UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-1653
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IDS Life Variable Annuity Fund A (Individual and Employer)
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(Exact name of registrant as specified in charter)
50606 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Mary Ellyn Minenko - 50607 AXP Financial Center, Minneapolis, MN 55474
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-3678
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Date of fiscal year end: 12/31
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Date of reporting period: 6/30
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(logo)
American
Express(R)
Annuities
IDS Life Variable Annuity
Fund A
Invests in a wide range of securities with the objective of long-term capital
appreciation for contract owners.
2004 SEMIANNUAL REPORT
June 30, 2004
(logo)
AMERICAN
EXPRESS
(R)
Table of Contents
Questions & Answers
with Portfolio Management 3
The 10 Largest Holdings 5
Financial Statements 6
Notes to Financial Statements 8
Investments in Securities 13
Proxy Voting 15
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2 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, Portfolio Manager Doug Chase discusses the Fund's results and positioning
for the first six months of fiscal 2004. The Fund's Board of Managers has
recommended that the Fund be reorganized. The reorganization would result in the
Fund's assets being transferred into AXP Variable Portfolio - Core Equity Fund.
Contract owners will be asked to approve this reorganization at a special
meeting on Aug. 31, 2004. Approval is not guaranteed.
Q: How did the Fund perform for the six months ended June 30, 2004?
A: The IDS Life Variable Annuity Fund A rose 1.35% (excluding sales charge).
This was less than the 3.44% advance of the Standard & Poor's 500 Index (S&P
500 Index) for the period.
Q: What factors significantly affected the Fund's performance?
A: Although the stock market continued to advance in the first half of calendar
year 2004, its momentum slowed considerably from 2003's torrid pace. While
economic news remained largely positive, speculation about rising interest
rates, renewed terrorism fears and concern about slow improvement in U.S.
employment were factors in the stock market's more moderate advance during
the first half of 2004.
Two major market trends hampered the Fund's performance, with most of the
negative impact occurring in the first three months of the fiscal period.
First, small-cap stocks continued to outperform large-cap stocks in the
early months of 2004. This was a disadvantage for the Fund, which focused
primarily on the largest stocks within its benchmark, the S&P 500 Index.
Second, the market's preference for lower quality stocks carried over from
last year through much of the first quarter. Both trends began to shift in
the second quarter, with large-cap stocks outpacing small-caps and
higher-quality stocks generally keeping pace with lower-quality stocks. The
Fund performed better relative to the index as the market environment became
more favorable, but still lagged for the full period.
The portfolio's sector allocations added to relative return during the past
six months; however, stock selection was a negative factor. The most
significant detractor was our consumer discretionary position. A
lower-than-index weighting in consumer discretionary stocks had a favorable
effect, but was overshadowed by our selection of industries and individual
stocks within the sector. In particular, our results were hindered by a
larger-than-index position in Viacom, which did not meet our expectations,
and our avoidance of eBay and Yahoo!, which performed well but did not meet
our valuation parameters. Despite recent underperformance, we consider
Viacom to be more valuable than many other media stocks -- such as cable
companies -- because it is a content provider with less physical property to
maintain. We continued to add to the portfolio's Viacom holdings on
weakness.
Within the consumer discretionary sector the Fund's holdings of Disney
performed well and the Fund also benefited from not owning Comcast, which
suffered from an unsuccessful bid for Disney. In other sectors, favorable
results came from commercial services firm Cendant, pharmaceutical
distributor McKesson and mortgage lender Countrywide Financial.
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3 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Q: What changes were made to the Fund over the past six months?
A: After the energy sector's strong performance in December and January, we
reduced the portfolio's energy position, bringing it in line with the
benchmark. However, we subsequently rebuilt our energy position, which was
modestly larger than that of the benchmark at the end of the period.
We eliminated a number of stocks during the past six months. We took profits
in defense contractor United Technologies following a run of very strong
performance. We sold Wells Fargo even though we think the money center bank
is well-run, because we considered it expensive and vulnerable to the
negative impact of higher short-term interest rates. In addition, we haven't
seen an increase in commercial or industrial lending to offset the decline
in mortgage lending. We also sold technology stock Hewlett Packard because
the company appears to be facing more serious competition in printers. The
Fund holds a significant position in Dell, which we think is better
positioned in the computer market.
Within the health care sector, we initiated portfolio positions in the HMO
industry. Although the market has been negative about HMOs, these companies
have been regularly beating Wall Street earnings estimates. As for the
health care sector in general, we are cognizant that political issues could
increase volatility; however, we believe potential bad news is already
reflected in the stock prices. We see attractive appreciation opportunities
in this sector because we believe that over time health care stocks are
likely to grow earnings faster than the overall market. Consequently, we
continued to take advantage of any weakness to increase our healthcare
weighting.
To summarize our sector positioning at the end of the period, the Fund had
higher-than-index positions in health care, consumer staples and energy,
with lower-than-index positions in the consumer discretionary, financials,
telecommunications, industrials, materials and technology sectors.
Q: How are you positioning the Fund for the coming months?
A: Regardless of the economic environment, we adhere to a strategy of
identifying stocks with strong fundamentals, sustainable growth rates and
reasonable valuations. We base our stock selection strategy on the premise
that the historical tendency of the market is to grow earnings 8% a year, on
average. We strive to identify stocks that we believe have attractive growth
characteristics, but may be selling at valuation levels cheaper than the S&P
500 Index.
Our current view is that stock prices already reflect economic expectations
that may be higher than what actually occurs. Given the inevitable impact of
the Federal Reserve's shift toward higher short-term interest rates, as well
as the possibility of an economic slowdown and an earnings peak, we believe
the type of higher-quality stocks we hold should begin to do well. We have
recently seen the market put high quality and low quality stocks on an even
keel. We are optimistic that this is a precursor to outperformance from
higher-quality stocks.
Should growth begin to slow as we anticipate, investors are likely to seek
alternatives to cyclical and industrial holdings. We believe health care,
consumer staples and higher-quality stable growth companies should benefit
from such a shift and have positioned the portfolio accordingly.
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4 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
The 10 Largest Holdings
Percent Value
(of net assets) (as of June 30, 2004)
Pfizer 6.2% $14,688,980
Citigroup 4.9 11,564,550
Cendant 4.1 9,787,104
Procter & Gamble 3.7 8,851,944
AmerisourceBergen 3.5 8,387,134
Viacom Cl B 3.5 8,258,464
ExxonMobil 3.0 7,034,544
PepsiCo 2.7 6,503,316
Disney (Walt) 2.7 6,499,950
Microsoft 2.6 6,214,656
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
(pie chart)
The 10 holdings listed here make up 36.9% of net assets
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5 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Financial Statements
Statement of assets, liabilities and contract owners' equity
IDS Life Variable Annuity Fund A
June 30, 2004 (Unaudited)
Assets
Investments in securities, at value (Note 1)
(identified cost $214,816,179) $236,440,626
Cash in bank on demand deposit 128,278
Dividends and interest receivable 231,364
Receivable for investment securities sold 694,348
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Total assets $237,494,616
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Liabilities
Payable for contract terminations $ 51,384
Mortality and expense risk assurance fee 6,462
Investment management services fee 2,585
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Total liabilities $ 60,431
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Contract owners' equity
Contracts in accumulation period -- 9,658,068 units at $24.04 per unit (Note 5) $232,204,015
Contracts in payment period 5,230,170
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Total contract owners' equity 237,434,185
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Total liabilities and contract owners' equity $237,494,616
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See accompanying notes to financial statements.
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6 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Statement of operations
IDS Life Variable Annuity Fund A
Six months ended June 30, 2004 (Unaudited)
Investment income (loss) -- net
Income:
Dividends $ 1,761,892
Interest 29,361
Less foreign taxes withheld (12,933)
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Total income 1,778,320
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Expenses:
Mortality and expense risk assurance fee (Note 2) 1,202,673
Investment management services fee (Note 3) 480,963
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Total expenses 1,683,636
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Investment income (loss) -- net 94,684
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Realized and unrealized gain (loss) -- net
Net realized gain (loss) on investments 11,185,254
Net change in unrealized appreciation (depreciation) on investments (8,010,098)
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Net gain (loss) on investments 3,175,156
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Net increase (decrease) in contract owners' equity from operations $ 3,269,840
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See accompanying notes to financial statements.
Statements of changes in contract owners' equity
IDS Life Variable Annuity Fund A
Six months ended Year ended
June 30, 2004 Dec. 31, 2003
(Unaudited)
Operations
Investment income (loss) -- net $ 94,684 $ 192,213
Net realized gain (loss) on investments 11,185,254 8,958,492
Net change in unrealized appreciation (depreciation) on investments (8,010,098) 45,358,110
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Net increase (decrease) in contract owners' equity from operations 3,269,840 54,508,815
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Contract transactions
Net contract purchase payments (Note 2) 423,011 956,451
Repayment of temporary withdrawals 61 173
Net transfers from (to) fixed annuities (1,129,569) (3,006,051)
Actuarial adjustment for mortality assurance on annuities in payment period (131,522) (6,701)
Contract termination payments and temporary withdrawals (10,524,517) (18,654,902)
Annuity payments (310,895) (610,686)
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Net increase (decrease) from contract transactions (11,673,431) (21,321,716)
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Net increase (decrease) in contract owners' equity (8,403,591) 33,187,099
Contract owners' equity at beginning of period 245,837,776 212,650,677
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Contract owners' equity at end of period $237,434,185 $245,837,776
============ ============
See accompanying notes to financial statements.
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7 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Notes to Financial Statements
IDS Life Variable Annuity Fund A
(Unaudited as to June 30, 2004)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
IDS Life Variable Annuity Fund A (the Fund) is organized as a segregated asset
account of IDS Life Insurance Company (IDS Life) under Minnesota law and is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Fund's assets are held for the exclusive
benefit of its variable annuity contract owners and are not chargeable with any
liabilities arising from the other business activities of IDS Life. The
significant accounting policies followed by the Fund are summarized as follows:
Use of estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increase and decrease in net assets from
operations during the year. Actual results could differ from those estimates.
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. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Pursuant to procedures adopted by the Fund's Board of Managers, American Express
Financial Corporation (AEFC) utilizes Fair Value Pricing (FVP). FVP
determinations are made in good faith in accordance with these procedures. If a
development or event is so significant that there is a reasonably high degree of
certainty that the effect of the development or event has actually caused the
closing price to no longer reflect the actual value, the closing prices, as
determined at the close of the applicable foreign market, may be adjusted to
reflect the fair value of the affected foreign securities as of the close of the
New York Stock Exchange. Significant events include material movements in the
U.S. securities markets prior to the opening of foreign markets on the following
trading day. FVP results in an estimated price that reasonably reflects the
current market conditions in order to value the portfolio holdings such that
shareholder transactions receive a fair net asset value (NAV). 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 contracts
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and sell put and call options
and write covered call options on portfolio securities. The risk in writing a
call option is that the Fund gives up the
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8 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
opportunity for profit if the market price of the security increases. The risk
in writing a put 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 being unable 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 when the option transaction expires or closes. When an
option is 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.
During the six months ended June 30, 2004, the Fund did not buy or sell any put
or call options or write any covered call or put options. There were no option
contracts outstanding as of June 30, 2004.
Futures contracts
To gain exposure to or protect itself from market changes, the Fund may buy and
sell stock index futures contracts and related options. Risks of entering into
futures contracts and related options include the possibility of an illiquid
market and that a change in the value of the contract or option may not
correlate with the 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.
During the six months ended June 30, 2004, the Fund did not buy or sell stock
index futures contracts and related options. There were no stock index futures
contracts outstanding as of June 30, 2004.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. 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. It is not practicable to identify that
portion of realized and unrealized gain or loss arising from changes in the
exchange rates from the portion arising from changes in the market value of
investments.
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 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 its contract obligations.
There were no forward foreign currency exchange contracts outstanding as of June
30, 2004.
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9 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Variable payout
Net assets allocated to contracts in the payout period are periodically compared
to a computation which uses the Annuity 2000 Basic Mortality Table and which
assumes future mortality improvement. The assumed investment return is 5% unless
the annuitant elects otherwise, in which case the rate would be 3.5%, as
regulated by the laws of the respective states. The mortality risk is fully
borne by IDS Life and may result in additional amounts being transferred into
the variable annuity account by IDS Life to cover greater longevity of
annuitants than expected. Conversely, if amounts allocated exceed amounts
required, transfers may be made to IDS Life.
Federal income taxes
IDS Life is taxed as a life insurance company. The Fund is treated as part of
IDS Life for federal income tax purposes. Under current federal income tax law,
no taxes are payable with respect to any income of the Fund.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
2. MORTALITY AND EXPENSE RISK ASSURANCE FEE AND SALES CHARGES
IDS Life makes contractual assurances to the Fund that possible future adverse
changes in administrative expenses and mortality experience of the annuitants
and beneficiaries will not affect the Fund. The mortality and expense risk
assurance fee paid to IDS Life is computed daily and is equal on an annual basis
to 1% of the average daily net assets of the Fund.
Charges by IDS Life for its sales and administrative services applicable to the
variable annuity contracts amounted to $17,987 for the six months ended June 30,
2004 and $40,076 for the year ended Dec. 31, 2003. Such charges are not an
expense of the Fund. They are deducted from contract purchase payments and are
not included in the net contract purchase payments to the Fund.
3. INVESTMENT MANAGEMENT SERVICES AGREEMENT
The Fund has an agreement with AEFC to manage its portfolio. Under an Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is computed daily and is equal on an
annual basis to 0.40% of the average daily net assets of the Fund.
In addition to paying its own management fee, the Fund also pays all brokerage
clearing fees and charges in the purchase and sale of assets.
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10 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
4. SECURITY TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $141,982,135 and $153,100,075, respectively, for the six
months ended June 30, 2004. Net realized gains and losses on investments are
determined on an identified cost basis.
Brokerage clearing fees paid to brokers affiliated with AEFC were $264 for the
six months ended June 30, 2004.
5. ACCUMULATION UNITS
The changes in number of outstanding units applicable to contracts in the
accumulation period were as follows:
Six months ended Year ended
June 30, 2004 Dec. 31, 2003
Units outstanding at beginning of period 10,132,502 11,166,900
Additions for contract purchase payments and repayments 17,737 45,163
Net transfers from (to) fixed account (47,543) (167,828)
Deductions for contract terminations and withdrawals (444,628) (911,733)
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Units outstanding at end of period 9,658,068 10,132,502
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6. SUBSEQUENT EVENT
The Fund's Board of Managers has recommended that the Fund be reorganized. The
reorganization would result in the Fund's assets being transferred into AXP
Variable Portfolio - Core Equity Fund. Contract owners will be asked to approve
this reorganization at a special meeting on Aug. 31, 2004. Approval is not
guaranteed.
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11 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
7. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Fund's results.
Fiscal period ended Dec. 31, 2004(e) 2003 2002 2001 2000
Accumulation unit value at beginning of period $23.72 $18.61 $24.54 $30.54 $32.26
Income from investment operations(a):
Net investment income (loss) .01 .02 (.03) (.10) (.20)
Net gains (losses) (both realized and unrealized) .31 5.09 (5.90) (5.90) (1.52)
Total from investment operations .32 5.11 (5.93) (6.00) (1.72)
Accumulation unit value at end of period $24.04 $23.72 $18.61 $24.54 $30.54
Total return(b) 1.35%(d) 27.46% (24.16%) (19.65%) (5.33%)
Ratios/supplemental data
Total contract owners' equity at end of period (000 omitted) $237,434 $245,838 $212,651 $316,867 $429,472
Ratio of operating expenses to average daily net assets 1.40%(c) 1.40% 1.40% 1.40% 1.40%
Ratio of net investment income (loss) to average daily net assets .08%(c) .09% (.14%) (.39%) (.59%)
Portfolio turnover rate 60% 108% 195% 76% 85%
(a) Per accumulation unit value amounts have been calculated using the average
accumulation units values outstanding method.
(b) Total return does not reflect payment of a sales charge.
(c) Adjusted to an annual basis.
(d) Not annualized.
(e) Six months ended June 30, 2004 (Unaudited).
The foregoing table pertains to accumulation units only. There are two kinds of
units. As long as contract owners are paying into the Fund they are called
"accumulation" units. When contract owners begin to receive the annuity, they
change to "annuity" units.
The value of an annuity unit (assuming a 3.5% investment rate) was $6.95 as of
June 30, 2004, $6.97 as of Dec. 31, 2003, $5.66 as of Dec. 31, 2002, $7.73 as of
Dec. 31, 2001 and $9.95 as of Dec. 31, 2000. The value of an annuity unit
(assuming a 5% investment rate) was $4.12 as of June 30, 2004, $4.16 as of Dec.
31, 2003, $3.43 as of Dec. 31, 2002, $4.75 as of Dec. 31, 2001 and $6.20 as of
Dec. 31, 2000.
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12 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Investments in Securities
IDS Life Variable Annuity Fund A
June 30, 2004 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (97.5%)
Issuer Shares Value(a)
Aerospace & defense (1.6%)
Empresa Brasileira de
Aeronautica ADR 49,750(c) $1,422,353
Lockheed Martin 19,800 1,031,184
Northrop Grumman 27,200 1,460,640
Total 3,914,177
Banks and savings & loans (3.1%)
Bank of America 70,300 5,948,786
Commerce Bancorp 14,000 770,140
Investors Financial Services 14,500 631,910
Total 7,350,836
Beverages & tobacco (6.6%)
Altria Group 51,900 2,597,595
Anheuser-Busch Companies 23,400 1,263,600
Coca-Cola 105,300 5,315,544
PepsiCo 120,700 6,503,316
Total 15,680,055
Building materials & construction (0.3%)
Masco 21,600 673,488
Cable (0.7%)
NTL 27,373(b) 1,577,232
Cellular telecommunications (2.0%)
Nextel Communications Cl A 77,500(b) 2,066,150
Vodafone Group ADR 95,600(c) 2,112,760
Western Wireless Cl A 22,300(b) 644,693
Total 4,823,603
Chemicals (0.9%)
Dow Chemical 30,700 1,249,490
Lyondell Chemical 48,300 839,937
Total 2,089,427
Computer hardware (4.9%)
Cisco Systems 241,600(b) 5,725,920
Dell 162,400(b) 5,817,168
Total 11,543,088
Computer software & services (4.7%)
Affiliated Computer
Services Cl A 41,400(b) 2,191,716
Microsoft 217,600 6,214,656
Oracle 83,100(b) 991,383
PeopleSoft 46,100(b) 852,850
State Street 17,000 833,680
Total 11,084,285
Electronics (1.4%)
Intel 85,600 2,362,560
Taiwan Semiconductor
Mfg ADR 129,360(c) 1,074,983
Total 3,437,543
Energy (6.8%)
ChevronTexaco 33,700 3,171,507
ConocoPhillips 25,500 1,945,395
ExxonMobil 158,400 7,034,544
Newfield Exploration 14,000(b) 780,360
Royal Dutch Petroleum ADR 60,600(c) 3,131,202
Total 16,063,008
Energy equipment & services (0.3%)
Varco Intl 30,100(b) 658,889
Finance companies (4.9%)
Citigroup 248,700 11,564,550
Financial services (4.7%)
Capital One Financial 14,900 1,018,862
Countrywide Financial 42,699 2,999,605
Fannie Mae 72,200 5,152,192
MBNA 73,500 1,895,565
Total 11,066,224
Food (1.0%)
General Mills 25,800 1,226,274
Heinz (HJ) 32,200 1,262,240
Total 2,488,514
See accompanying notes to investments in securities.
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13 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Common stocks (continued)
Issuer Shares Value(a)
Health care products (15.0%)
Biogen Idec 27,300(b) $1,726,725
Forest Laboratories 15,500(b) 877,765
Genentech 22,800(b) 1,281,360
Gilead Sciences 7,400(b) 495,800
Johnson & Johnson 106,400 5,926,480
Medco Health Solutions 97,300(b) 3,648,750
Medtronic 22,000 1,071,840
Merck & Co 49,600 2,356,000
Momenta Pharmaceutical 17,700(b) 159,300
Novartis ADR 59,500(c) 2,647,750
Pfizer 428,500 14,688,980
Wyeth 28,500 1,030,560
Total 35,911,310
Health care services (9.0%)
Aetna 23,500 1,997,500
AmerisourceBergen 140,300 8,387,134
Anthem 17,500(b) 1,567,300
Cardinal Health 9,500 665,475
Caremark Rx 36,000(b) 1,185,840
Fisher Scientific Intl 12,700(b) 733,425
HCA 31,600 1,314,244
McKesson 128,600 4,414,838
UnitedHealth Group 20,500 1,276,125
Total 21,541,881
Household products (6.2%)
Colgate-Palmolive 98,800 5,774,860
Procter & Gamble 162,600 8,851,944
Total 14,626,804
Insurance (3.8%)
ACE 43,500(c) 1,839,180
Allstate 22,500 1,047,375
American Intl Group 37,000 2,637,360
Chubb 31,900 2,174,942
St. Paul Travelers Companies 30,038 1,217,741
Total 8,916,598
Investment companies (0.5%)
Utilities Select Sector
SPDR Fund 50,500 1,198,870
Leisure time & entertainment (3.5%)
Multimedia Games 1,600(b) 42,912
Viacom Cl B 231,200 8,258,464
Total 8,301,376
Machinery (1.1%)
Caterpillar 25,200 2,001,888
Ingersoll-Rand Cl A 9,300(c) 635,283
Total 2,637,171
Media (7.4%)
Cendant 399,800 9,787,104
Disney (Walt) 255,000 6,499,950
InterActiveCorp 39,400(b) 1,187,516
Total 17,474,570
Multi-industry (4.1%)
General Electric 175,000 5,670,000
Tyco Intl 119,300(c) 3,953,602
Total 9,623,602
Paper & packaging (0.6%)
Intl Paper 13,700 612,390
Weyerhaeuser 12,700 801,624
Total 1,414,014
Precious metals (0.5%)
Freeport McMoRan
Copper & Gold Cl B 33,000 1,093,950
Retail -- general (1.8%)
Home Depot 50,500 1,777,600
Wal-Mart Stores 46,700 2,463,892
Total 4,241,492
Telecom equipment & services (0.2%)
Motorola 29,700 542,025
Total common stocks
(Cost: $209,975,866) $231,538,582
Bond (0.1%)
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligation & agency
U.S. Treasury
05-15-16 7.25% $250,000 $302,236
Total bond
(Cost: $240,313) $302,236
See accompanying notes to investments in securities.
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14 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
Short-term security (1.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Commercial paper
Grampian Funding
07-01-04 1.50% $4,600,000 $4,599,808
Total short-term security
(Cost: $4,600,000) $4,599,808
Total investments in securities
(Cost: $214,816,179)(d) $236,440,626
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. As of June 30, 2004,
the value of foreign securities represented 7.1% of net assets.
(d) At June 30, 2004, the cost of securities for federal income tax purposes
was approximately $214,816,179 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $25,071,502
Unrealized depreciation (3,447,055)
----------
Net unrealized appreciation $21,624,447
-----------
Proxy Voting
Proxy voting procedures are stated in the prospectus. You may obtain a copy of
the prospectus without charge by calling (800) 862-7919; or by searching the Web
site of the Securities and Exchange Commission http://www.sec.gov. You may view
the Fund's voting record for all portfolio companies whose shareholders meetings
were completed the previous quarter on americanexpress.com/funds. In addition,
after August 2004, information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 will
be available at http://www.sec.gov.
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15 IDS LIFE VARIABLE ANNUITY FUND A -- SEMIANNUAL REPORT
IDS Life Insurance Company
70100 AXP Financial Center
Minneapolis, MN 55474
- --------------------------------------------------------------------------------
(logo)
AMERICAN
EXPRESS
(R)
- --------------------------------------------------------------------------------
S-6445 V (8/04)
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for
semi-annual reports.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 9. Submission of matters to a vote of security holders. Not applicable.
Item 10. Controls and Procedures.
(a) The registrant's Principal Executive Officer and Principal
Financial Officer have evaluated the registrant's disclosure
controls and procedures within 90 days of this filing and have
concluded that the registrant's disclosure controls and
procedures by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) At the date of filing this Form N-CSR, the registrant's Principal
Executive Officer and Principal Financial Officer are aware of no
significant changes in the registrant's internal controls or in
other factors that could significantly affect these controls
subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 11. Exhibits.
(a)(1) Not applicable for semi-annual reports.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) IDS Life Variable Annuity Fund A
By /s/ Timothy V. Bechtold
-----------------------
Timothy V. Bechtold
President and Principal Executive Officer
Date September 2, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Timothy V. Bechtold
-----------------------
Timothy V. Bechtold
President and Principal Executive Officer
Date September 2, 2004
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Principal Financial Officer
Date September 2, 2004