PAGE
IDS
Diversified
Equity
Income
Fund
1995 semiannual report
The primary goal of IDS Diversified Equity Income
Fund is to provide a high level of income. Its
secondary goal is to provide capital growth. The
fund invests mainly in dividend paying stocks.
Distributed by
American Express
Financial Advisors Inc.
<PAGE>
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Dual-purpose stocks
Some of the most successful investments over the
years have been stocks that reward investors in
two ways- through growth in the value of the share
price as well as through payment of regular
dividend income. Diversified Equity Income sets
its sights on stocks that can provide this
double-barreled benefit. The fund takes advantage of
opportunities across various industries, among
different types of securities and in markets
throughout the world to find investments that meet
its combination growth-and-dividend requirements.
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 19
Directors and officers 24
IDS mutual funds 25
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To our shareholders
(Picture of William Pearce)
William R. Pearce
President of the fund
(Picture of Keith Tufte)
Keith Tufte
Portfolio manager
From the president
As I indicated in the fund's annual report, new agreements between the
fund and American Express Financial Corporation were approved by
shareholders in November 1994. The new agreements became effective when
the fund began offering multiple classes of shares on March 20, 1995.
The advantage of offering more than a single class of shares is that
investors may choose how they wish to pay sales charges. These charges
compensate your American Express financial advisor (formerly called your
IDS planner), who is committed to providing you with outstanding
services.
Adding new classes of mutual fund shares does make the presentation of
financial information in this report more complex. However, we will
continue our effort to make the reports easier to read and understand.
Meanwhile, your advisor is available to answer your questions.
William R. Pearce
From the portfolio manager
IDS Diversified Equity Income Fund rebounded from a downturn last fall
October 1994 through March 1995. (The lower net asset value at the end
of the period resulted partially from a capital gain distribution last
December, which reduced the net asset value by a like amount. That
distribution and dividends are assumed to be reinvested and are taken
into account when the fund's total return is calculated.)
As was true throughout 1994, volatility continued to dominate the stock
market early in the fiscal period. This was a reflection of an ongoing
tug-of-war between the positive forces of low inflation and good
corporate profits and the negative influence of higher interest rates.
Last fall, the interest-rate trend was winning, resulting in a decline
for the fund.
Downturn proves temporary
Three segments of the portfolio were particularly affected during that
time -- REITs (real estate investment trusts), banks and foreign stocks.
The first two suffered at the hands of higher interest rates, while our
foreign stocks, particularly in Latin America, lost ground because of
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economic and political problems in Mexico that ultimately drove down the
value of the peso. Prior to that, we reduced our foreign holdings and
raised the level of cash reserves in the portfolio -- two moves that
helped cushion the effect of the downturn.
The turning point for the U.S. market and fund came in December, when
long-term interest rates leveled off and, at times, moved lower. That
lent support to the stock market and ultimately resulted in a strong
rally during February and March. A number of stock sectors represented
in the portfolio responded well to the improving investment environment,
including insurance, beverages/tobacco, aerospace and pharmaceuticals.
Emphasis on quality, yield
Given the likelihood that the economy will grow less rapidly this year,
we have taken some steps to re-position the portfolio. These include:
focusing almost exclusively on companies of the highest quality, both
here and abroad; reducing the exposure to "cyclical " companies (whose
performance is closely linked to the strength of the economy) in favor
of those that boast a more consistent profit pattern; and keeping the
portfolio well-diversified across industry groups.
Although the stock market's strong run-up in the first quarter was
exhilarating, we don't expect the market to maintain that kind of pace
all year. It rarely does. In light of that, we think the somewhat
conservative structure of the portfolio is appropriate, at least for the
near term. Overall, we believe our holdings should provide us with a
substantial yield and the ability to participate in potential market
advances, while being less vulnerable to possible retreats.
Keith Tufte
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1995 $ 7.18
Sept. 30, 1994 $ 7.66
Decrease $ (0.48)
Distributions
Oct. 1, 1994 - March 31, 1995
From income $ 0.37
From capital gains $ 0.10
Total distributions $ 0.47
Total return** +0.2%
Class B
March 20, 1995 - March 31, 1995
(All figures per share)
Net asset value (NAV)
March 31, 1995 $ 7.18
March 20, 1995* $ 7.11
Increase $ 0.07
Distributions
March 20, 1995 - March 31, 1995
From income $ 0.07
From capital gains $ --
Total distributions $ 0.07
Total return** --%***
Class Y
March 20, 1995 - March 31, 1995
(All figures per share)
Net asset value (NAV)
March 31, 1995 $ 7.18
March 20, 1995* $ 7.11
Increase $ 0.07
Distributions
March 20, 1995 - March 31, 1995
From income $ 0.07
From capital gains $ --
Total distributions $ 0.07
Total return** --%***
*Commencement of operations.
**The prospectus discusses the effects of the sales charge on the various
classes.
***Not presented - as short period of operations may not be indicative
of annual results.
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<TABLE>
<CAPTION>
IDS Diversified Equity Income Fund
Your fund's ten largest holdings
Pie chart: The ten holdings listed here make up 14.12% of the fund's net assets
____________________________________________________________________________________
Percent Value
(of fund's net assets)(as of March 31, 1995)
____________________________________________________________________________________
<S> <C> <C>
General Electric 1.60% $16,237,500
General Electric is a diversified company with interest in manufacturing,
broadcasting (NBC), financial services and technology.
Royal Dutch Petroleum 1.54 15,600,000
Royal Dutch Petroleum Co., which includes Royal Dutch (the Dutch version) and Shell
Transport (the English version) is a major oil company.
Amoco 1.51 15,270,000
Amoco Corp. is one of the major integrated domestic oil and gas companies known
traditionally for its extensive petroleum marketing operations.
Exxon 1.48 15,018,750
Exxon is a major factor in the world crude oil, natural gas and chemical industry
and also has substantial coal and mineral holdings.
Repsol S.A. 1.48 14,935,000
Repsol is the major gasoline refiner and marketer in Spain, and is now venturing
abroad in a search for oil and gas. The company also has interests in commodity
chemicals.
Federal National Mortgage 1.37 13,833,750
Sometimes called "Fannie Mae," this U.S. government-sponsored, publicly held
company is the largest mortgage lender in the country.
Tele Danmark 1.35 13,647,500
Formed by the Danish Government in 1990, Tele Danmark is the principal provider of
domestic and international telephone services in Denmark, with over three million
subscriber lines to residences and businesses.
Mobil 1.28 12,967,500
Among the largest oil companies, with world-scale refining and marketing operations.
Hanson Industries 1.27 12,835,000
Hanson Industries is a large, diversified industrial conglomerate based in the United
Kingdom.
Enron Global Power & Pipelines 1.24 12,600,000
The company owns and manages the operating power plant and natural gas pipeline business
of Enron Corporation (parent) conducted outside the U.S., Canada and Western Europe.
</TABLE>
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<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Diversified Equity Income Fund
March 31, 1995
_____________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers (identified cost $1,044,331,141) $1,069,123,914
Investments in securities of affiliated issuers (identified cost $7,120,781) 7,044,375
Dividends and accrued interest receivable 3,989,248
Receivable for investment securities sold 16,436,794
Receivable for foreign currency contracts held, at value (Notes 1 and 8) 34,704,900
U.S. government securities held as collateral (Note 5) 7,486,063
_____________________________________________________________________________________________________________
Total assets 1,138,785,294
_____________________________________________________________________________________________________________
Liabilities
____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 10,545,701
Dividends payable to shareholders 462,180
Payable for foreign currency contracts held, at value (Notes 1 and 8) 35,078,501
Payable for investment securities purchased 58,074,673
Payable upon return of securities loaned (Note 5) 22,136,063
Accrued investment management and services fee 166,429
Accrued distribution fee and service fees 56,472
Accrued transfer agency fee 57,365
Accrued administrative services fee 12,242
Other accrued expenses 65,316
Open option contracts written, at value (premium received $402,214) (Note 7) 119,365
_____________________________________________________________________________________________________________
Total liabilities 126,774,307
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,012,010,987
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- $.01 par value; $ 1,408,663
Additional paid-in capital 1,017,445,597
Excess of distributions over net investment income (18,884)
Accumulated net realized loss (Notes 1 and 9) (31,450,004)
Unrealized appreciation (Note 8) 24,625,615
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,012,010,987
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $ 990,676,732
Class B $ 2,459,057
Class Y $ 18,875,198
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock: Class A shares 137,896,790 $ 7.18
Class B shares 342,271 $ 7.18
Class Y shares 2,627,317 $ 7.18
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
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Financial statements
Statement of operations
IDS Diversified Equity Income Fund
Six months ended March 31, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $ 7,209,932
Dividends (net of foreign taxes withheld of $86,033) 17,247,234
_____________________________________________________________________________________________________________
Total income 24,457,166
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 2,528,019
Distribution fee 318,624
Transfer agency fee 850,380
Service fee 56,225
Administrative services fee 12,242
Compensation of directors 4,636
Compensation of officers 6,716
Custodian fees 186,056
Postage 93,169
Registration fees 156,177
Reports to shareholders 118,970
Audit fees 10,081
Administrative 7,405
Other 18,612
_____________________________________________________________________________________________________________
Total expenses 4,367,312
_____________________________________________________________________________________________________________
Investment income -- net 20,089,854
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions
(including gain of $227,859 from foreign currency transactions) (Note 3) (32,158,879)
Net realized gain on closed or expired option contracts written (Note 7) 882,245
_____________________________________________________________________________________________________________
Net realized loss on investments and foreign currency (31,276,634)
Net change in unrealized appreciation or depreciation 13,598,625
_____________________________________________________________________________________________________________
Net loss on investments and foreign currency (17,678,009)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 2,411,845
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Diversified Equity Income Fund
_____________________________________________________________________________________________________________
Operations and distributions March 31, 1995 Sept. 30, 1994
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $ 20,089,854 $ 27,087,887
Net realized gain (loss) on investments and foreign currency (31,276,634) 39,681,404
Net change in unrealized appreciation or depreciation 13,598,625 (26,167,681)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 2,411,845 40,601,610
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (20,456,661) (26,871,792)
Class B (1,712) --
Class Y (29,294) --
Net realized gain
Class A (39,678,584) (20,616,878)
Excess distributions of realized gains
Class A (227,859) --
_____________________________________________________________________________________________________________
Total distributions (60,394,110) (47,488,670)
_____________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 160,456,426 502,336,890
Class B shares 2,449,767 --
Class Y shares 19,109,903 --
Reinvestment of distributions at net asset value
Class A shares 59,606,904 44,540,693
Class B shares 1,676 --
Class Y shares 29,294 --
Payments for redemptions
Class A shares (107,351,023) (91,147,458)
Class B shares (Note 2) (1,954) --
Class Y shares (448,633) --
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 133,852,360 455,730,125
_____________________________________________________________________________________________________________
Total increase in net assets 75,870,095 448,843,065
Net assets at beginning of period 936,140,892 487,297,827
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$(18,884) and $378,929) $1,012,010,987 $936,140,892
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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Notes to financial statements
IDS Diversified Equity Income Fund
(Unaudited as to March 31, 1995)
______________________________________________________________________________
1. Summary of significant accounting policies
The fund is a series of IDS Investment Series, Inc. and registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. IDS Investment Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board of directors. The fund offers Class A, Class
B and Class Y shares. Class A shares are sold with a front-end sales charge.
Class B shares, which the fund began offering on March 20, 1995, may be
subject to a contingent deferred sales charge and such shares automatically
convert to Class A after 8 years. Class Y shares, which the fund also began
offering on March 20, 1995, have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differ 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:
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 of directors.
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.
Options transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the fund may buy or write
options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The fund also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the fund
gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the fund pays a premium whether or not the
option is exercised. The fund also has the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or closing of the option
transaction. When 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 interest rate futures contracts traded on any U.S. or
foreign exchange. The fund also may buy or write put and call options on these
futures contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that
a change in the value of the contract or option may not correlate with changes
in the value of the underlying securities.
Upon entering into a futures contract, the fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
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. The
effect on dividend distributions of certain book-to-tax differences is
presented as "excess distributions" in the statement of changes in net assets.
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 paid each calendar
quarter, 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 and interest
income, including level-yield amortization of premium and discount, is accured
daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of a prior agreement, which ended March 19, 1995, the fund paid
American Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee was a percentage of the
fund's average daily net assets consisting of a group asset charge in reducing
percentages from 0.46% to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual
asset charge of 0.14% of average daily net assets.
Also under terms of the prior agreement, the fund paid American Express
Financial Advisors Inc. a distribution fee at an annual rate of $6 per
shareholder account and paid American Express Financial Corporation a transfer
agency fee at an annual rate of $15 per shareholder account. The transfer
agency fee was reduced by earnings on monies pending shareholder redemptions.
Effective March 20, 1995, when the fund began offering multiple classes of
shares, the fund entered into agreements with American Express Financial
Corporation for managing its portfolio providing administrative services and
serving as tranfer agent as follows: Under its Investment Management Services
Agreement, American Express Financial Corporation 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 0.53% to 0.4%
annually. Under an Administrative Servies Agreement, the fund pays American
Express Financial Corporation for administration and accounting services at a
percentage of the fund's average daily net assets in reducing percentages from
0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, American Express Financial
Corporation maintains shareholder accounts and records. The fund pays American
Express Financial Corporation an annual fee per shareholder account for this
service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the fund entered into agreements with American
Express Financial Advisors, Inc. for distribution and shareholder servicing -
related services as follows: Under the Distribution Agreement, 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.
American Express Financial Corporation will assume and pay any expenses
(except taxes and brokerage commissions) that exceed the most
restrictive applicable state expense limitation.
Sales charges by American Express Financial Advisors Inc. for distributing
fund shares were $3,441,158 for Class A for the six months ended March 31,
1995. The fund also pays custodian fees to American Express Trust Company, an
affiliate of American Express Financial Corporation.
The fund has a retirement plan for its independent directors. Upon retirement,
directors receive monthly payments equal to one-half of the retainer fee for
as many months as they served as directors up to 120 months. There are no
death benefits. The plan is not funded but the fund recognizes the cost of
payments during the time the directors serve on the board. The retirement plan
expense amounted to $439 for the six months ended March 31, 1995.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $688,267,137 and 532,058,513, respectively, for the
six months ended March 31, 1995. Realized gains and losses are determined on
an identified cost basis.
Brokerage commissions paid to brokers affiliated with American Express
Financial Corporation were $103,852 for the six months ended March 31, 1995.
______________________________________________________________________________
4. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
________________________________________________________________________________________
Six months ended March 31, 1995 Year ended
9/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 22,146,999 342,310 2,685,900 65,143,446
Issued for reinvested
distributions 8,545,799 233 3,917 5,808,815
Redeemed (14,964,500) (272) (62,500) (11,825,092)
_________________________________________________________________________________________
Net increase 15,728,298 342,271 2,627,317 59,127,169
_________________________________________________________________________________________
*Commencement of operations was March 20, 1995.<PAGE>
5. Lending of portfolio securities
</TABLE>
At March 31, 1995, securities valued at $21,303,100 were on loan to brokers.
For collateral, the fund received $14,650,000 in cash and U.S. government
securities valued at $7,486,063. Income from securities lending amounted to
$39,449 for the six months ended March 31, 1995. The risks to the fund of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
______________________________________________________________________________
6. Illiquid securities
At March 31, 1995, 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 March 31, 1995, was $5,218,750, which represents
0.5% of net assets. Pursuant to guidelines adopted by the fund's board of
directors, certain unregistered securities are determined to be liquid and are
not included within the 10% limitation specified above.
______________________________________________________________________________
7. Option contracts written
The number of contracts and premium amounts associated with options
written are as follows:
Six months ended March 31, 1995
________________________________________________
Puts Calls
Contracts Premium Contracts Premium
________________________________________________________________________
Balance Sept. 30, 1994 -- $ -- 2,000 $219,993
Opened 22,716 1,245,933 5,000 591,480
Closed (7,016) (403,779) (3,000) (464,109)
Exercised (3,450) (240,592) (1,200) (110,197)
Expired (6,950) (290,020) (1,500) (146,495)
________________________________________________________________________
Balance March 31, 1995 5,300 $ 311 542 1,300 $ 90,672
________________________________________________________________________
______________________________________________________________________________
8. Foreign currency contracts
At March 31, 1995, the fund had entered into eight foreign currency exchange
contracts that obligate the fund to deliver currency at a specified future
date. The net unrealized depreciation of $373,601 on these contracts is
included in the accompanying financial statements. The terms of the open
contracts are as follows:
<TABLE>
<CAPTION>
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered March 31, 1995 received March 31, 1995
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
April 3, 1995 1,900,438,500 $ 849,168 849,548 $ 849,548
Indian Rupee U.S. Dollar
April 3, 1995 1,280,083,578 571,977 572,796 572,796
Indian Rupee U.S. Dollar
April 5, 1995 2,189,313,880 978,246 979,625 979,625
Indian Rupee U.S. Dollar
April 12, 1995 3,600,000 5,829,912 5,619,780 5,619,780
British Pound U.S. Dollar
April 12, 1995 9,250,000 14,979,635 14,744,500 14,744,500
British Pound U.S. Dollar
April 12, 1995 4,427,189 4,427,189 2,748,885 4,451,819
U.S. Dollar British Pound
April 12, 1995 4,173,984 4,173,984 2,609,914 4,226,756
U.S. Dollar British Pound
April 12, 1995 3,268,390 3,268,390 2,013,014 3,260,076
U.S. Dollar British Pound
___________ ___________
$35,078,501 $34,704,900
</TABLE>
9. Capital loss carryover
For federal income tax purposes, the fund has a capital loss carryover of
approximately $32,321,000 at March 31, 1995, that will expire in 2003 if
not offset by subsequent capital gains.
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<TABLE>
<CAPTION>
10. Financial highlights
The table below shows certain important financial information for evaluating the fund's results.
Fiscal period ended Sept. 30,
Per share income and capital changes*
1995** 1994 1993 1992 1991***
Classes
A B Y
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $7.66 $7.11 $ 7.11 $7.73 $6.48 $5.98 $5.00
beginning of period
Income from investment operations:
Net investment income .16 .07 .02 .27 .28 .31 .30
Net gains (losses) (both (.17) .07 .12 .20 1.31 .58 .98
realized and unrealized)
Total from investment (.01) .14 .14 .47 1.59 .89 1.28
operations
Less distributions:
Dividends from net (.16) (.07) (.07) (.27) (.28) (.30) (.30)
investment income
Distributions from (.31) -- -- (.27) (.06) (.09) --
realized gains
Total distributions (.47) (.07) (.07) (.54) (.34) (.39) (.30)
Net asset value, $7.18 $7.18 $7.18 $7.66 $7.73 $6.48 $5.98
end of period
Ratios/supplemental data
1995** 1994 1993 1992 1991***
Classes
A B Y
Net assets, end of period $991 $2 $19 $936 $487 $162 $23
(in millions)
Ratio of expenses to .92%**** 1.52**** .91%**** .88% .96% 1.08%++ .90%++
average daily net assets
Ratio of net income 4.22%**** 5.78%**** 5.78%**** 3.75% 3.94% 4.79%++ 5.97%****++
to average daily net assets
Portfolio turnover rate 66% 66% 66% 95% 73% 34% 74%
(excluding short-term
securities)
Total return+ 0.2%+++ 2.0% 2.0% 6.3% 25.0% 15.4% 25.9%+++
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended March 31, 1995 for Class A and commencement of operations
March 20, 1995 for Class B and Y (Unaudited).
***Commencement of operations. Period from Oct. 15, 1990 to Sept. 30, 1991.
****Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++During the periods ended Sept. 30 1991 and 1992, American Express Financial
Corporation reimbursed the fund for expenses in excess of 0.9% of its average
daily net assets, on an annual basis. Had American Express Financial Corporation
not done so, the ratios of expenses and net investment income would have been
1.34% and 5.53% for 1991 and 1.13% and 4.74% for 1992.
+++For the periods ended Sept. 30, 1991 and March 31, 1995 for Class A, the annualized
total returns are 27.2% and 0.4%, respectively.
</TABLE>
<PAGE>
PAGE
<TABLE>
<CAPTION>
Investments in securities
IDS Diversified Equity Income Fund (Percentages represent value of
March 31, 1995 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
_____________________________________________________________________________________________________________________________
Common stocks (79.8%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (2.4%)
Rockwell Intl 310,000 $12,090,000
United Technologies 175,000 12,096,875
Total 24,186,875
_____________________________________________________________________________________________________________________________
Automotive & related (0.9%)
Genuine Parts 225,000 8,971,875
_____________________________________________________________________________________________________________________________
Banks and savings & loans (5.3%)
Bank of Boston 405,000 12,048,750
BankAmerica 245,000 11,821,250
Bankers Trust NY 115,000 6,008,750
First Chicago 235,000 11,779,375
NationsBank 240,000 12,180,000
___________
Total 53,838,125
_____________________________________________________________________________________________________________________________
Beverages & tobacco (3.0%)
Anheuser-Busch 120,000 7,035,000
Philip Morris 165,000 10,766,250
UST 390,000 12,382,500
___________
Total 30,183,750
______________________________________________________________________________________________________________________________
Chemicals (4.0%)
Dow Chemical 155,000 11,315,000
Monsanto 135,000 (i) 10,833,750
Nalco Chemical 245,000 8,238,125
PPG Inds 280,000 10,570,000
____________
Total 40,956,875
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.7%)
Xerox 65,000 7,629,375
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Energy (5.3%)
Amoco 240,000 15,270,000
Exxon 225,000 15,018,750
Mobil 140,000 12,967,500
Ultramar 410,000 10,660,000
____________
Total 53,916,250
_____________________________________________________________________________________________________________________________
Financial services (1.4%)
Federal Natl Mtge 170,000 13,833,750
______________________________________________________________________________________________________________________________
Food (1.2%)
ConAgra 360,000 (c) 11,925,000
______________________________________________________________________________________________________________________________
Health care (5.6%)
Amer Home Products 150,000 10,687,500
Bristol-Myers Squibb 180,000 11,340,000
Lilly (Eli) 160,000 11,700,000
Merck 275,000 11,721,875
Pfizer 130,000 11,147,500
____________
Total 56,596,875
_____________________________________________________________________________________________________________________________
Health care services (1.2%)
LTC Properties 300,000 3,975,000
Nationwide Health 115,000 4,240,625
Omega Healthcare Investors 165,000 3,918,750
____________
12,134,375
_____________________________________________________________________________________________________________________________
Household products (1.0%)
Clorox 165,000 9,900,000
_____________________________________________________________________________________________________________________________
Industrial machines & services (1.2%)
General Signal 330,000 11,756,250
_____________________________________________________________________________________________________________________________
Industrial transportation (2.3%)
Norfolk Southern 170,000 11,368,750
Union Pacific 220,000 12,100,000
____________
Total 23,468,750
_____________________________________________________________________________________________________________________________
Insurance (5.0%)
Amer General 360,000 11,610,000
Lincoln Natl 295,000 11,873,750
Marsh & McLennan 130,000 10,676,250
St. Paul Companies 120,000 6,000,000
Transamerica 190,000 10,758,750
____________
Total 50,918,750
<PAGE>
_____________________________________________________________________________________________________________________________
Media (1.8%)
Knight-Ridder 125,000 7,062,500
McGraw-Hill 160,000 (i) 11,480,000
____________
Total 18,542,500
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (2.1%)
Emerson Electric 80,000 5,320,000
General Electric 300,000 16,237,500
____________
Total 21,557,500
_____________________________________________________________________________________________________________________________
Paper & packaging (2.3%)
Kimberly-Clark 230,000 11,960,000
Union Camp 210,000 10,893,750
____________
Total 22,853,750
_____________________________________________________________________________________________________________________________
Real estate (10.9%)
Alexander Haagen Properties 225,000 3,121,875
Bay Apartment 200,000 3,675,000
Beacon Office Property 200,000 3,975,000
Bradley Real Estate Trust 190,000 3,111,250
Cali Realty 270,000 4,691,250
Crown Amer Realty 220,000 2,860,000
Felcor Hotel 180,000 4,297,500
Gable Residential Trust 155,000 2,886,875
Highwood Property 165,000 3,609,375
Home Properties 160,000 2,940,000
Household Intl 45,000 (i) 1,957,500
Kranzco Realty Trust 185,000 3,283,750
Manufactured Home Communities 265,000 4,074,375
Merry Land & Investment 155,000 3,022,500
Mid-Amer Apart Communities 195,000 5,021,250
Mid Atlantic 96,200 769,600
Mills 55,000 928,125
Oasis 200,000 4,550,000
Prime Residential 172,000 2,623,000
RFS Hotel Investors 565,000 8,051,250
ROC Communities 250,000 5,062,500
Sizeler Property Investment 250,000 2,593,750
South West Property Trust 330,000 3,960,000
Storage USA 185,000 5,388,125
Summit Properties 200,000 3,300,000
Sun Communities 195,000 4,387,500
United Asset Management 195,000 7,483,125
Weeks 150,000 3,431,250
Wellsford 250,000 (h) 5,218,750
____________
Total 110,274,475
<PAGE>
_______________________________________________________________________________________________________________________________
Retail (3.6%)
Dayton Hudson 165,000 (i) 11,797,500
Rite Aid 415,000 10,167,500
Sears Roebuck 165,000 8,806,875
TJX 395,000 5,184,375
____________
Total 35,956,250
_____________________________________________________________________________________________________________________________
Utilities-electric (0.6%)
Southern Co 320,000 6,520,000
_____________________________________________________________________________________________________________________________
Utilities-gas (3.6%)
Enron 370,000 12,210,000
Enron Global Power 525,000 12,600,000
Tenneco 245,000 11,545,625
____________
Total 36,355,625
_____________________________________________________________________________________________________________________________
Utilities-telephone (3.1%)
BellSouth 205,000 12,197,500
Comsat 380,000 7,077,500
U S WEST 300,000 12,000,000
____________
Total 31,275,000
_____________________________________________________________________________________________________________________________
Foreign (11.3%)(d)
Amcor 1,040,000 (c) 7,136,480
Grand Met Place 1,850,000 11,982,450
Hanson ADR 680,000 12,835,000
Hopewell Holdings 12,550,000 8,835,200
Repsol (SA) ADR 515,000 14,935,000
Royal Dutch Petroleum 130,000 15,600,000
SmithKline Beecham 280,000 10,500,000
Tele Danmark ADR 515,000 13,647,500
Tomkins 3,055,000 (b) 11,624,275
Woolworth's LTD 3,471,065 (c) 7,303,121
____________
Total 114,399,026
_____________________________________________________________________________________________________________________________
Total common stocks of unaffiliated issuers
(Cost: $771,263,130) $807,951,001
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Preferred stocks & other (4.6%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
AK Steel Holdings
7% Cv 160,000 4,600,000
ATL Richfield
$9 Cv 220,000 (j) 5,472,500
COINTEL
5.04% 120,000 (l) 5,940,000
Kaiser Aluminum 455,000 (l) 4,777,500
Kenetech
1.67% Cv 194,500 (l) 2,771,625
Reynolds Metals
3.31% Cv 100,000 4,762,500
Service Corp
3.125% Cv 190,000 10,521,250
Sonoco Products
$2.25 Cv 150,000 7,875,000
South West Property Trust
Rights 330,000 (f) --
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $49,652,832) $46,720,375
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Bonds (3.6%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Mortgage-backed security (--%)
Federal Natl Mtge Assn
Collateralized Mtge Obligation 9.25% 2020 $ 32,084 $ 32,525
_____________________________________________________________________________________________________________________________
Financial (0.7)
Financial services (0.7)
SBH/Amgen
Cv 3.185 1997 12,500,000 (k) 7,273,438
_____________________________________________________________________________________________________________________________
<PAGE>
Industrial (1.7%)
Computers & office equipment (0.7%)
Danka Business Systems
Cv 6.75 2002 5,000,000 (e) 5,387,500
Intermagnetics General
Cv Sub Deb 5.75 2003 2,000,000 1,760,000
____________
Total 7,147,500
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.5%)
Sholodge
Cv 7.50 2004 6,000,000 5,190,000
_____________________________________________________________________________________________________________________________
Metals (0.5%)
Inco
Cv 5.75 2004 4,750,000 5,320,000
_____________________________________________________________________________________________________________________________
Foreign (1.2%)(d)
Grupo Financiero Invermexico
(U.S. Dollar) Cv 7.50 2001 10,000,000 (e) 3,600,000
Renong
(U.S. Dollar) 2.50 2005 8,000,000 (e) 8,160,000
____________
Total 11,760,000
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $42,442,652) $36,723,463
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Options purchased (--%)
_____________________________________________________________________________________________________________________________
Issuer Number Exercise Expiration Value(a)
of contracts price date
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Call
Capstead Mtge 5,000 $33 August 1998 $ 62,500
_____________________________________________________________________________________________________________________________
Total options purchased
(Cost: $3,300,000) $ 62,500
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (17.6%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C>
U.S. government agency (0.5%)
Federal Home Loan Mtge Corp
Disc Note
04-10-95 5.94% $5,300,000 $5,292,169
_____________________________________________________________________________________________________________________________
Commercial paper (16.6%)
Amer General
04-11-95 6.01 4,900,000 (m) 4,891,874
04-18-95 6.00 5,600,000 (m) 5,584,213
04-24-95 6.05 2,500,000 (m) 2,490,369
04-28-95 6.01 2,700,000 (m) 2,687,911
Avco Financial Services
04-04-95 6.09 6,500,000 6,496,734
04-07-95 6.00 500,000 499,502
BBV Finance (Delaware)
04-06-95 6.03 5,500,000 5,495,417
Bell Atlantic Network Funding
04-25-95 6.00 4,600,000 4,581,692
Cafco
04-17-95 6.01 4,400,000 (m) 4,388,325
Cargill
04-25-95 6.00 900,000 896,418
Ciesco LP
04-20-95 6.06 5,400,000 5,382,900
Commerzbank US Finance
04-26-95 6.00 5,000,000 4,979,271
Consolidated Rail
04-07-95 5.99 5,900,000 (m) 5,894,149
04-19-95 5.99 2,400,000 (m) 2,392,848
Fleet Funding
05-04-95 6.11 3,387,000 (m) 3,368,216
05-08-95 6.11 1,500,000 (m) 1,490,673
Goldman Sachs Group
04-05-95 6.01 6,600,000 6,595,615
Household Finance
05-11-95 6.11 900,000 893,663
Kredietbank
North Amer Finance
04-05-95 6.03 8,500,000 8,494,333
<PAGE>
Lincoln Natl
04-12-95 6.02 700,000 (m) 698,721
Mobil Australia Finance
04-28-95 6.00 5,600,000 (m) 5,574,926
Morgan Stanely Group
04-07-95 6.03 7,600,000 7,592,400
Motorola
04-27-95 6.00 1,700,000 1,692,682
Nestle Capital
04-27-95 5.98 5,900,000 5,874,646
Norfolk Southern
04-12-95 6.06 5,400,000 (m) 5,389,128
Paccar Financial
04-05-95 5.99 2,400,000 2,398,408
04-17-95 6.00 5,200,000 5,186,203
Penney (JC) Funding
04-18-95 6.11 6,900,000 6,877,981
Pitney Bowes Credit
04-17-95 6.10 5,100,000 5,085,145
St. Paul Companies
04-18-95 5.99 1,700,000 (m) 1,695,215
04-21-95 5.99 3,260,000 (m) 3,249,206
04-24-95 6.00 2,900,000 (m) 2,888,957
Sandoz
04-27-95 6.03 4,600,000 4,580,067
SmithKline Beecham
04-28-95 6.02 4,900,000 4,878,042
05-01-95 6.02 5,700,000 5,671,595
Sysco
04-12-95 6.08 6,000,000 (m) 5,987,752
Toyota Motor Credit
04-06-95 6.06 4,000,000 3,996,667
UBS Finance
04-03-95 6.09 5,600,000 5,598,108
U S WEST Communications
04-03-95 6.05 5,000,000 4,998,333
____________
Total 167,418,305
_____________________________________________________________________________________________________________________________
Letter of credit (0.5%)
First Natl Bank Chicago-
Commed Fuel
04-13-95 6.01 4,966,000 4,956,101
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $177,672,527) $ 177,666,575
_____________________________________________________________________________________________________________________________
<PAGE>
Total investments in securities of unaffiliated issuers
(Cost: $1,044,331,141) $1,069,123,914
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Investments in securities of affiliated issuers (g)
Common stocks (0.7%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Financial services (0.3%)
Malan Realty 205,000 $ 2,844,375
____________________________________________________________________________________________________________________________
Retail (0.4%)
Conso Products 300,000 (b) 4,200,000
_____________________________________________________________________________________________________________________________
Total investments in securities of affiliated issuers
(Cost: $7,120,781) $ 7,044,375
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,051,451,922)(n) $1,076,168,289
_____________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial statements.
(d) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the
currency indicated.
(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 of directors.
(f) Presently negligible market value.
(g) Investments representing 5% or more of the outstanding voting securities of the issuer.
<PAGE>
(h) Identifies issues considered to be illiquid (see Note 6 to the financial statements). Information concerning such
security holdings at March 31, 1995, is as follows:
Acquisition
Security date Cost
______________________________________________________________________
Wellsford
Common 08-19-94 5,250,000
(i) At March 31, 1995, securities valued at $49,375 were held to cover
open call options written as follows:
Number Exercise Expiration
Issuer of contracts price date Value(a)
_________________________________________________________________________
Dayton Hudson 300 $75 Apr. 22, 1995 $ 16,875
Household Intl 450 45 Apr. 22, 1995 22,500
McGraw-Hill 300 75 Apr. 22, 1995 3,750
Monsanto 250 85 Apr. 22, 1995 6,250
_______
$49,375
=======
At March 31, 1995, cash or short-term securities were designated to cover the following open
put options written:
Number Exercise Expiration
Issuer of contracts price date Value(a)
___________________________________________________________________________________________
Dayton Hudson 300 $65 Apr. 22, 1995 $ 3,750
CitiCorp 1,200 38 Apr. 22, 1995 6,240
Clorox 400 60 Apr. 22, 1995 25,000
Gannett 1,000 50 Apr. 22, 1995 12,500
Penney (JC) 1,200 40 Apr. 22, 1995 7,500
US Health Center 1,200 40 Apr. 22, 1995 15,000
_______
$69,990
=======
(j) ACES are automatically convertible equity securities.
(k) ELKS are equity-linked securities that are structured as an interest-bearing
debt security of a brokerage firm and linked to the common stock of another company.
The terms of ELKS differ from those of ordinary debt securities in that the principal
amount received at maturity is not fixed, but is based on the price of the common
stock the ELK is linked to. The principal amount disclosed equals the current estimated
future value of the amount to be received upon maturity.
<PAGE>
(l) PRIDES -- Preferred Redeemed Increased Dividend Equity Securities are structured
as convertible preferred securities issued by a company. Investors receive an enhanced
yield but based upon a specific formula, potential appreciation is limited. PRIDES pay
dividends, have voting rights, are noncallable for three years and upon maturity, convert
into shares of common stock.
(m) Commercial paper sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and may be
sold only to dealers in that program or other "accredited investors." This security has
been determined to be liquid under guidelines established by the board of directors.
(n) At March 31, 1995, the cost of securities for federal income tax purposes was
approximately $1,051,452,000 and the approximate aggregate gross unrealized appreciation
and depreciation based on that cost was:
Unrealized appreciation $53,634,000
Unrealized depreciation (28,918,000)
___________________________________________________________________________________________
Net unrealized appreciation $24,716,000
___________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation.
William H. Dudley
Executive vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Financial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Officers who also are officers and or/employees of American Express
Financial Corporation
Peter J. Anderson
Vice president of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP .
<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia<PAGE>
PAGE
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and
safety of principal consistent with its type of investments.
(icon of) federal building
Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies
by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed<PAGE>
PAGE
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk bond
categories.
(icon of) shield with Greek column
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 eagle head
Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
(icon of) bird in a nest
<PAGE>
PAGE
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice<PAGE>
PAGE
Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Strategy, Aggressive Equity Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
<PAGE>
PAGE
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. This is the most aggressive and most speculative
IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
advisor or writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or send money.
<PAGE>
PAGE
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including current
fund prices and performance, account values and recent account
transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Diversified Equity Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
IDS
Mutual
1995 semiannual report
The goal of IDS Mutual is to provide a balance of growth of capital
and current income. The fund divides its investments between common
stocks and senior securities (bonds and preferred stocks).
Distributed by
American Express
Financial Advisors Inc.
<PAGE>
A beneficial
balance
A balanced portfolio is one of the building blocks of investment
planning. And balance is what IDS Mutual is all about. The fund
starts with a focus on stocks, many of which are part of the who's who
of corporate America. To help balance the fluctuations inherent in
stocks, as well as provide greater income to investors, bonds are
added to the portfolio. The result: a fund that offers income above
that of a pure stock fund, while still providing potential for capital
appreciation.
Contents
From the president 3
From the portfolio managers 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 20
Directors and officers 28
IDS mutual funds 29
<PAGE>
To our shareholders
(Picture of)
William R. Pearce
President of the fund
(Picture of)
Thomas Medcalf
Equity portfolio
manager
(Picture of)
Ed Labenski
Fixed-income
portfolio manager
From the president
As I indicated in the fund's annual report, new agreements between the
fund and American Express Financial Corporation were approved by
shareholders in November 1994. The new agreements became effective
when the fund began offering multiple classes of shares on March 20,
1995.
The advantage of offering more than a single class of shares is that
investors may choose how they wish to pay sales charges. These charges
compensate your American Express financial advisor (formerly called
your IDS planner), who is committed to providing you with outstanding
services.
Adding new classes of mutual fund shares does make the presentation of
financial information in this report more complex. However, we will
continue our effort to make the reports easier to read and understand.
Meanwhile, your advisor is available to answer your questions.
William R. Pearce
From the portfolio managers
Buoyed by an improving interest-rate environment last winter, IDS
Mutual rebounded from an early downturn to post a solid gain for the
first half of the fiscal year -- October 1994 through March 1995. (The
lower net asset value at the end of the period resulted from a capital
gain distribution last December, which, when paid, reduced the net
asset value by a like amount. That distribution and dividends are
assumed to be reinvested and are taken into account when the fund's
total return is calculated.)
As had been the case since early in 1994, higher interest rates
continued to trouble the stock and bond markets last fall, culminating
in a sharp downturn in November. (Rising interest rates automatically
depress bond prices, and often have the same effect on stocks.) Stocks
of financial services companies, chiefly banks and insurance
companies, were particularly affected. Because these issues comprised
a substantial portion of the portfolio, fund performance also
suffered.
December turnaround
It didn't take long for the fund to begin making up lost ground,
however. Long-term interest rates finally began to level off in
December and, at times during the ensuing weeks, even moved lower.
That immediately helped bonds get back on their feet and began to
rouse the slumping stock market. In fact, during the final four months
of the fiscal period, the fund enjoyed positive performance each month
-- a marked departure from the volatile investment environment stocks
and bonds had experienced since late 1993.
The positive side of volatility is that it often creates opportunities
to exercise our value-oriented investment strategy -- buying stocks of
companies with solid potential when their prices reach what we believe
are bargain levels. We were able to find several values among chemical
and paper stocks, for example, and benefited from an upturn in their
stock prices when the market moved ahead.
Economy, rates still key
As for portfolio structure, we maintained a mix of 55%-60% stocks,
about 30% bonds and between 10% and 15% cash throughout the six
months.
On the stock side, we supplemented our domestic holdings with a small
amount (less than 10%) of foreign issues. On the bond side, we held
mainly corporate, U.S. Treasury and mortgage-backed securities, all of
which benefited from the decline in long-term interest rates.
At this writing (mid-April), there are indications that the economy
will continue to grow but at a less rapid pace than it has in recent
years. If that proves to be true, inflation is unlikely to increase
greatly, which should in turn take some upward pressure off long-term
interest rates. At the same time, much of corporate America continues
to enjoy reasonably good earnings power. That's a favorable scenario
for both stocks and bonds, and if it plays out as we expect, the
markets and the fund should be among the beneficiaries.
Thomas Medcalf
Ed Labenski
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1995 $11.68
Sept. 30, 1994 $11.89
Decrease $(0.21)
Distributions
Oct. 1, 1994 - March 31, 1995
From income $0.58
From capital gains $0.21
Total distributions $0.79
Total return** +5.4%
Class B
March 20, 1995 - March 31, 1995
(All figures per share)
Net asset value (NAV)
March 31, 1995 $11.68
March 20, 1995* $11.66
Increase $ 0.02
Distributions
March 20, 1995 - March 31, 1995
From income $0.14
From capital gains $ --
Total distributions $0.14
Total return** --%***
Class Y
March 20, 1995 - March 31, 1995
(All figures per share)
Net asset value (NAV)
March 31, 1995 $11.69
March 20, 1995* $11.66
Increase $ 0.03
Distributions
March 20, 1995 - March 31, 1995
From income $ 0.14
From capital gains $ --
Total distributions $ 0.14
Total return** --%***
*Commencement of operations.
**The prospectus discusses the effects of the sales charge on the
various classes.
***Not presented -- as short period of operations may not be
indicative
of annual results.
<PAGE>
PAGE
<TABLE>
<CAPTION>
IDS Mutual
The ten holdings listed here make up 9.08% of the fund's net assets
Your fund's ten largest holdings
_____________________________________________________________________________________
Percent Value
fund's net assets)(as of March 31, 1995)
_____________________________________________________________________________________
<S> <C> <C>
Dow Chemical .99% $ 31,025,000
The second largest U.S. chemical company. Dow produces
basic chemicals and plastics, industrial specialties and
household, drug and agricultural products.
Atlantic Richfield .92 28,750,000
A major U.S.-based integrated crude oil and natural gas
company with large interest in chemicals and coal.
UST .91 28,575,000
Moist, smokeless tobacco and wines.
General Electric .91 28,415,625
General Electric is a diversified company with interest
in manufacturing, broadcasting (NBC), financial services
and technology.
Exxon .90 28,368,750
Exxon is a major factor in the world crude oil, natural
gas and chemical industry and also has substantial coal
and mineral holdings
Textron .90 28,312,500
A diversified aerospace/technology manufacturer that also
produces commercial products and provides financial services.
Baxter International .89 27,837,500
Baxter International is the largest distributor of hospital
and medical supplies, with additional businesses in the
specialty medical products and home care industries.
Mobil Corporation .89 27,787,500
Among the largest oil companies, with world-scale refining
and marketing operations.
Philip Morris .89 27,731,250
Philip Morris is the largest cigarette company and has
become the second largest packaged-food company in the
world as a result of the Kraft aquisition.
Masco Corporation .88 27,625,000
A diversified producer of products for the home, ranging
from faucets to furniture.
Excludes U.S. Treasury and government agency holdings that total 9% of the fund's
net assets.
</TABLE>
<PAGE>
PAGE
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Mutual
March 31, 1995
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $3,028,248,776) $3,105,183,635
Cash in bank on demand deposit 6,033,309
Dividends and accrued interest receivable 29,080,824
Receivable for investment securities sold 18,365,644
Receivable for foreign currency contracts held at value (Notes 1 and 4) 2,888,242
U.S. government securities held as collateral (Note 6) 75,209,392
_____________________________________________________________________________________________________________
Total assets 3,236,761,046
_____________________________________________________________________________________________________________
Liabilities
____________________________________________________________________________________________________________
Dividends payable to shareholders 4,147,770
Payable for investment securities purchased 20,698,220
Payable for foreign currency contracts held, at value (Notes 1 and 4) 2,829,924
Payable upon return of securities loaned (Note 6) 75,209,392
Accrued investment management and services fee 521,800
Accrued distribution and service fees 136,935
Accrued transfer agency fee 144,032
Accrued administrative services fee 35,391
Other accrued expenses 379,840
_____________________________________________________________________________________________________________
Total liabilities 104,103,304
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $3,132,657,742
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- $.01 par value; (Note 1) $ 2,680,932
Additional paid-in capital 3,048,302,936
Undistributed net investment income 515,514
Accumulated net realized gain (Notes 1 and 8) 4,165,183
Unrealized appreciation (Note 4) 76,993,177
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $3,132,657,742
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $2,395,860,869
Class B $ 1,269,115
Class Y $ 735,527,758
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock: Class A shares 205,038,271 $ 11.68
Class B shares 108,620 $ 11.69
Class Y shares 62,946,252 $ 11.69
_____________________________________________________________________________________________________________
See accompanying notes to financial statements. <PAGE>
PAGE
Financial statements
Statement of operations
IDS Mutual
Six months ended March 31, 1995
_________________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $42,538,825
Dividends (net of foreign taxes withheld of $761,645) 39,521,766
_____________________________________________________________________________________________________________
Total income 82,060,591
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 7,925,402
Distribution fee 812,578
Transfer agency fee 2,166,622
Service fee 136,819
Administrative services fee 35,391
Compensation of directors 10,552
Compensation of officers 39,711
Custodian fees 259,952
Postage 46,771
Registration fees 236,642
Reports to shareholders 87,370
Audit fees 15,375
Administrative 17,746
Other 17,509
_____________________________________________________________________________________________________________
Total expenses 11,808,440
_____________________________________________________________________________________________________________
Investment income -- net 70,252,151
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including gain of $1,439,570 from foreign currency transactions) (Note 3) 3,118,660
Net change in unrealized appreciation or depreciation 86,557,771
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 89,676,431
___________________________________________________________________________________________________________
Net increase in net assets resulting from operations $159,928,582
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Mutual
_____________________________________________________________________________________________________________
Operations and distributions March 31, 1995 Sept. 30, 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Six months ended Year ended
(Unaudited)
Investment income -- net $ 70,252,151 $ 133,513,034
Net realized gain on investments and foreign currency 3,118,660 149,214,488
Net change in unrealized appreciation or depreciation 86,557,771 (284,665,447)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 159,928,582 (1,937,925)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (64,429,855) (131,395,507)
Class B (12,058) --
Class Y (8,424,867) --
Net realized gain
Class A (127,571,078) (150,422,829)
Excess distribution of realized gain
Class A (1,439,569) --
_____________________________________________________________________________________________________________
Total distributions (201,877,427) (281,818,336)
_____________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds
Class A shares (Note 2) 254,131,382 664,265,348
Class B shares 1,261,612 --
Class Y shares 732,971,503 --
Reinvestment of distributions at net asset value
Class A shares 172,443,150 247,558,333
Class B shares 12,058 --
Class Y shares 8,424,867 --
Payments for redemptions or transfers to other funds
Class A shares (985,582,478) (417,171,236)
Class B shares (75) --
Class Y shares (7,722,256) --
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 175,939,763 494,652,445
_____________________________________________________________________________________________________________
Total increase in net assets 133,990,918 210,896,184
Net assets at beginning of period 2,998,666,824 2,787,770,640
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$515,514 and $3,130,143) $3,132,657,742 $2,998,666,824
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE
Notes to financial statements
IDS Mutual
(Unaudited as to March 31, 1995)
______________________________________________________________________________
1. Summary of significant accounting policies
The fund is a series of IDS Investment Series, Inc. and registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. IDS Investment Series, Inc. has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the board of directors. The fund offers Class A, Class
B and Class Y shares. Class A shares are sold with a front-end sales charge.
Class B shares, which the fund began offering on March 20, 1995, may be
subject to a contingent deferred sales charge and such shares automatically
convert to class A after eight years. Class Y shares, which the fund also
began offering on March 20, 1995, have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differ 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:
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 of directors.
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.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
fund may buy and sell interest rate futures contracts traded on any U.S. or
foreign exchange. The fund also may buy or write put and call options on these
futures contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
Upon entering into a futures contract, the fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
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. The
effect on dividend distributions of certain book-to-tax differences is
presented as "excess distributions" in the statement of changes in net assets.
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 and paid each calendar quarter,
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 and interest
income, including level-yield amortization of premium and discount is accrued
daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of a prior agreement which ended March 19, 1995, the fund paid
American Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee was a percentage of the
fund's average daily net assets consisting of a group asset charge in reducing
percentages from 0.46% to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual
asset charge of 0.14% of average daily net assets. The fee was adjusted upward
or downward by a performance incentive adjustment based on the fund's average
daily net assets over a rolling 12-month period as measured against the change
in the Lipper Balanced Fund Index. The maximum adjustment is 0.12% of the
fund's average daily net assets after deducting 1% from the performance
difference. If the performance difference was less than 1%, the adjustment
would have been zero. The adjustment decreased the fee by $109,876 for the six
months ended March 31, 1995.
Also under terms of the prior agreement, the fund paid American Express
Financial Corporation a distribution fee at an annual rate of $6 per
shareholder account and a transfer agency fee at an annual rate of $15 per
shareholder account. The transfer agency fee was reduced by earnings on monies
pending shareholder redemptions.
Effective March 20, 1995, when the fund began offering multiple classes of
shares, the fund entered into agreements with American Express Financial
Corporation for managing its portfolio, providing administrative services and
serving as transfer agent as follows: Under its Investment Management Services
Agreement, American Express Financial Corporation 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 0.53% to 0.43%
annually. The performance incentive adjustment remains unchanged from the
prior agreement. Under an Administrative Services Agreement, the fund pays
American Express Financial Corporation for administration and accounting
services at a percentage of the fund's average daily net assets in reducing
percentages from 0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, American Express Financial
Corporation maintains shareholder accounts and records. The fund pays American
Express Financial Corporation an annual fee per shareholder account for this
service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder servicing-
related services as follows: Under the Distribution Agreement, 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 a rate of 0.175% of the fund's average daily net assets
attributable to Class A and Class B shares.
American Express Financial Corporation will assume and pay any expenses
(except taxes and brokerage commissions) that exceed the most
restrictive applicable state expense limitation.
Sales charges by American Express Financial Advisors Inc. for distributing
fund shares were $1,864,875 for Class A for the six months ended March 31,
1995. The fund also pays custodian fees to American Express Trust Company, an
affiliate of American Express Financial Corporation.
The fund has a retirement plan for its independent directors. Upon retirement,
directors receive monthly payments equal to one-half of the retainer fee for
as many months as they served as directors up to 120 months. There are no
death benefits. The plan is not funded but the fund recognizes the cost of
payments during the time the directors serve on the board. The retirement
plan expense amounted to $18,086 for the six months ended March 31, 1995.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $754,315,611 and $612,414,016, respectively, for the
six months ended March 31, 1995. Realized gains and losses are determined on
an identified cost basis.
______________________________________________________________________________
4. Foreign currency contracts
At March 31, 1995, the fund had entered into a foreign currency exchange
contract that obligates the fund to deliver currency at a specified future
date. The unrealized appreciation of $58,318 on this contract is included in
the accompanying financial statements. The terms of the open contract are as
follows:
<TABLE>
<CAPTION>
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered March 31, 1995 received March 31, 1995
______________________________________________________________________________________________________
<S> <C> <C> <C> <C>
April 5, 1995 2,829,924 $2,829,924 1,783,416 $2,888,242
U.S. Dollar British Pound
</TABLE>
5. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
________________________________________________________________________________________
Six months ended March 31, 1995 Year ended
9/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 22,145,300 107,589 62,885,000 53,618,895
Issued for reinvested
distributions 15,516,500 1,031 720,300 20,162,068
Redeemed (84,885,730) -- (659,048) (33,760,095)
________________________________________________________________________________________
Net increase (decrease) (47,223,930) 108,620 62,946,252 40,020,868
________________________________________________________________________________________
* Commencement of operations was March 20, 1995.
_________________________________________________________________________________________
</TABLE>
6. Lending of portfolio securities
At March 31, 1995, securities valued at $71,838,168 were on loan to brokers.
For collateral, the fund received U.S. government securities valued at
$75,209,392. Income from securities lending amounted to $137,719 for the six
months ended March 31, 1995. 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. Illiquid securities
At March 31, 1995, 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 March 31, 1995, was $10,437,500 which represents
0.3% of net assets. Pursuant to guidelines adopted by the fund's board of
directors, certain unregistered securities are determined to be liquid and are
not included within the 10% limitation specified above.
______________________________________________________________________________
8. Financial highlights
The table below shows certain important financial
information for evaluating the fund's results.
<TABLE>
<CAPTION>
Fiscal period ended Sept. 30,
Per share income and capital changes*
1995*** 1994 1993 1992 1991 1990
Class A Class B Class Y
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $11.89 $11.66 $11.66 $13.13 $12.62 $12.00 $10.39 $13.15
beginning of period
Income from investment operations:
Net investment income .27 .03 .02 .56 .55 .61 .66 .72
Net gains (losses) .31 .13 .15 (.56) 1.39 .91 2.01 (2.01)
(both realized and
unrealized)
Total from investment .58 .16 .17 -- 1.94 1.52 2.67 (1.29)
operations
Less distributions:
Dividends from net (.29) (.14) (.14) (.56) (.55) (.60) (.67) (.73)
investment income
Distributions from (.50) -- -- (.68) (.88) (.30) (.39) (.74)
realized gains
Total distributions (.79) (.14) (.14) (1.24) (1.43) (.90) (1.06) (1.47)
Net asset value, $11.68 $11.68 $11.69 $11.89 $13.13 $12.62 $12.00 $10.39
end of period
Ratios/supplemental data
1995** 1994 1993 1992 1991 1990
Class A Class B Class Y
Net assets, end of period $2,396 $1 $736 $2,999 $2,788 $2,222 $1,889 $1,496
(in millions)
Ratio of expenses to .80%+ 1.39%+ .73%+ .79% .79% .78% .71% .69%
average daily net assets
Ratio of net income 4.69%+ 4.26%+ 5.37%+ 4.57% 4.41% 4.99% 5.81% 6.04%
average daily net assets
Portfolio turnover rate 23% 23% 23% 69% 48% 50% 47% 37%
(excluding short-term
securities)
Total return++ 5.4%++++++ 1.4% 1.5% (0.1%) 16.7% 13.3% 26.9% (10.8%)
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended March 31, 1995, for Class A and commencement of operation
period from March 20, 1995 for Class B and Class Y (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
+++For the fiscal period ended March 31, 1995, the annualized total return is 10.8%.
<PAGE>
PAGE
</TABLE>
<TABLE>
<CAPTION>
Investments in securities
IDS Mutual (Percentages represent value of
March 31, 1995 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (57.2%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (1.5%)
Raytheon 350,000 $ 25,506,250
Rockwell Intl 600,000 23,400,000
_______________
Total 48,906,250
_____________________________________________________________________________________________________________________________
Automotive & related (2.8%)
Dana 900,000 22,950,000
Ford Motor 700,000 18,900,000
General Motors 450,000 19,912,500
Genuine Parts 625,000 24,921,875
______________
Total 86,684,375
_____________________________________________________________________________________________________________________________
Banks and savings & loans (4.1%)
Ahmanson (HF) 1,075,000 19,350,000
BankAmerica 400,000 19,300,000
Bankers Trust NY 400,000 20,900,000
Fleet Financial 700,000 22,662,500
NationsBank 500,000 25,375,000
Republic NY 450,000 22,106,250
______________
Total 129,693,750
_____________________________________________________________________________________________________________________________
Beverages & tobacco (2.5%)
Philip Morris 425,000 27,731,250
RJR Nabisco 3,755,000 22,060,625
UST 900,000 28,575,000
______________
Total 78,366,875
_____________________________________________________________________________________________________________________________
Building materials (1.5%)
Masco 1,000,000 27,625,000
Potlatch 500,000 21,062,500
______________
Total 48,687,500
_____________________________________________________________________________________________________________________________
Chemicals (4.7%)
ARCO Chemical 575,000 25,587,500
Dow Chemical 425,000 31,025,000
Ethyl 1,500,000 15,375,000
See accompanying notes to investments in securities.
Lubrizol 750,000 26,437,500
Olin 450,000 24,187,500
Rohm & Haas 425,000 25,075,000
______________
Total 147,687,500
_____________________________________________________________________________________________________________________________
Computers & office equipment (1.5%)
IBM 250,000 20,468,750
Xerox 225,000 26,409,375
______________
Total 46,878,125
_____________________________________________________________________________________________________________________________
Energy (3.9%)
Amoco 350,000 22,268,750
Atlantic Richfield 250,000 28,750,000
Exxon 425,000 28,368,750
Mobil 300,000 27,787,500
Texaco 225,000 14,962,500
______________
Total 122,137,500
_____________________________________________________________________________________________________________________________
Financial services (3.8%)
Alexander Haagen Properties 535,000 7,423,125
AMLI 350,000 6,212,500
Crown Amer 760,200 9,882,600
Equity Residential 400,000 10,400,000
First Industrial 300,000 5,700,000
General Growth 500,000 10,250,000
Kranzco Realty 225,000 3,993,750
Mills 425,000 7,171,875
Paragon 450,000 7,706,250
Simon Properties 550,000 13,406,250
Student Loan Mtge Assn 500,000 17,437,500
Taubman Centers 850,000 8,181,250
Wellsford 500,000 (i) 10,437,500
______________
Total 118,202,600
_____________________________________________________________________________________________________________________________
Food (0.6%)
Supervalu 700,000 18,725,000
_____________________________________________________________________________________________________________________________
Furniture & appliances (1.4%)
Maytag 1,300,000 22,262,500
Stanley Works 550,000 21,656,250
______________
Total 43,918,750
_____________________________________________________________________________________________________________________________
Health care (2.4%)
Amer Home Products 400,000 21,375,000
Baxter Intl 850,000 27,837,500
Bristol-Myers Squibb 400,000 25,200,000
______________
Total 74,412,500
_____________________________________________________________________________________________________________________________
Health care services (0.8%)
LTC Properties 400,000 5,300,000
Meditrust 400,000 11,900,000
Omega Healthcare Investors 300,000 7,125,000
______________
Total 24,325,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.4%)
General Signal 358,000 12,753,750
_____________________________________________________________________________________________________________________________
Industrial transporation (2.3%)
GATX 474,600 21,238,350
Norfolk Southern 400,000 26,750,000
Union Pacific 450,000 24,750,000
______________
Total 72,738,350
_____________________________________________________________________________________________________________________________
Insurance (4.1%)
Amer General 850,000 27,412,500
Aon 700,000 25,550,000
Provident Life & Accident 350,000 7,918,750
Providian 525,000 18,440,625
St. Paul Companies 500,000 25,000,000
Travelers 600,000 23,175,000
______________
Total 127,496,875
_____________________________________________________________________________________________________________________________
Media (1.8%)
Dun & Bradstreet 425,000 22,365,625
Gannett 500,000 26,687,500
Knight-Ridder 125,000 7,062,500
______________
Total 56,115,625
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (3.5%)
General Electric 525,000 28,415,625
Minnesota Mining & Mfg 450,000 26,156,250
Tenneco 575,000 27,096,875
Textron 500,000 28,312,500
______________
Total 109,981,250
_____________________________________________________________________________________________________________________________
Paper & packaging (1.5%)
Union Camp 500,000 25,937,500
Westvaco 550,000 22,825,000
______________
Total 48,762,500
_____________________________________________________________________________________________________________________________
Retail (4.4%)
Dayton Hudson 300,000 21,450,000
K mart 1,250,000 17,187,500
May Department Stores 650,000 24,050,000
Melville 600,000 22,350,000
Sears Roebuck 475,000 25,353,125
Shopko Stores 1,050,000 10,762,500
TJX 1,250,000 16,406,250
______________
Total 137,559,375
_____________________________________________________________________________________________________________________________
Utilities-electric (0.4%)
SCE 750,000 11,718,750
_____________________________________________________________________________________________________________________________
Utilities-telephone (0.6%)
Pacific Telesis Group 650,000 19,662,500
_____________________________________________________________________________________________________________________________
Foreign (6.6%) (h)
Anglian Water 1,400,000 10,859,800
BTR 4,000,000 (b) 21,244,000
English China Clay 2,025,000 (b) 11,771,325
Hanson ADR 1,350,000 25,481,250
Imperial Chemical Inds 2,250,000 26,379,000
Moore 1,250,000 24,375,000
Pacific Dunlop 5,000,000 10,960,000
Repsol (SA) ADR 500,000 14,500,000
Royal Dutch Petroleum 200,000 24,000,000
Severn Trent Water 1,138,015 9,471,699
Shandong Huaneng 600,000 (b) 5,400,000
Southern Water 1,000,000 9,165,000
Thames Water 1,761,051 13,716,826
______________
Total 207,323,900
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $1,705,249,008) $1,792,738,600
____________________________________________________________________________________________________________________________
Preferred stocks and other (1.4%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Atlantic Richfield
$9 Cv 700,000 (j) $ 17,412,500
Delta Airlines
$3.50 Cv 200,000 10,650,000
Reynolds Metals
3.31% Cv 300,000 14,287,500
Virginia Amer Water
5.05% Cm 2,600 208,156
Western Resources
4.25% Cm 10,000 540,000
_____________________________________________________________________________________________________________________________
Total preferred stocks and other
(Cost: $44,203,863) $ 43,098,156
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Bonds (32.4%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (9.0%)
U.S. Treasury 6.375% 1997 $40,000,000 (c) $ 39,646,400
6.750 1997 20,000,000 19,942,800
6.875 2000 20,000,000 19,846,200
7.125 1999 62,650,000 (c) 39,646,400
7.25 2016 10,000,000 9,684,500
7.50 2001 19,675,000 (c) 20,040,955
9.375 2006 13,500,000 15,596,550
10.375 2012 40,000,000 49,344,800
Govt Trust Certs Israel 9.25 2001 10,000,000 10,641,700
Resolution Funding Corp 8.125 2019 33,775,000 35,383,703
______________
Total 282,931,101
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (9.3%)
Collateralized Mtge Obligation Trust 9.95 2014 5,000,000 5,281,050
Federal Home Loan Bank 6.66 1996 25,000,000 24,906,250
7.32 1997 20,000,000 19,944,400
8.00 2014 25,000,000 (k) 24,421,875
Federal Home Loan Mtge Corp 6.50 1995-07 1,181,899 1,139,942
6.75 1995-08 3,380,260 3,137,321
8.00 1995-24 10,257,688 10,174,396
Collateralized Mtge Obligation 7.50 2003 7,800,000 7,729,956
8.50 2022 7,000,000 7,141,400
Inverse Floater 1.255 1995-23 5,000,000 (e) 2,125,000
3.219 1997 5,436,950 (e) 4,791,534
Trust Series Z 6.00 1995-23 10,776,827 (f) 7,534,834
6.50 2023 18,656,620 (f) 13,373,320
Federal Natl Mtge Assn 6.50 1995-23 16,309,836 14,908,169
7.40 2004 33,750,000 (c) 33,632,887
7.50 1995-14 4,598,480 4,665,465
9.00 1995-24 11,532,748 11,860,740
Collateralized Mtge Obligation 4.50 2007 11,900,000 9,339,239
5.00 2024 6,696,553 5,512,134
Inverse Floater .946 2023 450,569 (e) 108,137
6.168 2023 2,281,774 (e) 1,491,710
Trust Series Z 6.00 2024 6,370,067 (f) 3,958,296
6.50 2023 15,493,268 (f) 11,081,912
7.00 2016-22 46,153,878 (f) 39,137,657
7.50 2014 7,415,691 (f) 6,575,271
8.00 2006-20 17,729,035 (f) 17,149,560
_____________
Total 291,122,454
_____________________________________________________________________________________________________________________________
<PAGE>
Financial (3.1%)
Banks and savings & loans (0.2%)
Bankers Trust
Sub Deb 7.50 2002 5,000,000 4,831,400
_____________________________________________________________________________________________________________________________
Commercial finance (1.1%)
Carco Auto Master Trust
Asset-Backed Obligation 7.875 1998 6,000,000 6,040,680
GMAC 7.50 1999 8,000,000 7,911,440
Premium Auto
Asset-Backed Obligation 6.45 1998 7,000,000 6,904,100
Salomon Brothers 6.75 2006 7,000,000 5,922,350
Standard Credit Card Trust 5.95 2007 8,550,000 7,628,566
______________
Total 34,407,136
_____________________________________________________________________________________________________________________________
Financial services (0.9%)
Associates 6.00 2000 6,000,000 5,621,580
Avco Financial 7.25 1999 6,500,000 6,455,540
Corporate Property Investors 7.18 2013 1,500,000 (g) 1,314,720
General Electric Capital
Reset Nts 8.65 2018 4,000,000 (k) 4,073,520
Intl Lease Finance 5.99 1998 5,000,000 4,795,600
Property Trust Amer 7.50 2014 5,000,000 4,550,750
______________
Total 26,811,710
_____________________________________________________________________________________________________________________________
Insurance (0.9%)
Nationwide Mutual Insurance 7.50 2024 4,000,000 (g) 3,388,760
Nationwide Trust
Capital Sub Nts 9.875 2025 3,500,000 (g) 3,653,790
New England Mutual 7.875 2024 7,500,000 (g) 6,367,875
New York Life 7.50 2023 5,000,000 (g) 4,322,800
Principal Mutual 8.00 2044 7,150,000 (g) 6,268,405
SunAmerica 8.125 2023 5,150,000 4,689,229
______________
Total 28,690,859
_____________________________________________________________________________________________________________________________
Industrial (6.1%)
Aerospace & defense (0.3%)
United Technologies 8.875 2019 9,500,000 10,161,770
_____________________________________________________________________________________________________________________________
Airlines (0.1%)
AMR 6.125 2024 22,500,000 21,150,000
Delta Air Lines
Cv 3.23 2003 13,000,000 10,985,000
______________
Total 32,135,000
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.1%)
Coca-Cola 7.375 2093 3,000,000 2,731,050
_____________________________________________________________________________________________________________________________
Building materials (0.1%)
Owens-Corning Fiberglas 9.375 2012 3,500,000 3,707,760
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.3%)
Apple Computer 6.50 2004 4,900,000 4,427,493
IBM 6.375 2000 5,100,000 4,860,555
______________
Total 9,288,048
_____________________________________________________________________________________________________________________________
Electronics (0.1%)
Harris 10.375 2018 4,000,000 4,391,320
_____________________________________________________________________________________________________________________________
Energy (0.8%)
Exxon Capital 6.625 2002 7,000,000 6,668,550
Occidental Petroleum 6.25 2000 6,500,000 6,088,485
Phillips Petroleum 7.20 2023 5,000,000 4,213,150
Standard Oil 9.00 2019 9,000,000 9,390,240
______________
Total 26,360,425
_____________________________________________________________________________________________________________________________
Health care (1.1%)
Johnson & Johnson 8.00 1998 20,000,000 20,395,400
Kaiser Foundation 9.55 2005 6,000,000 6,713,340
Schering-Plough
Zero Coupon 7.26 1996 9,300,000 (d,g) 8,317,269
______________
Total 35,426,009
_____________________________________________________________________________________________________________________________
Household products (0.1%)
Proctor & Gamble 8.00 2024 3,000,000 3,079,200
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.2%)
Disney (Walt) 7.55 2093 7,500,000 6,699,900
_____________________________________________________________________________________________________________________________
Media (0.1%)
Time Warner 8.375 2033 5,000,000 4,443,750
_____________________________________________________________________________________________________________________________
Paper & packaging (0.9%)
Crown Cork & Seal 8.00 2023 6,000,000 5,724,000
Federal Paper Board 10.00 2011 7,000,000 7,863,240
Intl Paper 5.125 2012 13,400,000 9,874,594
Pope & Talbot 8.375 2013 4,500,000 4,280,580
______________
Total 27,742,414
_____________________________________________________________________________________________________________________________
Retail (0.2%)
Penney (JC) 9.05 2001 4,500,000 4,811,625
_____________________________________________________________________________________________________________________________
Utilities (2.5%)
Electric (1.2%)
Arizona Public Service
Sale Lease-Backed Obligation 8.00 2015 5,400,000 5,076,000
Commonwealth Edison 6.50 1997 10,000,000 9,825,600
Pacific Gas & Electric 8.25 2022 4,600,000 4,496,960
Pennsylvania Power & Light
1st Mtge 9.25 9019 5,000,000 5,279,700
Texas Utilities Electric
1st Mtge 7.375 2025 7,050,000 6,163,180
Wisconsin Electric Power
1st Mtge 7.75 2023 5,500,000 5,281,595
______________
Total 36,123,035
_____________________________________________________________________________________________________________________________
Telephone (1.3%)
Bell Tel Pennsylvania 7.375 2033 5,000,000 4,499,200
GTE 8.75 2021 5,000,000 5,072,100
9.375 2000 4,600,000 4,957,466
Illinois Bell Tel
1st Mtge 4.375 2003 4,600,000 3,703,782
New York Tel 4.875 2006 13,000,000 10,340,590
Pacific Bell Tel 6.625 2034 6,100,000 4,941,610
7.375 2043 7,500,000 6,679,200
______________
Total 40,193,948
_____________________________________________________________________________________________________________________________
Foreign (3.1%)(h)
ABN Amro Bank
(U.S. Dollar) 7.125 2093 7,000,000 5,867,680
Asian Development Bank
(U.S. Dollar) 9.125 2000 17,700,000 18,984,843
Canadian Natl Railway
(U.S. Dollar) 7.625 2023 6,000,000 5,365,440
Govt of Canada
(Canadian Dollar) 7.51 2001 7,500,000 5,914,350
Grand Metropolitan
(U.S. Dollar) Cv 6.50 2000 20,000,000 (g) 21,400,000
Hydro Quebec
(Canadian Dollar) 7.778 2001 10,000,000 7,829,100
Interamer Development Bank Euro
(U.S. Dollar) 9.50 2000 5,000,000 5,419,400
KFW Intl Finance
(U.S. Dollar) 8.20 2006 6,750,000 6,978,015
Legrand
(U.S. Dollar) 8.50 2025 10,000,000 10,074,100
Republic of Italy
(U.S. Dollar) 6.875 2023 5,000,000 4,043,750
Roche Holding
(U.S. Dollar) 2.75 2000 7,000,000 5,687,500
______________
Total 97,564,178
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,023,064,126) $1,013,654,092
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (8.2%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.2%)
Federal Home Loan Bank
Disc Notes
04-24-95 5.94% $ 2,200,000 $ 2,191,693
05-05-95 6.15 4,300,000 4,273,347
______________
Total 6,465,040
_____________________________________________________________________________________________________________________________
Commercial paper (7.8%)
Amer General
04-24-95 6.05 5,600,000 5,578,426
Amgen
04-07-95 6.01 4,500,000 4,495,523
Avco Financial Services
04-27-95 6.00 5,100,000 5,078,010
BBV Finance (Delaware)
04-04-95 6.32 5,000,000 4,997,078
Cafco
04-13-95 6.01 2,700,000 (l) 2,694,618
05-05-95 6.02 3,400,000 (l) 3,380,797
Cargill
04-24-95 6.00 5,000,000 4,980,929
Ciesco LP
04-03-95 6.00 8,000,000 (l) 7,997,347
Coca-Cola
04-05-95 6.00 9,200,000 9,193,907
Commercial Credit
04-07-95 5.99 8,000,000 7,992,067
04-20-95 6.02 8,300,000 8,273,804
Commerzbank U.S. Finance
04-06-95 6.03 6,100,000 6,094,925
Consolidated Rail
04-07-95 5.99 3,200,000 (l) 3,196,827
04-28-95 6.04 8,300,000 (l) 8,262,774
Dun & Bradstreet
04-11-95 6.21 5,000,000 4,990,451<PAGE>
Ford Motor Credit
04-18-95 6.01 5,100,000 5,085,598
Gateway Fuel
06-01-95 6.15 3,160,000 3,120,374
General Electric Capital
07-06-95 6.38 5,000,000 4,914,990
Goldman Sachs Group
05-10-95 6.09 3,000,000 2,979,382
Household Finance
04-11-95 6.00 4,000,000 3,993,367
05-11-95 6.11 5,100,000 5,064,091
Kredietbank North Amer Finance
04-05-95 6.03 6,400,000 6,395,733
04-18-95 6.04 3,000,000 2,991,500
Lilly (Eli)
05-08-95 6.08 6,700,000 (l) 6,657,855
MetLife Funding
04-17-95 6.00 8,600,000 8,577,181
04-19-95 6.00 4,079,000 4,066,824
05-03-95 6.03 13,298,000 13,227,077
05-12-95 6.07 8,000,000 7,941,316
Morgan Stanley Group
04-04-95 5.99 3,800,000 3,798,113
04-12-95 6.04 8,500,000 8,484,417
Norfolk Southern
06-12-95 6.26 4,700,000 (l) 4,640,243
Paccar Financial
04-21-95 6.21 7,000,000 6,973,974
05-23-95 6.09 1,500,000 1,486,365
SBT Funding
05-09-95 6.12 5,000,000 (l) 7,384,282
Schering
04-04-95 5.98 5,200,000 5,197,422
Southwestern Bell Capital
05-04-95 6.02 5,435,000 5,405,008
Siemens
04-03-95 5.97 4,800,000 4,798,416
Societe Generale North Amer
04-04-95 6.30 7,000,000 6,995,809
Southern California Gas
08-16-95 6.45 3,900,000 (l) 3,805,067
Sysco
05-16-95 6.17 5,000,000 (l) 4,960,030
USAA Capital
04-25-95 6.06 12,600,000 12,546,541
United Parcel
05-01-95 6.04 5,588,000 5,560,013
_____________
Total 244,258,471
_____________________________________________________________________________________________________________________________
Letter of credit (0.2%)
Bank of Amer-
AES Barbers Point
05-05-95 6.05 5,000,000 4,969,276
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $255,731,779) $ 255,692,787
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $3,028,248,776)(m) $3,105,183,635
_____________________________________________________________________________________________________________________________
Notes to investments in securities
________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Security is partially or fully on loan. See Note 6 to the financial statements.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on
the date of acquisition.
(e) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the
same magnitude as, or in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index.
Interest rate disclosed is the rate in effect on March, 31, 1995. Inverse floaters in the aggregate represent 0.3%
of the fund's net assets as of March 31, 1995.
(f) 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;
similar to a zero coupon bond.
(g) 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 of directors.
(h) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated
in the currency indicated.
(i) Identifies issues considered to be illiquid (see Note 7 to the financial statements). Information
concerning such security holdings at March 31, 1995, is as follows:
Acquisition
Security date Cost
_____________________________________________________________________
Wellsford 08-19-94 $10,500,000
(j) ACES are automatically convertible equity securities.
(k) Interest rate varies, rate shown is the effective rate on March 31, 1995.
(l) Commercial paper sold within terms of a private placement memorandum, exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that
program or other "accredited investors." This security has been determined to be liquid under
guidelines established by the board of directors.
(m) At March 31, 1995, the cost of securities for federal income tax purposes was approximately
$3,025,542,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $188,295,000
Unrealized depreciation (108,653,000)
_________________________________________________________________
Net unrealized appreciation $ 79,642,000
_________________________________________________________________
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation.
William H. Dudley
Executive vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Financial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Officers who also are officers and or/employees of American Express
Financial Corporation
Peter J. Anderson
Vice president of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP .
<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia<PAGE>
PAGE
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and
safety of principal consistent with its type of investments.
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Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies
by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
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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.)
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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.
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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.
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Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
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IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
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IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
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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.
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IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
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IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
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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.
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IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
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IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
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Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
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IDS Strategy, Aggressive Equity 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.
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IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
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IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
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IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
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Specialty growth investment
This fund aggressively seeks capital growth as a hedge against inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. This is the most aggressive and most speculative
IDS mutual fund.
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For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
advisor or writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or send money.
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Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Mutual
IDS Tower 10
Minneapolis, MN 55440-0010
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