1997 SEMIANNUAL REPORT
IDS Bond Fund
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.
Distributed by American Express Financial Advisors Inc., Member SIPC.
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
alsoholds 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 21
Board members and officers 35
IDS mutual funds 36
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many 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.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
President of the Fund
<PAGE>
From the portfolio manager
A rebound in the bond market last fall set the stage for a solid
performance by IDS Bond Fund during the first half of its fiscal year --
September 1996 through February 1997. For the six months, investors in the
Fund's Class A shares realized a total return (net asset value change plus
distributions) of 7.6%.
After suffering through several months of lackluster performance, the bond
market encountered a more favorable environment when the period began last
September. By that time, what had been troubling the market -- the
possibility of a stronger economy leading to higher inflation and, thus,
higher interest rates -- had pretty much been set aside. In fact,
supported by unthreatening reports on wage rates and inflation, as well as
expected results in the presidential and congressional elections, the
outlook soon turned downright positive. This reversal in investment
psychology drove buyers back into the market, sending long-term interest
lower and bond prices higher throughout the fall.
Winter doldrums
The trend switched direction in December and January, however, as
stronger-than-expected economic growth caused long-term interest rates to
head higher. But once again investors were subsequently reassured by still
another report of low inflation, which spawned increased buying, a
downturn in interest rates and, in turn, a somewhat better bond market in
February.
The Fund's performance basically tracked that of the broad bond market -
surging last fall, flattening out through January, then improving in
February. Because I expected the market to be somewhat volatile, I
structured the portfolio with an essentially neutral duration (a function
of the average maturity of the securities in the portfolio that determines
how sensitive the portfolio is to changes in long-term interest rates).
Ultimately, this helped temper fluctuations in the Fund's net asset value
during interest-rate swings.
A mix of investments
As has been the case for some time, the portfolio remained diversified
among several types of securities of varying quality. While the majority
(about two-thirds) of investments were in investment-grade, or
high-quality, bonds, including those issued by corporations and the
federal government and its agencies, about a quarter were in high-yield
and emerging market issues, which are considered to be below investment
grade. The latter two groups performed especially well during the past
six months, while also enhancing the Fund's yield. In an additional effort
to boost performance, I added a small amount of a new type of security
- trust preferreds, which are equivalent to investment-grade corporate
bonds but with higher interest payments.
As this report is being prepared in mid-February, the investment
environment is mixed. The latest reports show that inflation is still
subdued, while the economy appears to be stronger than it has been in some
months. Should economic growth remain relatively robust, I think it's
likely that the Federal Reserve will raise short-term interest rates to
head off a spike in inflation. If so, long-term rates would probably
follow suit, making for tougher going for the bond market. Given that
possibility, I'm maintaining the neutral structure of the portfolio with
regard to interest rates and concentrating instead on maintaining a
healthy yield.
Frederick Quirsfeld
(picture of)Frederick Quirsfeld
Portfolio manager
<PAGE>
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ------------------------------------
Feb. 28, 1997 $ 5.16
Aug. 31, 1996 $ 4.99
Increase $ 0.17
- ------------------------------------
Distributions
Sept. 1, 1996 - Feb. 28, 1997
- ------------------------------------
From income $ 0.18
From capital gains $ --
Total distributions $ 0.18
- ------------------------------------
Total return* +7.6%**
- ------------------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ------------------------------------
Feb. 28, 1997 $ 5.16
Aug. 31, 1996 $ 4.99
Increase $ 0.17
- ------------------------------------
Distributions
Sept. 1, 1996 - Feb. 28, 1997
- ------------------------------------
From income $ 0.16
From capital gains $ --
Total distributions $ 0.16
- ------------------------------------
Total return* +6.8%**
- ------------------------------------
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
- ------------------------------------
Feb. 28, 1997 $ 5.16
Aug. 31, 1996 $ 4.99
Increase $ 0.17
- ------------------------------------
Distributions
Sept. 1, 1996 - Feb. 28, 1997
- ------------------------------------
From income $ 0.18
From capital gains $ --
Total distributions $ 0.18
- ------------------------------------
Total return* +7.8%**
- ------------------------------------
*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>
The Fund's ten largest holdings
Percent Value
(of Fund's net assets) (as of Feb. 28, 1997)
Virgina Electric Power .94% $34,039,250
6.75% 1st Mtge 2007
Long Island Lighting .81 29,301,387
9.625% Gen Ref Mtge 2024
Viacom Intl .72 26,037,000
8.00% Sub Deb 2006
New York Tel .71 25,843,363
9.375% 2031
Tenet Healthcare .67 24,282,500
10.125% Sr Sub Nts 2005
Scotland Bank .62 22,300,720
8.80% 2004
Ford Capital .59 21,426,928
9.50% 2010
Salomon .58 21,195,930
7.00% Sr Nts 1999
USX .56 20,171,725
9.375% 2022
Turner Broadcasting .52 18,951,855
8.40% Sr Deb 2024
Excludes U.S. Treasury and government agency holdings.
The ten holdings listed here make up 6.72% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Statement of assets and liabilities IDS Bond Fund, Inc.
Feb. 28, 1997
Assets (Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $3,503,329,582) $3,603,257,106
Receivable for investment securities sold 94,343,918
Dividends and accrued interest receivable 56,387,790
U.S. government securities held as collateral (Note 6) 62,961,897
-------------
Total assets 3,816,950,711
-------------
Liabilties
Disbursements in excess of cash on demand deposit 1,855,095
Dividends payable to shareholders 1,404,614
Payable for investment securities purchased 89,353,415
Payable upon return of securities loaned (Note 6) 100,585,647
Accrued investment management services fee 48,323
Accrued distribution fee 18,672
Accrued service fee 16,965
Accrued transfer agency fee 9,474
Accrued administrative services fee 4,299
Other accrued expenses 43,480
-------------
Total liabilities 193,339,984
-------------
Net assets applicable to outstanding capital stock $3,623,610,727
==============
Represented by
Capital stock-- authorized 10,000,000,000 shares of $.01 par value $ 7,023,686
Additional paid-in capital 3,484,214,367
Undistributed net investment income 3,057,698
Accumulated net realized gain (Note 1) 29,393,562
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies (Note 1) 99,921,414
-------------
Total -- representing net assets applicable to outstanding capital stock $3,623,610,727
==============
Net assets applicable to outstanding shares: Class A $2,627,686,242
Class B $ 907,835,749
Class Y $ 88,088,736
Net asset value per share of outstanding capital stock:
Class A shares 509,327,729 $ 5.16
Class B shares 175,966,853 $ 5.16
Class Y shares 17,073,983 $ 5.16
See accompanying notes to financial statements.
<PAGE>
Statement of operations
IDS Bond Fund, Inc.
Six months ended Feb. 28, 1997
Investment income
(Unaudited)
Income:
Dividends $ 1,959,860
Interest 137,112,120
-------------
Total income 139,071,980
-------------
Expenses (Note 2):
Investment management services fee 8,714,854
Distribution fee -- Class B 3,310,343
Transfer agency fee 1,822,364
Incremental transfer agency fee-- Class B 36,881
Service fee
Class A 2,244,188
Class B 763,457
Administrative services fees and expenses 789,902
Compensation of board members 18,530
Compensation of officers 9,580
Custodian fees 83,884
Postage 192,957
Registration fees 70,920
Reports to shareholders 57,962
Audit fees 19,750
Administrative 13,037
Other 4,311
-------------
Total expenses 18,152,920
Earnings credits on cash balances (Note 2) (90,473)
-------------
Total net expenses 18,062,447
-------------
Investment income-- net 121,009,533
Realized and unrealized gain(loss) -- net
Net realized gain on security and foreign currency transactions
(including gain of $7,118 from foreign currency transactions) (Note 3) 40,415,573
Net realized loss on financial futures contracts (1,962,975)
Net realized loss on option contracts written (Note 5) (119,193)
-------------
Net realized gain on investments and foreign currencies 38,333,405
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 83,979,765
-------------
Net gain on investments and foreign currencies 122,313,170
-------------
Net increase in net assets resulting from operations $243,322,703
============
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
IDS Bond Fund, Inc.
Operations and distributions Feb. 28, 1997 Aug. 31, 1996
Six months ended Year ended
(Unaudited)
Investment income-- net $ 121,009,533 $ 238,059,906
Net realized gain on investments and foreign currencies 38,333,405 36,066,563
Net change in unrealized appreciation or depreciation of
investments and on translation of assets and liabilities
in foreign currencies 83,979,765 (96,036,937)
--------------- ---------------
Net increase in net assets resulting from operations 243,322,703 178,089,532
--------------- ---------------
Distributions to shareholders from:
Net investment income
Class A (90,981,821) (175,703,125)
Class B (27,409,768) (52,732,279)
Class Y (3,156,153) (5,540,758)
--------------- ---------------
Total distributions (121,547,742) (233,976,162)
--------------- ---------------
Capital share transactions (Note 7)
Proceeds from sales
Class A shares (Note 2) 177,629,585 589,054,034
Class B shares 130,104,065 377,985,661
Class Y shares 14,598,354 46,288,572
Reinvestment of distributions at net asset value
Class A shares 62,068,808 116,649,304
Class B share 24,179,139 46,578,257
Class Y shares 3,156,153 5,540,758
Payments for redemptions
Class A shares (264,293,079) (464,239,661)
Class B shares (Note 2) (123,878,922) (346,225,740)
Class Y shares (20,420,093) (26,441,033)
--------------- ---------------
Increase in net assets from capital share transactions 3,144,010 345,190,152
--------------- ---------------
Total increase in net assets 124,918,971 289,303,522
Net assets at beginning of period 3,498,691,756 3,209,388,234
--------------- ---------------
Net assets at end of period
(including undistributed net investment income of
$3,057,698 and $3,595,907) $3,623,610,727 $3,498,691,756
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Bond Fund, Inc.
(Unaudited as to Feb. 28, 1997)
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 maybe subject to a contingent
deferred sales charge. Class B 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.
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 the 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 an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost
of a security for a purchased put or call option is adjusted by the amount
of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Fund may buy and sell financial futures contracts traded on any U.S. or
foreign exchange. The Fund also may buy or write put and call options on
these 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 for foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividend, interest
income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the 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.
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 its 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. Additional administrative services paid by the Fund are office
expenses, consultant's fees and compensation of officers and employees.
Under this agreement, the Fund also pays taxes, audit and certain legal
fees, registration fees for shares, compensation of board members,
corporate filing fees, organizational expenses, and any other expenses
properly payable by the Fund approved by the board.
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.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $4,168,067 for Class A and $350,775 for Class
B for the six months ended Feb. 28, 1997.
During the six months ended Feb. 28, 1997 the Fund's custodian and transfer
agency fees were reduced by $90,473 as a result of earning credits from
overnight cash balances.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $965,505,235 and $897,273,672,
respectively, for the six months ended Feb. 28, 1997. Realized gains and
losses are determined on an identified cost basis.
4. Illiquid securities
At Feb. 28, 1997, 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. 28, 1997 was $33,437,536
representing 0.9% 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. Option contracts written
The number of contracts and premium amounts associated with option
contracts written (see Summary of significant accounting policies) is as
follows:
Period ended Feb. 28, 1997
- -------------------------------------------------------------------------------
Calls
- -------------------------------------------------------------------------------
Contracts Premium
- -------------------------------------------------------------------------------
Balance Aug. 31, 1996 -- $ --
Opened 68,600 150,920
Closed (68,600) (150,920)
- -------------------------------------------------------------------------------
Balance Feb. 28, 1997 -- $ --
- -------------------------------------------------------------------------------
6. Lending of portfolio securities
At Feb. 28, 1997, securities valued at $97,498,290 were on loan to brokers.
For collateral, the Fund received $37,623,750 in cash and U.S. government
securities valued at $62,961,897. Income from securities lending amounted
to $53,123 for the six months ended Feb. 28, 1997. 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.
7. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Feb. 28, 1997
Class A Class B Class Y
- --------------------------------------------------------------------------------
Sold 34,609,822 25,335,315 2,839,209
Issued for reinvested 12,090,944 4,712,791 623,079
distributions
Redeemed (51,505,934) (24,139,792) (3,989,351)
- --------------------------------------------------------------------------------
Net increase (decrease) (4,805,168) 5,908,314 (527,063)
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
8. 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.
<PAGE>
9. Financial highlights
The tables below shows certain important financial information for
evaluating the Fund's results.
<TABLE>
<CAPTION>
Fiscal period ended Aug. 31,
Per share income and capital changes*
Class A
1997** 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $4.99 $5.05 $4.91 $5.48 $5.11 $4.74 $4.39 $4.74 $4.60 $4.72
beginning of period
Income from investment operations:
Net investment income .18 .36 .38 .41 .40 .40 .41 .40 .42 .44
Net gains (losses) .17 (.07) .23 (.51) .38 .37 .33 (.36) .15 (.12)
(both realized and unrealized)
Total from investment .35 .29 .61 (.10) .78 .77 .74 .04 .57 .32
operations
Less distributions:
Dividends from net (.18) (.35) (.37) (.41) (.41) (.40) (.39) (.39) (.43) (.44)
investment income
Distributions from -- -- (.10) (.06) -- -- -- -- -- --
realized gains
Total distributions (.18) (.35) (.47) (.47) (.41) (.40) (.39) (.39) (.43) (.44)
Net asset value, $5.16 $4.99 $5.05 $4.91 $5.48 $5.11 $4.74 $4.39 $4.74 $4.60
end of period
Ratios/supplemental data
Class A
1997** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $2,628 $2,563 $2,363 $2,249 $2,490$2,174 $1,902 $1,730 $1,811 1,733
period (in millions)
Ratio of expenses to .82% .84% .78% .68% .70% .72% .77% .77% .75% .73%
average daily net assets#
Ratio of net income to 6.93% 7.01% 7.84% 7.71% 7.78% 8.29% 9.03% 8.83% 9.04% 9.45%
average daily net assets
Portfolio turnover rate 28% 45% 43% 40% 60% 64% 74% 81% 97% 76%
(excluding short-term
securities)
Total return 7.6% 5.8% 13.7% (2.0%) 15.8% 16.9% 17.6% .9% 13.0% 7.2%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Six months ended Feb. 28, 1997 (Unaudited).
Adjusted to an annual basis
Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
</TABLE>
Fiscal period ended Aug. 31,
Per share income and capital changes*
Class B Class Y
1997*** 1996 1995** 1997*** 1996 1995**
Net asset value, $4.99 $5.05 $4.79 $4.99 $5.05 $4.79
beginning of period
Income from investment operations:
Net investment income .16 .32 .17 .18 .37 .19
Net gains (both realized
and unrealized) .17 (.07) .26 .17 (.07) .26
Total from investment .33 .25 .43 .35 .30 .45
operations
Less distributions:
Dividends from net (.16) (.31) (.17) (.18) (.36) (.19)
investment income
Net asset value, $5.16 $4.99 $5.05 $5.16 $4.99 $5.05
end of period
Class B Class Y
1997*** 1996 1995** 1997*** 1996 1995**
Net assets, end of $908 $848 $782 $88 $88 $64
period (in millions)
Ratio of expenses to 1.58% 1.60% 1.63% .65% .67% .67%
average daily net assets#
Ratio of net income to 6.17% 6.24% 6.81% 7.10% 7.19% 8.44%
average daily net assets
Portfolio turnover rate 28% 45% 43% 28% 45% 43%
(excluding short-term
securities)
Total return++ 6.8% 5.0% 9.0% 7.8% 5.9% 9.4%
* For a share outstanding throughout the period.Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Feb. 28, 1997 (Unaudited).
Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before the reduction of earnings credits on cash balances.
<PAGE>
IDS Bond Fund, Inc. (Percentages represent
Feb. 28, 1997 (Unaudited) value of investments
compared to net assets)
<TABLE>
<CAPTION>
Bonds (88.4%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
U.S. government obligations (9.0%)
<S> <C> <C> <C> <C>
U.S. Treasury 3.375% 2007 $ 5,906,136 $ 5,922,732
5.875 2004 36,450,000(b) 35,269,385
6.375 1999 2,000,000 2,013,560
6.375 2002 17,300,000(b) 17,287,371
6.75 1997 10,000,000(b) 10,029,500
7.00 2006 15,300,000 15,731,460
7.125 1999 56,500,000(b) 57,775,770
7.50 2001-16 37,900,000 39,748,727
7.875 2004 16,000,000 17,283,680
8.875 2017 42,750,000 51,873,278
Govt Trust Certs Israel 9.25 2001 10,321,432 10,932,254
Resolution Funding Corp 8.125 2019 46,925,000 52,523,622
Zero Coupon 8.68 1999 11,500,000(f) 10,107,810
Total 326,499,149
Mortgage-backed securities (16.1%)
Federal Home Loan Mtge Corp 6.00 2010 13,776,077 13,297,084
6.50 2007 698,200 686,415
8.00 2017-24 16,214,630 16,574,588
Collateralized Mtge Obligation 3.24 2023 7,640,693 3,997,381
7.00 2022 22,000,000 21,100,840
8.50 2022 17,000,000 18,082,900
Trust Series Z 8.25 2024 10,783,381(c) 10,803,331
Federal Natl Mtge Assn 5.50 2009 10,360,775 9,783,381
6.00 2024-26 86,754,741 80,559,945
6.50 2008-25 200,073,602 192,521,932
7.00 2026 51,212,647 49,942,060
8.00 2025 23,137,256 23,560,899
8.50 2023-24 21,855,961 22,810,936
9.00 2009-24 12,421,528 13,209,560
Collateralized Mtge Obligation 5.00 2024 9,961,155 8,920,115
Trust Series Z 6.00 2024 5,983,403(c) 4,444,591
Govt Natl Mtge Assn 7.00 2008 41,301,051 41,546,379
8.00 2024-26 27,146,597 27,689,831
9.00 2025 3,767,064 3,988,380
Merrill Lynch Mtge Investors 6.96 2026 7,515,000 7,133,379
8.21 2021 6,635,603(d) 6,255,092
Prudential Bache
Collateralized Mtge
Obligation Trust 7.97 2019 7,984,207 8,128,962
Total 585,037,981
Aerospace & defense (2.9%)
Airplanes GPA 10.875 2019 6,000,000 6,870,000
Alliant Techsystems
Sr Sub Nts 11.75 2003 6,000,000(d) 6,660,000
BE Aerospace 9.875 2006 7,000,000(d) 7,323,750
Boeing 8.75 2031 15,000,000 17,534,400
Goodrich (BF) 9.625 2001 10,000,000 10,946,800
McDonnell Douglas 7.22 2010 10,000,000 9,932,800
Newport News 9.625 2006 10,675,000(d) 11,048,625
Northrop Grumman 7.00 2006 8,000,000(d) 7,807,760
Sequa 9.625 1999 10,000,000 10,250,000
TransDigm 13.00 2000 5,000,000(i) 5,356,250
United Technologies 8.875 2019 10,000,000 11,474,500
Total 105,204,885
Airlines (1.2%)
Continental Airlines 6.94 2015 14,750,882 14,461,323
7.82 2015 4,901,961 5,045,343
Delta Air Lines 10.125 2010 10,000,000 11,782,600
10.375 2022 3,700,000 4,656,931
Northwest Airlines 8.07 2015 4,960,248 5,095,117
8.97 2015 2,960,127 3,096,825
Total 44,138,139
Automotive & related (0.4%)
General Motors Acceptance 7.625 1998 10,000,000 10,163,800
Mascotech
Cv 4.50 2003 6,500,000 5,622,500
Total 15,786,300
Banks and savings & loans (2.6%)
BankAmerica
Sub Nts 7.70 2026 10,000,000(d) 9,703,400
BankBoston Capital 8.25 2026 10,000,000(d) 10,188,400
Banque Audi 9.375 2001 2,500,000(d) 2,612,500
Barclays NA Capital 9.75 2021 13,600,000 15,465,920
First Nationwide
Sr Sub Nts 10.625 2003 5,890,000 6,537,900
Firstar Capital Trust 8.32 2026 10,000,000(d) 10,198,500
Mellon Capital 7.72 2026 3,850,000 3,740,314
Meridian Bancorp
Sub Deb 7.875 2002 10,400,000 10,870,184
Morgan (JP)
Sr Sub Nts 4.00 2012 13,000,000 12,984,400
Society
Sub Nts 8.125 2002 3,000,000 3,162,480
Union Planters Trust 8.20 2026 10,000,000(d) 9,964,800
Total 95,428,798
Building materials & construction (0.9%)
McQuay (AAF)
Sr Nts 8.875 2003 8,000,000 8,080,000
Owens-Corning Fiberglas 9.375 2012 6,900,000 7,641,267
Pulte
Sr Nts 7.00 2003 7,700,000 7,528,906
Schuller Intl Group
Sr Nts 10.875 2004 7,500,000 8,362,500
Total 31,612,673
Chemicals (0.5%)
General Chemical
Sr Sub Nts 9.25 2003 7,000,000 7,192,500
Grace (WR) 8.00 2004 10,420,000 10,954,338
Total 18,146,838
Communications equipment & services (0.3%)
Comcast Cellular
Zero Coupon 9.45 2000 8,150,000(f) 5,980,063
Geotek Communications
Cv 12.00 2001 4,630,000(i) 4,514,250
Total 10,494,313
Computers & office equipment (0.6%)
Data General
SF Deb 8.375 2002 6,700,000 6,716,750
HMT Technology 5.75 2004 3,760,000(d) 3,971,500
Softkey
Cv 5.50 2000 12,000,000(d) 9,420,000
Total 20,108,250
Electronics (0.5%)
Cirrus Logic
Cv 6.00 2003 4,300,000(d) 3,692,625
Reliance Electric 6.80 2003 6,000,000 6,011,220
Thomas & Betts 6.50 2006 9,200,000(d) 8,724,820
Total 18,428,665
Energy (3.1%)
Atlantic Richfield 9.125 2011 9,000,000 10,485,270
Enron Oil & Gas 6.70 2006 5,000,000 4,877,850
Honam Oil Refinery 7.125 2005 9,000,000(d) 8,753,850
Oryx Energy
Deb 10.00 2001 9,650,000 10,489,164
Parker & Parsley Petroleum
Sr Nts 8.25 2007 9,500,000 9,952,865
PDV America 7.875 2003 15,000,000 15,189,300
Texaco Capital
Gtd Deb 7.50 2043 3,000,000 2,942,970
Gtd Deb 8.625 2032 10,000,000 11,413,200
Triton Energy
Sr Sub Nts 9.75 2000 4,250,000 4,499,688
UNC
Sr Nts 9.125 2003 14,000,000 14,350,000
USX 9.375 2022 17,500,000 20,171,725
Total 113,125,882
Energy equipment & services (0.3%)
Foster Wheeler 6.75 2005 11,000,000 10,613,900
Financial services (3.3%)
Arvin Capital 9.50 2027 10,000,000 9,988,400
Cityscape Financial
Sub Deb 11.00 1998 15,000,000 15,000,000
Corporate Property Investors 7.18 2013 7,000,000(d) 6,651,890
DVI
Sr Nts 9.875 2004 6,000,000 6,210,000
First Union REIT
Sub Nts 8.875 2003 10,000,000 9,450,000
Homeside
Sr Nts 11.25 2003 9,225,000(d) 10,562,625
Malan Realty Investors REIT
Cv Sub Deb 9.50 2004 2,620,000 2,626,550
Olympic Financial
Sr Nts 13.00 2000 12,900,000 14,722,125
Omega Health Care
Cv 8.50 2001 4,000,000 4,350,000
Property Trust America REIT 7.50 2014 15,000,000 13,743,600
Salomon
Medium-term Nts 6.625 2000 6,700,000 6,665,294
Sr Nts 7.00 1999 21,000,000 21,195,930
Total 121,166,414
Food (0.2%)
Chiquita Brands Intl
Sr Nts 10.25 2006 7,000,000 7,551,250
Furniture & appliances (0.4%)
Interface 9.50 2005 7,500,000(d) 7,818,750
Lifestyle Furnishings 10.875 2006 6,000,000(d) 6,637,500
Total 14,456,250
Health care (0.4%)
IMED
Sr Sub Nts 9.75 2006 6,250,000(d) 6,445,313
Lilly (Eli) 6.77 2036 7,950,000 7,237,839
Phoenix Shannon
Cv 9.50 2000 2,000,000(d,h) 900,000
Total 14,583,152
Health care services (2.0%)
Columbia/HCA Healthcare 7.69 2025 4,400,000 4,414,388
Foundation Health
Sr Nts 7.75 2003 8,400,000 8,661,408
Magellan Health
Sr Sub Nts 11.25 2004 7,500,000(d) 8,371,875
Merit Behavioral 11.50 2005 3,250,000(d) 3,562,813
NOVACARE
Cv Sub Deb 5.50 2000 7,000,000 6,335,000
Owens & Minor
Sr Sub Nts 10.875 2006 4,000,000 4,400,000
Paracelsus Healthcare
Sr Sub Nts 10.00 2006 7,500,000 7,368,750
Tenet Healthcare
Sr Nts 8.625 2003 3,850,000 4,042,500
Sr Sub Nts 10.125 2005 22,000,000 24,282,500
Total 71,439,234
Industrial equipment & services (0.2%)
AGCO
Sr Sub Nts 8.50 2006 5,200,000(d) 5,414,500
Molten Metal Technology
Cv Sub Nts 5.50 2006 2,000,000(i) 1,335,000
Total 6,749,500
Insurance (2.8%)
Americo Life
Sr Sub Nts 9.25 2005 9,400,000 9,364,750
Arkwright
Credit Sensitive Nts 9.625 2026 5,000,000(d) 5,563,000
Berkley (WR) 8.70 2022 3,000,000 3,224,430
Conseco Finance Trust 8.70 2026 9,300,000 9,716,733
Equitable Cos
Sr Nts 9.00 2004 4,250,000 4,722,770
Equitable IBM 7.33 2009 5,500,000(d) 5,623,750
Executive Risk Capital Trust 8.675 2027 6,500,000(d) 6,572,215
General American Life 7.625 2024 8,000,000(d) 7,294,400
Leucadia Natl 7.75 2013 11,780,000 11,264,154
Sr Sub Nts 7.875 2006 10,850,000 10,787,395
Nationwide Trust
Credit Sensitive Nts 9.875 2025 11,500,000(d) 12,635,280
New York Life
Credit Sensitive Nts 7.50 2023 6,000,000(d) 5,720,460
Principal Mutual 8.00 2044 10,000,000(d) 9,903,200
Total 102,392,537
Leisure time & entertainment (0.7%)
Caesars World
Sr Sub Nts 8.875 2002 6,000,000 6,247,500
John Q.Hammons Hotels
1st Mtge 8.875 2004 7,000,000 6,982,500
Lodgenet Entertainment
Sr Nts 10.25 2006 5,500,000(d) 5,527,500
Trump Atlantic City Funding
1st Mtge 11.25 2006 5,380,000 5,205,150
Total 23,962,650
Media (5.6%)
Ackerley Communications
Sr Secured Nts 10.75 2003 10,000,000(d) 11,797,500
Cablevision Systems
Sr Sub Deb 10.75 2004 4,000,000 4,150,000
Sr Sub Nts 9.25 2005 6,000,000 6,015,000
Cox Communications 7.625 2025 7,000,000 6,836,340
Lenfest Communications
Sr Nts 8.375 2005 7,950,000 7,721,438
News American Holdings 8.875 2023 17,000,000 18,458,600
News Corp 10.15 2010 3,773,760(d) 4,349,292
Plitt Theatres 10.875 2004 7,500,000 7,725,000
Scandinavian Broadcasting
Cv Sub Deb 7.25 2005 5,600,000 5,040,000
Tele-Communications
Sr Deb 9.80 2012 8,000,000 8,882,880
Sr Deb 9.875 2022 10,000,000 11,124,400
Time Warner
Deb 9.15 2023 10,000,000 11,012,600
TKR Cable
Sr Deb 10.50 2007 10,225,000 11,232,980
Turner Broadcasting
Sr Deb 8.40 2024 19,500,000 18,951,855
Sr Nts 8.375 2013 10,000,000 10,163,000
United Artist Theatre 9.30 2015 13,518,280(d) 12,521,307
Universal Outdoor
Sr Sub Nts 9.75 2006 10,000,000 10,525,000
Viacom Intl
Sr Nts 7.75 2005 3,850,000 3,819,354
Sub Deb 7.00 2003 5,000,000 4,710,050
Sub Deb 8.00 2006 26,300,000 26,037,000
Total 201,073,596
Metals (0.8%)
EnviroSource
Sr Nts 9.75 2003 9,760,000 9,589,200
Ryerson Tull 8.50 2001 11,800,000 12,242,500
Santa Fe Pacific Gold
Sr Deb 8.375 2005 5,000,000 5,231,250
Total 27,062,950
Multi-industry conglomerates (1.5%)
Coty
Sr Sub Nts 10.25 2005 5,500,000 5,995,000
Marshall & Ilsley 7.65 2026 10,000,000(d) 9,680,000
Mark IV Inds
Sr Sub Nts 8.75 2003 8,000,000 8,250,000
Outsourcing Solutions
Sr Sub Nts 11.00 2006 3,750,000(d) 4,059,375
Prime Succession
Sr Sub Nts 10.75 2004 4,240,000(d) 4,695,800
Talley Mfg & Technology
Sr Nts 10.75 2003 7,000,000 7,385,000
USI American Holdings
Sr Nts 7.25 2006 13,000,000(d) 12,635,610
Total 52,700,785
Paper & packaging (2.1%)
Federal Paper Board 10.00 2011 11,900,000 14,615,342
Fort Howard 11.00 2002 8,755,531 9,160,474
Gaylord Container
Sr Sub Deb 12.75 2005 5,000,000 5,550,000
Intl Paper 5.125 2012 9,000,000 7,152,030
Pope & Talbot 8.375 2013 11,000,000 9,711,680
Riverwood Intl
Sr Nts 10.25 2006 7,000,000 6,737,500
Scotia Pacific Holding 7.95 2015 4,252,182 4,274,718
Silgan
Sr Sub Nts 11.75 2002 11,850,000 12,753,562
Warren (SD)
Sr Nts 12.00 2004 5,000,000(d) 5,550,000
Total 75,505,306
Retail (1.3%)
Dairy Mart Convenience Stores
Sr Sub Nts 10.25 2004 6,250,000 6,156,250
Kroger 8.15 2006 13,000,000 13,438,750
Pueblo Xtra Intl
Sr Nts 9.50 2003 7,000,000 6,755,000
Wal-Mart Stores 7.00 2006 17,480,382(d) 17,571,105
8.875 2011 3,500,000 3,658,200
Total 47,579,305
Soaps & cosmetics (0.2%)
Sweetheart Cup
Sr Sub Nts 9.625 2000 6,500,000 6,711,250
Textiles & apparel (0.3%)
Dominion Textiles
Sr Nts 9.25 2006 3,000,000 3,120,000
WestPoint Stevens
Sr Nts 8.75 2001 7,500,000 7,818,750
Total 10,938,750
Utilities -- electric (9.9%)
Appalachian Power 8.50 2022 5,000,000 5,304,050
Arizona Public Service
Sale Lease-Backed Obligation 8.00 2015 12,556,000 12,943,227
Cajun Electric Power Cooperative
Mtge Trust 8.92 2019 5,000,000 5,447,300
California Energy
Sr Nts 9.50 2006 3,000,000(d) 3,270,000
Zero Coupon 6.08 2004 10,000,000(g) 10,900,000
Cleveland Electric Illuminating
1st Mtge 8.375 2011 8,115,000 7,988,812
1st Mtge 9.50 2005 15,100,000 15,947,412
Consumers Power
1st Mtge 7.375 2023 10,000,000 9,420,100
EIP Funding 10.25 2012 6,833,000 7,729,831
First Palo Verde Funding 10.15 2016 6,433,000 6,818,980
10.30 2014 3,287,000 3,470,086
Long Island Lighting
Gen Ref Mtge 9.625 2024 28,888,000 29,301,387
Gen Ref Mtge 9.75 2021 15,500,000 15,717,620
Louisiana Power & Light Waterford
Sale Lease-Backed Obligation 10.67 2017 7,500,000 7,983,900
Midland Cogeneration Venture 11.75 2005 14,900,000 16,967,375
Sub Secured Sale
Lease-Backed Obligation 10.33 2002 10,516,156 11,304,867
Niagara Mohawk Power
1st Mtge 6.875 2001 5,000,000 4,819,200
1st Mtge 7.75 2006 19,600,000 18,611,572
Ohio Edison
1st Mtge 6.875 2005 2,500,000 2,368,875
1st Mtge 7.875 2023 6,000,000 5,680,320
Public Service Electric & Gas
1st Ref Mtge 6.75 2006 5,500,000 5,391,430
RGS Funding
Sale Lease-Backed Obligation 9.82 2022 9,939,219 11,885,617
Salton Sea
Sr Nts 7.84 2010 10,000,000(d) 9,973,700
San Diego Gas & Electric
1st Mtge 9.625 2020 16,925,000 18,914,026
Sithe Independence Funding 8.50 2007 7,500,000 7,769,325
9.00 2013 4,700,000 4,797,243
Texas-New Mexico Power
1st Mtge 9.25 2000 6,000,000 6,375,000
Secured Deb 10.75 2003 5,000,000 5,550,000
Texas Utilities Electric
1st Collateral Trust 7.375 2025 3,000,000 2,864,490
1st Collateral Trust 9.75 2021 9,900,000 11,181,060
1st Mtge 7.625 2025 10,000,000 9,721,900
Secured Facility 9.45 2005 4,067,000 4,299,958
Texas Utility Capital 8.175 2037 10,000,000 10,028,300
Tucson Electric Power
1st Mtge 8.50 2009 7,000,000 6,816,250
Virginia Electric Power
1st Mtge 6.75 2007 35,000,000 34,039,250
Wisconsin Electric Power 6.875 2095 8,000,000 7,303,280
Total 358,905,743
Utilities -- gas (1.6%)
Coastal 7.42 2037 6,000,000 5,792,040
Columbia Gas Systems 6.80 2005 7,700,000 7,530,908
Equitable Resources 7.50 1999 5,000,000 5,118,400
Questar Pipeline 9.375 2021 8,000,000 8,771,120
Southern California Gas
1st Mtge 7.375 2023 6,900,000 6,619,722
Southwest Gas 9.75 2002 7,900,000 8,643,390
Tenneco 9.20 2012 9,000,000 10,206,810
Transco Energy 9.875 2020 4,800,000 5,656,512
Total 58,338,902
Utilities -- telephone (4.0%)
AT&T
Deb 8.35 2025 17,500,000 18,257,050
Ameritech Capital Funding
Gtd Deb 9.10 2016 16,000,000 18,527,840
BellSouth Telecommunications 6.50 2005 7,200,000 7,015,248
7.00 2095 10,000,000 9,496,700
GTE 10.25 2020 7,000,000 7,938,560
New York Tel 9.375 2031 23,665,000 25,843,363
Pacific Bell 6.625 2034 10,000,000 8,782,500
7.125 2026 10,200,000 9,866,562
7.375 2043 10,000,000 9,565,000
360 Communications
Sr Nts 7.50 2006 17,470,000 17,424,578
U S WEST
Deb 7.20 2026 14,000,000 13,108,200
Total 145,825,601
Miscellaneous (1.4%)
Adams Outdoor Advertising
Sr Nts 10.75 2006 10,000,000(i) 10,825,000
ECM Funding LP 11.92 2002 2,029,432(i) 2,232,375
Norcal Waste Systems
Sr Nts 13.00 2005 10,000,000(d) 11,250,000
Pierce Leahy
Sr Sub Nts 11.125 2006 6,875,000(d) 7,648,438
SC Intl
Sr Sub Nts 13.00 2005 10,900,000 12,398,750
Yale University 7.375 2096 6,000,000 5,930,940
Total 50,285,503
Foreign (11.3%)(j)
ABN Amro
(U.S. Dollar) 7.75 2023 9,000,000 9,130,320
ALFA Bank Loan Participation
(U.S. Dollar) 10.85 1997 3,000,000 3,000,000
Argentina
(U.S. Dollar) Disc 7.125 2023 7,500,000 6,225,000
Austria Republic Euro
(U.S. Dollar) 10.00 1998 5,000,000 5,237,500
BAA Euro
(British Pound) 5.75 2006 2,500,000 4,328,896
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 9,200,000 9,722,836
Bank of China
(U.S. Dollar) 8.25 2014 10,000,000 10,071,500
Brazil C Bonds
(U.S. Dollar) 8.00 2014 4,680,822 3,697,849
Brazil DCB
(U.S. Dollar) 6.56 2012 4,250,000(e) 3,442,500
Carter Holt Harvey
(U.S. Dollar) 7.625 2002 5,000,000 5,138,000
(U.S. Dollar) 8.875 2004 10,500,000 11,442,585
CEI Citicorp Sociedad Anonima
(Argentine Peso) 8.50 2002 3,000,000(d) 2,962,500
(Argentine Peso) 11.25 2007 5,000,000(d) 4,862,500
Celcaribe
(U.S. Dollar) Zero Coupon 2.14 2004 2,870,000(d,f) 3,673,600
(U.S. Dollar) Zero Coupon 24.37 2004 3,250,000(d,f) 2,941,250
China Power & Light
(U.S. Dollar) Sr Nts 7.50 2006 8,000,000 8,104,160
Comp Nav Perez Companc
(U.S, Dollar) 9.00 2004 3,000,000(d) 3,000,000
Delta Electronics
(U.S. Dollar) Cv 2004 3,120,000(d) 3,135,600
Deutsche Finance Netherlands
(U.S. Dollar) Zero Coupon 4.50 2017 13,640,000(d) 5,609,450
Doa Heng Bank
(Hong Kong Dollar) Sub Nts 7.75 2007 7,750,000(i) 7,866,250
Doman Inds
(U.S. Dollar) 8.75 2004 4,000,000 3,910,000
Dominion Textiles
(U.S. Dollar) 8.875 2003 7,500,000 7,725,000
Ford Capital
(U.S. Dollar) 9.125 1998 4,000,000 4,140,120
(U.S. Dollar) 9.50 2010 18,350,000 21,426,928
Govt of Algeria
(U.S. Dollar) 7.06 2006 6,000,000 4,905,000
Govt of Poland PDI Euro
(U.S. Dollar) 3.75 2014 9,600,000(d) 8,016,000
Govt of Venezuela
(British Pounds) 6.625 2007 4,250,000(d) 3,867,500
Grupo Televisa
(U.S. Dollar) Sr Nts 11.375 2003 6,000,000(d) 6,540,000
Groupe Videotron
(U.S. Dollar) 10.625 2005 5,000,000 5,618,750
GST Telecommunications
(U.S. Dollar) Zero Coupon Cv 5.24 2000 1,045,000(d,g) 815,100
Imexsa Export Trust
(U.S. Dollar) 10.125 2003 7,500,000(d) 7,809,375
Intertek Finance
(U.S. Dollar) 10.25 2006 6,500,000(d) 6,865,625
Israel Electric
(U.S. Dollar) Sr Nts 7.25 2006 10,000,000(d) 9,915,000
Korea Electric Power
(U.S. Dollar) 8.00 2002 2,800,000 2,925,860
MacMillan Bole Delaware
(U.S. Dollar) 8.50 2004 3,000,000 3,162,900
Ministry Finance Russia
(U.S. Dollar) 9.25 2001 4,000,000(d) 3,960,000
People's Republic of China
(U.S. Dollar) 7.375 2001 3,500,000 3,580,938
(U.S. Dollar) 9.00 1996 10,000,000 10,763,400
Petronas
(U.S. Dollar) 7.75 2015 10,000,000(d) 10,297,500
Philippines Long Distance
Telephone
(U.S. Dollar) 7.85 2007 4,000,000(d) 3,983,600
(U.S. Dollar) 8.35 2017 3,000,000(d) 2,954,220
Placer Dome
(U.S. Dollar) 7.125 2003 5,000,000 5,007,400
Quno
(U.S. Dollar) Sr Nts 9.125 2005 7,000,000 7,420,000
Ras Laffan
(U.S. Dollar) 8.29 2014 10,000,000(d) 10,577,500
Repap New Brunswick
(U.S. Dollar) 9.875 2000 7,000,000 7,078,750
Republic of Argentina
(U.S. Dollar) 11.375 2017 5,000,000 5,312,500
(U.S. Dollar) 11.75 2007 7,500,000 7,903,125
Republic of Israel
(U.S. Dollar) 6.375 2005 7,300,000 6,835,063
Republic of Italy
(U.S. Dollar) 6.875 2023 9,000,000 8,463,420
Republic of Panama
(U.S. Dollar) 7.875 2002 3,000,000(d) 3,008,820
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 7.06 2014 3,700,000 2,666,155
Rogers Cantel Mobile
(U.S. Dollar) 9.375 2008 9,300,000 9,881,250
Scotland Bank
(U.S. Dollar) 8.80 2004 20,500,000(d) 22,300,720
Tarkett Intl
(U.S. Dollar) 9.00 2002 11,000,000(d) 11,220,000
Telekom Malaysia
(U.S. Dollar) 7.875 2025 15,000,000(d) 15,281,850
Transport Maritima Mex
(U.S.Dollar) Sr Nts 10.00 2006 5,100,000 5,074,500
United Mexican States
(U.S. Dollar) 11.375 2016 9,000,000 9,933,750
(U.S. Dollar) 11.50 2026 3,833,460 4,285,808
WMC Finance
(U.S. Dollar) 7.25 2013 10,000,000 9,762,500
Zhuhai Highway
(U.S. Dollar) 11.50 2008 10,000,000(d) 11,425,000
Total 410,213,223
Total bonds
(Cost: $3,099,563,730) $3,202,067,674
Common stocks (--%)
Issuer Shares Value(a)
Celcaribe 528,450(d,h) $ 1,122,956
Triangle Wire Cable 211,111(h,i) 211,111
Webcraft Technology 32,502(h,i) 325
Total common stocks
(Cost: $5,645,774) $ 1,334,392
Preferred stocks & other (0.9%)
Cablevision Systems
Pay-in-kind 110,120(d,h,l) $10,103,510
Dairy Mart
Warrants 51,666(d) 129,165
First Nationwide Bank
11.50% Cm 80,000 9,260,000
Salomon
2.375% 400,000 10,800,000
Station Casinos
7% Cv 30,000 1,380,000
Transdigm
Warrants 3,989(i) 1,096,975
Total preferred stocks & other
(Cost: $30,832,425) $32,769,650
Short-term securities (10.1%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (0.1%)
Federal Home Loan Mtge Corp Disc Nt
03-13-97 5.23% $ 5,430,000 $ 5,420,570
Certificate of deposit (0.4%)
Morgan Guaranty
04-28-97 5.40 13,500,000 13,378,602
Commercial paper (9.6%)
Albertson's
03-19-97 5.32 3,705,000 3,695,200
American General Capital
03-04-97 5.31 7,800,000(k) 7,796,568
Ameritech Capital Funding
04-14-97 5.34 2,800,000(k) 2,780,510
ANZ (Delaware)
03-06-97 5.31 8,500,000 8,493,755
Associates Corp
North America
04-23-97 5.31 1,500,000 1,488,362
Avco Financial Services
03-28-97 5.35 6,100,000 6,072,779
BBV Finance (Delaware)
04-17-97 5.41 15,000,000 14,891,250
Beneficial
03-24-97 5.31 7,300,000 7,275,235
CAFCO
03-25-97 5.38 5,700,000(k) 5,678,639
04-04-97 5.28 3,000,000(k) 2,985,125
Campbell Soup
04-04-97 5.35 6,500,000(k) 6,467,403
11-17-97 5.49 5,800,000(k) 5,563,618
CIT Group Holdings
03-12-97 5.32 11,200,000 11,181,862
Clorox
04-07-97 5.40 11,900,000 11,831,113
Commerzbank U.S. Finance
03-26-97 5.27 7,500,000 7,472,656
Consolidated Natural Gas
03-05-97 5.26 2,000,000 1,998,834
04-30-97 5.29 6,200,000 6,141,484
Dean Witter Discover & Co.
03-20-97 5.34 5,000,000 4,986,014
Deustche Bank Financial
04-10-97 5.28 7,000,000 6,959,167
05-27-97 5.33 11,300,000 11,146,144
First Chicago NBD
03-11-97 5.31 6,500,000 6,490,449
General Electric
03-03-97 5.32 4,700,000 4,898,557
03-21-97 5.34 6,000,000 5,982,300
03-28-97 5.34 6,500,000 6,474,114
General Electric Capital
03-13-97 5.33 3,400,000 3,393,982
Kellogg
04-03-97 5.28 2,500,000 2,487,969
04-16-97 5.30 7,700,000 7,648,149
Kredietbank North America Finance
04-11-97 5.28 5,200,000 5,168,908
Merrill Lynch
03-03-97 5.34 4,900,000 4,898,554
Natl Australia Funding (Delaware)
05-12-97 5.36 10,000,000 9,887,053
05-15-97 5.37 15,700,000 15,515,385
05-27-97 5.35 11,400,000 11,244,783
NBD Bank Canada
03-20-97 5.27 4,000,000 3,988,917
Northern States Power
03-25-97 5.46 5,000,000 4,980,593
Novartis Finance
03-06-97 5.32 2,800,000(k) 2,797,943
03-19-97 5.27 8,400,000 8,377,950
03-20-97 5.26 5,100,000 5,085,896
Paccar Financial
03-03-97 5.29 1,700,000 1,699,501
Pfizer
03-12-97 5.37 6,900,000(k) 6,886,759
Reed Elsevier
03-17-97 5.29 9,800,000(k) 9,777,046
03-18-97 5.37 4,900,000(k) 4,886,128
SAFECO Credit
03-19-97 5.37 8,600,000 8,574,701
SBC Communications Capital
03-21-97 5.27 6,000,000(k) 5,982,500
03-27-97 5.32 6,500,000(k) 6,475,119
Siemens
04-14-97 5.41 3,900,000 3,872,791
04-25-97 5.31 9,000,000 8,927,675
Southwestern Bell Telephone
04-18-97 5.28 10,600,000 10,525,941
Toyota Motor Credit
03-07-97 5.37 3,500,000 3,496,891
03-10-97 5.31 5,900,000 5,892,197
04-08-97 5.32 3,800,000 3,778,781
Transamerica Finance
03-14-97 5.29 5,700,000 5,689,153
04-15-97 5.33 6,500,000 6,456,937
04-21-97 5.38 3,200,000 3,174,425
U S WEST Communications
04-02-97 5.31 8,000,000 7,962,453
Total 348,286,218
Total short-term securities
(Cost: $367,287,653) $ 367,085,390
Total investments in securities
(Cost: $3,503,329,582)(m) $3,603,257,106
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Security is partially or fully on loan. See Note 6 to the financial statements.
(c) 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.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1997.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) 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.
(h) Non-income producing. For long term debt securities, item identified is in
default as to payment of interest and/or principal.
(i) Identifies issues considered to be illiquid as to their marketability (see
Note 4 to the financial statements). Information concerning such security
holdings at Feb. 28, 1997, is as follows:
Security Acquisition Cost
date
Adams Outdoor Advertising
10.75% Sr Nts 2006 03-05-96 thru 3-11-97 $7,607,000
Doa Heng Bank*
7.75% Sub Nts 2007 04-16-97 7,742,018
ECM Funding LP
11.92% 2002 04-13-92 thru 12-10-96 2,029,432
Geotek Communications
12% Cv 2001 03-04-96 4,630,000
Molten Metal Technology*
5.50% Cv Sub Nts 2006 10-30-96 1,400,000
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 144A, which is exempt from registration under
the Securities Act of 1933, as amended.
(j) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(k) 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.
(l) 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.
(m) At Feb. 28, 1997, the cost of securities for federal income tax purposes was
approximately $3,499,357,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation...............................$136,435,000
Unrealized depreciation................................(32,535,000)
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Net unrealized appreciation...........................$103,900,000
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</TABLE>
<PAGE>
President and interested board member
William R. Pearce
President and director, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
Independent board members
H. Brewster Atwater Jr.
Former chairman and chief executive officer, General Mills, Inc.
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.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer,
Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion Senior vice president and chief financial officer, AEFC.
Treasurer for the Fund.
Other officer
Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world globe
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of 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 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 Global Balanced Fund
Invests in stocks-and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
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. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
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) building
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 in a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of 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
Growth and income funds
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.
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 Managed Allocation Fund
Invests in a Portfolio comprised primarily of 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) spinning toy
IDS Stock Fund
Invests in a Portfolio comprised primarily of 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) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised 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 Portfolio which seeks to 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
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised 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
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 a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
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 High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of 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 Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current
income consistent with these objectives. An investment in
these funds is neither insured nor guaranteed by the U.S. government,
and there can be no assurance that these funds
will be able to maintain a stable net asset value of $1.00
per share. 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
<PAGE>
Quick telephone reference
- --------------------------------------------------------------------------------
American Express Redemptions and exchanges, National/Minnesota:
Telephone Transaction dividend payments or 800-437-3133
Service reinvestments and
automatic payment arrangements Mpls./St.Paul area:
671-3800
American Express Fund performance, objectives 612-671-3733
Shareholder Service and account inquiries
- --------------------------------------------------------------------------------
TTY Service For the hearing impaired 800-846-4852
- --------------------------------------------------------------------------------
American Express Automated account information National/Minnesota:
Infoline (TouchTone(R) phones only), 800-272-4445
including current fund prices and
performance, account values Mpls./St. Paul area:
and recent account transactions 671-1630
IDS Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
