IDS
Bond
Fund
1999 SEMIANNUAL REPORT
(icon of) clock
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.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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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 Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements 7
Notes to Financial Statements 10
Investments in Securities 18
<PAGE>
From the Chairman
(picture of) Arne H. Calrson
Arne H. Carlson
Chairman of the board
It is an honor for me to join the IDS Mutual Fund Group as chairman of the board
and chief executive officer for each of the funds. I have served for the past
eight years as governor of Minnesota and also for the past 20 years as a
constitutional officer responsible for the pension investments made on behalf of
government employees. My responsibility in the upcoming years is to serve your
interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation (AEFC), nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of AEFC
and for the services it provides to investors. Your financial advisor assists
you in financial planning, conducts regular investment reviews and responds to
your questions and needs. This is a very personal service that makes AEFC a
partner in your financial future. I know that AEFC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
Arne H. Carlson
From the Portfolio Manager
(picture of) Frederick Quirsfeld
Frederick Quirsfeld
Portfolio manager
An improving environment for bonds other than U.S. Treasury issues set the stage
for a positive performance by IDS Bond Fund during the first half of the fiscal
year. For the six months -- September 1998 through February 1999 -- the total
return (net asset value change and interest income) for the Fund's Class A
shares was 2.36%.
The period began with corporate, mortgage-backed and emerging-market bonds --
the bulk of the Fund's portfolio -- still feeling the effects of last summer's
"flight to quality" that stemmed from economic turmoil in Asia, Russia and parts
of Latin America. The condition resulted in a big boost in price for U.S.
Treasury bonds at the expense of other sectors of the market.
But by fall, the mood of the market began to change. Encouraged by ongoing
reports of low inflation and solid economic growth in the U.S., not to mention
three reductions in short-term interest rates by the Federal Reserve, investors
evidently decided that it was time to venture outside the ultra-safe world of
Treasuries. The result was a trend toward generally rising prices for the Fund's
corporate and mortgage-backed holdings that continued through the winter until
it was reversed by a run-up in long-term interest rates in February.
EMPHASIS ON `CORPORATES'
Looking at the portfolio mix, the biggest portion (about 55%) remained in
corporate bonds, which included mostly high-grade issues complemented by a
moderate amount of low-grades. Investments in mortgage-backed bonds rose from
about 15% to 20%, as I added to that group based on the above-average value they
offered. The next-largest exposure (10% to 12%) was to Treasury bonds, followed
by emerging-market issues (about 5% at period-end).
As the period progressed, I lowered the portfolio's duration somewhat.
(Duration, a function of the average maturity of the bonds in the portfolio,
determines how sensitive the Fund's net asset value is to changes in interest
rates. The longer the duration, the greater the sensitivity.) The duration
reduction was a reflection of my view that, because the economy appeared to
remain remarkably robust, long-term interest rates would most likely rise
modestly in the months ahead. That proved to be true in February.
At this writing (mid-March), I have yet to see any changes in the market
fundamentals to make me alter the basic structure of the portfolio. Should
conditions remain relatively stable in the second half of the fiscal year, I
expect corporate and mortgage-backed bonds -- the majority of the Fund's
holdings -- to continue to be the most productive sectors of the market.
Frederick Quirsfeld
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 28, 1999 $5.01
Aug. 31, 1998 $5.11
Decrease $0.10
Distributions -- Sept. 1, 1998 - Feb. 28, 1999
From income $0.19
From capital gains $0.03
Total distribution $0.22
Total return* +2.36%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 28, 1999 $5.01
Aug. 31, 1998 $5.11
Decrease $0.10
Distributions -- Sept. 1, 1998 - Feb. 28, 1999
From income $0.17
From capital gains $0.03
Total distribution $0.20
Total return* +1.98%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 28, 1999 $5.01
Aug. 31, 1998 $5.11
Decrease $0.10
Distributions -- Sept. 1, 1998 - Feb. 28, 1999
From income $0.19
From capital gains $0.03
Total distribution $0.22
Total return* +2.40%**
*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 10 Largest Holdings
Percent Value
(of net assets) (as of Feb. 28, 1999)
Virginia Electric & Power .87% $35,726,785
6.75% 2007
Bistro Trust .76 31,377,774
9.50% 2002
New York Telephone .72 29,676,752
9.38% 2031
Connecticut Light & Power .72 29,562,287
7.75% 2002
Ford Capital .55 22,706,972
9.50% 2010
Scotland Bank .55 22,638,942
8.80% 2004
Tenet Healthcare .55 22,522,774
8.13% 2008
Cleveland Electric Illuminating .52 21,508,887
7.67% 2004
Salomon .51 21,068,580
7.00% 1999
Turner Broadcasting .51 21,008,023
8.40% 2024
Excludes U.S. Treasury and government agency holdings.
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
(picture of) pie chart
The 10 holdings listed here
make up 6.26% of net assets.
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<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Bond Fund, Inc.
Feb. 28, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $4,198,596,509) $4,210,802,684
Dividends and accrued interest receivable 56,570,083
Receivable for investment securities sold 4,314,992
---------
Total assets 4,271,687,759
-------------
Liabilities
Disbursements in excess of cash on demand deposit 3,091,574
Payable for investment securities purchased 151,090,651
Payable upon return of securities loaned (Note 4) 1,135,200
Dividends payable to shareholders 1,997,727
Accrued investment management services fee 54,310
Accrued distribution fee 23,386
Accrued service fee 19,194
Accrued transfer agency fee 11,833
Accrued administrative services fee 4,770
Other accrued expenses 116,154
-------
Total liabilities 157,544,799
-----------
Net assets applicable to outstanding capital stock $4,114,142,960
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 8,213,007
Additional paid-in capital 4,100,405,139
Undistributed net investment income 2,384,212
Accumulated net realized gain (loss) (15,586,514)
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies 18,727,116
----------
Total -- representing net assets applicable to outstanding capital stock $4,114,142,960
==============
Net assets applicable to outstanding shares: Class A $2,722,112,212
Class B $1,137,575,780
Class Y $ 254,454,968
Net asset value per share of outstanding capital stock: Class A shares 543,418,328 $ 5.01
Class B shares 227,093,277 $ 5.01
Class Y shares 50,789,093 $ 5.01
See accompanying notes to financial statements.
</TABLE>
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<CAPTION>
Statement of operations
IDS Bond Fund, Inc.
Six months ended Feb. 28, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 2,697,562
Interest 148,471,475
-----------
Total income 151,169,037
-----------
Expenses (Note 2):
Investment management services fee 9,661,188
Distribution fee-- Class B 4,072,849
Transfer agency fee 2,046,671
Incremental transfer agency fee-- Class B 39,354
Service fee
Class A 2,318,134
Class B 944,014
Class Y 118,382
Administrative services fees and expenses 878,415
Compensation of board members 13,614
Custodian fees 107,861
Postage 263,134
Registration fees 161,128
Reports to shareholders 39,427
Audit fees 20,125
Other 15,339
------
Total expenses 20,699,635
Earnings credits on cash balances (Note 2) (173,128)
--------
Total net expenses 20,526,507
----------
Investment income (loss) -- net 130,642,530
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (14,120,265)
Foreign currency transactions 133,221
-------
Net realized gain (loss) on investments (13,987,044)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (28,903,276)
-----------
Net gain (loss) on investments and foreign currencies (42,890,320)
-----------
Net increase (decrease) in net assets resulting from operations $ 87,752,210
============
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Bond Fund, Inc.
Feb. 28, 1999 Aug. 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 130,642,530 $ 255,611,139
Net realized gain (loss) on investments (13,987,044) 35,089,295
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (28,903,276) (67,075,582)
----------- -----------
Net increase (decrease) in net assets resulting from operations 87,752,210 223,624,852
---------- -----------
Distributions to shareholders from:
Net investment income
Class A (91,263,267) (185,166,841)
Class B (32,766,907) (60,794,441)
Class Y (8,115,202) (10,267,513)
Net realized gain
Class A (23,801,353) (41,282,498)
Class B (9,728,585) (14,848,739)
Class Y (2,147,339) (1,901,326)
---------- ----------
Total distributions (167,822,653) (314,261,358)
------------ ------------
Capital share transactions (Note 6)
Proceeds from sales
Class A shares (Note 2) 244,207,273 464,140,220
Class B shares 200,773,812 350,432,516
Class Y shares 87,796,144 161,452,699
Reinvestment of distributions at net asset value
Class A shares 83,841,122 158,793,960
Class B shares 38,171,524 66,114,629
Class Y shares 10,429,654 11,994,698
Payments for redemptions
Class A shares (262,263,987) (498,864,299)
Class B shares (Note 2) (136,499,429) (247,706,628)
Class Y shares (63,275,596) (59,320,071)
----------- -----------
Increase (decrease) in net assets from capital share transactions 203,180,517 407,037,724
----------- -----------
Total increase (decrease) in net assets 123,110,074 316,401,218
Net assets at beginning of period 3,991,032,886 3,674,631,668
------------- -------------
Net assets at end of period $4,114,142,960 $3,991,032,886
============== ==============
Undistributed net investment income $ 2,384,212 $ 3,887,058
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
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Notes to Financial Statements
IDS Bond Fund, Inc.
(Unaudited as to Feb. 28, 1999)
1. SUMMARY OF SIGNIFICANT ACCOUNTNG 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.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The 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.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. 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
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends 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 as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When
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
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with 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,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
Illiquid securities
As of Feb. 28, 1999, investments in securities included issues that are
illiquid. The Fund currently limits investments in illiquid securities to 10% of
net assets, at market value, at the time of purchase. The aggregate value of
such securities as of Feb. 28, 1999 was $5,768,748 representing 0.14% of net
assets. Pursuant to guidelines adopted by the Fund's board, certain unregistered
securities are determined to be liquid and are not included in the 10%
limitation specified above.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred 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 or upon receipt of
ex-dividend notification in the case of certain foreign securities. For U.S.
dollar denominated bonds, interest income includes level-yield amortization of
premium and discount. For foreign bonds, the Fund amortizes premium and original
issue discount daily and market discount is recognized at the time of sale.
Interest income, including level-yield amortization of premium and discount, is
accrued daily.
2. EXPENSES AND SALES CHARGES
The Fund entered into agreements with American Express Financial Corporation
(AEFC) for managing its portfolio, providing administrative services and serving
as transfer agent. Under an 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 a fee 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 service expenses paid by the Fund are office expenses,
consultants' 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 and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class Y $15.50
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annual rate per shareholder account of $15.50 for
Class A and $16.50 for Class B. Effective April 1, 1999, the annual rate per
shareholder account will change to $17.50 for Class Y.
The Fund entered into agreements with American Express Financial Advisors Inc.
for distribution and shareholder 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
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 and 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $5,202,068 for Class A and $445,321 for Class B
for the six months ended Feb. 28, 1999.
During the six months ended Feb. 28, 1999, the Fund's custodian and transfer
agency fees were reduced by $173,128 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,021,426,583 and $799,892,301, respectively, for the
six months ended Feb. 28, 1999. Realized gains and losses are determined on an
identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
As of Feb. 28, 1999, securities valued at $1,082,310 were on loan to brokers.
For collateral, the Fund received $1,135,200 in cash. Income from securities
lending amounted to $8,678 for the six months ended Feb. 28, 1999. 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.
5. INTEREST RATE FUTURES CONTRACTS
Investments in securities as of Feb. 28, 1999, included securities valued at
$4,007,817 that were pledged as collateral to cover initial margin deposits on
1,172 open sale contracts. The market value of the open sale contracts as of
Feb. 28, 1999 was $142,361,375 with a net unrealized gain of $6,533,437.
<PAGE>
<TABLE>
<CAPTION>
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Feb. 29, 1999
Class A Class B Class Y
<S> <C> <C> <C>
Sold 47,788,076 39,289,497 17,190,308
Issued for reinvested distributions 16,454,422 7,491,271 2,046,946
Redeemed (51,329,388) (26,726,526) (12,385,121)
----------- ----------- -----------
Net increase (decrease) 12,913,110 20,054,242 6,852,133
Year ended Aug. 31, 1998
Class A Class B Class Y
Sold 88,430,002 66,777,710 30,799,950
Issued for reinvested distributions 30,359,464 12,641,358 2,294,191
Redeemed (95,013,501) (47,187,636) (11,310,471)
----------- ----------- -----------
Net increase (decrease) 23,775,965 32,231,432 21,783,670
7. BANK BORROWINGS
The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby
the Fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The Fund must have asset coverage for
borrowings not to exceed the aggregate of 333% of advances equal to or less than
five business days plus 367% of advances over five business days. The agreement,
which enables the Fund to participate with other IDS Funds, permits borrowings
up to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Feb.
28, 1999.
</TABLE>
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<CAPTION>
FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
Fiscal period ended Aug. 31,
Per share income and capital changesa
Class A
1999b 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.11 $5.22 $4.99 $5.05 $4.91
Income from investment operations:
Net investment income (loss) .17 .36 .35 .36 .38
Net gains (losses) (both realized and unrealized) (.05) (.03) .23 (.07) .23
Total from investment operations .12 .33 .58 .29 .61
Less distributions:
Dividends from net investment income (.17) (.36) (.35) (.35) (.37)
Distributions from realized gains (.05) (.08) -- -- (.10)
Total distributions (.22) (.44) (.35) (.35) (.47)
Net asset value, end of period $5.01 $5.11 $5.22 $4.99 $5.05
Ratios/supplemental data
Class A
1999b 1998 1997 1996 1995
Net assets, end of period (in millions) $2,722 $2,709 $2,646 $2,563 $2,363
Ratio of expenses to average daily net assetsc .83%d .83% .84% .84% .78%
Ratio of net investment income (loss)
to average daily net assets 6.71%d 6.79% 6.86% 7.01% 7.84%
Portfolio turnover rate
(excluding short-term securities) 20% 43% 50% 45% 43%
Total returne 2.36% 6.30% 12.06% 5.77% 13.65%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Feb. 28, 1999 (Unaudited).
c Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended Aug. 31,
Per share income and capital changesa
Class B Class Y
1999c 1998 1997 1996 1995b 1999c 1998 1997 1996 1995b
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.11 $5.22 $4.99 $5.05 $4.79 $5.11 $5.22 $4.99 $5.05 $4.79
Income from investment operations:
Net investment income (loss) .15 .32 .31 .32 .17 .17 .36 .36 .37 .19
Net gains (losses) (both realized and unrealized) (.05) (.03) .23 (.07) .26 (.05) (.03) .23 (.07) .26
Total from investment operations .10 .29 .54 .25 .43 .12 .33 .59 .30 .45
Less distributions:
Dividends from net investment income (.15) (.32) (.31) (.31) (.17) (.17) (.36) (.36) (.36) (.19)
Distributions from realized gains (.05) (.08) -- -- -- (.05) (.08) -- -- --
Total distributions (.20) (.40) (.31) (.31) (.17) (.22) (.44) (.36) (.36) (.19)
Net asset value, end of period $5.01 $5.11 $5.22 $4.99 $5.05 $5.01 $5.11 $5.22 $4.99 $5.05
Ratios/supplemental data
Class B Class Y
1999c 1998 1997 1996 1995b 1999c 1998 1997 1996 1995b
Net assets, end of period
(in millions) $1,138 $1,057 $913 $848 $782 $254 $224 $116 $88 $64
Ratio of expenses to average daily net assetsd 1.59%e 1.59% 1.60% 1.60% 1.63%e .76%e .76% .70% .67% .67%e
Ratio of net investment income
(loss) to average daily net assets 5.96%e 6.03% 6.10% 6.24% 6.81%e 6.78%e 6.90% 7.01% 7.19% 8.44%e
Portfolio turnover rate
(excluding short-term securities) 20% 43% 50% 45% 43% 20% 43% 50% 45% 43%
Total returnf 1.98% 5.50% 11.21% 4.96% 9.00% 2.40% 6.40% 12.21% 5.95% 9.40%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c Six months ended Feb. 28, 1999 (Unaudited).
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
IDS Bond Fund, Inc
Feb. 28, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (92.9%)
Issuer Coupon Principal Value(a)
rate amount
Government obligations (12.2%)
City of Moscow
(U.S. Dollar) Zero Coupon
<S> <C> <C> <C> <C> <C>
12-31-98 21.80% $3,691,890(c,f) $572,612
Govt of Algeria
(U.S. Dollar)
03-04-00 7.06 1,636,364(c) 1,341,818
09-04-06 6.60 2,672,727(c) 1,122,545
Govt of Russia
(Russian Ruble)
09-27-00 14.00 19,002,914(c) 24,592
12-15-20 6.63 22,000,000(c) 1,567,500
(Russian Ruble) Zero Coupon
05-05-99 -- 16,822,000(b,c,f,n) --
(U.S. Dollar)
07-24-05 8.75 2,235,000(c,e) 491,700
06-24-28 12.75 835,000(c,e) 222,841
12-29-49 6.63 541,652(c) 55,519
Govt Trust Certs Israel
11-15-01 9.25 6,235,395 6,406,073
People's Republic of China
(U.S. Dollar)
07-03-01 7.38 3,500,000(c) 3,433,329
01-15-96 9.00 10,000,000(c) 9,685,893
Province of Mendoza
(U.S. Dollar)
09-04-07 10.00 3,200,000(c,e) 2,060,000
Republic of Argentina
(Argentine Peso)
07-10-02 8.75 2,500,000(c) 2,000,740
02-12-07 11.75 4,750,000(c) 3,802,969
(U.S. Dollar)
12-04-05 11.00 7,000,000(c) 6,300,000
03-31-23 5.75 4,450,000(c) 2,967,594
Republic of Korea
(U.S. Dollar)
04-15-08 8.88 7,800,000(c) 8,244,951
Republic of Panama
(U.S. Dollar)
02-13-02 7.88 3,000,000(c,e) 2,902,500
Republic of Philippines
(U.S. Dollar)
01-15-19 9.88 3,000,000(c) 2,982,538
Resolution Funding Corp
Zero Coupon
04-15-99 8.68 11,500,000(f) 11,430,287
U.S. Treasury
09-30-99 7.13 26,500,000 26,843,626
11-15-01 7.50 64,900,000 68,600,202
08-15-02 6.38 17,300,000(p) 17,891,663
05-15-04 7.25 16,450,000 17,875,664
02-15-16 9.25 50,000,000 68,281,000
11-15-16 7.50 8,100,000 9,590,455
05-15-17 8.75 50,000,000 66,307,340
08-15-17 8.88 42,750,000 57,347,573
11-15-21 8.00 5,150,000(p) 6,538,634
08-15-23 6.25 30,000,000 31,689,300
TIPS
07-15-02 3.63 20,000,000(k) 20,350,664
01-15-07 3.38 5,900,000(k) 5,890,267
01-15-08 3.63 20,000,000(k) 19,892,110
United Mexican States
(U.S. Dollar)
12-31-19 6.25 13,000,000(c) 9,701,250
05-15-26 11.50 5,500,000(c,h) 5,768,125
Total 500,183,874
Mortgage-backed securities (18.1%)
Federal Home Loan Mtge Corp
07-01-07 6.50 310,991 310,366
11-01-10 6.00 10,023,926 9,966,489
03-01-13 5.50 11,037,849 10,740,196
04-01-17 8.00 431,844 451,143
08-01-24 8.00 6,778,766 7,057,441
12-01-27 6.00 10,472,783 10,179,192
10-01-28 7.00 37,980,716 38,491,082
Collateralized Mtge Obligation
03-15-22 7.00 10,000,000 9,996,438
04-15-22 8.50 17,000,000 17,784,890
07-15-22 7.00 12,000,000 12,017,400
Trust Series Z
04-25-24 8.25 6,536,714(d) 6,539,888
Federal Natl Mtge Assn
02-15-08 5.75 22,365,000 22,271,584
07-01-08 6.50 8,948,593 9,018,481
01-01-09 5.50 7,703,310 7,527,597
11-01-09 9.00 1,982 2,110
06-01-10 6.50 19,419,983 19,571,653
08-01-11 8.50 26,212,747 27,408,539
04-01-13 6.00 14,077,410 13,951,923
05-01-13 6.50 37,585,916 37,856,065
08-01-13 6.00 33,403,275 33,096,966
11-01-13 6.00 38,685,407 38,334,821
04-01-23 8.50 8,032,854 8,508,720
05-01-23 6.50 31,681,572 31,511,759
08-01-23 6.50 2,596,816 2,582,897
09-01-23 6.50 3,689,724 3,669,948
11-01-23 6.50 7,264,403 7,225,466
01-01-24 6.50 48,543,108 48,282,916
02-01-24 6.50 6,729,330 6,693,260
05-01-24 6.00 51,509,209 50,080,858
06-01-24 9.00 6,519,942 6,975,425
07-01-24 8.50 2,676,921 2,825,463
02-01-25 8.00 3,761,352 3,912,972
09-01-25 6.50 21,795,607 21,665,052
09-01-25 8.00 7,273,821 7,567,028
01-01-26 6.00 20,981,084 20,360,044
02-01-26 7.00 32,470,586 32,890,328
06-01-28 6.00 30,053,652 29,145,130
10-01-28 6.00 19,958,789 19,355,435
11-01-28 6.50 11,365,267 11,293,666
12-01-28 6.00 22,878,331 22,186,719
12-01-28 6.50 5,135,575 5,103,221
Collateralized Mtge Obligation
05-18-26 5.00 15,000,000 13,752,329
Trust Series Z
02-25-24 6.00 6,744,251(d) 5,924,015
Govt Natl Mtge Assn
12-01-08 7.00 26,534,562 27,214,377
02-15-24 8.00 2,588,400 2,699,080
02-15-25 9.00 1,123,095 1,200,252
06-15-26 8.00 4,077,410 4,249,232
08-15-26 8.00 6,994,084 7,288,815
Merrill Lynch Mtge Investors
06-15-21 8.01 3,916,482 3,642,940
Prudential Bache
Collateralized Mtge Obligation
04-01-19 7.97 5,328,961 5,480,218
Total 745,861,829
Aerospace & defense (1.4%)
Compass Aerospace
Sr Sub Nts
04-15-05 10.13 7,180,000(e) 6,982,550
Goodrich (BF)
07-01-01 9.63 10,000,000 10,766,140
L-3 Communications
Sr Sub Nts
05-15-08 8.50 6,400,000 6,680,000
Sr Sub Nts Series B
05-01-07 10.38 5,000,000 5,512,500
McDonnell Douglas Finance
Medium-term Sr Nts
01-27-10 7.22 10,000,000 10,708,565
United Defense Inds
Company Guaranty
11-15-07 8.75 6,000,000 6,060,000
United Technologies
11-15-19 8.88 10,000,000 12,493,509
Total 59,203,264
Airlines (0.8%)
Aviation Sales
Company Guaranty
02-15-08 8.13 4,135,000 4,140,169
Continental Airlines
Series 1996A
04-15-15 6.94 13,957,919 14,142,303
Series 1996B
04-15-15 7.82 4,652,639 4,893,972
Delta Air Lines
05-15-10 10.13 10,000,000 11,680,489
Total 34,856,933
Automotive & related (1.1%)
Arvin Capital
Company Guaranty
02-01-27 9.50 10,000,000 10,843,872
Ford Motor
10-01-28 6.63 10,000,000 9,814,983
Ford Motor Credit
06-15-07 7.20 5,500,000 5,855,060
Hayes Lemmerz Intl
Company Guaranty Series B
07-15-07 9.13 10,000,000 10,575,000
MSX Intl
Company Guaranty
01-15-08 11.38 7,700,000 7,642,250
Total 44,731,165
Banks and savings & loans (4.1%)
ABN-Amro Bank
(U.S. Dollar) Sub Nts Series B
05-15-23 7.75 9,000,000(c) 9,626,655
Banco General
(U.S. Dollar)
08-01-02 7.70 7,500,000(c,e) 6,915,605
Bank One
Medium-term Nts Series A
02-17-09 6.00 10,000,000 9,715,581
BankAmerica
Sub Nts Series B
12-31-26 7.70 10,000,000(e) 10,302,109
Central Fidelity Capital
Company Guaranty Series A
04-15-27 6.35 16,500,000 16,387,965
Comerica Bank
Sub Nts
10-01-08 6.00 9,780,000 9,394,463
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 12,000,000(c,e) 9,518,880
Firstar Capital
Company Guaranty Series B
12-15-26 8.32 10,000,000 10,538,004
Fleet Financial Group
Sub Nts
05-15-08 6.38 4,000,000 3,987,155
Greenpoint Capital
Company Guaranty
06-01-27 9.10 5,000,000 5,409,147
M & I Capital
Company Guaranty
12-01-26 7.65 10,000,000 10,184,087
Mellon Capital
Company Guaranty Series A
12-01-26 7.72 3,850,000 3,952,170
Meridian Bancorp
Sub Deb
07-15-02 7.88 10,400,000 11,034,048
Morgan (JP)
Sr Sub Medium-term Nts Series A
02-15-12 4.00 13,000,000(l) 11,546,210
Scotland Bank
(U.S. Dollar)
01-27-04 8.80 20,500,000(c,e) 22,638,942
Union Planters Capital
Company Guaranty
12-15-26 8.20 10,000,000 10,063,672
Washington Mutual Capital
Company Guaranty
06-01-27 8.38 5,800,000(e) 6,261,262
Total 167,475,955
Building materials & construction (1.2%)
Formica
Sr Sub Nts
03-01-09 10.88 1,700,000(e) 1,689,375
Foster Wheeler
11-15-05 6.75 11,000,000 10,631,575
Nortek
Sr Nts
08-01-08 8.88 7,500,000(e) 7,668,750
Pulte
Sr Nts
12-15-03 7.00 7,700,000 7,845,590
Tyco Intl Group
(U.S. Dollar) Company Guaranty
06-15-28 7.00 20,000,000(c) 20,046,674
Total 47,881,964
Chemicals (1.2%)
Allied Waste North America
Sr Nts
01-01-09 7.88 10,625,000(e) 10,757,813
IMC Global
10-15-01 6.63 10,000,000 9,895,610
USA Waste Services
Sr Nts
10-01-07 7.13 15,000,000 15,568,044
Waste Management
Sr Nts
07-15-28 7.00 12,500,000 11,831,526
Total 48,052,993
Communications equipment & services (1.8%)
BellSouth Telecommunications
10-01-25 7.00 10,000,000 10,633,100
12-01-95 7.00 10,000,000 10,383,674
Celcaribe
Sr Nts
03-15-04 13.50 3,250,000 2,754,375
Units
03-15-04 13.50 2,870,000(e) 5,115,775
EchoStar DBS
Sr Nts
02-01-09 9.38 8,200,000(e) 8,261,500
GTE California
09-01-09 6.70 10,000,000 10,444,238
Jordan Telecommunications Products
Sr Nts Series B
08-01-07 9.88 10,000,000 9,775,000
Level 3 Communications
Sr Nts
05-01-08 9.13 2,250,000 2,193,750
NTL
Zero Coupon Sr Nts Series B
04-01-03 9.78 7,625,000(g) 5,223,125
PhoneTel Technologies
Sr Nts
12-15-06 12.00 5,500,000(b) 2,475,000
TCI Telecommunications
Sr Nts
02-15-28 7.13 8,000,000 8,447,712
Total 75,707,249
Computers & office equipment (0.5%)
At Home
Cv Sub Deb
12-12-18 .53 2,500,000(e) 1,871,475
Cooperative Computing
Sr Sub Nts
02-01-08 9.00 7,000,000 6,133,750
Hewlett-Packard
Zero Coupon Cv Sub Nts
10-15-17 3.13 2,500,000(e,f) 1,368,750
Zero Coupon Sub Nts
10-14-17 3.13 7,500,000(f) 4,246,875
Solectron
Cv Sub Nts
01-27-19 4.00 11,000,000(e) 5,252,500
Total 18,873,350
Consumer finance -- personal loans (0.2%)
Yale University
04-15-96 7.38 6,000,000 6,602,819
Electronics (0.7%)
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.63 10,000,000(c,e) 8,789,156
Kent Electronics
Cv Sub Nts
09-01-04 4.50 2,500,000 1,931,250
Reliance Electric
04-15-03 6.80 6,000,000 6,198,721
STMicroelectronics
(U.S. Dollar) Zero Coupon Cv Sub Nts
06-10-08 .50 4,275,000(c,f) 3,975,622
Thomas & Betts
01-15-06 6.50 9,200,000 9,254,630
Total 30,149,379
Energy (2.8%)
Canadian Forest Oil
(U.S. Dollar) Company Guaranty
09-15-07 8.75 5,500,000(c) 4,895,000
Enron Oil & Gas
11-15-06 6.70 5,000,000 5,101,614
Honam Oil Refinery
(U.S. Dollar)
10-15-05 7.13 9,000,000(c,e) 8,235,000
Ocean Energy
Company Guaranty Series B
07-01-05 7.63 10,000,000 9,437,500
Oryx Energy
04-01-01 10.00 9,650,000 10,278,325
Parker & Parsley Petroleum
Sr Nts
08-15-07 8.25 9,500,000 8,671,135
PDV America
Sr Nts
08-01-03 7.88 15,000,000 13,436,631
Pennzenergy
Cv
08-15-08 4.90 2,500,000 2,437,500
Petronas
(U.S. Dollar)
08-15-15 7.75 10,000,000(c) 8,638,690
Roil
(U.S. Dollar)
12-05-02 12.78 4,350,000(c,e) 783,000
Swift Energy
Cv Sub Nts
11-15-06 6.25 2,175,000 1,566,000
Tesoro Petroleum
Company Guaranty Series B
07-01-08 9.00 7,150,000 6,980,188
Texaco Capital
04-01-32 8.63 10,000,000 12,483,635
Gtd Deb
03-01-43 7.50 3,000,000 3,165,370
USX-Marathon Group
05-15-22 9.38 17,500,000 19,595,278
Total 115,704,866
Energy equipment & services (0.3%)
Global Marine
09-01-07 7.13 10,000,000 10,034,610
Pride Intl
Zero Coupon Cv Sub Deb
04-24-18 5.84 10,000,000(f) 2,200,000
Total 12,234,610
Financial services (5.1%)
Airplanes GPA Cl D
(U.S. Dollar) Series 1
03-15-19 10.88 6,000,000(c) 6,506,400
AirTours
(British Pound) Cv Sub Nts
01-05-04 5.75 1,500,000(c) 2,819,188
Arcadia Financial
Sr Nts
03-15-07 11.50 5,000,000 4,043,750
Barclays North America Capital
05-15-21 9.75 13,600,000 15,234,229
Bat-Crave-800
08-12-00 6.68 10,100,000(e) 10,190,234
08-12-00 6.86 7,000,000 7,062,413
Equitable Life Assurance Society US Cl B1
05-15-09 7.33 5,500,000 5,731,110
First Union-
Lehman Brothers Cl A3
Series 1997-C2
11-18-29 6.65 20,000,000 20,207,400
Fleet Capital
Company Guaranty
12-11-26 7.92 14,600,000 15,151,924
Ford Capital
(U.S. Dollar)
06-01-10 9.50 18,350,000(c) 22,706,972
FPL Energy Caithness Funding
12-31-18 7.65 19,556,266(e) 18,836,595
GenAmerica Capital
Company Guaranty
06-30-27 8.53 8,000,000 7,753,160
Household Finance
Medium-term Nts Series E
06-17-08 6.40 10,000,000 9,971,124
Merrill Lynch & Co
02-12-03 6.00 4,150,000 4,151,249
Merrill Lynch Mtge Investors Cl D
Series 1996-C2
12-21-28 6.96 7,515,000 7,222,366
Ohio Savings Capital
Company Guaranty
06-03-27 9.50 9,500,000 11,108,917
Salomon
Medium-term Nts
11-30-00 6.63 6,700,000 6,753,169
Sr Nts
05-15-99 7.00 21,000,000 21,068,580
Salomon Smith Barney Holdings
01-15-03 6.13 15,000,000 14,864,288
Total 211,383,068
Food (0.1%)
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 4,575,000(c,e) 2,883,708
Health care (0.5%)
Alaris Medical Systems
Company Guaranty
12-01-06 9.75 6,250,000 6,414,063
Elan Finance
Zero Coupon Cv Company Guaranty
12-14-18 7.28 5,000,000(e,f) 3,006,250
Lilly (Eli)
01-01-36 6.77 7,950,000 7,916,900
Phoenix Shannon
(U.S. Dollar) Cv Sr Sub Nts
11-01-00 9.50 2,000,000(b,c,e) 20,000
Sepracor
Cv
12-15-05 7.00 4,000,000(e) 4,930,000
Total 22,287,213
Health care services (1.4%)
Magellan Health Services
Sr Sub Nts
02-15-08 9.00 10,000,000 8,650,000
Novacare
Cv Sub Deb
01-15-00 5.50 5,100,000 3,595,500
Owens & Minor
Company Guaranty Sr Sub Nts
06-01-06 10.88 4,000,000 4,285,000
Paracelsus Healthcare
Sr Sub Nts
08-15-06 10.00 8,500,000 7,256,875
Physician Sales & Service
Company Guaranty
10-01-07 8.50 11,250,000 11,475,000
Tenet Healthcare
Sr Sub Nts
12-01-08 8.13 22,700,000(e) 22,522,774
Total 57,785,149
Industrial equipment & services (0.3%)
AGCO
Sr Sub Nts
03-15-06 8.50 1,900,000 1,769,375
Ametek
Sr Nts
07-15-08 7.20 10,000,000 9,624,294
Total 11,393,669
Insurance (3.3%)
American General Institute Capital
Company Guaranty Series A
12-01-45 7.57 10,000,000(e) 10,507,385
Americo Life
Sr Sub Nts
06-01-05 9.25 9,400,000 9,623,250
Arkwright CSN Trust
08-15-26 9.63 5,000,000(e) 5,628,987
Berkshire Hathaway
Cv Sr Nts
12-02-01 1.00 1,600,000 2,844,000
Conseco Financing Trust
Company Guaranty
11-15-26 8.70 9,300,000 8,978,281
Equitable Companies
Sr Nts
12-15-04 9.00 4,250,000 4,779,380
Executive Risk Capital
Company Guaranty Series B
02-01-27 8.68 11,500,000 12,441,983
Leucadia Natl
Sr Sub Nts
10-15-06 7.88 10,850,000 10,509,055
Lincoln Natl
05-15-05 7.25 7,000,000 7,287,763
Nationwide CSN Trust
02-15-25 9.88 11,500,000(e) 13,570,259
New York Life Insurance
12-15-23 7.50 6,000,000(e) 5,912,720
Orion Capital
Company Guaranty
04-15-28 7.70 9,000,000 8,609,002
Presidential Life
Sr Nts
02-15-09 7.88 7,250,000 7,096,102
Principal Mutual
03-01-44 8.00 10,000,000(e) 10,669,573
SAFECO Capital
Company Guaranty
07-15-37 8.07 10,000,000 10,096,007
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 7,500,000(c,e) 8,081,024
Total 136,634,771
Leisure time & entertainment (1.9%)
Caesars World
Sr Sub Nts
08-15-02 8.88 6,000,000 6,022,500
Hammons (JQ) Hotels
1st Mtge
02-15-04 8.88 7,000,000 6,615,000
Icon Health & Fitness
Sr Sub Nts Series B
07-15-02 13.00 6,000,000(b) 4,200,000
Lodgenet Entertainment
Sr Nts
12-15-06 10.25 5,500,000 5,493,125
Mirage Resorts
02-01-08 6.75 11,850,000 11,403,374
Time Warner
02-01-24 7.57 11,875,000 12,829,078
Sr Nts
01-15-28 6.95 17,000,000 17,232,223
Trump Atlantic City Assn/Funding
1st Mtge Company Guaranty
05-01-06 11.25 4,000,000 3,400,000
United Artists Theatres
Series 1995A
07-01-15 9.30 12,986,538 11,708,403
Total 78,903,703
Media (4.3%)
Bresnan Communications
Sr Nts
02-01-09 8.00 2,000,000(e) 2,025,000
Chancellor Media
Sr Nts
11-01-08 8.00 10,000,000(e) 10,600,000
Clear Channel Communications
Cv Sr Nts
04-01-03 2.63 4,000,000 4,550,000
Comcast Cable Communications
11-15-08 6.20 5,500,000 5,452,042
Cox Communications
06-15-25 7.63 7,000,000 7,775,700
08-01-28 6.80 7,000,000 7,062,355
CSC Holdings
Series B
08-15-09 8.13 5,000,000 5,481,250
Sr Nts
07-15-08 7.25 14,000,000 14,245,431
Globo Communicacoes Participacoes
(U.S. Dollar) Sr Nts
12-05-08 10.63 10,000,000(c,e) 5,550,000
Jacor Communications
Sr Sub Nts
02-15-10 8.00 6,300,000(e) 6,678,000
Lamar Advertising
Company Guaranty
09-15-07 8.63 9,000,000 9,540,000
News Corp
06-24-10 10.15 3,622,261(i) 4,491,235
Outdoor Systems
Company Guaranty
06-15-07 8.88 8,000,000 8,600,000
Paxson Communications
Sr Sub Nts
10-01-02 11.63 7,500,000 7,631,250
Price Communications Wireless
Sr Nts
12-15-06 9.13 15,000,000(e) 15,750,000
Rogers Cablesystems
(Canadian Dollar)
01-15-14 9.65 3,700,000(c) 2,516,029
TCI Communications
08-01-15 8.75 2,100,000 2,591,753
Telewest Communication
(British Pound) Cv
02-19-07 5.25 2,040,000(c) 3,323,156
Time Warner Entertainment
Sr Nts
07-15-33 8.38 17,500,000 20,901,634
Turner Broadcasting
07-01-13 8.38 10,000,000 11,525,999
02-01-24 8.40 19,500,000 21,008,023
Total 177,298,857
Metals (1.2%)
AK Steel
Sr Nts
02-15-09 7.88 10,900,000(e) 10,872,749
EnviroSource
Sr Nts
06-15-03 9.75 4,576,000 3,969,680
Sr Nts Series B
06-15-03 9.75 5,893,000 5,112,178
Grupo Minero Mexico
(U.S. Dollar) Company Guaranty Series A
04-01-08 8.25 5,000,000(c) 4,250,000
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.13 6,907,229(c,e) 6,251,043
Ormet
Company Guaranty
08-15-08 11.00 8,600,000(e) 8,180,750
WMC Finance USA
(U.S. Dollar)
11-15-13 7.25 10,000,000(c) 10,613,981
Total 49,250,381
Miscellaneous (3.6%)
Bistro Trust
Sub Nts
12-31-02 9.50 32,750,000(e) 31,377,774
Centaur Mining & Exploration
(U.S. Dollar) Company Guaranty
12-01-07 11.00 5,500,000(c) 5,280,000
Comforce Operating
Sr Nts Series B
12-01-07 12.00 2,400,000 2,382,000
Continucare
Cv Sr Sub Nts
10-31-02 8.00 2,500,000 856,250
Delphes 2
(U.S. Dollar)
05-05-09 7.75 8,500,000(c) 8,415,000
ECM Funding LP
06-10-02 11.92 1,277,513(i) 1,277,513
FCB/NC Capital
Company Guaranty
03-01-28 8.05 9,250,000 9,689,867
First Empire Capital
Company Guaranty
02-01-27 8.23 10,450,000 10,791,685
Great Central Mines
(U.S. Dollar) Sr Nts
04-01-08 8.88 6,000,000(c,e) 5,940,000
Hyder PLC
(U.S. Dollar)
12-15-17 7.25 8,000,000(c,e) 8,031,390
ISG Resources
04-15-08 10.00 8,280,000 8,383,500
Network Associates
Zero Coupon Cv Sub Deb
02-13-18 3.24 7,350,000(f) 3,482,063
Norcal Waste Systems
Company Guaranty Series B
11-15-05 13.50 7,500,000 8,268,750
NSM Steel
Company Guaranty
02-01-06 12.00 6,925,000(b,e) 1,385,000
Omnipoint Communications
Sr Nts
02-17-06 8.53 9,890,226(e,l) 8,629,223
Penn-American Water
1st Mtge Medium-term Nts
11-01-17 7.08 13,000,000 12,944,998
Pierce Leahy Command
Company Guaranty
05-15-08 8.13 10,000,000 10,025,000
SC Intl
09-01-07 9.25 7,500,000 7,593,750
Stellex Inds
Sr Sub Nts Series B
11-01-07 9.50 6,100,000 5,314,625
Total 150,068,388
Multi-industry conglomerates (1.6%)
Coltec Inds
Company Guaranty
04-15-08 7.50 11,750,000(e) 12,396,250
Hutchison Whampoa Finance
(U.S. Dollar) Company Guaranty
08-01-27 7.50 8,000,000(c,e) 6,608,242
(U.S. Dollar) Company Guaranty Series B
08-01-17 7.45 2,600,000(c,e) 2,211,688
Prime Succession
Sr Sub Nts
08-15-04 10.75 3,260,000 2,347,200
Tenneco
06-15-07 7.63 5,000,000 5,050,847
US Inds/USI America Holdings
Company Guaranty
10-15-03 7.13 10,000,000(e) 9,804,110
USI American Holdings
Sr Nts Series B
12-01-06 7.25 10,920,000 11,079,393
Westinghouse Electric
06-01-01 8.88 10,000,000 10,459,321
Xerox
Cv Sub Deb
04-21-18 .57 6,400,000(e) 3,891,008
Total 63,848,059
Paper & packaging (2.0%)
Carter Holt Harvey
(U.S. Dollar)
12-01-04 8.88 10,500,000(c) 11,202,005
Doman Inds
(U.S. Dollar)
03-15-04 8.75 4,000,000(c) 2,960,000
(U.S. Dollar) Sr Nts Series B
11-15-07 9.25 3,500,000(c) 2,410,625
Gaylord Container
Sr Nts
06-15-07 9.75 5,650,000 5,395,750
Sr Nts Series B
06-15-07 9.38 5,350,000 4,988,875
Intl Paper
11-15-12 5.13 9,000,000 7,640,510
MacMillan Bloe Delaware
(U.S. Dollar)
01-15-04 8.50 3,000,000(c) 3,154,811
Owens-Illinois
Sr Nts
05-15-08 7.35 20,000,000 19,878,384
Quno Corp
(U.S. Dollar) Sr Nts
05-15-05 9.13 7,000,000(c) 7,350,000
Repap New Brunswick
(U.S. Dollar) Sr Nts
06-01-04 9.00 5,900,000(c) 5,546,000
Tenneco
11-15-12 9.20 9,000,000 10,558,306
Total 81,085,266
Real estate investment trust (0.4%)
Property Trust of America
02-15-14 7.50 15,000,000 15,160,446
Restaurants & lodging (0.4%)
Domino's
Sr Sub Nts
01-15-09 10.38 6,525,000(e) 6,737,063
MGM Grand
02-01-05 6.95 10,000,000 9,413,662
Total 16,150,725
Retail (1.4%)
Costco Companies
Zero Coupon Cv Sub Nts
08-19-17 .82 2,500,000(f) 2,306,250
Dairy Mart Convenience Stores
Sr Sub Nts
03-15-04 10.25 5,925,000 5,576,906
Home Depot
Cv Sub Nts
10-01-01 3.25 1,000,000 2,575,000
Kroger
Sr Nts
07-15-06 8.15 13,000,000 14,406,642
Meyer (Fred)
Company Guaranty
03-01-08 7.45 10,000,000 10,576,588
Rite Aid
Cv Sub Nts
09-15-02 5.25 1,750,000 2,222,500
Wal-Mart CRAVE Trust
07-17-06 7.00 14,684,907(e) 14,880,804
Wal-Mart Stores
06-29-11 8.88 3,500,000 3,636,656
Total 56,181,346
Textiles & apparel (0.3%)
Westpoint Stevens
Sr Nts
06-15-08 7.88 13,000,000 13,390,000
Transportation (1.7%)
American Architectural
Company Guaranty
12-01-07 11.75 7,500,000 5,990,625
Atlas Air Series C
01-02-10 8.01 14,998,260 14,835,229
CSX
05-01-27 7.25 9,700,000 10,259,567
Enterprise Rent-A-Car USA Finance
02-15-08 6.80 10,000,000(e) 9,901,000
Enterprises Shipholding
(U.S. Dollar) Sr Nts
05-01-08 8.88 8,100,000(c) 6,388,859
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(c) 1,995,000
06-15-07 9.50 8,750,000(c) 4,725,000
Norfolk Southern Corp
05-15-07 7.35 10,000,000 10,656,514
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 12.00 10,000,000(c,e) 5,350,000
Total 70,101,794
Utilities -- electric (9.5%)
AEP Generating
Series F
12-07-22 9.82 4,967,999 6,043,372
Appalachian Power
1st Mtge Medium-term Nts
12-01-22 8.50 5,000,000 5,241,007
Arizona Public Service
1st Mtge Sale Lease-backed Obligation
12-30-15 8.00 12,556,000 13,878,061
Cajun Electric Power
Mtge Trust
03-15-19 8.92 5,000,000 5,255,797
China Power & Light
(U.S. Dollar) Sr Nts
04-15-06 7.50 8,000,000(c) 8,179,918
Cleveland Electric Illuminating
07-01-00 7.19 8,000,000 8,109,663
07-01-04 7.67 20,500,000 21,508,887
1st Mtge
10-01-08 6.86 15,000,000(e) 14,660,333
1st Mtge Series B
05-15-05 9.50 18,790,000 20,086,006
1st Mtge Series E
07-01-23 9.00 5,000,000 5,259,567
CMS Energy
Sr Nts
05-15-02 8.13 10,000,000 10,301,529
11-15-04 7.63 12,000,000 12,277,980
Connecticut Light & Power
1st Mtge Series A
06-01-01 7.88 3,500,000 3,603,609
1st Mtge Series C
06-01-02 7.75 28,750,000 29,562,287
EIP Funding-PNM
10-01-12 10.25 6,555,000 7,747,411
El Paso Electric
1st Mtge Series E
05-01-11 9.40 10,000,000 11,550,000
Espirito Santo-Escelsa
(U.S. Dollar)
07-15-07 10.00 2,015,000(c) 1,128,400
Indiana & Michigan Power
Sale Lease-backed Obligation Series F
12-07-22 9.82 4,967,993 6,043,365
Israel Electric
(U.S. Dollar) Sr Nts
12-15-06 7.25 10,000,000(c) 9,834,400
Korea Electric Power
(U.S. Dollar)
07-01-02 8.00 2,800,000(c) 2,775,491
12-01-03 6.38 5,000,000(c) 4,637,186
Midland Cogeneration
Series 1991-C
07-23-02 10.33 4,983,706 5,313,877
Midland Funding
Series 1994-C
07-23-02 10.33 2,683,185 2,860,946
Series A
07-23-05 11.75 14,900,000 17,079,125
Ohio Edison
1st Mtge
04-01-23 7.88 6,000,000 6,087,246
PSI Energy
08-01-05 6.50 10,000,000 10,072,036
Public Services Electric & Gas
1st & Ref Mtge (MBIA Insured)
03-01-06 6.75 5,500,000(m) 5,704,235
Salton Sea Funding
Series C
05-30-10 7.84 10,000,000 10,636,604
Sithe Independence Funding
Series A
06-30-07 8.50 7,500,000 8,023,923
12-30-13 9.00 4,700,000 5,293,193
Texas Utilities Electric
01-01-05 9.45 3,580,000 3,787,749
08-01-07 7.17 13,900,000 14,688,452
07-01-25 7.63 10,000,000 10,038,026
10-01-25 7.38 3,000,000 2,977,285
Texas-New Mexico Power
09-15-03 10.75 5,000,000 5,262,500
1st Mtge Series U
09-15-00 9.25 6,000,000 6,217,500
TU Electric Capital
Company Guaranty
01-30-37 8.18 10,000,000 10,529,304
Tucson Electric Power
10-01-09 8.50 3,250,000 3,197,188
Virginia Electric & Power
02-01-07 6.75 35,000,000 35,726,785
Western Massachusetts Electric
1st Mtge Series B
07-01-01 7.38 12,000,000 12,183,163
Wisconsin Electric Power
12-01-95 6.88 8,000,000 8,158,835
Total 391,522,241
Utilities -- gas (1.3%)
Coastal
Sr Deb
02-15-37 7.42 6,000,000 5,961,957
Columbia Gas System
Series C
11-28-05 6.80 18,157,000 18,727,035
Equitable Resources
07-01-99 7.50 5,000,000 5,031,382
Questar Pipeline
06-01-21 9.38 8,000,000 8,743,410
Southern California Gas
1st Mtge Series BB
03-01-23 7.38 6,900,000 7,005,259
Southwest Gas
Series F
06-15-02 9.75 7,900,000 8,678,513
Total 54,147,556
Utilities -- telephone (5.8%)
360 Communications
03-01-06 7.50 17,470,000 18,651,344
Airtouch Communications
05-01-08 6.65 10,600,000 10,898,616
Ameritech Capital Funding
06-01-16 9.10% $16,000,000 $20,098,949
Bell Atlantic Financial Services
Cv
09-15-05 4.25 4,750,000(e) 5,314,063
Geotek Communications
Cv Sr Sub Nts
02-15-01 12.00 4,135,000(b) 5,169
Grupo Iusacell
(U.S. Dollar)
07-15-04 10.00 3,000,000(c) 2,730,000
GTE Florida
02-01-28 6.86 7,000,000 7,196,267
Indiana Bell Telephone
08-15-26 7.30 4,000,000 4,385,168
Intermedia Communications
Sr Nts Series B
11-01-07 8.88 3,200,000 3,072,000
Zero Coupon Sr Disc Nts Series B
07-15-02 9.67 15,000,000(g) 10,425,000
ITC Deltacom
Sr Nts
03-01-08 8.88 12,500,000 12,500,000
MCI WorldCom
03-15-24 7.75 16,400,000 16,784,408
McLeod USA
Sr Nts
02-15-09 8.13 4,250,000(e) 4,218,125
Metrocall
Sr Sub Nts
11-01-07 9.75 7,000,000 6,597,500
MetroNet Communications
(U.S. Dollar) Sr Nts
11-01-08 10.63 4,800,000(c,e) 5,388,000
New York Telephone
07-15-31 9.38 27,200,000 29,676,752
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts Series E
03-06-07 7.85 7,000,000(c,e) 5,981,342
Qwest Communications Intl
11-01-08 7.50% $9,000,000(e) $9,495,000
Rogers Cantel
(U.S. Dollar)
06-01-08 9.38 9,300,000(c) 10,264,875
RSL Communications
(U.S. Dollar) Sr Nts
11-15-08 10.50 5,500,000(c,e) 5,651,250
SBC Communications
10-15-34 6.63 10,000,000 9,713,318
07-15-43 7.38 10,000,000 10,523,421
U S WEST Communications
11-10-26 7.20 14,000,000 13,931,351
WorldCom
04-01-07 7.75 15,000,000 16,418,990
Total 239,920,908
Municipal bonds (0.4%)
Denver Colorado City & County School District 1
Taxable-Pension-School Facilities Lease (AMBAC Insured)
12-15-12 6.94 7,700,000(m) 8,119,804
New Jersey Economic Development Authority
State Pension Funding Revenue Bond (MBIA Insured)
02-15-29 7.43 4,600,000(m) 5,136,820
St. Paul Sales Tax Revenue Bonds
RiverCentre Arena (FSA Insured)
11-01-19 6.94 5,000,000(m) 4,967,500
Total 18,224,124
Total bonds
(Cost: $3,809,559,364) $3,825,141,622
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Common stocks (0.1%)
Issuer Shares Value(a)
<S> <C> <C>
Celcaribe 528,450(b,c) $2,113,800
Intermedia Communications 5,424(b) 98,310
Total common stocks
(Cost: $739,922) $2,212,110
Preferred stocks & other (1.9%)
Issuer Shares Value(a)
APP Finance II Mauritius Cl B
12.00% 5,405(c) $2,540,350
CNF Trust
5.00% Cv Series A 74,000 4,421,500
Coltec Capital
5.25% Cv 91,000(e) 3,628,625
Dairy Mart
Warrants 51,666(e) 13,950
Federal-Mogul Finance Trust
7.00% Cm Cv 37,000 2,155,250
Finova Finance Trust
5.50% Cv 67,000 4,790,500
Houston Inds
7.00% Cv ACES 22,500(o) 2,463,750
Intermedia Communications
7.00% Cv Series F 300,000 4,912,500
Intl Paper Capital
5.25% Cm Cv 52,500 2,551,605
Lincoln Natl
7.75% Cm Cv 168,000 4,389,000
MediaOne Group
4.50% Cm Cv Series D 21,500 2,343,500
Newell Financial Trust
5.25% Cm Cv 50,000 2,593,750
Owens-Illinois
Cv 80,000 3,110,000
Pinto Totta Intl Finance
7.77% 10,000(c,e) 8,837,500
Republic of Argentina
Warrants 7,000(c) 161,000
Salomon Income Financing Trust
9.50% 400,000 10,775,000
Suiza Capital
5.50% Cm Cv 44,200(e) 1,602,250
5.50% Cv 79,200 2,871,000
TCI Pacific Communications Cl A
5.00% 6,650 2,247,700
Tosco Financing Trust
5.75% Cv 75,000 3,262,500
Tower Automotive Capital
6.75% Cv 70,000 2,957,500
Union Pacific Capital
6.25% Cm Cv 75,000 3,525,000
Wendys Financing
5.00% Cm Cv Series A 66,000 3,597,000
Total preferred stocks & other
(Cost: $84,598,554) $79,750,730
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (7.4%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agency (3.2%)
Federal Home Loan Mtge Corp Disc Nts
<S> <C> <C> <C> <C> <C>
03-04-99 4.83% $13,900,000 $13,890,733
03-08-99 4.78 30,000,000 29,964,338
03-08-99 4.81 30,700,000 30,663,314
03-12-99 4.81 25,300,000 25,256,329
03-15-99 4.72 15,000,000 14,968,733
03-19-99 4.74 15,000,000 14,960,667
Total 129,704,114
Commercial paper (4.2%)
BMW US Capital
03-01-99 4.84 7,800,000 7,797,911
CAFCO
03-18-99 4.85 5,200,000(j) 5,186,744
Ciesco LP
03-02-99 4.81 9,000,000 8,996,400
03-02-99 4.82 2,200,000 2,199,118
03-17-99 4.86 6,000,000(j) 5,985,510
Clorox
03-04-99 4.82 13,300,000 13,291,133
Corporate Receivables
03-12-99 5.18 5,000,000(j) 4,990,290
Dresdner US Finance
03-02-99 4.85 10,600,000 10,595,716
Duke Energy
03-02-99 4.82 5,000,000 4,997,992
Ford Motor Credit
03-02-99 4.81 4,900,000 4,898,036
03-02-99 4.83 21,000,000 20,991,548
03-02-99 4.85 35,500,000 35,485,651
GTE Funding
03-02-99 4.83 3,900,000 3,898,433
Household Finance
03-02-99 4.82 22,400,000 22,391,022
Natl Rural Utilities
03-05-99 4.84 2,600,000 2,597,911
New Center Asset Trust
03-02-99 4.86 14,800,000 14,794,007
Salomon Smith Barney
03-04-99 4.90 4,900,000 4,896,686
Total 173,994,108
Total short-term securities
(Cost: $303,698,669) $303,698,222
Total investments in securities
(Cost: $4,198,596,509)(q) $4,210,802,684
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated. As of Feb. 28,
1999, the value of foreign securities represented 9.79% of net assets.
(d) This security is a collateralized mortgage obligation that pays no interest
or principal during its initial accrual
period until previous series within the trust have been paid off. Interest is
accrued at an effective yield; similar to a zero coupon bond.
(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) 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) Security is partially or fully on loan. See Note 4 to the financial
statements.
(i) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Feb. 28, 1999, is as follows:
Security Acquisition dates Cost
ECM Funding LP
11.92% 2002 04-13-92 $1,277,513
News Corp*
10.15% 2010 01-29-93 3,709,304
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(j) 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.
(k) U.S. Treasury inflation-protection securities (TIPS) are securities in which
the principal amount is adjusted for inflation and the semiannual interest
payments equal a fixed percentage of the inflation-adjusted principal amount.
(l) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1999.
(m) The following abbreviations are used in portfolio descriptions to identify
the insurer of
the issue:
AMBAC -- American Municipal Bond Association Corporation
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(n) Negligible market value.
(o) ACES are automatically convertible to the underlying equity securities.
(p) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Sale contracts
U.S. Treasury Bond, March 1999 $117,200,000
(q) At Feb. 28, 1999, the cost of securities for federal income tax purposes was
approximately $4,193,797,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $138,286,000
Unrealized depreciation (121,280,000)
Net unrealized appreciation $17,006,000
<PAGE>
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Fund performance, objectives and account inquiries: 800-862-7919
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For the hearing impaired: 800-846-4852
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Automated account information (TouchTone(R) telephones only), including current
Fund prices and performance, account values and recent account
transactions: 800-862-7919
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