.
Underlying Mortgages of the Pool. Pools consist of whole mortgage loans or
participations in loans. The majority of these loans are made to purchasers of
1-4 member family homes. The terms and characteristics of the mortgage
instruments generally are uniform within a pool but may vary among pools. For
example, in addition to fixed-rate fixed-term mortgages, a portfolio may
purchase pools of variable rate mortgages, growing equity mortgages, graduated
payment mortgages and other types.
All servicers apply standards for qualification to local lending institutions
which originate mortgages for the pools. Servicers also establish credit
standards and underwriting criteria for individual mortgages included in the
pools. In addition, many mortgages included in pools are insured through private
mortgage insurance companies.
Average Life of GNMA Certificates. The average life of GNMA certificates varies
with the maturities of the underlying mortgage instruments which have maximum
maturities of 30 years. The average life is likely to be substantially less than
the original maturity of the mortgage pools underlying the securities as the
result of prepayments or refinancing of such mortgages. Such prepayments are
passed through to the registered holder with the regular monthly payments of
principal and interest.
As prepayment rates vary widely, it is not possible to accurately predict the
average life of a particular pool. It is customary in the mortgage industry in
quoting yields on a pool of 30-year mortgages to compute the yield as if the
pool were a single loan that is amortized according to a 30-year schedule and
that is
<PAGE>
PAGE 88
prepaid in full at the end of the 12th year. For this reason, it is standard
practice to treat GNMA certificates as 30-year mortgage-backed securities which
prepay fully in the 12th year.
Calculation of Yields. Yields on pass-through securities are typically quoted
based on the maturity of the underlying instruments and the associated average
life assumption.
Actual pre-payment experience may cause the yield to differ from the assumed
average life yield. When mortgage rates drop, pre- payments will increase, thus
reducing the yield. Reinvestment of pre-payments may occur at higher or lower
interest rates than the original investment, thus affecting the yield of a
portfolio. The compounding effect from reinvestments of monthly payments
received by a portfolio will increase the yield to shareholders compared to
bonds that pay interest semi-annually. The yield also may be affected if the
certificate was issued at a premium or discount, rather than at par. This also
applies after issuance to certificates trading in the secondary market at a
premium or discount.
"When-Issued" GNMA Certificates. Some U.S. government securities may be
purchased on a "when-issued" basis, which means that it may take as long as 45
days after the purchase before the securities are delivered to a portfolio.
Payment and interest terms, however, are fixed at the time the purchaser enters
into the commitment. However, the yield on a comparable GNMA certificate when
the transaction is consummated may vary from the yield on the GNMA certificate
at the time that the when-issued transaction was made. A portfolio does not pay
for the securities or start earning interest on them until the contractual
settlement date. When- issued securities are subject to market fluctuations and
they may affect a portfolio's gross assets the same as owned securities.
Market for GNMA Certificates. Since the inception of the GNMA mortgage-backed
securities program in 1970, the amount of GNMA certificates outstanding has
grown rapidly. The size of the market and the active participation in the
secondary market by securities dealers and many types of investors make the GNMA
certificates a highly liquid instrument. Prices of GNMA certificates are readily
available from securities dealers and depend on, among other things, the level
of market interest rates, the certificate's coupon rate and the prepayment
experience of the pool of mortgages underlying each certificate.
Stripped mortgage-backed securities. Generally, there are two classes of
stripped mortgage-backed securities: Interest Only (IO) and Principal Only (PO).
IOs entitle the holder to receive distributions consisting of all or a portion
of the interest on the underlying pool of mortgage loans or mortgage-backed
securities. POs entitle the holder to receive distributions consisting of all or
a portion of the principal of the underlying pool of mortgage loans or
mortgage-backed securities. The cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal
<PAGE>
PAGE 89
payments (including prepayments) on the underlying mortgage loans or
mortgage-backed securities. A rapid rate of principal payments may adversely
affect the yield to maturity of IOs. A slow rate of principal payments may
adversely affect the yield to maturity of POs. If prepayments of principal are
greater than anticipated, an investor may incur substantial losses. If
prepayments of principal are slower than anticipated, the yield on a PO will be
affected more severely than would be the case with a traditional mortgage-backed
security.
Income, Managed and Government Securities Portfolios may invest in securities
called "inverse floaters". Inverse floaters are created by underwriters using
the interest payments on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for short-term
securities. What is left over, less a servicing fee, is paid to holders of the
inverse floaters. As interest rates go down, the holders of the inverse floaters
receive more income and an increase in the price for the inverse floaters. As
interest rates go up, the holders of the inverse floaters receive less income
and a decrease in the price for the inverse floaters.
Equity, Income, International Equity, Managed and Government Securities
Portfolios may purchase some securities in advance of when they are issued.
Price and rate of interest are set on the date the commitments are given but no
payment is made or interest earned until the date the securities are issued,
usually within two months, but other terms may be negotiated. The commitment
requires the portfolio to buy the security when it is issued so the commitment
is valued daily the same way as owning a security would be valued. The
portfolio's custodian will maintain, in a segregated account, cash or liquid
high-grade debt securities that are marked to market daily and are at least
equal in value to the portfolio's commitments to purchase the securities. The
portfolio may sell the commitment just like it can sell a security. Frequently,
the portfolio has the opportunity to sell the commitment back to the institution
that plans to issue the security and at the same time enter into a new
commitment to purchase a when-issued security in the future. For rolling its
commitment forward, the portfolio realizes a gain or loss on the sale of the
current commitment or receives a fee for entering into the new commitment.
Income, Managed and Government Securities Portfolios may purchase
mortgage-backed security (MBS) put spread options and write covered MBS call
spread options. MBS spread options are based upon the changes in the price
spread between a specified mortgage-backed security and a like-duration Treasury
security. MBS spread options are traded in the OTC market and are of short
duration, typically one to two months. The portfolio would buy or sell covered
MBS call spread options in situations where mortgage-backed securities are
expected to under perform like-duration Treasury securities.
<PAGE>
PAGE 90
APPENDIX F
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more units will be purchased when the
price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
units lower than the average market price of units purchased, although there is
no guarantee.
While this technique does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many shareholders who
can continue investing on a regular basis through changing market conditions,
including times when the price of their shares falls or the market declines, to
accumulate shares in a fund to meet long-term goals.
Dollar-cost averaging
Regular Market Price Units
Investment of a Unit Acquired
$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
---- ------ -----
$500 $25.00 103.4
Average market price of a unit over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each unit:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 91
APPENDIX G
Description of corporate bond ratings
Bond ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price. Ratings by Moody's Investors Service,
Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
Aaa/AAA - Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for interest and
principal may not be quite as good as Aaa or AAA rated securities.
A - Considered upper-medium grade. Protection for interest and principal is
deemed adequate but may be susceptible to future impairment.
Baa/BBB - Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these obligations may have
certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of interest and
principal payments may be very moderate.
B - Lack characteristics of the desirable investments. There may be small
assurance over any long period of time of the payment of interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or there may be
risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such issues are often
in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These securities have
major risk exposures to default.
D - Are in payment default. The D rating is used when interest payments or
principal payments are not made on the due date.
Definitions of Zero-Coupon and Pay-In-Kind Securities
A zero-coupon security is a security that is sold at a deep discount from its
face value and makes no periodic interest payments. The buyer of such a security
receives a rate of return by gradual appreciation of the security, which is
redeemed at face value on the maturity date.
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A pay-in-kind security is a security in which the issuer has the option to make
interest payments in cash or in additional securities. The securities issued as
interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
Non-rated securities will be considered for investment when they possess a risk
comparable to that of rated securities consistent with the Fund's objectives and
policies. When assessing the risk involved in each non-rated security, the Fund
will consider the financial condition of the issuer or the protection afforded
by the terms of the security.
<PAGE>
Independent auditors' report
The board and shareholders
IDS Life Series Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities, of the Equity,
Income, Money Market, Managed, Government Securities and International
Equity Portfolios of IDS Life Series Fund, Inc. at April 30, 1997, and the
related statements of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year period
ended April 30, 1997, and the financial highlights for each of the years
in the ten-year period ended April 30, 1997 (for the two-year period ended
April 30, 1997 and for the period from Oct. 28, 1994, commencement of
operations, to April 30, 1995 for the International Equity Portfolio.)
These financial statements and the financial highlights are the
responsibility of the fund's management. Our responsibility is to express
an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Investment securities held in
custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we request confirmations from
brokers, and where replies are not received, we carry out other
appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Equity, Income, Money Market, Managed, Government Securities and
International Equity Portfolios of IDS Life Series Fund, Inc. at April 30,
1997 and the results of their operations, changes in their net assets, and
the financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 6, 1997
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
IDS Life Series Fund, Inc.
April 30, 1997
Equity Income Money
Portfolio Portfolio Market
<S> <C> <C> <C>
Portfolio
Assets
Investments in securities, at value (Note 1)
(identified cost: $519,255,815; $65,796,043 and
$28,550,337, respectively) $562,160,295 $65,957,206 $28,550,337
Cash in bank on demand deposit 111,438 77,878 60,108
Receivable for investment securities sold 5,063,477 141,323 --
Dividends and accrued interest receivable 100,971 976,749 --
Receivable for capital stock sold -- 344,061 91,219
------- ------- ------
Total assets 567,436,181 67,497,217 28,701,664
----------- ---------- ----------
Liabilities
Dividends payable to shareholders (Note 1) 390,779 360,414 110,195
Payable for investment securities purchased 14,723,307 319,125 --
Accrued investment management and services fee 308,416 37,773 11,154
Payable for capital stock redeemed 456,448 3,926 32,371
Other accrued expenses 39,235 31,221 2,231
------ ------ -----
Total liabilities 15,918,185 752,459 155,951
---------- ------- -------
Net assets applicable to outstanding capital stock $551,517,996 $66,744,758 $28,545,713
============ =========== ===========
Represented by
Capital stock-- authorized 10,000,000,000 shares of $.001
par value: outstanding, 23,446,744; 6,652,858 and
28,548,252 shares, respectively $ 23,447 $ 6,653 $ 28,548
Additional paid-in capital 483,556,463 66,270,016 28,517,981
Undistributed net investment income 20,999 19,838 --
Accumulated net realized gain (loss) on investments (Note 1) 25,015,292 287,088 (816)
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 42,901,795 161,163 --
---------- ------- -------
Total-- representing net assets applicable to outstanding
capital stock $551,517,996 $66,744,758 $28,545,713
============ =========== ===========
Net asset value per share of outstanding capital stock $ 23.52 $ 10.03 $ 1.00
============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of assets and liabilities (continued)
IDS Life Series Fund, Inc.
April 30, 1997
Managed Government International
Portfolio Securities Equity
Portfolio Portfolio
<S> <C> <C> <C>
Assets
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost: $381,326,129; $13,682,923 and
$126,056,621, respectively) $412,239,004 $13,611,166 $124,827,506
Investments in securities of affiliated issuers
(identified cost: $1,592,232 for
International Equity Portfolio) -- -- 2,580,975
Cash in bank on demand deposit 974 27,789 105,221
Receivable for investment securities sold 1,589,410 -- 1,805,573
Dividends and accrued interest receivable 2,822,802 162,278 178,178
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 4) -- -- 530
Receivable for capital stock sold 2,509,399 53,912 4,937
--------- ------ -----
Total assets 419,161,589 13,855,145 129,502,920
----------- ---------- -----------
Liabilities
Dividends payable to shareholders (Note 1) 3,250,500 64,538 84,786
Payable for investment securities purchased 4,897,380 394,625 3,412,728
Accrued investment management and services fee 229,883 7,666 96,986
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 4) -- -- 12,358
Payable for capital stock redeemed 4,586 9,690 11,991
Other accrued expenses 42,349 1,384 10,209
------ ----- ------
Total liabilities 8,424,698 477,903 3,629,058
--------- ------- ---------
Net assets applicable to outstanding capital stock $410,736,891 $13,377,242 $125,873,862
============ =========== ============
Represented by
Capital stock -- authorized 10,000,000,000 shares of $.001
par value: outstanding, 23,934,725; 1,354,893 and 8,547,308
shares, respectively $ 23,935 $ 1,355 $ 8,547
Additional paid-in capital 348,656,435 13,324,665 122,172,921
Excess of distributions over net investment income (91,841) (18,384) (32,761)
Accumulated net realized gain (Note 1) 31,234,861 141,363 3,971,051
Unrealized appreciation (depreciation) of investments and on
translation of assets and liabilities in foreign currencies
(Note 4) 30,913,501 (71,757) (245,896)
- ---------- ------- --------
Total-- representing net assets applicable to outstanding
capital stock $410,736,891 $13,377,242 $125,873,862
------------ ----------- ------------
Net asset value per share of outstanding capital stock $ 17.16 $ 9.87 $ 14.73
============ =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations
IDS Life Series Fund, Inc.
Year ended April 30, 1997
Equity Income Money
Portfolio Portfolio Market
Portfolio
<S> <C> <C> <C>
Investment income
Income:
Dividends (net of foreign taxes withheld of $16,397
for Equity Portfolio) $ 1,721,455 $ 20,091 $ --
Interest 3,331,957 4,617,672 1,068,731
--------- --------- ---------
Total income 5,053,412 4,637,763 1,068,731
--------- --------- ---------
Expenses (Note 2):
Investment management and services fee 3,629,237 430,476 98,580
Custodian fees 161,700 20,484 16,150
Audit fees 12,000 8,000 6,000
Directors fees 17,845 4,019 548
Printing and postage 67,000 25,761 2,782
Other 75,579 3,232 1,401
------ ----- -----
Total expenses 3,963,361 491,972 125,461
Less expenses voluntarily reimbursed by IDS Life -- -- (7,165)
------ ------ ------
Total expenses-- net 3,963,361 491,972 118,296
--------- ------- -------
Investment income-- net 1,090,051 4,145,791 950,435
--------- --------- -------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 25,103,731 872,910 (79)
Net realized gain on foreign currency transactions 802 -- --
Net realized gain on option contracts written (Note 6) 101,230 -- --
- ------- ------- ------
Net realized gain (loss) on investments and foreign currencies 25,205,763 872,910 (79)
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies (47,584,150) (278,890) --
----------- -------- ------
Net gain (loss) on investments and foreign currencies (22,378,387) 594,020 (79)
----------- ------- ---
Net increase (decrease) in net assets resulting from operations $(21,288,336) $4,739,811 $950,356
============ ========== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations (continued)
IDS Life Series Fund, Inc.
Year ended April 30, 1997
Managed Government International
Portfolio Securities Equity
Portfolio Portfolio
<S> <C> <C> <C>
Investment income
Income:
Dividends (net of foreign taxes withheld of $79,394
for International Equity Portfolio) $ 2,526,349 $ -- $ 1,024,383
Interest 12,862,482 873,627 590,950
---------- ------- -------
Total income 15,388,831 873,627 1,615,333
---------- ------- ---------
Expenses (Note 2):
Investment management and services fee 2,555,556 91,353 862,518
Custodian fees 67,854 7,200 229,419
Audit fees 12,000 7,000 10,000
Directors fees 12,265 490 2,334
Printing and postage 60,809 3,470 2,800
Other 22,380 1,409 1,394
------ ----- -----
Total expenses 2,730,864 110,922 1,108,465
Less expenses voluntarily reimbursed by IDS Life -- (6,519) (155,157)
------- ------ --------
Total expenses-- net 2,730,864 104,403 953,308
--------- ------- -------
Investment income-- net 12,657,967 769,224 662,025
---------- ------- -------
Realized and unrealized gain (loss) -- net
Net realized gain on security transactons (Note 3) 28,373,814 129,567 4,084,369
Net realized gain on foreign currency transactions 639 -- 38,474
Net realized gain (loss) on financial futures contracts 2,879,519 -- (75,865)
--------- ------- --------
Net realized gain on investments and foreign currencies 31,253,972 129,567 4,046,978
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies (1,450,532) (188,485) (6,133,514)
---------- -------- ----------
Net gain (loss) on investments and foreign currencies 29,803,440 (58,918) (2,086,536)
---------- ------- ----------
Net increase (decrease) in net assets resulting from operations $42,461,407 $710,306 $(1,424,511)
=========== ======== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Life Series Fund, Inc.
Year ended April 30,
Equity Portfolio Income Portfolio
Operations and distributions 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Investment income-- net $ 1,090,051 $ 489,831 $ 4,145,791 $ 3,176,680
Net realized gain on investments and foreign currencies 25,205,763 73,815,809 872,910 327,190
Net change in unrealized appreciation or depreciation
of investments and on translation of assets
and liabilities in foreign currencies (47,584,150) 52,637,428 (278,890) 385,120
----------- ---------- -------- -------
Net increase (decrease) in net assets resulting from operations (21,288,336) 126,943,068 4,739,811 3,888,990
----------- ----------- --------- ---------
Distributions to shareholders from:
Net investment income (1,069,807) (484,198) (4,144,980) (3,152,824)
Excess distribution of net investment income -- (26,661) (811) (10,470)
Net realized gain (73,838,149) (76,149) -- --
----------- ------- ---------- ----------
Total distributions (74,907,956) (587,008) (4,145,791) (3,163,294)
----------- -------- ---------- ----------
Capital share transactions (Note 5)
Proceeds from sales 134,772,812 88,096,157 12,860,826 16,653,461
Reinvested distributions at net asset value 74,907,956 587,008 4,145,791 3,163,294
Payments for redemptions (10,378,879) (7,658,827) (5,832,042) (3,389,539)
----------- ---------- ---------- ----------
Increase in net assets from capital share transactions 199,301,889 81,024,338 11,174,575 16,427,216
----------- ---------- ---------- ----------
Total increase in net assets 103,105,597 207,380,398 11,768,595 17,152,912
Net assets at beginning of year 448,412,399 241,032,001 54,976,163 37,823,251
----------- ----------- ---------- ----------
Net assets at end of year $551,517,996 $448,412,399 $66,744,758 $54,976,163
------------ ------------ ----------- -----------
Undistributed (excess of distributions over) net investment
income $ 20,999 $ (47) $ 19,838 $ (811)
============ ============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets (continued)
IDS Life Series Fund, Inc.
Year ended April 30,
Money Market Portfolio Managed Portfolio
Operations and distributions 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Investment income-- net $ 950,435 $ 645,793 $ 12,657,967 $ 10,044,599
Net realized gain (loss) on investments and foreign currencies (79) (84) 31,253,972 17,885,868
Net change in unrealized appreciation or depreciation
of investments and on translation of assets
and liabilities in foreign currencies -- -- (1,450,532) 24,654,105
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations 950,356 645,709 42,461,407 52,584,572
------- ------- ---------- ----------
Distributions to shareholders from:
Net investment income (950,435) (645,793) (12,603,155) (10,002,686)
Excess distribution of net investment income -- -- (55,452) --
Net realized gain -- -- (13,910,481) (2,226,152)
---------- ---------- ---------- ----------
Total distributions (950,435) (645,793) (26,569,088) (12,228,838)
-------- -------- ----------- -----------
Capital share transactions (Note 5)
Proceeds from sales 22,306,772 12,705,078 61,977,979 54,477,756
Reinvested distributions at net asset value 950,435 645,793 26,569,088 12,228,838
Payments for redemptions (9,029,770) (8,917,032) (10,434,788) (10,316,093)
---------- ---------- ----------- -----------
Increase in net assets from capital share transactions 14,227,437 4,433,839 78,112,279 56,390,501
---------- --------- ---------- ----------
Total increase in net assets 14,227,358 4,433,755 94,004,598 96,746,235
Net assets at beginning of year 14,318,355 9,884,600 316,732,293 219,986,058
---------- --------- ----------- -----------
Net assets at end of year $28,545,713 $14,318,355 $410,736,891 $316,732,293
----------- ----------- ------------ ------------
Excess of distributions over net investment income $ -- $ -- $ (91,841) $ (54,812)
=========== =========== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets (continued)
IDS Life Series Fund, Inc.
Year ended April 30,
Government Securities International Equity
Portfolio Portfolio
Operations and distributions 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Investment income-- net $ 769,224 $ 732,941 $ 662,025 $ 212,955
Net realized gain on investments and foreign currencies 129,567 97,312 4,046,978 5,987,533
Net change in unrealized appreciation or depreciation
of investments and on translation of assets
and liabilities in foreign currencies (188,485) 3,853 (6,133,514) 5,339,537
-------- ----- ---------- ---------
Net increase (decrease) in net assets resulting from operations 710,306 834,106 (1,424,511) 11,540,025
------- ------- ---------- ----------
Distributions to shareholders from:
Net investment income (762,735) (729,863) (662,648) (212,955)
Excess distributions of net investment income (6,588) (3,078) (108,688) (77,263)
Net realized gain (103,298) -- (5,909,647) --
-------- ----------
Total distributions (872,621) (732,941) (6,680,983) (290,218)
-------- -------- ---------- --------
Capital share transactions (Note 5)
Proceeds from sales 3,256,810 2,091,806 76,861,699 32,311,329
Reinvested distributions at net asset value 872,621 732,941 6,680,983 290,218
Payments for redemptions (3,054,279) (1,901,971) (1,624,761) (286,727)
---------- ---------- ---------- --------
Increase in net assets from capital share transactions 1,075,152 922,776 81,917,921 32,314,820
--------- ------- ---------- ----------
Total increase in net assets 912,837 1,023,941 73,812,427 43,564,627
------- --------- ---------- ----------
Net assets at beginning of year 12,464,405 11,440,464 52,061,435 8,496,808
---------- ---------- ---------- ---------
Net assets at end of year $13,377,242 $12,464,405 $125,873,862 $52,061,435
----------- ----------- ------------ -----------
Undistributed (excess of distributions over) net investment
income $ (18,384) $ (6,489) $ (32,761) $ 623
=========== =========== ============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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. It has
six portfolios whose goals are as follows:
Equity Portfolio invests primarily in U.S. common stocks and
securities convertible into common stock; Income Portfolio invests in
corporate bonds of the four highest ratings; Money Market Portfolio
invests in high-quality short-term debt securities; Managed Portfolio
invests in common and preferred stocks, convertible securities, debt
securities and money market instruments; Government Securities
Portfolio invests in debt obligations issued or guaranteed by U.S.
governmental units; and International Equity Portfolio invests
primarily in common stocks of foreign issuers.
Shares of each portfolio of the Fund are sold to IDS Life Insurance
Company (IDS Life) subaccounts or IDS Life Insurance Company of New York
subaccounts in connection with the sale of variable insurance contracts.
The significant accounting policies followed by the Fund are summarized as
follows:
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,
other than bonds, traded on national securities exchanges or included in
the NASDAQ National Market System, are valued at the last quoted sales
price; securities traded in the over-the-counter market and securities for
which a last quoted sales price is not readily available, including
illiquid securities, are valued at the mean of the closing bid and asking
prices; and bonds and other securities are valued at fair value according
to methods selected in good faith by the board of directors. Determination
of fair value involves, among other things, reference to market indexes,
matrixes and data from independent brokers. Short-term securities in the
Equity, Income, Managed, Government Securities and International Equity
Portfolios 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. Pursuant to Rule 2a-7 of the 1940 Act, all securities in the Money
Market Portfolio are valued daily at amortized cost, which approximates
market value, in order to maintain a constant net asset value of $1 per
share.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate
buying and selling of securities for investment purposes, the Equity,
Income, Managed, Government Securities and International Equity Portfolios
may buy or sell put or 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 portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the portfolios 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 portfolios pay a premium whether or not the option
is exercised. The portfolios also have the additional risk of not being
able to enter into a closing transaction if a liquid secondary market does
not exist. The portfolios also may write over-the-counter options where
the completion of the obligation is dependent upon the credit standing of
the other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
portfolios 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 Equity, Income, Managed, Government Securities and International
Equity Portfolios may buy and sell stock index and interest rate future
contracts. Risks of entering into future 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 portfolios are 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 portfolios 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 portfolios recognize 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 Equity, Income, Managed and International Equity Portfolios also 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 portfolios and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The portfolios are
subject to the credit risk that the other party will not complete the
obligations of the contract.
Illiquid securities
At April 30, 1997, investments in securities for Income Portfolio and
Managed Portfolio included issues that are illiquid. The portfolios
currently limit investments in illiquid securities to 10% of net assets,
at market value, at the time of purchase. The aggregate value of such
securities at April 30, 1997 was $185,730 and $648,325, which represents
0.28% and 0.16% of net assets for Income Portfolio and Managed Portfolio,
respectively. Pursuant to guidelines adopted by the board, certain
unregistered securities are determined to be liquid and are not included
in the 10% limitation specified above.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the
portfolios 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
portfolio's net assets the same as owned securities. The portfolios
designate cash or liquid high-grade short-term debt securities at least
equal to the amount of its commitment. At April 30, 1997, Government
Securities Portfolio had entered into outstanding when issued or forward
commitments of $394,625.
Federal income taxes
Since the Fund's policy is to comply with all requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders, no provision for
income taxes is required. Each portfolio is treated as a separate entity
for federal income tax purposes.
Net investment income (loss) and net realized gains (losses) differ for
financial statement and tax purposes primarily because of wash sale
transactions, foreign currency exchange gains and losses, and the timing
and amount of market discount recognized as ordinary income. 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) are recorded by the portfolios.
On the statements of assets and liabilities, as a result of permanent
book-to-tax differences, accumulated net realized gain (loss) and
undistributed net investment income have been increased (decreased),
resulting in net reclassification adjustments to additional paid-in
capital by the following:
<TABLE>
<CAPTION>
Equity Income Managed Government International
Portfolio Portfolio Portfolio Securities Equity
Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Accumulated net realized gain (loss) (27,444) (20,649) 36,389 11,796 (75,927)
Undistributed net investment income 802 20,649 (36,389) (11,796) 75,927
--- ------ ------- ------- ------
Additional paid-in-capital reduction (increase) 26,642 -- -- -- --
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Dividends to shareholders
At April 30, 1997, dividends declared for each portfolio payable May 1,
1997 are as follows:
Equity $.017
Income $.055
Money Market $.004
Managed $.137
Government Securities $.047
International Equity $.010
Distributions to shareholders are recorded as of the close of business on
the record date and are payable on the first business day following the
record date. Dividends from net investment income are declared daily and
distributed monthly for the Money Market, Income and Government Securities
Portfolios and declared and distributed quarterly for the Equity, Managed
and International Equity Portfolios. Capital gain distributions, when
available, will be made annually. However, additional capital gain
distributions may be made periodically during the fiscal year in order to
comply with the Internal Revenue Code as applicable to regulated
investment companies.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
or upon receipt of ex-dividend notification in the case of certain foreign
securities. Interest income, including level-yield amortization of premium
and discount, is accrued daily.
2
Investment
management
and services
agreement
The Fund has an Investment Management and Services Agreement with IDS
Life. For its services, IDS Life is paid a fee based on the aggregate
average daily net assets of each of the portfolios. The fee is 0.7% on an
annual basis for the Equity, Income, Managed and Government Securities
Portfolios. For Money Market Portfolio the fee is 0.5% on an annual basis.
For International Equity Portfolio the fee is 0.95% on an annual basis.
IDS Life and American Express Financial Corporation have an Investment
Advisory Agreement which calls for IDS Life to pay American Express
Financial Corporation a fee for investment advice about the Fund's
portfolios. The fee paid by IDS Life is 0.25% of Equity, Income, Money
Market, Managed and Government Securities Portfolios' average daily net
assets for the year. The fee paid by IDS Life is 0.35% of International
Equity Portfolio's average daily net assets for the year.
In addition to paying its own management fee, each portfolio also pays its
taxes, brokerage commissions and nonadvisory expenses. Expenses that
relate to a particular portfolio, such as custodian fees and registration
fees for shares, are paid by that portfolio. Other expenses are allocated
to the portfolios in an equitable manner as determined by the Fund's
board. Each portfolio also pays custodian fees to American Express Trust
Company, an affiliate of IDS Life.
IDS Life has voluntarily agreed to reimburse each portfolio for operating
expenses, excluding the investment management and services fees, which
exceed 0.1% on an annual basis of average daily net assets of each
portfolio.
3
Securities
transactions
For the year ended April 30, 1997, cost of purchases and proceeds from
sales of securities aggregated, respectively, $156,224,113 and
$141,941,144 for Money Market Portfolio. Cost of purchases and proceeds
from sales of securities (other than short-term obligations) aggregated
for each Portfolio are as follows:
Portfolio Purchases Proceeds
Equity $1,146,628,368 $1,064,260,709
Income 67,940,007 60,492,262
Managed 394,678,825 325,362,445
Government Securities 8,173,316 7,686,831
International Equity 196,517,762 125,284,548
Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with IDS Life were
$21,588, $2,005 and $930 for Equity Portfolio, Managed Portfolio and
International Equity Portfolio, respectively, for the year ended April 30,
1997.
4
Foreign currency
contracts
At April 30, 1997, International Equity Portfolio had entered into 13
foreign currency exchange contracts that obligate the Portfolio to deliver
currencies at specified future dates. The unrealized appreciation and/or
depreciation (see Summary of significant accounting policies) on these
contracts is included in the accompanying financial statements. The terms
of the open contracts are as follows:
<TABLE>
<CAPTION>
International Equity Portfolio
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C> <C>
May 2, 1997 15,628 408,038 $ -- $ 7
U.S. Dollar Thailand Baht
May 2, 1997 114,011 114,000 5 --
U.S. Dollar Argentine Peso
May 2, 1997 413,041 412,999 19 --
U.S. Dollar Argentine Peso
May 2, 1997 12,986 1,676 -- --
Hong Kong Dollar U.S. Dollar
May 5, 1997 628,552 7,583,861 -- 6,134
U.S. Dollar Austrian Schilling
May 6, 1997 1,742,258 1,006,736 378 --
Deutsche Mark U.S. Dollar
May 6, 1997 107,049 65,872 -- 296
U.S. Dollar British Pound
May 6, 1997 1,211,422 6,300,000 128 --
U.S. Dollar Finnish Markka
May 6, 1997 3,649 95,254 -- 3
U.S. Dollar Thailand Baht
May 6, 1997 372,802 934,725 -- 475
U.S. Dollar Malaysian Dollar
May 7, 1997 2,323 60,682 -- --
U.S. Dollar Thailand Baht
May 7, 1997 21,021,110 795,953 -- 1,208
Philippine Peso U.S. Dollar
May 30, 1997 429,848 2,484,090 -- 4,235
U.S. Dollar French Franc
----- -----
$530 $12,358
</TABLE>
<PAGE>
<TABLE>
5
Capital share
transactions
Transactions in shares of each portfolio for the years ended April 30,
1997 and 1996 were as follows:
Number of shares: Year ended April 30, 1997
<CAPTION>
Money Government International
Equity Income Market Managed Securities Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sold 5,247,248 1,285,296 22,308,722 3,697,780 326,772 5,004,552
Issued for reinvested
distributions 3,352,450 412,933 950,526 1,664,945 85,930 471,553
Redeemed (436,609) (582,861) (9,030,614) (633,327) (307,264) (112,948)
- --------------------------------------------------------------------------------------------------------------------------
Net increase 8,163,089 1,115,368 14,228,634 4,729,398 105,438 5,363,157
Number of shares: Year ended April 30, 1996
Money Government International
Equity Income Market Managed Securities Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Sold 3,543,079 1,633,884 12,706,236 3,492,833 203,165 2,358,924
Issued for reinvested
distributions 22,323 311,618 645,835 788,557 71,365 21,630
Redeemed (306,199) (333,001) (8,917,863) (665,334) (186,050) (22,514)
- --------------------------------------------------------------------------------------------------------------------------
Net increase 3,259,203 1,612,501 4,434,208 3,616,056 88,480 2,358,040
</TABLE>
<PAGE>
6
Option contracts
written
The number of contracts and premium amounts associated with options
contracts written by Equity Portfolio (see Summary of significant
accounting policies) is as follows:
Year ended April 30, 1997
Calls
Contracts Premium
Balance April 30, 1996 -- $ --
Opened 1,200 275,231
Closed (600) (126,736)
Expired (600) (148,495)
- --------------------------------------------------------------------------------
Balance April 30, 1997 -- $ --
- --------------------------------------------------------------------------------
7
Financial
highlights
"Financial highlights" showing per share data and selected information is
presented on pages 5-10 of the prospectus.
<PAGE>
Investments in securities
IDS Life Series Fund, Inc.
Equity Portfolio
April 30, 1997
(Percentages represent value of
investments compared to net assets)
Common stocks (86.6%)
Aerospace & defense (0.3%)
AAR 48,100 $ 1,430,975
Airlines (1.0%)
Alaska Air Group 117,000(b) 2,910,375
Northwest Airlines 73,000(b) 2,847,000
Total 5,757,375
Banks and savings & loans (2.7%)
BankBoston 40,000 2,910,000
Barnett Banks 80,000 3,910,000
Magna Group 100,000 3,087,500
Washington Mutual 103,300 5,100,438
Total 15,007,938
Beverages & tobacco (0.5%)
Robert Mondavi Cl A 70,000(b) 2,625,000
Building materials & construction (2.5%)
Chicago Bridge & Iron 134,400(b) 2,284,800
Sherwin-Williams 100,000 3,025,000
Tyco Intl 140,000 8,540,000
Total 13,849,800
Chemicals (3.0%)
Betz Laboratories 46,000 2,944,000
Praxair 120,000 6,195,000
Sigma-Aldrich 90,000 2,700,000
USA Waste Service 150,000(b) 4,912,500
Total 16,751,500
Communications equipment & services (2.1%)
Ascend Communications 250,000(b) 11,437,500
Computers & office equipment (17.7%)
Acxiom 150,000(b) 1,968,750
Adaptec 60,000(b) 2,220,000
Avid Technology 65,000(b) 1,259,375
BEA Systems 200,000(b) 1,200,000
BMC Software 112,000(b) 4,844,000
BTG 140,000(b) 2,100,000
Cadence Design Systems 90,000(b) 2,880,000
Cisco Systems 70,000(b) 3,622,500
Computer Sciences 100,000(b) 6,250,000
Equifax 95,000 2,731,250
Fiserv 48,800(b) 1,842,200
HPR 55,000(b) 776,875
Ikon Office Solutions 206,000 5,536,250
Infinity Financial
Technology 100,000(b) 1,262,500
McAfee Associates 117,000(b) 6,522,750
Network General 170,000(b) 2,337,500
Parametric Technology 117,000(b) 5,294,250
PeopleSoft 111,000(b) 4,606,500
Rational Software 250,000(b) 3,453,125
Read-Rite 130,000(b) 3,363,750
Renaissance Solutions 192,000(b) 4,176,000
Reynolds & Reynolds Cl A 102,000 2,116,500
Sanmina 77,500(b) 3,875,000
Sterling Commerce 360,000(b) 9,315,000
Structural Dynamics
Research 133,000(b) 2,826,250
SunGard Data Systems 15,000(b) 665,625
Synopsys 100,000(b) 3,187,500
Technology Solutions 100,000(b) 2,637,500
Veritas Software 90,000(b) 3,026,250
Whittman-Hart 80,000(b) 1,520,000
Total 97,417,200
Electronics (7.9%)
Altera 32,000(b) 1,586,000
Burr-Brown 76,500(b) 2,256,750
Dallas Semiconductor 117,000 4,270,500
Harris 35,000 2,992,500
Kent Electronics 80,000(b) 2,000,000
KLA Instruments 126,000(b) 5,607,000
Kulicke & Soffa Inds 100,000(b) 2,793,750
Lattice Semiconductor 60,000(b) 3,352,500
Maxim Intergrated Products 55,000(b) 2,908,125
Molex 82,500 2,557,500
PRI Automation 55,000(b) 2,818,750
Sawtek 80,000(b) 2,370,000
Tencor Instruments 48,000(b) 2,130,000
Teradyne 54,000(b) 1,768,500
Vitesse Semiconductor 35,800(b) 1,127,700
Xilinx 67,100(b) 3,287,900
Total 43,827,475
Energy (0.6%)
Tosco 111,000 3,288,375
Energy equipment & services (2.0%)
Cooper Cameron 40,000(b) 2,850,000
ENSCO Intl 58,000(b) 2,755,000
Global Marine 135,000(b) 2,716,875
Lone Star Technologies 143,000(b) 2,663,375
Total 10,985,250
Financial services (4.3%)
Franklin Resources 72,600 4,292,475
Household Intl 17,900 1,575,200
MBNA 90,000 2,970,000
MGIC Investment 40,000 3,250,000
Providian 80,000 4,620,000
Schwab (Charles) 108,900 3,988,462
Winthrop Resources 100,000 3,037,500
Total 23,733,637
Food (1.0%)
Delta & Pine Land 113,333 2,833,325
JP Foodservice 100,000(b) 2,787,500
Total 5,620,825
Furniture & appliances (2.0%)
Leggett & Platt 100,000 3,475,000
Miller (Herman) 150,000 4,856,250
Stanley Works 73,000 2,837,875
Total 11,169,125
Health care (7.0%)
Acuson 111,000(b) 2,691,750
ALZA 115,000(b) 3,363,750
Biogen 167,000(b) 5,344,000
Boston Scientific 75,000(b) 3,618,750
Centocor 185,000(b) 5,203,125
DENTSPLY Intl 104,300 5,162,850
Genentech 40,000(b) 2,345,000
Guidant 40,000 2,730,000
IDEC Pharmaceuticals 102,400(b) 1,817,600
Physio-Control Intl 59,800(b) 747,500
Watson Pharmaceuticals 148,700(b) 5,316,025
Total 38,340,350
Health care services (8.5%)
Cardinal Health 60,000 3,195,000
Equity Corporation Intl 100,000(b) 2,150,000
FPA Medical Management 320,000(b) 5,200,000
Genesis Health Ventures 105,000(b) 3,136,875
HBO & Co 212,000 11,342,000
Health Management
Associates 160,000(b) 4,280,000
HEALTHSOUTH 70,000(b) 1,382,500
McKesson 33,300 2,410,088
Medical Resources 137,000(b) 1,746,750
NovaCare 270,000(b) 3,071,250
PhyCor 91,000(b) 2,422,875
Quorum Health Group 44,000(b) 1,369,500
Tenet Healthcare 194,000(b) 5,044,000
Total 46,750,838
Household products (0.6%)
Newell 94,600 3,311,000
Industrial equipment & services (1.2%)
U.S. Rentals 43,000(b) 817,000
United Waste Systems 171,000(b) 5,771,250
Total 6,588,250
Insurance (2.6%)
Nationwide Financial
Services 70,000(b) 1,855,000
Protective Life 98,000 4,336,500
SunAmerica 115,600 5,317,600
UNUM 35,000 2,695,000
Total 14,204,100
Leisure time & entertainment (0.2%)
Brunswick 48,000 1,356,000
Media (1.7%)
American Radio Systems 88,000(b) 2,574,000
Outdoor Systems 100,000(b) 2,775,000
Telemundo Group Cl A 100,000(b) 2,625,000
VDI Media 250,000(b) 1,562,500
Total 9,536,500
Metals (1.2%)
Commonwealth Inds 120,000 2,070,000
Stillwater Mining 230,000(b) 4,628,750
Total 6,698,750
Paper & packaging (1.0%)
Sealed Air 113,700(b) 5,258,625
Restaurants & lodging (1.2%)
CapStar Hotel 160,000(b) 4,540,000
Extended Stay America 144,000(b) 2,178,000
6,718,000
Retail (7.8%)
CDW Computer Centers 65,000(b) 3,120,000
CVS 60,000 2,977,500
Dollar General 178,500 5,645,062
Dominick's Supermarkets 133,000(b) 2,726,500
Family Dollar Stores 180,000 4,702,500
Kohl's 66,000(b) 3,225,750
Lazare Kaplan Intl 99,000(b) 1,348,875
Quality Food Centers 64,000 2,568,000
Rite Aid 81,000 3,726,000
Safeway 200,625(b) 8,952,891
Walgreen 90,800 4,176,800
Total 43,169,878
Textiles & apparel (0.5%)
WestPoint Stevens 67,400(b) 2,637,025
Utilities -- gas (1.4%)
El Paso Natural Gas 53,000 3,080,625
Sonat 80,000 4,570,000
7,650,625
Utilities -- telephone (0.4%)
WorldCom 100,000(b) 2,400,000
Foreign (3.7%)
ACE 38,000 2,280,000
Amer Group 101,000(b) 1,728,670
ASM Lithography Holdings 43,900(b) 3,490,050
Belle 10,245,000(b) 2,447,602
BioChem Pharma 240,000(b) 4,316,250
Gucci Group 42,000 2,913,750
Philip Environmental 191,900(b) 3,022,425
Total 20,198,747
Total common stocks
(Cost: $434,816,183) $477,720,663
Short-term securities (15.3%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.2%)
Federal Home Loan Bank Disc Nt
05-01-97 5.43% $1,200,000 $1,200,000
Commercial paper (15.1%)
Albertson's
05-16-97 5.55 7,500,000 7,482,750
Ameritech Capital Funding
05-15-97 5.51 7,300,000(c) 7,284,415
Avco Financial Services
05-23-97 5.52 3,425,000 3,413,488
CAFCO
05-09-97 5.54 3,500,000(c) 3,495,707
05-12-97 5.54 6,500,000(c) 6,489,037
Colgate-Palmolive
05-13-97 5.52 5,000,000(c) 4,990,833
Dean Witter, Discover & Co
06-04-97 5.62 3,600,000 3,581,062
Fleet Funding
05-14-97 5.57 7,500,000(c) 7,484,996
05-19-97 5.53 900,000(c) 897,521
05-22-97 5.56 5,100,000(c) 5,083,548
05-23-97 5.54 1,100,000(c) 1,096,296
Gannett
05-08-97 5.58 1,400,000(c) 1,398,489
05-16-97 5.55 5,800,000(c) 5,786,660
Gateway Fuel
05-28-97 5.51 5,600,000 5,576,942
Novartis Finance
05-02-97 5.57 4,000,000 3,999,383
05-05-97 5.54 6,000,000 5,996,320
Paccar Financial
05-07-97 5.54 1,600,000 1,598,528
SBC Communications Capital
05-09-97 5.52 3,900,000(c) 3,895,233
06-03-97 5.53 2,100,000(c) 2,089,412
USAA Capital
05-05-97 5.59 1,600,000 1,599,012
Total 83,239,632
Total short-term securities
(Cost: $84,439,632) $ 84,439,632
Total investment in securities
(Cost: $519,255,815) $562,160,295
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) 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.
(d) At April 30, 1997, the cost of securities for federal income tax purposes
was $519,326,870 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $58,069,087
Unrealized depreciation (15,235,662)
-----------
Net unrealized appreciation $42,833,425
===========
<PAGE>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Income Portfolio
April 30, 1997
(Percentages represent value of
investments compared to net assets)
Bonds (85.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (3.4%)
<S> <C> <C> <C> <C>
U.S. Treasury 7.00 % 2006 $1,750,000 $ 1,779,383
TIPS 3.375 2007 503,620(i) 495,592
Total 2,274,975
Mortgage-backed securities (30.0%)
Federal Home Loan Mtge Corp 5.50 2009 814,463 769,667
6.50 2011 1,943,069 1,889,033
Collateralized Mtge Obligation 8.00 2020 185,000 189,041
8.50 2022 1,000,000 1,055,000
Federal Natl Mtge Assn 6.00 2011 1,918,853 1,831,450
6.50 2010 1,196,574 1,170,286
6.58 2001 2,000,000(e) 1,990,040
7.00 2003-26 1,997,962 1,937,633
7.50 2027 1,974,345 1,958,925
8.00 2027 2,929,535 2,966,155
8.50 2027 2,691,577 2,774,854
Collateralized Mtge Obligation
Trust Series Z 8.00 2021 364,539(f) 369,615
Merrill Lynch Mtge Investors 8.16 2021 222,980 219,565
Morgan Stanley
Collateralized Mtge Obligation 6.59 2028 942,923 928,779
Total 20,050,043
Aerospace & defense (1.0%)
Airplanes Cl D 10.875 2019 100,000 110,500
BE Aerospace
Sr Sub Nts 9.875 2006 100,000 103,125
Goodrich (B.F.) 9.625 2001 150,000 162,609
Newport News Shipbuilding
Sr Nts 8.625 2006 75,000 75,375
Northrop Grumman 7.00 2006 250,000(c) 241,378
Total 692,987
Airlines (0.6%)
Continental Airlines 6.94 2015 392,157 380,933
Automotive & related (0.4%)
Arvin Capital 9.50 2027 250,000 247,485
Banks and savings & loans (3.5%)
Barclays NA Capital 9.75 2021 300,000 338,562
First Bank System 6.875 2007 400,000 386,336
Fleet/Norstar Financial
Sub Nts 9.00 2001 200,000 214,758
Hubco Capital Trust 8.98 2027 500,000(c) 492,500
Morgan (JP)
Medium-term Nts 4.00 2012 500,000(e) 488,250
Norwest
Sr Nts 6.375 2002 400,000 391,900
Total 2,312,306
Building materials & construction (2.2%)
Carlisle
Sr Nts 7.25 2007 500,000 492,425
Owens-Corning Fiberglass 9.375 2012 100,000 109,138
Pulte
Sr Nts 7.00 2003 300,000 290,292
Schuller Intl Group
Sr Nts 10.875 2004 500,000 551,250
Southdown
Sr Sub Nts 10.00 2006 50,000 52,688
Total 1,495,793
Communications equipment & services (1.6%)
GST Acquisition
Sr Sub Nts 10.50 2007 200,000(c) 201,750
GST Telecommunications
Zero Coupon Cv 5.25 2000 20,000(c,d) 15,000
Phonetel Technologies
Sr Nts 12.00 2006 125,000 124,062
Shared Technologies
Zero Coupon 12.25 1999 250,000(d) 204,063
US West Capital Funding 6.85 2002 500,000 497,365
Total 1,042,240
Electronics (0.7%)
Magnetek
Sr Sub Debs 10.75 1998 100,000 104,500
Thomas & Betts 6.50 2006 400,000(c) 375,452
Total 479,952
Energy (2.1%)
Clark Oil
Sr Nts 9.50 2004 100,000 101,250
Forcenergy
Sr Sub Nts 9.50 2006 50,000 50,438
Oryx Energy 8.125 2005 500,000 512,045
Parker & Parsley Petroleum 8.25 2007 500,000 525,710
UNC
Sr Nts 9.125 2003 200,000 212,000
Total 1,401,443
Energy equipment & services (1.2%)
Foster Wheeler 6.75 2005 300,000 286,545
Noble Drilling
Sr Nts 9.125 2006 500,000 531,875
Total 818,420
Financial services (2.5%)
Avco Financial Services 7.25 1999 300,000 304,734
Corporate Property Investors 7.18 2013 300,000(c) 281,163
Countrywide Funding
Medium-term Nts 8.42 1999 300,000 309,753
DVI
Sr Nts 9.875 2004 250,000 245,625
First Union REIT 8.875 2003 100,000 100,250
Homeside
Sr Nts 11.25 2003 130,000 148,200
Property Trust America REIT 7.50 2014 300,000 283,587
Total 1,673,312
Food (0.2%)
Chiquita Brands Intl 9.625 2004 100,000 102,875
Furniture & appliances (0.3%)
Interface 9.50 2005 100,000 102,750
Lifestyle Furniture 10.875 2006 100,000 107,250
Total 210,000
Health care (0.2%)
IMED
Sr Sub Nts 9.75 2006 150,000(c) 150,000
Health care services (1.9%)
Columbia-HCA Healthcare 6.91 2005 100,000 97,692
La Petite Holdings
Sr Secured Nts 9.625 2001 200,000 204,250
Manor Care
Sr Nts 7.50 2006 250,000 250,785
Merit Behavioral
Sr Sub Nts 11.50 2005 100,000 108,125
Paracelsus Healthcare
Sr Sub Nts 10.00 2006 350,000 329,875
Tenet Healthcare
Sr Sub Nts 10.125 2005 250,000 269,375
Total 1,260,102
Household products (0.1%)
Sweetheart Cup
Sr Sub Nts 10.50 2003 100,000 101,750
Industrial equipment & services (1.8%)
AGCO
Sr Sub Nts 8.50 2006 100,000 100,750
Aramark Services 7.10 2006 500,000 478,595
Case 7.25 2005 400,000 394,348
Motors and Gears
Sr Nts 10.75 2006 250,000(c) 249,062
Total 1,222,755
Insurance (0.9%)
American United Life 7.75 2026 200,000(h) 185,730
Americo Life 9.25 2005 100,000 100,000
Conseco Financing Trust 8.70 2026 300,000 296,220
Total 581,950
Leisure time & entertainment (0.8%)
Trump Atlantic City Funding
1st Mtge 11.25 2006 250,000 243,750
Trump Holdings & Funding
Sr Nts 15.50 2005 250,000 281,250
Total 525,000
Media (4.2%)
Ackerley Communications
Sr Secured Nts 10.75 2003 100,000 106,500
Cablevision Systems
Sr Sub Debs 10.75 2004 100,000 103,250
Comcast
Sr Sub 9.125 2006 500,000 507,500
Lamar Advertising 9.625 2006 275,000 274,313
Lenfest Communications
Sr Nts 8.375 2005 250,000 238,750
MDC Communications
Sr Sub Nts 10.50 2006 100,000 102,750
Quebecor Printing 7.25 2007 500,000 496,835
Time Warner
Deb 9.15 2023 300,000 321,165
Time Warner Entertainment 8.375 2033 250,000 247,840
TKR Cable
Sr Debs 10.50 2007 100,000 109,304
United Artist Theatre 9.30 2015 98,315 90,818
Viacom Intl
Sr Sub Nts 10.25 2001 100,000 106,625
Sub Deb 8.00 2006 100,000 93,000
Total 2,798,650
Metals (0.8%)
Ryerson Tull 8.50 2001 500,000 509,375
Multi-industry conglomerates (1.4%)
Crane 7.25 1999 300,000 303,930
Fairchild 13.125 2006 65,000 66,625
Mark IV Inds 8.75 2003 100,000 101,000
Prime Succession
Sr Sub Nts 10.75 2004 85,000 91,162
USI American Holdings
Sr Nts 7.25 2006 425,000(c) 408,574
Total 971,291
Paper & packaging (1.6%)
Chesapeake 9.875 2003 100,000 112,204
Federal Paperboard 10.00 2011 100,000 120,993
Gaylord Container
Sr Sub Deb 12.75 2005 100,000 106,750
Intl Paper 5.125 2012 85,000 66,530
Scotia Pacific Holdings 7.95 2015 255,131 253,871
Silgan
Sr Sub Nts 11.75 2002 100,000 106,625
Warren (SD)
Sr Nts 12.00 2004 250,000 274,687
Total 1,041,660
Restaurants & lodging (0.4%)
Hammons (John Q) Hotels
1st Mtge 8.875 2004 250,000 243,750
Retail (1.4%)
Kroger
Sr Nts 8.15 2006 500,000 516,250
Pep Boys - Manny, Moe & Jack 7.00 2005 300,000 292,602
Safeway
Sr Sub Nts 10.00 2001 100,000 110,000
Total 918,852
Textiles & apparel (0.7%)
Dominion Textiles
Sr Nts 9.25 2006 200,000 203,750
Polysindo 11.375 2006 250,000 266,250
Total 470,000
Transportation (0.7%)
Enterprise Rent-A-Car USA Finance
Medium-term Nts 8.75 1999 300,000(c) 312,798
Ryder System 9.25 2001 150,000 161,663
Total 474,461
Utilities -- electric (2.2%)
Cal Energy
Sr Nts 9.50 2006 250,000 260,312
Cleveland Electric Illuminating
1st Mtge 9.50 2005 100,000 106,625
El Paso Electric 8.90 2006 100,000 104,750
First Palo Verde Funding 10.15 2016 96,000 103,320
Houston Ind 9.375 2001 150,000 162,420
Long Island Lighting 8.625 2004 500,000 515,290
Midland Funding II 11.75 2005 100,000 108,625
Sithe Independence Funding 9.00 2013 100,000 100,752
Total 1,462,094
Utilities -- gas (0.9%)
Columbia Gas 7.32 2010 500,000 482,920
Southwest Gas 9.75 2002 100,000 108,293
Total 591,213
Utilities -- telephone (1.2%)
MFS Communications
Zero Coupon Sr Disc Nts 10.59 1999 500,000(d) 451,875
Teleport Communications
Zero Coupon Sr Disc Nts 8.04 2007 500,000(d) 343,750
Total 795,625
Miscellaneous (1.1%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 100,000 104,000
Banque Audi
Sr Sub 9.375 2001 100,000(c) 103,250
Coty 10.25 2005 100,000 106,625
M & I Capital Trust 7.65 2026 300,000 280,773
Outsourcing Solutions
Sr Sub Nts 11.00 2006 140,000(c) 149,275
Total 743,923
Foreign (13.5%) (b)
Alcan Aluminum
(U.S. Dollar) 8.875 2022 200,000 213,008
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 300,000 313,152
CAF
(U.S. Dollar) 7.10 2003 300,000 295,104
CEI Citicorp Holdings
(Argentine Peso) 11.25 2007 250,000(c) 239,375
China Light & Power
(U.S. Dollar) 7.50 2006 300,000 300,558
Dao Heng Bank
(U.S. Dollar) Sub Nts 7.75 2007 500,000(c) 490,625
Doman Inds
(U.S. Dollar) Sr Nts 8.75 2004 500,000 465,000
Dominion Textiles
(U.S. Dollar) 8.875 2003 100,000 101,250
Fresh Delmonte
(U.S. Dollar) 10.00 2003 200,000 195,000
Honam Oil Refinery
(U.S. Dollar) 7.125 2005 250,000(c) 240,712
Govt of Poland PDI Euro
(U.S. Dollar) 4.00 2014 650,000(e) 528,938
Grupo Televisa
(U.S. Dollar) Sr Nts 11.875 2006 100,000 106,875
Gulf Canada Resources
(U.S. Dollar) Sub Deb 9.625 2005 500,000 525,000
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 200,000(c) 207,250
Israel Electric
(U.S. Dollar) Sr Nts 7.250 2006 300,000(c) 292,875
Ministry Finance Russia
(U.S. Dollar) 9.25 2001 300,000(c) 295,500
People's Republic of China
(U.S. Dollar) 7.375 2001 100,000 100,625
Perez Companc
(U.S. Dollar) 9.00 2004 250,000(c) 253,125
Petronas
(U.S. Dollar) 7.75 2015 500,000 504,785
Philippine Long Distance Telephone
(U.S. Dollar) 7.85 2007 250,000(c) 236,728
Pohang Iron & Steel
(U.S. Dollar) 7.125 2006 500,000 488,080
Quno
(U.S. Dollar) Sr Nts 9.125 2005 250,000 261,562
Ras Laffan Gas
(U.S. Dollar) 8.29 2014 500,000(c) 510,140
Repap New Brunswick
(U.S. Dollar) 9.875 2000 100,000 99,125
Republic of Panama
(U.S. Dollar) 7.875 2002 250,000(c) 243,410
Republic of Slovenia
(U.S. Dollar) 7.00 2001 260,000(c) 258,549
Republic of South Africa
(U.S. Dollar) 9.625 1999 250,000 264,100
State of Israel
(U.S. Dollar) 6.375 2005 200,000 187,698
Telekom Malaysia
(U.S. Dollar) 7.875 2025 200,000(c) 201,892
TMM Transportation
(U.S. Dollar) 10.00 2006 125,000 116,562
Veritas Holdings
(U.S. Dollar) Sr Nts 9.625 2003 200,000(c) 201,500
Zhuhai Highway
(U.S. Dollar) 11.50 2008 250,000(c) 280,000
Total 9,018,103
Total bonds
(Cost: $56,903,130) $57,063,318
</TABLE>
<PAGE>
Other (--%)
Issuer Shares Value(a)
Intermedia Communications
Warrants 100 $2,000
Total other
(Cost: $1,025) $2,000
Short-term securities (13.3%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (10.8%)
Federal Home Loan Mtge Corp Disc Nt
05-02-97 5.41% $4,600,000 $ 4,599,310
Federal Natl Mtge Assn Disc Nts
05-08-97 5.44 1,100,000 1,098,841
05-19-97 5.38 1,500,000 1,495,972
Total 7,194,123
Commercial paper (2.5%)
AT&T
05-02-97 5.43 500,000 499,925
Exxon Asset Management
05-13-97 5.41 1,200,000(g) 1,197,840
Total 1,697,765
Total short-term securities
(Cost: $8,891,888) $ 8,891,888
Total investments in securities
(Cost: $65,796,043)(j) $65,957,206
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Foreign securities values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(c) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(d) For those zero coupon bonds, that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(e) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1997.
(f) This security is a collateralized mortgage obligation that pays no interest
or principal during its initial accrual period until payment of a previous
series within the trust have been paid off. Interest is accrued at an effective
yield.
(g) 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.
(h) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 1997, is as follows:
Security Aquisition Cost
date
American United Life*
7.75% 2026 02-13-96 $200,000
*Represents a security sold under Rule 144A, which is exempt from registration
under the securities Act of 1933, as amended.
(i) U.S. Treasury inflation protection securities (TIPS) are securities in which
the prinicipal amount is adjusted for inflation and the semiannual interest
payments equal a fixed percentage of inflation adjusted principal amount. (j) At
April 30, 1997, the cost of securities for federal income tax purposes was
$65,771,179 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation.........................$793,531
Unrealized depreciation.........................(607,504)
--------
Net unrealized appreciation.....................$186,027
========
IDS Life Series Fund, Inc.
Money Market Portfolio
April 30, 1997
(Percentages represent value of
investments investments compared to net assets)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
Commercial paper (91.7%)
Automotive & related (2.8%)
Ford Motor Credit
06-09-97 5.60% $ 800,000 $ 795,190
Banks and savings & loans (14.6%)
ANZ (Delaware)
07-21-97 5.38 1,000,000 988,143
Ciesco LP
06-18-97 5.62 1,200,000 1,191,072
Fleet Funding
05-22-97 5.56 1,100,000(b) 1,096,451
Societe Generale North America
05-14-97 5.33 900,000 898,287
Total 4,173,953
Broker dealers (11.5%)
Dean Witter, Discover & Co
05-02-97 5.58 1,200,000 1,199,815
Goldman Sachs Group
05-28-97 5.40 800,000 796,796
Merrill Lynch
05-30-97 5.58 600,000 597,318
Morgan Stanley Group
06-02-97 5.54 700,000 696,572
Total 3,290,501
Computers & office equipment (4.2%)
Pitney Bowes
07-22-97 5.67 1,200,000 1,184,693
Financial services (19.9%)
Associates Corp North America
05-28-97 5.62 900,000 896,240
Avco Financial Services
06-19-97 5.59 1,100,000 1,091,705
Beneficial
06-03-97 5.61 700,000 696,426
CIT Group Holdings
06-03-97 5.59 1,200,000 1,193,895
Commercial Credit
05-16-97 5.56 600,000 598,618
Household Finance
05-15-97 5.56 600,000 598,710
05-21-97 5.58 600,000 598,153
Total 5,673,747
Food (8.4%)
Cargill
05-02-97 5.54 1,200,000 1,199,816
CPC Intl
06-02-97 5.33 700,000(b) 696,727
07-23-97 5.68 500,000(b) 493,533
Total 2,390,076
Household products (3.1%)
Clorox
06-24-97 5.60 900,000 892,508
Insurance (11.2%)
American General Capital
05-22-97 5.61 700,000(b) 697,726
American General Finance
07-21-97 5.71 600,000 592,386
SAFECO Credit
05-23-97 5.57 800,000 797,301
USAA Capital
06-02-97 5.53 1,100,000 1,094,622
Total 3,182,035
Media (3.5%)
Gannett
05-23-97 5.53 1,000,000(b) 996,639
Multi-industry conglomerates (6.6%)
BOC Group
05-12-97 5.58 600,000 598,983
General Electric
06-17-97 5.60 1,300,000 1,290,563
Total 1,889,546
Retail (2.8%)
Albertson's
05-16-97 5.55 800,000 798,160
Utilities -- telephone (3.1%)
MCI Communications
05-28-97 5.54 900,000(b) 896,274
Total commerical paper
(Cost: $26,163,322) $26,163,322
Letters of credit (8.4%)
Bank of America -
Formosa Plastics
05-09-97 5.60 600,000 599,257
Bank of New York -
River Fuel
06-06-97 5.58 600,000(b) 596,670
First Chicago -
Commed Fuel
06-18-97 5.62 1,200,000 1,191,088
Total letters of credit
(Cost: $2,387,015) $ 2,387,015
Total investments in securities
(Cost: $28,550,337)(c) $28,550,337
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) 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.
(c) At April 30, 1997, this also represents the cost of securities for federal
income tax purposes.
<PAGE>
IDS Life Series Fund, Inc.
Managed Portfolio
April 30, 1997
(Percentages represent value of
investments compared to total net assets)
Common stocks (52.8%)
Issuer Shares Value(a)
Aerospace & defense (2.6%)
Boeing 33,000 $ 3,254,625
General Motors Cl H 50,000 2,687,500
Lockheed Martin 30,000 2,685,000
United Technologies 25,600 1,936,000
Total 10,563,125
Airlines (0.8%)
AMR 35,000(b) 3,259,375
Automotive & related (0.8%)
Danaher 75,000 3,384,375
Banks and savings & loans (2.9%)
BankBoston 40,000 2,910,000
First Union 20,000 1,680,000
Mellon Bank 40,000 3,325,000
Washington Mutual 78,700 3,885,812
Total 11,800,812
Building materials & construction (1.9%)
Sherwin-Williams 80,000 2,420,000
Tyco Intl 88,300 5,386,300
Total 7,806,300
Chemicals (2.6%)
Culligan Water Technologies 80,000(b) 3,270,000
Praxair 80,000 4,130,000
USA Waste Services 100,000(b) 3,275,000
Total 10,675,000
Communications equipment & services (1.0%)
Advanced Fibre
Communications 100,000(b) 3,987,500
Computers & office equipment (2.8%)
Cisco Systems 35,000(b) 1,811,250
Compaq Computer 31,000(b) 2,646,625
First Data 80,000 2,760,000
Ikon Office Solutions 76,600 2,058,625
Oracle 60,000(b) 2,385,000
Total 11,661,500
Electronics (0.6%)
Intel 15,000 2,296,875
Energy (1.4%)
Newfield Exploration 140,000(b) 2,677,500
Noble Affiliates 90,000 3,217,500
Total 5,895,000
Energy equipment & services (0.8%)
Fluor 15,000 825,000
Transocean Offshore 40,000 2,425,000
Total 3,250,000
Financial services (1.6%)
Providian 50,000 2,887,500
Travelers Group 68,000 3,765,500
Total 6,653,000
Food (0.7%)
Sara Lee 65,000 2,730,000
Health care (6.7%)
ALZA 30,000(b) 877,500
American Home Products 56,000 3,710,000
Amgen 49,000(b) 2,884,875
Baxter Intl 58,000 2,776,750
Boston Scientific 40,000(b) 1,930,000
Guidant 55,000 3,753,750
IDEXX Laboratories 160,000(b) 2,080,000
Johnson & Johnson 48,400 2,964,500
Merck 49,000 4,434,500
Schering Plough 25,600 2,048,000
Total 27,459,875
Health care services (1.8%)
Service Corp Intl 120,000 4,110,000
Tenet Healthcare 120,000(b) 3,120,000
Total 7,230,000
Household products (0.8%)
Dial 220,000 3,410,000
Industrial equipment & services (0.7%)
AGCO 110,000 2,846,250
Insurance (1.5%)
Risk Capital Holdings 54,400(b) 1,033,600
Travelers/Aetna Property
Casualty 72,000 2,430,000
UNUM 35,000 2,695,000
Total 6,158,600
Leisure time & entertainment (1.3%)
Carnival Cl A 75,000 2,765,625
Harley-Davidson 70,000 2,765,000
Total 5,530,625
Metals (1.5%)
Aluminum Co of America 40,500 2,829,938
UCAR Intl 81,000(b) 3,402,000
Total 6,231,938
Multi-industry conglomerates (2.9%)
Emerson Electric 120,000 6,090,000
Interim Services 75,000(b) 2,906,250
Westinghouse Electric 175,000 2,975,000
Total 11,971,250
Paper & packaging (1.5%)
Bemis 36,000 1,372,500
Crown Cork & Seal 32,500 1,779,375
Kimberly-Clark 60,000 3,075,000
Total 6,226,875
Restaurants & lodging (1.5%)
Hilton Hotels 130,000 3,510,000
La Quinta Inns 120,000 2,625,000
Total 6,135,000
Retail (3.9%)
American Stores 68,900 3,134,950
Dollar General 75,000 2,371,875
Kohl's 52,000(b) 2,541,500
Rite Aid 100,000 4,600,000
Safeway 75,000(b) 3,346,875
Total 15,995,200
Textiles & apparel (1.1%)
Tommy Hilfiger 40,000 1,590,000
Unifi 100,000 3,100,000
Total 4,690,000
Transportation (0.6%)
Burlington Northern Santa Fe 30,000 2,362,500
Utilities -- electric (0.8%)
CMS Energy 100,000 3,175,000
Utilities -- gas (0.9%)
El Paso Natural Gas 65,000 3,778,125
Utilities -- telephone (0.9%)
BellSouth 80,000 3,560,000
Foreign (3.9%)(c)
Ericsson (LM) ADR 80,000 2,690,000
Mutual Risk Management 68,333 2,511,238
Northern Telecom 40,000 2,905,000
Renaissance Energy 125,000(b) 3,463,396
Telecomunicacoes
Brasileiras-Telebras ADR 38,500 4,417,875
Total 15,987,509
Total common stocks
(Cost: $185,240,755) $216,711,609
<TABLE>
<CAPTION>
Bonds (36.1%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
<S> <C> <C> <C> <C>
U.S. government obligations (8.2%)
U.S. Treasury 5.625% 2000 $ 10,100,000 $ 9,830,431
5.75 2003 6,500,000 6,212,115
5.875 1998 5,000,000 4,987,550
6.25 2023 3,600,000 3,261,060
6.50 2005 1,300,000 1,281,059
7.125 1999 2,850,000 2,899,761
7.50 2001-2016 1,085,000 1,136,503
7.75 2000 3,700,000 3,823,580
Govt Trust Certs Israel 9.25 2001 255,711 269,369
Total 33,701,428
Mortgage-backed securities (8.5%)
Federal Home Loan Mtge Corp 7.00 2003 2,977,615 2,974,816
8.00 2022-2024 1,036,146 1,056,971
8.50 2026 916,204 947,409
Federal Natl Mtge Assn 5.50 2009 1,746,997 1,642,929
6.00 2024 1,759,307 1,624,615
6.50 2010-2025 2,717,247 2,620,731
7.00 2003-2026 6,671,688 6,469,225
7.50 2025-2026 7,230,682 7,178,934
8.00 2022-2027 6,119,270 6,196,969
8.50 2023-2025 1,100,261 1,138,070
9.00 2024 149,523 158,261
Collaterized Mtge Obligation
Trust Series Z 6.50 2023 310,301(j) 254,062
7.00 2016 1,393,103(j) 1,361,048
Merrill Lynch Mtge Investors 6.96 2028 900,000 849,516
8.16 2021 356,768(h) 351,304
Total 34,824,860
Aerospace & defense (0.6%)
Alliant Techsystem
Sr Sub 11.75 2003 300,000 327,000
BE Aerospace
Sr Sub Nts 9.875 2006 400,000 412,500
Newport News Shipbuilding 8.625 2006 750,000 753,750
Northrop Grumman 7.75 2016 500,000 487,855
Sequa 9.625 1999 500,000 515,625
Total 2,496,730
Airlines (0.1%)
Continental Air Lines 6.94 2015 490,196 476,167
Automotive & related (--%)
General Motors Acceptance 8.375 1997 65,000 65,000
Banks and savings & loans (1.6%)
BankAmerica 7.70 2026 1,000,000(h) 946,590
First Bank System 6.875 2007 1,000,000 965,840
First Nationwide Bank 10.625 2003 390,000 416,325
Firstar 8.32 2026 500,000(h) 495,580
Mellon Capital 7.72 2026 400,000 377,876
Morgan (JP)
Medium-term Nts 4.00 2012 1,500,000(i) 1,464,750
Norwest
Sr Nts 6.375 2002 800,000 783,800
Riggs Natl
Sub Nts 8.50 2006 100,000 101,875
Union Planters Trust 8.20 2026 1,000,000(h) 964,420
Total 6,517,056
Building materials & construction (0.3%)
McQuay (AAF)
Sr Nts 8.875 2003 500,000 485,625
Pulte 7.00 2003 500,000 483,820
Schuller Intl Group
Sr Nts 10.875 2004 250,000 275,625
Total 1,245,070
Communications equipment & services (0.3%)
Geotek Communications
Cv 12.00 2001 230,000(g) 184,000
GST Acquisition 10.50 2007 500,000(h) 504,375
GST Telecommunications
Zero Coupon Cv 5.25 2000 50,000(e) 37,500
Optel
with Common Stock 13.00 2005 500,000(h) 470,000
Total 1,195,875
Electronics (0.4%)
Advanced Micro Devices 11.00 2003 750,000 817,500
Reliance Electric 6.80 2003 500,000 496,845
Thomas & Betts 6.50 2006 400,000 375,452
Total 1,689,797
Energy (1.0%)
Enron Oil & Gas 6.70 2006 1,000,000 962,590
Parker & Parsley 8.25 2007 500,000 525,710
TransAmerican Refining
Zero Coupon with Warrants 8.35 1998 750,000(d) 695,625
Triton Energy 9.75 2000 750,000 785,625
UNC
Sr Nts 9.125 2003 1,000,000 1,060,000
Total 4,029,550
Energy equipment & services (0.2%)
Foster Wheeler 6.75 2005 750,000 716,362
Financial services (0.6%)
Avco Financial Services 7.25 1999 250,000 253,945
Corporate Property Investors 7.18 2013 500,000(h) 468,605
First Union REIT 8.875 2003 300,000 300,750
Homeside 11.25 2003 237,000 270,180
Property Trust of America REIT 7.50 2014 750,000 708,967
Salomon Brothers 6.75 2006 500,000 475,980
Total 2,478,427
Food (0.6%)
ARA Group 8.50 2003 1,025,000 1,050,625
Gorges/Quick to Fix Food 11.50 2006 750,000(h) 764,062
Twin Labs
Sr Sub Nts 10.25 2006 750,000 774,375
Total 2,589,062
Furniture & appliances (0.2%)
Interface
Sr Sub Nts 9.50 2005 400,000 411,000
Syratech 11.00 2007 500,000 511,250
Total 922,250
Health care (0.1%)
Lilly (Eli) 6.77 2036 500,000 449,510
Health care services (0.8%)
Columbia/HCA Healthcare 7.69 2025 280,000 276,161
Merit Behavioral Care
Sr Sub Nts 11.50 2005 350,000 378,438
Owens & Minor
Sr Sub Nts 10.875 2006 400,000 428,000
Paracelsus Healthcare 10.00 2006 500,000 471,250
Tenet Healthcare 8.625 2007 500,000 496,500
Sr Sub Nts 10.125 2005 1,000,000 1,077,500
Total 3,127,849
Household products (1.1%)
Revlon Worldwide
Zero Coupon 6.25 1998 5,000,000(d) 4,731,250
Industrial equipment & services (0.5%)
Case 7.25 2005 850,000 837,990
Jordan Industries
Zero Coupon 11.75 2002 1,141,954(e) 632,357
Specialty Equipment
Sr Sub Deb 11.375 2003 500,000 538,125
Total 2,008,472
Insurance (0.7%)
American United Life 7.75 2026 500,000(g) 464,325
Americo Life 9.25 2005 600,000 600,000
General American Life
Sub Cap Nts 7.625 2024 500,000(h) 448,730
New England Mutual
Credit Sensitive Nts 7.875 2024 250,000(h) 243,835
Principal Mutual 8.00 2044 250,000(h) 243,125
SunAmerica
Medium-term Nts 7.34 2005 700,000 698,173
Total 2,698,188
Leisure time & entertainment (0.8%)
Coast Hotels & Casino 13.00 2002 500,000 557,500
Lodgenet Entertainment 10.25 2006 750,000(h) 730,313
Trump Atlantic City Funding
1st Mtge 11.25 2006 400,000 390,000
United Artists Theatre 9.30 2015 737,362 681,138
Waterford Gaming 12.75 2003 700,000(h) 756,000
Total 3,114,951
Media (1.6%)
Ackerley Communications
Sr Secured Nts 10.75 2003 400,000 426,000
Adelphia Communications
Pay-in-kind 9.50 2004 203(k) 178
Cablevision Systems 9.25 2005 750,000 731,250
Cox Communication 7.625 2025 500,000 480,155
EchoStar Satellite Broadcast
Zero Coupon 7.06 2000 1,000,000(e) 735,000
News American Holdings 7.50 2000 250,000 253,942
Outdoor Systems 9.375 2006 500,000 487,500
Pegasus Media & Communication 12.50 2005 500,000 535,000
Time Warner Entertainment 8.375 2033 500,000 495,680
Turner Broadcasting System
Sr Nts 8.375 2013 250,000 250,723
Universal Outdoor 9.75 2006 500,000 500,000
Viacom Intl 7.00 2003 500,000 466,805
8.00 2006 1,500,000 1,395,000
Total 6,757,233
Metals (0.2%)
Ryerson Tull 8.50 2001 750,000 764,062
Multi-industry conglomerates (0.5%)
Crane 7.25 1999 250,000 253,275
Mark IV Inds 8.75 2003 400,000 404,000
Prime Succession Acquisition 10.75 2004 420,000 450,450
USI American Holdings 7.25 2006 850,000(h) 817,147
Total 1,924,872
Paper & packaging (0.5%)
Federal Paperboard 10.00 2011 250,000 302,483
Gaylord Container 12.75 2005 250,000 266,875
Intl Paper 5.125 2012 250,000 195,676
Scotia Pacific Holdings 7.95 2015 255,131 253,871
Silgan
Sr Sub Nts 11.75 2002 500,000 533,125
Warren (SD)
Sr Nts 12.00 2004 400,000 439,500
Total 1,991,530
Retail (0.2%)
Pep Boys - Manny, Moe & Jack 7.00 2005 500,000 487,670
White Rose Foods
Zero Coupon 26.29 1998 650,000(d) 533,000
Total 1,020,670
Utilities -- electric (1.5%)
Alabama Power 9.00 2024 300,000 325,911
Cal Energy 9.50 2006 350,000 364,438
California Energy 9.875 2003 250,000 263,125
Cleveland Electric Illuminating
1st Mtge 9.50 2005 250,000 266,563
El Paso Electric 8.90 2006 650,000 680,875
First Palo Verde Funding 10.15 2016 192,000 206,640
Jersey Central Power & Light 6.75 2025 1,000,000 870,420
Long Island Lighting 9.75 2021 300,000 314,652
Niagara Mohawk Power 7.75 2006 700,000 677,992
RGS Funding
Sale Lease-Back Obligation 9.82 2022 208,723 245,668
Salton Sea 7.84 2010 300,000 299,487
Sithe Independence Funding 9.00 2013 150,000 151,128
Texas-New Mexico Power
1st Mtge 9.25 2000 400,000 416,000
Texas Utilities Electric Capital 8.175 2037 750,000 738,937
Wisconsin Electric Power 6.875 2095 400,000 360,412
Total 6,182,248
Utilities -- telephone (0.6%)
GTE 9.375 2000 400,000 430,184
Mountain States Telephone & Telegraph 5.50 2005 80,000 71,914
New England Telephone & Telegraph 6.375 2008 70,000 65,008
New York Telephone 4.875 2006 130,000 111,444
U S WEST Communications 7.20 2026 700,000 643,517
Worldcom 7.75 2007 1,000,000 999,200
Total 2,321,267
Miscellaneous (0.9%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 750,000(h) 780,000
Coty 10.25 2005 500,000(h) 533,125
L-3 Comms 10.375 2007 345,000(h) 355,350
La Petite Holdings 9.625 2001 1,000,000 1,021,250
Norcal Waste Systems
Sr Nts 11.36 2005 500,000(i) 557,500
Pierce Leahy 11.125 2006 625,000(h) 679,688
Total 3,926,913
Foreign (3.5%)(c)
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 500,000 521,920
Bank of China
(U.S. Dollar) 8.25 2014 300,000 298,035
CEI Citicorp Holdings
(Argentine Peso) 11.25 2007 250,000(h) 239,375
China Light & Power
(U.S. Dollar) 7.50 2006 500,000 500,930
Dao Heng Bank
(U.S. Dollar) 7.75 2007 750,000(h) 735,938
Dominion Textile
(U.S. Dollar) 9.25 2006 300,000 305,625
Fresh Del Monte
(U.S. Dollar) 10.00 2003 500,000 487,500
Globo Communicacoes Participacoes
(U.S. Dollar) 10.50 2006 350,000(h) 357,875
Govt of Algeria
(U.S. Dollar) 7.063 2006 250,000 196,875
Govt of Poland PDI Euro
(U.S. Dollar) 4.00 2014 510,000 415,013
Grupo Televisa
(U.S. Dollar) Sr Nts 11.875 2006 650,000 694,686
Honam Oil Refinery
(U.S. Dollar) 7.125 2005 1,000,000(h) 962,850
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 500,000(h) 518,125
KFW Intl Finance
(U.S. Dollar) 8.00 2010 250,000 266,915
Newquest Capital
(U.S. Dollar) 11.00 2006 500,000 519,375
Petronas
(U.S. Dollar) 7.75 2015 850,000(h) 858,135
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts 7.85 2007 500,000(h) 473,455
(U.S. Dollar) Medium-term Nts 8.35 2017 500,000(h) 461,285
Quno
(U.S. Dollar) Sr Nts 9.125 2005 400,000 418,500
Ras Laffan Gas
(U.S. Dollar) 8.294 2014 700,000(h) 714,196
Repap New Brunswick
(U.S. Dollar) 9.875 2000 750,000 743,437
Republic of Argentina
(U.S. Dollar) 11.00 2006 500,000(i) 538,125
Republic of Italy
(U.S. Dollar) 6.875 2023 350,000 321,975
Republic of Slovenia
(U.S. Dollar) 7.00 2001 410,000 (h) 407,713
Rogers Cable System
(Canadian Dollar) 6.909 2014 600,000 420,977
Rogers Cantel Mobile
(U.S. Dollar) 9.375 2008 450,000 461,250
State of Israel
(U.S. Dollar) 6.375 2005 350,000 328,471
Telekom Malaysia
(U.S. Dollar) 7.875 2025 425,000(h) 429,021
Veritas Holdings
(U.S. Dollar) Sr Nts 9.625 2003 800,000(h) 806,000
Total 14,403,577
Total bonds
(Cost: $148,442,716) $148,370,226
</TABLE>
<PAGE>
Preferred stocks & other (0.4%)
Issuer Shares Value(a)
American Radio Systems
7% Cv Pfd 20,500(h) $ 948,125
Bar Technologies
Warrants 500(b) 22,500
Cablevision Systems
Pay-in-kind
11.125% Pfd 5,658(k) 518,414
Clearnet Communications
Warrants 990(b) 2,722
Nevsun Resources
Special Warrants 80,000(b,c) 249,150
Total preferred stocks & other
(Cost: $2,226,400) $1,740,911
Short-term securities (11.1%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.8%)
Federal Home Loan Mtge Corp Disc Nt
05-19-97 5.37% $3,300,000 $3,291,173
Certificate of deposit (1.4%)
Harris Trust
05-27-97 5.54 5,900,000 5,899,915
Commercial paper (7.8%)
AT&T
05-02-97 5.43 1,700,000 1,699,744
Avco Financial Services
05-23-97 5.52 1,700,000 1,694,286
BOC Group
05-02-97 5.57 4,000,000(f) 3,999,383
BellSouth
05-05-97 5.46 4,490,000 4,487,281
CAFCO
05-07-97 5.58 4,000,000(f) 3,996,300
05-21-97 5.52 4,700,000(f) 4,685,639
Cargill
05-02-97 5.54 1,800,000 1,799,724
Fleet Funding
05-14-97 5.57 2,500,000(f) 2,494,999
05-19-97 5.53 2,200,000(f) 2,193,939
Morgan Stanley Group
05-19-97 5.54 1,700,000 1,695,308
Novartis Finance
05-07-97 5.54 3,100,000(f) 3,097,148
Total 31,843,751
Letters of credit (1.1%)
Bank of America -
Formosa Plastics
05-20-97 5.54 600,000 598,255
05-30-97 5.52 3,800,000 3,783,164
Total 4,381,419
Total short-term securities
(Cost: $45,416,258) $45,416,258
Total investments in securities
(Cost: $381,326,129)(l) $412,239,004
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 securities values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(e) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(f) 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.
(g) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at April 30, 1997, is as follows:
Security Acquisition Cost
date
American United Life*
7.75% 2026 02-13-96 $500,000
Geotek Communications*
12% 2001 03-04-96 230,000
*Represents a security sold under Rule144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(h) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1997.
(j) This security is a collateralized mortgage obligation that pays no interest
or principal during its initial accrual period until payment of a previous
series within the trust have been paid off. Interest is accrued at an effective
yield.
(k) Pay-in-kind securities are securities in which the issuer has the option to
make interest payments in cash or in additional securities. These securities
issued as interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
(l) At April 30, 1997, the cost of securities for federal income tax purposes
was $381,247,689 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation...........................$38,744,883
Unrealized depreciation............................(7,753,568)
- -----------------------------------------------------------------
Net unrealized appreciation.......................$30,991,315
- -----------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Government Securities Portfolio
April 30, 1997
<S> <C> <C> <C> <C>
(Percentages represent value of
investments compared to net assets)
Bonds (93.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (59.1%)
U.S. Treasury 5.125% 1998 $1,000,000 $ 993,680
6.125 1998 900,000 902,115
7.50 2016-24 1,480,000 1,559,008
7.75 2001 2,210,000 2,302,621
8.875 1999 1,450,000 1,514,235
Resolution Funding Corp 8.125 2019 400,000 443,256
Zero Coupon 7.18 2009 460,000(b) 192,676
Total 7,907,591
Mortgage backed securities (34.4%)
Federal Natl Mtge Assn 6.50 2010 398,858 390,095
6.82 2005 925,000 916,222
7.00 2025 275,968 267,568
7.50 2025 400,000(c) 397,000
8.00 2027 989,243 1,001,609
8.50 2023-25 890,369 924,053
9.00 2023 164,365 173,765
Govt Natl Mtge Assn 7.50 2025 459,728 456,510
8.00 2017 75,645 77,772
Total 4,604,594
Total bonds
(Cost: $12,583,942) $12,512,185
</TABLE>
<PAGE>
Short-term securities (8.2%)
<TABLE>
<CAPTION>
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
<S> <C> <C> <C>
U.S. government agencies
Federal Farm Credit Bank Disc Nt
05-05-97 5.38% $800,000 $799,522
Federal Home Loan Mtge Corp Disc Nt
05-13-97 5.43 300,000 299,459
Total short-term securities
(Cost: $1,098,981) $ 1,098,981
Total investments in securities
(Cost: $13,682,923)(d) $13,611,166
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(c) At April 30, 1997, the cost of securities purchased on a when-issued basis
was $394,625.
(d) At April 30, 1997, the cost of securities for federal income tax purposes
was $13,683,212 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation....................................$ 63,987
Unrealized depreciation....................................(136,033)
- ---------------------------------------------------------------------
Net unrealized depreciation................................$(72,046)
- ---------------------------------------------------------------------
</TABLE>
<PAGE>
IDS Life Series Fund, Inc.
International Equity Portfolio
April 30, 1997
(Percentages represent value of
investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (92.5%)
Issuer Shares Value(a)
Argentina (1.9%)
Multi-industry (0.1%)
Cresud ADR 5,000(b) $ 91,875
Retail (1.0%)
Disco 20,000 620,000
Importadora y Exportadora
Patagonia 51,228 645,566
Total 1,265,566
Miscellaneous (0.8%)
Mirgor ADR 400,000(b,c) 960,000
Australia (1.0%)
Insurance (0.6%)
Reinsurance Australia 250,000 772,249
Metals (0.4%)
Panorama Resources 2,500,000(b) 468,028
Austria (5.5%)
Building materials & construction (0.7%)
VA Technology 6,000 932,217
Chemicals (1.1%)
BWT 10,000 1,378,801
Energy (0.9%)
OMV ADR 10,000 1,091,551
Metals (0.8%)
Boehler-Uddeholm 15,000(c) 1,082,112
Textiles & apparel (1.0%)
Wolford 12,000 1,236,981
Utilities -- electric (1.0%)
Energie - Versorgung
Niederoesterreich 10,000 1,236,817
Bahamas (1.1%)
Restaurants & lodging
Sun Intl Hotels 46,000(b) 1,397,250
Brazil (1.5%)
Chemicals (0.9%)
Trikem 250,000,000 $1,081,500
Media (0.6%)
TV Filme 70,000(b) 778,750
Canada (6.7%)
Energy (0.9%)
Abacan Resource 175,000(b) 1,126,563
Health care (1.0%)
Biovail Intl 50,000(b) 1,250,000
Financial services (1.7%)
Bruncor 40,000 813,316
Intrawest 100,000 1,375,000
Total 2,188,316
Metals (2.2%)
Euro-Nevada Mining 13,000 373,224
Francisco Gold 50,000(b) 783,962
Nevsun Resources 150,000(b) 467,156
Westmin Resources 250,000(b) 1,154,465
Total 2,778,807
Multi-industry conglomerates (0.9%)
Bombardier Cl B 55,000 1,110,435
Chile (0.8%)
Multi-industry
Madeco 37,000 1,012,875
Denmark (0.6%)
Multi-industry conglomerates
Sophus Berendsen 6,000(b) 728,343
Finland (5.5%)
Electronics (0.8%)
Suunto 100,000 961,548
Food (1.6%)
Raision Tehtaat 25,000(b) 2,072,135
Industrial equipment & services (1.0%)
Valmet 75,000 1,267,801
Metals (1.1%)
Rautaruukki 150,000 1,315,397
Multi-industry conglomerates (1.0%)
Amer Group 75,000 1,283,666
France (2.7%)
Automotive & related (1.1%)
Michelin 25,000 1,396,813
Energy (1.6%)
Elf Aquitaine 20,000 1,939,518
Germany (7.0%)
Automotive & related (4.3%)
Phoenix 80,000 1,289,242
Porsche 1,900 2,469,314
Volkswagen 2,500 1,589,892
Total 5,348,448
Electronics (1.1%)
Siemens 25,000 1,354,513
Industrial equipment & services (0.7%)
Duerr 25,000 880,866
Miscellaneous (0.9%)
BHW Holdings 70,000(b) 1,178,628
Hong Kong (3.4%)
Financial services (2.0%)
Amoy Properties 450,000 444,394
Cheung Kong 90,000 790,034
New World Development 105,000 605,886
Sun Hung Kai Properties 60,000 650,616
Total 2,490,930
Insurance (0.6%)
Natl Mutual Asia 758,000 782,805
Retail (0.6%)
Goldlion Holdings 1,200,000 708,707
Utilities -- telephone (0.2%)
ABC Communications
Holdings 1,482,000 309,925
India (0.7%)
Automotive & related
Tata Engineering &
Locomotive GDR 75,000 911,250
Ireland (0.8%)
Banks and savings & loans
Bank of Ireland 100,000 1,040,417
Italy (1.1%)
Textiles & apparel
Gucci Group 20,000 1,387,500
Israel (0.9%)
Electronics
Magal Security Systems 235,000(b) 1,145,625
Japan (5.7%)
Communications equipment & services (0.7%)
DDI 70 464,847
Oki Electric 85,000 417,149
Total 881,996
Computers & office equipment (0.6%)
Meitec 38,000 760,329
Electronics (1.7%)
Mitsumi Electric 50,000 1,051,636
NEC 85,000 1,037,851
Total 2,089,487
Financial services (0.7%)
Nomura Securities 80,000 894,876
Furniture & appliances (0.6%)
Matsushita Electric 45,000 719,603
Multi-industry conglomerates (0.9%)
Secom 20,000 1,189,492
Utilities -- electric (0.5%)
Hirose Electric 12,000 656,032
Malaysia (3.7%)
Automotive & related (0.7%)
Diversified Resources 350,000(b) 836,487
Banks and savings & loans (0.8%)
DCB Holdings 300,000 973,909
Leisure time & entertainment (0.9%)
Multi-Purpose Holdings 700,000 1,143,198
Multi-industry conglomerates (0.9%)
Leader Universal Holdings 600,000(b) 1,194,981
Utilities -- electric (0.4%)
Tenaga Nasional 105,000 485,162
Mexico (5.2%)
Beverages & tobacco (0.8%)
Grupo Modelo 175,000 1,061,741
Leisure time & entertainment (1.0%)
Corporacion Interamericana
de Entretenimiento 325,000(b) 1,219,082
Multi-industry conglomerates (0.6%)
Grupo Financiero Banorte 750,000(b) 732,578
Restaurants & lodging (0.9%)
Posadas de Mexico 2,300,000 1,059,587
Utilities -- telephone (1.9%)
Telefonos de Mexico 20,000 825,000
Telinfo 30,000(b) 1,590,210
Total 2,415,210
Netherlands (0.7%)
Transportation
Nedlloyd 40,000(b) 918,029
Panama (0.8%)
Banks and savings & loans
Banco Latinoamericano
de Exportaciones 21,500 986,312
Peru (0.7%)
Utilities -- telephone
CPT Telefonica 350,000 840,525
Philippines (0.9%)
Multi-industry conglomerates
Belle 5,000,000 1,194,535
Portugal (0.8%)
Paper & packaging
Portucel-Emp Celul Papel 150,000(b) 982,292
Singapore (2.3%)
Banks and savings & loans (0.5%)
Overseas Union Trust 100,000(b) 656,304
Electronics (1.0%)
GP Batteries 450,000 1,327,500
Health care (0.8%)
Avimo Group 800,000 967,185
Spain (1.8%)
Restaurants & lodging (0.9%)
Tele Pizza 25,000(b) 1,145,652
Utilities -- telephone (0.9%)
Telefonica de Espana ADR 15,000 1,155,000
Sweden (2.0%)
Industrial equipment & services (0.6%)
Svedala 40,000 734,254
Multi-industry conglomerates (1.4%)
Medical Investment 55,000 1,787,831
Switzerland (2.5%)
Computers & office equipment (1.5%)
Logitech Intl 35,000(b) 1,878,659
Retail (1.0%)
Valora Holdings 5,500 1,201,085
Thailand (1.4%)
Building materials & construction (0.6%)
Italian-Thai Development 235,800(b) 794,340
Electronics (0.8%)
KR Precision 150,000 999,138
United Kingdom (11.5%)
Communications equipment & services (0.7%)
Filtronic Comtek 175,000 876,333
Computers & office equipment (0.9%)
JBA Holdings 83,000 1,096,247
Chemicals (0.7%)
Victrex 350,000 933,053
Electronics (0.6%)
Johnson Matthey 100,000 811,104
Health care (4.1%)
Biocompatibles Intl 90,000(b) 2,067,465
Celltech 100,000(b) 915,632
Serco Group 115,000 1,257,981
Vanguard Medica Group 100,000(b) 972,353
Total 5,213,431
Media (2.3%)
Freepages Group 2,667,000(b) 1,750,453
Pearson 100,000 1,148,187
Total 2,898,640
Multi-industry conglomerates (1.5%)
EMI Group 50,000 991,800
Man E D & F 300,000 872,687
Total 1,864,487
Miscellaneous (0.7%)
McKechnie Group 105,000 841,450
United States (11.3%)
Aerospace & defense (1.2%)
Rohr 100,000(b) 1,562,500
Computers & office equipment (1.0%)
Oracle 30,000(b) 1,192,500
Energy equipment & services (2.8%)
Camco Intl 20,000$ 887,500
ENSCO Intl 20,000(b) 950,000
Oceaneering Intl 50,000(b) 725,000
Smith Intl 20,000(b) 947,500
Total 3,510,000
Media (0.6%)
Telemundo Group 30,000(b) 787,500
Metals (5.7%)
Commonwealth Inds 90,000 1,552,500
EASCO130,000 1,023,750
Getchell Gold 25,000(b) 959,375
Stillwater Mining 100,000(b) 2,012,500
Ucar Intl 40,000(b) 1,680,000
Total 7,228,125
Total common stocks
(Cost: $117,055,945) $116,443,289
Other (0.2%)
Issuer Shares Value(a)
Canada (0.2%)
Banro
Special Warrants 20,000(b) 67,299
Nevsun Resources
Special Warrants 70,000(b) 218,006
Total 285,305
Malaysia (--%)
Multi-Purpose Holdings
Warrants 660,000(b,d) $ --
Total other
(Cost: $904,118) $285,305
Bonds (0.2%)
Issuer and Principal Value(a)
coupon rate amount
India
Mahindra & Mahindra
(U.S. Dollar)
5.00% Cv 2001 $300,000(c) $312,000
Total bonds
(Cost: $309,646) $312,000
Short-term securities (6.2%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (3.7%)
Federal Home Loan Mtge Corp Disc Nts
05-01-97 5.36% $ 900,000 $ 900,000
05-06-97 5.37 500,000 499,628
05-13-97 5.42 1,600,000 1,597,120
05-15-97 5.39 1,000,000 997,908
Federal Natl Mtge Assn Disc Nts
05-08-97 5.44 100,000 99,894
05-15-97 5.42 600,000 598,740
Total 4,693,290
Commercial paper (2.5%)
AT&T
05-12-97 5.44 2,300,000 2,296,184
Metlife Funding
05-22-97 5.51 800,000 797,438
Total 3,093,622
Total short-term securities
(Cost: $7,786,912) $ 7,786,912
Total investments in securities of unaffiliated issuers
(Cost: $126,056,621) $124,827,506
Investment in security of affiliated issuer (e)
Common stocks (2.0%)
Issuer Shares Value(a)
Brazil
Telecomunicacoes
Brasileiras-Telebras 22,500,000(b)$2,580,975
Total investment in security of affiliated issuer
(Cost: $1,592,232) $2,580,975
Total investments in securities
(Cost: $127,648,853)(f) $127,408,481
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.
(b) Non-income producing.
(c) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(d) Negligible market value.
(e) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
year ended April 30, 1997, are as follows:
Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income
Telecomunicacoes Brasileiras -
Telebras $-- $1,592,232 $-- $1,592,232 $--
(f) At April 30, 1997, the cost of securities for federal income tax purposes
was $127,656,730 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation........................$8,401,269
Unrealized depreciation........................(8,649,518)
- -----------------------------------------------------------
Net unrealized depreciation....................$ (248,249)
- -----------------------------------------------------------
<PAGE>
PAGE 93
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
List of financial statements filed as part of this Post-Effective Amendment to
the Registration Statement:
Independent Auditors Report, June 6, 1997.
Statements:
- Statements of assets and liabilities at April 30, 1997.
- Statements of operations, for the year ended April 30, 1997.
- Statements of changes in net assets, for the years ended
April 30, 1997 and April 30, 1996.
- Notes to financial statements.
Schedules:
- Investments in securities, April 30, 1997.
- Notes to investments in securities.
(b) EXHIBITS:
1. Copy of Articles of Incorporation as amended December 20,
1994, filed electronically as Exhibit 1 with Post-Effective
Amendment No. 18 to Registration Statement No. 2-97636, is
incorporated herein by reference.
2. Copy of By-laws, filed electronically as Exhibit 2 with Post-
Effective Amendment No. 15 to Registration Statement No. 2-
97636, is incorporated herein by reference.
3. Not Applicable.
4. Copy of Stock Certificate, filed as Exhibit No. 3 to
Registrant's Registration Statement No. 2-97636, is
incorporated herein by reference.
5.(a) Copy of Investment Management and Services Agreement
between IDS Life Insurance Company and the Registrant
dated December 17, 1985, filed electronically as Exhibit
5(a) with Post-Effective Amendment No. 15 to Registration
Statement No. 2-97636, is incorporated herein by
reference.
(b) Copy of Investment Advisory Agreement between IDS Life
Insurance Company and IDS/American Express Inc., dated
July 11, 1984, filed electronically as Exhibit 5(b) with
Post-Effective Amendment No. 15 to Registration Statement
No. 2-97636, is incorporated herein by reference.
<PAGE>
PAGE 94
(c) Addendum to Investment Advisory Agreement between IDS Life Insurance
Company and American Express Financial Corporation for IDS Life
International Equity Portfolio, dated January 1, 1995, filed
electronically herewith.
6. Not Applicable.
7. All employees are eligible to participate in a profit sharing plan. Entry
into the plan is Jan. 1 or July 1. The Registrant contributes each year an
amount equal to 15 percent of their annual salaries, the maximum amount
permitted under Section 404 (a) of the Internal Revenue Code.
8.(a) Copy of Custodian Agreement between IDS Trust Company and
Registrant dated January 1, 1986, filed electronically as
Exhibit 8 with Post-Effective Amendment No. 15 to
Registration Statement No. 2-97636, is incorporated
herein by reference.
(b) Copy of Custody Agreement between Morgan Stanley Trust
Company and IDS Bank and Trust, dated May 1993, is filed
electronically as Exhibit 8(b) with Post-Effective
Amendment No. 17 to Registration Statement No. 2-97636,
is incorporated herein by reference.
9. None.
10. Opinion and Consent of Counsel and consent to its use as to the legality
of the securities registered was filed with Registrant's 24f-2 Notice on
or about June 20, 1997.
11. Independent Auditors' Consent, is filed electronically
herewith.
12. None.
13. None.
14. None.
15. None.
16. Copy of Schedule for computation of each performance
quotation, filed electronically as Exhibit 8(b) with Post-
Effective Amendment No. 18 to Registration Statement No. 2-
97636, is incorporated herein by reference.
17. Financial Data Schedule, filed electronically herewith.
18. Power of Attorney dated April 11, 1997, filed electronically
herewith.
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not Applicable.
<PAGE>
PAGE 95
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders as
of May 31, 1997 for Equity,
Government Securities,
Income, Managed and Money
Title of Class Market Portfolios
Common Stock 5
Number of Record Holders
as of May 31, 1997 for
Title of Class International Equity Portfolio
Common Stock 2
Item 27. Indemnification
The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that he is or was a director, officer, employee or agent
of the Fund, or is or was serving at the request of the Fund as a director,
officer, employee or agent of another company, partnership, joint venture, trust
or other enterprise, to any threatened, pending or completed action, suit or
proceeding, wherever brought, and the Fund may purchase liability insurance and
advance legal expenses, all to the fullest extent permitted by the laws of the
State of Minnesota, as now existing or hereafter amended.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
<PAGE>
PAGE 96
<TABLE>
<CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are
directors and/or officers of one or more other companies:
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
<S> <C> <C>
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering
Douglas A. Alger, Vice President--Field Compensation and Administration
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation and
Administration
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President- American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Retirement Services
John M. Baker, Vice President--Plan Sponsor Services
American Express Financial Advisors IDS Tower 10 Vice President-Plan Sponsor
Minneapolis, MN 55440 Services
American Express Trust Company IDS Tower 10 Senior Vice President
Minneapolis, MN 55440
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 97
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Risk Management Products
American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products
Alan F. Bignall, Vice President--Technology and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology and
Development
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
<PAGE>
PAGE 98
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James E. Choat, Director and Senior Vice President--Field Management
American Enterprise Life Insurance IDS Tower 10 Director, President
Company Minneapolis, MN 55440
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President--North
Central Region
American Express Minnesota Foundation Director
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
AMEX Assurance Co. Director and President
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Colleen Curran, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President and Chief
Legal Counsel
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
Luz Maria Davis, Vice President--Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Communications
<PAGE>
PAGE 99
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
American Express Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director, Senior Vice
Services Inc. Minneapolis, MN 55440 President
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
Douglas L. Forsberg, Vice President--Institutional Products Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Institutional Products
Group
Jeffrey P. Fox, Vice President and Corporate Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Corporate Controller
John J. Golden, Vice President--Human Resources Planning and Field Support
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Planning and
Field Support
<PAGE>
PAGE 100
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Centurion Life Assurance Co. Vice President and
Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Insurance Agency of Nevada Inc. Vice President and
Treasurer
American Express Minnesota Foundation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
American Partners Life Insurance Co. Vice President and
Treasurer
AMEX Assurance Co. Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Futures Corp. Director
IDS Futures III Corp. Director
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
<PAGE>
PAGE 101
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
<PAGE>
PAGE 102
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
AMEX Assurance Co. Vice President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Director and Vice
President-Investments
Janis K. Heaney, Vice President--Incentive Compensation
American Express Financial Advisors IDS Tower 10 Vice President-Incentive
Minneapolis, MN 55440 Compensation
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Retirement Services
American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and Chief
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations and
Chief Compliance Officer
American Express Service Corporation Vice President and Chief
Compliance Officer
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and Executive Vice
President
<PAGE>
PAGE 103
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
AMEX Assurance Co. Director
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
James M. Jensen, Vice President--Life Products
American Express Financial Advisors IDS Tower 10 Vice President-Life
Minneapolis, MN 55440 Products
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
James E. Kaarre, Vice President--Marketing Promotions
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Promotions
Matthew N. Karstetter, Vice President--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Accounting
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
Richard W. Kling, Director and Senior Vice President--Products
American Centurion Life Assurance Co. Director
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Express Insurance Agency of Nevada Inc. Director and President
American Express Service Corporation Vice President
American Partners Life Insurance Co. Director and Chairman of
the Board
<PAGE>
PAGE 104
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
AMEX Assurance Co. Director and Chairman of
the Board
IDS Certificate Company Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Director and Chairman of
the Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
IDS Property Casualty Insurance Company Director
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
Edward Labenski, Jr., Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
<PAGE>
PAGE 105
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Centurion Life Assurance Co. Director and
Vice President-Product
Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Trust Company Director
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 106
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
Jonathan S. Linen, Director
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Service Corporation Senior Vice President
American Express Tax and Business Director
Services Inc.
AMEX Assurance Co. Director
IDS Certificate Company Director
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 107
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William Miller, Vice President and Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President and Senior
Minneapolis, MN 55440 Portfolio Manager
Pamela J. Moret, Vice President--Retail Services
American Express Financial Advisors IDS Tower 10 Vice President-Retail
Minneapolis, MN 55440 Services
American Express Trust Company IDS Tower 10 Vice President
Minneapolis, MN 55440
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
Mary Owens Neal, Vice President--Mature Market Segment
American Express Financial Advisors Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Segment
Robert J. Neis, Vice President--Technology Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology Services
James R. Palmer, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corp. Vice President
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 108
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
James M. Punch, Vice President--Geographical Service Teams
American Express Financial Advisors IDS Tower 10 Vice President-Geographical
Minneapolis, MN 55440 Service Teams
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
Debra J. Rabe, Vice President--Financial Planning
American Express Financial Advisors IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Planning
ReBecca K. Roloff, Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
IDS International, Inc. Director
IDS Fund Management Limited Director
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
<PAGE>
PAGE 109
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Centurion Life Assurance Co. Director and Chairman
and President
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
American Partners Life Insurance Co. Director and President
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Director and Chairman of
the Board and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
AMEX Assurance Co. Vice President
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
<PAGE>
PAGE 110
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Barbara Stroup Stewart, Vice President--Corporate Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Reengineering
<PAGE>
PAGE 111
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
Melinda S. Urion, Director, Senior Vice President and Chief Financial Officer
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Trust Company Director
American Partners Life Insurance Co. Director and Vice President
IDS Life Insurance Company Director, Executive Vice
President and Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President
Norman Weaver Jr., Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President--
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-Southeast
Region
IDS Insurance Agency of Alabama Inc. Vice President-Pacific
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Pacific
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Pacific
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Pacific
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Pacific
Region
IDS Insurance Agency of Ohio Inc. Vice President-Pacific
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Pacific
Region
Michael L. Weiner, Vice President--Tax Research and Audit
American Express Financial Advisors IDS Tower 10 Vice President-Tax Research
Minneapolis, MN 55440 and Audit
American Express Service Corporation Assistant Treasurer
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
<PAGE>
PAGE 112
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
William N. Westhoff, Director, Senior Vice President--Global Investments
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
<PAGE>
PAGE 113
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
Item 29. The Fund has no principal underwriter.
Item 30. Location of Accounts and Records
American Express Financial Corporation
IDS Tower 10
Minneapolis, Minnesota
Item 31. Management Services
Not applicable
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge.
<PAGE>
PAGE 114
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, IDS Life Series Fund, Inc., certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Minneapolis and
State of Minnesota on the 26th day of June, 1997.
IDS LIFE SERIES FUND, INC.
By /s/ Richard W. Kling
Richard W. Kling
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the 26th day of June, 1997.
Signature Capacity
/s/ Richard W. Kling* President and Director
Richard W. Kling
/s/ Morris Goodwin, Jr.* Vice President and
Morris Goodwin, Jr. Treasurer
/s/ Paul F. Kolkman* Vice President and Chief
Paul F. Kolkman Actuary
/s/ Jeffrey S. Horton* Vice President and
Jeffrey S. Horton Controller
/s/ Lorraine R. Hart Vice President,
Lorraine R. Hart Investments
/s/ Edward Landes* Director
Edward Landes
/s/ Carl N. Platou* Director
Carl N. Platou
/s/ Gordon H. Ritz* Director
Gordon H. Ritz
<PAGE>
PAGE 115
Signature Capacity
/s/ Timothy S. Meehan Secretary
Timothy S. Meehan
/s/ William A. Stoltzmann General Counsel and
William A. Stoltzmann Assistant Secretary
*Signed pursuant to Power of Attorney dated April 11, 1997, filed electronically
herewith.
- ---------------------------
Colin Lancaster
<PAGE>
PAGE 116
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 20
TO REGISTRATION STATEMENT NO. 2-97636
This Post-Effective Amendment comprises the following papers and documents:
The facing sheet.
The cross-reference page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
<PAGE>
PAGE 1
IDS Life Series Fund, Inc.
File No. 2-97636/811-4299
EXHIBIT INDEX
Exhibit 5(c): Addendum to Investment Advisory Agreement between IDS Life
Insurance Company and American Express Financial Corporation for
IDS Life International Equity Portfolio, dated January 1, 1995.
Exhibit 11: Independent Auditors' Consent.
Exhibit 17: Financial Data Schedule.
Exhibit 18: Power of Attorney dated April 11, 1997.
<PAGE>
PAGE 1
ADDENDUM TO INVESTMENT ADVISORY AGREEMENT
The following provision is added to Section 6, Compensation to IDS, of the
Investment Advisory Agreement between IDS Life Insurance Company (IDS Life) and
IDS/American Express, Inc. (IDS) [now known as American Express Financial
Corporation] dated July 11, 1984. All other provisions of this Investment
Advisory Agreement remain in full force and effect.
6. Compensation to IDS. In addition to the fee for services provided under the
Investment Advisory Agreement described above, IDS Life Series Fund, Inc. for
the International Equity Portfolio shall pay IDS life a fee for each calendar
day of each year equal to the total of 1/365th (1/366th in each leap year) of
0.10% of the total net assets of the International Equity Portfolio for a total
of 0.35% of the net assets of the International Equity Portfolio. This
additional 0.10% fee shall be paid on a monthly basis in cash by IDS Life to IDS
within five (5) business days after the last day of each month.
(IN WITNESS WHEREOF, the parties have executed the Addendum as of the 1st day of
January, 1995.)
IDS LIFE INSURANCE COMPANY
Attest:/s/ Nancy Careaga By:/s/ Richard W. Kling
Nancy Careaga Richard W. Kling
Title: Assistant Secretary Title: President
AMERICAN EXPRESS FINANCIAL
CORPORATION
Attest:/s/ Colleen Curran By:/s/ William A. Stoltzmann
Colleen Curran William A. Stoltzmann
Title: Secretary Title: Vice President
<PAGE>
PAGE 1
Independent Auditors' Consent
- -------------------------------------------------------------------
The board and shareholders
IDS Life Series Equity Portfolio
IDS Life Series Income Portfolio
IDS Life Series Money Market Portfolio
IDS Life Series Managed Portfolio
IDS Life Series Government Securities Portfolio
IDS Life Series International Equity Portfolio
We consent to the use of our reports included or incorporated herein by
reference, and to the references to our Firm under the heading "FINANCIAL
HIGHLIGHTS" in Part A and "INDEPENDENT AUDITORS" in Part B of the Registration
Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 27, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 519255815
<INVESTMENTS-AT-VALUE> 562160295
<RECEIVABLES> 5164448
<ASSETS-OTHER> 111438
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 567436181
<PAYABLE-FOR-SECURITIES> 14723307
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1194878
<TOTAL-LIABILITIES> 15918185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 483579910
<SHARES-COMMON-STOCK> 23446744
<SHARES-COMMON-PRIOR> 15283655
<ACCUMULATED-NII-CURRENT> 20999
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25015292
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 42901795
<NET-ASSETS> 551517996
<DIVIDEND-INCOME> 1721455
<INTEREST-INCOME> 3331957
<OTHER-INCOME> 0
<EXPENSES-NET> 3963361
<NET-INVESTMENT-INCOME> 1090051
<REALIZED-GAINS-CURRENT> 25205763
<APPREC-INCREASE-CURRENT> (47584150)
<NET-CHANGE-FROM-OPS> (21288336)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1069807
<DISTRIBUTIONS-OF-GAINS> 73838149
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5247248
<NUMBER-OF-SHARES-REDEEMED> 436609
<SHARES-REINVESTED> 3352450
<NET-CHANGE-IN-ASSETS> 103105597
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13854981
<OVERDISTRIB-NII-PRIOR> 54812
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3629237
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3963361
<AVERAGE-NET-ASSETS> 519379383
<PER-SHARE-NAV-BEGIN> 29.34
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> (1.34)
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> (4.48)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.52
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 65796043
<INVESTMENTS-AT-VALUE> 65957206
<RECEIVABLES> 1462133
<ASSETS-OTHER> 77878
<OTHER-ITEMS-ASSETS> 0
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<NAME> MONEY MARKET PORTFOLIO
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<PAGE>
PAGE 1
IDS LIFE SERIES FUND, INC.
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as a director or officer of IDS Life Series Fund, Inc.,
which is an open-end, diversified investment company that previously has filed
registration statements and amendments thereto pursuant to the requirements of
the Securities Act of 1933 and the Investment Company Act of 1940 with the
Securities and Exchange Commission, File Numbers 2-97636 and 811- 4299,
respectively, hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn
Minenko, Sherilyn K. Beck, Colin Lancaster and Timothy S. Meehan or any one of
them, as his/her attorney-in-fact and agent, to sign for him/her in his/her
name, place and stead any and all further filings, applications (including
applications for exemptive relief), periodic reports, registration statements
(with all exhibits and other documents required or desirable in connection
therewith), other documents, an amendments thereto and to such filings,
applications, periodic reports, registration statements, other documents, and
amendments thereto with the Securities and Exchange Commission, and any
necessary states, and grants to any or all of them the full power and authority
to do and perform each and every act required or necessary in connection
therewith.
Dated the 11th day of April 1997.
/s/ Richard W. Kling /s/ Morris Goodwin Jr.
Richard W. Kling Morris Goodwin Jr.
/s/ Edward Landes /s/ Paul F. Kolkman
Edward Landes Paul F. Kolkman
/s/ Carl N. Platou /s/ Lorraine R. Hart
Carl N. Platou Lorraine R. Hart
/s/ Gordon H. Ritz /s/ William A. Stoltzmann
Gordon H. Ritz William A. Stoltzmann
/s/ Jeffrey S. Horton /s/ Timothy S. Meehan
Jeffrey S. Horton Timothy S. Meehan
