IDS
Emerging
Markets Fund
1998 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
(icon of) Compass
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 strategy, 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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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.
IDS EMERGING MARKETS FUND (This annual report is not part of the prospectus.)
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Table of Contents
1998 ANNUAL REPORT
The purpose of this annual report is to tell
investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report (Fund) 10
Financial Statements (Fund) 11
Notes to Financial Statements (Fund) 14
Independent Auditors' Report (Portfolio) 18
Financial Statements (Portfolio) 19
Notes to Financial Statements (Portfolio) 22
Investments in Securities 27
Federal Income Tax Information 34
1998 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 4p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 22p
Personalized Shareholder Information 24p
Master/Feeder Structure 25p
About the Company 26p
Quick Telephone Reference 28p
Financial Highlights 29p
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1998
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(picture of) William R. Pearce
William R. Pearce
Chairman of the board
From the Chairman
If you're an experienced investor, you know that the past 12 months was a highly
volatile period in many financial markets. But history tells us that substantial
market moves are nothing new. Though they're often unpredictable, declines --
whether they're brief or long-lasting, moderate or substantial -- are always a
possibility.
That potential for such volatility 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.
(Signature of) William R. Pearce
William R. Pearce
(picture of) Ian King
Ian King
Portfolio manager
From the Portfolio Manager
Major declines in smaller foreign markets late in the fiscal year led to a
disappointing period for IDS Emerging Markets Fund. Over the 12 months from
November 1997 through October 1998, the Fund's Class A shares lost 33.74%.
The volatile tone that characterized the period was set in the fall of 1997,
which found much of the world reeling from a meltdown in Asian markets. Although
the financial crisis was confined to Asia, many smaller markets in other parts
of the world suffered as well, as worried investors hastily dumped shares in any
market that appeared susceptible to a spreading of the "Asian flu."
IDS EMERGING MARKETS FUND (This annual report is not part of the prospectus.)
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The situation improved a bit over the winter, especially in February, when the
Fund's holdings in Brazil and Eastern Europe rebounded strongly. But by spring,
the Asian flu had spread to Russia, which in turn sent emerging markets as a
whole into a tailspin. When Russia was ultimately forced to devalue its currency
in August, markets throughout the world, even the major ones in Europe and the
U.S., fell in dramatic fashion. Still, the period did end on a positive note, as
many markets bounced back strongly in October.
A FEW BRIGHT SPOTS
As for the Fund, its performance largely followed the pattern of the emerging
markets as a group. To its overall benefit, I maintained very little exposure to
Asia during the fiscal year, while keeping relatively large exposures to Greece
and Israel, which were essentially unaffected by the problems in the rest of the
emerging markets. In fact, Greece performed extremely well during the 12 months.
Still, there was no avoiding the difficult market conditions. To try to temper
the impact, last spring I reduced the Fund's exposure to Russia and
substantially raised the level of cash reserves (to more than 20%). I also
maintained considerable diversification in the portfolio, which included
holdings in Brazil, Mexico, Argentina, Chile, China, South Africa, Hungary,
Thailand and Turkey, in addition to those mentioned earlier.
As performance picked up in October, I began reducing the cash level and putting
more money to work in stocks. That decision reflects my belief that the worst is
probably over for the emerging markets, though I fully expect periods of
considerable volatility. For investors who are comfortable with that likelihood,
I think it's reasonable to expect better performance in the year ahead.
(Signature of) Ian King
Ian King
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1998
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Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1998 $ 3.44
Oct. 31, 1997 $ 5.33
Decrease $ 1.89
Distributions -- Nov. 1, 1997 - Oct. 31, 1998
From income $ 0.14
From capital gains $ --
Total distributions $ 0.14
Total return* -33.74%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1998 $ 3.39
Oct. 31, 1997 $ 5.29
Decrease $ 1.90
Distributions -- Nov. 1, 1997 - Oct. 31, 1998
From income $ 0.14
From capital gains $ --
Total distributions $ 0.14
Total return* -34.24%**
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
Oct. 31, 1998 $ 3.45
Oct. 31, 1997 $ 5.33
Decrease $ 1.88
Distributions -- Nov. 1, 1997 - Oct. 31, 1998
From income $ 0.14
From capital gains $ --
Total distributions $ 0.14
Total return* -33.66%**
* 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.
IDS EMERGING MARKETS FUND (This annual report is not part of the prospectus.)
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Oct. 31, 1998)
Natl Bank of Greece (Greece) 3.14% $8,945,684
Telecomunicacoes Brasileiras (Brazil) 2.81 8,003,812
Samsung Electronics GDR (South Korea) 2.66 7,588,174
Compania de Telecomunicaciones de Chile
ADR (Chile) 2.58 7,347,395
Telefonica de Argentina ADR (Argentina) 2.44 6,943,125
Compania de Minas Buenaventura ADR (Peru) 2.30 6,543,840
Persetel Q Data Holdings (South Africa) 2.29 6,524,136
Compal Electronics (Taiwan) 2.17 6,188,060
Mahanagar Telephone Nigam GDR (India) 2.16 6,168,963
China Telecom (Hong Kong) 2.05 5,855,596
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" herein.
(icon of) pie chart
The 10 holdings listed here make up 24.60% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1998
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Making the Most of the Fund
BUILD YOU 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. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
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Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $8 $10
$ 5 $5 $5
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
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Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
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$100 invested per month. Total invested: $600
*Shares purchased is determined by dividing the amount invested per month by the
current share price.
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. 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.
IDS EMERGING MARKETS FUND (This annual report is not part of the prospectus.)
The Fund's Long-term Performance
How $10,000 has grown in IDS Emerging Markets Fund
$20,000
$10,000
X MSCI Emerging Markets
Free Index
$ 9,500
X Lipper
Emerging Markets
Fund Index
X $6,726
Emerging Markets
Fund-Class A
12/1/96 1/97 4/97 7/97 10/97 1/98 4/98 7/98 10/98
Average annual total return (as of Oct. 31, 1998):
1 year Since inception*
Class A -37.05% -18.28%
Class B -36.80% -18.42%
Class Y -33.66% -16.07%
* Inception date was Nov. 13, 1996.
Assumes: Holding period from 12/1/96 to 10/31/98. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $186. Also see "Past Performance" in
the Fund's current prospectus.
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.
Morgan Stanley Capital International (MSCI) Emerging Markets Free Index is an
unmanaged market capitalization-weighted index compiled from a composite of
securities markets of 26 emerging market countries. The index reflects
reinvestment of all distributions and changes in market prices, but excludes
brokerage commissions or other fees.
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.
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1998
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The financial statements contained in Post-Effective Amendment #31 to
Registration Statement No. 33-25824 filed on or about December 28, 1998, are
incorporated herein by reference.
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Federal Income Tax Information
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 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, 1998
Class A
Income distribution taxable as dividend income, none qualifying for deduction by
corporations.
Payable date Per share
Dec. 29, 1997 $0.14019
The distribution of $0.14019 per share is from net short-term capital gains and
is taxable as dividend income.
Class B
Income distribution taxable as dividend income, none qualifying for deduction by
corporations.
Payable date Per share
Dec. 29, 1997 $0.14019
The distribution of $0.14019 per share is from net short-term capital gains and
is taxable as dividend income.
Class Y
Income distribution taxable as dividend income, none qualifying for deduction by
corporations.
Payable date Per share
Dec. 29, 1997 $0.14019
The distribution of $0.14019 per share is from net short-term capital gains and
is taxable as dividend income.
IDS EMERGING MARKETS FUND (This annual report is not part of the prospectus.)
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IDS Emerging Markets Fund
IDS Tower 10
Minneapolis, MN 55440-0010
American Express
Financial Advisors
S-6354 D (12/98)
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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) There are pictures, icons 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
