IDS
Life Series
Fund, Inc.
Offers seven portfolios with separate goals and objectives
to provide investment flexibility for Variable Life
Insurance Policies.
1999 ANNUAL REPORT
(prospectus included)
References to "Fund" throughout the remainder of this annual
report refer to Equity Portfolio, Income Portfolio, Money
Market Portfolio, Managed Portfolio, Government Securities
Portfolio, International Equity Portfolio and Equity Income
Portfolio, singularly or collectively as the context
requires.
(icon of) the Planet Saturn
AMERICAN
EXPRESS
Financial
Advisors
Managed by IDS Life Insurance Company
<PAGE>
Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the President 3
Equity Portfolio
From the Portfolio Manager 4
The 10 Largest Holdings 5
The Fund's Long-term Performance 6
Income Portfolio
From the Portfolio Manager 7
The 10 Largest Holdings 8
The Fund's Long-term Performance 9
Money Market Portfolio
From the Portfolio Manager 10
Managed Portfolio
From the Portfolio Managers 11
The 10 Largest Holdings 12
The Fund's Long-term Performance 13
Government Securities Portfolio
From the Portfolio Manager 14
The Fund's Long-term Performance 15
International Equity Portfolio
From the Portfolio Manager 16
The 10 Largest Holdings 17
The Fund's Long-term Performance 18
Equity Income Portfolio
From the Portfolio Manager 19
The Fund
Independent Auditors' Report 20
Financial Statements 21
Notes to Financial Statements 28
Investments in Securities 34
1999 PROSPECTUS
The prospectus, which is bound with this annual report, describes the Fund in
detail.
The Funds
Equity Portfolio 3p
Equity Income Portfolio 6p
Government Securities Portfolio 7p
Income Portfolio 10p
International Equity Portfolio 12p
Managed Portfolio 16p
Money Market Portfolio 19p
Buying and Selling Shares 21p
Distributions and Taxes 22p
Business Structure 23p
Financial Highlights 25p
IDS LIFE SERIES FUND, INC.
<PAGE>
(picture of) Richard W. Kling
Richard W. Kling
President
From the President
Diversification and balance continue to be vital elements in a financial
strategy. These elements are provided by combining the seven investment options
of IDS Life Series Fund, Inc. with life insurance protection.
While you may allocate your policy's value among these portfolios, please note
that all seven investment options may not be available under all policies. For
example, the International Equity Portfolio is available only to purchasers of
Flexible Premium Variable Life Insurance (Variable Universal Life and Variable
Second-to-Die) policies.
For a review of performance during the past fiscal year (May 1998 through April
1999), please consult the portfolio managers' letters that begin on the next
page.
Sincerely,
(signature of) Richard W. Kling
Richard W. Kling
President
IDS Life Series Fund, Inc.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
(picture of) Louis Giglio
Louis Giglio
Portfolio manager
From the Portfolio Manager
Equity Portfolio
Small- and mid-capitalization stocks faced a difficult environment during the
past 12 months -- May 1998 through April 1999. Equity Portfolio's performance
reflected that condition; despite a strong comeback in the second half of the
fiscal year, for the period as a whole its value fell 2.80%. (This figure does
not reflect expenses that apply to the variable subaccounts or to the policy.)
The period began on a good note, as the stock market, despite considerable
volatility, managed a moderate advance, reaching a peak in mid-July. It was then
that a second bout of the financial phenomenon known as the "Asian flu" hit,
this time in Russia and Latin America. Already fearful that profits of U.S.
companies would decline as a result of reduced exports to Asia, investors
reacted to this latest outbreak with wholesale stock-selling. Much of the
downturn was concentrated in technology and financial services stocks, two
groups that comprised a substantial portion of the Fund.
But, with the remarkable resilience that has been its hallmark in recent years,
the market soon got back on its feet and began to regain the lost ground.
Supported by three reductions in short-term interest rates by the Federal
Reserve, stocks not only recouped their losses by autumn's end but went to reach
an all-time high by late April.
As has long been the case, stocks of the largest companies most often led the
market's advance. Because this Fund concentrates on small and mid-capitalization
stocks, that trend worked to the Fund's disadvantage. Still, over the final
eight months of the period, the Fund recorded solid gains in every month but
February, when a rise in long-term interest rates caused the market to retreat.
Looking at the mix of holdings, the biggest exposure was to the technology
sector, which comprised nearly half the assets at times. While extremely
volatile, the tech stocks made the largest overall contribution to performance.
Most of the rest of the investments were spread among consumer stocks, including
health care and retailing, followed by a small investment in financial services
issues.
As for changes to the holdings, about mid-year I sold some small-cap stocks that
appeared especially vulnerable to the difficult conditions and raised the level
of cash reserves. When the environment improved in the fall, I began bringing
the cash level back down, putting more money to work in stocks.
At this writing (mid-May), the favorable factors of low inflation, low long-term
interest rates and a strong economy remain in place. As for the Fund, the
largest exposures are to health care and technology, followed by financial
services, all of which continue to offer strong earnings-growth potential.
(signature of) Louis Giglio
Louis Giglio
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The 10 Largest Holdings
Equity Portfolio
Percent Value
(of net assets) (as of April 30, 1999)
Knight/Trimark Group Cl A 5.03% $49,785,938
Univision Communications Cl A 3.22 31,831,249
Uniphase 2.45 24,274,999
Sterling Commerce 2.22 21,918,749
Outdoor Systems 1.83 18,079,588
Cisco Systems 1.82 17,964,843
Tiffany & Co 1.78 17,639,999
SunGard Data Systems 1.74 17,255,831
America Online 1.73 17,130,000
CMGI 1.67 16,546,563
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 23.49% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
The Fund's Long-term Performance
Equity Portfolio
How $10,000 has grown in Equity Portfolio
$60,000
$50,000
$47,403
$40,000 S&P 500 Equity Portfolio
Index
$30,000
Lipper Growth &
$20,000 Income Fund Index
S&P MidCap
$10,000 400 Index
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Average Annual Total Return (as of April 30, 1999):
1 year 5 years 10 years
-2.80% +18.51% +16.84%
On the chart above you can see how the Fund's total return compared to three
widely cited performance indexes, the S&P 500 Index, the S&PMidcap 400 Index and
the Lipper Growth & Income Fund Index. Recently, the Fund's portfolio manager
recommended that the Fund change its comparative index from the Lipper Growth
&Income Fund Index to the S&PMidCap 400 Index. The portfolio manager made this
recommendation because the new index more closely represents the Fund's holdings
and information for the index is more readily available. We will include both
the Lipper Growth &Income Fund Index and the S&PMidCap 400 Index in this
transition year. In the future, however, only the S&PMidCap 400 Index will be
included.
Your investment and return value fluctuate so that your accumulation units, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The above chart does not reflect expenses
that apply to the subaccounts or the policies.
S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees. However, the S&P 500 Index companies are generally larger than
those in which the Fund invests.
The S&PMidcap 400 Index is a capitalization-weighted index that measures the
performance of the mid-range sector of the U.S. stock market. The index was
developed with a base level of 100 as of Dec. 31, 1990.
Lipper Growth & Income Fund Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Lorraine R Hart
Lorraine R. Hart
Portfolio manager
From the Portfolio Manager
Income Portfolio
It was a mixed environment for bonds during the past fiscal year, as investors
tried to sort out a variety of conflicting factors. Still, the Fund managed to
generate a positive total return (price change plus interest income) of 3.52%
for the period, which ran from May 1998 through April 1999. (This figure does
not reflect expenses that apply to the variable subaccounts or to the policy.)
Inflation remained remarkably low during the period, a fact that usually keeps
long-term interest rates in a stable-to-declining range. The economy, on the
other hand, remained remarkably robust, which often fans the fear of higher
inflation and, consequently, results in rising interest rates.
This unusual combination was accompanied late last summer by heavy buying of
U.S. Treasury bonds on the part of investors who were seeking what they believed
to be a safe haven amid considerable turmoil in foreign financial markets. The
buying resulting from this "flight to quality" and the ongoing low inflation
trend drove down long-term interest rates during the first several months of the
period, which in turn boosted Treasury bond prices.
Essentially ignored in the buying spree were the other sectors, including
corporate, mortgage-backed and emerging-market bonds, which investors believed
were vulnerable to ongoing economic weakness abroad and the possibility of
slower economic growth here at home. But, thanks chiefly to three reductions in
short-term interest rates last fall by the Federal Reserve, foreign markets soon
settled down and U.S. corporate and mortgage-backed bonds began to attract more
buyers.
Because the bulk of the Fund (close to 90% at times) was invested in the
corporate, mortgage and emerging-market sectors, its performance lagged well
behind the powerful advance made by Treasury bonds during the second half of
1998. The Fund picked up the pace after that, though, even as a moderate rise in
long-term interest rates over the ensuing months tempered the gain.
My outlook for the new fiscal year that began in May has changed little in
recent months. I still expect economic growth to remain solid if not robust,
inflation to stay well-behaved, and long-term interest rates to float in a
comfortable range. If that forecast proves to be reasonably accurate, I think
the Fund has the potential to perform quite well.
(signature of) Lorraine R. Hart
Lorraine R. Hart
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
<TABLE>
<CAPTION>
The 10 Largest Holdings
Income Portfolio
Percent Value
(of net assets) (as of April 30, 1999)
<S> <C> <C>
California Infrastructure-Pacific Gas & Electric 1.03% $1,006,369
6.15% 2002
California Infrastructure-Southern California Edison .79 775,162
6.14% 2002
Morgan Stanley Capital .61 596,180
6.59% 2028
Delphes 2 .61 592,499
7.75% 2009
Kroger .56 548,240
8.15% 2006
Comcast .56 547,499
9.13% 2006
NEXTLINK Communications .55 538,750
10.75% 2008
Oryx Energy .55 535,957
8.13% 2005
Carlisle Companies .54 525,442
7.25% 2007
Qwest Communications Intl .54 525,244
7.50% 2008
Excludes U.S. Treasury and government agency holdings.
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 6.34% of net assets
</TABLE>
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
Income Portfolio
How $10,000 has grown in Income Portfolio
$30,000
Lehman Brothers
Aggregate Bond Index
$20,000
$23,152
Income Portfolio
$10,000
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Average Annual Total Return (as of April 30, 1999):
1 year 5 years 10 years
+3.52% +7.63% +8.76%
On the chart above you can see how the Fund's total return compared to a widely
cited performance measure, the Lehman Brothers Aggregate Bond Index.
Your investment and return value fluctuate so that your accumulation units, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The above chart does not reflect expenses
that apply to the subaccounts or the policies.
The Lehman Brothers Aggregate Bond Index is an unmanaged index made up of a
representative list of government and corporate bonds as well as asset-backed
securities and mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. The index reflects reinvestment of
all distributions and changes in market prices, but excludes brokerage
commissions or other fees. However, the securities used to create the index may
not be representative of the bonds held in the Fund.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
(picture of) Terry Fettig
Terry Fettig
Portfolio manager
From the Portfolio Manager
Money Market Portfolio
Short-term interest rates dropped during the past 12 months, leading to a slight
decline in the Fund's yield over the past fiscal year -- May 1998 through April
1999. For the period, the Fund generated a total return of 4.84%. (This figure
does not reflect expenses that apply to the variable subaccounts or to the
policy.) The net asset value remained at $1 per share during the period. (An
investment in the Fund is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1 per share, it is possible to lose
money by investing in the Fund.)
The economy continued to expand at a strong pace during the period, while
unemployment remained at historically low levels. In the past, periods of
extended economic growth and low unemployment have usually been followed by an
increase in the rate of inflation. But, as has been the case in recent years,
inflation stayed remarkably well-behaved.
Given that environment, the Federal Reserve Board, or the Fed, left short-term
interest rates unchanged through last summer. By late September, though, the Fed
evidently concluded that the economy was becoming vulnerable to a downturn
stemming from foreign financial turmoil that began in Asia, then worked its way
to Latin America and Russia. The result was not one but three rate reductions by
the Fed, which brought short-term rates down by about three-fourths of a
percentage point.
For the most part, I kept the average maturity of the securities in the Fund in
the 40- to 50-day area -- a neutral range. This strategy was based on my belief
that the difference in yield between shorter-term and longer-term securities was
too slight to warrant a significant maturity shift. But when the Fed first
reduced rates last fall, I began extending the maturity to take advantage of the
relatively higher yields still available. As always, the Fund remained invested
in high-quality securities, largely top-rated commercial paper (short-term
securities issued by banks and corporations), complemented by U.S. government
issues and bank letters of credit.
Looking toward the new fiscal year, given the continued strength of the U.S.
economy and the calmer conditions in foreign markets, I think it's unlikely that
the Fed will find it necessary to reduce short-term interest rates. In fact,
should the economy remain robust and signs of rising consumer prices surface,
the Fed could well be prompted to nudge rates somewhat higher. If so, the Fund's
yield would rise, as well.
(signature of) Terry Fettig
Terry Fettig
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Doug Guffy
Doug Guffy
Portfolio manager
(picture of) Scott Schroepfer
Scott Schroepfer
Portfolio manager
From the Portfolio Managers
Managed Portfolio
A strong, stock-led recovery in the second half of the fiscal year allowed the
Fund to erase a 1998 downturn and finish the period well into positive
territory. For the 12 months -- May 1998 through April 1999 -- the Fund's total
return was 10.52%. (This figure does not reflect expenses that apply to the
variable subaccounts or to the policy.)
The period began well enough for the stock market, as it reached an all-time
high by mid-July. But the environment would soon change. The culprit was the
so-called "Asian flu," the global financial crisis that by then had made its way
to Russia and, soon after, Latin America. Already concerned that profits of
American companies would decline as a result of reduced exports to Asia,
investors reacted to this latest outbreak with wholesale stock-selling into the
fall months.
But, in another display of remarkable resilience, the market quickly got back on
its feet and, supported by reductions in short-term interest rates by the
Federal Reserve, mounted a spectacular rally. By late April, the market had not
only made up the lost ground but had made a new all-time high.
Conditions were less volatile on the bond side, though there were ups-and-downs
in various sectors of the market. Treasury bonds rallied strongly during the
final six months of 1998, then slumped in the face of rising interest rates in
1999. Corporate bonds followed an essentially opposite course, declining during
the Asian flu outbreak, then recovering over the ensuing months.
As for the Fund's asset mix, we maintained a ratio of about 65%-70% stocks and
30%-35% bonds. The stock investments were concentrated for the most part in the
technology (where we increased holdings), health care, financial services,
retailing and media sectors, while the bonds were spread among Treasury and
high-quality corporate issues.
Concurrent with a change in managers for the stock side of the Fund, last fall
we began reducing its modest investments in small and mid-size stocks and adding
more large-capitalization securities, which will continue to be the core of the
Fund. In addition, we reduced the number of stock holdings from 88 to 65, which
will allow greater concentration in the most-promising issues.
(signature of) Doug Guffy
Doug Guffy
(signature of) Scott Schroepfer
Scott Schroepfer
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
The 10 Largest Holdings
Managed Portfolio
Percent Value
(of net assets) (as of April 30, 1999)
Microsoft 3.32% $22,767,500
U.S. Treasury 3.30 22,617,082
5.88% 2005
U.S. Treasury 3.22 22,077,291
6.63% 2007
America Online 3.13 21,412,500
MCI WorldCom 3.12 21,368,750
Boston Scientific 2.48 17,025,000
General Electric 2.46 16,880,000
Cisco Systems 2.33 15,968,750
MediaOne Group 2.26 15,496,875
Tyco Intl 2.25 15,437,500
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 27.87% of net assets
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
Managed Portfolio
How $10,000 has grown in Managed Portfolio
$60,000
S&P 500
$50,000 Index
$44,491
$40,000 Managed
Portfolio
$30,000
$20,000 Lipper Balanced
Fund Index
$10,000
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Average Annual Total Return (as of April 30, 1999):
1 year 5 years 10 years
+10.52% +15.22% +16.10%
On the chart above you can see how the Fund's total return compared to two
widely cited performance indexes, the S&P 500 Index and the Lipper Balanced Fund
Index.
Your investment and return value fluctuate so that your accumulation units, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The above chart does not reflect expenses
that apply to the subaccounts or the policies.
S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees. However, the S&P 500 companies are generally larger than those in
which the Fund invests.
Lipper Balanced Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
(picture of) Colin Lundgren
Colin Lundgren
Portfolio manager
From the Portfolio Manager
Government Securities Portfolio
A largely favorable environment for bonds led to a productive 12 months for the
Fund. For the fiscal year -- May 1998 through April 1999 -- its total return
(price change plus interest income) was 5.73%. (This figure does not reflect
expenses that apply to the variable subaccounts or to the policy.)
The most persistent positive factor during the period was a continuation of the
low rate of inflation the U.S. has enjoyed in recent years. When inflation
appears under control, investors are more willing to buy bonds because low
inflation usually results in stable, or even falling, interest rates. And a drop
in interest rates boosts the value of existing bonds, which is what happened
during the first several months of the period.
During that time, in the face of ongoing turmoil in many foreign financial
markets, many investors moved their money into the perceived safe haven offered
by U.S. bonds, particularly those issued by the U.S. Treasury. This "flight to
quality" put downward pressure on interest rates and, concurrently, upward
pressure on bond prices. In fact, for the first half of the period, investors
were so attracted to Treasury bonds that they largely shunned corporate and
mortgage-backed issues, which resulted in their weak price performance compared
with Treasuries.
To the Fund's benefit, I maintained a substantial exposure (more than 40% at the
peak) to Treasury bonds. In addition, I kept the Fund's duration slightly long.
(Duration is a function of the average maturity of the securities in the Fund.
The longer the duration, the more sensitive a portfolio's value is to changes in
interest rates.) Therefore, when rates came down, the Fund's performance was
enhanced.
As the period progressed, though, I gradually reduced the holdings among
Treasury bonds and increased the exposure to mortgage-backed bonds. By November,
the mix was about 25% Treasuries and 70% mortgages. The shift stemmed from my
expectation that the rally in Treasuries would subside and give way to better
performance by mortgages, which proved true during the final four months of the
period.
As for what the new fiscal year might bring, recent data show the economy
remains quite strong, while inflation has yet to slow signs of a meaningful
pick-up. Unless that outlook changes, I think bonds, especially mortgage-backed
issues, will continue to perform reasonably well.
(signature of) Colin Lundgren
Colin Lundgren
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
Government Securities Portfolio
How $10,000 has grown in Government Securities Portfolio
$30,000
Merrill Lynch 1-3 Year
Government Index
$20,000
$21,974
Government
$10,000 Securities Portfolio
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Average Annual Total Return (as of April 30, 1999):
1 year 5 years 10 years
+5.73% +7.01% +8.19%
On the chart above you can see how the Fund's total return compared to a widely
cited performance measure, the Merrill Lynch 1-3 year Government Index.
Your investment and return value fluctuate so that your accumulation units, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The above chart does not reflect expenses
that apply to the subaccounts or the policies.
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.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
(picture of) John O'Brien
John O'Brien
Portfolio manager
From the Portfolio Manager
International Equity Portfolio
A rebound in foreign stock markets, as well as the U.S., resulted in a
second-half comeback for the Fund. In the end, that meant a positive performance
for the fiscal year as a whole. For the May 1998 through April 1999 period, the
total return was 8.27%. (This figure does not reflect expenses that apply to the
variable subaccounts or to the policy.)
The period began on a positive note as, for the first few months, strong stock
markets in Europe and the U.S. propelled the Fund to a healthy advance. By
August, though, the environment became radically different. Russia, already on
shaky economic ground, was forced to devalue its currency, which in turn spawned
fear that much of Latin America might soon be forced to follow suit.
Then, just as the shock waves from that development had begun to subside a bit,
financial markets worldwide were confronted with the possibility that heavy
losses in speculative investments made by so-called hedge funds could ultimately
cause banks to greatly curtail corporate lending activities. The result of all
this bad news was widespread stock-selling in all major markets that didn't let
up until mid-autumn. By that time, the Fund had lost close to 20% of its value.
But almost before anyone had time to assess the damage, stocks in both Europe
and the U.S. regained their footing and set out to make up the lost ground.
Supported by falling interest rates in many major markets and ongoing economic
strength in the U.S., the upturn gathered so much momentum that the Fund
recorded healthy gains in six of the final seven months, putting it back in the
black for the fiscal year.
I kept most of the Fund invested in Europe during the period, chiefly in the
United Kingdom, France, Italy and Germany, with the next-largest exposure (a
range of about 20% to 30%) being to the U.S. market. Looking at stock sectors,
the biggest areas of investment were in telecommunications and banking stocks,
which comprised as much as 40% of the holdings at times. The most notable change
was to substantially raise the level of cash reserves in response to the
downturn in the markets late last summer. This helped mitigate the negative
effect on the Fund. I brought the cash level down gradually as things improved
during the ensuing months.
Looking toward the new fiscal year, the investment environment continues to be
largely favorable. In the U.S., the economy remains robust, while inflation and
interest rates remain low. In Europe, while the economies are growing at slower
rates, stock valuations continue to be more attractive. Therefore, I am staying
with an emphasis on Europe unless a change in conditions warrants a shift.
(signature of) John O'Brien
John O'Brien
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The 10 Largest Holdings
International Equity Portfolio
Percent Value
(of net assets) (as of April 30, 1999)
<S> <C> <C>
United Kingdom Treasury (United Kingdom) 4.39% $12,424,556
7.00% 2002
General Electric (United Kingdom) 3.67 10,380,187
Total Petroleum Cl B (France) 3.65 10,335,062
UBS (Switzerland) 3.50 9,907,305
Mannesmann (Germany) 3.38 9,550,856
Elf Aquitaine (France) 3.16 8,953,278
Banque Natl de Paris (France) 3.12 8,839,670
Vodafone (United Kingdom) 2.80 7,925,527
Philips Electronics (Netherlands) 2.80 7,914,292
Ericsson (LM) Cl B (Sweden) 2.64 7,469,339
Note: Certain foreign investment risks include changes in currency exchange
rates, adverse political or economic order, and lack of similar regulatory
requirements followed by U.S. companies.
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(icon of) pie chart
The 10 holdings listed here
make up 33.11% of net assets
</TABLE>
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
<PAGE>
The Fund's Long-term Performance
International Equity Portfolio
How $10,000 has grown in International Equity Portfolio
$30,000
$23,164
International Equity
$20,000 Portfolio
Goldman Sachs
$10,000 EGMI ex U.S.
11/1/94 4/95 10/95 4/96 10/96 4/97 10/97 4/98 10/98 4/99
Average Annual Total Return (as of April 30, 1999):
1 year Since inception*
+8.27% +20.49%
*Inception date was Oct. 28, 1994.
On the chart above you can see how the Fund's total return compared to a widely
cited performance measure, the Goldman Sachs Extended Global Market Index ex.
U.S.
Your investment and return value fluctuate so that your accumulation units, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The above chart does not reflect expenses
that apply to the subaccounts or the policies.
The Goldman Sachs Extended Global Market Index ex. U.S. (Goldman Sachs EGMIex.
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.
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(icon of) Kurt Winters
Kurt Winters
Portfolio manager
From the Portfolio Manager
Equity Income Portfolio
This Fund commenced operations on May 3, 1999 -- after the close of the fiscal
year -- and therefore does not have results to report. Instead, I would like to
devote this space to describing the Fund's investment style to help
policy-owners decide whether this Fund is appropriate for them.
On the investment risk-and-return scale, this Fund would be somewhat on the
conservative side. While the great majority of its investments will be in
stocks, the emphasis will be on large, usually blue-chip, issues, as opposed to
stocks of smaller, less-established companies. Over time, history shows that the
former group, while it surely experiences ups and downs, displays less price
volatility than its smaller counterparts. Another factor in the stock-selection
process will be valuation -- that is, the price of the stock compared with the
company's earnings and other business fundamentals. I will tend to prefer stocks
with lower valuations, which typically undergo smaller price fluctuations than
do high-valuation issues.
The third major consideration will be maintaining an above-average dividend
yield (compared with the stock market as a whole) in the Fund. A good example of
the type of holding that would satisfy that factor is utility stocks, which
typically have a much-greater dividend than most stocks. While most of the
dividend will be generated by investments in stocks, the Fund may also hold a
small amount of government and corporate bonds in order to enhance the level of
the dividend.
As for what the current fiscal year may hold, at this writing (mid-May) the
stock market has shown some signs of "broadening out" in the past several weeks;
that is, stocks other than the relatively small number of high-valuation growth
stocks that have led the market in recent years have enjoyed gains. Should that
trend continue, this Fund probably would benefit. On the other hand, if the
market struggles or turns down, the Fund's conservative style and comparatively
high dividend yield, should allow it to hold up relatively well.
(signature of) K. Winters
Kurt Winters
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The financial statements contained in Post-Effective Amendment #25 to
Registration Statement No. 2-97636 filed on or about June 29, 1999, are
incorporated herein by reference.
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IDS Life Series Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN
EXPRESS
Financial
Advisors
S-6191 N (6/99)
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 2) Each picture, icon and
and graphs throughout the graph is described by text and
annual report. parentheses.
