<PAGE>
PAGE 1
1996 ANNUAL REPORT
IDS Bond Fund
(prospectus enclosed)
(icon of) column
The goal of IDS Bond Fund, Inc. is to provide shareholders with a
high level of current income while attempting to conserve the value
of the investment and to continue a high level of income for the
longest period of time. The Fund invests primarily in corporate
bonds and other debt securities.
(This annual report includes a prospectus that describes in detail
the Fund's objective, investment policies, risks, sales charges,
fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
AMERICAN
EXPRESS
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
PAGE 2
(icon of) column
Striking a balance among bonds
A bond is like an I.O.U. But with a bond, it's a corporation or
the government--the bond issuer--that promises to pay the money
back. In return for lending money to the issuer, bond investors
get paid interest, which varies by bond quality. (The lower the
quality, the higher the interest.)
Bond Fund invests largely in high-quality bonds, but includes some
lower-quality and even some foreign bonds seeking to boost the
return. The portfolio manager shifts this mix, as well as the
balance between corporate and government bonds, as investment
conditions dictate. In doing so, the Fund seeks to maximize the
long-term return potential for investors.
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PAGE 3
Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the Fund
performed.
The prospectus, which is bound into the middle of this annual
report, describes the Fund in detail.
1996 annual report
From the president 4
From the portfolio manager 4
Ten largest holdings 6
Making the most of the Fund 7
Long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 27
IDS mutual funds 43
Federal income tax information 46
1996 prospectus
The Fund in brief 3p
Goal 3p
Investments policies and risks 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative purchase arrangements 3p
Sales charge and Fund expenses 4p
Performance 6p
Financial highlights 6p
Total returns 8p
Yield 10p
Investment policies and risks 11p
Facts about investments and their risks 11p
Alternative investment option 15p
Valuing Fund shares 16p
How to purchase, exchange or redeem shares 17p
Alternative purchase arrangements 17p
How to purchase shares 20p
How to exchange shares 23p
How to redeem shares 23p
Reductions and waivers of the sales charge 28p
Special shareholder services 33p
Services 33p
Quick telephone reference 33p
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PAGE 4
Distributions and taxes 34p
Dividend and capital gain distributions 34p
Reinvestments 35p
Taxes 35p
How to determine the correct TIN 37p
How the Fund is organized 38p
Shares 38p
Voting rights 38p
Shareholder meetings 38p
Board members and officers 38p
Investment manager 40p
Administrator and transfer agent 40p
Distributor 41p
About American Express Financial Corporation 43p
General information 43p
Appendices 44p
Description of corporate bond ratings 44p
Descriptions of derivative instruments 46p<PAGE>
PAGE 5
To our shareholders
(Photo of) William R. Pearce, President of the Fund
(Photo of) Fred Quirsfeld, Portfolio manager
From the president
The volatility in the stock market in recent months has put some
investors, even experienced ones, on edge. Although no one can
know exact;y what will happen next, history tells us that ups and
downs are intrinsic to stock investing.
But, history also shows that changing strategies with every twist
and turn of the market is an impracticle and typically unproductive
way to invest. What matters more is how we react to market
volatility. If we take a long-term view and accept the downs with
the ups, we improve our chances of success. For in the investment
world, the race most often goes not to the swift, but to the
persistent.
Along the way, you'll want to review your investment program to
make sure it's on track to achieving your financial goals. Your
American Express financial advisor will help you do just that, and
I suggest you take advantage of his or her services on a regular
basis.
William R. Pearce
From the portfolio manager
Despite a sharp downturn in bond prices in the middle of the fiscal
year, IDS Bond Fund provided positive results during the past 12
months. For investors in Class A shares, the total return (net
asset value change and net investment income) was 5.8% from
September 1995 through August 1996.
The bond market enjoyed largely smooth sailing during the final
four months of 1995. Prompted by moderate economic growth, an
ongoing low inflation rate and hopes for a meaningful balanced-
budget agreement, long-term interest rates continued their year-
long decline, finishing 1995 about two full percentage points below
where they started. As always, the drop in rates drove up prices
of existing bonds and, consequently, the net asset value of bond
mutual funds.
'Long' strategy pays off early on
This Fund especially benefitted from that positive trend because of
its longer-than average maturities, whose prices rise more than
those of shorter-term bonds when rates fall. In addition, I kept
cash reserves relatively low, which also proved to be more
productive as the return of cash was far below that generated by
the bonds in the portfolio.
Although January was another productive month, 1996 brought a far
different tone to the bond market. Instead of wondering about the
possibility of the economy slipping into recession, professional
bond traders were now fretting that the economy could be getting
too strong and that this would soon spark a run-up in the <PAGE>
PAGE 6
inflation rate - a bond-holder's everlasting nemesis. While the
inflation scare never proved to be justified, traders' fears
ignited a bond sell-off that drove long-term interest rates
markedly higher. And, just as falling rates previously boosted
bond prices, the rise in rates drove them down, penalizing the
performance of funds such as this one. Fortunately, by May some
sense of calm returned to the market, which allowed the Fund to
make up a little ground over the final months of the period.
Portfolio changes prove beneficial
As for changes to the portfolio, during the downturn I reduced the
average maturity of Fund holdings and raised the level of cash
reserves. These moves helped dampen the Fund's volatility and
provided some cushion against the decline in bond prices. In
addition, I reduced the Fund's holdings among U.S. Treasury bonds
and invested more money in mortgage-backed securities, whose return
ultimately exceeded that of Treasuries. The best returns for the
entire 12 months, however, were generated by high-yield, or "junk,"
bonds and bonds issued by governments in so-called "Emerging
markets. Such issues comprised about 25% of assets during the
fiscal year and clearly enhanced Fund performance.
For the remainder of 1996, I wouldn't be surprised to see ongoing
volatility in the bond market concerns about inflation continue to
nag the market. Therefore, I intend to stay with a relatively
conservative portfolio structure until surer signs of improving
bond performance materialize. At that point, I will take a more
aggressive position to capitalize on what I believe remains, over
the long term, a positive environment for bonds.
Fred Quirsfeld
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
Aug. 31, 1996 $4.99
Aug. 31, 1995 $5.05
Decrease $0.06
Distributions
Sept. 1, 1995-Aug. 31, 1996
From income $0.35
From capital gains $ --
Total distributions $0.35
Total return* +5.8%**
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PAGE 7
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
Aug. 31, 1996 $4.99
Aug. 31, 1995 $5.05
Decrease $0.06
Distributions
Sept. 1, 1995-Aug. 31, 1996
From income $0.31
From capital gains $ --
Total distributions $0.31
Total return* +5.0%**
Class Y
12-months performance
(All figures per share)
Net asset value (NAV)
Aug. 31, 1996 $4.99
Aug. 31, 1995 $5.05
Decrease $0.06
Distributions
Sept. 1, 1995-Aug. 31, 1996
From income $0.36
From capital gains $ --
Total distributions $0.36
Total return* +5.9%**
* The prospectus discusses the effects of sales charges, if any, on
the various classes.
**The total return is a hypothetical investment in the Fund with
all distributions reinvested.<PAGE>
PAGE 8
<TABLE>
<CAPTION>
IDS Bond Fund, Inc.
The Fund's ten largest holdings
(Picture of: Pie Chart) The ten holdings listed here make up 6.69%
of the Fund's net assets
__________________________________________________________________________
Percent Value
(of Fund's net assets) (as of Aug. 31, 1996)
__________________________________________________________________________
<S> <C> <C>
Long Island Lighting .82% $28,522,567
9.625% Gen Ref Mtge 2024
Govt of Poland PDI Euro .78 27,312,375
3.75% 2014
New York Tel .72 25,075,671
9.375% 2031
Viacom Intl .69 24,196,000
8% Sub Deb 2006
Tenet Healthcare .68 23,677,500
10.125% Sr Sub Nts 2005
Cleveland Electric Illuminating .64 22,589,259
9.50% 1st Mtge 2005
Scotland Bank .63 21,881,290
8.80% 2004
Salomon .60 20,935,950
7% Sr Nts 1999
Ford Capital .59 20,813,671
9.50% 2010
USX .54 18,949,350
9.375% 2022
Excludes U.S. Treasury and government agency holdings that total 24% of the Fund's
net assets.
</TABLE>
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PAGE 9
Making the most of your fund
Average annual total return
(as of Aug. 31, 1996)
1 year Since inception* 5 years 10 years
Class A +0.48% -- % +8.65% +8.35%
Class B -0.03% +6.92% -- % -- %
Class Y +5.93% +10.53% -- % -- %
* Inception date was March 20, 1995.
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 in the Fund is by dollar-cost
averaging -- a time-tested strategy that can make market
fluctuations work for you. To dollar-cost average, simply invest a
fixed amount of money regularly. You'll automatically buy more
shares when the Fund's share price is low, fewer shares when it is
high.
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 XXXXX
Feb 100 18 5.56 XXXXXx
Mar 100 17 5.88 XXXXXx
Apr 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(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.
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PAGE 10
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.
The Fund's long-term performance
Three ways to benefit from a mutual fund:
o your shares increase in value when the Fund's investments do
well
o you receive capital gains when the gains on investments sold
by the Fund exceed losses
o you receive income when the Fund's stock dividends, interest
and short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the Fund or another fund.
How your $10,000 has grown in IDS Bond Fund
$22,319
Bond Fund
Class A
Lehman Aggregate
Bond Index
$9,500
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96
Average annual total return
(as of Aug. 31, 1996)
1 year Since inception* 5 years 10 years
Class A +0.48% -- % +8.65% +8.35%
Class B -0.03% +6.92% -- % -- %
Class Y +5.93% +10.53% -- % -- %
*Inception date was March 20, 1995.
Assumes: Holding period from 9/1/86 to 8/31/96. Returns do not
reflect taxes payable on distributions. Reinvestment of all income
and capital gain distributions for the Fund, with a value of
$13,231. Also see "Performance" in the Fund's current prospectus.
The Lehman Aggregate Bond Index is made up of a representative list
of government and corporate bonds as well as asset-backed
securities. The index is frequently used as a general measure of
bond market performance. However, the securities used to create
the index may not be representative of the bonds held in Bond Fund.
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PAGE 11
On the graph above you can see how the Fund's total return compared
to a widely cited performance measure, the Lehman Aggregate Bond
Index. In comparing Bond Fund with this index, you should take
into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in
the performance of the index. If you were actually to buy either
individual bonds or bond mutual funds, any sales charges that you
pay would reduce your total return as well.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Average annual total return figures reflect the deduction of the
maximum 5% sales charge, if any. This was a period of widely
fluctuating security prices. Past performance is no guarantee of
future results.<PAGE>
PAGE 12
Independent auditors' report
The board and shareholders
IDS Bond Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Bond Fund, Inc. as of August 31, 1996, 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 then ended, and the financial highlights for each of the
years in the ten-year period ended August 31, 1996. 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 purchased and
sold but not received or delivered, and securities on loan, 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
Bond Fund, Inc. at August 31, 1996, 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 then ended, 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
October 4, 1996
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PAGE 13
Financial statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Bond Fund, Inc.
Aug. 31, 1996
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $3,446,346,292) $3,462,079,470
Receivable for investment securities sold 1,876,613
Dividends and accrued interest receivable 55,316,922
U.S. government securities held as collateral (Note 5) 62,346,351
_____________________________________________________________________________________________________________
Total assets 3,581,619,356
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 5,322,996
Dividends payable to shareholders 2,903,612
Payable for investment securities purchased 11,841,602
Payable upon return of securities loaned (Note 5) 62,346,351
Accrued investment management services fee 47,033
Accrued distribution fee 17,533
Accrued service fee 16,489
Accrued transfer agency fee 10,241
Accrued administrative services fee 4,197
Other accrued expenses 417,546
_____________________________________________________________________________________________________________
Total liabilities 82,927,600
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $3,498,691,756
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 7,017,925
Additional paid-in capital 3,481,076,118
Undistributed net investment income 3,595,907
Accumulated net realized loss (Notes 1 and 9) (8,939,843)
Unrealized appreciation of investments and on translation of
assets and liabilities in foreign currencies (Notes 1 and 8) 15,941,649
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $3,498,691,756
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $2,563,138,920
Class B $ 847,802,500
Class Y $ 87,750,336
Net asset value per share of outstanding capital stock: Class A shares 514,132,897 $ 4.99
Class B shares 170,058,539 $ 4.99
Class Y shares 17,601,046 $ 4.99
See accompanying notes to financial statements.
<PAGE>
PAGE 14
Financial statements
Statement of operations
IDS Bond Fund, Inc.
Year ended Aug. 31, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Interest $271,585,109
Dividends (net of foreign taxes withheld $31,908) 2,244,833
_____________________________________________________________________________________________________________
Total income 273,829,942
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 16,984,406
Distribution fee -- Class B 6,447,035
Transfer agency fee 3,554,516
Incremental transfer agency fee -- Class B 76,633
Service fee
Class A 4,383,432
Class B 1,488,880
Administrative services fee 1,517,544
Compensation of board members 70,631
Compensation of officers 32,295
Custodian fees 201,307
Postage 470,318
Registration fees 315,754
Reports to shareholders 144,750
Audit fees 39,500
Administrative 26,221
Other 49,199
_____________________________________________________________________________________________________________
Total expenses 35,802,421
Earnings credits on cash balances (Note 2) (32,385)
_____________________________________________________________________________________________________________
Total net expenses 35,770,036
_____________________________________________________________________________________________________________
Investment income -- net 238,059,906
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions (including
loss of $26,954 from foreign currency transactions) (Note 3) 35,510,938
Net realized gain on closed interest rate futures contracts 555,625
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 36,066,563
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (96,036,937)
_____________________________________________________________________________________________________________
Net loss on investments and foreign currency (59,970,374)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $178,089,532
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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PAGE 15
Financial statements
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Bond Fund, Inc.
Year ended Aug. 31,
_____________________________________________________________________________________________________________
Operations and distributions 1996 1995
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 238,059,906 $ 198,350,433
Net realized gain (loss) on investments and foreign currency 36,066,563 (29,440,601)
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (96,036,937) 182,633,301
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 178,089,532 351,543,133
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (175,703,125) (172,502,967)
Class B (52,732,279) (22,840,548)
Class Y (5,540,758) (2,210,213)
Net realized gain
Class A -- (44,353,816)
_____________________________________________________________________________________________________________
Total distributions (233,976,162) (241,907,544)
_____________________________________________________________________________________________________________
Capital share transactions (Note 6)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 589,054,034 340,793,447
Class B shares 377,985,661 125,204,756
Class Y shares 46,288,572 69,208,436
Fund merger (Note 7)
Class A shares -- 4,455,838
Class B shares -- 667,109,887
Reinvestment of distributions at net asset value
Class A shares 116,649,304 143,593,478
Class B shares 46,578,257 19,534,420
Class Y shares 5,540,758 2,033,460
Payments for redemptions
Class A shares (464,239,661) (442,588,203)
Class B shares (Note 2) (346,225,740) (67,847,577)
Class Y shares (26,441,033) (10,418,481)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 345,190,152 851,079,461
_____________________________________________________________________________________________________________
Total increase in net assets 289,303,522 960,715,050
Net assets at beginning of year 3,209,388,234 2,248,673,184
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income
of $3,595,907 and $301,819) $3,498,691,756 $3,209,388,234
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 16
Notes to financial statements
IDS Bond Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company.
The Fund invests primarily in corporate bonds and other debt
securities. 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 may be subject to a contingent deferred sales charge and
such shares automatically convert to Class A after eight years.
Class Y shares have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation
and other rights, and 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:
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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 period. 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;
securities for which market quotations are not readily available,
including illiquid securities, are valued at fair value according
to methods selected in good faith by the board. 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.
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PAGE 17
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
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 interest rate futures contracts
traded on any U.S. or foreign exchange. The Fund also may buy or
write put and call options 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.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the
Fund on a forward-commitment or when-issued basis can take place
one month or more after the transaction date. During this period,
such securities are subject to market fluctuations, and they may
affect the Fund's net assets the same as owned securities. The Fund
designates cash or liquid high-grade debt securities at least equal
to the amount of its commitment. As of Aug. 31, 1996, the Fund had
entered into outstanding when-issued or forward commitments of
$4,765,000.
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PAGE 18
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 dividends, 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
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. 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 $789,656 and accumulated net realized
loss has been decreased by $800,583, resulting in a net
reclassification adjustment to decrease paid-in-capital by $10,927.
Dividends to shareholders
Dividends from net investment income, declared daily and payable
monthly, 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.
<PAGE>
PAGE 19
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date. 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. Interest income, including
level-yield amortization of premium and discount, is accrued daily.
2. Expenses and sales charges
Effective March 20, 1995, the Fund entered into agreements with
American Express Financial Corporation (AEFC) for managing its
portfolio, providing administrative services and serving as
transfer agent. 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 0.52% to 0.395% 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 0.05%
to 0.025% 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. 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 $11,888,126 for Class A and
$603,490 for Class B for the year ended Aug. 31, 1996.
During the year ended Aug. 31, 1996, the Fund's custodian and
transfer agency fees were reduced by $32,385 as a result of
earnings credits from overnight cash balances.
<PAGE>
PAGE 20
Prior to April 30, 1996, the Fund had a retirement plan for its
independent board members. The plan was terminated April 30, 1996.
The retirement plan expense amounted to $23,369 for the year. The
total liability for the plan is $87,931, which will be paid out at
some future date.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,496,267,065 and
$1,434,459,183, respectively, for the year ended Aug. 31, 1996.
Realized gains and losses are determined on an identified cost
basis.
___________________________________________________________________
4. Illiquid securities
At Aug. 31, 1996, investments in securities included issues that
are illiquid. The Fund currently limits investments in illiquid
securities to 10% of the net assets, at market value, at the time
of purchase. The aggregate value of such securities at Aug. 31,
1996 was $23,781,007, representing 0.7% of the net assets. Pursuant
to guidelines adopted by the Fund's board, certain unregistered
securities are determined to be liquid and are not included within
the 10% limitation specified above.
___________________________________________________________________
5. Lending of portfolio securities
At Aug. 31, 1996, securities valued at $60,866,000 were on loan to
brokers. For collateral, the Fund received $62,346,351 in U.S.
government securities. Income from securities lending amounted to
$146,607 for the year ended Aug. 31, 1996. The risks to the Fund of
securities lending are that the borrower may not provide additional
collateral when required or return the securities when due.
___________________________________________________________________
6. Capital share transactions
Transactions in shares of capital stock for the years indicated are
as follows:
Year ended Aug. 31, 1996
Class A Class B Class Y
____________________________________________________________
Sold 114,769,614 73,749,573 9,060,737
Issued for reinvested 22,892,773 9,133,222 1,088,615
distributions
Redeemed (91,167,526) (67,607,017) (5,191,693)
____________________________________________________________
Net increase 46,494,861 15,275,778 4,957,659
____________________________________________________________
<PAGE>
PAGE 21
Year ended Aug. 31, 1995
Class A Class B* Class Y*
_____________________________________________________________
Sold 70,297,518 25,211,637 14,357,265
Fund merger 930,821 139,358,656 --
Issued for reinvested 29,953,783 3,918,832 407,713
distributions
Redeemed (91,890,852) (13,706,364) (2,121,591)
_____________________________________________________________
Net increase 9,291,270 154,782,761 12,643,387
_____________________________________________________________
*Inception date was March 20, 1995.
___________________________________________________________________
7. Fund merger
On March 17, 1995, IDS Bond Fund acquired the assets and assumed
the identified liabilities of IDS Strategy - Income Fund.
The aggregate net assets of IDS Bond Fund immediately before the
acquisition were $2,217,255,191.
The merger was accomplished by a tax-free exchange of 115,800,789
shares of IDS Strategy - Income Fund valued at $671,565,725.
In exchange for the IDS Strategy - Income Fund shares and assets,
IDS Bond Fund issued the following number of shares:
Class A 930,821
Class B 139,358,656
IDS Strategy - Income Fund's net assets at that date were as
follows, which include the following amounts of capital stock,
unrealized depreciation and accumulated net realized loss that was
combined with IDS Bond Fund.
<TABLE><CAPTION>
Total net Capital stock Unrealized Accumulated net
assets depreciation realized loss
___________________________________________________________________________
<S> <C> <C> <C> <C>
Class A $ 4,455,838 $ 4,702,952 $ (109,256) $ (137,858)
Class B 667,109,887 704,106,719 (16,357,326) (20,639,506)
___________________________________________________________________________
</TABLE>
8. Interest rate futures contracts
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.
<PAGE>
PAGE 22
Investments in securities at Aug. 31, 1996, included securities
valued at $1,999,140 that were pledged as collateral to cover
initial margin deposit on 300 sale contracts. The market value of
the open contracts on Aug. 31, 1996 was $32,034,375 with a net
unrealized gain of $206,250.
9. Capital loss carryover
For federal income tax purposes, the Fund had a capital loss
carryover of $12,597,428 at Aug. 31, 1996, that if not offset by
subsequent capital gains, will expire in 2003. It is unlikely the
board will authorize a distribution of any net realized gains until
the available capital loss carryover has been offset or expires.
___________________________________________________________________
10. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on pages 6 and 7 of the prospectus.
<PAGE>
PAGE 23
Investments in securities
<TABLE>
<CAPTION>
IDS Bond Fund, Inc. (Percentages represent value of
Aug. 31, 1996 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (85.8%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (7.6%)
U.S. Treasury 6.375% 1999 $ 2,000,000 (o) $ 1,999,140
6.375 2002 17,300,000 16,968,878
6.75 1997 10,000,000 (b) 10,067,000
7.125 1999 56,500,000 (b) 57,402,870
7.50 2001 29,900,000 30,878,328
7.875 2004 12,000,000 12,713,760
8.875 2017 60,500,000 70,860,020
Govt Trust Certs Israel 9.25 2001 11,100,000 11,760,561
Resolution Funding Corp 8.125 2019 40,925,000 43,896,564
Zero Coupon 8.68 1999 11,500,000 (g) 9,700,480
______________
Total 266,247,601
_______________________________________________________________________________________________________________________________
Mortgage-backed securities (17.3%)
Federal Home Loan Mtge Corp 6.00 2010 14,604,905 13,758,259
6.50 2007 832,126 813,603
8.00 2017-24 17,087,818 17,114,854
Collateralized Mtge Obligation 3.24 2023 7,640,693 3,595,481
7.00 2022 22,000,000 20,556,000
8.50 2022 17,000,000 17,727,600
Inverse Floater 6.825 2023 4,000,000 (c) 2,567,480
Trust Series Z 8.25 2024 10,349,076 (d) 9,976,820
Federal Natl Mtge Assn 5.50 2009 10,980,941 10,071,609
6.00 2024-26 89,223,202 80,042,449
6.50 2008-25 207,956,183 193,913,878
7.00 2026 52,441,432 49,934,207
8.00 2025 24,264,755 24,272,277
8.50 2023-24 23,588,734 24,031,021
9.00 2009-24 13,596,855 14,127,948
Collateralized Mtge Obligation 5.00 2024 9,961,155 8,632,437
Trust Series Z 6.00 2024 5,807,000 (d) 4,093,529
7.00 2019 18,851,932 (d) 18,173,449
Govt Natl Mtge Assn 7.00 2008 44,385,419 43,719,638
8.00 2024-26 27,850,017 27,876,196
9.00 2025 4,459,813 4,654,930
Merrill Lynch Mtge Investors 8.29 2021 7,088,692 (e) 6,290,106
Prudential Bache
Collateralized Mtge Obligation Trust 7.97 2019 8,324,622 8,253,279
______________
Total 604,197,050
______________________________________________________________________________________________________________________________
Financial (6.1%)
Banks and savings & loans (1.7%)
BankAmerica
Sub Nts 7.50 2002 18,000,000 18,181,620
Barclays NA Capital 9.75 2021 13,600,000 15,337,264
Meridian Bancorp
Sub Deb 7.875 2002 10,400,000 10,664,680
Society
Sub Nts 8.125 2002 3,000,000 3,159,810
Standard Credit Card 8.625 2002 12,000,000 12,100,439
______________
Total 59,443,813
_____________________________________________________________________________________________________________________________
Financial services (2.6%)
Camden Property Trust 7.33 2001 3,000,000 3,198,750
Corporate Property Investors 7.18 2013 7,000,000 (e) 6,454,630
Developers Diversified Realty
Cv Sub Deb 7.00 1999 3,500,000 3,574,375
First Union REIT
Sub Nts 8.875 2003 10,000,000 9,250,000
Homeside
Sr Nts 11.25 2003 9,225,000 (e) 9,766,969
Malan Realty Investors REIT
Cv Sub Deb 9.50 2004 4,050,000 3,756,375
See accompanying notes to investments in securities<PAGE>
PAGE 24
Olympic Financial
Sr Nts 13.00 2000 12,900,000 14,061,000
Omega Health Care
Cv 8.50 2001 4,000,000 4,120,000
Property Trust America REIT 7.50 2014 15,000,000 13,340,550
Salomon
Sr Nts 7.00 1999 21,000,000 20,935,950
Saul (BF) REIT 11.625 2002 2,630,000 (e) 2,725,337
______________
Total 91,183,936
_____________________________________________________________________________________________________________________________
Insurance (1.8%)
Americo Life
Sr Sub Nts 9.25 2005 9,000,000 8,583,750
Arkwright
Credit Sensitive Nts 9.625 2026 5,000,000 (e) 5,031,350
Berkley (WR) 8.70 2022 3,000,000 3,132,060
Equitable Cos
Sr Nts 9.00 2004 4,250,000 4,615,203
Equitable IBM 7.33 2009 5,500,000 (e) 5,402,891
General American Life 7.625 2024 8,000,000 (e) 6,926,480
Leucadia Natl 7.75 2013 11,780,000 10,796,488
Nationwide Mutual 7.50 2024 8,000,000 (e) 7,047,360
Nationwide Trust
Credit Sensitive Nts 9.875 2025 3,500,000 (e) 3,736,530
Principal Mutual 8.00 2044 10,000,000 (e) 9,198,800
______________
Total 64,470,912
_____________________________________________________________________________________________________________________________
Industrial (28.1%)
Aerospace & defense (2.2%)
Airplanes GPA 10.875 2019 6,000,000 6,375,000
Alliant Techsystems
Sr Sub Nts 11.75 2003 6,000,000 (e) 6,540,000
BE Aerospace 9.875 2006 7,000,000 (e) 7,008,750
Boeing 8.75 2031 15,000,000 16,720,650
Goodrich (BF) 9.625 2001 10,000,000 10,882,100
Northrop Grumman 7.75 2016 8,000,000 (e) 7,630,160
Sequa 9.625 1999 10,000,000 10,162,500
United Technologies 8.875 2019 10,000,000 11,154,100
______________
Total 76,473,260
Airlines (1.2%)
Continental Airlines 6.94 2015 15,000,000 (e) 14,299,650
7.82 2015 5,000,000 (e) 4,991,850
Delta Air Lines 10.125 2010 10,000,000 11,555,200
10.375 2022 3,700,000 4,379,135
Northwest Airlines 8.07 2015 5,000,000 4,987,650
8.97 2015 3,000,000 3,065,370
______________
Total 43,278,855
_____________________________________________________________________________________________________________________________
Automotive & related (0.4%)
General Motors Acceptance 7.625 1998 10,000,000 10,156,400
Mascotech
Cv 4.50 2003 6,500,000 5,021,250
_____________
Total 15,177,650
_____________________________________________________________________________________________________________________________
Building materials (0.9%)
McQuay (AAF)
Sr Nts 8.875 2003 8,000,000 7,760,000
Owens-Corning Fiberglas 9.375 2012 6,900,000 7,473,597
Pulte
Sr Nts 7.00 2003 7,700,000 7,304,297
Schuller Intl Group
Sr Nts 10.875 2004 7,500,000 8,118,750
______________
Total 30,656,644
_____________________________________________________________________________________________________________________________
Chemicals (0.9%)
General Chemical
Sr Sub Nts 9.25 2003 7,000,000 6,938,750
G-I Holdings 10.00 2006 780 (e) 759
Zero Coupon Sr Disc Nts 12.92 1998 15,000,000 (e,g) 12,618,750
Grace (WR) 8.00 2004 10,420,000 10,522,533
______________
Total 30,080,792
<PAGE>
PAGE 25
Communications equipment (0.4%)
Comcast Cellular
Zero Coupon 9.45 2000 8,150,000 (g) 5,684,625
Geotek Communications
Cv 12.00 2001 5,000,000 (j) 5,500,000
Ionica
Units 13.50 2006 3,855,000 (e) 3,840,544
______________
Total 15,025,169
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.7%)
Data General
SF Deb 8.375 2002 6,700,000 6,130,500
Softkey
Cv 5.50 2000 12,000,000 (e) 9,660,000
Solectron 6.00 2006 3,000,000 (e) 2,752,500
Unisys
Credit Sensitive Nts 15.00 1997 4,350,000 (f) 4,600,125
______________
Total 23,143,125
_____________________________________________________________________________________________________________________________
Electronics (0.4%)
Reliance Electric 6.80 2003 6,000,000 5,813,760
Thomas & Betts 6.50 2006 9,200,000 (e) 8,477,524
______________
Total 14,291,284
_____________________________________________________________________________________________________________________________
Energy (2.8%)
Atlantic Richfield 9.125 2011 9,000,000 10,176,030
Clark-Schwebel
Sr Nts 10.50 2006 5,750,000 (e) 5,929,688
Honam Oil Refinery 7.125 2005 9,000,000 (e) 8,535,060
Oryx Energy 9.50 1999 4,000,000 4,181,800
Parker & Parsley Petroleum
Sr Nts 8.25 2007 9,500,000 9,691,140
PDV America 7.875 2003 15,000,000 14,306,100
Texaco Capital
Gtd Deb 7.50 2043 3,000,000 2,831,160
Gtd Deb 8.625 2032 10,000,000 11,039,300
UNC
Sr Nts 9.125 2003 14,000,000 13,702,500
USX 9.375 2022 17,500,000 18,949,350
______________
Total 99,342,128
_____________________________________________________________________________________________________________________________
Energy equipment & services (0.6%)
Cliffs Drilling
Sr Nts 10.25 2003 6,500,000 (e) 6,597,500
Foster Wheeler 6.75 2005 15,000,000 14,080,050
______________
Total 20,677,550
_____________________________________________________________________________________________________________________________
Food (0.1%)
Specialty Foods
Sr Nts 10.25 2001 3,000,000 (e) 2,760,000
_____________________________________________________________________________________________________________________________
Furniture & appliances (0.4%)
Interface 9.50 2005 7,500,000 (e) 7,228,125
Lifestyle Furnishings 10.875 2006 6,000,000 (e) 6,052,500
_____________
Total 13,280,625
_____________________________________________________________________________________________________________________________
Health care (0.2%)
Lilly (Eli) 6.77 2036 7,950,000 6,985,347
Phoenix Shannon
Cv 9.50 2000 2,000,000 (e) 1,760,000
_____________
Total 8,745,347
_____________________________________________________________________________________________________________________________
Health care services (2.1%)
Columbia/HCA Healthcare 6.91 2005 7,000,000 6,745,340
7.69 2025 4,000,000 3,877,920
Foundation Health
Sr Nts 7.75 2003 8,400,000 8,446,368
Healthsource
Cv 5.00 2003 4,000,000 (j) 3,055,000
La Petite Holdings
Sr Secured Nts 9.625 2001 8,795,000 8,179,350
Magellan Health
Sr Sub Nts 11.25 2004 7,500,000 (e) 8,034,375
<PAGE>
PAGE 26
Merit Behavioral 11.50 2005 3,250,000 (e) 3,408,438
Owens & Minor
Sr Sub Nts 10.875 2006 4,000,000 4,145,000
Tenet Healthcare
Sr Nts 8.625 2003 3,000,000 3,120,000
Sr Sub Nts 10.125 2005 22,000,000 23,677,500
_____________
Total 72,689,291
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.1%)
AGCO
Sr Sub Nts 8.50 2006 5,100,000 (e) 5,080,875
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (1.0%)
Caesars World
Sr Sub Nts 8.875 2002 6,000,000 6,315,000
MGM Grand Hotel Finance
1st Mtge 11.75 1999 10,000,000 10,587,500
1st Mtge 12.00 2002 10,000,000 10,900,000
Trump Atlantic City Funding
1st Mtge 11.25 2006 7,500,000 7,200,000
______________
Total 35,002,500
_____________________________________________________________________________________________________________________________
Media (5.5%)
Ackerley Communications
Sr Secured Nts 10.75 2003 10,000,000 (e) 10,550,000
Adelphia Communications
Sr Deb 11.875 2004 7,000,000 7,008,750
Cablevision Systems
Sr Sub Deb 10.75 2004 4,000,000 4,100,000
Sr Sub Nts 9.25 2005 6,000,000 5,760,000
Continental Cablevision
Sr Deb 8.875 2005 5,000,000 5,343,750
Cox Communications 7.625 2025 7,000,000 6,622,490
Lenfest Communications
Sr Nts 8.375 2005 10,000,000 9,225,000
News American Holdings 8.875 2023 17,000,000 17,428,400
News Corp 10.15 2010 3,807,175 (e) 4,304,392
Outdoor Systems
Sr Sub Nts 11.56 2008 5,833,333 5,833,333
Plitt Theatres 10.875 2004 7,500,000 7,678,125
Scandinavian Broadcasting
Cv Sub Deb 7.25 2005 5,600,000 5,530,000
Tele-Communications
Sr Deb 7.875 2013 6,800,000 6,023,168
Sr Deb 9.80 2012 8,000,000 8,383,120
Sr Deb 9.875 2022 10,000,000 10,445,100
Time Warner
Deb 9.15 2023 10,000,000 10,179,300
TKR Cable
Sr Deb 10.50 2007 5,225,000 5,723,308
Turner Broadcasting
Sr Nts 8.375 2013 10,000,000 9,594,600
United Artist Theatre 9.30 2015 13,636,781 (e) 12,443,563
Universal Outdoor
Sr Nts 11.00 2003 5,000,000 5,312,500
Zero Coupon 9.95 1999 3,500,000 (h) 2,585,625
Viacom Intl
Sr Nts 7.75 2005 3,000,000 2,883,900
Sub Deb 7.00 2003 5,000,000 4,590,250
Sub Deb 8.00 2006 26,300,000 24,196,000
______________
Total 191,744,674
_____________________________________________________________________________________________________________________________
Metals (0.8%)
Magma Copper
Sr Sub Nts 12.00 2001 10,000,000 10,912,500
Ryerson Tull 8.50 2001 11,800,000 11,829,500
Santa Fe Pacific Gold
Sr Deb 8.375 2005 5,000,000 4,868,750
______________
Total 27,610,750
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (0.7%)
Coltec Inds
Sr Nts 9.75 2000 5,000,000 5,137,500
Mark IV Inds
Sr Sub Nts 8.75 2003 8,000,000 8,030,000
<PAGE>
PAGE 27
Prime Succession
Sr Sub Nts 10.75 2004 4,240,000 (e) 4,367,200
Talley Mfg & Technology
Sr Nts 10.75 2003 7,000,000 7,297,500
______________
Total 24,832,200
_____________________________________________________________________________________________________________________________
Paper & packaging (2.2%)
Federal Paper Board 10.00 2011 11,900,000 14,180,516
Fort Howard 11.00 2002 9,087,473 9,360,097
Gaylord Container
Sr Sub Deb 12.75 2005 5,000,000 5,362,500
Intl Paper 5.125 2012 9,000,000 6,922,710
Plastic Containers
Sr Secured Nts 10.75 2001 10,000,000 10,262,500
Pope & Talbot 8.375 2013 11,000,000 9,894,060
Scotia Pacific Holding 7.95 2015 4,365,325 4,283,344
Silgan
Sr Sub Nts 11.75 2002 11,850,000 12,398,063
Warren (SD)
Sr Nts 12.00 2004 5,000,000 (e) 5,268,750
______________
Total 77,932,540
_____________________________________________________________________________________________________________________________
Restaurants & lodging (0.2%)
Hammons (John Q) Hotel
1st Mtge 8.875 2004 7,000,000 6,597,500
_____________________________________________________________________________________________________________________________
Retail (2.3%)
American Stores 8.00 2026 15,000,000 14,664,600
Dairy Mart Convenience Stores
Sr Sub Nts 10.25 2004 6,250,000 5,890,625
Kash n' Karry Food Stores
Pay-in-kind 11.50 2003 9,486,080 (n) 9,486,080
Kroger 8.15 2006 13,000,000 13,162,500
Musicland Group
Sr Sub Nts 9.00 2003 7,000,000 4,025,000
Penn Traffic
Sr Nts 8.625 2003 6,500,000 5,395,000
Pueblo Xtra Intl
Sr Nts 9.50 2003 7,000,000 6,300,000
Wal-Mart Stores 7.00 2006 18,000,000 (e) 17,691,660
8.875 2011 3,500,000 3,666,775
______________
Total 80,282,240
_____________________________________________________________________________________________________________________________
Soaps & cosmetics (0.3%)
Coty
Sr Sub Nts 10.25 2005 5,500,000 5,802,500
Sweetheart Cup
Sr Sub Nts 9.625 2000 6,500,000 6,573,125
______________
Total 12,375,625
_____________________________________________________________________________________________________________________________
Textiles & apparel (0.5%)
Dominion Textiles
Sr Nts 9.25 2006 3,000,000 2,973,750
Stevens (JP) 9.00 2017 6,000,000 5,775,000
WestPoint Stevens
Sr Nts 8.75 2001 7,500,000 7,518,750
______________
Total 16,267,500
_____________________________________________________________________________________________________________________________
Miscellaneous (1.2%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 6,800,000 (j) 7,021,000
ECM Funding LP 11.92 2002 2,488,204 (j) 2,737,025
Norcal Waste Systems
Sr Nts 12.50 2005 10,000,000 (e) 10,587,500
Pierce Leahy
Sr Sub Nts 11.125 2006 4,875,000 (e) 5,063,906
SC Intl
Sr Sub Nts 13.00 2005 8,900,000 9,734,374
Yale University 7.375 2096 6,000,000 5,607,780
______________
Total 40,751,585
_____________________________________________________________________________________________________________________________
Transportation (0.5%)
Southern Pacific Rail
Sr Nts 9.375 2005 15,345,000 16,495,875
<PAGE>
PAGE 28
Utilities (14.7%)
Electric (10.3%)
Appalachian Power 8.50 2022 5,000,000 5,148,650
Arizona Public Service
1st Mtge 8.00 2025 5,800,000 5,616,546
1st Mtge 8.75 2024 9,000,000 9,343,800
Sale Lease-Backed Obligation 8.00 2015 12,556,000 12,350,960
Cajun Electric Power Cooperative
Mtge Trust 8.92 2019 5,000,000 5,452,100
California Energy
Zero Coupon 6.08 2004 10,000,000 (h) 10,050,000
Cleveland Electric Illuminating
1st Mtge 9.50 2005 23,100,000 22,589,259
Commonwealth Edison
1st Mtge 8.375 2023 5,000,000 4,842,400
1st Mtge 9.75 2020 10,000,000 10,608,600
1st Mtge 9.875 2020 12,800,000 13,967,872
Consumers Power
1st Mtge 7.375 2023 10,000,000 8,989,200
EIP Funding 10.25 2012 6,894,000 6,661,327
First Palo Verde Funding 10.15 2016 13,400,000 13,510,014
10.30 2014 4,500,000 4,546,080
Long Island Lighting
Gen Ref Mtge 9.625 2024 28,888,000 28,522,567
Gen Ref Mtge 9.75 2021 15,500,000 15,315,240
Louisiana Power & Light Waterford
Sale Lease-Backed Obligation 10.67 2017 7,500,000 8,022,150
Midland Cogeneration Venture 11.75 2005 14,900,000 15,738,125
Sub Secured Sale
Lease-Backed Obligation 10.33 2002 11,084,055 11,596,692
Niagara Mohawk Power
1st Mtge 6.875 2001 5,000,000 4,568,150
1st Mtge 7.75 2006 19,600,000 17,217,228
Pacific Gas & Electric
1st Ref Mtge 7.25 2026 14,000,000 12,494,860
Pennsylvania Power & Light
1st Mtge 9.25 2019 900,000 963,837
Public Service Electric & Gas
1st Ref Mtge 6.75 2006 5,500,000 5,226,980
RGS Funding
Sale Lease-Backed Obligation 9.82 2022 9,939,934 11,506,766
Salton Sea
Sr Nts 7.84 2010 10,000,000 (e) 9,422,800
San Diego Gas & Electric
1st Mtge 9.625 2020 16,925,000 18,469,914
Sithe Independence Funding 8.50 2007 7,500,000 7,333,200
9.00 2013 4,700,000 4,586,542
Texas-New Mexico Power
1st Mtge 9.25 2000 6,000,000 6,225,000
1st Mtge 10.00 2017 2,879,000 2,886,198
Secured Deb 10.75 2003 5,000,000 5,293,750
Texas Utilities Electric
1st Collateral Trust 7.375 2025 3,000,000 2,699,790
1st Collateral Trust 9.75 2021 9,900,000 10,881,486
1st Mtge 7.625 2025 10,000,000 9,222,200
Secured Facility 9.45 2005 4,129,000 4,278,800
Tucson Electric Power
1st Mtge 8.50 2009 7,000,000 6,623,750
Wisconsin Electric Power 6.875 2095 8,000,000 6,874,080
______________
Total 359,646,913
______________________________________________________________________________________________________________________________
Gas (1.7%)
Coastal
Sr Deb 7.75 2035 6,000,000 5,650,920
Sr Deb 10.25 2004 7,750,000 8,940,555
Equitable Resources 7.50 1999 5,000,000 5,076,300
Questar Pipeline 9.375 2021 8,000,000 8,637,200
Southern California Gas
1st Mtge 7.375 2023 6,900,000 6,414,033
Southwest Gas 9.75 2002 7,900,000 8,512,803
Tenneco 9.00 2012 9,000,000 9,841,860
Tennessee Gas Pipeline 6.00 2011 3,600,000 2,993,112
Transco Energy 9.875 2020 4,800,000 5,502,768
______________
Total 61,569,551
<PAGE>
PAGE 29
Telephone & other (2.7%)
Ameritech Capital Funding
Gtd Deb 9.10 2016 16,000,000 18,004,320
BellSouth Telecommunications 6.50 2005 7,200,000 6,848,280
7.00 2095 10,000,000 9,019,400
GTE 10.25 2020 7,000,000 7,935,270
New York Tel 9.375 2031 23,665,000 25,075,671
Pacific Bell 6.625 2034 10,000,000 8,376,700
7.125 2026 10,200,000 9,376,248
7.375 2043 10,000,000 9,136,200
______________
Total 93,772,089
_____________________________________________________________________________________________________________________________
Municipal bonds (0.4%) (l)
Los Angeles County Pension Obligation Capital
Appreciation Series C Zero Coupon (MBIA Insured) 7.09 2008 10,000,000 (g) 4,070,400
San Bernardino County Finance Authority
Pension Obligation Revenue Bond (MBIA Insured) 6.99 2010 2,000,000 1,906,000
7.09 2011 8,000,000 7,611,520
______________
Total 13,587,920
_____________________________________________________________________________________________________________________________
Foreign (11.1%)(k)
ABN Amro
(U.S. Dollar) 7.75 2023 9,000,000 8,809,920
Argentina Republic
(U.S. Dollar) Zero Coupon 5.46 2001 5,000,000 (h) 5,742,500
Argentina Republic Euro
(U.S. Dollar) Zero Coupon 6.31 2005 2,970,000 (f) 2,305,463
Austria Republic Euro
(U.S. Dollar) 10.00 1998 5,000,000 5,300,000
BAA Euro
(British Pound) 5.75 2006 2,500,000 4,004,295
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 9,200,000 9,457,416
Bank of China
(U.S. Dollar) 8.25 2014 10,000,000 9,286,400
Brazil C Bonds
(U.S. Dollar) 8.00 2014 4,329,720 2,795,375
Brazil DCB
(U.S. Dollar) 6.875 2012 7,000,000 (f) 4,965,625
Carter Holt Harvey
(U.S. Dollar) 7.625 2002 5,000,000 5,036,650
(U.S. Dollar) 8.875 2004 10,500,000 11,200,665
Celcaribe
(U.S. Dollar) Zero Coupon 2.14 2004 2,870,000 (e,g) 3,113,950
(U.S. Dollar) Zero Coupon 24.37 2004 3,250,000 (e,g) 2,665,000
China Power & Light
(U.S. Dollar) Sr Nts 7.50 2006 8,000,000 7,781,040
Doman Inds
(U.S. Dollar) 8.75 2004 4,000,000 3,680,000
Dominion Textiles
(U.S. Dollar) 8.875 2003 7,500,000 7,359,375
Financiera Ener Nacional
(U.S. Dollar) 9.375 2006 14,750,000 (e) 14,676,250
Ford Capital
(U.S. Dollar) 9.125 1998 4,000,000 4,159,760
(U.S. Dollar) 9.50 2010 18,350,000 20,813,671
Govt of Poland PDI Euro
(U.S. Dollar) 3.75 2014 34,600,000 (f) 27,312,375
Govt of Russia
(U.S. Dollar) 6.60 2049 8,000,000 (p) 4,715,000
Govt of Venezuela
(British Pounds) 6.375 2007 7,000,000 (f) 5,407,500
Grupo Televisa
(U.S. Dollar) Sr Nts 11.375 2003 10,000,000 (e) 10,475,000
Groupe Videotron
(U.S. Dollar) 10.625 2005 5,000,000 5,350,000
GST Telecommunications
(U.S. Dollar) Zero Coupon Cv 5.24 2000 1,045,000 (e,h) 877,800
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 4,000,000 (e) 3,620,600
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 7,500,000 (e) 7,640,625
Korea Electric Power
(U.S. Dollar) 7.75 2013 8,900,000 8,672,961
(U.S. Dollar) 8.00 2002 2,800,000 2,868,544
MacMillan Bole Delaware
(U.S. Dollar) 8.50 2004 3,000,000 3,098,520
<PAGE>
PAGE 30
Matsushita Electric
(Japanese Yen) Cv 1.30 2002 467,000,000 4,994,051
Nippon Express
(Japanese Yen) Cv 1.00 2004 460,000,000 4,318,052
People's Republic of China
(U.S. Dollar) 7.375 2001 3,500,000 3,494,610
(U.S. Dollar) 9.00 1996 10,000,000 9,471,600
Petronas
(U.S. Dollar) 7.75 2015 10,000,000 (e) 9,738,400
Placer Dome
(U.S. Dollar) 7.125 2003 5,000,000 4,873,550
Quno
(U.S. Dollar) Sr Nts 9.125 2005 7,000,000 6,833,750
Reliance Inds
(U.S. Dollar) 8.125 2005 4,500,000 (e) 4,312,485
Repap New Brunswick
(U.S. Dollar) 9.875 2000 7,000,000 6,973,750
Republic of Israel
(U.S. Dollar) 6.375 2005 7,300,000 6,734,031
Republic of Italy
(U.S. Dollar) 6.875 2023 9,000,000 7,993,260
(U.S. Dollar) Cv 5.00 2001 3,000,000 3,003,750
Republic of Slovenia
(U.S. Dollar) 7.00 2001 7,200,000 (e) 7,185,600
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 7.06 2014 3,700,000 2,406,110
Rogers Cantel Mobile
(U.S. Dollar) 9.375 2008 9,300,000 9,125,625
Scotland Bank
(U.S. Dollar) 8.80 2004 20,500,000 (e) 21,881,290
Sumitomo Bank
(Japanese Yen) Cv 0.75 2001 375,000,000 (e) 3,684,075
Tarkett Intl
(U.S. Dollar) 9.00 2002 11,000,000 (e) 11,151,250
Telekom Malaysia
(U.S. Dollar) 7.875 2025 15,000,000 (e) 14,542,350
Transdigm
(U.S. Dollar) 13.00 2000 5,000,000 (j) 4,575,000
United Mexican States
(U.S. Dollar) 11.50 2026 6,583,460 6,332,466
WMC Finance
(U.S. Dollar) 7.25 2013 10,000,000 9,473,300
Zhuhai Highway
(U.S. Dollar) 11.50 2008 10,000,000 (e) 10,250,000
______________
Total 386,540,635
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $2,981,884,532) $3,001,256,004
</TABLE>
<PAGE>
PAGE 31
<TABLE>
<CAPTION>
Stocks & other (1.2%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
American Life Holdings
$2.16 Cm Preferred 120,000 $3,045,000
Cablevision Systems
Pay-in-kind Preferred 104,241 (e,i,n) 9,798,654
Celcaribe
Common 528,450 (e,i) 792,675
Dairy Mart
Warrants 51,666 (e,j) 154,998
First Nationwide Bank
11.50% Cm Preferred 80,000 8,720,000
Kash n' Karry Food Stores
Common 149,570 (i) 3,589,680
Salomon
2.375% Preferred 400,000 10,300,000
Station Casinos
7% Cv Preferred 30,000 1,522,500
Security Pacific
Cv Preferred 136,500 3,480,750
Transdigm
Warrants 3,989 (j) 526,548
Triangle Wire Cable
Common 211,111 (i,j) 211,111
Webcraft Technology
Common 32,502 (i,j) 325
_____________________________________________________________________________________________________________________________
Total stocks & other
(Cost: $45,723,235) $42,142,241
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (12.0%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.5%)
Federal Home Loan Mtge Corp Disc Nts
09-19-96 5.19% $14,400,000 $ 14,360,708
09-20-96 5.23 1,940,000 1,934,385
______________
Total 16,295,093
_____________________________________________________________________________________________________________________________
Commercial paper (11.3%)
AIG Funding
09-16-96 5.40 7,700,000 7,681,657
Alabama Power
10-22-96 5.34 9,035,000 8,962,424
Ameritech
09-26-96 5.40 9,700,000 9,659,546
10-04-96 5.34 6,700,000 (m) 6,666,463
Associates
North America
09-03-96 5.35 2,900,000 2,898,714
Avco Financial
11-15-96 5.37 10,000,000 9,880,833
BBV Finance
09-13-96 5.30 6,200,000 6,188,179
CAFCO
09-11-96 5.44 7,520,000 7,505,436
09-25-96 5.30 6,000,000 5,978,000
Cargill
09-20-96 5.31 6,200,000 6,181,779
Ciesco LP
10-09-96 5.31 4,800,000 4,772,544
11-06-96 5.39 8,200,000 8,113,558
Clorox
09-30-96 5.29 2,200,000 2,190,338
<PAGE>
PAGE 32
Coca-Cola
10-15-96 5.37 4,400,000 (m) 4,368,640
Commercial Credit
09-24-96 5.33 10,400,000 10,363,253
10-03-96 5.32 9,000,000 8,956,357
Commerzbank US Finance
09-10-96 5.30 6,700,000 6,690,173
Consolidated Rail
10-03-96 5.50 4,000,000 (m) 3,978,489
Dean Witter
09-05-96 5.35 8,100,000 8,094,004
Deustche Finance
10-16-96 5.32 4,900,000 4,865,801
Fleet Funding
09-03-96 5.35 7,000,000 (m) 6,996,896
10-11-96 5.33 13,000,000 (m) 12,921,530
Ford Motor Credit
09-13-96 5.39 5,800,000 5,788,795
10-04-96 5.33 6,100,000 6,069,466
Gannett
10-16-96 5.54 11,000,000 (m) 10,920,609
Goldman Sachs
09-27-96 5.33 9,600,000 9,561,840
Hewlett-Packard
09-17-96 5.42 4,400,000 4,387,118
Household Finance
09-20-96 5.31 15,000,000 14,955,917
Kellogg
09-04-96 5.33 5,485,000 5,481,770
Merrill Lynch
09-06-96 5.38 5,400,000 5,395,185
Metlife Funding
09-09-96 5.39 4,600,000 4,593,836
09-23-96 5.33 5,400,000 5,381,715
09-24-96 5.31 9,700,000 9,665,856
10-24-96 5.32 4,000,000 3,968,320
Mobil Australia
09-18-96 5.45 9,000,000 (m) 8,973,821
Natl Australia Funding
10-02-96 5.43 8,500,000 8,457,445
Natl Bank Detroit Canadian
09-13-96 5.30 8,000,000 7,984,747
NationsBank
09-04-96 5.40 7,000,000 6,999,915
11-26-96 5.37 6,500,000 6,498,772
Penney (JC) Funding
09-24-96 5.41 9,200,000 9,165,767
10-02-96 5.28 3,500,000 3,483,635
10-10-96 5.30 5,400,000 5,368,380
Pfizer
09-12-96 5.30 7,500,000 (m) 7,486,800
Pitney Bowes Credit
10-08-96 5.52 4,765,000 4,736,773
Reed Elsevier
09-16-96 5.39 8,000,000 (m) 7,980,978
SAFECO Credit
10-09-96 5.36 6,500,000 6,459,929
10-11-96 5.33 9,600,000 9,542,163
Sandoz
09-03-96 5.42 2,700,000 2,698,789
Siemens
09-25-96 5.32 1,000,000 996,319
Southern California Gas
10-23-96 5.48 16,534,000 (m) 16,396,760
Transamerica Financial
09-09-96 5.44 8,800,000 8,788,120
09-16-96 5.44 7,000,000 6,981,064
USAA Capital
09-19-96 5.41 13,200,000 13,157,204
U S WEST Communications
09-12-96 5.39 7,100,000 7,087,338
09-23-96 5.40 4,300,000 4,283,303
_____________
Total 393,613,063
<PAGE>
PAGE 33
Letter of credit (0.2%)
First Chicago-
Natl Bank Detroit
09-19-96 5.43 8,800,000 8,773,069
______________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $418,738,525) $418,681,225
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $3,446,346,292)(q) $3,462,079,470
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 34
Notes to investments in securities
___________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Security is partially or fully on loan. See Note 5 to the
financial statements.
(c) Inverse floaters represent securities that pay interest at a
rate that increases (decreases) in the same magnitude as, or in a
multiple of, a decline (increase) in the LIBOR (London InterBank
Offered Rate) Index. Interest rate disclosed is the rate in effect
on Aug. 31, 1996. Inverse floaters in the aggregate represent 0.1%
of the Fund's net assets as of Aug. 31, 1996.
(d) This security is a collateralized mortgage obligation that pays
no interest or principal during its initial accrual period until
payment of a previous series within the trust have been paid off.
Interest is accrued at an effective yield.
(e) 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.
(f) Interest rate varies either based on a predetermined schedule
or to reflect current market conditions; rate shown is the
effective rate on Aug. 31, 1996.
(g) For zero coupon bonds, the interest rate disclosed represents
the annualized effective yield on the date of acquisition.
(h) For those zero coupon bonds that become coupon paying at a
future date, the interest rate disclosed represents the annualized
effective yield from the date of acquisition to interest reset date
disclosed.
(i) Non-income producing.
(j) Identifies issues considered to be illiquid as to their
marketability (see Note 4 to the financial statements). Information
concerning such security holdings at Aug. 31, 1996, is as follows:
<PAGE>
PAGE 35
Acquisition
Security date Cost
___________________________________________________________________
Adams Outdoor Advertising
10.75% Sr Nts 2006 03-05-96 $6,817,500
Dairy Mart
Warrants 11-28-95
ECM Funding LP
11.92% 2002 04-13-92 2,488,204
Geotek Communications
12% Cv 2001 03-04-96 5,000,000
Healthsource*
5% Cv 2003 06-28-96 3,117,000
Transdigm
13% 2000 12-06-95 4,375,000
Warrants 12-06-95 274,974
Triangle Wire Cable
Common 01-13-92 5,000,045
Webcraft Technology
Common 12-22-86 16,875
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
<PAGE>
PAGE 36
(k) Foreign security values are stated in U.S. dollars. For debt
securities, principal amounts are denominated in the currency
indicated.
(l) The following abbreviation is used in portfolio descriptions to
identify the issuer of the issue:
MBIA -- Municipal Bond Investors Assurance
(m) 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.
(n) Pay-in-kind securities are securities in which the issuer has
the option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the same
terms, including maturity date, as the pay-in-kind securities.
(o) Partially pledged as initial deposit on the following open
interest rate futures sale contracts (see Note 8 to the financial
statements):
Notional
Type of security amount
___________________________________________________________________
Dec. T-Bond Futures $30,000,000
___________________________________________________________________
(p) At Aug. 31, 1996, the cost of securities purchased, including
interest purchased, on a when-issued basis was $4,765,000.
(q) At Aug. 31, 1996, the cost of securities for federal income tax
purposes was $3,442,688,706 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $84,279,776
Unrealized depreciation (64,889,012)
___________________________________________________________________
Net unrealized appreciation $19,390,764
___________________________________________________________________
<PAGE>
PAGE 37
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) coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher
rated, lower risk bond categories, or the equivalent, and in
government bonds.
(icon of) greek column
<PAGE>
PAGE 38
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) shield with eagle head enclosed
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 enclosed
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with star enclosed
<PAGE>
PAGE 39
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 Allocation Fund
Invests in U.S. equity securities, U.S. and foreign debt
securities, foreign equity securities and money market instruments.
The fund provides diversification among these major investment
categories and has a target mix that represents the way the fund's
investments will be allocated over the long term. Seeks maximum
total return.
(icon of) 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 pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS 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>
PAGE 40
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high
current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a 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 Small Company Index Fund
Invests in all or a representative group of the equity securities
comprising the S&P SmallCap 600 Index, as it strives to provide
long-term capital appreciation.
(icon of) office building
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
<PAGE>
PAGE 41
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 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 Research Opportunities Fund
Invests primarily in equity securities of companies included in the
S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the
Research Department of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
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) trees
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
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
<PAGE>
PAGE 42
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>
PAGE 43
Federal income tax information
IDS Bond Fund, Inc.
___________________________________________________________________
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 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 Bond Fund, Inc.
Fiscal year ended Aug. 31, 1996
Class A
Income distributions
taxable as dividend income, 0.9% qualifying for deduction by
corporations.
Payable date Per share
Sept. 25, 1995 $0.03178
Oct. 26, 1995 0.02980
Nov. 27, 1995 0.02985
Dec. 27, 1995 0.02982
Jan. 25, 1996 0.02884
Feb. 26, 1996 0.02791
March 27, 1996 0.02866
April 26, 1996 0.02873
May 28, 1996 0.02978
June 26, 1996 0.02775
July 26, 1996 0.02923
Aug. 26, 1996 0.03171
Total distributions $0.35386
<PAGE>
PAGE 44
Class B
Income distributions
taxable as dividend income, 0.9% qualifying for deduction by
corporations.
Payable date Per share
Sept. 25, 1995 $0.02852
Oct. 26, 1995 0.02651
Nov. 27, 1995 0.02642
Dec. 27, 1995 0.02657
Jan. 25, 1996 0.02568
Feb. 26, 1996 0.02443
March 27, 1996 0.02541
April 26, 1996 0.02558
May 28, 1996 0.02644
June 26, 1996 0.02475
July 26, 1996 0.02612
Aug. 26, 1996 0.02846
Total distributions $0.31489
Class Y
Income distributions
taxable as dividend income, 0.9% qualifying for deduction by
corporations.
Payable date Per share
Sept. 25, 1995 $0.03254
Oct. 26, 1995 0.03056
Nov. 27, 1995 0.03063
Dec. 27, 1995 0.03057
Jan. 25, 1996 0.02955
Feb. 26, 1996 0.02871
March 27, 1996 0.02938
April 26, 1996 0.02944
May 28, 1996 0.03053
June 26, 1996 0.02844
July 26, 1996 0.02994
Aug. 26, 1996 0.03246
Total distributions $0.36275
<PAGE>
PAGE 45
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 Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 46
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
