IDS
Life Series
Fund
Offers six portfolios with separate goals and objectives to provide
investment flexibility for Variable Life Insurance Policies.
1998 ANNUAL REPORT
(PROSPECTUS INCLUDED)
(icon of) the planet Saturn
American Express Financial Advisors
Managed by IDS Life Insurance Company
<PAGE>
Contents
Section start title
1998 annual report
From the president 3
Equity Portfolio 4
From the portfolio manager 4
Ten largest holdings 5
Long-term performance 6
Income Portfolio 7
From the portfolio manager 7
Ten largest holdings 8
Long-term performance 9
Money Market Portfolio 10
From the portfolio manager 10
Managed Portfolio 11
From the portfolio managers 11
Ten largest holdings 12
Long-term performance 13
Government Securities Portfolio 14
From the portfolio manager 14
Long-term performance 15
International Equity Portfolio 16
From the portfolio manager 16
Ten largest holdings 17
Long-term performance 18
All portfolios 19
Independent auditors' report 19
Financial statements 20
Notes to financial statements 27
Investments in securities 41
1998 prospectus
The fund in brief 3p
Performance 5p
Investment policies and risks 16p
How to invest, transfer or redeem shares 25p
Distributions and taxes 26p
How the fund is organized 27p
About IDSLife and American Express Financial Corporation 30p
The purpose of this annual report is to tell investors how the portfolios
performed.
(icon of) open book inside of another.
The prospectus, which is bound with this annual report, describes the
portfolios in detail.
See page 2 of the prospectus for a detailed table of contents.
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
Section start title
From the president
Diversification and balance continue to be vital elements in a financial
strategy. These elements are provided by combining the six investment
options of IDS Life Series Fund with life insurance protection.
You can allocate your policy's value among these portfolios. However, it
should be noted that the six investment options may not be available under
all policies. For example, the International Equity Portfolio is available
only to purchasers of Flexible Premium Variable Life Insurance (Variable
Universal Life and Variable Second-to-Die) policies. In their comments on
the following pages, the funds' portfolio managers review the past fiscal
year, which ran from May 1997 through April 1998.
Sincerely,
Richard W. Kling
(picture of) Richard W. Kling
Richard W. Kling
President
IDS Life Series Fund, Inc.
(This annual report is not part of the prospectus.)
<PAGE>
Equity Portfolio
From the portfolio manager
A periodically powerful stock market and a well-positioned portfolio
combined for an exceptional gain by Equity Portfolio during the past
fiscal year. For the May 1997 through April 1998 period, the total return
came to 49.5%. (This figure does not reflect expenses that apply to the
variable subaccounts or to the policy.) Given that large-capitalization
stocks have generally led the market in recent years, the performance of
the portfolio, which is concentrated in small- and mid-cap stocks, was
particularly gratifying.
The portfolio was restructured when I assumed management responsibility in
the spring of 1997. The number of stocks owned was cut dramatically, from
almost 200 to about 130. This reduction, along with a lowering of cash
reserves, means the portfolio will be more concentrated and potentially
volatile. Therefore, stocks that perform well will have a greater positive
impact on performance, and vice-versa.
The latter point was especially evident last October, when the market and
the portfolio dropped sharply. On the other hand, the portfolio responded
very well during the market's upturns. Over the long run, I think
performance will benefit from this more aggressive investment approach.
For the past fiscal year, the portfolio's highest concentration was in the
technology sector, which offered more of the fast-growing companies that I
look for. (Each stock, however, is selected individually for its growth
potential.) Other major areas of investment were health care and financial
services. Those three sectors performed well overall, although the
technology holdings were extremely volatile as a result of a financial
crisis in Asia. I reduced investments in companies that were particularly
vulnerable to that situation, chiefly in the semiconductor and electronics
areas.
Still, the overall exposure to technology stocks remained substantial,
which paid off during the final three months of the period, when they
rebounded sharply. A variety of industries, however, were represented by
the portfolio's biggest winners over the entire 12 months. Among the top
performers were People Soft, Tyco International, Gulf South Medical, Cisco
Systems, Dollar General, Watson Pharmaceutical and Outdoor Systems, each
of which was up more than 100%.
Looking to the new fiscal year, at this point (mid-May) the investment
environment remains generally good. The economy is still strong; corporate
profits remain reasonably healthy; and inflation has yet to become a
problem. In my view, the biggest potential problem is interest rates,
which could move higher as the year progresses. But whatever comes to
pass, I plan to continue to keep the portfolio fully invested in
fast-growing companies that I expect will prove rewarding over the long
term.
Louis Giglio
(picture of) Louis Giglio
Louis Giglio
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
The Portfolio's ten largest holdings
Equity Portfolio
Percent Value
(of Portfolio's net assets) (as of April 30, 1998)
HBO & Co 3.59% $33,495,000
Network Associates 3.24 30,254,669
Watson Pharmaceuticals 2.07 19,350,000
Outdoor Systems 2.04 19,050,000
CDW Computer Centers 1.82 16,975,000
Viasoft 1.68 15,693,750
Stage Stores 1.65 15,431,250
SunGard Data Systems 1.53 14,250,000
Sterling Commerce 1.37 12,768,750
PeopleSoft 1.29 12,090,000
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
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The ten holdings listed here make up 20.28% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
<PAGE>
The Portfolio's long-term performance
Equity Portfolio
How your $10,000 has grown in Equity Portfolio
$50,000
S&P 500
$40,000
$30,000
$20,000 $56,656
Equity Portfolio
Lipper Growth
$10,000 & Income Fund Index
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Average annual total return
(as of April 30, 1998)
1 year 5 years 10 years
+49.52% +23.55% +18.94%
On the chart above you can see how the portfolio's total return compared
to two widely cited performance indexes, the S&P 500 and the Lipper Growth
& Income Fund Index.
Standard & Poor's 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.
Lipper Growth & Income Fund Index, published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to this fund,
although some funds in the index may have somewhat different investment
policies or objectives.
Your investment and return value fluctuate so that your accumulation
units, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The above chart does
not reflect expenses that apply to the subaccounts or the policies.
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
Income Portfolio
From the portfolio manager
A favorable environment for bonds prevailed for much of the past fiscal
year, fostering higher prices in most sectors of the market. For policy
owners, the result was a total return of 10.0% for the period -- May 1997
through April 1998. (This figure does not reflect expenses that apply to
the variable subaccounts or to the policy.)
The bond market got off to a good start in the spring of 1997. Although
data showed that the economy was continuing to expand, the growth was not
being accompanied by an increase in the inflation rate. Consequently,
long-term interest rates began declining, a trend that continued through
July. (Because falling rates boost bond prices, the portfolio experienced
healthy appreciation along the way.)
The rally stalled out in August, as inflation fear resurfaced and
long-term interest rates rose a bit. But more tame inflation news, as well
as heavy buying of U.S. Treasury bonds by investors concerned about a
crisis in Asian markets, led to a rebound over the final three months of
last year. From that point, the bond market could do little more than
tread water through April, as investors continued to weigh the factors of
the Asian situation and the outlook for economic growth and inflation here
at home.
As for this portfolio, it remained invested in three main bond sectors:
bonds issued by U.S. corporations, mortgage-backed bonds issued by federal
government agencies such as Fannie Mae and Ginnie Mae, and bonds issued by
the U.S. Treasury. Because of their price-sensitivity to changes in
interest rates, the Treasury bond holdings provided the best overall
performance over the 12 months.
I did change the portfolio mix somewhat during the year. Early in the
period, I kept a relatively high level of cash reserves (about 10%), a
reflection of my concern that inflation might heat up. As the period
progressed and the inflation data remained unthreatening, I brought that
down to as low as 1%. Much of that money went into U.S. corporate bonds, a
move that proved to be beneficial given that "corporates" provided a far
better return than cash. In addition, I lengthened the portfolio's
duration, a strategy that increases the portfolio's price-sensitivity to
changes in interest rates. That, too, worked in the portfolio's favor.
In light of the economy's ongoing strength, I think the upward pressure on
inflation and, thus, interest rates is likely to increase in the months
ahead. Therefore, I may well take a less-aggressive investment approach,
which would include a shorter duration to temper the negative effect of a
possible upturn in interest rates.
Lorraine R. Hart
(picture of) Lorraine R. Hart
Lorraine R. Hart
Portfolio manager
(This annual report is not part of the prospectus.)
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<TABLE>
<CAPTION>
The Portfolio's ten largest holdings
Income Portfolio
Percent Value
(of Portfolio's net assets) (as of April 30, 1998)
<S> <C> <C>
California Infrastructure-Southern California Edison 1.21% $1,005,270
6.14% 2002
California Infrastructure-Pacific Gas & Electric 1.21 1,004,390
6.15% 2002
Morgan Stanley Capital .92 761,034
6.59% 2028
Delphes 2 .74 615,374
7.75% 2009
Hubco Capital .67 551,071
8.98% 2027
Kroger .66 544,375
8.15% 2006
Gulf Canada Resources .66 543,125
9.625% 2005
Comcast .65 534,375
9.125% 2006
Oryx Energy .65 534,260
8.125% 2005
SAFECO Capital .63 524,740
8.07% 2037
Excludes U.S. Treasury and government agency holdings.
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
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The ten holdings listed here make up 8.00% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Portfolio's long-term performance
Income Portfolio
How your $10,000 has grown in Income Portfolio
$20,000
$23,863
Income
Portfolio
Lehman Aggregate
$10,000 Bond Index
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Average annual total return
(as of April 30, 1998)
1 year 5 years 10 years
+9.97% +7.33% +9.09%
On the chart above you can see how the portfolio's total return compared
to a widely cited performance measure, the Lehman Aggregate Bond Index.
The Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed securities 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.
Your investment and return value fluctuate so that your accumulation
units, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The above chart does
not reflect expenses that apply to the subaccounts or the policies.
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
Money Market Portfolio
From the portfolio manager
Short-term interest rates were little changed during the past fiscal year
(May 1997 through April 1998), resulting in a 12-month total return on the
portfolio of 5.2% (This figure does not reflect expenses that apply to the
variable subaccounts or to the policy.) The net asset value remained at $1
per share during the period. (An investment in the 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.)
The economy continued to grow at a healthy pace during the 12 months,
while the unemployment rate continued to fall. Historically, such
conditions have led to an increase in the rate of inflation and,
consequently, higher interest rates. However, as has been the case in
recent years, inflation remained quite tame and, in fact, even declined
slightly over the period.
With virtually no indication of imminently higher inflation, the Federal
Reserve Board, or Fed, decided not to raise short-term interest rates
during the period. Therefore, aside from two brief rises on their own --
last summer and this past January -- the yields on the short-term
securities this portfolio invests in stayed basically the same.
Because I expected interest rates to rise, I kept the average maturity of
the portfolio in a short to neutral range for the 12 months. (This
strategy is based on the fact that the longer the portfolio's average
maturity, the longer it takes the portfolio to respond to a change in
interest rates. Therefore, when rates rise, a shorter maturity allows me
to more quickly add new, higher-yielding investments, which increase the
income paid to shareholders.) The yields on longer maturity securities
were only slightly above that of short-maturity issues, so I decided it
wasn't prudent to substantially lengthen the portfolio's maturity.
As the new fiscal year begins, the inflation data have yet to show signs
of a pick-up. However, I think the ongoing strength of the economy and
upward pressure on wages are likely to result in moderately higher
interest rates before the year is out. Should that occur, I will add some
newly issued, higher-yielding securities, which would result in a somewhat
higher yield for the portfolio.
Terry Fettig
(picture of) Terry Fettig
Terry Fettig
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
Managed Portfolio
From the portfolio managers
The past 12 months was a positive period overall for U.S. stocks and
bonds, as they benefited from tame inflation, low long-term interest
rates, solid economic growth and generally good corporate profits. The
portfolio's performance reflected those favorable factors, generating a
total return of 26.7% in its fiscal year -- May 1997 through April 1998.
(This figure does not reflect expenses that apply to the variable
subaccounts or to the policy.)
The portfolio got off to a strong start, recording a double-digit gain
over the first three months. But the environment became more difficult
from that point, as a rise in long-term interest rates in the U.S. last
August and a financial crisis in Asia last fall forced the portfolio to
give back some of its gain.
The so-called "Asian flu" lingered through January, keeping a lid on the
U.S stock and bond markets. By then, though, new data had trickled in
indicating that the economy was still growing without a pick-up inflation.
The good news lit a fire under stocks that continued through March,
allowing the portfolio to finish the period with a flourish.
Among the portfolio's stock holdings, those in the technology, health
care, financial services, telecommunications, retailing,
leisure/entertainment, food and auto sectors took turns making positive
contributions. For the most part, we stressed stocks of larger companies
with "earnings predictability" -- that is, those best able to produce
consistent profits despite potential problems resulting from the Asian
situation and a possible slow-down in the U.S. economy.
On the bond side, we held a combination of U.S. Treasury and corporate
issues, with the majority of the latter carrying high credit-quality
ratings. Because we were cautious about the prospects for both stocks and
bonds as the period began, we had a high level of cash reserves in the
portfolio. But, as the investment environment remained favorable, we
gradually reduced the cash level and put more money to work in stocks. By
last fall, we had built up the stock portion to about 65% of assets, with
about 29% in bonds and 6% in cash, a mix that we basically maintained
through period-end.
As we begin a new fiscal year, we think it's likely that the U.S. markets
will remain volatile. On the other hand, the investment fundamentals that
have powered the markets in recent years -- low inflation, low long-term
interest rates and solid economic growth -- are in place. Given that, we
expect to stick to a somewhat conservative strategy, which should allow
the portfolio to participate in potential market upturns while providing
some cushion in the event of a decline.
Betty J. Tebault
(picture of) Betty J. Tebault
Betty J. Tebault
Portfolio manager
Scott Schroepfer
(picture of) Scott Schroepfer
Scott Schroepfer
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Portfolio's ten largest holdings
Managed Portfolio
Percent Value
(of Portfolio's net assets) (as of April 30, 1998)
<S> <C> <C>
Tyco Intl 2.28% $13,216,250
USA Waste Services 1.48 8,585,937
Tenet Healthcare 1.35 7,861,875
Emerson Electric 1.26 7,316,875
Thermo Electron 1.20 6,967,187
Travelers Group 1.18 6,822,406
AccuStaff 1.17 6,816,250
Service Corp Intl 1.14 6,600,000
Telecomunicacoes Brasileiras-Telebras ADR 1.12 6,516,969
CVS 1.08 6,268,750
Excludes U.S. Treasury and government agency holdings.
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 13.26% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Portfolio's long-term performance
Managed Portfolio
How your $10,000 has grown in Managed Portfolio
$50,000 S&P 500
$40,000
$30,000
$20,000 $45,841
Managed
Portfolio
$10,000 Lipper Balanced
Fund Index
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Average annual total return
(as of April 30, 1998)
1 year 5 years 10 years
+26.70% +15.80% +16.45%
On the chart above you can see how the portfolio's total return compared
to two widely cited performance indexes, the S&P 500 and the Lipper
Balanced Fund Index.
Standard & Poor's 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.
Lipper Balanced Fund Index, published by Lipper Analytical Services, Inc.,
includes 10 funds that are generally similar to the fund, although some
funds in the index may have somewhat different investment policies or
objectives.
Your investment and return value fluctuate so that your accumulation
units, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The above chart does
not reflect expenses that apply to the subaccounts or the policies.
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
Government Securities Portfolio
From the portfolio manager
An overall decline in interest rates made for a favorable environment for
bonds during the past 12 months. As a result, the portfolio generated a
total return of 10.1% for policy owners during the fiscal year -- May 1997
through April 1998. (This figure does not reflect expenses that apply to
the variable subaccounts or to the policy.)
Interest rates began declining around the start of the fiscal year, as
ongoing reports of low consumer and producer prices eased investors' fears
of a potential run-up in the inflation rate. Naturally, this was good news
for the portfolio, whose bond holdings appreciated in value. (Bond prices
move in the opposite direction of interest rates).
The positive interest-rate trend continued through the end of 1997. From
that point, though, reports of stronger-than-expected economic growth
re-ignited concern of higher inflation. Although subsequent data again
confirmed that inflation had yet to pick up, interest rates fluctuated
moderately through April, keeping bond prices pretty much in a holding
pattern during that time.
The biggest beneficiaries of the overall rate decline were the portfolio's
investments in U.S. Treasury bonds, whose prices react most strongly to
interest-rate changes. I kept between 42% and 63% of assets in
"Treasurys." The rest was invested in mortgage-backed bonds issued by the
federal government, which provided more interest income than Treasurys but
did not enjoy as much price appreciation when interest rates were falling.
As the fiscal year progressed, I reduced the Treasury investments somewhat
and moved more money into mortgage-backed bonds. The strategy was based on
my expectation that interest rates would rise somewhat and my desire to
preserve policy owners' capital should that happen. In the end, it proved
to have little effect on portfolio performance over the period.
While the environment for bonds remains relatively good at this time
(mid-May), I think it's unlikely that we'll see a continuation of the
interest-rate decline we enjoyed in the past fiscal year. In fact, I think
rates have a better chance of rising than falling in the months ahead.
Therefore, for the near-term at least, I expect to maintain a slightly
conservative investment approach, focusing more on interest income than on
potential price appreciation from the portfolio's bond holdings.
Colin Lundgren
(picture of) Colin Lundgren
Colin Lundgren
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
The Portfolio's long-term performance
Government Securities Portfolio
How your $10,000 has grown in Government Securities Portfolio
$20,000
$22,263
Government
Securities Portfolio
Merrill Lynch 1-3 yr.
$10,000 Government Index
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Average annual total return
(as of April 30, 1998)
1 year 5 years 10 years
+10.11% +5.85% +8.33%
On the chart above you can see how the portfolio's total return compared
to a widely cited performance measure, the Merrill Lynch 1-3 year
Government Index.
Merrill Lynch 1-3 year Government Index is an unmanaged list of all
treasury and agency securities. 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 debt securities held in the Government
Securities Portfolio.
Your investment and return value fluctuate so that your accumulation
units, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The above chart does
not reflect expenses that apply to the subaccounts or the policies.
(This annual report is not part of the prospectus.)
<PAGE>
To our policyowners
International Equity Portfolio
From the portfolio manager
Largely healthy global stock markets, particularly in Europe, helped the
portfolio record a substantial gain during the past fiscal year. For the
12 months -- May 1997 through April 1998 -- policy owners realized a total
return of 28.4%. (This figure does not reflect expenses that apply to the
variable subaccounts or to the policy.)
Thanks to generally good economic growth and declining interest rates
throughout much of the world, stock markets as a whole rallied strongly
last summer. The next several months, though, proved to be a struggle, as
a financial crisis in Asia led to downturns in many markets through the
fall and winter.
By early spring, much of the global gloom had lifted, reflecting the
still-favorable investment environment in most major markets. Stocks in
the U.S. and Europe responded by surging through the end of the period,
more than making up for the slump during the prior months.
The portfolio's largest area of investment during the 12 months was
Europe, with the primary concentration in the United Kingdom, France,
Italy, the Netherlands and Switzerland. I also had a substantial exposure
to the U.S. stock market, where I kept up to about a third of the
portfolio's assets. I gradually reduced that exposure as the period
progressed, moving most of the money into European markets, which were
benefiting from corporate restructuring efforts throughout that part of
the world. This strategy proved successful as those stocks rallied sharply
during the final months of the fiscal year.
I maintained few investments in Asian markets, including Japan. This, too,
worked in the portfolio's favor as those markets bore the brunt of the
global downturn last fall and winter.
In the new fiscal year that began in May, I have maintained the emphasis
on Europe and the U.S., which continue to enjoy generally positive
investment environments. That notwithstanding, while opportunities for
gain still exist, I think it's unlikely that these markets will repeat
their stellar performances of the past 12 months. Therefore, I continue to
hold an above-average level of cash reserves in the portfolio, which
provide the flexibility to add attractively priced stocks of solid
companies should the markets make a meaningful retreat at some point.
John O'Brien
(picture of) John O'Brien
John O'Brien
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Portfolio's ten largest holdings
International Equity Portfolio
Percent Value
(of Portfolio's net assets) (as of April 30, 1998)
<S> <C> <C>
United Kingdom Treasury (United Kingdom) 5.80% $12,611,378
7.00% 2002
Banque Natl de Paris (France) 3.83 8,337,711
Rhone-Poulenc Cl A (France) 3.78 8,218,317
ING Groep (Netherlands) 3.56 7,745,669
Bayerische Vereinsbank (Germany) 3.18 6,908,222
Credito Italiano (Italy) 3.17 6,907,866
Novartis (Switzerland) 2.89 6,292,956
General Electric (United Kingdom) 2.78 6,048,798
Schweizer Bankgesellschaft (Switzerland) 2.76 6,001,765
TOTAL Cl B (France) 2.73 5,947,430
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 34.48% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Portfolio's long-term performance
International Equity Portfolio
How your $10,000 has grown in International Equity Portfolio
International Equity
Portfolio $21,395
$20,000
$10,000
Goldman Sachs Goldman Sachs
EGMI ex. U.S. with EGMI ex. U.S.
Japanese Modification
Oct-94 Apr-95 Oct-95 Apr-96 Oct-96 Apr-97 Oct-97 Apr-98
Average annual total return
(as of April 30, 1998)
1 year Since inception*
+28.41% +24.02%
*Inception date was Oct. 28, 1994.
On the chart above you can see how the portfolio's total return compared
to a widely cited performance measure, the Goldman Sachs Extended Global
Market Index and also to the Goldman Sachs Extended Global Market Index
ex. U.S. with Japanese Modification.
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.
Your investment and return value fluctuate so that your accumulation
units, when redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The above chart does
not reflect expenses that apply to the subaccounts or the policies.
(This annual report is not part of the prospectus.)
<PAGE>
The financial statements contained in Post-Effective Amendment #21 to
Registration Statement No. 2-97636 filed on or about June 25, 1998, are
incorporated herein by reference.
<PAGE>
IDS Life Series Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN
EXPRESS
Financial
Advisors
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
