PAGE
IDS
Bond
Fund
1996 semiannual report
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.
AMERICAN EXPRESS FINANCIAL ADVISORS
Distributed by
American Express
Financial Advisors Inc.
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.
IDS Bond Fund invests mainly in bonds issued by U.S. corporations, but it
also holds some U.S. government bonds, as well as foreign bonds. The
portfolio manager shifts this mix as investment conditions dictate. In
doing so, the Fund seeks to provide long-term return potential for
investors.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 22
Board members and officers 36
IDS mutual funds 37
To our shareholders
William R. Pearce
President of the Fund
Fred Quirsfeld
Portfolio manager
From the president
If you're an experienced investor, you know that 1995 was an unusually
strong year for the U.S. financial markets. Perhaps just as important,
you also know that history shows that bull markets don't last forever.
Though they're often unpredictable, declines
- -- whether they're brief or long-lasting, moderate or substantial
- -- are always a possibility.<PAGE>
That fact reinforces the need for investors to review periodically their
long-term goals and assess whether their investment program remains on
track to achieving them. Your quarterly investment statements are one
part of that monitoring process. The other is a meeting with your
American Express financial advisor. That becomes even more important if
there's a major change in your financial situation or in the financial
markets.
William R. Pearce
From the portfolio manager
Despite a downturn late in the period, the bond market recorded a solid
advance for the past six months. IDS Bond Fund was well-positioned to
respond to the positive overall market trend and, as a result, produced
a total return (net asset value increase plus dividend income) of 5.3%
for investors in Class A shares during the first half of the Fund's
fiscal year--September 1995 through February 1996.
As it had earlier in the year, 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 the possibility of 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. The drop in rates drove up prices of existing
bonds and, consequently, the net asset value of bond mutual funds.
'Long'strategy pays off well
This Fund especially benefited from that positive trend because of its
emphasis on bonds with longer-than-average maturities, whose prices rise
more than those of shorter-term bonds when rates fall. In addition, we
kept cash reserves relatively low, which also proved to be productive as
the return from cash was far below that generated by our bond holdings.
As for the structure of our investment portfolio, the only change of
note was a slight increase in our exposure to mortgage-backed securities.
This shift was based on our desire to upgrade the portfolio's overall
credit quality in light of a rather listless economy. During the six
months, we kept nearly half the portfolio invested in a broadly
diversified group of corporate bonds (split about 50/50 between high-
grade and low-grade securities), about 15% each in U.S. Treasury and
mortgage-backed bonds, and about 13% in dollar-denominated foreign bonds.
<PAGE>
Near-term questions
At this writing (early March), the bond market has recently been under
some pressure as hopes for passage of a balanced-budget bill have dimmed,
while concern about higher inflation and uncertainly about potential
changes in the political landscape have increased. Although these factors
could continue to upset the market periodically over the near term, we
think the fundamental forces still favor a further decline in interest
rates.
That said, we think it is appropriate for bond investors to lower their
expectations for investment returns this year. The bond market's spectac-
ular advance in 1995 was fueled by an uncommonly large decline in long-
term interest rates, which most likely won't be repeated in 1996.
Therefore, we expect the bulk of bonds' return to come from interest
income, rather than price appreciation. The ultimate result, we believe,
will be a positive year more in line with historical bond market returns.
Fred Quirsfeld
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 29, 1996 $ 5.14
Aug. 31, 1995 $ 5.05
Increase $ 0.09
Distributions
Sept. 1, 1995 - Feb. 29, 1996
From income $ 0.18
From capital gains $ --
Total distributions $ 0.18
Total return* +5.3%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 29, 1996 $ 5.14
Aug. 31, 1995 $ 5.05
Increase $ 0.09
Distributions
Sept. 1, 1995 - Feb. 29, 1996
From income $ 0.16
From capital gains $ --
Total distributions $ 0.16
Total return* +4.9%**
<PAGE>
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 29, 1996 $ 5.14
Aug. 31, 1995 $ 5.05
Increase $ 0.09
Distributions
Sept. 1, 1995 - Feb. 29, 1996
From income $ 0.18
From capital gains $ --
Total distributions $ 0.18
Total return* +5.4%**
*The prospectus discusses the effect of sales charges, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.<PAGE>
PAGE
<TABLE>
<CAPTION>
IDS Bond Fund, Inc.
The Fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 6.23% of the Fund's
net assets
_____________________________________________________________________________________
Percent Value
(of Fund's net assets) (as of Feb. 29, 1996)
_____________________________________________________________________________________
<S> <C> <C>
Long Island Lighting .81% $ 29,091,083
9.625% Gen Ref Mtge 2024
New York Telephone .74 26,433,805
9.375% 2031
Viacom Intl .73 26,037,000
8% Sub Deb 2006
Scotland Bank .65 23,010,225
8.80% 2004
Ford Capital .62 22,289,378
9.50% 2010
USX .55 19,801,775
9.375% 2022
San Diego Gas & Electric .54 19,329,873
9.625% 1st Mtge 2020
Ameritech Capital Funding .54 19,190,720
9.10% Gtd Deb 2016
BankAmerica .53 18,952,920
7.50% Sub Nts 2002
News American Holdings .52 18,574,710
8.875% 2023
Excludes U.S. Treasury and government agency holdings that total 30% of the Fund's
net assets.
/TABLE
<PAGE>
PAGE
Financial statements
Statement of assets and liabilities
IDS Bond Fund, Inc.
Feb. 29, 1996
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $3,386,670,934) $3,531,423,264
Receivable for investment securities sold 13,823,593
Dividends and accrued interest receivable 62,835,085
U.S. government securities held as collateral (Note 5) 10,313,264
_____________________________________________________________________________________________________________
Total assets 3,618,395,206
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 9,873,661
Dividends payable to shareholders 1,875,205
Payable for investment securities purchased 16,596,405
Payable upon return of securities loaned (Note 5) 12,591,564
Accrued investment management services fee 95,335
Accrued distribution fee 39,274
Accrued service fee 33,534
Accrued transfer agency fee 19,851
Accrued administrative services fee 8,493
Other accrued expenses 213,670
_____________________________________________________________________________________________________________
Total liabilities 41,346,992
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $3,577,048,214
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 6,955,373
Additional paid-in capital 3,449,021,121
Undistributed net investment income 3,486,456
Accumulated net realized loss (Notes 1 and 8) (27,167,568)
Unrealized appreciation of investments and on translation of
assets and liabilities in foreign currencies 144,752,832
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $3,577,048,214
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $2,541,973,698
Class B $ 958,418,874
Class Y $ 76,655,642
Net asset value per share of outstanding capital stock: Class A shares 494,271,016 $ 5.14
Class B shares 186,361,062 $ 5.14
Class Y shares 14,905,175 $ 5.14
See accompanying notes to financial statements.<PAGE>
PAGE
Financial statements
Statement of operations
IDS Bond Fund, Inc.
Six months ended Feb. 29, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $132,433,471
Dividends 879,430
_____________________________________________________________________________________________________________
Total income 133,312,901
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 8,364,311
Distribution fee -- Class B 3,273,508
Transfer agency fee 1,712,989
Incremental transfer agency fee -- Class B 40,113
Service fee
Class A 2,145,956
Class B 758,892
Administrative services fee 748,547
Compensation of board members 86,576
Compensation of officers 11,198
Custodian fees 64,182
Postage 69,320
Registration fees 126,229
Reports to shareholders 27,652
Audit fees 19,250
Administrative 6,194
Other 21,024
_____________________________________________________________________________________________________________
Total expenses 17,475,941
_____________________________________________________________________________________________________________
Investment income -- net 115,836,960
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions (including
loss of $24,907 from foreign currency transactions) (Note 3) 18,639,421
Net change in unrealized appreciation or depreciation 32,774,246
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 51,413,667
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $167,250,627
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Bond Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions Feb. 29, 1996 Aug. 31, 1995
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $ 115,836,960 $ 198,350,433
Net realized gain (loss) on investments and foreign currency 18,639,421 (29,440,601)
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 32,774,246 182,633,301
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 167,250,627 351,543,133
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (83,955,701) (172,502,967)
Class B (26,224,210) (22,840,548)
Class Y (2,472,412) (2,210,213)
Net realized gain
Class A -- (44,353,816)
_____________________________________________________________________________________________________________
Total distributions (112,652,323) (241,907,544)
_____________________________________________________________________________________________________________
Capital share transactions (Note 6)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 274,922,723 340,793,447
Class B shares 226,487,993 125,204,756
Class Y shares 20,115,942 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 55,514,219 143,593,478
Class B shares 23,500,479 19,534,420
Class Y shares 2,472,412 2,033,460
Payments for redemptions
Class A shares (192,684,895) (442,588,203)
Class B shares (Note 2) (86,367,841) (67,847,577)
Class Y shares (10,899,356) (10,418,481)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 313,061,676 851,079,461
_____________________________________________________________________________________________________________
Total increase in net assets 367,659,980 960,715,050
_____________________________________________________________________________________________________________
Net assets at beginning of period 3,209,388,234 2,248,673,184
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$3,486,456 and $301,819) $3,577,048,214 $3,209,388,234
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
Notes to financial statements
IDS Bond Fund, Inc.
(Unaudited as to Feb. 29, 1996)
______________________________________________________________________________
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, which the Fund began offering on March 20, 1995, may
be subject to a contingent deferred sales charge. Class B shares automatically
convert to Class A after eight years. Class Y shares, which the Fund also
began offering on March 20, 1995, have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, 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.
<PAGE>
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.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
<PAGE>
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.
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.
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.<PAGE>
2. Expenses and sales charges
Effective March 20, 1995, when the Fund began offering multiple classes of
shares, the Fund entered into agreements with American Express Financial
Corporation (AEFC) for managing its portfolio, providing administrative
services and serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.52% 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 as follows: Under a Plan and Agreement of Distribution, the
Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average
daily net assets attributable to Class B shares for distribution-related
services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents. The
fee is calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares.
AEFC will assume and pay any expenses (except taxes and brokerage commissions)
that exceed the most restrictive applicable state expense limitation.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $7,207,208 for Class A and $283,751 for Class B
for the six months ended Feb. 29, 1996.
The Fund has a retirement plan for its independent board members. Upon
retirement, board members receive monthly payments equal to one-half of the
retainer fee for as many months as they served as board members up to 120
months. There are no death benefits. The plan is not funded, but the Fund
recognizes the cost of payments during the time board members serve on the
board. The retirement plan expense amounted to $6,931 for the six months ended
Feb. 29, 1996.<PAGE>
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $717,356,075 and $489,770,715, respectively, for the
six months ended Feb. 29, 1996. Realized gains and losses are determined on an
identified cost basis.
______________________________________________________________________________
4. Illiquid securities
At Feb. 29, 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 Feb. 29, 1996 was $39,772,374, representing 1.1% 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 Feb. 29, 1996, securities valued at $12,411,658 were on loan to brokers.
For collateral, the Fund received $2,278,300 in cash and U.S. government
securities valued at $10,313,264. Income from securities lending amounted to
$109,210 for the six months ended Feb. 29, 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 periods indicated are as
follows:
Six months ended Feb. 29, 1996
Class A Class B Class Y
____________________________________________________________
Sold 53,103,846 43,697,556 3,878,371
Issued for reinvested 10,738,109 4,547,600 485,531
distributions
Redeemed (37,208,975) (16,666,855) (2,102,114)
____________________________________________________________
Net increase 26,632,980 31,578,301 2,261,788
____________________________________________________________
<PAGE>
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 aquisition
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.
Total net Capital stock Unrealized Accumulated net
assets depreciation realized loss
__________________________________________________________________________
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)
_____________________________________________________________________________
8. Capital loss carryover
For federal income tax purposes, the Fund had a capital loss carryover of
approximately $18,015,000 at Feb. 29, 1996, that if not offset by subsequent
capital gains, will expire in 2003 and 2004. 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.<PAGE>
9. Financial highlights
<TABLE>
<CAPTION>
The tables below show certain important financial
information for evaluating the Fund's results.
Fiscal period ended Aug. 31,
Per share income and capital changes*
Class A
1996** 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $5.05 $4.91 $5.48 $5.11 $4.74 $4.39
beginning of period
Income from investment operations:
Net investment income .18 .38 .41 .40 .40 .41
Net gains (losses) .09 .23 (.51) .38 .37 .33
(both realized and unrealized)
Total from investment .27 .61 (.10) .78 .77 .74
operations
Less distributions:
Dividends from net (.18) (.37) (.41) (.41) (.40) (.39)
investment income
Dividends from -- (.10) (.06) -- -- --
realized gains
Total distributions (.18) (.47) (.47) (.41) (.40) (.39)
Net asset value, $5.14 $5.05 $4.91 $5.48 $5.11 $4.74
end of period
Ratios/supplemental data
Class A
1996** 1995 1994 1993 1992 1991
Net assets, end of period $2,542 $2,363 $2,249 $2,490 $2,174 $1,902
(in millions)
Ratio of expenses to .83%+ .78% .68% .70% .72% .77%
average daily net assets
Ratio of net income 6.95%+ 7.84% 7.71% 7.78% 8.29% 9.03%
to average daily net assets
Portfolio turnover rate 15% 43% 40% 60% 64% 74%
(excluding short-term
securities)
Total return++ 5.3% 13.7% (2.0%) 15.8% 16.9% 17.6%
*For a share outstanding throughout the period.
Rounded to the nearest cent.
**Six months ended Feb. 29, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales
charge.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Aug. 31,
Per share income and capital changes*
Class B Class Y
1996*** 1995** 1996*** 1995**
<S> <C> <C> <C> <C>
Net asset value, $5.05 $4.79 $5.05 $4.79
beginning of period
Income from investment operations:
Net investment income .16 .17 .19 .19
Net gains (both realized) .09 .26 .08 .26
and unrealized)
Total from investment .25 .43 .27 .45
operations
Less distributions:
Dividends from net (.16) (.17) (.18) (.19)
investment income
Net asset value, $5.14 $5.05 $5.14 $5.05
end of period
Ratios/supplemental data
Class B Class Y
1996*** 1995** 1996*** 1995**
Net assets, end of period $958 $782 $77 $64
(in millions)
Ratio of expenses to 1.59%+ 1.63%+ .66%+ .67%+
average daily net assets
Ratio of net income 6.19%+ 6.81%+ 7.12%+ 8.44%+
to average daily net assets
Portfolio turnover rate 15% 43% 15% 43%
(excluding short-term
securities)
Total return++ 4.9% 9.0% 5.4% 9.4%
*For a share outstanding throughout the period.
Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B
and Class Y.
***Six months ended Feb. 29, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales
charge.
/TABLE
<PAGE>
PAGE
<TABLE>
<CAPTION>
Investments in securities
IDS Bond Fund, Inc. (Percentages represent value of
Feb. 29, 1996 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (91.5%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (13.5%)
U.S. Treasury 6.25 % 2023 $125,000,000 $ 119,176,250
6.375 1999-02 19,300,000 19,788,057
6.75 1997 10,000,000 (b) 10,170,800
7.125 1999 56,500,000 59,219,345
7.25 2022 25,000,000 26,887,500
7.50 2016-24 22,475,000 24,831,158
7.875 2004 12,000,000 13,403,280
8.875 2017 110,500,000 139,125,025
Govt Trust Certs Israel 9.25 2001 11,100,000 12,232,200
Resolution Funding Corp 8.125 2019 40,925,000 47,680,490
Zero Coupon 8.68 1999 11,500,000 (g) 9,681,390
______________
Total 482,195,495
_________________________________________________________________________________________________________________________________
Mortgage-backed securities (16.2%)
Federal Home Loan Mtge Corp 6.00 2010 15,525,120 15,059,367
6.50 2007 962,775 955,583
8.00 2017-24 19,441,567 19,922,502
Collateralized Mtge Obligation 3.24 2023 7,640,693 4,462,241
7.00 2022 22,000,000 21,420,020
8.50 2022 17,000,000 18,046,180
Inverse Floater 6.825 2023 4,000,000 (c) 2,889,320
10.46 2023 5,665,564 (c) 5,023,712
Trust Series Z 8.25 2024 9,864,446 (d) 10,212,760
Federal Natl Mtge Assn 5.50 2009 11,675,712 11,146,686
6.00 2024-26 91,980,317 86,377,686
6.50 2008-25 217,819,563 211,433,509
7.00 2026 54,066,800 53,458,549
8.00 2025 11,029,871 11,319,405
8.50 2023-24 27,002,427 28,065,783
9.00 2009-24 15,761,589 16,579,300
Collateralized Mtge Obligation 5.00 2024 9,961,155 9,435,206
Inverse Floater 6.81 2023 1,884,245 (c) 1,688,359
Trust Series Z 6.00 2024 5,551,962 (d) 4,266,461
7.00 2019 18,099,797 (d) 18,016,538
See accompanying notes to investments in securities
<PAGE>
Govt Natl Mtge Assn 8.00 2024 4,488,486 4,621,749
9.00 2025 7,180,450 7,570,922
Merrill Lynch Mtge Investors 8.29 2021 7,299,418 (e) 6,601,411
Prudential Bache
Collateralized Mtge Obligation Trust 7.965 2019 8,925,903 9,097,459
______________
Total 577,670,708
______________________________________________________________________________________________________________________________
Financial (7.1%)
Banks and savings & loans (1.7%)
BankAmerica
Sub Nts 7.50 2002 18,000,000 18,952,920
Barclays NA Capital 9.75 2021 13,600,000 15,841,960
Meridian Bancorp
Sub Deb 7.875 2002 10,400,000 11,145,264
Society
Sub Nts 8.125 2002 3,000,000 3,310,020
Standard Credit Card 8.625 2002 12,000,000 12,297,480
______________
Total 61,547,644
_____________________________________________________________________________________________________________________________
Financial services (3.0%)
Camden Property Trust 7.33 2001 3,000,000 3,037,500
Corporate Property Investors 7.18 2013 7,000,000 (e) 6,851,460
Developers Diversified Realty
Cv Sub Deb 7.00 1999 3,500,000 3,486,875
First Union REIT
Sub Nts 8.875 2003 10,000,000 8,900,000
General Electric Capital
Reset Nts 8.65 1996 16,035,000 (f) 16,110,365
Lehman Brothers Holdings 8.875 2002 10,000,000 11,022,200
Liberty Property Trust
Cv 8.00 2001 2,500,000 2,703,125
Malan Realty Investors REIT
Cv Sub Deb 9.50 2004 4,850,000 4,122,500
Mutual Risk Management
Zero Coupon Cv 7.03 2015 12,000,000 (e,g) 5,130,000
Olympic Financial
Sr Nts 13.00 2000 10,100,000 10,945,875
Omega Health Care
Cv 8.50 2001 4,000,000 4,170,000
Property Trust Amer REIT 7.50 2014 15,000,000 14,132,100
Salomon 8.91 1998 9,800,000 10,206,700
Saul (BF) REIT 11.625 2002 6,800,000 (e) 6,970,000
______________
Total 107,788,700
_____________________________________________________________________________________________________________________________
Insurance (2.4%)
Aetna Life & Casualty 7.25 2023 15,000,000 14,397,300
Americo Life
Sr Sub Nts 9.25 2005 9,000,000 8,887,500
Berkley (WR) 8.70 2022 3,000,000 3,340,950
Equitable Cos
Sr Nts 9.00 2004 4,250,000 4,874,835
Equitable Life 7.70 2015 5,000,000 (e) 4,939,200
General Amer Life 7.625 2024 8,000,000 (e) 7,404,240
Leucadia Natl 7.75 2013 11,780,000 11,440,147
NAC Re
Cv 5.25 2002 3,500,000 (e) 3,447,500
NACOLAH Holding
Sr Nts 9.50 2003 5,000,000 5,393,750
Nationwide Mutual 7.50 2024 8,000,000 (e) 7,438,080
Nationwide Trust
Credit Sensitive Nts 9.875 2025 3,500,000 (e) 3,948,455
Principal Mutual 8.00 2044 10,000,000 (e) 9,745,900
______________
Total 85,257,857
_____________________________________________________________________________________________________________________________
Industrial (26.3%)
Aerospace & defense (2.1%)
Alliant Techsystems
Sr Sub Nts 11.75 2003 5,000,000 (e) 5,581,250
BE Aerospace 9.875 2006 7,000,000 (e) 7,210,000
Boeing 8.75 2031 15,000,000 17,966,850
Diagnostic Retrieval Systems
Cv 9.00 2003 3,000,000 (e) 3,120,000
Goodrich (BF) 9.625 2001 10,000,000 11,380,100
Northrop Grumman 7.75 2016 8,000,000 (e) 7,967,680
Sequa 9.625 1999 10,000,000 10,225,000
United Technologies 8.875 2019 10,000,000 11,915,100
______________
Total 75,365,980
_____________________________________________________________________________________________________________________________
Airlines (1.8%)
AMR 9.80 2021 10,000,000 11,760,800
Continental Airlines 6.94 2015 15,000,000 (e) 14,621,250
7.82 2015 5,000,000 (e) 4,861,300
Delta Air Lines 10.125 2010 10,000,000 11,800,300
10.375 2022 3,700,000 4,556,846
United Air Lines 10.67 2004 14,400,000 17,057,520
______________
Total 64,658,016
_____________________________________________________________________________________________________________________________
Automotive & related (0.9%)
Exide 10.75 2002 6,000,000 6,532,500
General Motors Acceptance 7.625 1998 10,000,000 10,332,000
Magna Intl
Cv 5.00 2002 5,000,000 5,025,000
Mascotech
Cv 4.50 2003 6,500,000 5,159,375
Penda
Sr Nts 10.75 2004 4,500,000 3,729,375
_____________
Total 30,778,250
_____________________________________________________________________________________________________________________________
Building materials (1.3%)
Georgia-Pacific 8.125 2023 10,000,000 9,810,000
McQuay (AAF)
Sr Nts 8.875 2003 8,000,000 8,080,000
Owens-Corning Fiberglas 9.375 2012 6,900,000 7,910,367
Pulte
Sr Nts 7.00 2003 7,700,000 7,492,562
<PAGE>
Schuller Intl Group
Sr Nts 10.875 2004 7,500,000 8,381,250
Southdown
Sr Sub Nts 14.00 2001 4,000,000 4,410,000
______________
Total 46,084,179
_____________________________________________________________________________________________________________________________
Chemicals (0.8%)
General Chemical
Sr Sub Nts 9.25 2003 7,000,000 7,262,500
G-I Holdings
Zero Coupon Sr Disc Nts 12.92 1998 10,000,000 (g,i) 8,062,500
Grace (WR) 8.00 2004 10,420,000 10,960,069
Sifto Canada
Sr Sub Nts 8.50 2000 3,000,000 3,007,500
______________
Total 29,292,569
_____________________________________________________________________________________________________________________________
Communications equipment (0.3%)
Comcast Cellular
Zero Coupon 9.45 2000 14,000,000 (g) 10,535,000
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.5%)
Data General
SF Deb 8.375 2002 6,700,000 6,231,000
Softkey
Cv 5.50 2000 12,000,000 (e) 10,020,000
______________
Total 16,251,000
_____________________________________________________________________________________________________________________________
Electronics (0.6%)
Berg Electronics 11.375 2003 7,000,000 (e) 7,770,000
Reliance Electric 6.80 2003 6,000,000 6,151,680
Thomas & Betts 6.50 2006 9,200,000 (e) 8,932,464
______________
Total 22,854,144
_____________________________________________________________________________________________________________________________
Energy (2.0%)
Atlantic Richfield 9.125 2011 9,000,000 10,720,350
Oryx Energy 9.50 1999 4,000,000 4,265,360
Parker & Parsley Petroleum
Sr Nts 8.25 2007 9,500,000 9,855,395
PDV Amer 7.875 2003 15,000,000 13,707,600
Texaco Capital
Gtd Deb 7.50 2043 3,000,000 3,027,300
Gtd Deb 8.625 2032 10,000,000 11,898,300
USX 9.375 2022 17,500,000 19,801,775
______________
Total 73,276,080
_____________________________________________________________________________________________________________________________
Energy equipment & services (0.4%)
Foster Wheeler 6.75 2005 15,000,000 14,830,350
<PAGE>
Food (0.2%)
Specialty Foods
Sr Nts 10.25 2001 7,500,000 (e) 7,059,375
_____________________________________________________________________________________________________________________________
Furniture & Appliance (0.2%)
Interface 9.50 2005 7,500,000 (e) 7,725,000
_____________________________________________________________________________________________________________________________
Health care (0.2%)
Lilly (Eli) 6.77 2036 7,950,000 7,542,165
_____________________________________________________________________________________________________________________________
Health care services (1.7%)
Columbia/HCA Healthcare 6.91 2005 7,000,000 7,065,660
7.69 2025 4,000,000 4,103,320
Foundation Health
Sr Nts 7.75 2003 8,400,000 8,636,628
La Petite Holdings
Sr Secured Nts 9.625 2001 8,795,000 8,113,388
Magellan Health
Sr Sub Nts 11.25 2004 7,500,000 (e) 8,400,000
Merit Behavioral 11.50 2005 3,250,000 (e) 3,473,437
Tenet Healthcare
Sr Nts 8.625 2003 3,000,000 3,150,000
Sr Sub Nts 10.125 2005 15,000,000 16,650,000
_____________
Total 59,592,433
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.9%)
Caesars World
Sr Sub Nts 8.875 2002 6,000,000 6,367,500
MGM Grand Hotel Finance
1st Mtge 11.75 1999 10,000,000 10,762,500
1st Mtge 12.00 2002 10,000,000 11,025,000
Premier Parks
Sr Nts 12.00 2003 5,000,000 (e) 5,287,500
______________
Total 33,442,500
_____________________________________________________________________________________________________________________________
Media (5.0%)
Ackerley Communications
Sr Secured Nts 10.75 2003 6,000,000 (e) 6,457,500
Adelphia Communications
Pay-in-Kind -- 2004 3,142,500 (m) 2,733,975
Sr Deb 11.875 2004 7,000,000 7,122,500
Cablevision Systems
Sr Sub Deb 10.75 2004 4,000,000 4,255,000
Sr Sub Nts 9.25 2005 6,000,000 6,255,000
Continental Cablevision
Sr Deb 8.875 2005 5,000,000 5,575,000
Sr Sub Deb 11.00 2007 2,500,000 2,925,000
Cox Communications 7.625 2025 7,000,000 7,093,590
News Amer Holdings 8.875 2023 17,000,000 18,574,710
News Corp 10.15 2010 3,838,976 (e) 4,490,450
Outdoor Systems
Sr Nts 10.75 2003 7,800,000 7,878,000
Paramount Communications
Sub Deb 7.00 2003 5,000,000 4,798,000
Plitt Theatres 10.875 2004 10,500,000 10,788,750
Robin Media Group 11.125 1997 5,000,000 5,000,000
Scandinavian Broadcasting
Cv Sub Deb 7.25 2005 6,000,000 6,240,000
Tele-Communications
Sr Deb 7.875 2013 3,000,000 2,984,190
Sr Deb 9.80 2012 8,000,000 9,305,760
Sr Deb 9.875 2022 10,000,000 11,731,800
Turner Broadcasting
Sr Nts 8.375 2013 10,000,000 10,066,300
United Artist Theatre Center 9.30 2015 10,000,000 (e) 9,975,000
Universal Outdoor
Sr Nts 11.00 2003 5,000,000 5,037,500
Viacom Intl
Sr Nts 7.75 2005 3,000,000 3,146,250
Sub Deb 8.00 2006 26,300,000 26,037,000
______________
Total 178,471,275
_____________________________________________________________________________________________________________________________
Metals (0.5%)
Magma Copper
Sr Sub Nts 12.00 2001 10,000,000 11,075,000
Santa Fe Pacific Gold
Sr Deb 8.375 2005 5,000,000 5,118,750
______________
Total 16,193,750
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (0.7%)
Boc Group
Sr Nts 8.73 1996 6,000,000 (e) 6,010,620
Coltec Inds
Sr Nts 9.75 2000 5,000,000 5,187,500
Mark IV Inds
Sr Sub Nts 8.75 2003 8,000,000 8,400,000
Talley Mfg & Technology
Sr Nts 10.75 2003 7,000,000 7,210,000
______________
Total 26,808,120
_____________________________________________________________________________________________________________________________
Paper & packaging (2.5%)
Federal Paper Board 10.00 2011 11,900,000 14,672,224
Fort Howard 11.00 2002 9,087,473 9,655,440
Gaylord Container
Sr Sub Deb 12.75 2005 8,000,000 8,300,000
Intl Paper 5.125 2012 9,000,000 7,360,380
Plastic Containers
Sr Secured Nts 10.75 2001 10,000,000 10,287,500
Pope & Talbot 8.375 2013 11,000,000 10,446,920
Scotia Pacific Holding 7.95 2015 4,438,182 4,579,360
Silgan
Sr Sub Nts 11.75 2002 10,000,000 10,812,500
Stone Container
1st Mtge 10.75 2002 5,300,000 5,406,000
Sr Nts 12.625 1998 3,000,000 3,228,750
Warren (SD)
Sr Nts 12.00 2004 5,000,000 (i) 5,462,500
______________
Total 90,211,574
_____________________________________________________________________________________________________________________________
Restaurants & lodging (0.4%)
Flagstar
Sr Nts 10.875 2002 8,000,000 7,220,000
Hammons (John Q) Hotel
1st Mtge 8.875 2004 7,000,000 7,052,500
______________
Total 14,272,500
_____________________________________________________________________________________________________________________________
Retail (1.3%)
Bruno's
Sr Sub Nts 10.50 2005 1,250,000 1,218,750
Dairy Mart Convenience Stores
Sr Sub Nts 10.25 2004 6,250,000 5,562,500
Eye Care Center 12.00 2003 5,000,000 4,900,000
Kash n' Karry Food Stores
Pay-in-Kind -- 2003 8,186,086 (m) 8,165,621
Musicland Group
Sr Sub Nts 9.00 2003 7,000,000 3,990,000
Penn Traffic
Sr Nts 8.625 2003 2,000,000 1,850,000
Sr Sub Nts 9.625 2005 9,000,000 7,717,500
Pueblo Xtra Intl
Sr Nts 9.50 2003 7,000,000 6,501,250
Ralphs Grocery
Sr Sub Nts 10.45 2004 4,600,000 4,519,500
Wal-Mart Stores 8.875 2011 3,500,000 3,660,860
______________
Total 48,085,981
_____________________________________________________________________________________________________________________________
Soaps & cosmetics (0.6%)
Coty
Sr Sub Nts 10.25 2005 5,500,000 5,926,250
Revlon Consumer Products
Sr Sub Nts 9.375 2001 7,000,000 7,175,000
Sweetheart Cup
Sr Sub Nts 9.625 2000 6,500,000 6,768,125
______________
Total 19,869,375
_____________________________________________________________________________________________________________________________
Textiles & apparel (0.6%)
Dominion Textiles
Sr Nts 8.875 2003 7,500,000 7,481,250
Stevens (JP) 9.00 2017 6,000,000 5,962,500
WestPoint Stevens
Sr Nts 8.75 2001 7,500,000 7,621,875
______________
Total 21,065,625
<PAGE>
Miscellaneous (0.5%)
ECM Funding LP 11.92 2002 2,749,367 (i) 3,024,303
Norcal Waste Systems
Sr Nts 12.50 2005 10,000,000 (e) 10,475,000
SC Intl
Sr Sub Nts 13.00 2005 3,900,000 (b) 4,251,000
______________
Total 17,750,303
_____________________________________________________________________________________________________________________________
Transportation (0.3%)
Burlington Northern 7.00 2025 10,000,000 9,428,700
_____________________________________________________________________________________________________________________________
Utilities (15.0%)
Electric (10.1%)
Appalachian Power 8.50 2022 5,000,000 5,504,350
Arizona Public Service
1st Mtge 8.00 2025 5,800,000 5,958,804
1st Mtge 8.75 2024 9,000,000 9,633,510
Sale Lease-Backed Obligation 8.00 2015 12,556,000 12,789,667
Cajun Electric Power Cooperative
Mtge Trust 8.92 2019 5,000,000 5,586,250
California Energy
Sr Secured Nts 9.875 2003 5,000,000 5,337,500
Cleveland Electric Illuminating
1st Mtge 9.50 2005 14,000,000 14,123,900
Commonwealth Edison
1st Mtge 8.375 2023 5,000,000 5,315,400
1st Mtge 9.75 2020 10,000,000 11,114,100
1st Mtge 9.875 2020 4,000,000 4,592,280
Consumers Power
1st Mtge 7.375 2023 10,000,000 9,445,700
EIP Funding 10.25 2012 6,944,000 6,883,240
First Palo Verde Funding 10.15 2016 13,400,000 13,158,130
10.30 2014 4,500,000 (b) 4,469,445
Gulf States Utilities
1st Mtge 8.70 2024 6,000,000 6,107,400
Long Island Lighting
Gen Ref Mtge 9.625 2024 28,888,000 29,091,083
Gen Ref Mtge 9.75 2021 15,500,000 15,646,165
Louisiana Power & Light
1st Mtge 10.125 2020 3,500,000 3,529,750
Louisiana Power & Light Waterford
Sale Lease-Backed Obligation 10.67 2017 7,500,000 8,076,300
Midland Cogeneration Venture 11.75 2005 14,900,000 15,980,250
Sub Secured Sale
Lease-Backed Obligation 10.33 2002 11,868,830 12,699,649
Niagara Mohawk Power
1st Mtge 7.75 2006 19,600,000 17,861,872
North Atlantic Energy
1st Mtge 9.05 2002 6,606,000 6,940,396
Pacific Gas & Electric
1st Ref Mtge 7.25 2026 14,000,000 13,231,260
Pennsylvania Power & Light
1st Mtge 9.25 2019 900,000 969,462
Public Service Electic & Gas
1st Ref Mtge 6.75 2006 5,500,000 5,563,965
RGS Funding
Sale Lease-Backed Obligation 9.82 2022 9,940,610 12,285,997
Salton Sea
Sr Nts 7.84 2010 10,000,000 (e) 10,066,300
San Diego Gas & Electric
1st Mtge 9.625 2020 16,925,000 19,329,873
Sithe Independence Funding 8.50 2007 7,500,000 7,727,625
9.00 2013 4,700,000 4,901,254
Texas-New Mexico Power
1st Mtge 9.25 2000 6,000,000 6,435,000
1st Mtge 10.00 2017 2,939,000 3,038,191
Secured Deb 10.75 2003 5,000,000 5,462,500
Texas Utilities Electric
1st Collateral Trust 7.375 2025 3,000,000 2,856,570
1st Collateral Trust 9.75 2021 9,900,000 11,151,756
1st Mtge 7.625 2025 10,000,000 9,752,800
Secured Facility Bond 9.45 2005 4,129,000 4,564,940
Tucson Electric Power
1st Mtge 8.50 2009 7,000,000 6,798,750
Wisconsin Electric Power 6.875 2095 8,000,000 7,405,520
______________
Total 356,049,404
______________________________________________________________________________________________________________________________
Gas (2.1%)
Coastal
Sr Deb 7.75 2035 6,000,000 5,869,260
Sr Deb 10.25 2004 7,750,000 9,396,565
Equitable Resources 7.50 1999 5,000,000 5,208,350
Questar Pipeline 9.375 2021 8,000,000 8,911,040
Southern California Gas
1st Mtge 7.375 2023 6,900,000 6,792,774
Southwest Gas 9.75 2002 7,900,000 9,134,375
Tenneco 9.00 2012 9,000,000 10,252,980
Tennessee Gas Pipeline 6.00 2011 3,600,000 3,101,832
Transco Energy 9.375 2001 4,000,000 4,478,080
9.875 2020 4,800,000 5,878,992
TransTexas Gas
Sr Secured Nts 11.50 2002 5,000,000 5,087,500
______________
Total 74,111,748
_____________________________________________________________________________________________________________________________
Telephone & other (2.8%)
Ameritech Capital Funding
Gtd Deb 9.10 2016 16,000,000 19,190,720
BellSouth Telecommunications 6.50 2005 7,200,000 7,233,840
7.00 2095 10,000,000 9,775,200
GTE 10.25 2020 7,000,000 8,142,540
New York Tel 9.375 2031 23,665,000 26,433,805
Pacific Bell 6.625 2034 10,000,000 9,108,600
7.125 2026 10,200,000 10,180,824
7.375 2043 10,000,000 9,939,900
______________
Total 100,005,429
_____________________________________________________________________________________________________________________________
Municipal Bonds (0.4%) (k)
Los Angeles County Pension Obligation Capital
Appreciation Series C Zero Coupon (MBIA Insured) 7.09 2008 10,000,000 (g) 4,243,100
San Bernardino County Finance Authority
Pension Obligation Revenue Bond (MBIA Insured) 6.99 2010 2,000,000 1,980,180
7.09 2011 8,000,000 7,918,160
______________
Total 14,141,440
_____________________________________________________________________________________________________________________________
Foreign (13.0%)(j)
ABN Amro
(U.S. Dollar) 7.75 2023 9,000,000 9,365,130
Asian Pulp & Paper
(U.S. Dollar) 11.75 2005 5,000,000 4,962,500
Argentina Republic
(U.S. Dollar) 5.00 2023 18,500,000 9,758,750
Argentina Republic Euro
(U.S. Dollar) 6.81 2005 6,750,000 4,805,156
Austria Republic Euro
(U.S. Dollar) 10.00 1998 5,000,000 5,436,460
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 9,200,000 9,641,048
Banco Nacional de Comercio Exterio
(U.S. Dollar) 7.25 2004 12,000,000 9,720,000
Bank of China
(U.S. Dollar) 8.25 2014 10,000,000 9,541,400
Brazil C Bonds
(U.S. Dollar) 4.00 2014 23,856,390 14,403,295
Brazil Disc ZL
(U.S. Dollar) 6.81 2024 25,000,000 (f) 15,531,250
British Airways
(U.S. Dollar) Cv 8.82 2006 2,500,000 (i) 3,942,425
Carter Holt Harvey
(U.S. Dollar) 7.625 2002 5,000,000 5,256,100
(U.S. Dollar) 8.875 2004 10,500,000 11,820,060
Celcaribe
(U.S. Dollar) Zero Coupon 2.14 2004 2,870,000 (e,g) 2,755,200
(U.S. Dollar) Zero Coupon 24.37 2004 3,250,000 (e,g) 2,405,000
China Republic
(U.S. Dollar) 9.00 1996 10,000,000 9,392,500
Doman Inds
(U.S. Dollar) 8.75 2004 8,000,000 7,630,000
Empressas La Moderna
(U.S. Dollar) 11.375 1999 3,000,000 (e) 2,977,500
Ford Capital
(U.S. Dollar) 9.125 1998 4,000,000 4,267,800
(U.S. Dollar) 9.50 2010 18,350,000 22,289,378
Govt of Poland Euro
(U.S. Dollar) 6.81 2024 17,950,000 15,448,219
Govt of Poland PDI Euro
(U.S. Dollar) 3.75 2014 24,600,000 (f) 18,342,375
Groupe Videotron
(U.S. Dollar) 10.625 2005 5,000,000 5,500,000
GST Telecommunications
(U.S. Dollar) 13.875 2005 1,045,000 (e,f) 6,113,250
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 14,000,000 (e) 13,079,780
Helsinki City
(U.S. Dollar) Sr Nts 9.25 2007 4,900,000 (i) 4,971,295
Honam Oil Refinery
(U.S. Dollar) 7.125 2005 9,000,000 (e) 8,879,310
Korea Electric Power
(U.S. Dollar) 7.75 2013 8,900,000 9,000,125
(U.S. Dollar) 8.00 2002 2,800,000 2,995,076
MacMillan Bole Delaware
(U.S. Dollar) 8.50 2004 3,000,000 3,262,440
Mass Transit Railway
(U.S. Dollar) 7.25 2005 8,000,000 8,070,640
Matsushita Electric
(Japanese Yen) Cv 1.30 2002 185,000,000 1,922,150
Mexican States United
(U.S. Dollar) 6.77 2019 3,000,000 2,133,750
(U.S. Dollar) 6.25 2019 18,000,000 11,081,250
Nippon Express
(Japanese Yen) Cv 1.00 2004 460,000,000 4,572,400
Petronas
(U.S. Dollar) 7.75 2015 10,000,000 (e) 10,346,600
Phoenix Shannon
(U.S. Dollar) Cv 9.50 2000 2,000,000 (e) 1,917,500
Placer Dome
(U.S. Dollar) 7.125 2003 5,000,000 5,084,550
Qantas Air
(U.S. Dollar) 7.50 2003 14,000,000 (e) 14,178,080
Quno
(U.S. Dollar) Sr Nts 9.125 2005 7,000,000 7,262,500
Reliance Inds
(U.S. Dollar) 8.125 2005 7,000,000 (e) 7,047,810
Repap New Brunswick
(U.S. Dollar) 9.875 2000 7,000,000 7,140,000
Republic of Brazil
(U.S. Dollar) 6.875 2012 22,300,000 (f) 13,421,813
Republic of Brazil Euro
(U.S. Dollar) 4.25 2024 16,000,000 8,140,000
Republic of Columbia
(U.S. Dollar) 7.25 2004 14,750,000 14,148,495
Republic of Israel
(U.S. Dollar) 6.375 2005 7,300,000 7,085,088
Republic of Italy
(U.S. Dollar) 6.875 2023 9,000,000 8,289,360
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 7.02 2014 3,700,000 2,441,042
Rogers Cantel Mobile
(U.S. Dollar) Sr Secured Gtd Nts 10.75 2001 11,000,000 11,591,250
Rogers Communications
(U.S. Dollar) Zero Coupon Cv 5.50 2013 6,000,000 (g) 2,212,500
Scotland Bank
(U.S. Dollar) 8.80 2004 20,500,000 (e) 23,010,225
Tarkett Intl
(U.S. Dollar) 9.00 2002 7,000,000 (i) 7,507,500
Teekay Shipping
(U.S. Dollar) 8.32 2008 4,200,000 4,221,000
Telekom Malaysia
(U.S. Dollar) 7.875 2025 15,000,000 (e) 15,625,650
Transdigm
(U.S. Dollar) 13.00 2000 5,000,000 (i) 4,575,000
WMC Finance
(U.S. Dollar) 7.25 2013 10,000,000 10,067,900
______________
Total 466,586,875
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $3,123,902,316) 3,900,133,274 $3,266,799,544
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Stocks and other (1.4%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
ABN Amro Holdings
6% Cv Preferred 95,900 $ 4,254,412
Amer Life Holdings
$2.16 Cm Preferred 120,000 3,000,000
Cablevision Systems
Pay-in-Kind Preferred 100,000 (e,h,m) 10,300,000
Celcaribe
Common 528,450 (e,h) 607,717
Crown Cork
1.89% Cv Preferred 125,000 (h) 6,046,875
Dairy Mart
Warrants 51,666 (i) 68,716
EnviroSource
7.25% Cv Preferred 30,000 (h) 4,125,000
Eye Care Center
Warrants 5,000 50,000
First Nationwide Bank
11.50% Cm Preferred 80,000 9,080,000
Kash n' Karry Food Stores
Common 149,570 (h) 3,346,629
Natl Health Investors
8.50% Cv Preferred 83,000 2,458,875
Pullman
Common Series B 182,094 (h,i) 1,547,799
Security Pacific
Cv Preferred 136,500 3,651,375
Transdigm
Warrants 3,989 (i) 398,900
Triangle Wire Cable
Common 211,111 (h,i) 211,111
Webcraft Technology
Common 32,502 (h,i) 325
_____________________________________________________________________________________________________________________________
Total stocks and other
(Cost: $52,609,685) 1,934,782 $ 49,147,734
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (5.9%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (0.6%)
Federal Home Loan Mtge Corp Disc Nt
03-15-96 5.15% $ 7,600,000 $ 7,584,838
Federal Natl Mtge Assn Disc Nts
03-01-96 5.17 7,700,000 7,700,000
03-18-96 5.14 5,100,000 5,087,669
______________
Total 20,372,507
_____________________________________________________________________________________________________________________________
Commercial paper (5.3%)
Alabama Power
05-16-96 5.11 4,600,000 4,547,362
American General Capital Services
03-06-96 5.47 10,000,000 (l) 9,992,458
03-11-96 5.48 4,600,000 (l) 4,593,062
American General Finance
03-14-96 5.24 5,300,000 5,290,029
AT&T
03-28-96 5.23 7,500,000 7,470,750
04-01-96 5.40 7,000,000 6,967,030
Bayshore Fuel
04-12-96 5.22 5,547,000 5,513,477
CAFCO
04-24-96 5.21 6,900,000 6,846,490
Chevron Transport
03-05-96 5.48 7,000,000 (l) 6,995,769
Ciesco LP
03-13-96 5.45 10,100,000 (l) 10,081,820
CIT Group Holdings
03-27-96 5.24 3,200,000 3,187,959
Colgate Palmolive
03-12-96 5.47 10,000,000 (l) 9,980,236
Commercial Credit
03-25-96 5.23 12,800,000 12,755,541
04-09-96 5.23 2,500,000 2,485,917
Consolidated Rail
04-04-96 5.24 5,000,000 (l) 4,975,397
Dresdner U.S. Finance
05-22-96 5.24 8,100,000 8,000,089
Household Finance
03-12-96 5.24 6,700,000 6,689,334
03-21-96 5.24 7,500,000 7,478,292
Metlife Funding
04-25-96 5.18 4,100,000 4,066,604
Natl Australia Funding
03-19-96 5.39 7,200,000 7,180,776
Norfolk Southern
03-27-96 5.39 13,100,000 (l) 13,047,577
04-29-96 5.20 4,500,000 (l) 4,460,036
Northern States Power
03-26-96 5.20 7,300,000 7,273,740
PepsiCo
04-02-96 5.21 2,500,000 2,488,489
Pitney Bowes Credit
03-18-96 5.22 6,000,000 5,985,267
03-22-96 5.39 6,500,000 6,479,752
Reed Elsevier
03-26-96 5.20 1,700,000 (l) 1,693,885
SAFECO Credit
04-19-96 5.18 4,100,000 4,070,459
St. Paul Companies
03-14-96 5.22 3,100,000 (l) 3,094,190
Societe Generale North America
04-16-96 5.44 1,100,000 1,092,289
Toyota Motor
03-22-96 5.40 4,200,000 4,185,157
03-29-96 5.25 800,000 796,746
______________
Total 189,765,979
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $210,158,933) 210,947,000 $ 210,138,486
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $3,386,670,934)(n) 4,113,015,056 $3,526,085,764
_____________________________________________________________________________________________________________________________
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 Offed Rate) Index. Interest rate disclosed is the rate in
effect on Feb. 29, 1996. Inverse floaters in the aggregate represent 0.3% of the Fund's net assets as of Feb. 29, 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 to reflect current market conditions; rate shown is the effective rate on Feb. 29, 1996.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(h) Presently non-income producing.
(i) Identifies issues considered to be illiquid (see Note 4 to the financial statements). Information concerning such
security holdings at Feb. 29, 1996, is as follows:
Acquisition
Security date Cost
_______________________________________________________________________________________________
British Airways
8.82% Cv 2006 02-07-96 $3,840,000
Dairy Mart
Warrants 11-28-95 --
ECM Funding LP
11.92% 2002 04-13-92 3,030,093
G-I Holdings
Zero Coupon Sr Disc Nts
12.92% 1998 03-23-95 2,195,258
Zero Coupon Sr Disc Nts
12.92% 1998 08-03-95 819,676
Zero Coupon Sr Disc Nts
12.92% 1998 02-27-96 4,410,565
Helsinki City
9.25% Sr Nts 2007 02-07-95 4,900,000
Pullman
Common Series B 01-05-87 4,837,500
Tarkett Intl
9% 2002 02-22-94 7,000,000
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
Warren (SD)
12% Sr Nts 2004 12-13-94 5,000,000
Webcraft Technology
Common 12-22-86 16,875
(j) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency
indicated.
(k) The following abbreviation is used in portfolio descriptions to identify the issuer of the issue:
MBIA -- Municipal Bond Investors Assurance
(l) 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.
(m) 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.
(n) At Feb. 29, 1996, the cost of securities for federal income tax purposes was approximately $3,383,508,000 and the
approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $182,674,000
Unrealized depreciation (34,759,000)
___________________________________________________________________________________
Net unrealized appreciation $147,915,000
___________________________________________________________________________________
/TABLE
<PAGE>
PAGE
Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board member
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar
Corporation.
_____________________________________________________________________
Interested board membrs who are officers and/or employees of AEFC
William H. Dudley
Exective vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
<PAGE>
PAGE
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Vice president, general counsel and secretary of all funds in the IDS
MUTUAL FUND GROUP.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the IDS
MUTUAL FUND GROUP.
<PAGE>
PAGE
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 deposit (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) Two coins<PAGE>
PAGE
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
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<PAGE>
PAGE
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
Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
(icon of) bird in a nest
<PAGE>
PAGE
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 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 stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) electrical 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<PAGE>
PAGE
Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) two trees
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
<PAGE>
PAGE
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. This is the most aggressive and most speculative
IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
planner 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
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 (TouchTone 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
