1997 ANNUAL REPORT
IDS
Global Bond
Fund
(prospectus enclosed)
(icon of) globe
The goal of IDS Global Bond Fund, a part of IDS Global Series, Inc., is a high
total return through income and growth of capital. The Fund invests in a
Portfolio comprised primarily of debt securities of U.S. and foreign issuers.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment policies, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
A bounty of bonds
In today's global economy, investment opportunities don't stop at the water's
edge. While bonds issued by the U.S. government and corporations once made up
almost all of the bond market, today more than half of the world's debt
securities are issued from outside the United States. This means expanded
opportunity for investors. Global Bond Fund's aim is to take advantage of
opportunities in bond markets at any time and in any place, providing investors
with greater portfolio diversification.
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Contents
(icon of) One book inside of another
The purpose of this annual report is to tell investors how the Fund performed.
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
1997 annual report
From the chairman 4
From the portfolio manager 4
The Portfolio's ten largest holdings 6
Making the most of the Fund 7
The Fund's long-term performance 8
Independent auditors' report (Fund) 9
Financial statements (Fund) 10
Notes to financial statements (Fund) 13
Independent auditors' report (Portfolio) 19
Financial statements (Portfolio) 20
Notes to financial statements (Portfolio) 23
Investments in securities 36
IDS mutual funds 42
Federal income tax information 46
1997 prospectus
The Fund in brief 3p
Goal 3p
Investment policies and risks 3p
Structure of the Fund 4p
Manager and distributor 4p
Portfolio manager 4p
Alternative purchase arrangements 4p
Sales charge and Fund expenses 5p
Performance 8p
Financial highlights 8p
Total returns 10p
Yield 12p
Investment policies and risks 13p
Facts about investments and their risks 13p
Valuing Fund shares 20p
How to purchase, exchange or redeem shares 21p
Alternative purchase arrangements 21p
How to purchase shares 24p
How to exchange shares 26p
How to redeem shares 26p
Reductions and waivers of the sales charge 32p
Special shareholder services 37p
Services 37p
Quick telephone reference 37p
Distributions and taxes 38p
Dividend and capital gain distributions 38p
Reinvestments 39p
Taxes 39p
How to determine the correct TIN 42p
How the Fund and Portfolio are organized 43p
Shares 43p
Voting rights 43p
Shareholder meetings 43p
Special considerations regarding
master/feeder structure 44p
Board members and officers 45p
Investment manager 47p
Administrator and transfer agent 47p
Distributor 48p
About American Express Financial Corporation 50p
General information 50p
Appendices 51p
Description of corporate bond ratings 51p
Descriptions of derivative instruments 53p
(This annual report is not part of the prospectus.)
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To our shareholders
(picture of) William R. Pearce
Chairman of the board
(picture of) Ray Goodner
Portfolio manager
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong ones in many financial markets. Perhaps just as
important, history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or
long-lasting, moderate or substantial -- are always a possibility. We saw
evidence of that in late October, when declines in certain Asian markets
spawned a sharp drop in several financial markets worldwide, including the
U.S.
That fact reinforces the need for investors to review periodically their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
/s/ W. R. Pearce
William R. Pearce
From the portfolio manager
In an up-and-down period for many worldwide bond markets, IDS Global Bond
Fund ultimately posted positive results. For the November 1996 through
October 1997 fiscal year, the Fund's Class A shares generated a total
return (net asset value change and dividends) of 4.9%.
The period got off to a strong start, with the U.S. bond market -- rallying
strongly through the end of 1996. The ensuing months, though, brought a
more difficult environment. In the U.S., periodic run-ups in long-term
interest rates resulted in an overall erosion of bond prices. There were
problems overseas as well; while the European and Japanese bond markets
performed positively, declining currency values penalized Fund performance.
Mid-year recovery
Fortunately, the spring and summer were kinder to bond investors. Tame
inflation reports allowed the U.S. bond market to rebound, a trend that
spilled over to major foreign markets, particularly in Europe. European
currency values also began firming up, which also benefited the Fund.
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The Fund also got a boost from its relatively modest holdings in emerging
markets, which was the best-performing bond sector for the entire 12
months, despite a sharp decline at the end of the period stemming from
economic distress in Asia. All of the Fund's investments in emerging
markets remained denominated in U.S. dollars, a strategy that negates the
effect of changes in the values in local currencies.
Asset shifts
During the year, I made a number of portfolio adjustments in response to
the changing conditions. Most noteworthy were increasing the average
maturity of dollar-denominated bonds following the peak in yields and an
increase in European currency exposure after the dollar reached a plateau.
This latter adjustment was accomplished by closing currency hedges and
purchasing bonds outright.
As we begin a new fiscal year, the worldwide fundamentals for bond
investors remain largely favorable, as governments and central banks in
most countries have done an admirable job of reigning in spending deficits
and bringing inflation under control. These achievements, combined with the
emergence of deflationary conditions in parts of Asia, should help keep
investors' concerns about inflation in check. Lastly, while another year of
solid economic growth in the U.S. should bolster the dollar, improving
economies in Europe, along with increasing confidence in the unified
European currency, should enhance investment performance outside the U.S.
/s/ Ray Goodner
Ray Goodner
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1997 $6.26
Oct. 31, 1996 $6.28
Decrease $0.02
Distributions
Nov. 1, 1996 - Oct. 31, 1997
From income $0.28
From capital gains $0.04
Total distributions $0.32
Total return* +4.9%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1997 $6.26
Oct. 31, 1996 $6.28
Decrease $0.02
Distributions
Nov. 1, 1996 - Oct. 31, 1997
From income $0.23
From capital gains $0.04
Total distributions $0.27
Total return* +4.1%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1997 $6.26
Oct. 31, 1996 $6.30
Decrease $0.04
Distributions
Nov. 1, 1996 - Oct. 31, 1997
From income $0.29
From capital gains $0.04
Total distributions $0.33
Total return* +5.1%**
* The prospectus discusses the effect of sales charges, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.)
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The Portfolio's ten largest holdings
(icon of) pie chart
The ten holdings listed here make up 38.89% of the Portfolio's net assets
Percent Value
(of Portfolio's net assets) (as of Oct. 31, 1997)
U.S. Treasury 7.78% $76,688,318
7.50% 2001
U.S. Treasury 5.77 56,912,934
7.50% 2016
United Kingdom Treasury 4.83 47,557,603
8.00% 2003
Govt of Canada 4.61 45,388,295
8.00% 2023
Govt of Italy 3.11 30,628,384
8.50% 2004
Kingdom of Denmark 3.08 30,333,768
8.00% 2003-2006
United Kingdom Treasury 2.79 27,470,945
9.00% 2000
Govt of Sweden 2.42 23,839,722
8.00% 2007
Govt of Spain 2.40 23,657,888
8.80% 2006
Bundes Republic Deutschland 2.10 20,715,130
7.50% 2004
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.
(This annual report is not part of the prospectus.)
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Making the most of the Fund
Build your assets systematically
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly.
You'll automatically buy more shares when the Fund's share price is low,
fewer shares when it is high.
Using this strategy does not ensure a profit or avoid a loss if the market
declines, and requires that you be able to keep on investing on a regular
basis, even when the price of your shares falls or the market declines.
Investing in this manner can be an effective way to accumulate shares to
meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00 XXXXX
Feb 100 18 5.56 XXXXXx
March 100 17 5.88 XXXXXx
April 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(footnote to table) By investing an equal number of dollars each month....
(arrow in table pointing to April) you automatically buy more shares when the
per share market price is low....
(arrow pointing to Sept) and fewer shares when the per share market price
is high.
You have paid an average price of only $17.91 per share over the 10 months,
while the average market price actually was $18.10.
(This annual report is not part of the prospectus.)
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The Fund's long-term performance
Three ways to benefit from a mutual fund:
o your shares increase in value when the Fund's
investments do well
o you receive capital gains when the gains on
investments sold by the Fund exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return and you potentially can increase your
investment if, like most investors, you reinvest your dividends and capital
gain distributions to buy additional shares of the Fund or another fund.
How your $10,000 has grown in IDS Global Bond Fund
SB Global
Govt. Bond
Composite Index
$21,798
Global Bond
Fund
Lipper Global Income Class A
$9,500 Fund Index
4/1/89 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total return
(as of Oct. 31, 1997)
1 year 5 years Since inception*
Class A* -0.34% +7.06% +9.48%
Class B** +0.14% --% +7.81%
Class Y** +5.06% --% +9.40%
* Inception date was March 20, 1989.
** Inception date was March 20, 1995.
Assumes:
oHolding period from 4/1/89 to 10/31/97.
oReturns do not reflect taxes payable on distributions.
oReinvestment of all income and capital gain distributions
for the Fund, with a value of $9,939. Also see "Performance" in the
Fund's current prospectus.
Salomon Brothers Global government Bond Composite Index, an unmanaged
index, includes all Government bond markets tracked by Salomon Brothers.
The index is a general measure of government bond performance. Performance
is expressed in the U.S. dollar as well as the currencies of governments
making up the index. The bonds included in the index may not be in Global
Bond Fund.
Lipper Global 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.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, Salomon Brothers Global Government Bond
Composite Index and the Lipper Global Income Fund Index. In comparing
Global Bond Fund to the two indexes, you should take account of the fact
that the Fund's performance reflects the maximum sales charge of 5%, while
no such charges are reflected in the performance of the index. If you were
actually to buy either individual bonds or bond mutual funds, any sales
charges that you pay would reduce your total return as well.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. Average annual
total return figures reflect the impact of the applicable sales charge, up
to a maximum of 5%. This was a period of widely fluctuating security
prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
The financial statements contained in Post-Effective Amendment #28 to
Registration statement No. 33-25824 filed on or about Dec. 24, 1997, are
incorporated herein by reference.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
(This annual report is not part of the prospectus.)
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IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
(This annual report is not part of the prospectus.)
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IDS mutual funds
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
(This annual report is not part of the prospectus.)
<PAGE>
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Global Bond Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. Some of the dividends listed below were reported to you on a Form
1099-DIV, Dividends and Distributions, last January. Dividends paid to you since
the end of last year will be reported to you on a tax statement sent next
January. Shareholders should consult a tax advisor on how to report
distributions for state and local purposes.
IDS Global Bond Fund
Fiscal year ended Oct. 31, 1997
Class A
Income distribution
taxable as dividend income, none qualifying for deduction by corporations.
Payable date Per share
Dec. 27, 1996 $0.08697
March 27, 1997 0.08225
June 27, 1997 0.04318
Sept. 26, 1997 0.06918
Total $0.28158
Capital gain distribution
taxable for long-term captial gain.
Payable date Per share
Dec. 27, 1996 $0.04043
Total distributions $0.32201
The distribution of $0.12740 per share, payable Dec. 27, 1996, consisted
of $0.08619 derived from net investment income, $0.00078 from net
short-term capital gains (a total of $0.08697 taxable as dividend income)
and $0.04043 from net long-term capital gains.
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Income distribution
taxable as dividend income, none qualifying for deduction by corporations.
Payable date Per share
Dec. 27, 1996 $0.07496
March 27, 1997 0.07071
June 27, 1997 0.03151
Sept. 26, 1997 0.05741
Total $0.23459
Capital gain distribution
taxable for long-term capital gain.
Payable date Per share
Dec. 27, 1996 $0.04043
Total distributions $0.27502
The distibution of $0.11539 per share, payable Dec. 27, 1996, consisted of
$0.07418 derived from net investment income, $0.00078 from net short-term
captial gains (a total of $0.07496 taxable as dividend income) and
$0.04043 from net long-term capital gains.
Class Y
Income distributions
taxable as dividend income, none qualifying for deduction by corporations.
Payable date Per share
Dec. 27, 1996 $0.08964
March 27, 1997 0.08457
June 27, 1997 0.04482
Sept. 26, 1997 0.07098
Total $0.29001
Capital gain distribution
taxable for long-term capital gain.
Payable date Per share
Dec. 27, 1996 $0.04043
Total distributions $ .33044
The distribution of $0.13007 per share, payable Dec. 27, 1996, consisted
of $0.08886 derived from net investment income, $0.00078 from net
short-term capital gains (a total of $0.08964 taxable as dividend income)
and $0.04043 from net long-term capital gains.
(This annual report is not part of the prospectus.)
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Global Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
