SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 21 (File No. 2-97636) [X]
---------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 (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 25, 1998 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.
<PAGE>
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.
<TABLE>
<CAPTION>
PART A
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
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
* Designates information is located in annual report.
**Designates location in prospectus.
</TABLE>
<PAGE>
IDS Life Series Fund
Prospectus
June 29, 1998
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 backed 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>
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>
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
Year 2000
<PAGE>
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.
<PAGE>
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.
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>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Equity Portfolio
Financial highlights
Fiscal period ended April 30,
Per share income and capital changesa
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $23.52 $29.34 $20.05 $18.10 $16.87 $16.01 $13.94 $12.77 $12.16 $10.79
Income from investment operations:
Net investment income (loss) (.08) .05 .03 .10 .06 .03 .03 .13 .35 .36
Net gains (losses) (both 11.55 (1.34) 9.30 2.40 3.26 1.40 2.90 2.09 .61 1.37
realized and unrealized)
Total from investment
operations 11.47 (1.29) 9.33 2.50 3.32 1.43 2.93 2.22 .96 1.73
Less distributions:
Dividends from net -- (.05) (.03) (.10) (.06) (.03) (.03) (.13) (.35) (.36)
investment income
Distributions from (1.03) (4.48) (.01) (.45) (2.03) (.54) (.83) (.92) -- --
realized gains
Total distributions (1.03) (4.53) (.04) (.55) (2.09) (.57) (.86) (1.05) (.35) (.36)
Net asset value, $33.96 $23.52 $29.34 $20.05 $18.10 $16.87 $16.01 $13.94 $12.77 $12.16
end of period
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period
(in thousands) $933,817 $551,518 $448,412 $241,032 $151,860 $87,742 $55,265 $33,933 $16,355 $11,620
Ratio of expenses to .72% .76% .76% .77% .75% .79% .80% .80%b .80%b .80%
average daily net assets
Ratio of net income (loss) to (.29%) .21% .15% .56% .33% .21% .17% 1.03% 2.61% 3.32%
average daily net assets
Portfolio turnover rate 147% 231% 184% 144% 109% 81% 52% 79% 190% 48%
(excluding short-term
securities)
Total returnc 49.5% (3.7%) 46.6% 13.9% 19.7% 8.9% 21.1% 18.6% 7.8% 16.2%
Average brokerage $.0392 $ .0421 -- -- -- -- -- -- -- --
commission rated
a For a share outstanding throughout the period. Rounded to the nearest cent.
b 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 0.86% and
0.90% for the years ended April 30, 1991 and 1990, respectively.
c Total return does not reflect the expenses that apply to the subaccounts or
the policies.
d 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>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Income Portfolio
Financial highlights (continued)
Fiscal period ended April 30,
Per share income and capital changes(a)
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $10.03 $9.93 $9.64 $9.71 $10.19 $ 9.40 $9.19 $8.55 $8.93 $9.05
beginning of period
Income from investment operations:
Net investment income (loss) .69 .68 .68 .69 .71 .76 .73 .75 .75 .70
Net gains (losses) (both .29 .10 .29 (.07) (.48) .80 .21 .64 (.40) (.12)
realized and unrealized)
Total from investment
operations .98 .78 .97 .62 .23 1.56 .94 1.39 .35 .58
Less distributions:
Dividends from net (.69) (.68) (.68) (.69) (.71) (.77) (.73) (.75) (.73) (.70)
investment income
Distributions from
realized gain (.04) -- -- -- -- -- -- -- -- --
Total distributions (.73) (.68) (.68) (.69) (.71) (.77) (.73) (.75) (.73) (.70)
Net asset value,
end of period $10.28 $10.03 $9.93 $9.64 $ 9.71 $10.19 $9.40 $9.19 $8.55 $8.93
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period $82,773 $66,745 $54,976 $37,823 $33,770 $22,641 $16,306 $11,949 $8,831 $6,203
(in thousands)
Ratio of expenses to
average daily net assets .74% .80% .80% .80% .80% .80%b .80%b .80%b .80%b 1.11%
Ratio of net income (loss) to 6.69% 6.73% 6.72% 7.23% 6.83% 7.66% 7.86% 8.41% 8.02% 7.87%
average daily net assets
Portfolio turnover rate 94% 106% 36% 55% 60% 47% 75% 55% 60% 99%
(excluding short-term securities)
Total return c 10.0% 8.1% 10.0% 6.7% 2.1% 17.2% 10.6% 16.8% 3.8% 6.7%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b 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.
c Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Money Market Portfolio
Financial highlights (continued)
Fiscal period ended April 30,
Per share income and capital changes(a)
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
beginning of period
Income from investment operations:
Net investment income (loss) .05 .05 .05 .04 .03 .03 .05 .07 .08 .07
Less distributions:
Dividends from net (.05) (.05) (.05) (.04) (.03) (.03) (.05) (.07) (.08) (.07)
investment income
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
end of period
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period $34,373 $28,546 $14,318 $9,885 $9,557 $8,181 $9,771 $9,596 $6,321 $4,721
(in thousands)
Ratio of expenses to .60% .60% .60% .60% .60% .60% .60% .60% .60% 1.10%
average daily net assetsb
Ratio of net income (loss) to 5.04% 4.81% 5.04% 4.45% 2.61% 3.00% 4.60% 7.06% 8.26% 7.38%
average daily net assets
Total returnc 5.2% 4.9% 5.0% 4.5% 2.6% 3.0% 4.7% 7.4% 8.6% 7.5%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencing on April 5, 1989, IDS Life voluntarily limited total operating
expenses to 0.60% 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.
c Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Managed Portfolio
Financial highlights (continued)
Fiscal period ended April 30,
Per share income and capital changes(a)
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $17.16 $16.49 $14.11 $13.85 $13.84 $13.55 $13.29 $12.80 $11.22 $10.42
beginning of period
Income from investment operation:
Net investment income (loss) .47 .57 .57 .44 .42 .44 .48 .57 .57 .61
Net gains (losses) (both 3.92 1.37 2.51 .30 1.40 1.44 1.87 1.90 1.58 .80
realized and unrealized)
Total from investment 4.39 1.94 3.08 .74 1.82 1.88 2.35 2.47 2.15 1.41
operations
Less distributions:
Dividends from net (.47) (.57) (.57) (.44) (.42) (.44) (.48) (.57) (.57) (.61)
investment income
Distributions from (1.27) (.70) (.13) (.04) (1.39) (1.15) (1.61) (1.41) -- --
realized gains
Total distributions (1.74) (1.27) (.70) (.48) (1.81) (1.59) (2.09) (1.98) (.57) (.61)
Net asset value, $19.81 $17.16 $16.49 $14.11 $13.85 $13.84 $13.55 $13.29 $12.80 $11.22
end of period
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period $580,697 $410,737 $316,732 $219,986 $160,706 $100,139 $72,366 $51,442 $32,725 $25,807
(in thousands)
Ratio of expenses to .72% .75% .78% .78% .77% .79% .80% .80%b .80%b .72%b
average daily net assets
Ratio of net income (loss) 2.60% 3.46% 3.73% 3.27% 2.83% 3.15% 3.40% 4.38% 4.54% 5.76%
to average daily net assets
Portfolio turnover rate 112% 100% 83% 143% 106% 118% 122% 71% 107% 58%
(excluding short-term
securities)
Total returnc 26.7% 12.5% 22.3% 5.5% 13.3% 14.0% 17.8% 20.2% 19.4% 13.9%
Average brokerage $.0555 $.0543 -- -- -- -- -- -- -- --
commission rated
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencing on April 5, 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 0.81%, 0.82%
and 0.84% for the years ended April 30, 1991, 1990 and 1989, respectively.
c Total return does not reflect the expenses that apply to the subaccounts or
the policies.
d 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>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
Government Securities Portfolio
Financial highlights (continued)
Fiscal period ended April 30,
Per share income and capital changesa
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $9.87 $9.98 $9.85 $9.88 $10.54 $ 9.69 $9.44 $8.88 $8.97 $9.00
beginning of period
Income from investment operations:
Net investment income (loss) .56 .59 .61 .59 .60 .63 .66 .67 .69 .64
Net gains (losses) (both .42 (.03) .13 (.03) (.56) .94 .28 .56 (.09) (.03)
realized and unrealized)
Total from investment .98 .56 .74 .56 .04 1.57 .94 1.23 .60 .61
operations
Less distributions:
Dividends from net (.56) (.59) (.61) (.59) (.60) (.63) (.66) (.67) (.69) (.64)
investment income
Distributions from (.11) (.08) -- -- (.10) (.09) (.03) -- -- --
realized gains
Total distributions (.67) (.67) (.61) (.59) (.70) (.72) (.69) (.67) (.69) (.64)
Net asset value, $10.18 $9.87 $9.98 $9.85 $ 9.88 $10.54 $9.69 $9.44 $8.88 $8.97
end of period
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period $14,607 $13,377 $12,464 $11,440 $11,185 $9,619 $7,853 $6,314 $3,184 $2,773
(in thousands)
Ratio of expenses to .80% .80% .80% .80% .80% .80% .80% .80% .80% 1.12%
average daily net assetsb
Ratio of net income (loss) to 5.57% 5.88% 5.98% 6.02% 5.59% 6.10% 6.79% 7.24% 7.34% 7.19%
average daily net assets
Portfolio turnover rate 82% 62% 38% 12% 32% 15% 11% 18% 18% 14%
(excluding short-term
securities)
Total returnc 10.1% 5.8% 7.5% 6.0% 0.2% 16.6% 10.2% 14.3% 6.5% 7.1%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b 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% , 0.85%,
0.88%, 0.87%, 0.85%, 0.88%, 0.92%, 1.08%, 1.12% and 1.21% for the years
ended April 30, 1998, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and
1989, respectively.
c Total return does not reflect the expenses that apply to the subaccounts or
the policies.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Series Fund, Inc.
International Equity Portfolio
Financial highlights
Fiscal period ended April 30,
Per share income and capital changes(a)
1998 1997 1996 1995b
<S> <C> <C> <C> <C>
Net asset value, $14.73 16.35 $10.29 $10.00
beginning of period
Income from investment operations:
Net investment income (loss) .08 .14 .11 .15
Net gains (losses) (both 4.06 (.24) 6.08 .29
realized and unrealized)
Total from investment operations 4.14 (.10) 6.19 .44
Less distributions:
Dividends from net (.07) (.15) (.13) (.15)
investment income
Excess distributions from (.05) -- -- --
net investment income
Distributions from (.42) (1.37) -- --
realized gains
Total distributions (.54) (1.52) (.13) (.15)
Net asset value,
end of period $18.33 $14.73 $16.35 $10.29
Ratios/supplemental data
1998 1997 1996 1995b
Net assets, end of period $217,573 $125,874 $52,061 $8,497
(in thousands)
Ratio of expenses to 1.05%d 1.05%d 1.05%d 1.00%c,d
average daily net assets
Ratio of net income (loss) to .49% .73% .92% 5.66%c
average daily net assets
Portfolio turnover rate 172% 151% 172% 40%
(excluding short-term
securities)
Total returne 28.4% (.5%) 60.5% 4.4%
Average brokerage commission ratef $.0014 $.0022 -- --
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencement of operations. Period from Oct. 28, 1994 to April 30, 1995.
c Adjusted to an annual basis.
d IDS Life voluntarily limited total operating expenses. Had IDS not done so,
the ratio of expenses to average daily net assets would have been 1.06%,
1.22%, 1.32% and 1.76% for the years ended April 30, 1998, 1997, 1996 and
1995, respectively.
e Total return does not reflect the expenses that apply to the subaccounts or
the policies.
f 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.
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.
</TABLE>
<PAGE>
Total returns
Average annual total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Equity Portfolio +49.52% +23.55% +18.94%
S&P 500 +40.91% +23.18% +18.88%
Lipper Growth and Income +34.88% +19.69% +16.34%
Fund Index
Cumulative total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Equity Portfolio +49.52% +187.91% +466.56%
S&P 500 +40.91% +183.57% +463.60%
Lipper Growth and Income +34.88% +145.60% +354.19%
Fund Index
Average annual total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Income Portfolio +9.97% +7.33% +9.09%
Lehman Aggregate Bond +10.92% +6.84% +9.02%
Index
Cumulative total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Income Portfolio +9.97% +42.44% +138.63%
Lehman Aggregate Bond +10.92% +39.24% +137.22%
Index
Average annual total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Managed Portfolio +26.70% +15.80% +16.45%
S&P 500 +40.91% +23.18% +18.88%
Lipper Balanced Fund Index +26.08% +14.21% +13.30%
<PAGE>
Cumulative total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Managed Portfolio +26.70% +108.19% +358.41%
S&P 500 +40.91% +183.57% +463.60%
Lipper Balanced Fund Index +26.08% +94.28% +248.62%
Average annual total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Government Securities +10.11% +5.85% +8.33%
Portfolio
Merrill Lynch 1-3 Govt +7.14% +5.50% +7.22%
Index
Cumulative total returns as of April 30, 1998
Purchase made 1 year ago 5 years ago 10 years ago
- ------------- ---------- ----------- ------------
Government Securities +10.11% +32.91% +122.63%
Portfolio
Merrill Lynch 1-3 Govt +7.14% +30.67% +100.88%
Index
Average annual total returns as of April 30, 1998
Purchase made 1 year ago Since inception*
International Equity Portfolio +28.41% +24.02%
Goldman Sachs Extended Global -0.10% -0.69%
Market Index ex. U.S.
Goldman Sachs Extended Global -1.94% -0.63%
Market Index ex. U.S. with
Japanese Modification
<PAGE>
Cumulative total returns as of April 30, 1998
Purchase made 1 year ago Since inception*
- ------------- ---------- ----------------
International Equity Portfolio +28.41% +113.95%
Goldman Sachs Extended Global -0.10% -2.39%
Market Index ex. U.S.
Goldman Sachs Extended Global -1.94% -2.17%
Market Index ex. U.S. with
Japanese Modification
*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 Equity Portfolio and
Managed Portfolio 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 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.
<PAGE>
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
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.
<PAGE>
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.
Yield - Net investment income earned per share for a specified time period,
divided by the share price at the end of the period.
<PAGE>
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 C 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, 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.
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
<PAGE>
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.
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, including those described in the next section of this
prospectus.
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>
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, 1998 for Income Portfolio
<TABLE>
<CAPTION>
S&P Rating (or Protection of Percent of net assets in
Percent of net Moody's equivalent) principal and unrated securities*
assets interest
<S> <C> <C> <C> <C>
34.24% AAA Highest quality 0.03%
3.30 AA High quality -
10.28 A Upper medium grade -
19.87 BBB Medium grade 0.38
15.12 BB Moderately speculative 0.03
8.81 B Speculative 0.16
0.14 CCC Highly speculative -
- CC Poor quality -
- C Lowest quality -
- D In default -
2.03 Unrated Unrated securities 1.43
* AEFC's assessment of unrated securities.
<PAGE>
Bond ratings of holdings for fiscal year ended
April 30, 1998 for Managed Portfolio
Protection of
Percent of net S&P Rating (or principal and Percent of net assets in
assets Moody's equivalent) interest unrated securities*
12.12% AAA Highest quality 0.43%
0.94 AA High quality -
2.72 A Upper medium grade -
3.23 BBB Medium grade -
3.74 BB Moderately speculative -
4.78 B Speculative 0.20
0.18 CCC Highly speculative 0.28
- CC Poor quality -
- C Lowest quality -
- D In default -
1.59 Unrated Unrated securities 0.68
* AEFC's assessment of unrated securities.
(See Appendix H to the SAI for further information regarding ratings.)
</TABLE>
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. There are risks when investing in
securities of foreign companies and governments in addition to those assumed
when investing in domestic securities. These risks are classified as country
risk, currency risk, and custody risk. Each can adversely affect the value of an
investment. Country risk includes the political, economic, and other conditions
of a country. These conditions include lack of publicly available information,
less government oversight, the possibility of government-imposed restrictions,
even the nationalization of assets. Currency risk results from the constantly
changing exchange rate between local currency and the U.S. dollar. Whenever the
fund holds securities
<PAGE>
valued in local currency or holds the currency, changes in the exchange rate add
or subtract from the asset value of the fund. Custody risk refers to the process
of clearing and settling trades. It also covers holding securities with local
agents and depositories. Low trading volumes and volatile prices in less
developed markets make trades harder to complete and settle. Local agents are
held only to the standard care of the local market. Governments or trade groups
may compel local agents to hold securities in designated depositories that are
not subject to independent evaluation. The less developed a country's securities
market is, the greater the likelihood of problems occurring. The risks of
foreign investments are managed carefully but the fund cannot guarantee against
losses that might result from them.
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.
<PAGE>
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 Assets without readily available market values are valued according to
methods selected in good faith by the board.
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.
<PAGE>
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 next close of business after we receive the
request.
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.
<PAGE>
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.
<PAGE>
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.
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 senior 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.
Betty Tebault joined AEFC in 1985 as an analyst and serves as portfolio manager.
She became a portfolio manager in 1993 and was appointed to this portfolio from
1995 until early 1997. She also has managed IDS Equity Select Fund since 1997.
<PAGE>
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
John O'Brien joined AEFC in 1988 and serves as vice president and portfolio
manager for American Express Asset Management International Inc. He became
portfolio manager of World Growth Portfolio and IDS Life International Equity
Portfolio in September 1997.
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, 1998 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 .72%, .74%, .60%, .72%, .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, 1998.
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.
<PAGE>
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.
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, 1998 were more
than $195 billion.
American Express Financial Advisors Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more than 8,700
planners.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the fund. The fund has
no computer systems of its own but is dependent upon the systems maintained by
AEFC and certain other third parties.
<PAGE>
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification of existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each of its critical systems
by the end of 1998 and to continue compliance efforts through 1999. The Year
2000 readiness of other third parties whose system failures could have an impact
on the fund's operations currently is being evaluated. The companies or
governments in which the fund invests also may be adversely affected by Year
2000 issues. This may affect the value of the fund's investments. The potential
materiality of any such impact is not known at this time.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
IDS LIFE SERIES FUND, INC.
Equity Portfolio
Income Portfolio
Money Market Portfolio
Managed Portfolio
Government Securities Portfolio
International Equity Portfolio
June 29, 1998
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 29, 1998, and is to
be used with the fund's Prospectus dated June 29, 1998 and the fund's Annual
Report for the fiscal year ended April 30, 1998.
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>
TABLE OF CONTENTS
Goals and Investment Policies....................................See Prospectus
Additional Investment Policies............................................p. 3
Portfolio Transactions....................................................p. 19
Brokerage Commissions Paid to
Brokers Affiliated with IDS Life..........................................p. 21
Calculation of Total Return...............................................p. 22
Calculation of Yield......................................................p. 23
Valuing Each Portfolio's Shares...........................................p. 24
Investing in the Fund.....................................................p. 26
Redeeming Shares..........................................................p. 27
Investment Management and Other Services..................................p. 27
Management of the Fund....................................................p. 28
Custodian.................................................................p. 30
Independent Auditors......................................................p. 31
Financial Statements..........................................See Annual Report
Appendix A: Foreign Currency Transactions, for
Investments of Equity, Income, Managed
and International Equity Portfolios.....................p. 32
Appendix B: Investing in Foreign Securities.........................p. 36
Appendix C: Description of Money Market Securities, for
Investments of all Portfolios except
Government Securities...................................p. 37
Appendix D: Options and Stock Index Futures Contracts,
for Investments of Equity, Managed and
International Equity Portfolios.........................p. 39
Appendix E: Options and Interest Rate Futures Contracts,
for Investments of Income, Managed and
Government Securities Portfolios........................p. 45
Appendix F: Mortgage-Backed Securities and Additional
Information on Investment Policies for all
Portfolios except Money Market..........................p. 50
Appendix G: Dollar-Cost Averaging...................................p. 53
Appendix H: Description of Corporate Bond Ratings...................p. 54
<PAGE>
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 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.
<PAGE>
`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.
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
<PAGE>
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.
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:
<PAGE>
`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. 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.
<PAGE>
`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.
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
<PAGE>
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 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.
<PAGE>
`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 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>
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.
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>
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.
`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
<PAGE>
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.
`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.
<PAGE>
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 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.
<PAGE>
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.
`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>
`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 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.
<PAGE>
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.
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.
<PAGE>
`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 C).
`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.
`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.
<PAGE>
`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
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.
<PAGE>
For a discussion on foreign currency transactions, see Appendix A. For a
discussion on money market securities, see Appendix C. For a discussion on
options and stock index futures contracts, see Appendix D. For a discussion on
options and interest rate futures contracts, see Appendix E. For a discussion on
mortgage-backed securities, see Appendix F. For a discussion on dollar-cost
averaging, see Appendix G.
For a description of corporate bond ratings, see Appendix H.
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
herein.
AEFC has a strict Code of Ethics that prohibits its affiliated personnel from
engaging in personal investment activities 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 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
<PAGE>
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 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 $1,546,768 for fiscal year
1996, $3,573,645 for fiscal year 1997 and $2,980,916 for fiscal year ended April
30, 1998. The majority of all firms through whom transactions were executed
provide research services.
<PAGE>
Transactions amounting to $60,703,000 with related commissions of $139,169 were
directed to brokers by the fund because of research services received for the
fiscal year ended April 30, 1998.
Income, Money Market and Managed Portfolios' acquisition during the period ended
April 30, 1998, 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 $4,636,410
Salomon Brothers 509,225
Merrill Lynch 2,028,289
First Chicago Capital Markets 5,009,817
Goldman Sachs & Co. 1,497,245
Morgan Stanley 997,857
Travelers Group 6,822,406
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% 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.
<PAGE>
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,
1998 1997 1996
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 (1) $11,112 .37% .76% $24,523 $50,443
Enterprise
Investment
Services Inc.
(1) Wholly owned subsidiary of AEFC.
</TABLE>
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>
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 5.44% for the 30-day period ended
April 30, 1998 and Income Portfolio's yield was 6.51%. 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 5.39%. Income Portfolio's yield would have been 6.51*%.
*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 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.
<PAGE>
The portfolio calculates its compound yield according to the following formula:
Compound Yield = [(return for seven day period + 1) x (365/7)] - 1
The portfolio's simple annualized yield was 5.01% and its compound yield was
5.13% on April 30, 1998, the last business day of the fund's fiscal year.
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, 1998
the computation looked like this for Equity, Income, International Equity,
Managed and Government Securities Portfolios:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset
shareholder transactions at end of previous value of one share
day
<S> <C> <C> <C>
Equity Portfolio $933,781,853 divided by 27,496,521 = $33.96
Income Portfolio 82,782,486 divided by 8,052,771 = 10.28
Managed Portfolio 580,699,563 divided by 29,313,456 = 19.81
Government 14,612,565 divided by 1,435,419 = 10.18
Securities
Portfolio
International Equity 217,535,674 divided by 11,867,740 = 18.33
Portfolio
</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.
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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:
`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;
0.5 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.
0.95 percent, on an annual basis, for International Equity Portfolio;
<PAGE>
The management fee is paid monthly. The total amount paid for fiscal year ended
April 30, 1998 was $5,369,342 for Equity Portfolio, $520,492 for Income
Portfolio, $156,403 for Money Market Portfolio, $3,495,488 for Managed
Portfolio, $98,674 for Government Securities Portfolio and $1,616,804 for
International Equity Portfolio. 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,
$91,353 for Government Securities Portfolio and $862,518 for International
Equity. The total amount paid for fiscal year ended April 30, 1996 was
$2,334,846 for Equity Portfolio, $332,795 for Income Portfolio, $64,350 for
Money Market Portfolio, $1,894,796 for Managed Portfolio, $86,352 for Government
Securities Portfolio and $220,659 for International Equity 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 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 $4,060,601 for investment advice for the fiscal year ended
April 30, 1998. 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.
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.
<PAGE>
*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.
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:
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.
<PAGE>
Timothy S. Meehan
IDS Tower 10
Minneapolis, MN
Secretary
Secretary of American Express Financial Corporation, American Express Financial
Advisors, Inc. since October 1995. Vice president & group counsel to American
Express Financial Corporation since 1998. Senior Counsel to American Express
Financial Corporation from 1995 to 1998. 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, 1998
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 from IDS
Board Member 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.
<PAGE>
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 1998 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 29, 1998, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
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 have 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.
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.
<PAGE>
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 their 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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
APPENDIX B
INVESTING IN FOREIGN SECURITIES
Investors should recognize that investing in foreign securities involves certain
special considerations, including those set forth below and those described in
the prospectus, which are not typically associated with investing in United
States securities. Foreign companies are not generally subject to uniform
accounting and auditing and financial reporting standards comparable to those
applicable to domestic companies. Additionally, many foreign stock markets,
while growing in volume of trading activity, have substantially less volume than
the New York Stock Exchange, and securities of some foreign companies are less
liquid and more volatile than securities of domestic companies. Similarly,
volume and liquidity in most foreign bond markets are less than the volume and
liquidity in the United States and, at times, volatility of price can be greater
than in the United States. Further, foreign markets have different clearance,
settlement, registration and communication procedures and in certain markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions making it difficult to conduct such
transactions. Delays in such procedures could result in temporary periods when
assets of the portfolio(s) are uninvested and no return is earned thereon. The
inability of the fund to make intended security purchases due to such problems
could cause the fund to miss attractive investment opportunities. Payment for
securities without delivery may be required in certain foreign markets and, when
participating in new issues, some foreign countries require payment to be made
in advance of issuance (at the time of issuance, the market value of the
security may be more or less than the purchase price). Some foreign markets also
have compulsory depositories (i.e., the fund does not have a choice as to where
the securities are held). Fixed commissions on some foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges, although the
fund will endeavor to achieve the most favorable net results on its portfolio
transactions. Further, the fund may encounter difficulties or be unable to
pursue legal remedies and obtain judgments in foreign courts. There is generally
less government supervision and regulation of business and industry practices,
stock exchanges, brokers and listed companies than in the United States. It may
be more difficult for the fund's agents to keep currently informed about
corporate actions such as stock dividends or other matters which may affect the
prices of portfolio securities. Communications between the United States and
foreign countries may be less reliable than within the United States, thus
increasing the risk of delays or loss of certificates for portfolio securities.
In addition, with respect to certain foreign countries, there is the possibility
of nationalization, expropriation, the imposition of withholding or confiscatory
taxes, political, social, or economic instability, diplomatic developments which
could affect United States investments in those countries, or other unforeseen
actions by regulatory bodies (such as changes to settlement or custody
procedures). Investments in foreign securities may also entail certain risks,
such as possible currency blockages or transfer restrictions, and the difficulty
of enforcing rights in other countries.
<PAGE>
APPENDIX C
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.
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
<PAGE>
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.
<PAGE>
APPENDIX D
OPTIONS AND STOCK INDEX FUTURES CONTRACTS, FOR INVESTMENTS OF EQUITY, MANAGED
AND INTERNATIONAL EQUITY PORTFOLIOS
The portfolios referred to above 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 E).
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 that 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
<PAGE>
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 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.
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
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 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.
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
<PAGE>
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.
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.
<PAGE>
APPENDIX E
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 D).
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 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.
<PAGE>
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.
`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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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.
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>
APPENDIX F
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 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
<PAGE>
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 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
<PAGE>
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>
APPENDIX G
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 Acquired
Investment of a Unit
- ------------------------- -----------------------------------------------------
$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>
APPENDIX H
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.
<PAGE>
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, 1998, 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, 1998, and the financial highlights for each of the years
in the ten-year period ended April 30, 1998 (for the three-year period
ended April 30, 1998 and for the period from October 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,
1998 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.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 5, 1998
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
IDS Life Series Fund, Inc.
April 30, 1998
Equity Income Money
Portfolio Portfolio Market
Portfolio
Assets
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost: $729,890,393; $81,058,671 and
<S> <C> <C> <C>
$34,112,035, respectively) $926,978,528 $82,590,561 $34,112,035
Investments in securities of affiliated issuers
(identified cost: $5,604,628 for Equity Portfolio) 4,837,500 -- --
--------- ---------- ----------
Total investments in securities
(identified cost: $735,495,021 for Equity Portfolio) 931,816,028 82,590,561 34,112,035
Cash in bank on demand deposit 38,347 152,525 107,985
Receivable for investment securities sold 19,297,781 307,079 --
Dividends and accrued interest receivable 100,291 1,296,003 --
Receivable for capital stock sold -- 379,006 377,698
------- -------
Total assets 951,252,447 84,725,174 34,597,718
----------- ---------- ----------
Liabilities
Dividends payable to shareholders (Note 1) -- 437,638 135,892
Payable for investment securities purchased 14,677,805 1,348,435 --
Accrued investment management services fee 540,206 47,226 13,614
Payable for capital stock redeemed 2,183,773 88,853 65,517
Other accrued expenses 33,737 29,741 9,344
------ ------ -----
Total liabilities 17,435,521 1,951,893 224,367
---------- --------- -------
Net assets applicable to outstanding capital stock $933,816,926 $82,773,281 $34,373,351
============ =========== ===========
Represented by
Capital stock-- $.001 par value (Note 1) $ 27,497 $ 8,053 $ 34,377
Additional paid-in capital 601,864,150 80,637,605 34,339,943
Undistributed net investment income -- 20,872 --
Accumulated net realized gain (loss) 135,604,272 574,861 (969)
----------- ------- ----
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 196,321,007 1,531,890 --
----------- --------- ---------
Total-- representing net assets applicable to outstanding capital stock $933,816,926 $82,773,281 $34,373,351
------------ ----------- -----------
Shares outstanding 27,496,521 8,052,771 34,376,580
---------- --------- ----------
Net asset value per share of outstanding capital stock $ 33.96 $ 10.28 $ 1.00
============ =========== ===========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of assets and liabilities (continued)
IDS Life Series Fund, Inc.
April 30, 1998
Managed Government International
Portfolio Securities Equity
Portfolio Portfolio
Assets
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost: $482,009,938; $14,053,688 and
<S> <C> <C> <C>
$183,940,794, respectively) $579,224,333 $14,427,314 $217,569,032
Cash in bank on demand deposit -- 482,166 130,825
Receivable for investment securities sold 1,635,311 -- 23,018
Dividends and accrued interest receivable 3,517,570 169,717 571,690
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) -- -- 127
Receivable for capital stock sold 2,513,768 61,174 808,313
--------- ------ -------
Total assets 586,890,982 15,140,371 219,103,005
----------- ---------- -----------
Liabilities
Disbursments in excess of cash on demand deposit 373,601 -- --
Dividends payable to shareholders (Note 1) 3,626,968 63,965 1,072,179
Payable for investment securities purchased 1,823,138 451,463 288,999
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) -- -- 78
Accrued investment management services fee 334,632 8,236 168,557
Payable for capital stock redeemed 13,176 10,091 --
Other accrued expenses 22,107 42 475
------ -- ---
Total liabilities 6,193,622 533,797 1,530,288
--------- ------- ---------
Net assets applicable to outstanding capital stock $580,697,360 $14,606,574 $217,572,717
------------ ----------- ------------
Represented by
Capital stock-- $.001 par value (Note 1) $ 29,313 $ 1,435 $ 11,868
Additional paid-in capital 447,082,484 14,115,536 176,189,279
Undistributed (excess of distributions over)
net investment income (98,258) (14,715) (32,762)
------- ------- -------
Accumulated net realized gain (loss) 35,828,556 130,692 7,775,713
---------- ------- ---------
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (Note 7) 97,855,265 373,626 33,628,619
---------- ------- ----------
Total-- representing net assets applicable to outstanding capital stock $580,697,360 $14,606,574 $217,572,717
------------ ----------- ------------
Shares outstanding 29,313,456 1,435,419 11,867,740
---------- --------- ----------
Net asset value per share of outstanding capital stock $ 19.81 $ 10.18 $ 18.33
============ =========== ============
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of operations
IDS Life Series Fund, Inc.
Year ended April 30, 1998
Equity Income Money
Portfolio Portfolio Market
Portfolio
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 1,883,381 $ 6,664 $ --
Interest 1,387,648 5,517,547 1,763,644
Less foreign taxes withheld (2,047) -- --
------ ------- --------
Total income 3,268,982 5,524,211 1,763,644
--------- --------- ---------
Expenses (Note 2):
Investment management and services fee 5,369,342 520,492 156,403
Custodian fees 128,472 8,710 20,301
Audit fees 15,500 9,500 7,000
Directors fees 5,189 766 229
Printing and postage 3,500 3,671 3,100
Other -- 8,773 650
----- ---
Total expenses 5,522,003 551,912 187,683
--------- ------- -------
Investment income (loss)-- net (2,253,021) 4,972,299 1,575,961
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 137,931,282 575,895 (159)
Foreign currency transactions (2,936) -- --
------ ----- ---
Net realized gain (loss) on investments 137,928,346 575,895 (159)
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 153,419,212 1,370,727 --
----------- --------- ---
Net gain (loss) on investments and foreign currencies 291,347,558 1,946,622 (159)
----------- --------- ----
Net increase (decrease) in net assets resulting from operations $289,094,537 $6,918,921 $1,575,802
============ ========== ==========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations (continued)
IDS Life Series Fund, Inc.
Year ended April 30, 1998
Managed Government International
Portfolio Securities Equity
Portfolio Portfolio
Investment income
Income:
<S> <C> <C> <C>
Dividends $ 2,697,045 $ -- $ 1,771,977
Interest 13,862,696 898,378 1,103,148
Less foreign taxes withheld (3,150) -- (254,666)
------ --------
Total income 16,556,591 898,378 2,620,459
---------- ------- ---------
Expenses (Note 2):
Investment management and services fee 3,495,488 98,674 1,616,804
Custodian fees 60,663 9,345 167,076
Audit fees 14,500 8,000 12,000
Directors fees 3,657 102 1,193
Printing and postage 4,496 1,900 3,400
Other -- 1,100 1,100
----- -----
Total expenses 3,578,804 119,121 1,801,573
Less expenses voluntarily reimbursed by IDS Life -- (6,351) (14,580)
------ -------
Total expenses-- net 3,578,804 112,770 1,786,993
--------- ------- ---------
Investment income (loss)-- net 12,977,787 785,608 833,466
---------- ------- -------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactons (includes foreign taxes
withheld of $47,957 and also includes $749,587 realized gain on investments
of affilliated issuers for International Equity Portfolio) (Note 3) 34,022,556 134,337 7,604,777
Financial futures contracts 1,709,267 -- --
Foreign currency transactions 14 -- 594,674
Options contracts written 112,771 -- 100,105
------- -------
Net realized gain (loss) on investments 35,844,608 134,337 8,299,556
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 66,941,764 445,383 33,874,515
---------- ------- ----------
Net gain (loss) on investments and foreign currencies 102,786,372 579,720 42,174,071
----------- ------- ----------
Net increase (decrease) in net assets resulting from operations $115,764,159 $1,365,328 $43,007,537
============ ========== ===========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Life Series Fund, Inc.
Year ended April 30,
Equity Portfolio Income Portfolio
Operations and distributions 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ (2,253,021) $ 1,090,051 $ 4,972,299 $ 4,145,791
Net realized gain (loss) on investments 137,928,346 25,205,763 575,895 872,910
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in foreign currencies 153,419,212 (47,584,150) 1,370,727 (278,890)
----------- ----------- --------- --------
Net increase (decrease) in net assets resulting from operations 289,094,537 (21,288,336) 6,918,921 4,739,811
----------- ----------- --------- ---------
Distributions to shareholders from:
Net investment income (20,999) (1,069,807) (4,972,299) (4,144,980)
Excess distribution of net investment income -- -- -- (811)
Net realized gain (25,086,345) (73,838,149) (287,088) --
----------- ----------- -------- ---
Total distributions (25,107,344) (74,907,956) (5,259,387) (4,145,791)
----------- ----------- ---------- ----------
Capital share transactions (Note 5)
Proceeds from sales 108,453,258 134,772,812 14,789,401 12,860,826
Reinvested distributions at net asset value 25,107,344 74,907,956 5,259,387 4,145,791
Payments for redemptions (15,248,865) (10,378,879) (5,679,799) (5,832,042)
----------- ----------- ---------- ----------
Increase (decrease) in net assets from capital share transactions 118,311,737 199,301,889 14,368,989 11,174,575
----------- ----------- ---------- ----------
Total increase (decrease) in net assets 382,298,930 103,105,597 16,028,523 11,768,595
----------- ----------- ---------- ----------
Net assets at beginning of year 551,517,996 448,412,399 66,744,758 54,976,163
----------- ----------- ---------- ----------
Net assets at end of year $933,816,926 $551,517,996 $82,773,281 $66,744,758
------------ ------------ ----------- -----------
Undistributed net investment income $ -- $ 20,999 $ 20,872 $ 19,838
============ ============ =========== ===========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</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 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 1,575,961 $ 950,435 $ 12,977,787 $ 12,657,967
Net realized gain (loss) on investments (159) (79) 35,844,608 31,253,972
Net change in unrealized appreciation (depreciation)on investments
and on translation of assets and liabilities in foreign currencies -- -- 66,941,764 (1,450,532)
---------- ----------
Net increase (decrease) in net assets resulting from operations 1,575,802 950,356 115,764,159 42,461,407
--------- ------- ----------- ----------
Distributions to shareholders from:
Net investment income (1,575,961) (950,435) (12,977,741) (12,603,155)
Excess distribution of net investment income -- -- -- (55,452)
Net realized gain -- -- (31,257,376) (13,910,481)
----------- -----------
Total distributions (1,575,961) (950,435) (44,235,117) (26,569,088)
---------- -------- ----------- -----------
Capital share transactions (Note 5)
Proceeds from sales 19,622,034 22,306,772 64,443,186 61,977,979
Reinvested distributions at net asset value 1,575,961 950,435 44,235,117 26,569,088
Payments for redemptions (15,370,198) (9,029,770) (10,246,876) (10,434,788)
----------- ---------- ----------- -----------
Increase (decrease) in net assets from capital share transactions 5,827,797 14,227,437 98,431,427 78,112,279
--------- ---------- ---------- ----------
Total increase (decrease) in net assets 5,827,638 14,227,358 169,960,469 94,004,598
Net assets at beginning of year 28,545,713 14,318,355 410,736,891 316,732,293
---------- ---------- ----------- -----------
Net assets at end of year $34,373,351 $28,545,713 $580,697,360 $410,736,891
----------- ----------- ------------ ------------
Excess of distributions over net investment income $ -- $ -- $ (98,258) $ (91,841)
=========== =========== ============ ============
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
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 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 785,608 $ 769,224 $ 833,466 $ 662,025
Net realized gain (loss) on investments 134,337 129,567 8,299,556 4,046,978
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 445,383 (188,485) 33,874,515 (6,133,514)
Net increase (decrease) in net assets resulting from operations 1,365,328 710,306 43,007,537 (1,424,511)
Distributions to shareholders from:
Net investment income (785,584) (762,735) (800,705) (662,648)
Excess distributions of net investment income -- (6,588) (548,730) (108,688)
Net realized gain (141,363) (103,298) (3,978,926) (5,909,647)
Total distributions (926,947) (872,621) (5,328,361) (6,680,983)
Capital share transactions (Note 5)
Proceeds from sales 4,424,154 3,256,810 51,860,011 76,861,699
Reinvested distributions at net asset value 926,947 872,621 5,328,361 6,680,983
Payments for redemptions (4,560,150) (3,054,279) (3,168,693) (1,624,761)
Increase (decrease) in net assets from capital share transactions 790,951 1,075,152 54,019,679 81,917,921
Total increase (decrease) in net assets 1,229,332 912,837 91,698,855 73,812,427
Net assets at beginning of year 13,377,242 12,464,405 125,873,862 52,061,435
Net assets at end of period $14,606,574 $13,377,242 $217,572,717 $125,873,862
Excess of distributions over net investment income $ (14,715) $ (18,384) $ (32,762) $ (32,761)
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Notes to financial statements
IDS Life Series Fund, Inc.
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. Each
Portfolio has 10 billion authorized shares of capital stock. 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
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities in all portfolios, except Money Market Portfolio, 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 Portfolios,
except Money Market Portfolio, may buy and 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 Portfolios, except Money Market Portfolio, may buy and sell financial
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 Portfolios, except Money Market Portfolio, 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, 1998, 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, 1998 was $454,302 and $653,280, which represents
0.5% and 0.1% 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. As of April 30, 1998, Government
Securities Portfolio had entered into outstanding when-issued or
forward-commitments of $451,463.
<PAGE>
<TABLE>
<CAPTION>
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:
Equity Income Managed Government International
Portfolio Portfolio Portfolio Securities Equity
Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
Undistributed net investment income 2,253,021 1,034 (6,463) 3,645 515,968
Accumulated net realized gain (loss) (2,253,021) (1,034) 6,463 (3,645) (515,968)
Additional paid-in capital reduction (increase) -- -- -- -- --
</TABLE>
<PAGE>
Dividends to shareholders
At April 30, 1998, dividends declared for each portfolio payable May 1,
1998 are as follows:
Income $.055
Money Market $.004
Managed $.124
Government Securities $.046
International Equity $.091
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, 1998, cost of purchases and proceeds from
sales of securities aggregated, respectively, $264,842,805 and
$259,280,948 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 $1,244,457,289 $1,090,278,901
Income 86,053,482 64,669,330
Managed 571,886,029 502,699,046
Government Securities 12,114,328 11,277,373
International Equity 315,248,477 268,890,402
Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with IDS Life were
$1,917, $7,965 and $1,230 for Equity Portfolio, Managed Portfolio and
International Equity Portfolio, respectively, for the year ended April 30,
1998.
4
Foreign currency
contracts
At April 30, 1998, International Equity Portfolio had entered into foreign
currency exchange contracts that obligate the Portfolio to deliver
currencies at specified future dates. The unrealized appreciation and/or
depreciation on these contracts is included in the accompanying financial
statements. See "Summary of significant accounting policies." The terms of
the open contracts are as follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
May 4, 1998 288,886 518,551 $113 $--
U.S. Dollar Deutsche Mark
May 5, 1998 789,653 390,820 -- 78
Dutch Guilder U.S. Dollar
May 5, 1998 138,445 23,047 14 --
French Franc U.S. Dollar
Total $127 $78
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
5
Capital share
transactions
Transactions in shares of each portfolio for the years indicated are as
follows:
Number of shares: Year ended April 30, 1998
Money Government International
Equity Income Market Managed Securities Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
Sold 3,690,818 1,441,650 19,623,972 3,499,409 440,153 3,199,923
Issued for reinvested
distributions 878,375 512,508 1,576,114 2,439,015 91,894 310,769
Redeemed (519,416) (554,245) (15,371,758) (559,693) (451,521) (190,260)
-------- -------- ----------- -------- -------- --------
\
Net increase (decrease) 4,049,777 1,399,913 5,828,328 5,378,731 80,526 3,320,432
--------- --------- --------- --------- ------ ---------
Number of shares: Year ended April 30, 1997
Money Government International
Equity Income Market Managed Securities Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
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 (decrease) 8,163,089 1,115,368 14,228,634 4,729,398 105,438 5,363,157
--------- --------- ---------- --------- ------- ---------
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Notes to financial statements
IDS Life Series Fund, Inc.
6
Option contracts
written
The number of contracts and premium amounts associated with option
contracts written by Managed Portfolio is as follows:
Year ended April 30, 1998
Calls
Contracts Premium
Balance April 30, 1997 -- $ --
Opened 200 161,895
Closed 200 161,895
Balance April 30, 1998 -- $ --
See "Summary of significant accounting policies."
The number of contracts and premium amounts associated with option
contracts written by International Equity Portfolio is as follows:
Year ended April 30, 1998
Calls
Contracts Premium
Balance April 30, 1997 -- $ --
Opened 170 141,860
Closed 170 141,860
Balance April 30, 1998 -- $ --
See "Summary of significant accounting policies."
7
Stock index
futures contracts
At April 30, 1998, investments in securities for Managed Portfolio
included securities valued at $1,155,750 that were pledged as collateral
to cover initial margin deposits on 63 open sales contracts. The market
value of the open sales contracts at April 30, 1998, was $17,627,400 with
a net unrealized gain of $641,025. See "Summary of significant accounting
policies."
8
Financial
highlights
"Financial highlights" showing per share data and selected information is
presented on pages 5-10 of the prospectus.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
Section start title
IDS Life Series Fund, Inc.
Equity Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Common stocks (98.9%)
Issuer Shares Value(a)
Automotive & related (0.8%)
Dura Automotive
Systems Cl A 200,000(b) $7,800,000
Banks and savings & loans (4.3%)
American Capital Strategies 200,000 4,525,000
Astoria Financial 100,000 5,862,500
Independence Community
Bank 250,000(b) 4,578,125
Richmond County Financial 250,000 4,906,250
TCF Financial 155,320 5,057,607
Washington Mutual 150,000 10,509,375
Wilshire Financial Services
Group 200,000(b) 4,825,000
Total 40,263,857
Building materials & construction (3.4%)
Advanced Lighting
Technologies 200,000(b) 5,550,000
Consolidated Capital 350,000(b) 7,721,875
Fairfield Communities 300,000(b) 7,012,500
Hospitality Worldwide
Services 300,000(b) 2,906,250
Tyco Intl 150,000 8,175,000
Total 31,365,625
Commercial finance (0.6%)
Finova Group 100,000 5,856,250
Communications equipment & services (5.5%)
Advanced Fibre
Communications 250,000(b) 10,593,750
Andrew Corp 150,000(b) 3,431,250
Ascend Communications 150,000(b) 6,534,375
DSC Communications 250,000(b) 4,500,000
Natural Microsystems 300,000(b) 9,675,000
PairGain Technologies 200,000(b) 3,687,500
RELTEC 100,000(b) 3,987,500
Tellabs 125,000(b) 8,859,375
Total 51,268,750
Computers & office equipment (21.6%)
American Management
Systems 250,000(b) 7,234,375
Aspec Technology 17,600(b) 244,200
BEA Systems 350,000(b) 7,787,500
BMC Software 100,000(b) 9,356,250
Cisco Systems 105,000(b) 7,691,250
Computer Task Group 96,600 3,755,325
CSG Systems Intl 220,000(b) 10,010,000
DAOU Systems 300,000(b) 5,400,000
DST Systems 100,000(b) 5,512,500
Envoy 150,000(b) 6,318,750
Extended Systems 300,000(b) 2,100,000
HNC Software 125,000(b) 4,875,000
Information Management
Associates 330,000(b) 4,455,000
MAXIMUS 170,000(b) 5,355,000
Metzler Group 150,000(b) $5,193,750
Network Associates 441,674(b) 30,254,669
PeopleSoft 260,000(b) 12,090,000
Pervasive Software 295,000(b) 4,019,375
Platinum Technology 150,000(b) 3,825,000
Profit Recovery Group Intl 300,000(b) 7,800,000
Sterling Commerce 300,000(b) 12,768,750
SunGard Data Systems 400,000(b) 14,250,000
Transition Systems 250,000(b) 5,625,000
Viasoft 900,000(b) 15,693,750
Whittman-Hart 200,000(b) 8,775,000
Total 200,390,444
Electronics (4.8%)
Advanced Micro Devices 150,000 4,162,500
EFTC 325,000(b) 5,565,625
Harris 175,000 8,465,625
PCD 250,000(b) 5,015,625
Sawtek 350,000(b) 10,631,250
Uniphase 200,000(b) 10,850,000
Total 44,690,625
Energy (0.5%)
Newfield Exploration 200,000(b) 4,850,000
Energy equipment & services (2.5%)
Cooper Cameron 110,000(b) 7,308,125
R&B Falcon 92,700(b) 2,972,193
Santa Fe Intl 200,000 7,837,500
Veritas DGC 100,000(b) 5,418,750
Total 23,536,568
Financial services (4.3%)
Allmerica Financial 75,000 4,696,875
Capital One Financial 60,000 5,763,750
CMAC Investment 80,000 5,165,000
Friedman, Billings, Ramsey
Group Cl A 450,000(b) 8,465,625
Providian Financial 200,000 12,037,500
Sirrom Capital 150,000 4,481,250
Total 40,610,000
Food (0.9%)
Dreyer's Grand Ice Cream 125,000 3,156,250
U.S. Foodservice 150,000(b) 5,296,875
Total 8,453,125
Foreign (5.7%)(e)
ACE 150,000 5,681,250
BioChem Pharma 300,000(b) 7,631,250
Check Point Software
Technologies 125,000(b) 3,671,875
Fundtech 200,000(b) 4,225,000
Peak Intl 250,000(b) 5,812,500
Petroleum Geo-Services
ADR 100,000(b) $6,575,000
Saipem 1,350,000(b) 7,766,145
Scandinavian Broadcasting
System 200,000(b) 6,350,000
Shire Pharmaceuticals
Group ADR 251,500(b) 5,658,750
Total 53,371,770
Furniture & appliances (0.6%)
CompX 175,000(b) 4,396,875
HON Inds 46,000 1,472,000
Total 5,868,875
Health care (8.6%)
ALZA 106,100(b) 5,086,168
Boston Scientific 60,000(b) 4,338,750
Dura Pharmaceuticals 200,000(b) 5,300,000
Guidant 80,000 5,350,000
IDEC Pharmaceuticals 150,000(b) 5,400,000
Maxxim Medical 150,000(b) 3,918,750
Medicis Pharmaceutical Cl A 225,000(b) 9,618,750
Pharmacyclics 150,000(b) 4,068,750
Sofamor Danek Group 42,200(b) 3,703,050
Somnus Medical Technologies 350,000(b) 4,200,000
Spiros Development 150,000(b) 2,493,750
Synaptic Pharmaceutical 200,000(b) 2,500,000
Trex Medical 275,000(b) 5,225,000
Watson Pharmaceuticals 450,000(b) 19,350,000
Total 80,552,968
Health care services (7.4%)
AmeriSource Health Cl A 100,000(b) 5,450,000
BioReliance 153,500(b) 2,379,250
HBO & Co 560,000 33,495,000
Health Management
Associates Cl A 240,000(b) 7,560,000
Rock of Ages 300,000(b,d) 4,837,500
Schein (Henry) 200,000(b) 7,800,000
Tenet Healthcare 194,000(b) 7,262,875
Total 68,784,625
Industrial equipment & services (1.4%)
Iron Mountain 100,000(b) 4,200,000
Superior Services 150,000(b) 4,875,000
TransTechnology 145,000 4,331,875
Total 13,406,875
Insurance (3.0%)
Capital Re 60,000 4,428,750
Life Re 100,000 7,200,000
Nationwide Financial
Services Cl A 125,000 5,421,875
Protective Life 196,000 7,276,500
UNUM 70,000 3,762,500
Total 28,089,625
Leisure time & entertainment (1.0%)
Activision 200,000(b) 2,175,000
Championship Auto Racing
Team 126,500(b) 2,387,688
Imax 175,000(b) 4,768,750
Total 9,331,438
Media (4.9%)
Chancellor Media 200,000(b) 9,487,500
Outdoor Systems 600,000(b) 19,050,000
Sinclair Broadcast Group Cl A180,000 9,337,500
Univision Communications Cl A200,000(b) 7,662,500
Total 45,537,500
Miscellaneous (0.9%)
BrightStar Information
Technology Group 200,000(b) 3,125,000
Medical Manager 175,000(b) 5,173,438
Total 8,298,438
Multi-industry conglomerates (2.3%)
AccuStaff 200,000(b) 7,175,000
Apollo Group Cl A 112,500(b) 3,853,125
Interim Services 171,600(b) 5,598,450
Steven Myers & Associates 300,000(b) 5,175,000
Total 21,801,575
Paper & packaging (0.4%)
Earthshell 250,000(b) 3,656,250
Real estate investment trust (0.6%)
Wilshire Real Estate
Investment Trust 323,273 5,172,368
Restaurants & lodging (0.9%)
Rainforest Cafe 300,000(b) 4,546,875
Silverleaf Resorts 150,000(b) 3,562,500
Total 8,109,375
Retail (10.0%)
CDW Computer Centers 350,000(b) 16,975,000
Consolidated Stores 110,000(b) 4,400,000
CVS 100,000 7,375,000
Dollar General 312,500 11,835,938
Dominick's Supermarkets 280,000(b) 11,217,500
Kohl's 173,600(b) 7,171,850
MSC Industrial Direct Cl A 150,000(b) 7,631,250
Rite Aid 162,000 5,204,250
Stage Stores 300,000(b) 15,431,250
Twinlab 150,000(b) 5,887,500
Total 93,129,538
Transportation (1.1%)
Covenant Transport 300,000(b) 5,718,750
Wisconsin Central
Transportation 200,000(b) 4,900,000
Total 10,618,750
Utilities -- telephone (0.9%)
Cincinnati Bell 125,000 4,781,250
STAR Telecommunications 135,000(b) 3,653,438
Total 8,434,688
Total common stocks
(Cost: $726,928,895) $923,249,902
Robomatix Technologies 1,451(c) $--
Warrants
Total other
(Cost: $--) $--
Short-term securities (0.9%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies
Federal Home Loan Bank Disc Nt
05-27-98 5.42% $7,400,000 $7,371,140
Federal Home Loan Mtge Corp Disc Nts
05-28-98 5.44 200,000 199,188
05-29-98 5.42 800,000 796,640
05-29-98 5.45 200,000 199,158
Total 8,566,126
Total short-term securities
(Cost: $8,566,126) $8,566,126
Total investments in securities
(Cost: $735,495,021)(f) $931,816,028
============
See accompanying notes to investments in securities.
<PAGE>
<TABLE>
<CAPTION>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Negligible market value.
(d) 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, 1998 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Rock of Ages* $-- $5,604,628 $-- $5,604,628 $-- $4,837,500
*Issuer was not an affiliate for the entire year ended April 30, 1998.
(e) Foreign securities values are stated in U.S. dollars.
(f) At April 30, 1998, the cost of securities for federal income tax purposes
was $739,497,355 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation........................$218,909,496
Unrealized depreciation.........................(26,590,823)
Net unrealized appreciation....................$192,318,673
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Life Series Fund, Inc.
Income Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Bonds (96.6%)
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations (4.3%)
U.S. Treasury
<S> <C> <C> <C>
10-15-06 6.50% $500,000 $524,130
11-15-27 6.125 3,000,000 3,072,510
Total 3,596,640
Mortgage-backed securities (23.2%)
Federal Home Loan Mtge Corp
06-01-09 5.50 696,332 683,101
03-01-13 5.50 985,548 951,978
08-01-11 6.50 1,850,101 1,860,979
06-15-20 8.00 185,000 191,368
Collateralized Mtge Obligation
04-15-22 8.50 1,000,000 1,099,830
Federal Natl Mtge Assn
03-15-01 5.625 600,000 597,222
04-15-03 5.75 2,000,000 1,988,436
02-15-08 5.75 1,500,000 1,472,670
06-01-10 6.50 1,012,874 1,020,410
02-01-11 6.00 1,714,117 1,697,147
01-25-21 8.00 180,682 182,265
07-01-26 7.00 1,847,684 1,869,819
12-01-27 6.00 2,489,242 2,406,574
12-01-27 6.50 2,220,733 2,199,525
Merrill Lynch Mtge Investors
06-15-21 8.17 165,661 165,350
Morgan Stanley Capital
Collateralized Mtge Obligation
11-15-28 6.59 757,012 761,034
Total 19,147,708
Aerospace & defense (0.7%)
BE Aerospace
Sr Sub Nts Series B
02-01-06 9.875 100,000 106,750
Goodrich (BF)
07-01-01 9.625 150,000 163,686
Newport News Shipbuilding
Sr Nts
12-01-06 8.625 75,000 78,563
Northrop-Grumman
03-01-06 7.00 250,000 257,075
Total 606,074
Airlines (0.5%)
Continental Airlines
Series 1996A
04-15-15 6.94 384,439 393,146
Automotive & related (0.3%)
Arvin Capital
Company Guaranty
02-01-27 9.50 250,000 277,538
Banks and savings & loans (6.3%)
Capital One Bank
05-15-08 6.70 500,000 498,900
Crestar Capital
Company Guaranty
12-15-26 8.16 350,000 378,315
First Bank System
Sub Nts
09-15-07 6.875 400,000 412,612
Fleet Financial Group
Sub Deb
01-15-28 6.875 300,000 300,525
Fleet/Norstar Financial Group
Sub Nts
12-01-01 9.00 200,000 217,748
Greenpoint Capital
Company Guaranty
06-01-27 9.10 200,000 220,284
Hubco Capital
Company Guaranty Series B
02-01-27 8.98 500,000 551,071
MBNA American Bank
Sub Nts
03-15-08 6.75 500,000 497,105
Mellon Capital
Company Guaranty Series A
12-01-26 7.72 500,000 521,310
Norwest
Sr Nts
09-15-02 6.375 400,000 402,748
Provident Cos
03-15-38 7.41 500,000 500,890
Union Planters Bank
Sub Nts
03-15-18 6.50 500,000 496,360
Washington Mutual Capital
Company Guaranty
06-01-27 8.375 200,000(c) 218,292
Total 5,216,160
Building materials & construction (1.2%)
Carlisle Cos
Sr Nts
01-15-07 7.25 500,000 523,190
Owens-Corning Fiberglass
06-01-12 9.375 100,000 117,369
Pulte
Sr Nts
12-15-03 7.00 300,000 302,451
Southdown
Sr Sub Nts Series B
03-01-06 10.00 50,000 55,563
Total 998,573
Chemicals (0.6%)
USA Waste Services
Sr Nts
10-01-07 7.125 500,000 520,260
Communications equipment & services (2.0%)
Facilicom Intl
Sr Nts
01-15-08 10.50 250,000 258,125
Iridium LLC/Capital
Sr Nts
07-15-05 11.25 100,000(c) 103,000
IXC Communications
Sr Sub Nts
04-15-08 9.00 250,000(c) 248,750
Jordan Telecommunications Products
Sr Nts Series B
08-01-07 9.875 250,000 263,750
NTL
Zero Coupon Sr Nts
04-01-08 9.78 190,000(c,e) 120,650
PhoneTel Technologies
Sr Nts
12-15-06 12.00 125,000 111,094
U S WEST Capital Funding
01-15-02 6.85 500,000 508,875
Total 1,614,244
Computers & office equipment (0.1%)
Psinet
Sr Nts
02-15-05 10.00 50,000(c) 51,500
Electronics (0.5%)
Thomas & Betts
01-15-06 6.50 400,000 398,992
Energy (2.7%)
Forcenergy
Sr Sub Nts
11-01-06 9.50 50,000 51,625
Gulf Canada Resources
07-01-05 9.625 500,000 543,125
Oryx Energy
10-15-05 8.125 500,000 534,260
R & B Falcon
Sr Nts
04-15-08 6.95 500,000 497,140
Trizec Hahn
Sr Nts
09-15-04 9.50 100,000 103,000
USX
03-01-08 6.85 500,000 501,700
Total 2,230,850
Energy equipment & services (1.9%)
DI Inds
Sr Nts
07-01-07 8.875 150,000 154,125
Foster Wheeler
11-15-05 6.75 300,000 305,112
Global Marine
09-01-07 7.125 500,000 516,235
Pioneer Natural Resource
01-15-08 6.50 500,000 488,375
Pool Energy Services
Sr Sub Nts
04-01-08 8.625 100,000(c) 99,500
Total 1,563,347
Financial services (3.1%)
Arcadia Financial
Sr Nts
03-15-07 11.50 130,000 129,188
Avco Financial Services
Sr Nts
07-15-99 7.25 300,000 304,878
Barclays North America Capital
05-15-21 9.75 300,000 341,199
Countrywide Funding
Company Guaranty Medium-term Nts Series A
03-01-99 8.42 300,000 305,769
Providian Master Trust
Series 1997-4 Cl A
06-15-07 6.25 500,000 505,315
Providian Natl Bank
Sr Nts
03-15-03 6.70 500,000 500,760
Wilmington Trust
Sub Nts
05-01-08 6.625 500,000 501,290
Total 2,588,399
Food (0.3%)
Ameriserve Food Distributions
Company Guaranty
07-15-07 10.125 100,000 108,125
Chiquita Brands Intl
Sr Nts
01-15-04 9.625 100,000 106,000
Total 214,125
Foreign (13.7%)(b)
Airplanes GPA Cl D
(U.S. Dollar) Series 1
03-15-19 10.875 100,000 111,483
Alcan Aluminum
(U.S. Dollar)
01-15-22 8.875 200,000 217,873
Argentina Govt Natl
(U.S. Dollar)
09-19-27 9.75 340,000 328,100
Banca Commercial Italian
(U.S. Dollar)
07-15-07 8.25 300,000 332,055
Banco General
(U.S. Dollar)
08-01-02 7.70 350,000(c) 347,701
City of Moscow
(U.S. Dollar)
05-31-00 9.50% $250,000(c) $245,267
Corp Andina de Fomento
(U.S. Dollar)
02-01-03 7.10 300,000 308,154
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 500,000(c) 453,309
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 100,000(c) 87,500
Delphes 2
(U.S. Dollar)
05-05-09 7.75 600,000 615,374
Doman Inds
(U.S. Dollar)
03-15-04 8.75 500,000 497,500
Espirito Santo Centrais
(U.S. Dollar) Sr Nts
07-15-07 10.00 250,000(c) 241,158
Globo Communicacoes Participacoes
(U.S. Dollar) Sr Nts
12-05-08 10.625 100,000(c) 101,634
Govt of Algeria
(U.S. Dollar)
12-31-20 6.72 200,000 127,000
Great Central Mines
(U.S. Dollar) Sr Nts
04-01-08 8.875 250,000(c) 252,500
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 100,000(c) 84,448
Grupo Iusacell
(U.S. Dollar)
07-15-04 10.00 100,000 104,379
Grupo Minero Mexico
(U.S. Dollar) Company Guaranty Series A
04-01-08 8.25 250,000 248,438
Grupo Televisa
(U.S. Dollar) Sr Nts
05-15-06 11.875 100,000 114,987
Guangdong Enterprises
(U.S. Dollar) Sr Nts
05-22-07 8.875 200,000(c) 177,758
Honam Oil Refinery
(U.S. Dollar)
10-15-05 7.125 250,000(c) 205,259
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-07 Series A 6.95 250,000(c) 237,045
08-01-17 Series B 7.45 125,000(c) 114,875
Hyder
(U.S. Dollar)
12-15-07 6.875 500,000(c) 503,965
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.625 500,000(c) 439,325
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.125 200,000(c) 208,000
Israel Electric
(U.S. Dollar) Sr Nts
12-15-06 7.25 300,000 305,205
MDC Communications
(U.S. Dollar) Sr Sub Nts
12-01-06 10.50 100,000 108,000
Ministry Finance Russia
(U.S. Dollar)
06-26-07 10.00 250,000(c) 240,468
Netia Holdings
(U.S. Dollar) Company Guaranty
11-01-07 10.25 100,000(c) 103,000
People's Republic of China
(U.S. Dollar)
07-03-01 7.375 100,000 101,255
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts Series E
03-06-07 7.85 250,000(c) 229,808
Quno Corp
(U.S. Dollar) Sr Nts
05-15-05 9.125 250,000 261,563
Repap New Brunswick
(U.S. Dollar) Sr Nts
07-15-00 9.875 100,000 105,250
Republic of Argentina
(Argentine Peso)
02-12-07 11.75 250,000 254,844
Republic of Brazil
(U.S. Dollar)
05-15-27 10.125 200,000 193,052
Republic of Korea
(U.S. Dollar)
04-15-08 8.875 200,000 196,770
Republic of Panama
(U.S. Dollar)
02-13-02 7.875 250,000(c) 246,495
Republic of Philiippines
(U.S. Dollar)
04-15-08 8.875 500,000 500,000
Roil
(U.S. Dollar)
12-05-02 12.78 250,000 (d) 248,750
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 250,000(c) 227,358
United Mexican States
(U.S. Dollar)
12-31-19 6.25 250,000 211,095
Veritas Holdings
(U.S. Dollar) Sr Nts
12-15-03 9.625 127,000 136,208
Woodside Petroleum
(U.S. Dollar)
04-15-08 6.60 500,000(c) 492,120
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 250,000(c) 234,105
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 250,000(c) 273,443
Total 11,373,876
Furniture & appliances (0.1%)
Interface
Sr Sub Nts Series B
11-15-05 9.50% $100,000 $107,500
Health care (0.2%)
Alaris Medical Systems
Company Guaranty
12-01-06 9.75 150,000 159,188
Health care services (2.2%)
Columbia/HCA Healthcare
06-15-05 6.91 100,000 94,576
Magellan Health Services
Sr Sub Nts
02-15-08 9.00 125,000(c) 124,531
Manor Care
Sr Nts
06-15-06 7.50 250,000 265,218
Paracelsus Healthcare
Sr Sub Nts
08-15-06 10.00 350,000 364,000
Service Corp Intl
03-15-20 6.30 500,000 497,680
Tenet Healthcare
Sr Sub Nts
03-01-05 10.125 250,000 278,540
Vencor
Sr Sub Nts
07-15-07 8.625 200,000 225,000
Total 1,849,545
Household products (0.3%)
Revlon Consumer Products
Sr Nts
02-01-06 8.125 250,000(c) 249,375
Industrial equipment & services (3.6%)
AGCO
Sr Sub Nts
03-15-06 8.50 500,000 516,250
ARAMARK Services
Company Guaranty
12-01-06 7.10 500,000 507,965
Case
08-01-05 7.25 400,000 416,812
Chattem
Sr Sub Nts
04-01-08 8.875 250,000(c) 252,500
Ingersoll-Rand
Sr Nts
02-15-01 6.26 500,000 502,780
Jorgensen (Earle M)
Sr Nt
04-01-05 9.50 275,000(c) 275,688
Motor & Gears
Sr Nts Series D
11-15-06 10.75 250,000 272,813
Terex
Sr Sub Nts
04-01-08 8.875 250,000(c) 249,375
Total 2,994,183
Insurance (1.7%)
American United Life Insurance
03-30-26 7.75 200,000(d) 205,552
Americo Life
Sr Sub Nts
06-01-05 9.25 100,000 102,625
Conseco Financing Trust
Company Guaranty
11-15-26 8.70 300,000 333,306
Orion Capital
Company Guaranty
04-15-28 7.70 250,000(c) 247,700
SAFECO Capital
Company Guaranty
07-15-37 8.07 500,000 524,740
Total 1,413,923
Leisure time & entertainment (2.3%)
Hammons (JQ) Hotels
1st Mtge
02-15-04 8.875 250,000 251,563
Mirage Resorts
02-01-08 6.75 500,000 488,565
Riviera Holdings
Company Guaranty
08-15-04 10.00 250,000 249,375
Time Warner
02-01-24 7.57 350,000 370,122
Trump Holdings & Funding
Sr Nts
06-15-05 15.50 250,000 284,375
United Artists Theatres
Series 1995A
07-01-15 9.30 96,469 99,122
Venetian Casino/LV Sands
Mtge
11-15-04 12.25 150,000(c) 155,624
Total 1,898,746
Media (2.5%)
Comcast
Sr Sub Deb
10-15-06 9.125 500,000 534,375
Lamar Advertising
Company Guaranty
12-01-06 9.625 275,000 292,875
Lenfest Communications
Sr Nts
11-01-05 8.375 250,000 260,000
Quebecor Printing Capital
Company Guaranty
01-15-07 7.25 500,000 521,170
Time Warner Entertainment
Sr Nts
07-15-33 8.375 250,000 288,088
Viacom
Sub Deb
07-07-06 8.00 100,000 101,750
Viacom Intl
09-15-01 10.25 100,000 110,625
Total 2,108,883
Miscellaneous (5.5%)
Adams Outdoor Advertising
Sr Nts
03-15-06 10.75 100,000 110,000
American General Institute Capital
Company Guaranty Series A
12-01-45 7.57 250,000(c) 260,640
Bayou Steel
1st Mtge
03-01-01 10.25 250,000 257,813
Bistro Trust
12-31-02 9.50 250,000(c) 250,900
BTI Telecommunications
Sr Nts
09-15-07 10.50 100,000 104,000
California Infrastructure-
San Diego Gas & Electric
03-25-02 6.04 500,000 501,345
California Infrastructure-
Southern California Edison
03-25-02 6.14 1,000,000 1,005,270
Grant Geophysical
Sr Nts
02-15-08 9.75 100,000 99,750
Grove Worldwide LLC
Sr Sub Nts
05-01-08 9.25 100,000(c) 100,000
JTM Inds
Sr Sub Nts
04-15-08 10.00 140,000(c) 142,800
Level 3 Communications
Sr Nts
05-01-08 9.125 225,000(c) 223,313
M & I Capital
Company Guaranty
12-01-26 7.65 300,000 311,028
MJD Communications
Sr Sub Nts
05-01-08 9.50 100,000(c) 100,000
MSX Intl
Sr Sub Nts
01-15-08 11.375 125,000 128,438
NSM Steel
Company Guaranty
02-01-06 12.00 275,000 261,250
Oshkosh Truck
03-01-08 8.75% $250,000(c) $251,875
Outsourcing Solutions
Sr Sub Nts Series B
11-01-06 11.00 140,000 154,175
Pierce Leahy
Company Guaranty
05-15-08 8.125 200,000(c) 195,000
SFX Entertainment
Sr Sub Nts
02-01-08 9.125 125,000 122,188
Total 4,579,785
Multi-industry conglomerates (1.9%)
Coltec Inds
Sr Nts
04-15-08 7.50 500,000(c) 500,000
Crane
06-15-99 7.25 300,000 304,107
Prime Succession
Sr Sub Nts
08-15-04 10.75 85,000 93,500
USI American Holdings
Sr Nts Series B
12-01-06 7.25 425,000 429,008
Westinghouse Electric
06-01-01 8.875 250,000 264,637
Total 1,591,252
Paper & packaging (1.6%)
Chesapeake
05-01-03 9.875 100,000 114,134
Gaylord Container
Sr Nts
06-15-07 9.375 100,000(c) 99,750
06-15-07 9.75 150,000 152,250
Intl Paper
11-15-12 5.125 85,000 73,469
Owens-Illinois
Sr Nts
05-15-07 8.10 250,000 264,738
Scotia Pacific Holding
Collateralized Mtge Obligation
07-20-15 7.95 240,929 252,426
Silgan Holdings
06-01-09 9.00 100,000 104,624
Warren (SD)
Sr Sub Nts Series B
12-15-04 12.00 250,000 277,500
Total 1,338,891
Real estate investment trust (0.5%)
First Union RE Eq SBI
Sr Nts
10-01-03 8.875 100,000 103,125
Property Trust of America
02-15-14 7.50 300,000 308,355
Total 411,480
Restaurants & lodging (0.6%)
MGM Grand
02-06-08 6.875% $500,000 $490,725
Retail (1.9%)
Federated Dept Stores
02-15-28 7.00 250,000 246,273
Kroger
Sr Nts
07-15-06 8.15 500,000 544,375
Maxim Group
Company Guaranty Series B
10-15-07 9.25 250,000 255,000
Meyer (Fred)
Company Guaranty
03-01-08 7.45 250,000 250,000
Pep Boys-Manny, Moe & Jack
06-01-05 7.00 300,000 307,521
Total 1,603,169
Transportation (1.4%)
Enterprise Rent-A-Car USA Finance
02-15-08 6.80 200,000 200,420
Medium-term Nts
12-15-99 8.75 300,000(c) 310,548
Ryder System
Series N
05-15-01 9.25 150,000 162,707
Union Pacific
02-01-08 6.625 500,000 495,170
Total 1,168,845
Utilities -- electric (4.4%)
AES
Sr Sub Nts
11-01-07 8.50 165,000 170,363
CalEnergy
Sr Nts
09-15-06 9.50 250,000 271,250
California Infrastructure-
Pacific Gas & Electric
06-25-02 6.15 1,000,000 1,004,390
Cleveland Electric Illuminating
1st Mtge Series B
05-15-05 9.50 100,000 111,459
CMS Energy
Sr Nts
05-15-02 8.125 200,000 205,382
CMS Energy
Sr Nts Series B
11-15-00 7.375 300,000 299,682
Connecticut Light & Power
1st Mtge Series C
06-01-02 7.75 250,000 254,845
El Paso Electric
1st Mtge Series D
02-01-06 8.90 100,000 111,125
First PV Funding
Series 1986B
01-15-16 10.15 74,000 78,440
Houston Inds
06-01-01 9.375% $150,000 $163,518
Long Island Lighting
Gen Ref Mtge
04-15-04 8.625 500,000 502,845
Midland Funding
Series A
07-23-05 11.75 100,000 119,000
Sithe Independence Funding
Series A
12-30-13 9.00 100,000 116,925
Western Massachusetts Electric
1st Mtge Series B
07-01-01 7.375 250,000 251,250
Total 3,660,474
Utilities -- gas (0.8%)
Columbia Gas System
Series E
11-28-10 7.32 500,000 515,440
Southwest Gas
Series F
06-15-02 9.75 100,000 109,813
Total 625,253
Utilities -- telephone (3.5%)
Airtouch Communications
05-01-08 6.65 500,000 503,170
Cable & Wireless Communications
(U.S. Dollar)
03-06-03 6.375 500,000 500,660
GTE Florida
02-01-28 6.86 500,000 505,015
GTE North
Debs Series F
02-15-10 6.375 500,000 498,095
Intermedia Communications
Sr Nts Series B
11-01-07 8.875 100,000 103,500
McLeod USA
Sr Nts
03-15-08 8.375 105,000(c) 106,837
Primus Telecommunications Group
Sr Nts
08-01-04 11.75 200,000 221,500
WorldCom
Sr Nts
01-15-04 9.375 435,000 465,994
Total 2,904,771
Total bonds
(Cost: $78,477,015) $79,947,420
Preferred stocks & other (0.5%)
Issuer Shares Value(a)
KMC Telecommunications Holdings
Warrants 700 $423,500
Time Warner
10.25% Pay-in-kind Series M 6 6,765
Intermedia Communications
Warrants 100 13,500
Primus Telecommunications
Warrants 200 5,000
Total preferred stocks & other
(Cost: $387,280) $448,765
Short-term securities (2.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (2.0%)
Federal Home Loan Bank Disc Nt
05-27-98 5.42% $500,000 $498,050
Federal Home Loan Mtge Corp Disc Nts
05-18-98 5.43 700,000 698,212
05-26-98 5.45 500,000 498,114
Total 1,694,376
Commercial paper (0.7%)
UBS Finance (Delaware)
05-01-98 5.55 500,000 500,000
Total short-term securities
(Cost: $2,194,376) $2,194,376
Total investments in securities
(Cost: $81,058,671)(f) $82,590,561
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
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) 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, 1998, is as follows:
Security Acquisition Cost
dates
American United Life Insurance*
7.75% 2026 02-13-96 $200,000
Roil
12.78% 2002 04-30-98 248,750
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(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) At April 30, 1998, the cost of securities for federal income tax purposes
was $81,042,890 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation..............................$2,055,775
Unrealized depreciation................................(508,104)
Net unrealized appreciation..........................$1,547,671
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Life Series Fund, Inc.
Money Market Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (8.1%)
Federal Home Loan Mtge Corp Disc Nts
05-22-98 5.43% $2,200,000 $2,193,057
05-26-98 5.45 600,000 597,738
Total U.S. government agency
(Cost: $2,790,795) $2,790,795
Commercial paper (83.0%)
Banks and savings & loans (13.0%)
ANZ (Delaware)
05-01-98 5.53 1,400,000 1,400,000
Deutsche Bank Financial
07-06-98 5.55 1,300,000 1,286,892
Kredietbank North America Finance
05-06-98 5.55 500,000 499,618
Natl Australia Funding (Delaware)
07-21-98 5.57 1,300,000 1,283,912
Total 4,470,422
Broker dealers (10.1%)
Goldman Sachs Group
05-13-98 5.54 1,500,000 1,497,245
Merrill Lynch
11-12-98 5.61 1,000,000 970,533
Morgan Stanley, Dean Witter
Discover & Co
05-15-98 5.57 1,000,000 997,857
Total 3,465,635
Commercial finance (13.1%)
CAFCO
05-11-98 5.56 1,500,000(b) 1,497,700
Ciesco LP
06-04-98 5.55 1,500,000(b) 1,492,180
New Center Asset Trust
05-07-98 5.58 1,500,000 1,498,615
Total 4,488,495
Financial services (23.1%)
Avco Financial Services
06-26-98 5.58 1,100,000 1,090,589
Delaware Funding
05-19-98 5.53 1,500,000(b) 1,495,867
Household Finance
05-26-98 5.56 1,400,000 1,394,624
Intl Lease Finance
08-18-98 5.55 1,500,000 1,475,203
Natl Rural Utilities
05-20-98 5.52% $1,500,000 $1,495,685
Paccar Financial
05-13-98 5.54 1,000,000 998,160
Total 7,950,128
Health care (7.8%)
Becton Dickinson
06-01-98 5.53 1,300,000 1,293,843
Novartis Finance
06-18-98 5.53 1,400,000 1,389,752
Total 2,683,595
Industrial equipment & services (2.9%)
ABB Treasury Center USA
06-01-98 5.57 1,000,000(b) 995,264
Metals (4.3%)
BHP Finance
05-20-98 5.54 1,500,000 1,495,630
Utilities -- telephone (8.7%)
Bell Atlantic Finance
05-21-98 5.52 1,500,000 1,495,417
GTE Funding
05-18-98 5.54 1,500,000 1,496,097
Total 2,991,514
Total commercial paper
(Cost: $28,540,683) $28,540,683
Letters of credit (8.1%)
Bank of America-
AES Hawaii
07-02-98 5.57 1,500,000 1,485,740
First Chicago-
Commed Fuel
05-27-98 5.56 1,300,000 1,294,817
Total letters of credit
(Cost: $2,780,557) $2,780,557
Total investments in securities
(Cost: $34,112,035)(c) $34,112,035
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, 1998, this also represents the cost of securities for federal
income tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Life Series Fund, Inc.
Managed Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Common stocks (63.0%)
Issuer Shares Value(a)
Aerospace & defense (2.1%)
General Motors Cl H 85,000 $4,696,250
Howmet Intl 140,000(b) 2,310,000
Precision Castparts 80,000 4,970,000
Total 11,976,250
Automotive & related (1.3%)
Danaher 45,000 3,234,375
Hayes Lemmerz Intl 115,000(b) 4,420,312
Total 7,654,687
Banks and savings & loans (5.5%)
BankAmerica 25,000 2,125,000
BankBoston 45,000 4,857,187
First Chicago NBD 40,000 3,715,000
First Union 100,000 6,037,500
Mellon Bank 80,000 5,760,000
Norwest 95,000 3,770,313
Washington Mutual 78,700 5,513,919
Total 31,778,919
Beverages & tobacco (1.2%)
Coca-Cola 53,600 4,066,900
Philip Morris 80,000 2,985,000
Total 7,051,900
Building materials & construction (2.3%)
Tyco Intl 242,500 13,216,250
Chemicals (1.5%)
USA Waste Services 175,000(b) 8,585,937
Commercial finance (0.4%)
Finova Group 42,900 2,512,331
Communications equipment & services (0.6%)
ADC Telecommunications 115,000(b) 3,442,812
Computers & office equipment (3.1%)
BMC Software 40,000(b) 3,742,500
Cisco Systems 52,500(b) 3,845,625
Compaq Computer 120,000 3,367,500
Parametric Technology 110,000(b) 3,516,562
Solectron 75,000(b) 3,323,438
Total 17,795,625
Electronics (1.0%)
Harris 60,000 2,902,500
Intel 35,000 2,828,437
Total 5,730,937
Energy equipment & services (1.7%)
Baker Hughes 110,000 4,455,000
Transocean Offshore 91,000 5,084,625
Total 9,539,625
Financial services (2.9%)
CCA Prison REIT 90,000 3,189,375
H&R Block 70,000 3,150,000
Household Intl 28,900 3,798,544
Travelers Group 111,500 6,822,406
Total16,960,325
Food (0.7%)
General Mills 60,000 4,053,750
Foreign (3.7%)(c)
ACE 114,300 4,329,113
Ericsson (LM) ADR Cl B 65,000 3,343,438
Mutual Risk Management 111,666 3,782,686
Northern Telecom 60,000 3,652,500
Telecomunicacoes
Brasileiras-Telebras ADR 53,500 6,516,969
Total 21,624,706
Furniture & appliances (0.7%)
Maytag 11,400 587,100
Sunbeam 145,000(d) 3,643,125
Total 4,230,225
Health care (7.3%)
ALZA 100,000(b) 4,793,750
American Home Products 60,000 5,587,500
Boston Scientific 64,600(b) 4,671,387
Dura Pharmaceuticals 95,000(b) 2,517,500
Guidant 50,000 3,343,750
Immunex 60,000(b) 4,117,500
Johnson & Johnson 50,000 3,568,750
Medtronic 60,000 3,157,500
Merck & Co 19,000 2,289,500
Schering-Plough 51,200 4,102,400
Sofamor Danek Group 45,000(b) 3,948,750
Total 42,098,287
Health care services (2.5%)
Service Corp Intl 160,000 6,600,000
Tenet Healthcare 210,000(b) 7,861,875
Total 14,461,875
Household products (1.4%)
Gillette 37,000 4,271,187
Newell 85,000 4,106,563
Total 8,377,750
Industrial equipment & services (1.2%)
Thermo Electron 175,000(b) 6,967,187
Insurance (0.9%)
Nationwide Financial
Services Cl A 120,000 5,205,000
Leisure time & entertainment (2.5%)
Carnival Cl A 75,000 5,217,187
Harley-Davidson 110,000 3,960,000
Viacom Cl B 95,000(b) 5,510,000
Total 14,687,187
Media (3.6%)
CBS 175,000 6,234,375
Chancellor Media 130,000(b) 6,166,875
Comcast Cl A 100,000 3,493,750
Univision
Communications Cl A 125,000(b) 4,789,062
Total 20,684,062
Metals (0.5%)
Aluminum Co of America 40,500 3,138,750
Multi-industry conglomerates (4.0%)
AccuStaff 190,000(b) 6,816,250
Baldor Electric 80,900 2,123,625
Cendant 100,000(b) 2,500,000
Emerson Electric 115,000 7,316,875
Interim Services 140,000(b) 4,567,500
Total 23,324,250
Paper & packaging (0.9%)
Fort James 100,000 4,962,500
Retail (6.9%)
American Stores 172,800 4,147,200
Consolidated Stores 115,000(b) 4,600,000
Costco Cos 80,000(b) 4,470,000
CVS 85,000 6,268,750
Dollar General 117,188 4,438,477
Home Depot 50,000 3,481,250
Kohlis 84,000(b) 3,470,250
Rite Aid 160,000 5,140,000
Safeway 100,000(b) 3,825,000
Total 39,840,927
Textiles & apparel (0.9%)
Wolverine World Wide 189,300 $5,466,037
Utilities -- gas (0.8%)
El Paso Natural Gas 130,000 4,801,875
Utilities -- telephone (0.9%)
WorldCom 127,000(b) 5,433,219
Total common stocks
(Cost: $271,705,709) $365,603,185
Preferred stocks & other (0.6%)
Issuer Shares Value(a)
American Radio Systems
7.00% Cv 20,500 $1,601,563
APP Finance II Mauritius
12.00% 750 663,750
Bar Technologies
Warrants 500 27,500
Clearnet Communications
Warrants 990 9,900
EchoStar Communications
12.125% Pay-in-kind Series B 795(b,e) 898,350
Vialog
Warrants 2,075 124,500
Total preferred stocks & other
(Cost: $2,562,476) $3,325,563
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Life Series Fund, Inc.
Managed Portfolio
(Percentages represent
value of investments
compared to net assets)
Bonds (28.8%)
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations (6.5%)
Govt Trust Certs Israel
<S> <C> <C> <C>
11-15-01 9.25% $205,096 $211,642
U.S. Treasury
11-30-00 5.625 8,600,000 8,602,580
12-31-00 5.50 11,500,000 11,468,030
05-15-07 6.625 6,500,000 6,891,625
08-15-23 6.25 10,100,000 10,385,224
Total 37,559,101
Mortgage-backed securities (4.8%)
Federal Home Loan Mtge Corp
03-01-13 5.50 985,548 951,978
11-01-22 8.00 425,899 444,801
08-01-24 8.00 454,521 472,761
Federal Natl Mtge Assn
02-15-08 5.75 5,000,000 4,908,900
01-01-09 5.50 1,540,906 1,505,850
06-01-10 6.50 1,350,498 1,360,546
08-01-11 8.50 1,250,744 1,303,510
04-01-22 8.00 171,061 178,247
04-01-23 8.50 229,400 242,325
05-01-24 6.00 1,623,678 1,575,844
06-01-24 9.00 116,489 125,044
06-01-25 8.50 574,169 602,033
08-01-25 7.50 764,047 787,174
09-01-25 6.50 1,026,669 1,020,345
09-01-25 7.00 836,834 849,838
12-01-25 7.00 2,238,400 2,273,185
02-01-26 7.00 840,866 852,360
04-01-26 7.00 898,453 910,734
05-01-26 7.50 2,289,444 2,355,883
09-01-26 7.50 1,575,181 1,619,412
Collateralized Mtge Obligation
09-25-08 4.50 1,500,000 1,359,519
Trust Series Z
10-25-16 7.00 1,493,811(h) 1,503,461
12-25-23 6.50 331,082(h) 303,573
Merrill Lynch Mtge Investors
06-15-21 8.17 264,997 264,500
Total 27,771,823
Aerospace & defense (0.3%)
BE Aerospace
Sr Sub Nts Series B
02-01-06 9.875 400,000 427,000
Compass Aerospace
Sr Sub Nts
04-15-05 10.125 510,000(g) 512,550
Northrop-Grumman
03-01-16 7.75 500,000 543,670
Total 1,483,220
Airlines (0.2%)
Atlantic Express
Company Guaranty
02-01-04 10.75 750,000 803,437
Continental Airlines
Series 1996A
04-15-15 6.94 480,548 491,433
Total 1,294,870
Banks and savings & loans (1.1%)
BankAmerica
Series B
12-31-26 7.70 1,000,000(g) 1,025,670
Firstar Capital
Company Guaranty Series B
12-15-26 8.32 500,000 544,805
Fleet Financial Group
Sub Deb
01-15-28 6.875 500,000 500,875
Mellon Capital
Company Guaranty Series A
12-01-26 7.72 750,000 781,965
Morgan (JP)
Sr Sub Medium-term Nts Series A
02-15-12 4.00 500,000(k) 463,905
Norwest
Sr Nts
09-15-02 6.375 800,000 805,496
Riggs Natl
Sub Nts
02-01-06 8.50 100,000 105,875
Union Planters Bank
Sub Nts
03-15-18 6.50 500,000 496,360
Union Planters Capital
Company Guaranty
12-15-26 8.20 1,000,000 1,052,520
Wilshire Financial Services
Series B
08-15-04 13.00 750,000 817,500
Total 6,594,971
Building materials & construction (0.1%)
Pulte
Sr Nts
12-15-03 7.00 500,000 504,085
Communications equipment & services (1.0%)
Intl Wireless Communications
Zero Coupon Sr Disc Nts
08-15-01 15.16 2,000,000(i) 700,000
IXC Communications
Sr Sub Nts
04-15-08 9.00 450,000(g) 447,750
Jordan Telecommunications Products
Sr Nts Series B
08-01-07 9.875 1,000,000 1,055,000
NTL
Zero Coupon Sr Nts
04-01-08 4.86 765,000(g,j) 485,775
PhoneTel Technologies
Sr Nts
12-15-06 12.00% $1,000,000 $888,750
Vialog
Company Guaranty
11-15-01 12.75 2,075,000 2,139,844
Total 5,717,119
Computers & office equipment (0.3%)
Bell Technology Group
Sr Nts
05-01-05 13.00 1,055,000(g) 1,065,550
Cooperative Computing
Sr Sub Nts
02-01-08 9.00 500,000(g) 481,250
Total 1,546,800
Electronics (0.2%)
Reliance Electric
04-15-03 6.80 500,000 515,795
Thomas & Betts
01-15-06 6.50 400,000 398,992
Total 914,787
Energy (0.7%)
Enron Oil & Gas
11-15-06 6.70 1,000,000 1,022,080
Parker & Parsley Petroleum
Sr Nts
08-15-07 8.25 500,000 547,040
Rayovac
Sr Sub Nts Series B
11-01-06 10.25 1,150,000 1,276,500
USX
03-01-08 6.85 1,500,000 1,505,100
Total 4,350,720
Energy equipment & services (0.2%)
DI Inds
Sr Nts
07-01-07 8.875 500,000 513,750
Foster Wheeler
11-15-05 6.75 750,000 762,780
Total 1,276,530
Financial services (0.6%)
Avco Financial Services
Sr Nts
07-15-99 7.25 250,000 254,065
Bat-Crave-800
08-12-00 6.68 700,000(g) 705,306
GenAmerica Capital
Company Guaranty
06-30-27 8.525 500,000 528,802
Merrill Lynch Mtge Investors Cl D
Series 1996-C2
12-21-28 6.96 900,000 892,406
Salomon
Sr Nts
01-15-06 6.75 500,000 509,225
Wilmington Trust
Sub Nts
05-01-08 6.625 800,000 802,063
Total 3,691,867
Food (0.5%)
ARAMARK
Sub Nts
06-01-03 8.50 1,025,000 1,067,281
Twin Laboratories
Sr Sub Nts Company Guaranty
05-15-06 10.25 1,750,000 1,933,750
Total 3,001,031
Foreign (3.2%)(c)
Banca Commercial Italian
(U.S. Dollar)
07-15-07 8.25 500,000 553,425
Banco General
(U.S. Dollar)
08-01-02 7.70 750,000(g) 745,073
Bank of China
(U.S. Dollar)
03-15-14 8.25 300,000 288,447
CEI Citicorp Holdings
(Argentine Peso)
02-14-07 11.25 250,000(g) 229,480
Centaur Mining & Exploration
(U.S. Dollar) Company Guaranty
12-01-07 11.00 500,000(g) 511,250
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 750,000(g) 679,965
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 400,000(g) 350,000
Doman Inds
(U.S. Dollar) Sr Nts Series B
11-15-07 9.25 350,000 351,750
EES Coke Battery
(U.S. Dollar) Sr Nts
04-15-02 7.125 637,128(g) 642,180
Enterprises Shipholding
(U.S Dollar) Sr Nts
05-01-08 8.875 800,000(g) 796,000
Globo Communicacoes Participacoes
(U.S. Dollar) Sr Nts
12-05-08 10.625 500,000(g) 508,175
Govt of Algeria
(U.S. Dollar)
09-04-06 7.06 227,273 178,409
Great Central Mines
(U.S. Dollar) Sr Nts
04-01-08 8.875 1,000,000(g) 1,010,000
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 200,000(g) 168,896
06-15-07 9.50 300,000(g) 238,962
Grupo Televisa
(U.S. Dollar) Sr Nts
05-15-06 11.875 650,000 747,422
Guangdong Enterprises
(U.S. Dollar) Sr Nts
05-22-07 8.875 400,000(g) 355,516
Honam Oil Refinery
(U.S. Dollar)
10-15-05 7.125 1,000,000(g) 821,040
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-17 7.45 250,000(g) 229,750
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.625 500,000(g) 439,325
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.125 500,000(g) 520,000
Mexican Cetes
(Mexican Peso) Zero Coupon
06-04-98 39.57 4,258,000(i) 540,553
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts Series E
03-06-07 7.85 500,000(g) 459,615
Poland Telecom Finance
(U.S. Dollar)
12-01-07 14.00 775,000 875,750
Repap New Brunswick
(U.S. Dollar) Sr Nts
07-15-00 9.875 1,000,000 1,052,500
Republic of Argentina
(Argentine Peso) Series 54
07-10-02 8.75 1,000,000(g) 926,000
Republic of Brazil
(U.S. Dollar)
05-15-27 10.125 350,000 337,841
Republic of Korea
(U.S. Dollar)
04-15-08 8.875 850,000 836,273
Rogers Cablesystems
(Canadian Dollar)
01-15-14 9.65 600,000 458,617
Rogers Cantel
(U.S. Dollar)
06-01-08 9.375 450,000 469,125
Russia Federal Loan Bond
(Russian Ruble) Series 25018
09-27-00 14.00 3,158,829 358,372
Sony
(U.S. Dollar)
03-04-03 6.125 1,400,000 1,401,288
Tri Polyta Finance BV
(U.S. Dollar) Company Guaranty
12-01-03 11.375 1,000,000 670,000
Total 18,750,999
Health care services (0.8%)
Magellan Health Services
Sr Sub Nts
02-15-08 9.00% $1,000,000(g) $996,250
Physician Sales & Service
Company Guaranty
10-01-07 8.50 1,000,000 1,043,750
Service Corp Intl
03-15-08 6.50 1,500,000 1,492,305
Tenet Healthcare
Sr Sub Nts
03-01-05 10.125 1,230,000 1,370,417
Total 4,902,722
Industrial equipment & services (0.2%)
Case
08-01-05 7.25 850,000 885,726
Purina Mills
Sr Sub Nts
03-15-10 9.00 300,000(g) 311,250
Total 1,196,976
Insurance (0.6%)
American United Life Insurance
03-30-26 7.75 500,000(f,g) 513,880
Americo Life
Sr Sub Nts
06-01-05 9.25 600,000 615,750
New England Mutual
02-15-24 7.875 250,000(g) 273,357
Principal Mutual
03-01-44 8.00 250,000(g) 266,053
SAFECO Capital
Company Guaranty
07-15-37 8.07 1,000,000 1,049,480
SunAmerica
08-30-05 7.34 700,000 737,051
Total 3,455,571
Leisure time & entertainment (0.7%)
Coast Hotels & Casino
Company Guaranty Series B
12-15-02 13.00 500,000 573,750
IHF Holdings
Zero Coupon Sr Sub Disc Nts Series B
11-15-04 2.42 750,000(j) 639,375
Time Warner
Sr Nts
01-15-28 6.95 500,000 488,275
Trump Atlantic City Assn/Funding
1st Mtge Company Guaranty
05-01-06 11.25 1,000,000 1,000,000
United Artists Theatres
Series 1995A
07-01-15 9.30 723,519 743,416
Waterford Gaming/LLC
Sr Nts
11-15-03 12.75 662,000 734,820
Total 4,179,636
Media (1.0%)
Capstar Broadcasting
Zero Coupon Sr Disc Nts
02-01-09 2.61% $1,000,000(g,j) $752,500
Cox Communications
06-15-25 7.625 500,000 538,950
CSC Holdings
Sr Sub Nts
11-01-05 9.25 500,000 531,250
Outdoor Systems
Company Guaranty
06-15-07 8.875 1,000,000 1,037,500
TCI Communications
08-01-15 8.75 1,000,000 1,166,800
Time Warner Entertainment
Sr Nts
07-15-33 8.375 500,000 576,175
Turner Broadcasting
Sr Nts
07-01-13 8.375 250,000 282,513
Viacom Intl
Sub Deb
07-07-06 8.00 500,000 508,750
Sub Deb Series A
07-01-03 7.00 500,000 488,570
Total 5,883,008
Metals (0.1%)
EnviroSource
Sr Nts
06-15-03 9.75 170,000 173,825
Sr Nts Series B
06-15-03 9.75 400,000 409,000
Total 582,825
Miscellaneous (1.9%)
Adams Outdoor Advertising
Sr Nts
03-15-06 10.75 500,000 550,000
American Architectural
Sr Nts
12-01-07 11.75 1,000,000(g) 1,050,000
Bistro Trust
Sub Nts
12-31-02 9.50 1,000,000(g) 1,003,600
Comforce Operating
Sr Nts Series B
12-01-07 12.00 600,000 640,500
JTM Inds
Sr Sub Nts
04-15-08 10.00 835,000(g) 851,700
Level 3 Communications
Sr Nts
05-01-08 9.125 1,350,000(g) 1,339,875
MSX Intl
Sr Sub Nts
01-15-08 11.375% $655,000 $673,013
Norcal Waste Systems
Sr Nts Company Guaranty Series B
11-15-05 13.50 500,000 581,250
NSM Steel
Sr Mtge Company Guaranty
02-01-06 12.00 1,000,000 950,000
Outsourcing Solutions
Sr Sub Nts Series B
11-01-06 11.00 1,000,000 1,101,250
Pierce Leahy
Company Guaranty
05-15-08 8.125 1,625,000(g) 1,584,375
Stellex Inds
Sr Sub Nts Series B
11-01-07 9.50 700,000 716,625
Total 11,042,188
Multi-industry conglomerates (0.4%)
Coltec Inds
Sr Nts
04-15-08 7.50 1,000,000(g) 1,000,000
Crane
06-15-99 7.25 250,000 253,423
USI American Holdings
Sr Nts Series B
12-01-06 7.25 850,000 858,015
Total 2,111,438
Paper & packaging (0.4%)
Gaylord Container
Sr Nts
06-15-07 9.375 1,000,000(g) 997,500
Graham Packaging/GPC Capital
Sr Sub Nts
01-15-08 8.75 1,000,000 1,010,000
Intl Paper
11-15-12 5.125 250,000 216,085
Scotia Pacific Holding
Collateralized Mtge Obligation
07-20-15 7.95 240,929 252,426
Total 2,476,011
Real estate investment trust (0.2%)
First Union RE Eq SBI
Sr Nts
10-01-03 8.875 300,000 309,375
Property Trust of America
02-15-14 7.50 750,000 770,888
Total 1,080,263
Retail (0.3%)
Meyer (Fred)
Company Guaranty
03-01-08 7.45% $1,000,000 $1,000,000
Pep Boys-Manny, Moe & Jack
06-01-05 7.00 500,000 512,535
Total 1,512,535
Utilities -- electric (1.2%)
Alabama Power
1st Mtge
12-01-24 9.00 300,000 331,020
California Infrastructure-
Pacific Gas & Electric
09-25-05 6.32 1,000,000 1,013,180
Cleveland Electric Illuminating
1st Mtge Series B
05-15-05 9.50 250,000 278,647
CMS Energy
Sr Nts
11-15-04 7.625 500,000 504,180
Connecticut Light & Power
1st Mtge Series C
06-01-02 7.75 1,000,000 1,019,380
El Paso Electric
1st Mtge Series D
02-01-06 8.90 650,000 722,312
First PV Funding
Series 1986B
01-15-16 10.15 149,000 157,940
Indiana & Michigan Power
Sale Lease-backed Obligation Series F
12-07-22 9.82 208,691 243,952
Jersey Central Power & Light
1st Mtge
11-01-25 6.75 1,000,000 957,930
Long Island Lighting
Gen Ref Mtge
05-01-21 9.75 300,000 302,826
Salton Sea Funding
Series C
05-30-10 7.84 300,000 317,322
Sithe Independence Funding
Series A
12-30-13 9.00 150,000 175,388
Texas-New Mexico Power
1st Mtge Series U
09-15-00 9.25 400,000 421,000
TU Electric Capital
Company Guaranty
01-30-37 8.175 750,000 767,385
Total 7,212,462
Utilities -- telephone (1.3%)
Airtouch Communications
05-01-08 6.65 1,000,000 1,006,339
Bell Atlantic
09-01-08 6.375 70,000 69,134
Series P
01-01-06 4.875 130,000 119,022
Geotek Communications
Cv Sr Sub Nts
02-15-01 12.00 205,000(f) 139,400
GTE
12-01-00 9.375 400,000 429,448
GTE North
Series F
02-15-10 6.375 1,000,000 996,190
Intermedia Communications
Sr Nts Series B
11-01-07 8.875 500,000 517,500
Zero Coupon Sr Disc Nts Series B
07-15-07 4.65 1,000,000(j) 735,000
ITC Deltacom
Sr Nts
03-01-08 8.875 650,000(g) 676,000
Metrocall
Sr Sub Nts
11-01-07 9.75 750,000 765,000
Mountain States Telephone & Telegraph
06-01-05 5.50 80,000 76,696
U S WEST Communications
11-10-26 7.20 700,000 701,673
WorldCom
04-01-07 7.75 1,000,000 1,079,910
Total 7,311,312
Total bonds
(Cost: $164,851,038) $167,404,870
Short-term securities (7.4%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (4.0%)
Federal Home Loan Mtge Corp Disc Nts
05-15-98 5.43% $8,000,000 $7,983,169
05-15-98 5.47 9,100,000 9,080,748
05-29-98 5.45 4,000,000 3,983,153
Federal Natl Mtge Assn Disc Nt
05-04-98 5.48 2,400,000 2,398,908
Total 23,445,978
Commercial paper (3.4%)
ABB Treasury Center USA
05-20-98 5.53 1,000,000(l) 997,092
Bell Atlantic Finance
05-11-98 5.52 800,000 798,778
Ciesco LP
05-12-98 5.51 1,300,000 1,297,815
Daimler-Benz
06-01-98 5.53 1,300,000 1,293,843
Delaware Funding
05-22-98 5.54% $1,900,000(l)$1,893,882
Fleet Funding
05-29-98 5.54 1,000,000(l) 995,714
Paccar Financial
05-13-98 5.54 2,600,000 2,595,216
Pfizer
06-03-98 5.54 3,100,000(l) 3,084,314
Reed Elsevier
05-13-98 5.52 6,500,000(l) 6,488,083
Total 19,444,737
Total short-term securities
(Cost: $42,890,715) $42,890,715
Total investments in securities
(Cost: $482,009,938)(m) $579,224,333
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Investments in securities
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Partially pledged as initial margin deposit on the following open stock
index futures purchase contracts (see Note 7 to the financial statements):
Type of security Contracts
Standard & Poor`s 500 Stock Index, June 1998 63
(e) Pay-in-kind securities are securities in which the issuer makes interest or
dividend payments in cash or in additional securities. The securities usually
have the same terms as the original holdings.
(f) 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, 1998, is as follows:
Security Acquisition Cost
dates
American United Life Insurance*
7.75% 2026 02-13-96 $500,000
Geotek Communications
Cv Sr Sub Nts
12.00% 2001 03-04-96 205,000
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(g) 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.
(h) 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.
(i) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(j) 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.
(k) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on April 30, 1998.
(l) 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.
(m) At April 30, 1998, the cost of securities for federal income tax purposes
was $481,757,839 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation...............................$104,961,945
Unrealized depreciation.................................(7,495,451)
Net unrealized appreciation............................$97,466,494
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Life Series Fund, Inc.
Government Securities Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Bonds (95.4%)
Issuer Coupon Principal Value(a)
rate amount
Mortgage-backed securities (54.2%)
Federal Home Loan Mtge Corp
<S> <C> <C> <C>
06-01-12 7.00% $229,615 $234,093
01-01-13 6.00 395,335 390,357
02-01-13 6.50 296,950 298,560
12-01-27 6.00 301,065 291,470
Federal Natl Mtge Assn
08-23-05 6.82 925,000 971,481
02-15-08 5.75 550,000 539,979
06-01-10 6.50 337,625 340,137
08-01-11 8.50 162,597 169,456
09-01-12 7.00 265,981 271,003
03-01-13 6.00 200,000(c) 197,172
03-01-23 9.00 121,285 130,192
04-01-23 8.50 229,400 242,324
09-01-23 8.50 333,929 351,701
03-01-25 7.00 250,000(c) 252,500
03-01-25 8.50 112,036 117,473
09-01-25 7.00 246,080 249,904
03-01-27 8.00 852,466 884,178
04-01-27 6.50 287,935 285,568
09-01-27 7.00 283,417 286,812
10-01-27 7.00 288,872 292,099
03-01-28 6.50 396,000 392,040
Collateralized Mtge Obligation
07-18-19 5.50 250,000 244,835
Govt Natl Mtge Assn
05-15-17 8.00 65,620 69,154
08-15-25 7.50 396,737 408,433
Total 7,910,921
U.S. government obligations (41.2%)
Resolution Funding Corp
10-15-19 8.125 400,000 490,116
Zero Coupon
04-15-05 5.66 200,000(b) 133,740
10-15-09 7.12 460,000(b) 233,169
U.S. Treasury
05-15-00 6.375 800,000 812,072
08-15-00 6.00 300,000 302,514
02-15-01 7.75 1,060,000 1,117,675
06-30-02 6.25 100,000 102,114
02-28-03 5.50 150,000 148,984
11-15-16 7.50 700,000 814,751
08-15-23 6.25 475,000 488,414
11-15-24 7.50 895,000 1,066,706
08-15-25 6.875 150,000 166,845
02-15-27 6.625 130,000 140,868
Total 6,017,968
Total bonds
(Cost: $13,555,263) $13,928,889
Short-term security (3.4%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency
Federal Home Loan Mtge Corp Disc Nt
05-22-98 5.42% $500,000 $498,425
Total short-term security
(Cost: $498,425) $498,425
Total investments in securities
(Cost: $14,053,688)(d) $14,427,314
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, 1998, the cost of securities purchased on a when-issued basis
was $451,463.
(d) At April 30, 1998, the cost of securities for federal income tax purposes
was $14,053,973 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation.....................................$395,237
Unrealized depreciation......................................(21,896)
Net unrealized appreciation.................................$373,341
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Investments in securities
IDS Life Series Fund, Inc.
International Equity Portfolio
April 30, 1998
(Percentages represent
value of investments
compared to net assets)
Common stocks (88.8%)(e)
Issuer Shares Value(a)
Argentina (1.1%)
Energy (0.7%)
Perez Companc 250,000 $1,500,150
Utilities -- telephone (0.4%)
Telefonica de Argentina ADR 23,000 886,937
Australia (0.8%)
Transportation
Brambles Inds 88,000 1,814,349
Brazil (0.9%)
Chemicals (0.5%)
Companhia de Saneamento Basico do
Estado de Sao Paulo 5,000,000 1,136,710
Energy (0.4%)
Petroleo Brasileiro ADR 35,000(b) 885,692
Canada (2.2%)
Multi-industry conglomerates (1.6%)
Bombardier Cl B 130,000 3,509,459
Utilities -- telephone (0.6%)
BCE 31,800 1,353,487
Chile (0.5%)
Multi-industry conglomerates
Madeco ADR 37,000 592,000
Quinenco ADR 57,740 595,444
Total 1,187,444
France (16.0%)
Automotive & related (1.3%)
Michelin Cl B 45,388 2,861,005
Banks and savings & loans (3.8%)
Banque Natl de Paris 98,852(b) 8,337,711
Computers & office equipment (1.9%)
Dassault Systems 108,000(b) 4,240,231
Energy (2.7%)
TOTAL Cl B 50,000(b) 5,947,430
Food (0.4%)
Sodexho Alliance 4,236(b) 775,884
Household products (3.8%)
Rhone-Poulenc Cl A 167,971(b) 8,218,317
Leisure time & entertainment (2.0%)
Accor 16,057(b) 4,378,211
Germany (6.9%)
Automotive & related (0.1%)
Volkswagen AG 376(b) 299,450
Banks and savings & loans (3.2%)
Bayerische Vereinsbank 90,809(b) 6,908,222
Industrial equipment & services (2.7%)
Mannesmann 7,442(b) 5,906,152
Textiles & apparel (0.9%)
Adidas 12,288 2,037,385
Hong Kong (2.7%)
Communications equipment & services (0.5%)
China Telecom 540,000(b) 1,024,812
Financial services (1.7%)
Cheung Kong Holdings 502,000 3,337,597
New World Development 100,703 286,661
Total 3,624,258
Multi-industry conglomerates (0.5%)
Hutchison Whampoa 200,000 1,236,760
Italy (10.6%)
Banks and savings & loans (8.1%)
Banca Intesa 884,710(b) 4,994,542
Credito Italiano 1,314,307(b) 6,907,866
Instituto Bancario
San Paolo di Torino 398,411(b) 5,757,955
Total 17,660,363
Utilities -- telephone (2.5%)
Telecom Italia 600,000(b) 3,163,680
Telecom Italia (New) 300,000(b) 2,244,060
Total 5,407,740
Japan (4.0%)
Automotive & related (0.6%)
Honda Motor 35,000 1,269,842
Banks and savings & loans (0.2%)
Sakura Bank 169,000 581,225
Computers & office equipment (1.1%)
Fujitsu 201,000 2,347,278
Electronics (1.5%)
Fujikura 170,000 876,350
Ibiden 53,000 837,262
Tokyo Electron 38,000 1,493,575
Total 3,207,187
Media (0.6%)
Sony 16,000 1,331,520
Mexico (2.4%)
Financial services (0.1%)
Grupo Financiero Bancomer
Cl B 417,700 288,477
Media (0.5%)
Grupo Televisa 26,900(b) 1,102,900
Multi-industry conglomerates (0.8%)
Banco Nacional do Norte 1,000,000(b) 1,649,971
Retail (1.0%)
Controladora Comercial
Mexicana GDR 90,000 2,216,250
Netherlands (6.8%)
Computers & office equipment (1.1%)
Baan 57,437(b) 2,516,298
Industrial equipment & services (2.1%)
Philips Electronics 52,610(b) 4,635,699
Insurance (3.6%)
ING Groep 119,170(b) 7,745,669
Singapore (0.6%)
Banks and savings & loans (0.1%)
United Overseas Bank 32,000 151,610
Electronics (0.5%)
GP Batteries Intl 380,000 1,051,422
Sweden (0.9%)
Banks and savings & loans
Nordbanken Holding 263,119 1,937,187
Switzerland (6.8%)
Banks and savings & loans (3.9%)
Credit Suisse Group 11,150(b) 2,451,856
Schweizer Bankgesellschaft 3,728(b) 6,001,765
Total 8,453,621
Health care (2.9%)
Novartis 3,808 6,292,956
United Kingdom (14.2%)
Health care (2.0%)
SmithKline Beecham 360,000 4,314,564
Media (1.1%)
Pearson 156,000 2,447,624
Multi-industry conglomerates (5.3%)
General Electric 739,887 6,048,798
Siebe125,000 2,839,412
Williams ADR 341,844(b) 2,618,867
Total11,507,077
Retail (2.5%)
Great Universal Stores 362,974(b) 5,540,217
Utilities -- telephone (3.3%)
Orange 642,258(b) 4,667,867
Vodafone 221,400 2,438,655
Total 7,106,522
United States (11.4%)
Banks and savings & loans (1.2%)
BankBoston 25,000 2,698,438
Beverages & tobacco (0.8%)
Philip Morris 46,300 1,727,569
Communications equipment & services (0.5%)
Motorola 18,000 1,001,250
Computers & office equipment (0.8%)
Compaq Computer 60,000 1,683,750
Electronics (0.6%)
Intel 17,000 1,373,813
Financial services (1.0%)
CIT Group Cl A 63,200 2,239,650
Health care (1.1%)
Pfizer 20,500 2,333,156
Household products (1.0%)
Colgate-Palmolive 24,000 2,152,500
Retail (3.3%)
Rite Aid 90,000 2,891,250
Safeway 59,000(b) 2,256,750
Wal-Mart Stores 39,000 1,971,938
Total 7,119,938
Utilities -- telephone (1.1%)
AirTouch Communications 46,200(b) 2,454,375
Total common stocks
(Cost: $161,513,556) $193,617,714
Other (0.6%)
Issuer Shares Value(a)
Chile (--%)
Madeco
Rights 5,285(c) $--
France (0.1%)
Rhone-Poulenc
Warrants 26,577 128,221
Italy (0.5%)
Banca Intesa
Warrants 884,710 1,143,753
Total other
(Cost: $194,747) $1,271,974
Bond (5.8%)
Issuer Coupon Principal Value(a)
rate amount
United Kingdom
United Kingdom Treasury
(British Pound)
06-07-02 7.00% 7,300,000 $12,611,378
Total bond
(Cost: $12,164,525) $12,611,378
Short-term securities (4.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U. S. government agency (3.9%)
Federal Home Loan Mtge Corp Disc Nts
05-15-98 5.43% $800,000 $798,317
05-20-98 5.42 1,300,000 1,296,295
05-20-98 5.42 1,000,000 997,150
05-22-98 5.43 1,600,000 1,594,951
05-26-98 5.45 800,000 796,983
05-26-98 5.45 1,500,000 1,494,344
05-28-98 5.44 1,600,000 1,593,508
Total 8,571,548
Commercial paper (0.7%)
Fleet Funding
05-27-98 5.54 900,000(d) 896,418
UBS Finance (Delaware)
05-01-98 5.55 600,000 600,000
Total 1,496,418
Total short-term securities
(Cost: $10,067,966) $10,067,966
Total investments in securities
(Cost: $183,940,794)(f) $217,569,032
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
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. For debt
security, principal amount is denominated in the currency indicated.
(b) Non-income producing.
(c) Negligible market value.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) Transactions with companies that are or were affiliates (investments
representing 5% or more) during the year ended April 30, 1998 are as follows:
Beginning Purchase Sales Ending Dividend Value(a)
Issuer cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Posadas de Mexico* $997,840 $345,820 $1,343,660 $-- $-- $--
*Issuer was not an affiliate for the entire year ended April 30, 1998.
(f) At April 30, 1998, the cost of securities for federal income tax purposes
was $184,000,135 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation...................................$39,678,402
Unrealized depreciation....................................(6,109,505)
Net unrealized appreciation...............................$33,568,897
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
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 5, 1998.
Statements:
Statements of assets and liabilities at April 30, 1998.
Statements of operations, for the year ended April 30, 1998.
Statements of changes in net assets, for the years ended April 30, 1998
and April 30, 1997.
Notes to financial statements.
Schedules:
Investments in securities, April 30, 1998.
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>
(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 as Exhibit 5(c) with Post Effective Amendment No. 20 to
Registration Statement No. 2-97636, is incorporated herein by
reference.
(d) Copy of Investment Advisory Agreement between American Express
Financial Corporation and American Express Asset Management
International, Inc. on behalf of IDS Life International Equity Fund,
dated April 9, 1998, is 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 of counsel and consent to its use as to the legality of the
securities registered, filed electronically herewith.
11. Independent Auditors' Consent, 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 as Exhibit 17
with Post-Effective Amendment No. 20 to Registration Statement No. 2-97636,
is incorporated herein by reference.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
Not Applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders as
of June 15, 1998 for Equity,
Government Securities,
Income, Managed and Money
Title of Class Market Portfolios
Common Stock 5
Number of Record Holders
as of June 15, 1998 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>
<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:
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Name and Title Other company(s) Address Title within other
company(s)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Ronald G. Abrahamson, American Express Client IDS Tower 10 Director and Vice President
Vice President Service Corporation Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
North Dakota Public Director and Vice President
Employee Payment Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Douglas A. Alger, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Peter J. Anderson, Advisory Capital Strategies IDS Tower 10 Director
Director and Senior Vice Group Inc. Minneapolis, MN 55440
President
American Express Asset Director and Chairman of
Management Group Inc. the Board
American Express Asset Director, Chairman of the
Management International, Board and Executive Vice
Inc. President
American Express Financial Senior Vice President
Advisors Inc.
IDS Capital Holdings Inc. Director and President
IDS Futures Corporation Director
NCM Capital Management 2 Mutual Plaza Director
Group, Inc. 501 Willard Street
Durham, NC 27701
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Ward D. Armstrong, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Service Vice President
Corporation
American Express Trust Director and Chairman of
Company the Board
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
John M. Baker, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Trust Senior Vice President
Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Joseph M. Barsky III, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Robert C. Basten, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Timothy V. Bechtold, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Executive Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
John C. Boeder, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Douglas W. Brewers, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Karl J. Breyer, American Express Financial IDS Tower 10 Senior Vice President
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Minnesota Director
Foundation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Daniel J. Candura, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Cynthia M. Carlson, American Enterprise IDS Tower 10 Director, President and
Vice President Investment Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Vice President
Advisors Inc.
American Express Service Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Mark W. Carter, American Express Financial IDS Tower 10 Senior Vice President and
Senior Vice President and Advisors Inc. Minneapolis, MN 55440 Chief Marketing Officer
Chief Marketing Officer
IDS Life Insurance Company Executive Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James E. Choat, American Enterprise Life IDS Tower 10 Director, President and
Senior Vice President Insurance Company Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Senior Vice President
Advisors Inc.
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of New Vice President
Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Kenneth J. Ciak, AMEX Assurance Company IDS Tower 10 Director and President
Vice President and General Minneapolis, MN 55440
Manager
American Express Financial Vice President and General
Advisors Inc. Manager
IDS Property Casualty 1 WEG Blvd. Director and President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Paul A. Connolly, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Colleen Curran, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
American Express Service Vice President and Chief
Corporation Legal Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Regenia David, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Luz Maria Davis American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Gordon L. Eid, American Express Financial IDS Tower 10 Senior Vice President,
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440 General Counsel and Chief
President, Deputy General Compliance Officer
Counsel and Chief
Compliance Officer
American Express Insurance Director and Vice President
Agency of Arizona Inc.
American Express Insurance Director and Vice President
Agency of Idaho Inc.
American Express Insurance Director and Vice President
Agency of Nevada Inc.
American Express Insurance Director and Vice President
Agency of Oregon Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Director and Vice President
Alabama Inc.
IDS Insurance Agency of Director and Vice President
Arkansas Inc.
IDS Insurance Agency of Director and Vice President
Massachusetts Inc.
IDS Insurance Agency of New Director and Vice President
Mexico Inc.
IDS Insurance Agency of Director and Vice President
North Carolina Inc.
IDS Insurance Agency of Director and Vice President
Ohio Inc.
IDS Insurance Agency of Director and Vice President
Wyoming Inc.
IDS Real Estate Services, Vice President
Inc.
Investors Syndicate Director
Development Corp.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Robert M. Elconin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Mark A. Ernst, American Enterprise IDS Tower 10 Director and Senior Vice
Senior Vice President Investment Services Inc. Minneapolis, MN 55440 President
American Enterprise Life Director
Insurance Company
American Express Financial Senior Vice President
Advisors Inc.
American Express Service Senior Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Gordon M. Fines, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Douglas L. Forsberg, American Centurion Life IDS Tower 10 Director
Vice President Assurance Company Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Jeffrey P. Fox, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Corporate Controller
Corporate Controller
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Harvey Golub, American Express Company American Express Tower Chairman and Chief
Director World Financial Center Executive Officer
New York, NY 10285
American Express Travel Chairman and Chief
Related Services Company, Executive Officer
Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
David A. Hammer, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Marketing Controller
Marketing Controller
IDS Plan Services of Director and Vice President
California, Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Lorraine R. Hart, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440
American Enterprise Life Vice President
Insurance Company
American Express Financial Vice President
Advisors Inc.
American Partners Life Director and Vice
Insurance Company President
IDS Certificate Company Vice President
IDS Life Insurance Company Vice President
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Vice President
Funds A and B
Investors Syndicate Director and Vice
Development Corp. President
IDS Life Insurance Company P.O. Box 5144 Investment Officer
of New York Albany, NY 12205
IDS Property Casualty 1 WEG Blvd. Vice President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Scott A. Hawkinson, American Centurion Life IDS Tower 10 Chief Actuary
Vice President Assurance Company Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Janis K. Heaney, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James G. Hirsh, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Darryl G. Horsman, American Express Trust IDS Tower 10 Director and President
Vice President Company Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Jeffrey S. Horton, AMEX Assurance Company IDS Tower 10 Vice President, Treasurer
Vice President and Minneapolis, MN 55440 and Assistant Secretary
Corporate Treasurer
American Centurion Life Vice President and
Assurance Company Treasurer
American Enterprise Vice President and
Investment Services Inc. Treasurer
American Enterprise Life Vice President and
Insurance Company Treasurer
American Express Asset Vice President and
Management Group Inc. Treasurer
American Express Asset Vice President and
Management International Treasurer
Inc.
American Express Client Vice President and
Service Corporation Treasurer
American Express Corporation Vice President and
Treasurer
American Express Financial Vice President and
Advisors Inc. Treasurer
American Express Insurance Vice President and
Agency of Arizona Inc. Treasurer
American Express Insurance Vice President and
Agency of Idaho Inc. Treasurer
American Express Insurance Vice President and
Agency of Nevada Inc. Treasurer
American Express Minnesota Vice President and
Foundation Treasurer
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Kentucky Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Maryland Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Pennsylvania Inc.
American Express Partners Vice President and
Life Insurance Company Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President, Treasurer
and Assistant Secretary
IDS Certificate Company Vice President and
Treasurer
IDS Insurance Agency of Vice President and
Alabama Inc. Treasurer
IDS Insurance Agency of Vice President and
Arkansas Inc. Treasurer
IDS Insurance Agency of Vice President and
Massachusetts Inc. Treasurer
IDS Insurance Agency of New Vice President and
Mexico Inc. Treasurer
IDS Insurance Agency of Vice President and
North Carolina Inc. Treasurer
IDS Insurance Agency of Vice President and
Ohio Inc. Treasurer
IDS Insurance Agency of Vice President and
Wyoming Inc. Treasurer
IDS Life Insurance Company Vice President, Treasurer
and Assistant Secretary
IDS Life Series Fund Inc. Vice President and
Treasurer
IDS Life Variable Annuity Vice President and
Funds A & B Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Vice President and
Corporation Treasurer
IDS Plan Services of Vice President and
California, Inc. Treasurer
IDS Real Estate Services, Vice President and
Inc. Treasurer
IDS Realty Corporation Vice President and
Treasurer
IDS Sales Support Inc. Vice President and
Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Vice President and
Development Corp. Treasurer
IDS Property Casualty 1 WEG Blvd. Vice President, Treasurer
Insurance Company DePere, WI 54115 and Assistant Secretary
North Dakota Public Vice President and
Employee Payment Company Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
David R. Hubers, AMEX Assurance Company IDS Tower 10 Director
Director, President and Minneapolis, MN 55440
Chief Executive Officer
American Express Financial Chairman, President and
Advisors Inc. Chief Executive Officer
American Express Service Director and President
Corporation
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of Director and President
California, Inc.
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Martin G. Hurwitz, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James M. Jensen, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Marietta L. Johns, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Nancy E. Jones, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Service Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James E. Kaarre, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Matthew N. Karstetter, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Linda B. Keene, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
G. Michael Kennedy, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Susan D. Kinder, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
IDS Securities Corporation Director
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Brian C. Kleinberg, American Express Financial IDS Tower 10 Executive Vice President
Executive Vice President Advisors Inc. Minneapolis, MN 55440
American Express Service Director
Corporation
AMEX Assurance Company Director and Chairman of
the Board
IDS Property Casualty 1 WEG Blvd. Director and Chairman of
Insurance Company DePere, WI 54115 the Board
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Richard W. Kling, AMEX Assurance Company IDS Tower 10 Director
Director and Senior Vice Minneapolis, MN 55440
President
American Centurion Life Director
Assurance Company
American Enterprise Life Director and Chairman of
Insurance Company the Board
American Express Corporation Director and President
American Express Financial Senior Vice President
Advisors Inc.
American Express Insurance Director and President
Agency of Arizona Inc.
American Express Insurance Director and President
Agency of Idaho Inc.
American Express Insurance Director and President
Agency of Nevada Inc.
American Express Insurance Director and President
Agency of Oregon Inc.
American Express Property Director and President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Director and President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Director and President
Casualty Insurance Agency
of Pennsylvania Inc.
American Express Service Vice President
Corporation
American Partners Life Director and Chairman of
Insurance Company the Board
IDS Certificate Company Director and Chairman of
the Board
IDS Insurance Agency of Director and President
Alabama Inc.
IDS Insurance Agency of Director and President
Arkansas Inc.
IDS Insurance Agency of Director and President
Massachusetts Inc.
IDS Insurance Agency of New Director and President
Mexico Inc.
IDS Insurance Agency of Director and President
North Carolina Inc.
IDS Insurance Agency of Director and President
Ohio Inc.
IDS Insurance Agency of Director and President
Wyoming Inc.
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Manager, Chairman of the
Funds A and B Board and President
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Paul F. Kolkman, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Claire Kolmodin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Steve C. Kumagai, American Express Financial IDS Tower 10 Director and Senior Vice
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440 President
President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Edward Labenski, Jr., American Express Asset IDS Tower 10 Senior Vice President
Vice President Management Group Inc. Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Kurt A Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Lori J. Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Futures Corporation Director
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Daniel E. Laufenberg, American Express Financial IDS Tower 10 Vice President and Chief
Vice President and Chief Advisors Inc. Minneapolis, MN 55440 U.S. Economist
U.S. Economist
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Richard J. Lazarchic, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Peter A. Lefferts, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Trust Director
Company
IDS Plan Services of Director
California, Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Douglas A. Lennick, American Express Financial IDS Tower 10 Director and Executive
Director and Executive Vice Advisors Inc. Minneapolis, MN 55440 Vice President
President
IDS Securities Corporation Director, President and
Chief Executive Officer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Mary J. Malevich, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Fred A. Mandell, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Thomas W. Medcalf, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
William C. Melton, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James A. Mitchell, AMEX Assurance Company IDS Tower 10 Director
Director and Executive Vice Minneapolis, MN 55440
President
American Enterprise Director
Investment Services Inc.
American Express Financial Executive Vice President
Advisors Inc.
American Express Service Director and Senior Vice
Corporation President
American Express Tax and Director
Business Services Inc.
IDS Certificate Company Director
IDS Life Insurance Company Director, Chairman of the
Board and Chief Executive
Officer
IDS Plan Services of Director
California, Inc.
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
William P. Miller, Advisory Capital Strategies IDS Tower 10 Vice President
Vice President and Senior Group Inc. Minneapolis, MN 55440
Portfolio Manager
American Express Asset Senior Vice President
Management Group Inc.
American Express Financial Vice President and Senior
Advisors Inc. Portfolio Manager
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Pamela J. Moret, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Trust Vice President
Company
IDS Life Insurance Company Executive Vice President
IDS Life Insurance Company P.O. Box 5144 Vice President
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Barry J. Murphy, American Express Client IDS Tower 10 Director and President
Director and Senior Vice Service Corporation Minneapolis, MN 55440
President
American Express Financial Senior Vice President
Advisors Inc.
IDS Life Insurance Company Director and Executive
Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Mary Owens Neal, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Robert J. Neis, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James R. Palmer, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Carla P. Pavone, American Express Client IDS Tower 10 Director and Vice President
Vice President Service Corporation Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
North Dakota Public Director and President
Employee Payment Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Thomas P. Perrine, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Susan B. Plimpton, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Ronald W. Powell, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Vice President and
Corporation Assistant Secretary
IDS Plan Services of Vice President and
California, Inc. Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James M. Punch, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Frederick C. Quirsfeld, American Express Asset IDS Tower 10 Vice President
Senior Vice President Management Group Inc. Minneapolis, MN 55440
American Express Financial Senior Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Debra J. Rabe, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
ReBecca K. Roloff, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Stephen W. Roszell, Advisory Capital Strategies IDS Tower 10 Director
Senior Vice President Group Inc. Minneapolis, MN 55440
American Express Asset Director, President and
Management Group Inc. Chief Executive Officer
American Express Asset Director
Management International,
Inc.
American Express Asset Director
Management Ltd.
American Express Financial Senior Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
John P. Ryan, American Express Financial IDS Tower 10 Vice President and General
Vice President and General Advisors Inc. Minneapolis, MN 55440 Auditor
Auditor
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Erven A. Samsel, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of New Vice President
Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Stuart A. Sedlacek, American Centurion Life IDS Tower 10 Director, Chairman and
Senior Vice President and Assurance Company Minneapolis, MN 55440 President
Chief Financial Officer
American Enterprise Life Director and Executive
Insurance Company Vice President
American Express Corporation Director
American Express Financial Senior Vice President and
Advisors Inc. Chief Financial Officer
American Partners Life Director and President
Insurance Agency
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President
Investors Syndicate Director, Chairman of the
Development Corp. Board and President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Donald K. Shanks, AMEX Assurance Company IDS Tower 10 Senior Vice President
Vice President Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
IDS Property Casualty 1 WEG Blvd. Senior Vice President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
F. Dale Simmons, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440
American Enterprise Life Vice President
Insurance
American Express Financial Vice President
Advisors Inc.
American Partners Life Vice President
Insurance Company
IDS Certificate Company Vice President
IDS Life Insurance Company Vice President
IDS Partnership Services Director and Vice President
Corporation
IDS Real Estate Services Director and Vice President
Inc.
IDS Realty Corporation Director and Vice President
IDS Life Insurance Company Box 5144 Vice President and
of New York Albany, NY 12205 Assistant Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Judy P. Skoglund, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Ben C. Smith, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
William A. Smith, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Controller
Controller
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Bridget Sperl, American Express Client IDS Tower 10 Vice President
Vice President Service Corporation Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
William A. Stoltzmann, American Enterprise Life IDS Tower 10 Director, Vice President,
Vice President and Insurance Company Minneapolis, MN 55440 General Counsel and
Assistant General Counsel Secretary
American Express Corporation Director, Vice President
and Secretary
American Express Financial Vice President and
Advisors Inc. Assistant General Counsel
American Partners Life Director, Vice President,
Insurance Company General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity General Counsel and
Funds A & B Assistant Secretary
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James J. Strauss, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Jeffrey J. Stremcha, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Barbara Stroup Stewart, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Wesley W. Wadman, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440
American Express Asset Director and Senior Vice
Management International, President
Inc.
American Express Asset Director and Vice Chairman
Management Ltd.
American Express Financial Vice President
Advisors Inc.
IDS Fund Management Limited Director and Vice Chairman
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Norman Weaver Jr., American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Arizona Inc.
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of New Vice President
Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Michael L. Weiner, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Sales Support Inc. Director, Vice President
and Assistant Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Lawrence J. Welte, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Jeffrey F. Welter, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Edwin M. Wistrand, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Michael D. Wolf, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Michael R. Woodward, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of New Vice President
Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE>
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>
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 25th day of June, 1998.
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 25th day of June, 1998.
Signature Capacity
/s/ Richard W. Kling* President and Director
Richard W. Kling
/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>
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
as Exhibit 17 with Post-Effective Amendment No. 20 to Registration Statement No.
2-97636, is incorporated herein by reference.
/s/ Colin Lancaster
- ---------------------------
Colin Lancaster
<PAGE>
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 21
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.
Exhibits
The signatures.
IDS Life Series Fund, Inc.
File No. 2-97636/811-4299
Exhibit Index
5.(d) Copy of Investment Advisory Agreement between American Express
Financial Corporation and American Express Asset Management
International, Inc. on behalf of IDS Life International Equity Fund,
dated April 9, 1998.
10. Opinion of counsel and consent to its use as to the legality of the
securities registered, filed electronically herewith.
11. Independent Auditors' Consent, filed electronically herewith.
17. Financial Data Schedule, filed electronically herewith.
INVESTMENT ADVISORY AGREEMENT
Agreement effective as of the 9th day of April, 1998, by and between American
Express Financial Corporation Inc. ("AEFC") and American Express Asset
Management International Inc. ("International").
Whereas each of the Funds and Portfolios listed in Exhibit A (individually a
"Fund" and collectively the "Funds" ), has been registered as an investment
company under the Investment Company Act of 1940; and
Whereas International has a staff of experienced investment personnel and
facilities for the kind of investment portfolio contemplated for the Funds;
NOW THEREFORE, it is mutually agreed with respect to each Fund:
1. Information Furnished to International. AEFC shall furnish such information
to International as to holdings, purchases, and sales of securities under its
management and investment portfolio requirements as will reasonably enable
International to furnish investment advice under this agreement. Any information
or notice provided to International under the terms of this agreement shall be
furnished to the President of International or to the person or persons
designated in writing by him or by a person to whom he has delegated the
authority to so designate.
2. Purchase and Sale of Securities. Subject to the supervision and approval of
AEFC and of the Fund's Board of Directors/Trustees (the "Board"), International
shall determine, consistent with the Fund's investment objectives and policies,
which securities (including both domestic and foreign securities) in
International's discretion shall be purchased, held or sold and to execute or
cause the execution of purchase and sell orders, provided that AEFC shall be
responsible for investing and reinvesting all of the Fund's cash and cash items
held by the Fund's U.S. custodian. All transactions will be executed in a manner
and in accordance with the procedures and standards as set forth in, or as
established in accordance with, the Investment Management Services Agreement
between the investment manager and the Fund. AEFC shall furnish International
with information concerning such procedures and standards, and any amendments
thereto, and International will maintain records to assure that such
transactions have been executed in accordance therewith.
3. Compensation to International. As compensation for its services, AEFC shall
pay International a fee as described in Exhibit A. AEFC shall pay this fee to
International on a monthly basis in cash within five (5) business days after the
last day of each month.
4. IMRO Provisions.
a. The IMRO required statements, disclosures and other provisions set forth in
Exhibit B shall be considered an integral part of this agreement.
b. The Securities Brokerage Policy set forth in Exhibit C shall be considered an
integral part of this agreement.
5. Miscellaneous.
a. AEFC recognizes that International now renders and may continue to render
investment advice and other services to other persons which may or may not have
investment policies and investments similar to those of the Fund, and that
International may manage its own investments. International shall be free to
render such investment advice and other services, and AEFC hereby consents
thereto.
b. It is understood and agreed that in furnishing investment advice and other
services as herein provided, neither International nor any officer, director,
employee, or agent thereof shall be held liable to AEFC or the Fund or creditors
for errors of judgment or for anything except willful misfeasance, bad faith, or
gross negligence in the performance of its duties, or reckless disregard of its
obligations and duties under the terms of this agreement. It is further
understood and agreed that International may rely upon information furnished to
it reasonably believed to be accurate and reliable and that, except as
hereinabove provided, International shall not be accountable for any loss
suffered by AEFC or the Fund by the reason of the latter's action or nonaction
on the basis of any advice or recommendation of International, its officers,
directors or agents.
6. Renewal and Termination.
This agreement, unless terminated pursuant to paragraph b, c, or d below, shall
continue in effect from year to year, provided its continued applicability is
specifically approved at least annually (i) by the Board of the Fund or by a
vote of the holders of a majority of the outstanding votes of the Fund and (ii)
by vote of a majority of the Board members who are not parties to this agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. As used in this paragraph, the term
"interested person" shall have the same meaning as set forth in the Investment
Company Act of 1940, as amended.
b. This agreement may be terminated at any time, without penalty, by the Board
of the Fund or by vote of the holders of a majority of the Fund's outstanding
shares, on sixty days' written notice to AEFC or to International.
c. AEFC or International may terminate this agreement by giving sixty days
written notice to the other party.
d. This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning set forth in the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing agreement as
of the day and year first above written.
AMERICAN EXPRESS FINANCIAL
CORPORATION
Attest: /s/ Timothy S. Meehan BY: /s/ Peter J. Anderson
Secretary Senior Vice President - Investment
Operations
AMERICAN EXPRESS ASSET MANAGEMENT
INTERNATIONAL INC.
Attest: /s/ Timothy S. Meehan BY: /s/ Peter L. Lamaison
Secretary President and Chief Executive Officer
<PAGE>
EXHIBIT A
American Express Financial Corporation shall pay American Express Asset
Management International Inc. a fee equal on an annual basis as follows:
Fund Fee
Emerging Markets Portfolio 0.50% of daily net assets
World Growth Portfolio 0.35% of daily net assets
IDS International Fund, Inc. 0.35% of daily net assets
IDS Life International Equity Fund 0.35% of daily net assets
American Express Financial Corporation shall pay this compensation to American
Express International Inc. in arrears on a monthly basis.
<PAGE>
Exhibit B
Attachment to
Investment Advisory Agreement
WHEREAS: American Express Asset Management International Inc. , (International)
of 11th Floor, Dashwood House, 69 Old Broad Street, London, United Kingdom, ECZM
IQS, is a Member of the Investment Management Regulatory Organisation (IMRO), a
Self-Regulatory Organisation established by virtue of the United Kingdom's
Financial Services Act 1986 (FSA).
WHEREAS: IMRO requires International to incorporate certain statements,
disclosures and other provisions into its investment advisory agreements.
NOW THEREFORE: International and American Express Financial Corporation (AEFC)
hereby agree that the following IMRO required statements, disclosures and other
provisions form an Attachment to the Investment Advisory Agreement effective as
between International and AEFC as of the 9th day of April, 1998 with regard to
each Fund listed in Exhibit A.
I. Appointment of International
A. AEFC appoints International and International accepts such
appointment to determine in its discretion, but consistent with the
Fund's investment objectives and policies and subject to the
supervision and approval of AEFC and of the Fund's Board, which
securities (including both domestic and foreign securities) shall be
purchased, held or sold and to execute or cause the execution of
purchase and sell orders.
B. International represents and warrants that it is an Authorised
Person by virtue of it being a Member of IMRO, and in so being a Member
is regulated by that body in its conduct of investment business.
II. Incorporation of Prospectus and Statement of Additional Information
The Prospectus and Statement of Additional Information for the Fund are
hereby incorporated and shall be seen as forming part of this
Attachment.
III. Portfolio Transactions and Commissions/Relevant Arrangements
International is responsible for seeing that the Fund's securities
transactions are effected, for choosing the executing firms, and for
determining the brokerage commissions to be paid to such firms in a
manner and in accordance with the procedures and standards as set forth
in, or as established in accordance with, the Investment Management
Services Agreement between the investment manager and the Fund. With
regard to these executions, International will seek to secure best
execution, defined as the best net results for the Fund, taking into
consideration such factors as price, commission, dealer spread, size of
order, difficulty of execution, operational facilities of the executing
firm involved, that firm's risk in positioning a block of securities
and the overall benefits of supplemental investment research provided
by such firm.
To the extent that any such securities transactions may be effected for
the Fund with or through the agency of a person who provides such
services under any relevant arrangement, as defined in IMRO Chapter IV,
Rule 6.01, such transactions will be effected so as to seek to secure
for the Fund best execution of the transactions disregarding any
benefit which might enure directly or indirectly from the services or
benefits provided under that arrangement, since such arrangements will
relate solely to transactions in markets and on exchanges where
commission rates are fixed
IV. Investment
A. In currency transactions a movement of the exchange rate may have a
separate effect, unfavorable as well as favorable, on the gain or loss
otherwise experienced on the investment.
B. Services provided by International may relate to Investments Not
Readily Realisable. When such securities are not readily realisable;
there can be no certainty that market makers will be prepared to deal
in them, nor may they have proper information for determining their
current value.
C. The Fund may invest in units in Collective Investment Schemes which,
for the purposes of IMRO, are Unregulated Collective Investment
Schemes.
D. The Fund may not acquire or dispose of units in a Collective
Investment Scheme either operated or advised by International or by an
Associate, as defined by IMRO, of International.
E. The Fund may not contain securities of which an issue or offer for
sale was underwritten, managed or arranged by International during the
preceding twelve months. The Fund may, however, contain securities of
which an issue or offer for sale was underwritten, managed or arranged
by an Associate of International during the preceding twelve months
F. Subject to the extent permitted or not prohibited by any applicable
law and subject to procedures established by the Fund's Board and AEFC,
International may effect transactions on behalf of the Fund with an
Associate. In all Portfolio transactions so effected by International,
International could be deemed by IMRO either to be effecting a
transaction in which International has a direct or indirect material
interest, or a transaction which may involve a conflict with
International's duty to the Fund.
G. International may not commit the Fund to an obligation to underwrite
any issue or offer for the sale of securities, but under certain
securities laws the Fund may be deemed to be an underwriter where it
purchases securities directly from the issuer and later resells them.
H. International may not commit the Fund to supplement funds in the
Portfolio either by borrowing on its behalf or by committing it to a
contract of performance which may have required it to supplement the
funds.
I. Prior to effecting any transactions on behalf of the Fund in Options
or Futures, IMRO requires International to send AEFC the applicable
IMRO disclosures and agreements. International will therefore forward
the necessary disclosures and agreements to AEFC, and no such
transaction as mentioned in this paragraph I will be effected until
such agreements have been executed
J. In the event that Contracts for Differences are considered a
possible investment vehicle, the appropriate disclosures and agreements
between International and AEFC will be forwarded.
K. AEFC will inform International of any restrictions regarding the
markets in which transactions may be effected.
V. Administration
A. International shall not, under any circumstance, act as custodian or
trustee for the Fund, nor hold money, nor be the registered holder of
the Fund's registered investments nor be the custodian of documents or
other evidence of title.
B. American Express Trust Company, an Associate of International, acts
as Custodian with respect to the Fund. American Express Trust Company
has a subcustodial agreement with Morgan Stanley Trust Company, an
entity not an Associate of International. It is International's
understanding that money will be deposited with Morgan Stanley Trust
Company in the account name of American Express Trust Company, that
investments, documents of title, certificates evidencing title to
investments and other property belonging to the Fund may be lent to a
third party in accordance with a resolution of the Fund's Board but
that money may not be borrowed on the Fund's behalf against the
investments documents, certificates or property hereinabove mentioned.
With respect to the Fund, International understands that Morgan Stanley
Trust Company has procedures for accounting to the Fund regarding
income received and rights conferred in respect of the investments
held.
International accepts no responsibility for the default of any such
Custodian so appointed by the Fund.
The Board of the Fund will exercise all voting rights conferred on the
owners of the securities in the Fund.
C. International shall furnish to AEFC monthly written reports on the
valuation of the Fund, including both securities and cash and showing
all investments, receipts, disbursements and other transactions
involving the Fund during the accounting period and also showing the
assets of the Fund held at the end of the period and their market
values. Such reports do not include any measurement of performance
D. International has in operation a written procedure for the effective
consideration and proper handling of complaints. Any complaint by, or on behalf
of, the Fund should be sent in writing to:
Peter L. Lamaison
American Express Asset Management International Inc.
11th Floor
Dashwood House
69 Old Broad Street
London, United Kingdom ECZM IQS
Direct complaint can also be made to IMRO. In the event of the
inability of International to meet its liabilities to the Fund
compensation may be available by virtue of the fund established under
the Financial Services (Compensation of Investors) Rules 1988
VI. Termination
Termination will be without prejudice to the completion of transactions
initiated prior to such termination, said transactions being completed
according to their terms. Termination shall occur in accordance with
procedures established in the Investment Advisory Agreement.
VII. Investment Management Fees
Pursuant to the IMRO provisions regarding the supplement and abatement
of fees, International hereby acknowledges that for the performance of
services contemplated by the Investment Advisory Agreement, it will
receive only the compensation set out in the Investment Advisory
Agreement. Such compensation shall be payable in accordance with the
agreed provisions regarding compensation to International.
In circumstances where International effects a transaction on behalf of
the Fund with an Associate, that Associate may receive commissions;
such commissions, however, would not supplement or abate
International's above-mentioned agreed compensation.
VIII. Miscellaneous
A. Non-Private Investor: In accordance with IMRO International hereby
deems AEFC a Non-Private Investor (as such term is defined by IMRO) in
relation to all investment advisory services to be provided by
International under the Investment Advisory Agreement
B. Calls: Under the terms of the Investment Advisory Agreement
International has the right for itself, its representatives, or its
employees to make calls to AEFC at appropriate times, with the caller
identifying himself/herself at the start of the conversation
IN WITNESS WHEREOF, the parties have executed this Attachment as of the 9th day
of April, 1998.
American Express Financial Corporation
By: /s/ Peter J. Anderson
Title: Director and Senior Vice President - Investment Operations
American Express Asset Management International Inc.
By: /s/ Peter L. Lamaison
Title: President and Chief Executive Officer
<PAGE>
Exhibit C
AMERICAN EXPRESS ASSET MANAGEMENT INTERNATIONAL INC.
SECURITIES BROKERAGE POLICY
American Express Asset Management International Inc. ("AEAMI") provides its
Securities Brokerage Policy, together with any and all disclosure requirements
thereto, to all clients at least annually. In the event that any significant
policy changes occur before AEAMI sends the next annual policy statement, an
updated securities brokerage policy will be provided to all clients.
AEAMI seeks to comply with the guidelines established by each of its clients.
Such guidelines generally give AEAMI the discretionary authority to determine
the brokers and dealers through which transactions are to be effected. AEAMI
will seek to select brokers and dealers who will deal in terms which are the
best available for the client, taking into consideration such factors as price,
commission, dealer spread, size of order, difficulty of execution, reliability,
integrity, financial soundness, operational and execution capabilities of the
executing broker/dealer involved, the risk in positioning a block of securities
and the overall benefits of supplemental investment research. Purchases and
sales of over-the-counter securities are executed with primary market makers for
such securities, except where AEAMI believes that a better combination of price
and execution may otherwise be provided to the client. Clients also may direct
AEAMI to effect a portion of their transactions through specific broker/dealers.
In these cases, clients should be aware that such directed arrangements may
result in less favorable executions than those achieved for clients who do not
so direct.
Under certain circumstances, AEAMI may participate in soft commission
arrangements with broker/dealers whereby services are provided for the benefit
of AEAMI's clients in anticipation of receiving a certain amount of trading
business. The soft commission services provided include assessment of political,
economical, industrial, technical, market, industry and company factors and/or
conditions. All of the soft commission services received by AEAMI are used to
assist in the investment management decision making process and client
investment services. The broker/dealer services provided, enable AEAMI to obtain
special products and services essential to the management of client funds. In
the event AEAMI has entered into a soft commission arrangement, the affected
client's annual brokerage report will include the following: (i) the percentage
of the total commission paid under any soft commission arrangement; (ii) the
value (on a cost price basis) of disclosable softing services received by AEAMI
expressed as a percentage of the total commission paid (whether or not paid
under a soft commission agreement); (iii) a summary of disclosable softing
services received by AEAMI; (iv) a list of counterparties to the soft commission
arrangement; (v) the total commission paid from the portfolio of the affected
client; (vi) information on any Value Added Tax cash reclaims received which
relate to soft commission paid by the affected client; and (vii) confirmation
that AEAMI's soft commission agreement has not changed, or if a change has
occurred, a current copy of the soft commission agreement.
<PAGE>
To: American Express Asset Management International Inc. (International)
On behalf of the Funds listed below, I hereby acknowledge receipt of the
Attachment (drafted to comply with the United Kingdom's Investment Management
Regulatory Organisation) to the Investment Advisory Agreement presently
effective between International and American Express Financial Corporation.
Emerging Markets Portfolio; World Growth Portfolio; IDS International Fund,
Inc.; and IDS Life International Equity Fund.
Signed: /s/ Leslie L. Ogg
Leslie L. Ogg
Title: Vice President, General Counsel and Secretary
Date: 5/28/98
June 25, 1998
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Gentlemen:
I have examined the Articles of Incorporation and the By-Laws of IDS Life Series
Fund, Inc. (the "Company") and all necessary certificates, permits, minute
books, documents and records of the Company, and the applicable statutes of the
State of Minnesota, and it is my opinion:
That the shares when sold in accordance with the then-current
registration statement of the Company and in accordance with applicable
federal and state securities laws have been and will be legally issued,
fully paid, and nonassessable.
I hereby consent that the foregoing opinion may be used in connection with this
Post-Effective Amendment.
Sincerely,
/s/ Colin Lancaster
Colin Lancaster
Associate Counsel
(612) 671-7981
CL/KB/dm
Independent auditors' consent
______________________________________________________________________________
The board and shareholders
IDS Life Series Fund, Inc.:
Equity Portfolio
Government Securities Portfolio
Income Portfolio
International Equity Portfolio
Managed Portfolio
Money Market 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.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 25, 1998
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER>1
<NAME>EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 735495021
<INVESTMENTS-AT-VALUE> 931816028
<RECEIVABLES> 19398072
<ASSETS-OTHER> 38347
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 951252447
<PAYABLE-FOR-SECURITIES> 14677805
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2757716
<TOTAL-LIABILITIES> 17435521
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601891647
<SHARES-COMMON-STOCK> 27496521
<SHARES-COMMON-PRIOR> 23446744
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 135604272
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 196321007
<NET-ASSETS> 933816926
<DIVIDEND-INCOME> 1881334
<INTEREST-INCOME> 1387648
<OTHER-INCOME> 0
<EXPENSES-NET> 5522003
<NET-INVESTMENT-INCOME> (2253021)
<REALIZED-GAINS-CURRENT> 137928346
<APPREC-INCREASE-CURRENT> 153419212
<NET-CHANGE-FROM-OPS> 289094537
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20999
<DISTRIBUTIONS-OF-GAINS> 25086345
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3690818
<NUMBER-OF-SHARES-REDEEMED> 519416
<SHARES-REINVESTED> 878375
<NET-CHANGE-IN-ASSETS> 382298930
<ACCUMULATED-NII-PRIOR> 20999
<ACCUMULATED-GAINS-PRIOR> 25015292
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5369342
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5522003
<AVERAGE-NET-ASSETS> 767048117
<PER-SHARE-NAV-BEGIN> 23.52
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 11.55
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 33.96
<EXPENSE-RATIO> 0.72
<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> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 81058671
<INVESTMENTS-AT-VALUE> 82590561
<RECEIVABLES> 1982088
<ASSETS-OTHER> 152525
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84725174
<PAYABLE-FOR-SECURITIES> 1348435
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 603458
<TOTAL-LIABILITIES> 1951893
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 80645658
<SHARES-COMMON-STOCK> 8052771
<SHARES-COMMON-PRIOR> 6652858
<ACCUMULATED-NII-CURRENT> 20872
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 574861
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1531890
<NET-ASSETS> 82773281
<DIVIDEND-INCOME> 6664
<INTEREST-INCOME> 5517547
<OTHER-INCOME> 0
<EXPENSES-NET> 551912
<NET-INVESTMENT-INCOME> 4972299
<REALIZED-GAINS-CURRENT> 575895
<APPREC-INCREASE-CURRENT> 1370727
<NET-CHANGE-FROM-OPS> 6918921
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4972299
<DISTRIBUTIONS-OF-GAINS> 287088
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1441650
<NUMBER-OF-SHARES-REDEEMED> 554245
<SHARES-REINVESTED> 512508
<NET-CHANGE-IN-ASSETS> 16028523
<ACCUMULATED-NII-PRIOR> 19838
<ACCUMULATED-GAINS-PRIOR> 287088
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 520492
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 551912
<AVERAGE-NET-ASSETS> 74355943
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> .69
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> .69
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.28
<EXPENSE-RATIO> .74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 34112035
<INVESTMENTS-AT-VALUE> 34112035
<RECEIVABLES> 377698
<ASSETS-OTHER> 107985
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 34597718
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 224367
<TOTAL-LIABILITIES> 224367
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34374320
<SHARES-COMMON-STOCK> 34376580
<SHARES-COMMON-PRIOR> 28548252
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 969
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 34373351
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1763644
<OTHER-INCOME> 0
<EXPENSES-NET> 187683
<NET-INVESTMENT-INCOME> 1575961
<REALIZED-GAINS-CURRENT> (159)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1575802
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1575961
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19623972
<NUMBER-OF-SHARES-REDEEMED> 15371758
<SHARES-REINVESTED> 1576114
<NET-CHANGE-IN-ASSETS> 5827638
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 816
<GROSS-ADVISORY-FEES> 156403
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 187683
<AVERAGE-NET-ASSETS> 31280682
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> MANAGED PORTFOLIO
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 482009938
<INVESTMENTS-AT-VALUE> 579224333
<RECEIVABLES> 7666649
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 586890982
<PAYABLE-FOR-SECURITIES> 1823138
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4370484
<TOTAL-LIABILITIES> 6193622
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 447111797
<SHARES-COMMON-STOCK> 29313456
<SHARES-COMMON-PRIOR> 23934725
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 98258
<ACCUMULATED-NET-GAINS> 35828556
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 97855265
<NET-ASSETS> 580697360
<DIVIDEND-INCOME> 2693895
<INTEREST-INCOME> 13862696
<OTHER-INCOME> 0
<EXPENSES-NET> 3578804
<NET-INVESTMENT-INCOME> 12977787
<REALIZED-GAINS-CURRENT> 35844608
<APPREC-INCREASE-CURRENT> 66941764
<NET-CHANGE-FROM-OPS> 115764159
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12977741
<DISTRIBUTIONS-OF-GAINS> 31257376
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3499409
<NUMBER-OF-SHARES-REDEEMED> 559693
<SHARES-REINVESTED> 2439015
<NET-CHANGE-IN-ASSETS> 169960469
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 31234861
<OVERDISTRIB-NII-PRIOR> 91841
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3495488
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3578804
<AVERAGE-NET-ASSETS> 499354972
<PER-SHARE-NAV-BEGIN> 17.16
<PER-SHARE-NII> .47
<PER-SHARE-GAIN-APPREC> 3.92
<PER-SHARE-DIVIDEND> .47
<PER-SHARE-DISTRIBUTIONS> 1.27
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.81
<EXPENSE-RATIO> .72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER> 5
<NAME>GOVERNMENT SECURITIES PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 14053688
<INVESTMENTS-AT-VALUE> 14427314
<RECEIVABLES> 169717
<ASSETS-OTHER> 61174
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15140371
<PAYABLE-FOR-SECURITIES> 451463
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82334
<TOTAL-LIABILITIES> 533797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14116971
<SHARES-COMMON-STOCK> 1435419
<SHARES-COMMON-PRIOR> 13377242
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 159723
<ACCUMULATED-NET-GAINS> 275700
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 373626
<NET-ASSETS> 14606574
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 898378
<OTHER-INCOME> 0
<EXPENSES-NET> 112770
<NET-INVESTMENT-INCOME> 785608
<REALIZED-GAINS-CURRENT> 134337
<APPREC-INCREASE-CURRENT> 445383
<NET-CHANGE-FROM-OPS> 1365328
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 926947
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 440153
<NUMBER-OF-SHARES-REDEEMED> 451521
<SHARES-REINVESTED> 91894
<NET-CHANGE-IN-ASSETS> 1229332
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 141363
<OVERDISTRIB-NII-PRIOR> 18384
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 98674
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 112770
<AVERAGE-NET-ASSETS> 14096363
<PER-SHARE-NAV-BEGIN> 9.87
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> 0.56
<PER-SHARE-DISTRIBUTIONS> 0.11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER>6
<NAME>INTERNATIONAL EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 183940794
<INVESTMENTS-AT-VALUE> 217569032
<RECEIVABLES> 1403021
<ASSETS-OTHER> 130952
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 219103005
<PAYABLE-FOR-SECURITIES> 288999
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1241289
<TOTAL-LIABILITIES> 1530288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176201147
<SHARES-COMMON-STOCK> 11867740
<SHARES-COMMON-PRIOR> 28548252
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 32762
<ACCUMULATED-NET-GAINS> 7775713
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33628619
<NET-ASSETS> 217572717
<DIVIDEND-INCOME> 1536399
<INTEREST-INCOME> 1084060
<OTHER-INCOME> 0
<EXPENSES-NET> 1786993
<NET-INVESTMENT-INCOME> 833466
<REALIZED-GAINS-CURRENT> 8299556
<APPREC-INCREASE-CURRENT> 33874515
<NET-CHANGE-FROM-OPS> 43007537
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 662648
<DISTRIBUTIONS-OF-GAINS> 5909647
<DISTRIBUTIONS-OTHER> 108688
<NUMBER-OF-SHARES-SOLD> 3199923
<NUMBER-OF-SHARES-REDEEMED> 190260
<SHARES-REINVESTED> 310769
<NET-CHANGE-IN-ASSETS> 54019679
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3971051
<OVERDISTRIB-NII-PRIOR> 32761
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1616804
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1801573
<AVERAGE-NET-ASSETS> 170313404
<PER-SHARE-NAV-BEGIN> 14.73
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 4.06
<PER-SHARE-DIVIDEND> 0.07
<PER-SHARE-DISTRIBUTIONS> 0.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.33
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
