1997 ANNUAL REPORT
IDS
Emerging
Markets Fund
(prospectus enclosed)
(icon of) world globe
The goal of IDS Emerging Markets Fund, a part of IDS Global Series, Inc., is
long-term growth of capital.
(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.
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(icon of) world globe
Expanding your opportunities
As free enterprise expands around the world, so do investment opportunities.
Some of the most exciting ones can be found in the so-called "emerging markets"
- -- smaller economies located largely in Asia, Latin America and Eastern Europe.
Attracted by their rapid growth potential, many aggressive investors have made
these markets, which have a higher-than-average risk level, an integral part of
their portfolios.
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(Icon of) One open 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.
Contents
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) 21
Financial statements (Portfolio) 22
Notes to financial statements (Portfolio) 25
Investments in securities 31
IDS mutual funds 35
Federal income tax information 39
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 7p
Financial highlights 7p
Total returns 8p
Investment policies and risks 10p
Facts about investments and their risks 11p
Valuing Fund shares 17p
How to purchase, exchange or redeem shares 18p
Alternative purchase arrangements 18p
How to purchase shares 21p
How to exchange shares 23p
How to redeem shares 23p
Reductions and waivers of the sales charge 28p
Special shareholder services 33p
Services 33p
Quick telephone reference 33p
Distributions and taxes 34p
Dividend and capital gain distributions 34p
Reinvestments 35p
Taxes 35p
How to determine the correct TIN 37p
How the Fund and Portfolio are organized 38p
Shares 38p
Voting rights 38p
Shareholder meetings 38p
Special considerations regarding
master/feeder structure 38p
Board members and officers 40p
Investment manager 42p
Administrator and transfer agent 42p
Distributor 43p
About American Express Financial Corporation 44p
General information 44p
Appendices 45p
Description of corporate bond ratings 45p
Descriptions of derivative instruments 47p
(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) Ian King
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 several foreign
stock markets spawned a sharp drop in the U.S. market.
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
The volatility that characterizes financial markets in emerging
economies was never more evident than in the past 12 months.
Nevertheless, and despite a dramatic downturn near the end of the
period, IDS Emerging Markets Fund's Class A shares produced a positive
return of 6.8% for the fiscal year, which ran from Nov. 13, 1996 (the
Fund's inception date) through Oct. 1997. The gain exceeded that of the
Morgan Stanley Capital International Emerging Markets Free Index, an
unmanaged index that is commonly used as a benchmark for evaluating the
performance of mutual funds such as this one.
The first several weeks of the period were largely devoted to putting
investors' money to work by purchasing shares of stocks in a wide range
of countries, including Hong Kong/China, Brazil, Argentina, Russia,
Mexico, Turkey, Taiwan and Malaysia. Later in the period, I also
established a position in Israel.
A focus on robust economies
For the most part, I concentrated on stocks of companies involved in
infrastructure (construction of roads, bridges, utilities, sewage
(This annual report is not part of the prospectus.)
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systems, etc.) and industrial development, which are in their early
stages in many emerging markets. My investment approach is to focus
first on countries with the fastest-growing economies, then try to
identify the stocks in those countries that appear to have the best
long-term appreciation potential. In many cases, this has led to
companies that are especially benefiting from the trend toward
privatization and deregulation in many developing countries.
During the first several months of the period, the investment
environment in most emerging markets was relatively calm and quite
productive. Leading the way were Brazil, Argentina, Mexico, Russia and
Hong Kong/China, which constituted the largest investment exposures for
the Fund. Despite a downturn in August, the Fund was ahead more than 24%
by early October.
Market meltdown
All the while, though, trouble had been brewing in Southeast Asia, where
declining currency values had dragged down those markets for many
months. Things came to a head in late October as the Hong Kong market
crumbled, sending shock waves throughout emerging markets worldwide.
Although its exposure to Asia was relatively minor (I had substantially
reduced investments there over the summer), the Fund couldn't avoid the
effect of the consequent declines in other markets. In the end, the
global downturn erased most of the previous 11 months' gain.
While such events test the patience of any investor, it's important to
keep in mind that sharp swings are nothing new in emerging markets and,
perhaps more important, the case for investing in emerging markets is,
in my view at least, as sound as ever. Inflation remains under control
around the globe, economies in many developing countries are still
vibrant, and the worldwide trend toward free markets and capitalism is
unbowed. Over the long run, I'm confident that combination will again
prove rewarding.
/s/ Ian King
Ian King
Class A
Nov. 13, 1996* - Oct. 31, 1997
(All figures per share)
Net asset value (NAV)
Oct. 31, 1997 $ 5.33
Nov. 13, 1996* $ 5.00
Increase $ 0.33
Distributions
Nov. 13, 1996* - Oct. 31, 1997
From income $ 0.01
From capital gains $ --
Total distributions $ 0.01
Total return** +6.8%***
Class B
Nov. 13, 1996* - Oct. 31, 1997
(All figures per share)
Net asset value (NAV)
Oct. 31, 1997 $ 5.29
Nov. 13, 1996* $ 5.00
Increase $ 0.29
Distributions
Nov. 13, 1996* - Oct. 31, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return** +6.1%***
Class Y
Nov. 13, 1996* - Oct. 31, 1997
(All figures per share)
Net asset value (NAV)
Oct. 31 1997 $ 5.33
Nov. 13, 1996* $ 5.00
Increase $ 0.33
Distributions
Nov. 13, 1996* - Oct. 31, 1997
From income $ 0.01
From capital gains $ --
Total distributions $ 0.01
Total return** +6.9%***
* Inception date.
** 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
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The ten holdings listed here make up 23.29% of the Portfolio's net assets
Percent Value
(of Portfolio's net assets) (as of Oct. 31, 1997)
Telecommunicacoes Brasileiras- 3.12% $11,165,000
Telebras ADR (Brazil)
Cia. de Telecommunicaciones 2.44 8,741,250
de Chile ADR (Chile)
AO Tatneft ADR (Russia) 2.40 8,580,000
Grupo Carso SA de CV (Mexico) 2.39 8,577,194
Yapi ve Kredi Bankasi (Turkey) 2.32 8,318,750
Telefonos de Mexico 2.29 8,217,500
ADR Cl L (Mexico)
Centrais Electricas Brasileiras 2.24 8,035,021
ADR (Brazil)
Kimberly-Clark de Mexico 2.06 7,395,764
ADR (Mexico)
Israel Chemicals (Israel) 2.03 7,276,790
Compania de Minas Buenaventura 2.00 7,175,000
ADR (Peru)
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.
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.
(This annual report is not part of the prospectus.)
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The Fund's long-term performance
How $10,000 has grown in IDS Emerging Markets Fund
MSCI Emerging MArkets
Free Index
$9,500 Lipper Emerging Markets
Fund Index
$10,066
Emerging Markets Fund
Class A
11/96 12/96 1/97 2/97 3/97 4/97 5/97 6/97 7/97 8/97 9/97 10/97
Average annual total return
(as of Oct. 31, 1997)
Since inception*
Class A +1.50%
Class B +2.07%
Class Y +6.86%
*Inception date was Nov. 13, 1996. For purposes of the graph above, start
date was Nov. 30, 1996.
Assumes: oHolding period from 11/13/96 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 $14. Also see
"Performance" in the Fund's current prospectus.
Morgan Stanley Capital International (MSCI) Emerging Markets Free Index,
an unmanaged market capitalization-weighted index compiled from a
composite of securities markets of 26 emerging market countries, is
widely recognized by investors as a measurement index for portfolios of
emerging market securities.
Lipper Emerging Markets Fund Index, an unmanaged index published by
Lipper Analytical Services, Inc., includes 31 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, the MSCI Emerging Markets Free
Index and the Lipper Emerging Markets Fund Index. In comparing IDS
Emerging Markets Fund (Class A) to the two indexes, you should take into
account the fact that the Fund's performance reflects the maximum sales
charge of 5%, while such charges are not reflected in the performance of
the indexes.
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.)
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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 portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
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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 mutual funds
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.
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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.
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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.
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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.
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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.
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(This annual report is not part of the prospectus.)
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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.
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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.
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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.
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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.
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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.
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(This annual report is not part of the prospectus.)
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IDS mutual funds
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.
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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.)
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Federal income tax information
IDS Emerging Markets 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. The dividends listed below were reported to you on a Form 1099-DIV,
Dividends and Distributions, last January. Shareholders should consult a tax
advisor on how to report distributions for state and local purposes.
IDS Emerging Markets Fund
Fiscal year ended Oct. 31, 1997
Class A
Income distribution
taxable as dividend income, 0.00% qualifying for deduction by
corporations.
Payable date Per share
Dec. 30, 1996 $0.00684
Class B
Income distribution
taxable as dividend income, 0.00% qualifying for deduction by
corporations.
Payable date Per share
Dec. 30, 1996 $0.00449
Class Y
Income distribution
taxable as dividend income, 0.00% qualifying for deduction by
corporations.
Payable date Per share
Dec. 30, 1996 $0.00748
(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 Emerging Markets Fund
IDS Tower 10
Minneapolis, MN 55440-0010
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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.
