-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LrN4C44ekhbP2llGXlfbRg8xpRUXxWjWTq/a1Fu0Z0yBqHL+khp6AwWMrWZL1ckl jLIkQNpAYXqxAXpO0amYHw== 0000820027-96-000010.txt : 19960105 0000820027-96-000010.hdr.sgml : 19960105 ACCESSION NUMBER: 0000820027-96-000010 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960104 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS GLOBAL SERIES INC CENTRAL INDEX KEY: 0000842918 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05696 FILM NUMBER: 96500793 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 FORMER COMPANY: FORMER CONFORMED NAME: IDS GLOBAL BOND FUND INC DATE OF NAME CHANGE: 19901011 N-30D 1 IDS GLOBAL BOND FUND, INC. PAGE 1 IDS Global Bond Fund 1995 annual report (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 primarily in 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.) Distributed by American Express Financial Advisors Inc. PAGE 2 (icon of) globe 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. PAGE 3 Contents (Icon of) One book inside of another and their both being opened together. 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. 1995 annual report From the president 4 From the portfolio manager 4 Ten largest holdings 6 Making the most of your fund 7 Long-term performance 8 Independent auditors' report 9 Financial statements 10 Notes to financial statements 13 Investments in securities 23 IDS mutual funds 28 Federal income tax information 31 1995 prospectus The fund in brief Goal 3p Types of Fund investments and their risks 3p Proposed conversion to master/feeder structure 3p Manager and distributor 4p Portfolio manager 4p Sales charge and fund expenses 5p Performance Financial highlights 7p Total returns 9p Yield 11p Investment policies and risks 12p Facts about investments and their risks 13p Valuing assets 18p How to purchase, exchange or redeem shares Alternative purchase arrangements 19p How to purchase shares 22p How to exchange shares 24p How to redeem shares 24p Reductions and waivers of the sales charge 29p Special shareholder services Services 35p Quick telephone reference 35p Distributions and taxes Dividend and capital gain distributions 36p Reinvestments 37p Taxes 38p How the fund is organized Shares 41p Voting rights 42p Shareholder meetings 42p PAGE 4 Special considerations regarding master/feeder structure 43p Directors and officers 46p Investment manager and transfer agent 48p Distributor 49p About American Express Financial Corporation General information 51p Appendices Description of corporate bond ratings 52p Description of derivative instruments 54p PAGE 5 To our shareholders (Photo of) William R. Pearce President of the fund (Photo of) Ray Goodner Portfolio manager From the president If you're an experienced investor, you know that 1995 was an unusually strong year for the U.S. and some foreign financial markets. Perhaps just as important, you also know that history shows that bull markets don't last forever. Though they're often unpredictable, declines -- whether they're brief or longlasting, moderate or substantial -- are always a possibility. That fact reinforces the need for investors to review periodically their long-term goals and assess 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. William R. Pearce From the portfolio manager The past fiscal year provided a noteworthy example of the opportunities presented by global fixed-income investing. Not only did bond markets in many countries advance in response to falling interest rates, in several cases appreciating local currencies sweetened the returns enjoyed by U.S. investors. Most important, IDS Global Bond Fund took advantage of largely favorable investment environments around the world to provide shareholders with a return well into double digits for the November 1994 through October 1995 period. A worldwide trend toward generally declining interest rates provided the spark for bonds' strong performance during the past 12 months. (Falling rates boost bond values, while rising rates depress them.) The trend was set in motion by low rates of inflation in most countries and governments' desire to get their financial houses in order. Currency translation boosts total return Among the major bond markets, returns (including price appreciation and interest) fell roughly in the 12% to 15% range. But after currency translations, the range was expanded from 9% to more than 25% for U.S. based investors. (When a foreign currency appreciates against the U.S. dollar, returns for domestic investors are automatically enhanced. A depreciating foreign currency has the opposite effect on returns.) PAGE 6 Germany -- where both the bond market and local currency, the deutsche mark, advanced -- proved to be the most productive market for the Fund. To the Fund's benefit, we kept the greatest percentage of the portfolio's foreign assets in that market. In the U.S., our largest investment exposure, we also enjoyed excellent returns, as the bond market rallied strongly. Returns from Japan, third in our investment - exposure ranking, also were positive but at the low end of the major-market performance list -- a result of a sharp decline in the yen (Japan's currency) late in the fiscal year. Emerging markets rebound As we have for some time, we maintained a modest portion of the portfolio in the smaller, so-called "emerging" markets, such as Mexico, Brazil, Argentina and Indonesia -- nearly all of it denominated in U.S. currency. While these markets provided overall favorable results, they experienced considerable volatility, as economic distress in Mexico late in 1994 fostered concerns about the outlook for smaller markets as a whole. We added to our holdings in those markets during the fiscal year, and were rewarded when they rebounded last summer. Portfolio structure shifted moderately in favor of the U.S. bond market over the 12 months, coinciding with a reduction in our Japanese investments. Looking to the current fiscal year, at this writing (mid-November) the environment for global fixed-income investing remains largely positive. Most important, inflation continues to be subdued throughout most of the world. That should help interest rates stay on a stable-to-declining path, and, as always, that would be favorable for bonds. While it seems unlikely that returns would be as generous as we've recently enjoyed, they should prove to be more than satisfactory. Ray Goodner Class A 12-month performance (All figures per share) Net asset value (NAV) Oct. 31, 1995 $ 6.11 Oct. 31, 1994 $ 5.76 Increase $(0.35) Distributions Nov. 1, 1994 - Oct. 31, 1995 From income $ 0.41 From capital gains $ --- Total distributions $ 0.41 Total return** (+13.6%)*** Class B March 20, 1995 - Oct. 31, 1995 (All figures per share) Net asset value (NAV) Oct. 31, 1995 $ 6.11 March 20, 1995* $ 5.74 Increase $(0.37) PAGE 7 Distributions March 20, 1995* - Oct. 31, 1995 From income $ 0.28 From capital gains $ --- Total distributions $ 0.28 Total return** (+11.5%)*** Class C March 20, 1995 - Oct. 31, 1995 (All figures per share) Net asset value (NAV) Oct. 31, 1995 $ 6.11 March 20, 1995* $ 5.74 Increase $(0.37) Distributions March 20, 1995* - Oct. 31, 1995 From income $ 0.31 From capital gains $ --- Total distributions $ 0.31 Total return** (+12.0%)*** * 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. PAGE 8
IDS Global Bond Fund Your fund's ten largest holdings Picture of pie chart: The ten holdings listed here make up 36.94% of the fund's net assets _______________________________________________________________________ Percent Value (of fund's net assets) (as of Oct. 31, 1995) _______________________________________________________________________ U.K. Treasury 5.08% $ 29,856,039 8% Bond 2003 Federal Republic of Germany 4.64 27,247,116 8.75% Bond 2001 Government of Canada 4.51 26,473,317 10.50% Bond 2001 Federal Republic of Germany 4.11 24,138,338 7.50% Bond 2004 U.S. Treasury 3.70 21,734,888 7.50% Bond 2016 Government of Denmark 3.61 21,185,380 8% Bond 2003 Government of Italy 3.08 18,096,000 8.50% Bond 1999 U.K. Treasury 3.05 17,922,179 9% Bond 2000 Intl Bank Reconstruction & Development 2.59 15,235,200 4.50% Bond 1997 U.K. Treasury 2.57 15,091,588 8.50% Bond 2005 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.
PAGE 9 Making the most of your fund Average annual total return (as of Oct. 31, 1995) 1 year 5 years Since inception* +7.90% +9.59% +10.27% *March 20, 1989 Total returns for Class A, Class B and Class Y for the period from March 20, 1995 to Oct. 31, 1995 were +4.75%, +6.52% and +12.02%, respectively. March 20, 1995 was the inception date for Class B and Class Y. Total return for Class A is shown for comparative purposes. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Figures for Class A and Class B reflect the effect of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. Build your assets systematically One of the best ways to invest 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. This 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, it 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 Feb 100 18 5.56 Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 June 100 18 5.56 July 100 17 5.88 Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00 (footnotes 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 in table pointing to September) 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. PAGE 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. Your fund's long-term performance How your $10,000 has grown in IDS Global Bond Fund SBH Global Govt. Bond Composite Index $19,070 Global Bond Fund Lipper General World Income Fund Index $9,500 4/1/89 '89 '90 '91 '92 '93 '94 '95 Assumes: o Holding period from 4/1/89 to 10/31/95. o Returns do not reflect taxes payable on distributions. o Reinvestment of all income and capital gain distributions for the fund, with a value of $7,476. o Also see "Performance" in the Fund's current prospectus. Salomon Brother Global Government Bond Composite Index is a representative list of government bonds of 17 countries throughout the world. 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 General World Income Fund 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. *The graph is for Class A only. Class B and Class Y are not shown. Total returns for Class A, Class B and Class Y for the period from March 20, 1995 to Oct. 31, 1995 were +4.75%, +6.52% and +12.02%, respectively. March 20, 1995 was the inception date for Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. 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 General World 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. Average annual total return (as of Oct. 31, 1995) 1 year 5 years Since 3/20/89 +7.90% +9.59% +10.27% PAGE 11 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 deduction of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 12 Independent auditors' report ___________________________________________________________________ The board of directors and shareholders IDS Global Series, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of IDS Global Bond Fund (a series of IDS Global Series, Inc.) as of October 31, 1995, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the years in the two-year period ended October 31, 1995, and the financial highlights for each of the years in the six-year period ended October 31, 1995, and for the period from March 20, 1989 (commencement of operations), to October 31, 1989. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody are confirmed to us by the custodian. As to securities sold but not delivered, we request confirmations from brokers, and where replies are not received, we carry out other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS Global Bond Fund at October 31, 1995, and the results of its operations for the year then ended and the changes in its net assets for each of the years in the two-year period ended October 31, 1995, and the financial highlights for the periods stated in the first paragraph above, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota December 1, 1995 PAGE 13
Financial statements Statement of assets and liabilities IDS Global Bond Fund Oct. 31, 1995 _____________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________ Investments in securities, at value (Note 1) (identified cost $554,970,434) $568,967,717 Receivable for investment securities sold 8,342,800 Dividends and accrued interest receivable 14,035,784 _____________________________________________________________________________________________________________ Total assets 591,346,301 _____________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit 284,655 Dividends payable to shareholders 2,917,974 Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 6) 459,505 Accrued investment management services fee 48,104 Accrued distribution fee 2,970 Accrued service fee 11,156 Accrued transfer agency fee 8,847 Accrued administrative services fee 3,609 Other accrued expenses 145,432 _____________________________________________________________________________________________________________ Total liabilities 3,882,252 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $587,464,049 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- $.01 par value (Note 1) $ 961,150 Additional paid-in capital 574,421,992 Undistributed net investment income (Note 1) 2,104,995 Accumulated net realized loss (Note 1 and 8) (3,715,086) Unrealized appreciation of investments and on translation of assets and liabilities in foreign currencies (Note 4 and 6) 13,690,998 _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $587,464,049 _____________________________________________________________________________________________________________ Net asset applicable to outstanding shares: Class A $548,361,335 Class B $ 37,031,477 Class Y $ 2,071,237 Net asset value per share of outstanding capital stock: Class A shares 89,717,714 $ 6.11 Class B shares 6,058,371 $ 6.11 Class Y shares 338,876 $ 6.11 See accompanying notes to financial statements. PAGE 14 Financial statements Statement of operations IDS Global Bond Fund Year ended Oct. 31, 1995 _____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ Income: Dividends (net of foreign taxes withheld of $15,779) $ 147,287 Interest (net of foreign taxes withheld of $145,528) 36,727,429 _____________________________________________________________________________________________________________ Total income 36,874,716 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 3,930,646 Distribution fee Class A 112,362 Class B 70,489 Transfer agency fee 780,747 Incremental transfer agency fee - Class B 1,214 Service fee Class A 552,980 Class B 16,447 Administrative services fee 186,326 Compensation of directors 13,699 Compensation of officers 4,567 Custodian fees 285,135 Postage 83,984 Registration fees 108,046 Reports to shareholders 101,060 Audit fees 24,500 Administrative 6,533 Other 18,728 _____________________________________________________________________________________________________________ Total expenses 6,297,463 Earnings credits on cash balances (Note 2) (14,136) _____________________________________________________________________________________________________________ Total net expenses 6,283,327 _____________________________________________________________________________________________________________ Investment income -- net 30,591,389 _____________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________ Net realized gain on security and foreign currency transactions (including loss of $1,603,883 from foreign currency transactions) (Note 3) 1,969,977 Net realized loss on futures contracts (707,281) Net realized gain on closed or expired option contracts written (Note 5) 414,669 _____________________________________________________________________________________________________________ Net realized gain on investments and foreign currency 1,677,365 Net change in unrealized appreciation or depreciation of investments and on translation of assets and liabilities in foreign currencies 31,801,594 _____________________________________________________________________________________________________________ Net gain on investments and foreign currency 33,478,959 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $64,070,348 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE 15
Financial statements Statements of changes in net assets IDS Global Bond Fund Year ended Oct. 31, _____________________________________________________________________________________________________________ Operations and distributions 1995 1994 _____________________________________________________________________________________________________________ Investment income -- net $ 30,591,389 $ 22,065,406 Net realized gain (loss) on investments and foreign currency 1,677,365 (2,477,889) Net change in unrealized appreciation or depreciation of investments and on translation of assets and liabilities in foreign currencies 31,801,594 (27,808,371) _____________________________________________________________________________________________________________ Net increase (decrease) in net assets resulting from operations 64,070,348 (8,220,854) _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (27,871,717) (19,649,029) Class B (547,216) -- Class Y (63,386) -- Net realized gain Class A (1,590,719) (3,556,158) Excess distribution of realized gains (Note 1) Class A (5,020,075) -- Class B (98,561) -- Class Y (11,417) -- _____________________________________________________________________________________________________________ Total distributions (35,203,091) (23,205,187) _____________________________________________________________________________________________________________ Capital share transactions (Note 7) _____________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 167,962,972 332,640,161 Class B shares 36,899,954 -- Class Y shares 1,971,042 -- Reinvestment of distributions at net asset value Class A shares 30,567,749 21,996,385 Class B shares 467,515 -- Class Y shares 64,234 -- Payments for redemptions Class A shares (145,031,336) (112,115,501) Class B shares (Note 2) (574,270) -- Class Y shares (20) -- _____________________________________________________________________________________________________________ Increase in net assets from capital share transactions 92,327,840 242,521,045 _____________________________________________________________________________________________________________ Total increase in net assets 121,195,097 211,095,004 Net assets at beginning of year 466,268,952 255,173,948 _____________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $2,104,995 and $1,129,458) $587,464,049 $466,268,952 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE 16 Notes to financial statements IDS Global Bond Fund ___________________________________________________________________ 1. Summary of significant accounting policies IDS Global Bond Fund is a series of IDS Global Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a non-diversified, open-end management investment company. IDS Global Series, Inc. has 10 billion authorized shares of capital stock which can be freely allocated among the separate series as designated by the board of directors. The Fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares, which the Fund began offering on March 20, 1995, may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. Class Y shares, which the Fund also began offering on March 20, 1995, have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differs among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Significant accounting policies followed by the Fund are summarized below: Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price; securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board of directors. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions In order to produce incremental earnings, protect gains, and facilitate buying and selling of securities for investment purposes, the fund may buy or write options traded on any U.S or foreign exchange or in the over-the-counter market where the completion of the obligation is dependent upon the credit standing of the other party. The Fund also may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity of profit if the market price of the security increases. The risk in writing a put PAGE 17 option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon expiration or closing of the option transaction. When options on debt securities or futures are exercised, the Fund will realize a gain or loss. When other options are exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions In order to gain exposure to or protect itself from changes in the market, the Fund may buy and sell futures contracts traded on any U.S. or foreign exchange. The Fund also may buy or write put and call contracts on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates on securities transactions, and other translation gains or losses on dividend, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the PAGE 18 resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete the obligations of the contract. Federal taxes Since the Fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. The effect on dividend distributions of certain book-to-tax differences is presented as "excess distributions" in the statement of changes in net assets. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been decreased by $1,133,533 and accumulated net realized loss has been decreased by $1,133,533. Dividends to shareholders Dividends from net investment income, declared daily and paid each calendar quarter, are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. For U.S. dollar denominated bonds, interest income includes level-yield amortization of premium and discount. For foreign bonds, except for original issue discount, the Fund does not amortize premium and discount. ___________________________________________________________________ 2. Expenses and sales charges Under terms of a prior agreement that ended March 19, 1995, the Fund paid AEFC a fee for managing its investments, recordkeeping and other specified services. The fee was a percentage of the Fund's average daily net assets consisting of a group asset charge in reducing percentages from 0.46% to 0.32% annually on the PAGE 19 combined net assets of all non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.46% of average daily net assets. Also under terms of a prior agreement, the Fund paid AEFC a distribution fee at an annual rate of $6 per shareholder account and a transfer agency fee at an annual rate of $15.50 per shareholder account. Effective March 20, 1995, when the Fund began offering multiple classes of shares, the Fund entered into agreements with AEFC for managing its portfolio, providing administrative services and serving as transfer agent as follows: Under its Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets in reducing percentages from 0.77% to 0.67% annually. Under an Administrative Services Agreement, the Fund pays AEFC for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.06% to 0.04% annually. Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts and records. The Fund pays AEFC an annual fee per shareholder account for this service as follows: o Class A $15.50 o Class B $16.50 o Class Y $15.50 Also effective March 20, 1995, the Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing-related services as follows: Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, the Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the Fund's average daily net assets attributable to Class A and Class B shares. AEFC will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges received by American Express Financial Advisors Inc. for distributing Fund shares were $2,842,816 for Class A and $1,209 for Class B for the year ended Oct. 31, 1995. The Fund also pays custodian fees to American Express Trust Company, an affiliate of AEFC. During the year ended Oct. 31, 1995, the Fund's custodian and transfer agency fees were reduced by $14,136 as a result of earnings credits from overnight cash balances. PAGE 20 The Fund has a retirement plan for its independent directors. Upon retirement, directors receive monthly payments equal to one-half of the retainer fee for as many months as they served as directors up to 120 months. There are no death benefits. The plan is not funded, but the Fund recognizes the cost of payments during the time the directors serve on the board. The retirement plan expense amounted to $4,740 for the year ended Oct. 31, 1995. 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $471,464,989 and $405,405,222, respectively, for the year ended Oct. 31, 1995. Realized gains and losses are determined on an identified cost basis. Income from securities lending amounted to $19,089 for the year ended Oct. 31, 1995. The risk to the Fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. ___________________________________________________________________ 4. Interest rate futures contracts At Oct. 31, 1995, investments in securities included securities valued at $1,939,470 that were pledged as collateral to cover initial margin deposits on 100 purchased contracts. The market value of the open contracts on Oct. 31, 1995 was $6,407,242 with a net unrealized gain of $72,767. ___________________________________________________________________ 5. Option contracts written
The number of contracts and premium amounts associated with option contracts written is as follows: Year ended Oct. 31, 1995 ______________________________________________________ Puts Calls Contracts Premium Contracts Premium ______________________________________________________________________________ Balance Oct. 31, 1994 100 $110,238 100 $ 121,800 Opened 450 702,125 975 1,632,625 Closed (450) (690,363) (925) (1,437,050) Exercised (100) (122,000) -- -- Expired -- -- (150) (317,375) ______________________________________________________________________________ Balance Oct. 31, 1995 -- $ -- -- $ -- ______________________________________________________________________________ PAGE 21 ___________________________________________________________________ 6. Foreign currency contracts At Oct. 31, 1995, the Fund had entered into five foreign currency exchange contracts that obligate the Fund to deliver currency at specified future dates. The unrealized appreciation and/or depreciation on these contracts is included in the accompanying financial statements. The terms of the open contracts are as follows: Exchange date Currency to be Currency to be Unrealized delivered received depreciation ____________________________________________________________________________________________________ Nov. 2, 1995 3,322,053 $ 2,442,614 $ 36,993 Canadian Dollar U.S. Dollar Nov. 13, 1995 5,020,354 497,000,000 149,765 U.S. Dollar Japanese Yen Nov. 24, 1995 6,010,398 600,000,000 120,659 U.S. Dollar Japanese Yen Nov. 27, 1995 5,146,836 510,000,000 138,293 U.S. Dollar Japanese Yen Dec. 4, 1995 3,435,001 348,000,000 13,795 U.S. Dollar Japanese Yen ____________ $459,505 7. Capital share transactions Transactions in shares of capital stock for the years indicated are as follows: ________________________________________________________________________________________ Year ended Oct. 31, 1995 Year ended 10/31/94 Class A Class B* Class Y* Class A ________________________________________________________________________________________ Sold 28,365,320 6,075,865 328,333 55,715,517 Issued for reinvested 5,162,365 77,021 10,547 3,701,527 distributions Redeemed (24,752,357) (94,515) (4) (19,204,423) _______________________________________________________________________________________ Net increase 8,775,328 6,058,371 338,876 40,212,621 _______________________________________________________________________________________ *Inception date was March 20, 1995. _________________________________________________________________________________________
8. Capital loss carryover For federal income tax purposes, the Fund had a capital loss carryover of $3,589,371 at Oct. 31, 1995, that will expire in 2002 and 2003 if not offset by subsequent capital gains. It is unlikely the board of directors will authorize a distribution of any net realized capital gains until the available capital loss carryover has been offset or expires. ___________________________________________________________________ 9. Financial highlights "Financial highlights" showing per share data and selected information is presented on pages 6 and 7 of the prospectus. PAGE 22
Investments in securities IDS Global Bond Fund (Percentages represent value of Oct. 31, 1995 investments compared to net assets) _____________________________________________________________________________________________________________________________ Bonds (84.2%)(b) _____________________________________________________________________________________________________________________________ Issuer Coupon Maturity Principal Value(a) rate year amount _____________________________________________________________________________________________________________________________ Argentina (2.6%) Argentina Euro (U.S. Dollar) 6.50 % 2005 $12,000,000 (c) $ 7,147,500 Argentina Republic (U.S. Dollar) 4.25 2023 16,500,000 7,889,062 ____________ Total 15,036,562 _____________________________________________________________________________________________________________________________ Austria (4.9%) Asian Development Bank (Japanese Yen) 5.00 2003 213,000,000 2,387,730 Autobahn Schnell (Japanese Yen) 6.00 2000 397,000,000 4,565,500 IADB (Japanese Yen) 6.00 2001 59,000,000 693,250 Intl Bank Reconstruction & Development (Japanese Yen) 4.50 1997 1,440,000,000 15,235,200 Republic of Austria Euro (Japanese Yen) 5.25 1998 540,000,000 5,810,400 ______________ Total 28,692,080 _____________________________________________________________________________________________________________________________ Brazil (3.0%) Brazil C Bonds (U.S. Dollar) 4.00 2014 5,040,748 2,567,631 Brazil DCB Bonds (U.S. Dollar) 6.875 2012 20,600,000 11,317,125 Brazil ZL Bonds (U.S. Dollar) 4.00 2024 4,000,000 1,942,500 Brazil ZL Bonds (U.S. Dollar) 5.187 2024 3,250,000 (c) 1,937,813 ______________ Total 17,765,069 _____________________________________________________________________________________________________________________________ Canada (4.7%) Government of Canada (Canadian Dollar) 10.50 2001 31,000,000 26,473,317 Rogers Cable System (Canadian Dollar) 9.65 2014 2,000,000 1,298,740 ______________ Total 27,772,057 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 23 China (1.6%) Bank of China (U.S. Dollar) 8.25 2014 5,000,000 4,847,950 Guang Dong Province Enterprises (U.S. Dollar) 8.75 2003 5,000,000 (d) 4,667,550 _____________ Total 9,515,500 _____________________________________________________________________________________________________________________________ Colombia (0.7%) Republic of Colombia (U.S. Dollar) 7.25 2004 4,100,000 3,903,364 _____________________________________________________________________________________________________________________________ Denmark (5.0%) Government of Denmark (Danish Krone) 8.00 2003 113,200,000 21,185,380 9.00 2000 40,000,000 7,931,600 ______________ Total 29,116,980 _____________________________________________________________________________________________________________________________ Finland (0.3%) City of Helsinki (U.S. Dollar) 7.90 2006 2,000,000 (d) 1,891,800 _____________________________________________________________________________________________________________________________ France (1.0%) Government of France (French Franc) 7.75 2005 28,100,000 5,941,183 _____________________________________________________________________________________________________________________________ Germany (13.6%) Federal Republic of Germany (Deutsche Mark) 6.00 2016 23,700,000 14,731,446 6.375 1998 12,200,000 9,020,192 7.50 2004 31,870,000 24,138,338 8.25 1997 6,000,000 4,535,880 8.75 2001 33,675,000 27,247,116 _______________ Total 79,672,972 _____________________________________________________________________________________________________________________________ Indonesia (1.2%) Asian Pulp & Paper Intl Finance (U.S. Dollar) 11.75 2005 2,500,000 2,556,250 Pt Indah Kiat Euro (U.S. Dollar) 8.875 2000 2,500,000 2,314,625 Tjiwi Kimia (U.S. Dollar) 13.25 2001 2,000,000 2,190,000 _______________ Total 7,060,875 _____________________________________________________________________________________________________________________________ Italy (5.0%) Government of Italy (Italian Lira) 8.50 1999 31,200,000,000 18,096,000 8.50 2004 11,450,000,000 5,954,000 Republic of Italy (U.S. Dollar) 6.875 2023 6,000,000 5,543,820 __________ Total 29,593,820 ______________________________________________________________________________________________________________________________ PAGE 24 Japan (1.9%) Euro Investment Bank (Japanese Yen) 5.875 1999 380,000,000 4,347,200 Japan Development Bank (Japanese Yen) 6.50 2001 550,000,000 6,600,000 ____________ Total 10,947,200 _____________________________________________________________________________________________________________________________ Korea (1.1%) Korea Electric Power (U.S. Dollar) 7.75 2013 6,100,000 6,306,424 _____________________________________________________________________________________________________________________________ Mexico (2.2%) BNCE (U.S. Dollar) 7.25 2004 5,250,000 3,858,750 Mexican Cetes Treasury Bill (Mexican Peso) Zero Coupon 42.29 1996 17,281,150 (e) 2,101,400 United Mexican States (U.S. Dollar) 6.50 2019 6,000,000 3,532,500 8.50 2002 4,000,000 3,360,000 ____________ Total 12,852,650 ______________________________________________________________________________________________________________________________ New Zealand (1.7%) Government of New Zealand (New Zealand Dollar) 6.50 2000 15,685,000 10,095,531 _____________________________________________________________________________________________________________________________ Poland (1.2%) Poland Discount (U.S. Dollar) 6.812 2024 9,500,000 7,273,437 ______________________________________________________________________________________________________________________________ Spain (2.9%) Government of Spain (Spanish Peseta) 7.40 1999 695,000,000 5,163,850 8.00 2004 1,755,000,000 12,091,950 ____________ Total 17,255,800 _____________________________________________________________________________________________________________________________ South Africa (--%) SAPI (U.S. Dollar) 7.50 2002 175,000 (d) 178,281 _____________________________________________________________________________________________________________________________ PAGE 25 United Kingdom (11.6%) Abbey Natl (U.S. Dollar) 8.20 2004 5,000,000 5,519,700 United Kingdom Treasury (British Pound) 8.00 2003 18,650,000 29,856,039 8.50 2005 9,200,000 15,091,588 9.00 2000 10,700,000 17,922,179 _____________ Total 68,389,506 _____________________________________________________________________________________________________________________________ United States (18.0%) AMR (U.S. Dollar) 9.75 2021 500,000 582,490 10.00 2021 1,000,000 1,186,140 Chesapeake (U.S. Dollar) 9.875 2003 1,000,000 1,178,810 Cleveland Electric Illuminating (U.S. Dollar) 9.50 2005 3,000,000 3,115,800 Dayton Hudson (U.S. Dollar) 8.50 2022 3,265,000 3,436,804 Fairchild Inds (U.S. Dollar) Sr Sec Nts 12.25 1999 1,000,000 1,040,000 General Motors (U.S. Dollar) 9.125 2001 2,000,000 2,253,500 Georgia-Pacific (U.S. Dollar) Credit Sensitive Nts 9.85 1997 500,000 525,790 Government Natl Mtge Assn (U.S. Dollar) 8.00 2024 4,843,953 4,992,323 Pacific Bell (U.S. Dollar) 8.50 2031 5,000,000 5,369,200 PDV Amer (U.S. Dollar) 7.875 2003 3,500,000 3,292,240 Phillips Pertoleum (U.S. Dollar) 7.92 2023 3,115,000 3,221,658 Questar Pipeline (U.S. Dollar) 9.375 2021 1,000,000 1,173,280 Reliance Inds (U.S. Dollar) 8.125 2005 3,000,000 (d) 3,039,210 Resolution Funding Corp (U.S. Dollar) Zero Coupon 7.50 2017 2,000,000 (e) 481,320 8.00 2016 3,259,000 (e) 839,812 Southern California Gas (U.S. Dollar) 7.375 2023 900,000 917,487 Tele-Communications (U.S. Dollar) 7.875 2013 3,000,000 2,964,180 Texas Utilities (U.S. Dollar) 1st Mtge 9.75 2021 500,000 597,685 U.S. Treasury (U.S. Dollar) 4.75 1998 14,535,000 14,184,706 7.25 2004 3,200,000 3,465,184 7.50 2016 19,300,000 21,734,888 7.625 2022 13,000,000 14,997,450 8.875 2019 8,595,000 (f) 11,113,163 ____________ Total 105,703,120 _____________________________________________________________________________________________________________________________ Total bonds (Cost: $480,966,928) $494,964,211 _____________________________________________________________________________________________________________________________ /TABLE PAGE 26
_____________________________________________________________________________________________________________________________ Short-term securities (12.6%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity _____________________________________________________________________________________________________________________________ U.S. government agencies (1.3%) Federal Home Loan Bank Disc Note 11-16-95 5.64% $3,600,000 $ 3,591,570 Federal Home Loan Mtge Corp Disc Notes 11-20-95 5.63 1,900,000 1,894,385 11-20-95 5.64 1,500,000 1,495,559 Federal Natl Mtge Assn Disc Note 11-13-95 5.64 800,000 798,501 _____________ Total 7,780,015 _____________________________________________________________________________________________________________________________ Commercial paper (11.3%) Alabama Power 12-12-95 5.74 3,700,000 3,675,981 CPC Intl 11-08-95 5.77 5,500,000 (g) 5,493,861 Dean Witter, Discover & Co. 11-22-95 5.76 3,500,000 3,488,301 Deutsche Bank Financial 11-09-95 5.75 5,100,000 5,093,517 Mobil Australia Finance 11-09-95 5.75 4,500,000 (g) 4,494,280 PACCAR Financial 11-20-95 5.75 3,500,000 3,489,434 11-28-95 5.75 1,200,000 1,194,852 11-29-95 5.75 4,900,000 4,878,201 PepsiCo 11-10-95 5.79 3,000,000 (g) 2,995,688 Pioneer Hi-Bred Intl 12-07-95 5.75 600,000 596,568 SAFECO Credit 11-28-95 5.75 2,900,000 2,887,559 St. Paul Companies 11-08-95 5.78 5,100,000 (g) 5,094,298 Sandoz 11-21-95 5.76 1,000,000 996,822 Sara Lee 11-06-95 5.84 1,400,000 1,398,872 Siemens 11-16-95 5.74 900,000 897,859 11-17-95 5.75 4,800,000 4,787,797 11-17-95 5.76 3,800,000 3,790,340 Sysco 12-04-95 5.75 2,400,000 (g) 2,387,438 Toyato Motor Credit 11-13-95 5.75 4,900,000 4,890,657 SL Capital 11-16-95 5.76 3,700,000 3,691,166 ____________ Total 66,223,491 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $74,003,506) $ 74,003,506 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $554,970,434)(h) $568,967,717 _____________________________________________________________________________________________________________________________ PAGE 27 Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. (c) Interest rate varies, rate shown is the effective rate on Oct. 31, 1995. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board of directors. (e) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (f) Partially pledged as initial deposit on the following open interest rate futures purchase contracts (see Note 4 to the financial statements): Type of Security Notional amount ____________________________________________________________________________________ Italian Lira Currency futures 10,000,000 (g) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board of directors. (h) At Oct. 31, 1995, the cost of securities for federal income tax purposes was $555,096,142 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 22,055,968 Unrealized depreciation (8,184,393) _____________________________________________________________________________ Net unrealized appreciation $ 13,871,575 _____________________________________________________________________________
PAGE 28 IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposits (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 Income investments 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 Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests mainly in 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) cornucopia 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 PAGE 29 IDS Selective Fund Invests in 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 primarily in 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) federal building Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in 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 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 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 eagle head PAGE 30 Growth and income investments 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. Moderate risk. 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 Managed Retirement Fund Invests in a combination of common stocks, fixed-income investments and money market securities to seek a maximum total return through a combination of growth of capital and current income. (icon of) bird in a nest 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 apple 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 Stock Fund Invests in 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 PAGE 31 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) electrical cord IDS Diversified Equity Income Fund Invests 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) four puzzle pieces IDS Mutual Invests in a 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 Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. 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 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. (icon of) chess piece IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) flower PAGE 32 IDS Global Growth Fund Invests in 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 New Dimensions Fund Invests primarily in 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 Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. 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. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems 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. PAGE 33 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, 1995 Class A Income distributions taxable as dividend income, .04% qualifying for deduction by corporations. Payable date Per share Dec. 29, 1994 $0.09926 March 29, 1995 0.07149 June 27, 1995 0.10191 Sept. 27, 1995 0.13334 Total distributions $0.40600 The distribution of $0.09926 per share, payable Dec. 29, 1994, consisted of $0.07926 derived from net investment income, $0.0200 from net short-term capital gains (a total of $0.09926 taxable as dividend income). Class B Income distributions taxable as dividend income, .04% qualifying for deduction by corporations. Payable date Per share March 29, 1995 $0.07094 June 27, 1995 0.09096 Sept. 27, 1995 0.12185 Total distributions $0.28375 PAGE 34 Class Y Income distributions taxable as dividend income, .04% qualifying for deduction by corporations. Payable date Per share March 29, 1995 $0.07174 June 27, 1995 0.10455 Sept. 27, 1995 0.13602 Total distributions $0.31231 PAGE 35 Quick telephone reference American Express Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchToneR phones only), including current fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 AMERICAN EXPRESS FINANCIAL ADVISORS IDS Global Bond Fund IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 36 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 and prospectus are placed in 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 and prospectus. 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. -----END PRIVACY-ENHANCED MESSAGE-----