IDS Life Series Fund, Inc.
Offers seven portfolios with separate goals and objectives to provide investment
flexibility for Variable Life Insurance Policies.
2000 ANNUAL REPORT
(PROSPECTUS INCLUDED)
References to "Fund" throughout the remainder of this annual report refer to
Equity Portfolio, Equity Income Portfolio, Government Securities Portfolio,
Income Portfolio, International Equity Portfolio, Managed Portfolio and Money
Market Portfolio, singularly or collectively as the context requires.
American
(R)Express
Managed by IDS Life Insurance Company
<PAGE>
Table of Contents
2000 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
Equity Income Portfolio
From the Portfolio Manager 7
The 10 Largest Holdings 8
The Fund's Long-term Performance 9
Government Securities Portfolio
From the Portfolio Manager 10
The Fund's Long-term Performance 11
Income Portfolio
From the Portfolio Manager 12
The 10 Largest Holdings 13
The Fund's Long-term Performance 14
International Equity Portfolio
From the Portfolio Managers 15
The 10 Largest Holdings 16
The Fund's Long-term Performance 17
Managed Portfolio
From the Portfolio Managers 18
The 10 Largest Holdings 19
The Fund's Long-term Performance 20
Money Market Portfolio
From the Portfolio Manager 21
The Fund
Independent Auditors' Report 22
Financial Statements 23
Notes to Financial Statements 31
Investments in Securities 38
2000 PROSPECTUS
The prospectus, which is bound with this annual report, describes the Fund in
detail.
The Funds 3p
Equity Portfolio 3p
Equity Income Portfolio 7p
Government Securities Portfolio 9p
Income Portfolio 12p
International Equity Portfolio 15p
Managed Portfolio 19p
Money Market Portfolio 22p
Fees and Expenses 24p
Buying and Selling Shares 25p
Distributions and Taxes 26p
Other Information 27p
Financial Highlights 28p
IDS LIFE SERIES FUND, INC.
<PAGE>
(picture of) Richard W. King
Richard W. King
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 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 portfolio performance during the past fiscal year (May 1999
through April 2000), please consult the portfolio managers' letters that begin
on the next page.
Sincerely,
Richard W. Kling
President
IDS Life Series Fund, Inc.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
(picture of) Louis Giglio
Louis Giglio
Portfolio manager
From the Portfolio Manager
Equity Portfolio
Despite a steep sell-off in technology-related stocks this past spring, the Fund
generated a substantial gain for the fiscal year. For the 12 months -- May 1999
through April 2000 -- the Fund's total return was 71.66%. (This figure does not
reflect expenses that apply to the variable subaccounts or the policy.)
It was feast or famine for the stock market and the Fund during the period, as
investors went through several mood swings induced by changing perceptions
regarding the outlook for corporate profits, inflation and interest rates.
Monthly gains reached as high as last February's 30%, which was followed in
April by a loss of more than 15%. Overall, though, the ups clearly outweighed
the downs.
Much of the volatility resulted from the Fund's heavy emphasis on technology and
telecommunications services/equipment stocks, two sectors that were subject to
considerable price swings. But when they were good, they were very good. Several
holdings, some of which are Internet-related, doubled and even tripled in value
during the 12 months.
Among other investment strategies, I invested in a number of initial public
stock offerings, which clearly enhanced performance. I also employed a small
amount of derivatives -- specifically, put and call options -- to help establish
or eliminate positions in relatively illiquid stocks. On the whole, this
strategy also benefited performance.
The number of stocks in the Fund increased somewhat during the period, roughly
from 100 to 130 issues, as I continued to find attractive investment
opportunities. I did, however, trim some larger stocks in order to maintain the
focus on the mid-capitalization area.
Looking toward the current fiscal year, last spring's market's decline
reinforces the likelihood that the investment environment will remain quite
volatile and the importance of maintaining a long-term investment perspective --
one based on years, rather than weeks and months. Despite that caveat, I believe
the outlook for the economy and the market remains very bright. I think this is
particularly true for technology and telecommunications companies, which
continue to enjoy exceptional growth potential and, therefore, remain the
largest areas of investment for the Fund.
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, 2000)
PMC-Sierra 3.02% $51,806,249
VeriSign 2.89 49,478,124
Juniper Networks 2.73 46,791,249
Teradyne 2.44 41,800,000
Univision Communications Cl A 2.39 40,968,750
SDL 2.27 39,000,000
Digex 2.07 35,489,999
Allegiance Telecom 2.06 35,375,000
Flextronics Intl 2.05 35,125,000
Cisco Systems 1.82 31,197,656
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 23.74% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The Fund's Long-term Performance
Equity Portfolio
How $10,000 has grown in Equity Portfolio
$80,000
$75,455
Equity Portfolio
$70,000
$60,000
S&P 500 Index
$50,000
$40,000
$30,000
S&P Midcap 400 Index
$20,000
$10,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Average Annual Total Returns (as of April 30, 2000)
1 year 5 years 10 years
+71.66% +28.65% +22.40%
On the chart above you can see how the Fund's total return compared to two
widely cited performance indexes, the Standard & Poor's 500 Index (S&P 500
Index) and the Standard & Poor's Midcap 400 Index (S&P Midcap 400 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 Index companies are generally larger than
those in which the Fund invests.
The S&P Midcap 400 Index is a capitalization-weighted index that measures the
performance of the mid-range sector of the U.S. stock market.
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Keith Tufte
Keith Tufte
Portfolio manager
From the Portfolio Manager
Equity Income Portfolio
Value stocks remained out of favor for most of the past 11 months, tempering the
performance of the Fund. For the June 17, 1999 (the Fund's inception date)
through April 2000 fiscal year, the Fund's total return was -4.12%. (This figure
does not reflect expenses that apply to the variable subaccounts or the policy.)
With the economy humming along, inflation remaining under control and companies
reporting generally healthy profits, the stock market had the wind at its back
for much of the period. This was particularly true during the final three months
of 1999, when the market rallied in dramatic fashion, thanks in part to
increasing excitement about the potential of the Internet. But there were some
slumps as well, most notably this past April, when renewed concerns about
inflation and higher interest rates drove the market into a sharp decline. All
in all, though, the ups outweighed the downs.
As has been the case in recent years, the market's advances were most often led
by growth stocks, particularly high-flying, technology-related issues -- quite
the opposite of the value emphasis of the Fund. Still, value stocks did have
their moments, such as last April when they held up much better than high-priced
growth stocks during the market's drubbing. But over the course of the fiscal
year, it was clearly a growth-driven market.
Looking at the holdings, financial services stocks made up the biggest area of
investment for the Fund. On the whole, they generated poor results as they were
hindered by periodic rises in interest rates. As for other sectors,
value-oriented technology stocks were volatile, but made a positive
contribution. Utility stocks also were affected by higher interest rates, but
finished the period with a modest overall gain. Energy-related stocks produced
the best results, as they benefited from a run-up in the price of oil.
Consumer-cyclical stocks, including retailers, were modestly positive
performers.
I made only small changes to the investment mix during the period, the most
notable being an increase in technology holdings in the summer of 1999. I
subsequently reversed that shift in the fall.
As the new fiscal year begins, the stock market continues to struggle under the
threat of higher inflation and higher interest rates, which may not be resolved
for several months. In the meantime, the fact that the Fund held up relatively
well during the market's turbulence of last April is encouraging and may prove
to be an early indication that value stocks are attracting more interest from
investors.
Keith Tufte
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The 10 Largest Holdings
Equity Income Portfolio
Percent Value
(of net assets) (as of April 30, 2000)
Citigroup 2.99% $68,353
American Intl Group 2.11 48,263
Exxon Mobil 1.92 43,892
CBS 1.67 38,246
Circuit City Stores-Circuit City Group 1.60 36,640
Chevron 1.59 36,263
AT&T 1.40 32,073
SBC Communications 1.35 30,887
Providian Financial 1.32 30,117
Target 1.28 29,288
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 17.23% of net assets
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
Equity Income Portfolio
How $10,000 has grown in Equity Income Portfolio
$20,000
S&P 500 Index
$10,000
Russell 1000 Lipper Equity Income
Value Index Funds Index $9,590
Equity Income
Portfolio
7/1/99 7/99 8/99 9/99 10/99 11/99 12/99 1/00 2/00 3/00 4/00
Average Annual Total Returns (as of April 30, 2000)
Since inception*
-4.12%
*Inception date was June 17, 1999.
On the chart above you can see how the Fund's total return compared to three
widely cited performance indexes, the Standard & Poor's 500 Index (S&P 500
Index), the Russell 1000 Value Index and the Lipper Equity Income Funds 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 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.
Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
Lipper Equity Income Funds 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 - 2000
<PAGE>
(picture of) Colin Lundgren
Colin Lundgren
Portfolio manager
From the Portfolio Manager
Government Securities Portfolio
The bond market struggled for most of the past 12 months as concerns about
potentially higher inflation led to rising interest rates and falling prices.
Still, the Fund managed to generate a positive total return of 0.86% for the
fiscal year -- May 1999 through April 2000. (This figure does not reflect
expenses that apply to the variable subaccounts or the policy.)
With the economy still growing at a remarkably strong pace, investors were
unnerved at the outset of the period when data showed a modest rise in
inflation. That uneasiness was soon reinforced by the Federal Reserve (the Fed),
which raised short-term interest rates in June and again in August. (By way of
background, the Fed typically raises rates to slow down the economy and,
consequently, keep inflation under control.) Investors quickly took those events
as a cue to sell bonds, which in turn drove intermediate- and long-term interest
rates up and bond prices down through last summer.
Aside from a relatively brief respite in the fall, the negative sentiment hung
over the bond market for most of the rest of the fiscal year, as the Fed
followed up with three more interest-rate hikes and the economic data hinted at
the possibility of a sustained upturn in inflation. As a result, with the
exception of long-term Treasury bonds, which rallied late in the fiscal year as
a result of the federal government's effort to buy back such issues, other
sectors of the bond market continued to languish.
Because I expected interest rates to head higher over the 12 months and
consequently drive down bond prices, I kept a relatively short duration in the
Fund. (Duration, a function of the average maturity of the holdings, affects how
sensitive the portfolio's value is to interest-rate fluctuations. In general,
the shorter the duration, the less the sensitivity.) In addition, early in the
period I kept the great majority of assets invested in mortgage-backed
securities, which fared better than short- and intermediate-term Treasury bonds.
Beginning in January, I shifted some money from short- and intermediate-term
Treasurys into long-term Treasurys to take advantage of the powerful rally in
that sector.
As the new fiscal year begins, I think it's likely that the economy will remain
robust and inflation will pick up moderately. If so, that probably will lead to
additional rate increases by the Fed and continued pressure on the bond market.
Given that outlook, I plan to maintain a conservative investment approach
centered on preserving Fund value and enhancing the interest income in a prudent
fashion.
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
U.S. Government Index
$20,809
Government Securities Portfolio
$20,000
Merrill Lynch 1-3 year
Government Index
$10,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Average Annual Total Returns (as of April 30, 2000)
1 year 5 years 10 years
+0.86% +5.95% +7.60%
On the chart above you can see how the Fund's total return compared to two
widely cited performance measure, the Merrill Lynch U.S. Government Index and
the Merrill Lynch 1-3 year Government Index. Recently, the Fund's portfolio
manager recommended that the Fund change its comparative index from the Merrill
Lynch 1-3 year Government Index to the Merrill Lynch U.S. Government 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 Merrill Lynch 1-3 year Government Index and
the Merrill Lynch U.S. Government Index in this transition year. In the future,
however, only the Merrill Lynch U.S. Government 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.
Merrill Lynch U.S. 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.
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 - 2000
<PAGE>
(picture of) Lorraine R. Hart
Loraine R. Hart
Portfolio manager
From the Portfolio Manager
Income Portfolio
Rising interest rates made for a difficult investment environment during the
past 12 months. Income Portfolio's performance reflected the conditions, as it
experienced a total return of -0.25% for the fiscal year -- May 1999 through
April 2000. (This figure does not reflect expenses that apply to the variable
subaccounts or the policy.)
After falling to remarkably low levels during the past two years, inflation
showed some signs that it might be picking up a bit at the outset of the period.
(Inflation is a bond investor's ongoing nemesis, as it erodes the value of
existing bonds.) That concern set a negative tone for the bond market that
continued for most of the 12 months, periodically driving down prices in most
sectors of the market.
The inflation threat evidently appeared genuine to the Federal Reserve Board,
(the Fed), which increased short-term interest rates five times during the
fiscal year. (The Fed typically raises rates to cool off the economy and,
consequently, head off a potential run-up in inflation.) Although the inflation
data remained largely inconclusive, bond investors clearly were reluctant to
make a buying commitment in most sectors of the bond market.
To provide some protection against the rising-rate trend, I kept a
shorter-than-average duration in the Fund. (Duration, a function of the average
maturity of the holdings, affects a portfolio's price sensitivity to
interest-rate changes. In general, the shorter the duration, the less the
sensitivity.) While the duration strategy could not completely shield the Fund
from the overall downturn in bond prices, it did allow the value of the Fund to
hold up relatively well. Also beneficial was an overall shift toward
higher-quality securities.
I kept the great majority of assets invested in corporate bonds (both high- and
low-grade) and mortgage-backed bonds, which proved to be relatively good
performers in 1999 but poor ones thus far in 2000. Long-term U.S. Treasury
bonds, a comparatively small area of investment, slumped during 1999, then
rebounded sharply during the final four months of the period.
Although the data have yet to provide clear evidence of a trend toward higher
inflation, I think interest rates are likely to move somewhat higher in the
months ahead. Consequently, at least over the near term, I expect to maintain a
conservative investment approach that centers on a relatively short duration in
the Fund.
Lorraine R. Hart
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The 10 Largest Holdings
Income Portfolio
Percent Value
(of net assets) (as of April 30, 2000)
Comcast
9.13% 2006 .56% $521,546
Kroger
8.15% 2006 .55 506,915
Packaging Corp of America
9.63% 2009 .55 503,749
Kerr-McGee
8.13% 2005 .54 502,682
BellSouth Capital Funding
7.75% 2010 .54 500,620
DLJ Secured Loan Trust
10.13% 2007 .54 499,999
U S WEST Capital Funding
6.88% 2001 .54 496,045
Ingersoll-Rand
6.26% 2001 .54 495,761
Sanwa Finance Aruba
8.35% 2009 .53 493,924
Cable & Wireless Communications
6.38% 2003 .53 491,009
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 5.42% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The Fund's Long-term Performance
Income Portfolio
How $10,000 has grown in Income Portfolio
$30,000
$22,255
$20,000 Income Portfolio
Lehman Brothers
Aggregate Bond Index
$10,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Average Annual Total Returns (as of April 30, 2000)
1 year 5 years 10 years
-0.25% +6.19% +8.33%
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.
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Peter Lamaison
Peter Lamaison
Portfolio manager
(picture of) Ian J. King
Ian J. King
Portfolio manager
From the Portfolio Managers
International Equity Portfolio
It was an up-and-down 12 months for the major foreign stock markets. But in the
end, it proved to be a productive period overall. For the Fund, the result was a
total return of 17.44% over the fiscal year -- May 1999 through April 2000.
(This figure does not reflect expenses that apply to the variable subaccounts or
the policy.)
The period got off to a poor start, as increasing concern about a possible
increase in the U.S. inflation rate sent many stock markets into retreat. As was
often the case over the 12 months, the situation was compounded by a decline in
Europe's new common currency, the euro, and, to a lesser degree, the yen. (A
decline in a local currency versus the dollar ultimately reduces returns for
U.S.-based investors.)
The markets managed to make some progress over the summer, putting the Fund back
into positive territory. But the best was yet to come. Feeding off a powerful
rally in U.S. stocks, Europe and Japan surged from October through year-end.
Particularly strong were stocks in the technology and telecommunications sectors
-- the two largest areas of investment for the Fund -- which were driven by
excitement about the potential of the Internet.
The rest of the fiscal year, though, turned out to be a struggle, as investors
became increasingly concerned about the potential for higher inflation and
central banks' willingness to raise interest rates to head off that possibility.
The worst month was April, when a steep sell-off in technology-related stock
roiled markets worldwide, causing the Fund to give back a good portion of its
gain.
Leading the list of positive contributors to performance for the year as a whole
were technology, telecommunications and media stocks, which made up as much as
50% of assets at times. We also kept a healthy exposure to pharmaceuticals,
which provided generally good results. On the other hand, we had relatively few
investments in cyclical and financial services issues, which proved to be
lackluster.
Japan was the largest in terms of single-country allocation (about one-third of
assets at the peak). Investments in the United Kingdom, France, Germany, Italy
and the Netherlands comprised nearly all of the rest and, therefore, the
majority of the Fund. Late in the period, we reduced our Japanese holdings and
moved more money into Europe, a reflection of our view that Europe offers the
better opportunity for gain, at least over the near term.
Peter Lamaison
Ian J. King
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The 10 Largest Holdings
International Equity Portfolio
Percent Value
(of net assets) (as of April 30, 2000)
Ericsson (LM) Cl B (Sweden) 4.36% $16,522,813
Glaxo Wellcome ADR (United Kingdom) 4.24 16,076,727
Nokia (Finland) 3.22 12,195,631
Vodafone AirTouch (United Kingdom) 3.06 11,600,591
Nippon Telegraph & Telephone (Japan) 2.33 8,846,892
Cap Gemini (France) 2.26 8,570,769
Total Petroleum Cl B (France) 2.16 8,173,782
Tesco (United Kingdom) 2.12 8,047,262
BG Group (United Kingdom) 2.10 7,948,240
EMI Group ADR (United Kingdom) 2.09 7,933,216
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 27.94% of net assets
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
International Equity Portfolio
How $10,000 has grown in International Equity Portfolio
$30,000
$27,207
International Equity Portfolio
$20,000
$10,000
MSCI EAFE Index
11/1/94 4/95 4/96 4/97 4/98 4/99 4/00
Average Annual Total Returns (as of April 30, 2000)
1 year 5 years Since inception*
+17.44% +21.12% +19.94%
*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 Morgan Stanley Capital International EAFE Index
(MSCI EAFE Index). Recently, the Fund's portfolio managers recommended that the
Fund change its comparative index from the Goldman Sachs Extended Global Market
Index ex. U.S.(Goldman Sachs EGMI ex. U.S.) to the MSCI EAFE Index. The
portfolio managers made this recommendation because the new index more closely
represents the Fund's holdings and information for the index is more readily
available. We would normally include both the MSCI EAFE Index and the Goldman
Sachs EGMI ex. U.S. in this transition year, however, information for the
Goldman Sachs EGMI ex. U.S. is no longer available.
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 MSCIEAFE Index is an unmanaged index compiled from a composite of securities
markets of Europe, Australia and the Far East, and is widely recognized by
investors in foreign markets as the measurement index for portfolios of
non-North American securities. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
(picture of) Doug Guffy
Doug Guffy
Portfolio manager
(picture of) Jeannette K. Parr
Jeannette K. Parr
Portfolio manager
From the Portfolio Managers
Managed Portfolio
The Fund enjoyed a productive fiscal year, thanks largely to its substantial
investment in technology-related stocks. For the 12 months -- May 1999 through
April 2000 -- the total return for the Fund was 20.79%. (This figure does not
reflect expenses that apply to the variable subaccounts or the policy.)
The stock market experienced considerable volatility during the period, as
investors weighed the positive factors of a strong economy and generally good
corporate profits against the negative forces of higher interest rates and a
potential increase in the inflation rate. The best period for the market was the
last three months of 1999, when increasing excitement about the potential for
the Internet helped power a spectacular rally. The period ended on a sour note,
however, as interest-rate and inflation concerns sparked a sharp sell-off in
April. But all in all, it was a good period for the stock market.
Leading the way for the market and the Fund were technology-related stocks,
which easily comprised our largest area of investment (more than 50% of assets
at the peak). Among the best-performing tech segments were communications
equipment, cable television, computer networking, software, semiconductors and
electronic equipment. Looking at other areas, retailing performed well for the
Fund, while financial services and health care were weak.
On the bond side, rising interest rates took its toll for much of the 12 months.
(Generally, rising rates depress bond prices.) Although inflation continued to
be well-behaved overall, investors were dubious about what the future would
bring, a feeling that was reinforced by five increases in short-term interest
rates by the Federal Reserve. As for the Fund's holdings, U.S. Treasury bonds
lost ground until January, after which they staged a solid recovery. High-grade
corporate issues were more consistent performers, and fared somewhat better for
the year as a whole.
Looking at changes to the Fund, the most notable was an increase in exposure to
technology-related stocks, some of which resulted from the addition of stocks as
well as appreciation in the issues we already held. As for the asset mix, until
January stocks made up approximately 70% of the investments, with nearly all the
rest in bonds. At that point, we shifted more assets into stocks, resulting in
roughly a 75/25 mix. As the new fiscal year begins, we are maintaining
essentially the same Fund structure.
Doug Guffy
Jeanette K. Parr
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
The 10 Largest Holdings
Managed Portfolio
Percent Value
(of net assets) (as of April 30, 2000)
Cisco Systems 4.53% $37,437,187
Corning 4.06 33,575,000
General Electric 3.42 28,305,000
JDS Uniphase 3.01 24,900,000
Intel 2.92 24,094,375
Solectron 2.83 23,406,250
Microsoft 2.53 20,925,000
MCI WorldCom 2.53 20,901,250
Nortel Networks 2.40 19,818,750
Jabil Circuit 2.38 19,650,000
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 30.61% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<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
$45,024
$40,000 Managed
Portfolio
$30,000
$20,000 Lipper Balanced
Fund Index
$10,000
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Average Annual Total Returns (as of April 30, 2000)
1 year 5 years 10 years
+20.79% +18.39% +16.24%
On the chart above you can see how the Fund's total return compared to two
widely cited performance indexes, the Standard & Poor's 500 Index (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.
IDS LIFE SERIES FUND, INC. (This annual report is not part of the prospectus.)
<PAGE>
(picture of) Terry Fettig
Terry Fettig
Portfolio manager
From the Portfolio Manager
Money Market Portfolio
Short-term interest rates rose during the past 12 months, leading to an increase
in the Fund's yield over the fiscal year -- May 1999 through April 2000. For the
period, the Fund generated a return of 5.11%, while its seven-day yield was
5.59%.* (These figures do not reflect expenses that apply to the variable
subaccounts or the policy.)
In keeping with its objective, the Fund also maintained a net asset value of $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 remained remarkably strong during the period, while unemployment
stayed at historically low levels. Inflation periodically showed signs of
picking up, causing some concern among investors that a trend toward higher
inflation might be emerging.
Evidently, the Federal Reserve Board (the Fed) shared that concern, as it raised
short-term interest rates five times during the 12 months. (By way of
background, the Fed typically raises interest rates to cool off the economy and,
therefore, keep inflation under control.) The ultimate impact on the Fund was
that the interest rates on the types of securities it invests in also rose,
resulting in a higher Fund yield.
Normally, I keep the average maturity of the securities in the Fund in the 40-
to 50-day range. But because I expected interest rates to rise as the period
progressed, late in 1999 I lowered the maturity to the 30- to 40-day range. The
shorter maturity allowed me to take quicker advantage of the higher rates
available on newly issued securities, which ultimately enhanced the Fund's
yield. As always, the Fund remained invested in high-quality securities,
primarily top-rated commercial paper, (short-term securities issued by banks and
corporations), complemented by U.S. government issues and bank letters of
credit.
Looking to the new fiscal year, I expect the trend toward higher short-term
interest rates to continue, as the Fed tries to rein in the economy and keep a
lid on inflation. In light of that, I plan to keep the Fund's maturity shorter
than normal.
Terry Fettig
*The yield quotation more closely reflects the current earnings of the money
market fund than the total return quotation. This yield is based on the
seven-day yield as of April 30, 2000.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 2000
<PAGE>
The financial statements contained in Post-Effective Amendment #26 to
Registration Statement No. 2-97636 filed on or about June 29, 2000, are
incorporated herein by reference.
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
IDS Life Series Fund, Inc.
200 AXP Financial Center
Minneapolis, MN 55474
AMERICAN
EXPRESS
(R)
S-6191 P (6/00)
<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 in
annual report. parentheses.
