<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 26 (File No. 2-86637) X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 (File No. 811-3848) X
IDS EXTRA INCOME FUND, INC.
IDS Tower 10,
Minneapolis, Minnesota 55440-0010
Leslie L. Ogg - 901 Marquette Ave. So., Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on October 30, 1995 pursuant to paragraph (b) of rule 485
60 days after filing, pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24f-2 of the Investment Company Act of 1940. Registrant's Rule
24f-2 Notice for its most recent fiscal year ended Aug. 31, 1995,
was filed on or about Oct. 11, 1995.
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PAGE 2
Cross reference sheet showing the location in its prospectus and
the Statement of Additional Information of the information called
for by the items enumerated in Parts A and B of Form N-1A.
Negative answers omitted from prospectus are so indicated.
<TABLE><CAPTION>
PART A PART B
Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
<S> <C> <C> <C>
1 Cover page of prospectus 10 Cover page of SAI
2(a) Sales charge and Fund expenses 11 Table of Contents
(b) The Fund in brief
(c) The Fund in brief 12 NA
3(a) Financial highlights 13(a) Additional Investment Policies; all
(b) NA appendices except Dollar-Cost Averaging
(c) Performance (b) Additional Investment Policies
(d) Financial highlights (c) Additional Investment Policies
(d) Portfolio Transactions
4(a) The Fund in brief; Investment policies and
risks; How the Fund is organized 14(a) Directors and officers of the Fund;**
(b) Investment policies and risks Directors and officers
(c) Investment policies and risks (b) Directors and Officers
(c) Directors and Officers
5(a) Directors and officers; Directors and
officers of the Fund (listing) 15(a) NA
(b)(i) Investment manager and transfer agent; (b) NA
About American Express Financial (c) Directors and Officers
Corporation -- General Information
(b)(ii) Investment manager and transfer agent 16(a)(i) How the Fund is organized; About American
(b)(iii) Investment manager and transfer agent Express Financial Corporation**
(c) Portfolio manager (a)(ii) Agreements: Investment Management Services
(d) Investment manager and transfer agent Agreement, Plan and Supplemental
(e) Investment manager and transfer agent Agreement of Distribution
(f) Distributor (a)(iii) Agreements: Investment Management Services Agreement
(g) Investment manager and transfer agent; (b) Agreements: Investment Management Services Agreement
About American Express Financial (c) NA
Corporation -- General Information (d) Agreements: Administrative Services
Agreement, Shareholder Service Agreement
5A(a) * (e) NA
(b) * (f) Agreements: Distribution Agreement
(g) NA
6(a) Shares; Voting rights (h) Custodian; Independent Auditors
(b) NA (i) Agreements: Transfer Agency Agreement; Custodian
(c) NA
(d) Voting rights 17(a) Portfolio Transactions
(e) Cover page; Special shareholder services (b) Brokerage Commissions Paid to Brokers Affiliated
(f) Dividends and capital gains distributions; with American Express Financial Corporation
Reinvestments (c) Portfolio Transactions
(g) Taxes (d) Portfolio Transactions
(h) Alternative sales arrangements; Special (e) Portfolio Transactions
considerations regarding master/feeder
structure 18(a) Shares; Voting rights**
(b) NA
7(a) Distributor
(b) Valuing Fund shares 19(a) Investing in the Fund
(c) How to purchase, exchange or redeem shares (b) Valuing Fund Shares; Investing in the Fund
(d) How to purchase shares (c) NA
(e) NA
(f) Distributor 20 Taxes
8(a) How to redeem shares 21(a) Agreements: Distribution Agreement
(b) NA (b) Agreements: Distribution Agreement
(c) How to purchase shares: Three ways to invest (c) NA
(d) How to purchase, exchange or redeem shares:
Redemption policies -- "Important..." 22(a) Performance Information (for money market
funds only)
9 None (b) Performance Information (for all funds except
money market funds)
23 Financial Statements
*Designates information is located in annual report.
**Designates location in prospectus.
/TABLE
<PAGE>
PAGE 3
IDS Extra Income Fund
Prospectus
Oct. 30, 1995
The primary goal of IDS Extra Income Fund, Inc. is to provide high
current income. Capital growth is a secondary goal. The Fund
invests primarily, and may invest all of its assets, in long-term
corporate bonds in the lower-rating categories, commonly known as
junk bonds. These securities generally have greater price
fluctuations than higher-rated securities and are more likely to
experience a default. Investors should carefully consider these
risks before investing. See the prospectus sections entitled
"Types of Fund investments and their risks" and "Facts about
investments and their risks."
This prospectus contains facts that can help you decide if the Fund
is the right investment for you. Read it before you invest and
keep it for future reference.
Additional facts about the Fund are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated Oct. 30, 1995, is incorporated here by
reference. For a free copy, contact American Express Shareholder
Service.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN THE FUND
INVOLVE INVESTMENT RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL.
American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
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PAGE 4
Table of contents
The Fund in brief
Goals
Types of Fund investments and their risks
Proposed conversion to master/feeder structure
Manager and distributor
Portfolio manager
Alternative purchase arrangements
Sales charge and Fund expenses
Performance
Financial highlights
Total returns
Yield
Investment policies and risks
Facts about investments and their risks
Valuing Fund shares
How to purchase, exchange or redeem shares
Alternative purchase arrangements
How to purchase shares
How to exchange shares
How to redeem shares
Reductions and waivers of the sales charge
Special shareholder services
Services
Quick telephone reference
Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN
How the Fund is organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Directors and officers
Investment manager and transfer agent
Distributor
About American Express Financial Corporation
General information
Appendices
Description of corporate bond ratings
Descriptions of derivative instruments
<PAGE>
PAGE 5
The Fund in brief
Goals
IDS Extra Income Fund (the Fund) seeks to provide shareholders with
high current income as its primary goal and, as its secondary goal,
capital growth. Because any investment involves risk, achieving
these goals cannot be guaranteed. Only shareholders can change the
goals.
Types of Fund investments and their risks
The Fund is a diversified mutual fund that invests primarily in
long-term, high-yielding, high risk debt securities below
investment grade issued by U.S. and foreign corporations. These
securities are commonly known as junk bonds. They generally
involve greater volatility of price and risk of principal and
income than higher rated securities.
The Fund also invests in government securities, investment-grade
bonds, convertible securities, common and preferred stocks,
derivative instruments and money market instruments.
Proposed conversion to master/feeder structure
Subject to certain contingencies, the Fund intends to invest all of
its assets in the Aggressive Income Portfolio (the Portfolio) of
Income Trust (the Trust) rather than directly investing in and
managing its own portfolio of securities. The Portfolio will have
the same investment objective as the Fund. The Fund anticipates
this conversion will occur in early 1996.
Manager and distributor
The Fund is managed by American Express Financial Corporation
(AEFC), a provider of financial services since 1894. AEFC
currently manages more than $44 billion in assets for the IDS
MUTUAL FUND GROUP. Shares of the Fund are sold through American
Express Financial Advisors Inc., a wholly owned subsidiary of AEFC.
After the Fund converts to the master/feeder structure, the
Portfolio in which the Fund invests will be managed by AEFC with
the same portfolio manager.
Portfolio manager
Jack Utter joined AEFC in 1962 and serves as senior portfolio
manager. He has managed this Fund since 1985.
Alternative purchase arrangements
The Fund offers its shares in three classes. Class A shares are
subject to a sales charge at the time of purchase. Class B shares
are subject to a contingent deferred sales charge (CDSC) on
redemptions made within six years of purchase and an annual
distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors.
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PAGE 6
Sales charge and Fund expenses
Shareholder transaction expenses are incurred directly by an
investor on the purchase or redemption of Fund shares. Fund
operating expenses are paid out of Fund assets for each class of
shares. Operating expenses are reflected in the Fund's daily share
price and dividends, and are not charged directly to shareholder
accounts.
Shareholder transaction expenses
Class A Class B Class Y
Maximum sales charge on purchases*
(as a percentage of offering price).......5% 0% 0%
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase price)....0% 5% 0%
Annual Fund operating expenses**
(% of average daily net assets):
Class A Class B Class Y
Management fee 0.58% 0.58% 0.58%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses*** 0.37% 0.38% 0.19%
Total 0.95% 1.71% 0.77%
*This charge may be reduced depending on your total investments in
IDS funds. See "Reductions of the sales charge."
**Expenses for Class A are based on actual expenses for the last
fiscal year, restated to reflect current fees. Expenses for Class
B and Class Y are estimated based on the restated expenses for
Class A, except that the 12b-1 fee and transfer agency fee (under
other expenses) for Class B are based on agreements for that class
and that Class Y does not have a service fee.
***Other expenses include an administrative services fee, a
shareholder services fee for Class A and Class B, a transfer agency
fee and other non-advisory expenses.
Example: Suppose for each year for the next 10 years, Fund
expenses are as above and annual return is 5%. If you sold your
shares at the end of the following years, for each $1,000 invested,
you would pay total expenses of:
1 year 3 years 5 years 10 years
Class A $59 $79 $100 $161
Class B $67 $94 $113 $182**
Class B* $17 $54 $ 93 $182**
Class Y $ 8 $25 $ 43 $ 96
*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.
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PAGE 7
This example does not represent actual expenses, past or future.
Actual expenses may be higher or lower than those shown. Expense
information in this table has been restated to reflect estimates of
Fund expenses from changes in fees approved by shareholders in
November 1994. Because Class B pays annual distribution (12b-1)
fees, long-term shareholders of Class B may indirectly pay an
equivalent of more than a 6.25% sales charge, the maximum permitted
by the National Association of Securities Dealers.
Performance
Financial highlights
<TABLE>
Fiscal period ended Aug. 31,
Per share income and capital changes*
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Classes
A B** Y**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $4.02 $3.93 $3.93 $4.44 $4.24 $3.72 $3.47 $4.46 $4.67 $4.94 $5.16 $4.92
beginning of period
Income from investment operations:
Net investment income .39 .18 .20 .43 .47 .44 .42 .46 .53 .53 .53 .58
Net gains (losses) .13 .21 .21 (.42) .16 .52 .24 (1.01) (.20) (.27) (.12) .38
(both realized
and unrealized)
Total from investment .52 .39 .41 .01 .63 .96 .66 (.55) .33 .26 .41 .96
operations
Less distributions:
Dividends from net (.39) (.17) (.19) (.43) (.43) (.44) (.41) (.44) (.54) (.53) (.53) (.57)
investment income
Distributions from -- -- -- -- -- -- -- -- -- -- (.10) (.15)
realized gains
Total distributions (.39) (.17) (.19) (.43) (.43) (.44) (.41) (.44) (.54) (.53) (.63) (.72)
Net asset value, $4.15 $4.15 $4.15 $4.02 $4.44 $4.24 $3.72 $3.47 $4.46 $4.67 $4.94 $5.16
end of period
Ratios/supplemental data
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Classes
A B** Y**
Net assets, end of $1,822 $76 $2 $1,626 $1,547 $1,304 $990 $931 $1,302 $1,186 $1,110 $835
period (in millions)
Ratio of expenses to .87% 1.72%+ .78%+ .79% .81% .83% .88% .84% .82% .81% .82% .84%
average daily net assets
Ratio of net income 9.93% 9.51%+ 10.19%+ 9.85% 10.03% 11.13% 12.45% 12.28% 11.67% 11.38% 10.34% 11.14%
to average
daily net assets
Portfolio turnover rate 70% 70% 70% 74% 70% 89% 88% 88% 102% 105% 87% 117%
(excluding short-term
securities)
Total return*** 14.2% 9.9% 10.4% (0.2%) 15.8% 26.9% 21.2% (12.5%) 7.4% 5.8% 8.3% 20.3%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y.
***Total return does not reflect payment of a sales charge.
+Adjusted to an annual basis.
</TABLE>
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PAGE 8
The information in this table has been audited by KPMG Peat Marwick
LLP, independent auditors. The independent auditors' report and
additional information about the performance of the Fund are
contained in the Fund's annual report which, if not included with
this prospectus, may be obtained without charge.
Total returns
Total return is the sum of all of your returns for a given period,
assuming you reinvest all distributions. It is calculated by
taking the total value of shares you own at the end of the period
(including shares acquired by reinvestment), less the price of
shares you purchased at the beginning of the period.
Average annual total return is the annually compounded rate of
return over a given time period (usually two or more years). It is
the total return for the period converted to an equivalent annual
figure.
Average annual total returns as of Aug. 31, 1995
Purchase 1 year 5 years 10 years
made ago ago ago
Extra Income:
Class A + 8.45% +14.02% + 9.58%
Lehman
Aggregate
Bond Index +10.99% + 9.55% + 9.92%
Cumulative total returns as of Aug. 31, 1995
Purchase 1 year 5 years 10 years
made ago ago ago
Extra Income:
Class A + 8.45% +92.71% +149.64%
Lehman
Aggregate
Bond Index +10.99% +57.78% +157.56%
These examples show total returns from hypothetical investments in
Class A shares of the Fund. These returns are compared to those of
a popular index for the same periods. Total returns for Class A,
Class B and Class Y for the period from March 20, 1995 to Aug. 31,
1995 were +4.85%, +5.01% and +10.41%, respectively. March 20, 1995
was the inception date for Class B and Class Y. Total return for
Class A is shown for comparative purposes. The performance of
Class B and Class Y will vary from the performance of Class A based
on differences in sales charges and fees. Past performance for
Class Y for the periods prior to March 20, 1995 may be calculated
based on the performance of Class A, adjusted to reflect
differences in sales charges, although not other differences in
expenses.
<PAGE>
PAGE 9
For purposes of calculation, information about the Fund assumes:
o a sales charge of 5% for Class A shares
o redemption at the end of the period and deduction of the
applicable contingent deferred sales charge for Class B shares
o no sales charge for Class Y shares
o no adjustments for taxes an investor may have paid on the
reinvested income and capital gains
o a period of widely fluctuating securities prices. Returns
shown should not be considered a representation of the Fund's
future performance.
The Fund invests primarily in corporate bonds and other debt
securities that may be different from those in the index. The
index reflects reinvestment of all distributions and changes in
market prices, but excludes brokerage commissions or other fees.
Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed and
mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in the Fund. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage
commissions or other fees.
Yield
Yield is the net investment income earned per share for a specified
time period, divided by the offering price at the end of the
period. The Fund's annualized yield for the 30-day period ended
Aug. 31, 1995, was 7.59% for Class A, 7.22% for Class B and 8.17%
for Class Y. The Fund calculates this 30-day annualized yield by
dividing:
o net investment income per share deemed earned during a 30-day
period by
o the public offering price per share on the last day of the
period, and
o converting the result to a yearly equivalent figure.
This yield calculation does not include any contingent deferred
sales charge, ranging from 5% to 0% on Class B shares, which would
reduce the yield quoted.
The Fund's yield varies from day to day, mainly because share
values and offering prices (that are calculated daily) vary in
response to changes in interest rates. Net investment income
normally changes much less in the short run. Thus, when interest
rates rise and share values fall, yield tends to rise. When
interest rates fall, yield tends to follow.
Past yields should not be considered an indicator of future yields.
<PAGE>
PAGE 10
Investment policies and risks
The Fund primarily invests in debt securities below investment
grade issued by U.S. and foreign corporations. Most of these will
be rated BBB, BB, or B by Standard & Poor's Corporation (S&P) or
the Moody's Investors Service, Inc. (Moody's) equivalent. However,
the Fund may invest in debt securities with lower ratings,
including those in default. Other investments include investment-
grade bonds, convertible securities, stocks, derivative instruments
and money market instruments.
Subject to certain contingencies, the Fund intends in early 1996 to
achieve its investment objective by investing all of its assets in
the Portfolio of the Trust, which is a separate investment company.
The Portfolio has the same investment objectives, policies and
restrictions as the Fund. The board of directors of the Fund
believes that by investing all of its assets in the Portfolio, the
Fund will be in a position to realize directly or indirectly
certain economies of scale inherent in managing a larger asset
base. When the Fund converts to the master/feeder structure, the
policies described below will apply to both the Fund and the
Portfolio.
The various types of investments the portfolio manager uses to
achieve investment performance are described in more detail in the
next section and in the SAI.
Facts about investments and their risks
Debt securities: The price of bonds generally falls as interest
rates increase, and rises as interest rates decrease. The price of
bonds also fluctuates if the credit rating is upgraded or
downgraded.
The price of bonds below investment grade may react more to the
ability of a company to pay interest and principal when due than to
changes in interest rates. They have greater price fluctuations,
are more likely to experience a default and sometimes are referred
to as junk bonds. Reduced market liquidity for these bonds may
occasionally make it more difficult to value them. In valuing
bonds the Fund relies both on independent rating agencies and the
investment manager's credit analysis. Securities that are
subsequently downgraded in quality may continue to be held and will
be sold only when the Fund's investment manager believes it is
advantageous to do so.
<TABLE><CAPTION>
Bond ratings and holdings for fiscal 1995
Percent of
S&P Rating Protection of net assets in
Percent of (or Moody's principal and unrated securities
net assets equivalent) interest assessed by AEFC
<S> <C> <C> <C>
1.22% AAA Highest quality 0.05%
-- AA High quality --
0.21 A Upper medium grade --
0.29 BBB Medium grade 0.66
20.98 BB Moderately speculative 0.56
56.81 B Speculative 5.64<PAGE>
PAGE 11
4.54 CCC Highly speculative 1.45
0.81 CC Poor quality --
0.42 C Lowest quality --
-- D In default 0.09
9.68 Unrated Unrated securities 1.23
</TABLE>
(See Appendix to this prospectus describing corporate bond ratings
for further information.)
Debt securities sold at a deep discount: Some bonds are sold at
deep discounts because they do not pay interest until maturity.
They include zero coupon bonds and PIK (pay-in-kind) bonds. To
comply with tax laws, the Fund has to recognize a computed amount
of interest income and pay dividends to shareholders even though no
cash has been received. In some instances, the Fund may have to
sell securities to have sufficient cash to pay the dividends.
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the convertible securities
trade more like common stock.
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.
Common stocks: Stock prices are subject to market fluctuations.
Stocks of smaller companies may be subject to more abrupt or
erratic price movements than stocks of larger, established
companies or the stock market as a whole. The Fund may invest up to
10% of its total assets in common stocks, preferred stocks that do
not pay dividends and warrants to purchase common stocks.
Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made, including the possibility of seizure or nationalization of
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency must be purchased. This is done
by using a forward contract in which the price of the foreign
currency in U.S. dollars is established on the date the trade is
made, but delivery of the currency is not made until the securities
are received. As long as the Fund holds foreign currencies or
securities valued in foreign currencies, the value of those assets
will be affected by changes in the value of the currencies relative
to the U.S. dollar. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the
price of the security, and it may be difficult to complete the
transaction. The Fund may invest up to 25% of its total assets in
foreign investments.
<PAGE>
PAGE 12
Derivative instruments: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies,
or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties and inability to close such instruments. The Fund will use
derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The Fund will designate cash or appropriate liquid
assets to cover its portfolio obligations. No more than 5% of the
Fund's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. The Fund is not limited as
to the percentage of its assets that may be invested in permissible
investments, including derivatives, except as otherwise explicitly
provided in this prospectus or the SAI. For descriptions of these
and other types of derivative instruments, see the Appendix to this
prospectus and the SAI.
Securities and derivative instruments that are illiquid: A
security or derivative instrument is illiquid if it cannot be sold
quickly in the normal course of business. Some investments cannot
be resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
of directors and consider relevant factors such as the nature of
the security and the number of likely buyers when determining
whether a security is illiquid. No more than 10% of the Fund's net
assets will be held in securities and derivative instruments that
are illiquid.
Money market instruments: Short-term debt securities rated in the
top two grades or the equivalent are used to meet daily cash needs
and at various times to hold assets until better investment
opportunities arise. Generally less than 25% of the Fund's total
assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that
amount for a limited period of time.
<PAGE>
PAGE 13
The investment policies described above may be changed by the board
of directors.
Lending portfolio securities: The Fund may lend its securities to
earn income so long as borrowers provide collateral equal to the
market value of the loans. The risks are that borrowers will not
provide collateral when required or return securities when due.
Unless shareholders approve otherwise, loans may not exceed 30% of
the Fund's net assets.
Valuing Fund shares
The public offering price is the net asset value (NAV) plus the
sales charge for Class A. It is the NAV for Class B and Class Y.
The NAV is the value of a single fund share. The NAV usually
changes daily, and is calculated at the close of business, normally
3 p.m. Central time, each business day (any day the New York Stock
Exchange is open). NAV generally declines as interest rates
increase and rises as interest rates decline.
To establish the net assets, all securities are valued as of the
close of each business day. In valuing assets:
o Securities (except bonds) and assets with available market
values are valued on that basis.
o Securities maturing in 60 days or less are valued at amortized
cost.
o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board of directors.
How to purchase, exchange or redeem shares
Alternative purchase arrangements
The Fund offers three different classes of shares - Class A, Class
B and Class Y. The primary differences among the classes are in
the sales charge structures and in their ongoing expenses. These
differences are summarized in the table below. You may choose the
class that best suits your circumstances and objectives.
<TABLE><CAPTION>
Sales charge and
distribution
(12b-1) fee Service fee Other information
<S> <C> <C> <C>
Class A Maximum initial 0.175% of average Initial sales charge
sales charge of daily net assets waived or reduced
5%; no 12b-1 fee for certain purchases
<PAGE>
PAGE 14
Class B No initial sales 0.175% of average Shares convert to
charge; maximum CDSC daily net assets Class A after eight years;
of 5% declines to 0% CDSC waived in certain
after six years; 12b-1 circumstances
fee of 0.75% of average
daily net assets
Class Y None None Available only to
certain qualifying
institutional
investors
</TABLE>
Conversion of Class B shares to Class A shares - Eight calendar
years after Class B shares were originally purchased, Class B
shares will convert to Class A shares and will no longer be subject
to a distribution fee. The conversion will be on the basis of
relative net asset values of the two classes, without the
imposition of any sales charge. Class B shares purchased through
reinvested dividends and distributions will convert to Class A
shares in a pro-rata portion as the Class B shares purchased other
than through reinvestment.
Considerations in determining whether to purchase Class A or Class
B shares - You should consider the information below in determining
whether to purchase Class A or Class B shares. The sales charges
and distribution fee (included in "Ongoing expenses") are
structured so that you will have approximately the same total
return at the end of eight years regardless of which class you
chose.
Sales charges on purchase or redemption
If you purchase Class A If you purchase Class B
shares shares
o You will not have all o All of your money is
of your purchase price invested in shares of
invested. Part of your stock. However, you will
purchase price will go pay a sales charge if you
to pay the sales charge. redeem your shares within
You will not pay a sales six years of purchase.
charge when you redeem
your shares.
o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.
If your investments in IDS funds total $250,000 or more, you are
better off paying the reduced sales charge in Class A than paying
the higher fees in Class B. If you qualify for a waiver of the
sales charge, you should purchase Class A shares.
<PAGE>
PAGE 15
Ongoing expenses
If you purchase Class A If you purchase Class B
shares shares
o Your shares will have o The distribution and
a lower expense ratio transfer agency fees for
than Class B shares Class B will cause your
because Class A does not shares to have a higher
pay a distribution fee expense ratio and to pay
and the transfer agency lower dividends than
fee for Class A is lower Class A shares. After
than the fee for Class B. eight years, Class B
As a result, Class A shares shares will convert to
will pay higher dividends Class A shares and will
than Class B shares. no longer be subject to
higher fees.
You should consider how long you plan to hold your shares and
whether the accumulated higher fees and CDSC on Class B shares
prior to conversion would be less than the initial sales charge on
Class A shares. Also consider to what extent the difference would
be offset by the lower expenses on Class A shares. To help you in
this analysis, the example in the "Sales charge and Fund expenses"
section of the prospectus illustrates the charges applicable to
each class of shares.
Class Y shares - Class Y shares are offered to certain
institutional investors. Class Y shares are sold without a front-
end sales charge or a CDSC and are not subject to either a service
fee or a distribution fee. The following investors are eligible to
purchase Class Y shares:
o Qualified employee benefit plans* if the plan:
- uses a daily transfer recordkeeping service offering
participants daily access to IDS funds and has
- at least $10 million in plan assets or
- 500 or more participants; or
- does not use daily transfer recordkeeping and has
- at least $3 million invested in funds of the IDS MUTUAL
FUND GROUP or
- 500 or more participants.
o Trust companies or similar institutions, and charitable
organizations that meet the definition in Section 501(c)(3) of
the Internal Revenue Code.* These must have at least $10
million invested in funds of the IDS MUTUAL FUND GROUP.
o Nonqualified deferred compensation plans* whose participants
are included in a qualified employee benefit plan described
above.
* Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.
<PAGE>
PAGE 16
How to purchase shares
If you're investing in this Fund for the first time, you'll need to
set up an account. Your financial advisor will help you fill out
and submit an application. Once your account is set up, you can
choose among several convenient ways to invest.
Important: When opening an account, you must provide AEFC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification number). See "Distributions and taxes."
When you purchase shares for a new or existing account, the price
you pay per share is the public offering price determined at the
close of business on the day your investment is received and
accepted at the Minneapolis headquarters.
Purchase policies:
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day and to receive that day's
share price. Otherwise your purchase will be processed the
next business day and you will pay the next day's share price.
o The minimums allowed for investment may change from time to
time.
o Wire orders can be accepted only on days when your bank, AEFC,
the Fund and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.
o AEFC and the Fund are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.
o You must pay any fee the bank charges for wiring.
o The Fund reserves the right to reject any application for any
reason.
o If your application does not specify which class of shares you
are purchasing, it will be assumed that you are investing in
Class A shares.
<TABLE><CAPTION>
Three ways to invest
<S> <C> <C>
1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Additional
to: investments: $ 100
American Express Financial Advisors Inc. Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none
Your financial advisor will help
you with this process.
<PAGE>
PAGE 17
2
By scheduled Contact your financial advisor Minimum amounts
investment plan to set up one of the following Initial investment: $100
scheduled plans: Additional
investments: $100/mo.
o automatic payroll deduction Account balances: none
(on active plans of
o bank authorization monthly payments)
o direct deposit of
Social Security check
o other plan approved by the Fund
3
By wire If you have an established account, If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the Fund, less
Routing No. 091000019 any costs the Fund or AEFC
Minneapolis, MN incurs, will be returned
Attn: Domestic Wire Dept. promptly.
Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).
*If your account balance falls below $300, you will be asked in writing to bring it up to
$300 or establish a scheduled investment plan. If you don't do so within 30 days, your
shares can be redeemed and the proceeds mailed to you.
</TABLE>
How to exchange shares
You can exchange your shares of the Fund at no charge for shares of
the same class of any other publicly offered fund in the IDS MUTUAL
FUND GROUP available in your state. Exchanges into IDS Tax-Free
Money Fund must be made from Class A shares. For complete
information, including fees and expenses, read the prospectus
carefully before exchanging into a new fund.
If your exchange request arrives at the Minneapolis headquarters
before the close of business, your shares will be redeemed at the
net asset value set for that day. The proceeds will be used to
purchase new fund shares the same day. Otherwise, your exchange
will take place the next business day at that day's net asset
value.
For tax purposes, an exchange represents a redemption and purchase
and may result in a gain or loss. However, you cannot create a tax
loss (or reduce a taxable gain) by exchanging from the Fund within
91 days of your purchase. For further explanation, see the SAI.
How to redeem shares
You can redeem your shares at any time. American Express
Shareholder Service will mail payment within seven days after
receiving your request.
When you redeem shares, the amount you receive may be more or less
than the amount you invested. Your shares will be redeemed at net
asset value, minus any applicable sales charge, at the close of
business on the day your request is accepted at the Minneapolis
headquarters. If your request arrives after the close of business,<PAGE>
PAGE 18
the price per share will be the net asset value, minus any
applicable sales charge, at the close of business on the next
business day.
A redemption is a taxable transaction. If the Fund's net asset
value when you redeem shares is more or less than the cost of your
shares, you will have a gain or loss, which can affect your tax
liability. Redeeming shares held in an IRA or qualified retirement
account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.
<TABLE><CAPTION>
Two ways to request an exchange or redemption of shares
<S> <C>
1
By letter Include in your letter:
o the name of the fund(s)
o the class of shares to be exchanged or redeemed
o your account number(s) (for exchanges, both funds must be registered in the same
ownership)
o your Taxpayer Identification Number (TIN)
o the dollar amount or number of shares you want to exchange or redeem
o signature of all registered account owners
o for redemptions, indicate how you want your sales proceeds delivered to you
o any paper certificates of shares you hold
Regular mail:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534
Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402
2
By phone
American Express Telephone o The Fund and AEFC will honor any telephone exchange or redemption request believed to be
Transaction Service: authentic and will use reasonable procedures to confirm that they are. This includes
800-437-3133 or asking identifying questions and tape recording calls. If reasonable
612-671-3800 procedures are not followed, the Fund or AEFC will be liable for any loss resulting from
fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges
NOT apply by writing American Express Shareholder Service. Each registered owner must sign
the request.
o AEFC answers phone requests promptly, but you may experience delays when call volume is
high. If you are unable to get through, use mail procedure as an alternative.
o Acting on your instructions, your financial advisor may conduct telephone transactions on
your behalf.
o Phone privileges may be modified or discontinued at any time.
Minimum amount
Redemption: $100
Maximum amount
Redemption: $50,000
</TABLE>
Exchange policies:
o You may make up to three exchanges within any 30-day period,
with each limited to $300,000. These limits do not apply to
scheduled exchange programs and certain employee benefit plans or
other arrangements through which one shareholder represents the
interests of several. Exceptions may be allowed with pre-approval
of the Fund.
<PAGE>
PAGE 19
o Exchanges must be made into the same class of shares of the new
fund.
o If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for
another exchange.
o If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured party.
o AEFC and the Fund reserve the right to reject any exchange,
limit the amount, or modify or discontinue the exchange privilege,
to prevent abuse or adverse effects on the Fund and its
shareholders. For example, if exchanges are too numerous or too
large, they may disrupt the Fund's investment strategies or
increase its costs.
Redemption policies:
o A "change of mind" option allows you to change your mind after
requesting a redemption and to use all or part of the proceeds to
purchase new shares in the same class from which you redeemed. If
you reinvest in Class A, you will purchase the new shares at net
asset value rather than the offering price on the date of a new
purchase. If you reinvest in Class B, any CDSC you paid on the
amount you are reinvesting also will be reinvested. To take
advantage of this option, send a written request within 30 days of
the date your redemption request was received. Include your
account number and mention this option. This privilege may be
limited or withdrawn at any time, and it may have tax consequences.
o A telephone redemption request will not be allowed within 30
days of a phoned-in address change.
Important: If you request a redemption of shares you recently
purchased by a check or money order that is not guaranteed, the
Fund will wait for your check to clear. Please expect a minimum of
10 days from the date of purchase before a check is mailed to you.
(A check may be mailed earlier if your bank provides evidence
satisfactory to the Fund and AEFC that your check has cleared.)
<TABLE><CAPTION>
Three ways to receive payment when you redeem shares
<S> <C>
1
By regular or express mail o Mailed to the address on record.
o Payable to names listed on the account.
NOTE: The express mail delivery charges
you pay will vary depending on the
courier you select.
<PAGE>
PAGE 20
2
By wire o Minimum wire redemption: $1,000.
o Request that money be wired to your bank.
o Bank account must be in the same
ownership as the IDS fund account.
NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.
3
By scheduled payout plan o Minimum payment: $50.
o Contact your financial advisor or American Express
Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges.
</TABLE>
Reductions and waivers of the sales charge
Class A - initial sales charge alternative
On purchases of Class A shares, you pay a 5% sales charge on the
first $50,000 of your total investment and less on investments
after the first $50,000:
Total investment Sales charge as a
percent of:*
Public Net
offering amount
price invested
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00
* To calculate the actual sales charge on an investment greater
than $50,000, amounts for each applicable increment must be
totaled. See the SAI.
Reductions of the sales charge on Class A shares
Your sales charge may be reduced, depending on the totals of:
o the amount you are investing in this Fund now,
o the amount of your existing investment in this Fund, if any, and
o the amount you and your immediate family (spouse or unmarried
children under 21) are investing or have in other funds in the IDS
MUTUAL FUND GROUP that carry a sales charge.
<PAGE>
PAGE 21
Other policies that affect your sales charge:
o IDS Tax-Free Money Fund and Class A shares of IDS Cash
Management Fund do not carry sales charges. However, you may count
investments in these funds if you acquired shares in them by
exchanging shares from IDS funds that carry sales charges.
o IRA purchases or other employee benefit plan purchases made
through a payroll deduction plan or through a plan sponsored by an
employer, association of employers, employee organization or other
similar entity, may be added together to reduce sales charges for
all shares purchased through that plan.
o If you intend to invest $1 million over a period of 13 months,
you can reduce the sales charges in Class A by filing a letter of
intent.
For more details, see the SAI.
Waivers of the sales charge for Class A shares
Sales charges do not apply to:
o Current or retired trustees, directors, officers or employees of
the Fund or AEFC or its subsidiaries, their spouses and unmarried
children under 21.
o Current or retired American Express financial advisors, their
spouses and unmarried children under 21.
o Qualified employee benefit plans* using a daily transfer
recordkeeping system offering participants daily access to IDS
funds.
(Participants in certain qualified plans for which the initial
sales charge is waived may be subject to a deferred sales charge of
up to 4% on certain redemptions. For more information, see the
SAI.)
o Shareholders who have at least $1 million invested in funds of
the IDS MUTUAL FUND GROUP. If the investment is redeemed in the
first year after purchase, a CDSC of 1% will be charged on the
redemption.
o Purchases made within 30 days after a redemption of shares (up
to the amount redeemed):
- of a product distributed by American Express Financial
Advisors in a qualified plan subject to a deferred sales
charge or
- in a qualified plan where American Express Trust Company has a
recordkeeping, trustee, investment management or investment
servicing relationship.
<PAGE>
PAGE 22
Send the Fund a written request along with your payment, indicating
the amount of the redemption and the date on which it occurred.
o Purchases made with dividend or capital gain distributions from
another fund in the IDS MUTUAL FUND GROUP that has a sales charge.
o Purchases made through American Express Strategic Portfolio
Service (total amount of all investments made in the Strategic
Portfolio Service must be at least $50,000).
o Purchases made under the University of Texas System ORP.
*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.
Class B - contingent deferred sales charge alternative
Where a CDSC is imposed on a redemption, it is based on the amount
of the redemption and the number of calendar years, including the
year of purchase, between purchase and redemption. The following
table shows the declining scale of percentages that apply to
redemptions during each year after a purchase:
If a redemption is The percentage rate
made during the for the CDSC is:
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
If the amount you are redeeming reduces the current net asset value
of your investment in Class B shares below the total dollar amount
of all your purchase payments during the last six years (including
the year in which your redemption is made), the CDSC is based on
the lower of the redeemed purchase payments or market value.
The following example illustrates how the CDSC is applied. Assume
you had invested $10,000 in Class B shares and that your investment
had appreciated in value to $12,000 after 15 months, including
reinvested dividend and capital gain distributions. You could
redeem any amount up to $2,000 without paying a CDSC ($12,000
current value less $10,000 purchase amount). If you redeemed
$2,500, the CDSC would apply only to the $500 that represented part
of your original purchase price. The CDSC rate would be 4% because
a redemption after 15 months would take place during the second
year after purchase.
Because the CDSC is imposed only on redemptions that reduce the
total of your purchase payments, you never have to pay a CDSC on
any amount you redeem that represents appreciation in the value of<PAGE>
PAGE 23
your shares, income earned by your shares or capital gains. In
addition, when determining the rate of any CDSC, your redemption
will be made from the oldest purchase payment you made. Of course,
once a purchase payment is considered to have been redeemed, the
next amount redeemed is the next oldest purchase payment. By
redeeming the oldest purchase payments first, lower CDSCs are
imposed than would otherwise be the case.
Waivers of the contingent deferred sales charge
The CDSC on Class B shares will be waived on redemptions of shares:
o In the event of the shareholder's death,
o Purchased by any trustee, director, officer or employee of a fund
or AEFC or its subsidiaries,
o Purchased by any American Express financial advisor,
o Held in a trusteed employee benefit plan,
o Held in IRAs or certain qualified plans for which American
Express Trust Company acts as custodian, such as Keogh plans, tax-
sheltered custodial accounts or corporate pension plans, provided
that the shareholder is:
- at least 59-1/2 years old, and
- taking a retirement distribution (if the redemption is part
of a transfer to an IRA or qualified plan in a product
distributed by American Express Financial Advisors, or a
custodian-to-custodian transfer to a product not distributed
by American Express Financial Advisors, the CDSC will not be
waived), or
- redeeming under an approved substantially equal periodic
payment arrangement.
For investors in Class A shares who have over $1 million invested
in one year, the 1% CDSC on redemption of those shares will be
waived in the same circumstances described for Class B.
Special shareholder services
Services
To help you track and evaluate the performance of your investments,
AEFC provides these services:
Quarterly statements listing all of your holdings and transactions
during the previous three months.
Yearly tax statements featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information - which simplifies tax calculations.
<PAGE>
PAGE 24
A personalized mutual fund progress report detailing returns on
your initial investment and cash-flow activity in your account. It
calculates a total return to reflect your individual history in
owning Fund shares. This report is available from your financial
advisor.
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
Distributions and taxes
As a shareholder you are entitled to your share of the Fund's net
income and any gains realized on its investments. The Fund
distributes dividends and capital gain distributions to qualify as
a regulated investment company and to avoid paying corporate income
and excise taxes. Dividend and capital gain distributions will
have tax consequences you should know about.
Dividend and capital gain distributions
The Fund's income from dividends and interest, and any net realized
short-term gain, are distributed to you monthly as dividends. The
Fund realizes long-term capital gains whenever it sells securities
held for more than one year for a higher price than it paid for
them. Net realized long-term capital gains, if any, are
distributed to you at the end of the calendar year as capital gain
distributions. Before they're distributed, net long-term capital
gains are included in the value of each share. After they're
distributed, the value of each share drops by the per-share amount
of the distribution. (If your distributions are reinvested, the
total value of your holdings will not change.)
<PAGE>
PAGE 25
Dividends paid by each class will be calculated at the same time,
in the same manner and in the same amount, except the expenses
attributable solely to Class A, Class B and Class Y will be paid
exclusively by that class. Class B shareholders will receive lower
per share dividends than Class A and Class Y shareholders because
expenses for Class B are higher than for Class A or Class Y. Class
A shareholders will receive lower per share dividends than Class Y
shareholders because expenses for Class A are higher than for Class
Y.
Reinvestments
Dividends and capital gain distributions are automatically
reinvested in additional shares in the same class of the Fund,
unless:
o you request the Fund in writing or by phone to pay
distributions to you in cash, or
o you direct the Fund to invest your distributions in any
publicly available IDS fund for which you've previously opened
an account. You pay no sales charge on shares purchased
through reinvestment from this Fund into any IDS fund.
The reinvestment price is the net asset value at close of business
on the day the distribution is paid. (Your quarterly statement
will confirm the amount invested and the number of shares
purchased.)
If you choose cash distributions, you will receive only those
declared after your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at the
then-current net asset value and make future distributions in the
form of additional shares.
Taxes
Distributions are subject to federal income tax and also may be
subject to state and local taxes. Distributions are taxable in the
year the Fund pays them regardless of whether you take them in cash
or reinvest them.
Income received by the Fund may be subject to foreign tax and
withholding. Tax conventions between certain countries and the
U.S. may reduce or eliminate such taxes. You may be entitled to
claim foreign tax credits or deductions subject to provisions and
limitations of the Internal Revenue Code. The Fund will notify you
if such credit or deduction is available.
Each January, you will receive a tax statement showing the kinds
and total amount of all distributions you received during the
previous year. You must report distributions on your tax returns,
even if they are reinvested in additional shares.<PAGE>
PAGE 26
Buying a dividend creates a tax liability. This means buying
shares shortly before a capital gain distribution. You pay the
full pre-distribution price for the shares, then receive a portion
of your investment back as a distribution, which is taxable.
Redemptions and exchanges subject you to a tax on any capital gain.
If you sell shares for more than their cost, the difference is a
capital gain. Your gain may be either short term (for shares held
for one year or less) or long term (for shares held for more than
one year).
Your Taxpayer Identification Number (TIN) is important. As with
any financial account you open, you must list your current and
correct Taxpayer Identification Number (TIN) -- either your Social
Security or Employer Identification number. The TIN must be
certified under penalties of perjury on your application when you
open an account at AEFC.
If you don't provide the TIN, or the TIN you report is incorrect,
you could be subject to backup withholding of 31% of taxable
distributions and proceeds from certain sales and exchanges. You
also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information
You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:
Individual or joint account The individual or individuals
listed on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)
A living trust The grantor-trustee (the person
who puts the money into the
trust)
An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)
<PAGE>
PAGE 27
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors office for Federal Form
W-9, "Request for Taxpayer Identification Number and
Certification."
Important: This information is a brief and selective summary of
certain federal tax rules that apply to this Fund. Tax matters are
highly individual and complex, and you should consult a qualified
tax advisor about your personal situation.
How the Fund is organized
The Fund is a diversified, open-end management investment company,
as defined in the Investment Company Act of 1940. It was
incorporated on Aug. 17, 1983 in Minnesota. The Fund headquarters
are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-
3268.
Shares
The Fund is owned by its shareholders. The Fund issues shares in
three classes - Class A, Class B and Class Y. Each class has
different sales arrangements and bears different expenses. Each
class represents interests in the assets of the Fund. Par value is
1 cent per share. Both full and fractional shares can be issued.
The Fund no longer issues stock certificates.
Voting rights
As a shareholder, you have voting rights over the Fund's management
and fundamental policies. You are entitled to one vote for each
share you own. Each class has exclusive voting rights with respect
to the provisions of the Fund's distribution plan that pertain to a
particular class and other matters for which separate class voting
is appropriate under applicable law.
Shareholder meetings
The Fund does not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors.
<PAGE>
PAGE 28
Special considerations regarding master/feeder structure
An investor in the Fund should be aware that, subject to certain
contingencies, the Fund intends to achieve its investment objective
in early 1996 by investing its assets in units in the Portfolio of
the Trust, which has an identical investment objective to the Fund.
This arrangement is commonly known as a master/feeder structure.
The Trust is a separate investment company. Therefore, the Fund's
interest in securities owned by the Portfolio will be indirect.
The board has considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio. The board
believes that this approach offers opportunities for economies of
scale. In determining to convert to a master/feeder structure, the
board considered whether the aggregate of the fees of the Fund and
the Portfolio will be more or less than if the Fund invested
directly in the securities to be held by the Portfolio. The board
negotiated certain expense reimbursement arrangements with AEFC to
mitigate the impact of increases in aggregate costs, and believes
that any additional costs not covered by such arrangements will be
outweighed by the anticipated benefits to the Fund and its
shareholders of conversion to a master/feeder structure.
The investment objective, policies and restrictions of the
Portfolio are described under the captions "Investment policies and
risks" and "Facts about investments and their risks."
To date, AEFC has sponsored and advised only traditionally
structured funds that invest directly in a portfolio of securities
and retain their own investment manager. Funds that invest all
their assets in interests in a separate investment company are a
relatively new development in the mutual fund industry and may be
subject to additional regulations and risks.
In addition to selling units to the Fund, the Portfolio may sell
units to other affiliated and non-affiliated mutual funds and to
institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a
proportionate share of the Portfolio's expenses. However, the
other investors investing in the Portfolio are not required to sell
their shares at the same price as the Fund due to variations in
sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the
different funds that invest in the same Portfolio.
The Fund may withdraw (completely redeem) all of its assets from
the Portfolio at any time if the board determines that it is in the
best interest of the Fund to do so. In the event the Fund
withdraws all of its assets from the Portfolio, the board would
consider what action might be taken, including investing all assets
of the Fund in another pooled investment entity or retaining an
investment advisor to manage the Fund's assets in accordance with<PAGE>
PAGE 29
its investment objective. The investment objective of the Fund and
its Portfolio can only be changed with shareholder approval. If
the objective of the Portfolio changes and shareholders of the Fund
do not approve a parallel change in the Fund's investment
objective, the Fund would seek an alternative investment vehicle
for the Fund or retain an investment advisor on its behalf.
Investors in the Fund should be aware that smaller funds investing
in the Portfolio may be adversely affected by the actions of larger
funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience
higher prorated operating expenses, thereby producing lower
returns. Additionally, the Portfolio may become less diverse,
resulting in increased portfolio risk, and experience decreasing
economies of scale. Institutional investors in the Portfolio that
have a greater pro rata ownership than the Fund could have
effective voting control over the operation of the Portfolio.
Certain changes in the Portfolio's fundamental objectives, policies
and restrictions could require the Fund to redeem its interest in
the Portfolio. Any such withdrawal could result in a distribution
of in-kind portfolio securities (as opposed to cash distribution).
If securities are distributed, the Fund could incur brokerage, tax
or other charges in converting the securities to cash. In
addition, a distribution in kind may result in a less diversified
portfolio of investments or adversely affect the liquidity of the
Fund.
Whenever the Fund as an investor in the Portfolio is requested to
vote on matters pertaining to the Portfolio, the Fund will hold a
meeting of Fund shareholders and will vote its units in the
Portfolio for or against such matters proportionately to the
instructions to vote for or against such matters received from Fund
shareholders. The Fund will vote shares for which it receives no
voting instructions in the same proportion as the shares for which
it receives voting instructions. See "Investment manager and
transfer agent" for a complete description of the management and
other expenses associated with the Fund's investment in the
Portfolio.
Directors and officers
Shareholders elect a board of directors that oversees the
operations of the Fund and chooses its officers. Its officers are
responsible for day-to-day business decisions based on policies set
by the board. The board has named an executive committee that has
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP, except for Mr. Dudley, who is a director of all
publicly offered funds.
<PAGE>
PAGE 30
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 AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
<PAGE>
PAGE 31
Officers who also are officers and/or employees of AEFC
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.
Refer to the SAI for the directors' and officers' biographies.
Investment manager and transfer agent
The Fund pays AEFC for managing its portfolio, providing
administrative services and serving as transfer agent (handling
shareholder accounts).
Under its Investment Management Services Agreement, AEFC determines
which securities will be purchased, held or sold (subject to the
direction and control of the board of directors). Under the
current agreement, effective March 20, 1995, the Fund pays AEFC a
fee for these services based on the average daily net assets of the
Fund, as follows:
Assets Annual rate
(billions) at each asset level
First $1.0 0.590%
Next 1.0 0.565
Next 1.0 0.540
Next 3.0 0.515
Next 3.0 0.490
Over 9.0 0.465
Upon the implementation of the new fund structure, AEFC will
provide these services to the Portfolio at the same annual rate
currently paid by the Fund.
For the fiscal year ended Aug. 31, 1995, under the current and
prior agreements, the Fund paid AEFC a total investment management
fee of 0.59% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory
expenses.
Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at an annual rate of 0.05%
decreasing in gradual percentages to 0.025% as assets increase.
<PAGE>
PAGE 32
In addition, under a separate Transfer Agency Agreement, AEFC
maintains shareholder accounts and records. The Fund pays AEFC an
annual fee per shareholder account for this service as follows:
o Class A $15.50
o Class B $16.50
o Class Y $15.50
Distributor
The Fund sells shares through American Express Financial Advisors,
a wholly owned subsidiary of AEFC, under a Distribution Agreement.
Financial advisors representing American Express Financial Advisors
provide information to investors about individual investment
programs, the Fund and its operations, new account applications,
exchange and redemption requests. The cost of these services is
paid partially by the Fund's sales charge.
Portions of sales charges may be paid to securities dealers who
have sold the Fund's shares, or to banks and other financial
institutions. The proceeds paid to others range from 0.8% to 4% of
the Fund's offering price depending on the monthly sales volume.
Financial advisors may receive different compensation for selling
Class A, Class B and Class Y shares.
For Class B shares, to help defray costs not covered by sales
charges, including costs for marketing, sales administration,
training, overhead, direct marketing programs, advertising and
related functions, the Fund pays American Express Financial
Advisors a distribution fee, also known as a 12b-1 fee. This fee
is paid under a Plan and Agreement of Distribution that follows the
terms of Rule 12b-1 of the Investment Company Act of 1940. Under
this 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. The total 12b-1
fee paid by the Fund under the current agreement for the fiscal
year ended Aug. 31, 1995 was 0.75% of its average daily net assets.
For Class A shares, the total 12b-1 fee paid by the Fund under the
prior agreement for the fiscal year ended Aug. 31, 1995, was 0.02%
of its average daily net assets. This fee will not cover all of
the costs incurred by American Express Financial Advisors.
Under a Shareholder Service Agreement, the Fund also 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.
Total expenses paid by the Fund's Class A shares for the fiscal
year ended Aug. 31, 1995 were 0.87% of its average daily net
assets. Annualized expenses for Class B and Class Y were 1.72% and
0.78% respectively, based on the period from March 20, 1995 (the
inception date for Class B and Class Y) to Aug. 31, 1995.
<PAGE>
PAGE 33
Total fees and expenses (excluding taxes and brokerage commissions)
cannot exceed the most restrictive applicable state expense
limitation.
About American Express Financial Corporation
General information
The AEFC family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.
Besides managing investments for all publicly offered funds in the
IDS MUTUAL FUND GROUP, AEFC also manages investments for itself and
its subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on Aug. 31, 1995 were more
than $124 billion.
American Express Financial Advisors serves individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 advisors.
Other AEFC subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.
AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is
a wholly owned subsidiary of American Express Company (American
Express), a financial services company with headquarters at
American Express Tower, World Financial Center, New York, NY 10285.
The Fund may pay brokerage commissions to broker-dealer affiliates
of American Express and AEFC.
<PAGE>
PAGE 34
Appendix A
Description of corporate bond ratings
Bond ratings concern the quality of the issuing corporation. They
are not an opinion of the market value of the security. Such
ratings are opinions on whether the principal and interest will be
repaid when due. A security's rating may change, which could
affect its price. Ratings by Moody's Investors Service, Inc. are
Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D. Ratings by Standard &
Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
Aaa/AAA - Judged to be of the best quality and carry the smallest
degree of investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for
interest and principal may not be quite as good as Aaa or AAA rated
securities.
A - Considered upper-medium grade. Protection for interest and
principal is deemed adequate but may be susceptible to future
impairment.
Baa/BBB - Considered medium-grade obligations. Protection for
interest and principal is adequate over the short-term; however,
these obligations may have certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of
interest and principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may
be small assurance over any long period of time of the payment of
interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or
there may be risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such
issues are often in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These
securities have major risk exposures to default.
D - Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
Non-rated securities will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the Fund's objectives and policies. When assessing the risk
involved in each non-rated security, the Fund will consider the
financial condition of the issuer or the protection afforded by the
terms of the security.
<PAGE>
PAGE 35
Definitions of zero-coupon and pay-in-kind securities
A zero-coupon security is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at face
value on the maturity date.
A pay-in-kind security is a security in which the issuer has the
option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the
same terms, including maturity date, as the pay-in-kind securities.
<PAGE>
PAGE 36
Appendix B
Descriptions of derivative instruments
What follows are brief descriptions of derivative instruments the
Fund may use. At various times the Fund may use some or all of
these instruments and is not limited to these instruments. It may
use other similar types of instruments if they are consistent with
the Fund's investment goal and policies. For more information on
these instruments, see the SAI.
Options and futures contracts. An option is an agreement to buy or
sell an instrument at a set price during a certain period of time.
A futures contract is an agreement to buy and sell an instrument
for a set price on a future date. The Fund may buy and sell
options and futures contracts to manage its exposure to changing
interest rates, security prices and currency exchange rates.
Options and futures may be used to hedge the Fund's investments
against price fluctuations or to increase market exposure.
Asset-backed and mortgage-backed securities. Asset-backed
securities include interests in pools of assets such as motor
vehicle installment sale contracts, installment loan contracts,
leases on various types of real and personal property, receivables
from revolving credit (credit card) agreements or other categories
of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities.
Interest and principal payments depend on payment of the underlying
loans or mortgages. The value of these securities may also be
affected by changes in interest rates, the market's perception of
the issuers and the creditworthiness of the parties involved.
Stripped mortgage-backed securities include interest only (IO) and
principal only (PO) securities. Cash flows and yields on IOs and
POs are extremely sensitive to the rate of principal payments on
the underlying mortgage loans or mortgage-backed securities.
Indexed securities. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Most indexed securities are short- to intermediate-
term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.
Inverse floaters. Inverse floaters are created by underwriters
using the interest payment on securities. A portion of the
interest received is paid to holders of instruments based on
current interest rates for short-term securities. The remainder,
minus a servicing fee, is paid to holders of inverse floaters. As
interest rates go down, the holders of the inverse floaters receive
more income and an increase in the price for the inverse floaters.
As interest rates go up, the holders of the inverse floaters
receive less income and a decrease in the price for the inverse
floaters.<PAGE>
PAGE 37
Structured products. Structured products are over-the-counter
financial instruments created specifically to meet the needs of one
or a small number of investors. The instrument may consist of a
warrant, an option or a forward contract embedded in a note or any
of a wide variety of debt, equity and/or currency combinations.
Risks of structured products include the inability to close such
instruments, rapid changes in the market and defaults by other
parties.<PAGE>
PAGE 38
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS EXTRA INCOME FUND
October 30, 1995
This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the prospectus and the financial
statements contained in the Annual Report which may be obtained
from your American Express financial advisor or by writing to
American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.
This SAI is dated October 30, 1995, and it is to be used with the
prospectus dated October 30, 1995, and the Annual Report for the
fiscal year ended August 31, 1995.
<PAGE>
PAGE 39
TABLE OF CONTENTS
Goal and Investment Policies.........................See Prospectus
Additional Investment Policies................................p. 3
Portfolio Transactions........................................p. 6
Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation........................p. 9
Performance Information.......................................p. 10
Valuing Fund Shares...........................................p. 12
Investing in the Fund.........................................p. 13
Redeeming Shares..............................................p. 17
Pay-out Plans.................................................p. 18
Capital Loss Carryover........................................p. 19
Taxes.........................................................p. 19
Agreements....................................................p. 20
Directors and Officers........................................p. 24
Custodian.....................................................p. 28
Independent Auditors..........................................p. 28
Financial Statements..............................See Annual Report
Prospectus....................................................p. 28
Appendix A: Foreign Currency Transactions....................p. 29
Appendix B: Options and Interest Rate Futures Contracts......p. 34
Appendix C: Mortgage-Backed Securities.......................p. 40
Appendix D: Dollar-Cost Averaging............................p. 41
<PAGE>
PAGE 40
ADDITIONAL INVESTMENT POLICIES
Subject to certain contingencies, the Fund intends in late 1995 or
early 1996 to achieve its goals by investing all of its assets in
Aggressive Income Portfolio (the "Portfolio") of the Income Trust
(the "Trust"), a separate investment company, rather than by
directly investing in and managing its own portfolio of securities.
The Portfolio has the same investment objectives, policies and
restrictions as the Fund.
Fundamental investment restrictions adopted by a Fund or Portfolio
cannot be changed without the approval of a majority of the
outstanding voting securities of the Fund or Portfolio, as defined
in the Investment Company Act of 1940. Whenever a Fund is
requested to vote on a change in the investment restrictions of the
corresponding Portfolio, the Fund will hold a meeting of Fund
shareholders and will cast the Fund's vote as instructed by the
shareholders.
These are investment policies in addition to those presented in the
prospectus. The policies below are fundamental policies of the
Fund and the Portfolio and may be changed only with shareholder
approval. Unless holders of a majority of the outstanding shares
agree to make the change, the Fund will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the Fund may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The Fund has not borrowed in the past and has
no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the
Fund's total assets.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'Invest more than 5% of its total assets in securities of any one
company, government or political subdivision thereof, except the
limitation will not apply to investments in securities issued by
the U.S. government, its agencies or instrumentalities, and except
that up to 25% of the Fund's total assets may be invested without
regard to this 5% limitation.
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real<PAGE>
PAGE 41
estate business or real estate investment trusts. For purposes of
this policy, real estate includes real estate limited partnerships.
'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the Fund from buying or selling options and futures
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.
'Lend Fund securities in excess of 30% of its net assets. The
current policy of the Fund's board of directors (the "board") is to
make these loans, either long- or short-term, to broker-dealers.
In making such loans the Fund gets the market price in cash, U.S.
government securities, letters of credit or such other collateral
as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the
Fund will get additional collateral on a daily basis. The risks
are that the borrower may not provide additional collateral when
required or return the securities when due. During the existence
of the loan, the Fund receives cash payments equivalent to all
interest or other distributions paid on the loaned securities. A
loan will not be made unless the investment manager believes the
opportunity for additional income outweighs the risks.
'Issue senior securities, except this restriction shall not be
deemed to prohibit the Fund from borrowing from banks, using
options or futures contracts, lending its securities or entering
into repurchase agreements.
'Concentrate in any one industry. According to the present
interpretation by the Securities and Exchange Commission (SEC),
this means no more than 25% of the Fund's total assets, based on
current market value at the time of purchase, can be invested in
any one industry.
Unless changed by the board, the Fund will not:
'Pledge or mortgage its assets beyond 15% of total assets. If the
Fund were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
restriction, collateral arrangements for margin deposits on a
futures contract are not deemed to be a pledge of assets.
'Invest more than 10% of its total assets in securities of
investment companies.
'Invest in exploration or development programs, such as oil, gas or
mineral leases.
'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.
'Invest in a company to control or manage it.
<PAGE>
PAGE 42
'Buy on margin or sell short, except they may enter into interest
rate future contracts.
'Purchase securities of an issuer if the directors and officers of
the Fund and of American Express Financial Corporation (AEFC) hold
more than a certain percentage of the issuer's outstanding
securities. The holdings of all directors and officers of the Fund
and of AEFC who own more than 0.5% of an issuer's securities are
added together, and if in total they own more than 5%, the fund
will not purchase securities of that issuer.
'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the Fund's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.
'Invest more than 10% of its net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have readily available markets,
loans and loan participations, repurchase agreements with
maturities greater than seven days, non-negotiable fixed-time
deposits and over-the-counter options. For purposes of complying
with Ohio law, the Fund will not invest more than 15% of its total
assets in a combination of illiquid securities, 144A securities and
securities of companies, including any predecessor, that have a
record of less than three years continuous operations.
'In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers,
and interest-only and principal-only fixed mortgage-backed
securities (IOs and POs) issued by the United States government or
its agencies and instrumentalities. The investment manager, under
guidelines established by the board, will consider any relevant
factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of
marketplace trades.
'In determining the liquidity of commercial paper issued in
transactions not involving a public offering under Section 4(2) of
the Securities Act of 1933, the investment manager, under
guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its
commercial paper programs, the willingness and ability of the
issuer or dealer to repurchase the paper, and the nature of the
clearance and settlement procedures for the paper.
Loans, loan participations and interests in securitized loan pools
are interests in amounts owed by a corporate, governmental or other
borrower to a lender or consortium of lenders (typically banks,
insurance companies, investment banks, government agencies or
international agencies). Loans involve a risk of loss in case of
default or insolvency of the borrower and may offer less legal
protection to the Fund in the event of fraud or misrepresentation. <PAGE>
PAGE 43
In addition, loan participations involve a risk of insolvency of
the lender or other financial intermediary.
The Fund may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued
securities or forward commitments). Under normal market
conditions, the Fund does not intend to commit more than 5% of its
total assets to these practices. The Fund does not pay for the
securities or receive dividends or interest on them until the
contractual settlement date. The Fund will designate cash or
liquid high-grade debt securities at least equal in value to its
commitments to purchase the securities. When-issued securities or
forward commitments are subject to market fluctuations and they may
affect the fund's total assets the same as owned securities.
The Fund may maintain a portion of its assets in cash and cash-
equivalent investments. The cash-equivalent investments the fund
may use are short-term U.S. and Canadian government securities and
negotiable certificates of deposit, non-negotiable fixed-time
deposits, bankers' acceptances and letters of credit of banks or
savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent
in the instance of a foreign branch of a U.S. bank) at the date of
investment. Any cash-equivalent investments in foreign securities
will be subject to the limitations on foreign investments described
in the prospectus. The Fund also may purchase short-term corporate
notes and obligations rated in the top two classifications by
Moody's or S&P or the equivalent and may use repurchase agreements
with broker-dealers registered under the Securities Exchange Act of
1934 and with commercial banks. A risk of a repurchase agreement
is that if the seller seeks the protection of the bankruptcy laws,
the Fund's ability to liquidate the security involved could be
impaired.
Notwithstanding any of the Fund's other investment policies, the
Fund may invest its assets in an open-end management investment
company having substantially the same investment objectives,
policies and restrictions as the Fund for the purpose of having
those assets managed as part of a combined pool.
For a discussion about foreign currency transactions, see Appendix
A. For a discussion on options and interest rate futures contracts
and additional information on investment policies, see Appendix B.
For a discussion on mortgage-backed securities, see Appendix C.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board, AEFC is authorized to
determine, consistent with the Fund's investment goal and policies,
which securities will be purchased, held or sold. In determining
where the buy and sell orders are to be placed, AEFC has been
directed to use its best efforts to obtain the best available price
and most favorable execution except where otherwise authorized by
the board.<PAGE>
PAGE 44
AEFC has a strict Code of Ethics that prohibits its affiliated
personnel from engaging in personal investment activities that
compete with or attempt to take advantage of planned portfolio
transactions for any fund in the IDS MUTUAL FUND GROUP. AEFC
carefully monitors compliance with its Code of Ethics.
Normally, the Fund's securities are traded on a principal rather
than an agency basis. In other words, AEFC will trade directly
with the issuer or with a dealer who buys or sells for its own
account, rather than acting on behalf of another client. AEFC does
not pay the dealer commissions. Instead, the dealer's profit, if
any, is the difference, or spread, between the dealer's purchase
and sale price for the security.
On occasion, it may be desirable to compensate a broker for
research services or for brokerage services by paying a commission
that might not otherwise be charged or a commission in excess of
the amount another broker might charge. The board has adopted a
policy authorizing AEFC to do so to the extent authorized by law,
if AEFC determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light
of that transaction or AEFC's overall responsibilities to the funds
in the IDS MUTUAL FUND GROUP and other funds for which it acts as
investment advisor.
Research provided by brokers supplements AEFC's own research
activities. Such services include economic data on, and analysis
of, U.S. and foreign economies; information on specific industries;
information about specific companies, including earnings estimates;
purchase recommendations for stocks and bonds; portfolio strategy
services; political, economic, business and industry trend
assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. AEFC has obtained, and in the
future may obtain, computer hardware from brokers, including but
not limited to personal computers that will be used exclusively for
investment decision-making purposes, which include the research,
portfolio management and trading functions and other services to
the extent permitted under an interpretation by the Securities and
Exchange Commission.
When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge,
AEFC must follow procedures authorized by the board. To date,
three procedures have been authorized. One procedure permits AEFC
to direct an order to buy or sell a security traded on a national
securities exchange to a specific broker for research services it
has provided. The second procedure permits AEFC, in order to
obtain research, to direct an order on an agency basis to buy or
sell a security traded in the over-the-counter market to a firm
that does not make a market in that security. The commission paid<PAGE>
PAGE 45
generally includes compensation for research services. The third
procedure permits AEFC, in order to obtain research and brokerage
services, to cause the Fund to pay a commission in excess of the
amount another broker might have charged. AEFC has advised the
Fund it is necessary to do business with a number of brokerage
firms on a continuing basis to obtain such services as the handling
of large orders, the willingness of a broker to risk its own money
by taking a position in a security, and the specialized handling of
a particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but AEFC
believes it may obtain better overall execution. AEFC has assured
the Fund that under all three procedures the amount of commission
paid will be reasonable and competitive in relation to the value of
the brokerage services performed or research provided.
All other transactions shall be placed on the basis of obtaining
the best available price and the most favorable execution. In so
doing, if in the professional opinion of the person responsible for
selecting the broker or dealer, several firms can execute the
transaction on the same basis, consideration will be given by such
person to those firms offering research services. Such services
may be used by AEFC in providing advice to all the funds in the IDS
MUTUAL FUND GROUP even though it is not possible to relate the
benefits to any particular fund or account.
Each investment decision made for the Fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by AEFC or any of its subsidiaries.
When the Fund buys or sells the same security as another fund or
account, AEFC carries out the purchase or sale in a way the Fund
agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the
Fund, the Fund hopes to gain an overall advantage in execution.
AEFC has assured the fund it will continue to seek ways to reduce
brokerage costs.
On a periodic basis, AEFC makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions.
The review evaluates execution, operational efficiency and research
services.
The Fund paid total brokerage commissions of $40,448 for the fiscal
year ended August 31, 1995, $145,758 for fiscal year 1994, and
$101,951 for fiscal year 1993. Substantially all firms through
whom transactions were executed provide research services.
No transactions were directed to brokers because of research
services they provided to the Fund.
As of the fiscal year ended Aug. 31, 1995, the Fund held securities
of its regular brokers or dealers or of the parent of those brokers
or dealers that derived more than 15% of gross revenue from
securities-related activities as presented below:<PAGE>
PAGE 46
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
First Chicago $3,025,000
The portfolio turnover rate was 70% in the fiscal year ended August
31, 1995, and 74% in fiscal year 1994.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION
Affiliates of American Express Company (American Express) (of which
AEFC is a wholly owned subsidiary) may engage in brokerage and
other securities transactions on behalf of the Fund according to
procedures adopted by the Fund's board and to the extent consistent
with applicable provisions of the federal securities laws. AEFC
will use an American Express affiliate only if (i) AEFC determines
that the Fund will receive prices and executions at least as
favorable as those offered by qualified independent brokers
performing similar brokerage and other services for the Fund and
(ii) the affiliate charges the Fund commission rates consistent
with those the affiliate charges comparable unaffiliated customers
in similar transactions and if such use is consistent with terms of
the Investment Management Services Agreement.
AEFC may direct brokerage to compensate an affiliate. AEFC will
receive research on South Africa from New Africa Advisors, a
wholly-owned subsidiary of Sloan Financial Group. AEFC owns 100%
of IDS Capital Holdings Inc. which in turn owns 40% of Sloan
Financial Group. New Africa Advisors will send research to AEFC
and in turn AEFC will direct trades to a particular broker. The
broker will have an agreement to pay New Africa Advisors. All
transactions will be on a best execution basis. Compensation
received will be reasonable for the services rendered.
Information about brokerage commissions paid by the Fund for the
last three fiscal years to brokers affiliated with AEFC is
contained in the following table:
<TABLE><CAPTION>
For the Fiscal Year Ended August 31,
1995 1994 1993
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
<S> <C> <C> <C> <C> <C> <C>
American
Enterprise
Investment
Services, Inc. (1) None None None None $1,527
</TABLE>
(1) Wholly owned subsidiary of AEFC.
<PAGE>
PAGE 47
PERFORMANCE INFORMATION
The Fund may quote various performance figures to illustrate past
performance. Average annual total return and current yield
quotations used by the Fund are based on standardized methods of
computing performance as required by the SEC. An explanation of
these and any other methods used by the Fund to compute performance
follows below.
Average annual total return
The Fund may calculate average annual total return for a class for
certain periods by finding the average annual compounded rates of
return over the period that would equate the initial amount
invested to the ending redeemable value, according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Aggregate total return
The Fund may calculate aggregate total return for a class for
certain periods representing the cumulative change in the value of
an investment in the Fund over a specified period of time according
to the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Annualized yield
The Fund may calculate an annualized yield for a class by dividing
the net investment income per share deemed earned during a period
by the net asset value per share on the last day of the period and
annualizing the results.
<PAGE>
PAGE 48
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
The Fund's annualized yield was 7.59% for Class A, 7.22% for Class
B, and 8.17% for Class Y for the 30-day period ended August 31,
1995.
The Fund's yield, calculated as described above according to the
formula prescribed by the SEC, is a hypothetical return based on
market value yield to maturity for the Fund's securities. It is
not necessarily indicative of the amount which was or may be paid
to the Fund's shareholders. Actual amounts paid to Fund
shareholders are reflected in the distribution yield.
Distribution yield
Distribution yield is calculated according to the following
formula:
D divided by POP F equals DY
31 31
where: D = sum of dividends for 31-day period
POP = sum of public offering price for 31-day period
F = annualizing factor
DY = distribution yield
The Fund's distribution yield was 8.70% for Class A, 8.40% for
Class B, and 9.34% for Class Y for the 31-day period ended August
31, 1995.
In its sales material and other communications, the Fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.
<PAGE>
PAGE 49
VALUING FUND SHARES
The value of an individual share for each class is determined by
using the net asset value before shareholder transactions for the
day. On September 1, 1995, the first business day following the
end of the fiscal year, the computation looked like this:
<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<S> <C> <C> <C>
Class A $1,824,995,657 divided by 438,700,879 equals $4.16
Class B 76,317,767 18,345,617 4.16
Class Y 1,586,982 381,486 4.16
</TABLE>
In determining net assets before shareholder transactions, the
Fund's securities are valued as follows as of the close of business
of the New York Stock Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange (the
"Exchange"). Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current rate of exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange that will
not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
Fund's board.
<PAGE>
PAGE 50
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.
'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When
possible, bonds are valued by a pricing service independent from
the Fund. If a valuation of a bond is not available from a pricing
service, the bond will be valued by a dealer knowledgeable about
the bond if such a dealer is available.
The New York Stock Exchange, AEFC and the Fund will be closed on
the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
INVESTING IN THE FUND
Sales Charge
Shares of the Fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge, if applicable. For Class B and Class Y, there is
no initial sales charge so the public offering price is the same as
the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made September 1, 1995, was
determined by dividing the net asset value of one share, $4.16, by
0.95 (1.00-0.05 for a maximum 5% sales charge) for a public
offering price of $4.38. The sales charge is paid to American
Express Financial Advisors by the person buying the shares.
<PAGE>
PAGE 51
Class A - Calculation of the Sales Charge
Sales charges are determined as follows:
Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested
First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00
Sales charges on an investment greater than $50,000 are calculated
for each increment separately and then totaled. The resulting
total sales charge, expressed as a percentage of the public
offering price and of the net amount invested, will vary depending
on the proportion of the investment at different sales charge
levels.
For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.
The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE><CAPTION>
On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:
<S> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00
</TABLE>
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on<PAGE>
PAGE 52
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:
Deferred Sales Charge
Number of Participants
Total Plan Assets 1-99 100 or more
Less than $1 million 4% 0%
$1 million or more 0% 0%
_________________________________________________________
Class A - Reducing the Sales Charge
Sales charges are based on the total amount of your investments in
the Fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.
The total amount invested includes any shares held in the Fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.
Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the Fund or AEFC or its subsidiaries and
deceased advisors.
The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Growth Fund and $5,000 in this Fund. If you
invest $40,000 more in this Fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.
Finally, Individual Retirement Account (IRA) purchases, or other
employee benefit plan purchases made through a payroll deduction
plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be<PAGE>
PAGE 53
added together to reduce sales charges for shares purchased through
that plan.
Class A - Letter of Intent (LOI)
If you intend to invest $1 million over a period of 13 months, you
can reduce the sales charges in Class A by filing a LOI. The
agreement can start at any time and will remain in effect for 13
months. Your investment will be charged normal sales charges until
you have invested $1 million. At that time, your account will be
credited with the sales charges previously paid. If you do not
invest $1 million by the end of 13 months, there is no penalty,
you'll just miss out on the sales charge adjustment. A LOI is not
an option (absolute right) to buy shares.
Here's an example. You file a LOI to invest $1 million and make an
investment of $100,000 at that time. You pay the normal 5% sales
charge on the first $50,000 and 4.5% sales charge on the next
$50,000 of this investment. Let's say you make a second investment
of $900,000 (bringing the total up to $1 million) one month before
the 13-month period is up. AEFC makes an adjustment at the point
that you reach $1 million. The adjustment is made by crediting
your account with sales charges previously paid. The net effect is
that there's no sales charge on the total $1 million investment.
Systematic Investment Programs
After you make your initial investment of $2,000 or more, you can
arrange to make additional payments of $100 or more on a regular
basis. These minimums do not apply to all systematic investment
programs. You decide how often to make payments - monthly,
quarterly, or semiannually. You are not obligated to make any
payments. You can omit payments or discontinue the investment
program altogether. The Fund also can change the program or end it
at any time. If there is no obligation, why do it? Putting money
aside is an important part of financial planning. With a
systematic investment program, you have a goal to work for.
How does this work? Your regular investment amount will purchase
more shares when the net asset value per share decreases, and fewer
shares when the net asset value per share increases. Each purchase
is a separate transaction. After each purchase your new shares
will be added to your account. Shares bought through these
programs are exactly the same as any other fund shares. They can
be bought and sold at any time. A systematic investment program is
not an option or an absolute right to buy shares.
The systematic investment program itself cannot ensure a profit,
nor can it protect against a loss in a declining market. If you
decide to discontinue the program and redeem your shares when their
net asset value is less than what you paid for them, you will incur
a loss.
For a discussion on dollar-cost averaging, see Appendix D.
<PAGE>
PAGE 54
Automatic Directed Dividends
Dividends, including capital gain distributions, paid by another
fund in the IDS MUTUAL FUND GROUP subject to a sales charge, may be
used to automatically purchase shares in the same class of this
Fund without paying a sales charge. Dividends may be directed to
existing accounts only. Dividends declared by a fund are exchanged
to this Fund the following day. Dividends can be exchanged into
one fund but cannot be split to make purchases in two or more
funds. Automatic directed dividends are available between accounts
of any ownership except:
Between a non-custodial account and an IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;
Between two American Express Trust Company custodial accounts with
different owners (for example, you may not exchange dividends from
your IRA to the IRA of your spouse);
Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange dividends from your
IRA to your 401(k) plan account, although you may exchange
dividends from one IRA to another IRA).
Dividends may be directed from accounts established under the
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors
Act (UTMA) only into other UGMA or UTMA accounts with identical
ownership.
The Fund's investment goal is described in its prospectus along
with other information, including fees and expense ratios. Before
exchanging dividends into another fund, you should read its
prospectus. You will receive a confirmation that the automatic
directed dividend service has been set up for your account.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.
During an emergency, the board can suspend the computation of net
asset value, stop accepting payments for purchase of shares or
suspend the duty of the Fund to redeem shares for more than seven
days. Such emergency situations would occur if:
'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or
'Disposal of the Fund's securities is not reasonable practicable or
it is not reasonably practicable for the Fund to determine the fair
value of its net assets, or
<PAGE>
PAGE 55
'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.
Should the Fund stop selling shares, the board may make a deduction
from the value of the assets held by the Fund to cover the cost of
future liquidations of the assets so as to distribute fairly these
costs among all shareholders.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments. If you redeem Class B shares you may be
subject to a contingent deferred sales charge as discussed in the
prospectus. While the plans differ on how the pay-out is figured,
they all are based on the redemption of the investment. Net
investment income dividends and any capital gain distributions will
automatically be reinvested, unless you elect to receive them in
cash. If you are redeeming a tax-qualified plan account for which
American Express Trust Company acts as custodian, you can elect to
receive your dividends and other distributions in cash when
permitted by law. If you redeem an IRA or a qualified retirement
account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should
consult your tax advisor about this complex area of the tax law.
Applications for a systematic investment in a class of the Fund
subject to a sales charge normally will not be accepted while a
pay-out plan for any of those funds is in effect. Occasional
investments, however, may be accepted.
To start any of these plans, please write or call American Express
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534,
612-671-3733. Your authorization must be received in the
Minneapolis headquarters at least five days before the date you
want your payments to begin. The initial payment must be at least
$50. Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you
change or cancel it.
The following pay-out plans are designed to take care of the needs
of most shareholders in a way AEFC can handle efficiently and at a
reasonable cost. If you need a more irregular schedule of
payments, it may be necessary for you to make a series of
individual redemptions, in which case you'll have to send in a
separate redemption request for each pay-out. The Fund reserves
the right to change or stop any pay-out plan and to stop making
such plans available.
Plan #1: Pay-out for a fixed period of time
If you choose this plan, a varying number of shares will be
redeemed at regular intervals during the time period you choose.
This plan is designed to end in complete redemption of all shares
in your account by the end of the fixed period.
<PAGE>
PAGE 56
Plan #2: Redemption of a fixed number of shares
If you choose this plan, a fixed number of shares will be redeemed
for each payment and that amount will be sent to you. The length
of time these payments continue is based on the number of shares in
your account.
Plan #3: Redemption of a fixed dollar amount
If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until the account is closed.
Plan #4: Redemption of a percentage of net asset value
Payments are made based on a fixed percentage of the net asset
value of the shares in the account computed on the day of each
payment. Percentages range from 0.25% to 0.75%. For example, if
you are on this plan and arrange to take 0.5% each month, you will
get $50 if the value of your account is $10,000 on the payment
date.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had capital loss
carryover of $289,111,735 at August 31, 1995, that will expire as
follows:
1999 2000 2003 2004
$163,877,886 $28,359,344 $20,159,025 $76,715,480
It is unlikely that the board will authorize a distribution of any
net realized capital gains until the available capital loss
carryover has been offset or has expired except as required by
Internal Revenue Service rules.
TAXES
If you buy shares in the Fund and then exchange into another fund,
it is considered a sales and subsequent purchase of shares. Under
the tax laws, if this exchange is done within 91 days, any sales
charge waived on Class A shares on a subsequent purchase of shares
applies to the new shares acquired in the exchange. Therefore, you
cannot create a tax loss or reduce a tax gain attributable to the
sales charge when exchanging shares within 91 days.
Retirement Accounts
You may be able to defer taxes on current income from a fund by
investing through an IRA, 401(k) plan account or other qualified
retirement account. If you have a nonqualified investment in the
Fund and you wish to move part or all of those shares to an IRA or
qualified retirement account in the Fund, you can do so without
paying a sales charge. However, this type of exchange is
considered a sale of shares and may result in a gain or loss for<PAGE>
PAGE 57
tax purposes. In addition, this type of exchange may result in an
excess contribution under IRA or qualified plan regulations if the
amount exchanged plus the amount of the initial sales charge
applied to the amount exchanged exceeds annual contribution
limitations. For example: If you were to exchange $2,000 in Class
A shares from a nonqualified account to an IRA without considering
the 5% ($100) initial sales charge applicable to that $2,000, you
may be deemed to have exceeded current IRA annual contribution
limitations. You should consult your tax advisor for further
details about this complex subject.
Net investment income dividends received should be treated as
dividend income for federal income tax purposes. Corporate
shareholders are generally entitled to a deduction equal to 70% of
that portion of the fund's dividend that is attributable to
dividends the Fund received from domestic (U.S.) securities. For
the fiscal year ended August 31, 1995, 1.26% of the Fund's net
investment income dividends qualified for the corporate deduction.
Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the Fund are paid to shareholders as part of their
ordinary income dividend and are taxable.
Under federal tax law, by the end of a calendar year the Fund must
declare and pay dividends representing 98% of ordinary income for
that calendar year and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Oct. 31 of that calendar
year. The Fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
amount actually distributed. The Fund intends to comply with
federal tax law and avoid any excise tax.
The Fund may be subject to U.S. taxes resulting from holdings in a
passive foreign investment company (PFIC). A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year
is passive income or if 50% or more of the average value of its
assets consists of assets that produce or could produce passive
income. The Fund has no current intention to invest in PFICs.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax advisor as to the
application of federal, state and local income tax laws to Fund
distributions.
AGREEMENTS
Investment Management Services Agreement
The Fund has an Investment Management Services Agreement with AEFC.
For its services, AEFC is paid a fee based on the following
schedule:
<PAGE>
PAGE 58
Assets Annual rate at
(billions) each asset level
First $1.0 0.590%
Next 1.0 0.565
Next 1.0 0.540
Next 3.0 0.515
Next 3.0 0.490
Over 9.0 0.465
On August 31, 1995, the daily rate applied to the Fund's net assets
was equal to 0.578% on an annual basis. The fee is calculated for
each calendar day on the basis of net assets as of the close of
business two business days prior to the day for which the
calculation is made.
The management fee is paid monthly. Under the prior and current
agreements, the total amount paid was $9,856,787 for the fiscal
year ended August 31, 1995, $10,075,839 for fiscal year 1994, and
$8,481,616 for fiscal year 1993.
Under the current Agreement, the Fund also pays taxes, brokerage
commissions and nonadvisory expenses, that include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for shares; Fund office expenses; consultants' fees;
compensation of directors, officers and employees; corporate filing
fees; organizational expenses; expenses incurred in connection with
lending portfolio securities of the Fund; and expenses properly
payable by the Fund, approved by the board. Under the prior and
current agreements, the Fund paid nonadvisory expenses of $761,716
for the fiscal year ended August 31, 1995, $765,283 for fiscal year
1994, and $617,372 for fiscal year 1993.
Administrative Services Agreement
The Fund has an Administrative Services Agreement with AEFC. Under
this Agreement, the Fund pays AEFC for providing administration and
accounting services. The fee is calculated as follows:
Assets Annual rate
(billions) each asset level
First $1 0.050%
Next 1 0.045
Next 1 0.040
Next 3 0.035
Next 3 0.030
Over 9 0.025
On August 31, 1995, the daily rate applied to the Fund's net assets
was equal to 0.048% on an annual basis. The fee is calculated for
each calendar day on the basis of net assets as of the close of
business two business days prior to the day for which the
calculation is made.
<PAGE>
PAGE 59
Transfer Agency Agreement
The Fund has a Transfer Agency Agreement with AEFC. This agreement
governs AEFC's responsibility for administering and/or performing
transfer agent functions, for acting as service agent in connection
with dividend and distribution functions and for performing
shareholder account administration agent functions in connection
with the issuance, exchange and redemption or repurchase of the
Fund's shares. Under the agreement, AEFC will earn a fee from the
Fund determined by multiplying the number of shareholder accounts
at the end of the day by a rate determined for each class per year
and dividing by the number of days in the year. The rate for Class
A and Class Y is $15.50 per year and for Class B is $16.50 per
year. The fees paid to AEFC may be changed from time to time upon
agreement of the parties without shareholder approval. The Fund
paid fees of $1,787,275 for the fiscal year ended August 31, 1995.
Distribution Agreement
Under a Distribution Agreement, sales charges deducted for
distributing Fund shares are paid to American Express Financial
Advisors daily. These charges amounted to $7,922,313 for the
fiscal year ended August 31, 1995. After paying commissions to
personal financial advisors, and other expenses, the amount
retained was $1,398,718. The amounts were $14,976,206 and
$5,203,445 for fiscal year 1994, and $10,927,944 and $3,791,288 for
fiscal year 1993.
Additional information about commissions and compensation for the
fiscal year ended August 31, 1995, is contained in the following
table:
<TABLE><CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
<S> <C> <C> <C> <C>
AEFC None None None $489,528*
American
Express
Financial
Advisors $7,922,313 None None None
</TABLE>
*Distribution fees paid pursuant to the Plan and Agreement of
Distribution.
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.
<PAGE>
PAGE 60
Plan and Agreement of Distribution
For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the Fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the Fund's shares except compensation to
the sales force. A substantial portion of the costs are not
specifically identified to any one fund in the IDS MUTUAL FUND
GROUP. Under the Plan, American Express Financial Advisors is paid
a fee at an annual rate of 0.75% of the Fund's average daily net
assets attributable to Class B shares.
The Plan must be approved annually by the board, including a
majority of disinterested directors, if it is to continue for more
than a year. At least quarterly, the board must review written
reports concerning the amounts expended under the Plan and the
purposes for which such expenditures were made. The Plan and any
agreement related to it may be terminated at any time by vote of a
majority of directors who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation
of the Plan or in any agreement related to the Plan, or by vote of
a majority of the outstanding voting securities of the Fund or by
American Express Financial Advisors. The Plan (or any agreement
related to it) will terminate in the event of its assignment, as
that term is defined in the Investment Company Act of 1940, as
amended. The Plan may not be amended to increase the amount to be
spent for distribution without shareholder approval, and all
material amendments to the Plan must be approved by a majority of
the directors, including a majority of the directors who are not
interested persons of the Fund and who do not have a financial
interest in the operation of the Plan or any agreement related to
it. The selection and nomination of disinterested directors is the
responsibility of the other disinterested directors. No interested
person of the Fund, and no director who is not an interested
person, has any direct or indirect financial interest in the
operation of the Plan or any related agreement. The Fund paid fees
of $113,608 for the fiscal year ended August 31, 1995.
Total fees and expenses
Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the Fund's average daily net assets, 2$ of the next $70 million and
1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the
fund exceed this limitation for the Fund's fiscal year in progress,<PAGE>
PAGE 61
AEFC will assume all expenses in excess of the limitation. AEFC
then may bill the Fund for such expenses in subsequent months up to
the end of that fiscal year, but not after that date. No interest
charges are assessed by AEFC for expenses it assumes. The Fund
paid fees of $14,685,788 for the fiscal year ended August 31, 1995.
DIRECTORS AND OFFICERS
The following is a list of the Fund's directors who, except for Mr.
Dudley, also are directors of all other funds in the IDS MUTUAL
FUND GROUP. Mr. Dudley is a director of all publicly offered
funds. All shares have cumulative voting rights when voting on the
election of directors.
Lynne V. Cheney+'
Born in 1941.
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, the Interpublic Group of Companies, Inc.
(advertising), and FPL Group, Inc. (holding company for Florida
Power and Light).
William H. Dudley+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of AEFC.
Robert F. Froehlke+
Born in 1922.
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
David R. Hubers**
Born in 1943.
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of AEFC.
Previously, senior vice president, finance and chief financial
officer of AEFC.
<PAGE>
PAGE 62
Heinz F. Hutter+
Born in 1929.
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.
Anne P. Jones+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
Donald M. Kendall'
Born in 1921.
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
Lewis W. Lehr'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
<PAGE>
PAGE 63
William R. Pearce+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
Edson W. Spencer
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
John R. Thomas**
Born in 1937.
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of AEFC.
Wheelock Whitney+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. Angus Wurtele
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of
the Fund.
**Interested person by reason of being an officer, director,
employee and/or shareholder of AEFC or American Express.
<PAGE>
PAGE 64
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Born in 1942.
IDS Tower 10
Minneapolis, MN
Vice president-investments of all funds in the IDS MUTUAL FUND
GROUP. Director and senior vice president-investments of AEFC.
Melinda S. Urion
Born in 1953.
IDS Tower 10
Minneapolis, MN
Treasurer of all funds in the IDS MUTUAL FUND GROUP. Vice
president and corporate controller of AEFC. Director and executive
vice president and controller of IDS Life Insurance Company.
Besides Mr. Pearce, who is president, the Fund's other officer is:
Leslie L. Ogg
Born in 1938.
901 S. Marquette Ave.
Minneapolis, MN
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.
Members of the board who are not officers of the Fund or directors
of AEFC receive an annual fee of $2,000. They also receive
attendance and other fees, the cost of which the Fund shares with
the other funds in the IDS MUTUAL FUND GROUP. These fees include
attendance of meetings of the Contracts Committee, $750; meetings
of the Audit, Board, Executive or Investment Review Committees,
$500; meetings of the Personnel Committee, $300; out-of-state,
$500; and Chair of the Contracts Committee, $5,000. Expenses for
attending those meetings are also reimbursed. Upon retirement age,
or earlier if for approved reasons, the independent directors
receive monthly payments equal to 1/2 of the annual fee divided by
12 for as many months as the director served on the board up to 120
months or until the date of death. There are no death benefits and
the plan is not funded.
During the fiscal year that ended August 31, 1995, the members of
the board, for attending up to 30 meetings, received the following
compensation, in total, from all funds in the IDS MUTUAL FUND
GROUP.
<PAGE>
PAGE 65
<TABLE>
<CAPTION>
Compensation Table
Aggregate Retirement Estimated Total Cash
compensation benefits annual compensation
from the accrued as benefit on from the IDS
Board member fund fund expenses retirement MUTUAL FUND GROUP
<S> <C> <C> <C> <C>
Lynne V. Cheney $2,334 $ 271 $1,000 $70,000
Robert F. Froehlke 2,398 1,896 1,000 72,600
Heinz F. Hutter 2,054 313 483 61,300
(Part of year)
Anne P. Jones 2,360 443 1,000 71,000
Donald M. Kendall 2,259 2,029 1,000 67,000
Melvin R. Laird 2,359 1,247 1,000 71,000
Lewis W. Lehr 2,340 1,529 975 70,200
Edson W. Spencer 2,420 708 533 73,600
Wheelock Whitney 2,348 805 1,000 70,600
C. Angus Wurtele 2,047 305 992 61,000
(Part of Year)
</TABLE>
On August 31, 1995, the Fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended August 31, 1995, no director or officer earned more than
$60,000 from this Fund. All directors and officers as a group
earned $52,962, including $9,546 of retirement plan expense, from
this Fund.
CUSTODIAN
The Fund's securities and cash are held by First Bank National
Association, 180 E. Fifth St., St. Paul, MN 55101-1631, through a
custodian agreement. The custodian is permitted to deposit some or
all of its securities in central depository systems as allowed by
federal law.
INDEPENDENT AUDITORS
The financial statements contained in the Annual Report to
shareholders, for the fiscal year ended August 31, 1995, were
audited by independent auditors, KPMG Peat Marwick LLP, 4200
Norwest Center, 90 S. Seventh St., Minneapolis, MN 55402-3900.
The independent auditors also provide other accounting and tax-
related services as requested by the fund.
FINANCIAL STATEMENTS
The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1995 Annual Report to
shareholders, pursuant to Section 30(d) of the Investment Company
Act of 1940, as amended, are hereby incorporated in this SAI by
reference. No other portion of the Annual Report, however, is
incorporated by reference.
PROSPECTUS
The prospectus for IDS Extra Income Fund dated October 30, 1995, is
hereby incorporated in this SAI by reference.
<PAGE>
PAGE 66
APPENDIX A
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies
of foreign countries, and since the Fund may hold cash and cash-
equivalent investments in foreign currencies, the value of the
Fund's assets as measured in U.S. dollars may be affected favorably
or unfavorably by changes in currency exchange rates and exchange
control regulations. Also, the Fund may incur costs in connection
with conversions between various currencies.
Spot Rates and Forward Contracts. The Fund conducts its foreign
currency exchange transactions either at the spot (cash) rate
prevailing in the foreign currency exchange market or by entering
into forward currency exchange contracts (forward contracts) as a
hedge against fluctuations in future foreign exchange rates. A
forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days
from the contract date, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit
requirements. No commissions are charged at any stage for trades.
The Fund may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When the
Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency or has been notified of a
dividend or interest payment, it may desire to lock in the price of
the security or the amount of the payment in dollars. By entering
into a forward contract, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in the
relationship between different currencies from the date the
security is purchased or sold to the date on which payment is made
or received or when the dividend or interest is actually received.
The Fund also may enter into forward contracts when management of
the fund believes the currency of a particular foreign country may
suffer a substantial decline against another currency. It may
enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of
some or all of the Fund's securities denominated in such foreign
currency. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since
the future value of such securities in foreign currencies more than
likely will change between the date the forward contract is entered
into and the date it matures. The projection of short-term
currency market movements is extremely difficult and successful
execution of a short-term hedging strategy is highly uncertain.
The Fund will not enter into such forward contracts or maintain a
net exposure to such contracts when consummating the contracts
would obligate the fund to deliver an amount of foreign currency in<PAGE>
PAGE 67
excess of the value of the Fund's securities or other assets
denominated in that currency.
The Fund will designate cash or securities in an amount equal to
the value of the Fund's total assets committed to consummating
forward contracts entered into under the second circumstance set
forth above. If the value of the securities declines, additional
cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the Fund's
commitments on such contracts.
At maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency or
retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an offsetting contract
with the same currency trader obligating it to buy, on the same
maturity date, the same amount of foreign currency.
If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund will incur a gain or a loss (as
described below) to the extent there has been movement in forward
contract prices. If the Fund engages in an offsetting transaction,
it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline between the date
the Fund enters into a forward contract for selling foreign
currency and the date it enters into an offsetting contract for
purchasing the foreign currency, the Fund will realize a gain to
the extent the price of the currency it has agreed to sell exceeds
the price of the currency it has agreed to buy. Should forward
prices increase, the fund will suffer a loss to the extent the
price of the currency it has agreed to buy exceeds the price of the
currency it has agreed to sell.
It is impossible to forecast what the market value of portfolio
securities will be at the expiration of a contract. Accordingly,
it may be necessary for the Fund to buy additional foreign currency
on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign
currency the fund is obligated to deliver and a decision is made to
sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received on the sale of the portfolio security
if its market value exceeds the amount of foreign currency the fund
is obligated to deliver.
The Fund's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the Fund's securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices
of the securities. It simply establishes a rate of exchange that
can be achieved at some point in time. Although such forward
contracts tend to minimize the risk of loss due to a decline in
value of hedged currency, they tend to limit any potential gain
that might result should be the value of such currency increase.
<PAGE>
PAGE 68
Although the Fund values its assets each business day in terms of
U.S. dollars, it does not intend to convert its foreign currencies
into U.S. dollars on a daily basis. It will do so from time to
time, and shareholders should be aware of currency conversion
costs. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the
dealer.
Options on Foreign Currencies. The Fund may buy put and call
options and write covered call and cash-secured put options on
foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which portfolio
securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains
constant. In order to protect against such diminutions in the
value of portfolio securities, the Fund may buy put options on the
foreign currency. If the value of the currency does decline, the
Fund will have the right to sell such currency for a fixed amount
in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have
resulted.
As in the case of other types of options, however, the benefit to
the Fund derived from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs.
In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain
losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of
advantageous changes in such rates.
The Fund may write options on foreign currencies for the same types
of hedging purposes. For example, where the Fund anticipates a
decline in the dollar value of foreign-denominated securities due
to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the diminution in value of portfolio
securities will be fully or partially offset by the amount of the
premium received.
As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to
the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and
the Fund would be required to buy or sell the underlying currency
at a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund also
may be required to forego all or a portion of the benefits which<PAGE>
PAGE 69
might otherwise have been obtained from favorable movements on
exchange rates.
All options written on foreign currencies will be covered. An
option written on foreign currencies is covered if the Fund holds
currency sufficient to cover the option or has an absolute and
immediate right to acquire that currency without additional cash
consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An
option writer could lose amounts substantially in excess of its
initial investments, due to the margin and collateral requirements
associated with such positions.
Options on foreign currencies are traded through financial
institutions acting as market-makers, although foreign currency
options also are traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market movements
could therefore continue to an unlimited extent over a period of
time. Although the purchaser of an option cannot lose more than
the amount of the premium plus related transaction costs, this
entire amount could be lost.
Foreign currency option entered into on a national securities
exchange are cleared and guaranteed by the OCC, thereby reducing
the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be
more readily available than in the over-the-counter market,
potentially permitting the Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature
of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-
counter market. For example, exercise and settlement of such
options must be made exclusively through the OCC, which has
established banking relationships in certain foreign countries for
the purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
<PAGE>
PAGE 70
Foreign Currency Futures and Related Options. The Fund may enter
into currency futures contracts to buy or sell currencies. It also
may buy put and call options and write covered call and cash-
secured put options on currency futures. Currency futures
contracts are similar to currency forward contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency
futures call for payment of delivery in U.S. dollars. The Fund may
use currency futures for the same purposes as currency forward
contracts, subject to CFTC limitations, including the limitation on
the percentage of assets that may be used, described in the
prospectus. All futures contracts are aggregated for purposes of
the percentage limitations.
Currency futures and options on futures values can be expected to
correlate with exchange rates, but will not reflect other factors
that may affect the values of the Fund's investments. A currency
hedge, for example, should protect a Yen-denominated bond against a
decline in the Yen, but will not protect the Fund against price
decline if the issuer's creditworthiness deteriorates. Because the
value of the Fund's investments denominated in foreign currency
will change in response to many factors other than exchange rates,
it may not be possible to match the amount of a forward contract to
the value of the Fund's investments denominated in that currency
over time.
The Fund will not use leverage in its currency options and futures
strategies. The Fund will hold securities or other options or
futures positions whose values are expected to offset its
obligations. The Fund will not enter into an option or futures
position that exposes the fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or
(ii) cash, receivables and short-term debt securities with a value
sufficient to cover its potential obligations.
<PAGE>
PAGE 71
APPENDIX B
OPTIONS AND INTEREST RATE FUTURES CONTRACTS
The Fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. The Fund may enter
into interest rate futures contracts traded on any U.S. or foreign
exchange. The Fund may also buy or write put and call options on
these futures. Options in the over-the-counter market will be
purchased only when the investment manager believes a liquid
secondary market exists for the options and only from dealers and
institutions the investment manager believes present a minimal
credit risk. Some options are exercisable only on a specific date.
In that case, or if a liquid secondary market does not exist, the
Fund could be required to buy or sell securities at disadvantageous
prices, thereby incurring losses.
OPTIONS. An option is a contract. A person who buys a call option
for a security has the right to buy the security at a set price for
the length of the contract. A person who sells a call option is
called a writer. The writer of a call option agrees to sell the
security at the set price when the buyer wants to exercise the
option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person
who writes a put option agrees to buy the security at the set price
if the purchaser wants to exercise the option, no matter what the
market price of the security is at that time. An option is covered
if the writer owns the security (in the case of a call) or sets
aside the cash or securities of equivalent value (in the case of a
put) that would be required upon exercise.
The price paid by the buyer for an option is called a premium. In
addition the buyer generally pays a broker a commission. The
writer receives a premium, less a commission, at the time the
option is written. The cash received is retained by the writer
whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
market price rises above the exercise price. A writer of a put
option may have to pay an above-market price for the security if
its market price decreases below the exercise price.
Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options may benefit the Fund and its
shareholders by improving the Fund's liquidity and by helping to
stabilize the value of its net assets.
Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
between the price of the underlying security in the securities
market and its price on the options market. It is anticipated the<PAGE>
PAGE 72
trading technique will be utilized only to effect a transaction
when the price of the security plus the option price will be as
good or better than the price at which the security could be bought
or sold directly. When the option is purchased, the Fund pays a
premium and a commission. It then pays a second commission on the
purchase or sale of the underlying security when the option is
exercised. For record keeping and tax purposes, the price obtained
on the purchase of the underlying security will be the combination
of the exercise price, the premium and both commissions. When
using options as a trading technique, commissions on the option
will be set as if only the underlying securities were traded.
Put and call options also may be held by the Fund for investment
purposes. Options permit the Fund to experience the change in the
value of a security with a relatively small initial cash
investment. The risk the Fund assumes when it buys an option is
the loss of the premium. To be beneficial to the Fund, the price
of the underlying security must change within the time set by the
option contract. Furthermore, the change must be sufficient to
cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the
exercise of the option and subsequent sale (in the case of a call)
or purchase (in the case of a put) of the underlying security.
Even then the price change in the underlying security does not
ensure a profit since prices in the option market may not reflect
such a change.
Writing covered options. The Fund will write covered options when
it feels it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the Fund's
goals.
'All options written by the Fund will be covered. For covered call
options if a decision is made to sell the security, the Fund will
attempt to terminate the option contract through a closing purchase
transaction.
'The Fund will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by the Fund, it will conform to the requirements of those states.
For example, California limits the writing of options to 50% of the
assets of a fund.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the fund is
taxed as a regulated investment company under the Internal Revenue
Code, any gains on options and other securities held less than
three months must be limited to less than 30% of its annual gross
income.
<PAGE>
PAGE 73
If a covered call option is exercised, the security is sold by the
Fund. The Fund will recognize a capital gain or loss based upon
the difference between the proceeds and the security's basis.
Options on many securities are listed on options exchanges. If the
Fund writes listed options, it will follow the rules of the options
exchange. Options are valued at the close of the New York Stock
Exchange. An option listed on a national exchange, CBOE or NASDAQ
will be valued at the last-quoted sales price or, if such a price
is not readily available, at the mean of the last bid and asked
prices.
FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. They have been established by boards of trade which have
been designated contracts markets by the Commodity Futures Trading
Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and
the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures
contracts based on such debt securities as long-term U.S. Treasury
bonds, Treasury notes, GNMA modified pass-through mortgage-backed
securities, three-month U.S. Treasury bills and bank certificates
of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the
futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale
is effected by the Fund entering into a futures contract purchase
for the same aggregate amount of the specific type of financial
instrument and same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the Fund immediately
is paid the difference and realizes a gain. If the offsetting
purchase price exceeds the sale price, the Fund pays the difference
and realizes a loss. Similarly, closing out a futures contract
purchase is effected by the fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
Fund realizes a gain, and if the offsetting sale price is less than
the purchase price, the Fund realizes a loss. At the time a
futures contract is made, a good-faith deposit called initial
margin is set up within a segregated account at the Fund's
custodian bank. The initial margin deposit is approximately 1.5%
of a contract's face value. Daily thereafter, the futures contract
is valued and the payment of variation margin is required so that
each day the Fund would pay out cash in an amount equal to any
increase. At the time a futures contract is closed out, a nominal
commission is paid, which is generally lower than the commission on
a comparable transaction in the cash markets.
The purpose of a futures contract, in the case of a portfolio
holding long-term debt securities, is to gain the benefit of
changes in interest rates without actually buying or selling long-
term debt securities. For example, if the Fund owned long-term
bonds and interest rates were expected to increase, it might enter<PAGE>
PAGE 74
into futures contracts to sell securities which would have much the
same effect as selling some of the long-term bonds it owned.
Futures contracts are based on types of debt securities referred to
above, which have historically reacted to an increase or decline in
interest rates in a fashion similar to the debt securities the Fund
owns. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the
Fund's futures contracts would increase at approximately the same
rate, thereby keeping the net asset value of the Fund from
declining as much as it otherwise would have. If, on the other
hand, the Fund held cash reserves and interest rates were expected
to decline, the Fund might enter into interest rate futures
contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the Fund's
earnings. Even if short-term rates were not higher, the Fund would
still benefit from the income earned by holding these short-term
investments. At the same time, by entering into futures contracts
for the purchase of securities, the Fund could take advantage of
the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The Fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities
when interest rates are expected to decline. But by using futures
contracts as an investment tool, given the greater liquidity in the
futures market than in the cash market, it might be possible to
accomplish the same result more easily and more quickly.
Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest
rates. If the investment manager's prediction is incorrect, the
Fund would have been better off had it not entered into futures
contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell future contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are no daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily
and that change is reflected in the net asset value of the Fund.
RISKS. There are risks in engaging in each of the management tools
described above. The risk the fund assumes when it buys an option
is the loss of the premium paid for the option. Purchasing options<PAGE>
PAGE 75
also limits the use of monies that might otherwise be available for
long-term investments.
The risk involved in writing options on futures contracts the Fund
owns, or on securities held in its portfolio, is that there could
be an increase in the market value of such contracts or securities.
If that occurred, the option would be exercised and the asset sold
at a lower price than the cash market price. To some extent, the
risk of not realizing a gain could be reduced by entering into a
closing transaction. The Fund could enter into a closing
transaction by purchasing an option with the same terms as the one
it had previously sold. The cost to close the option and terminate
the Fund's obligation, however, might be more or less than the
premium received when it originally wrote the option. Furthermore,
the Fund might not be able to close the option because of
insufficient activity in the options market.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the Fund's securities. The
correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the
difference between a contract or security price and their costs of
borrowed funds. Such distortions are generally minor and would
diminish as the contract approached maturity.
Another risk is that the fund's manager could be incorrect in
anticipating as to the direction or extent of various interest rate
movements or the time span within which the movements take place.
For example, if the Fund sold futures contracts for the sale of
securities in anticipation of an increase in interest rates, and
interest rates declined instead, the Fund would lose money on the
sale.
TAX TREATMENT. As permitted under federal income tax laws, the
Fund intends to identify futures contracts as mixed straddles and
not mark them to market, that is, not treat them as having been
sold at the end of the year at market value. Such an election may
result in the Fund being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
Federal income tax treatment of gains or losses from transactions
in options on futures contracts and indexes will depend on whether
such option is a section 1256 contract. If the option is a non-
equity option, the Fund will either make a 1256(d) election and
treat the option as a mixed straddle or mark to market the option
at fiscal year end and treat the gain/loss as 40% short-term and
60% long-term. Certain provisions of the Internal Revenue Code may
also limit the Fund's ability to engage in futures contracts and
related options transactions. For example, at the close of each
quarter of the Fund's taxable year, at least 50% of the value of
its assets must consist of cash, government securities and other<PAGE>
PAGE 76
securities, subject to certain diversification requirements. Less
than 30% of its gross income must be derived from sales of
securities held less than three months.
The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, the Fund
may be required to defer closing out a contract beyond the time
when it might otherwise be advantageous to do so. The Fund also
may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale
holding period rules with respect to such underlying securities.
Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the Fund's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.
<PAGE>
PAGE 77
APPENDIX C
MORTGAGE-BACKED SECURITIES
A mortgage pass-through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FLMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. In pass-through certificates,
both principal and interest payments, including prepayments, are
passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and
the actual yield (or total return) to the Fund, which is influenced
by both stated interest rates and market conditions, may be
different than the quoted yield on certificates. Some U.S.
government securities may be purchased on a "when-issued" basis,
which means that it may take as long as 45 days after the purchase
before the securities are delivered to the fund.
Stripped Mortgage-Backed Securities. The Fund may invest in
stripped mortgage-backed securities. Generally, there are two
classes of stripped mortgage-backed securities: Interest Only (IO)
and Principal Only (PO). IOs entitle the holder to receive
distributions consisting of all or a portion of the interest on the
underlying pool of mortgage loans or mortgage-backed securities.
POs entitle the holder to receive distributions consisting of all
or a portion of the principal of the underlying pool of mortgage
loans or mortgage-backed securities. The cash flows and yields on
IOs and POs are extremely sensitive to the rate of principal
payments (including prepayments) on the underlying mortgage loans
or mortgage-backed securities. A rapid rate of principal payments
may adversely affect the yield to maturity of IOs. A slow rate of
principal payments may adversely affect the yield to maturity of
POs. If prepayments of principal are greater than anticipated, an
investor may incur substantial losses. If prepayments of principal
are slower than anticipated, the yield on a PO will be affected
more severely than would be the case with a traditional mortgage-
backed security.
Mortgage-Backed Security Spread Options. The Fund may purchase
mortgage-backed security (MBS) put spread options and write covered
MBS call spread options. MBS spread options are based upon the
changes in the price spread between a specified mortgage-backed
security and a like-duration Treasury security. MBS spread options
are traded in the OTC market and are of short duration, typically
one to two months. The Fund would buy or sell covered MBS call
spread options in situations where mortgage-backed securities are
expected to underperform like-duration Treasury securities.
<PAGE>
PAGE 78
APPENDIX D
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.
While this does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many
shareholders who can continue investing through changing market
conditions to accumulate shares in a fund to meet long-term goals.
Dollar-cost averaging
___________________________________________________________________
Regular Market Price Shares
Investment of a Share Acquired
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 79
Independent auditors' report
The board of directors and shareholders
IDS Extra Income Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Extra Income Fund, Inc. as of August 31, 1995, and the
related statement of operations for the year then ended and the
statements of changes in net assets for each of the years in the
two-year period ended August 31, 1995, and the financial highlights
for each of the years in the ten-year period ended August 31, 1995.
These financial statements and the financial highlights are the
responsibility of fund management. Our responsibility is to express
an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased but
not received and securities on loan, we request confirmations from
brokers, and where replies are not received, we carry out other
appropriate auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS
Extra Income Fund, Inc. at August 31, 1995, and the results of its
operations for the year then ended and the changes in its net
assets for each of the years in the two-year period ended
August 31, 1995, and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 6, 1995<PAGE>
PAGE 80
Financial statements
Statement of assets and liabilities
IDS Extra Income Fund, Inc.
Aug. 31, 1995
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost $1,832,716,421) $1,852,428,126
Investments in securities of affiliated issuers
(identified cost $31,062,250) 24,919,677
Cash in bank on demand deposit 4,764,166
Dividends and accrued interest receivable 40,046,061
_____________________________________________________________________________________________________________
Total assets 1,922,158,030
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Dividends payable to shareholders 2,863,256
Payable for investment securities purchased 8,479,267
Payable upon return of securities loaned (Note 4) 11,030,250
Accrued investment management services fee 60,120
Accrued distribution fee 3,071
Accrued service fee 18,183
Accrued transfer agency fee 8,820
Accrued administrative services fee 4,953
Other accrued expenses 223,042
_____________________________________________________________________________________________________________
Total liabilities 22,690,962
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,899,467,068
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value; $ 4,574,280
Additional paid-in capital 2,158,133,020
Undistributed net investment income 7,554,854
Accumulated net realized loss (Notes 1 and 7) (284,364,218)
Unrealized appreciation 13,569,132
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,899,467,068
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $1,821,708,761
Class B $ 76,174,216
Class Y $ 1,584,091
Net asset value per share of outstanding capital stock: Class A shares 438,700,879 $ 4.15
Class B shares 18,345,617 $ 4.15
Class Y shares 381,486 $ 4.15
See accompanying notes to financial statements.
<PAGE>
PAGE 81
Financial statements
Statement of operations
IDS Extra Income Fund, Inc.
Year ended Aug. 31, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Interest $170,484,760
Dividends (net of foreign taxes withheld of $22,018) 9,157,336
_____________________________________________________________________________________________________________
Total income 179,642,096
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 9,856,787
Distribution fee
Class A 375,920
Class B 113,608
Transfer agency fee 1,786,047
Incremental transfer agency fee - Class B 1,228
Service fee
Class A 1,379,500
Class B 26,508
Administrative services fee 384,474
Compensation of directors 33,343
Compensation of officers 19,349
Custodian fees 108,157
Postage 257,898
Registration fees 154,536
Reports to shareholders 107,662
Audit fees 36,500
Administrative 17,909
Other 26,362
_____________________________________________________________________________________________________________
Total expenses 14,685,788
_____________________________________________________________________________________________________________
Investment income -- net 164,956,308
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions (including loss of $415
from foreign currency transactions)(Note 3) (94,618,530)
Net change in unrealized appreciation or depreciation 154,638,498
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 60,019,968
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $224,976,276
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 82
Financial statements
Statements of changes in net assets
IDS Extra Income Fund, Inc.
Year ended Aug. 31,
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 164,956,308 $ 163,697,253
Net realized gain (loss) on investments and foreign currency (94,618,530) 31,955,638
Net change in unrealized appreciation or depreciation 154,638,498 (206,694,603)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 224,976,276 (11,041,712)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (163,086,676) (161,824,143)
Class B (1,285,639) --
Class Y (64,716) --
_____________________________________________________________________________________________________________
Total distributions (164,437,031) (161,824,143)
_____________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 386,116,539 557,279,130
Class B shares 76,560,620 --
Class Y shares 2,243,811 --
Reinvestment of distributions at net asset value
Class A shares 105,087,318 103,446,970
Class B shares 977,944 --
Class Y shares 60,615 --
Payments for redemptions
Class A shares (354,557,559) (409,030,424)
Class B shares (Note 2) (2,378,996) --
Class Y shares (807,210) --
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 213,303,082 251,695,676
_____________________________________________________________________________________________________________
Total increase in net assets 273,842,327 78,829,821
Net assets at beginning of year 1,625,624,741 1,546,794,920
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$7,554,854 and $7,035,992) $1,899,467,068 $1,625,624,741
_____________________________________________________________________________________________________________
See accompanying notes to financial statements
</TABLE>
<PAGE>
PAGE 83
Notes to financial statements
IDS Extra Income Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company.
The Fund offers Class A, Class B and Class Y shares. Class A shares
are sold with a front-end sales charge. Class B shares, which the
Fund began offering on March 20, 1995, may be subject to a
contingent deferred sales charge. Class B shares automatically
convert to Class A after eight years. Class Y shares, which the
Fund also began offering on March 20, 1995, have no sales charge
and are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation
and other rights, and the same terms and conditions, except that
the level of distribution fee, transfer agency fee and service fee
(class specific expenses) differs among classes. Income, expenses
(other than class specific expenses) and realized and unrealized
gains or losses on investments are allocated to each class of
shares based upon its relative net assets.
Significant accounting policies followed by the Fund are summarized
below:
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.
Option transactions
In order to produce incremental earnings, protect gains, and
facilitate buying and selling of securities for investment
purposes, the Fund may buy or write options traded on any U.S. or
foreign exchange or in the over-the-counter market where the
completion of the obligation is dependent upon the credit standing
of the other party. The Fund also may buy and sell put and call
options and write covered call options on portfolio securities and
may write cash-secured put options. The risk in writing a call
option is that the Fund gives up the opportunity of profit if the
market price of the security increases. The risk in writing a put<PAGE>
PAGE 84
option is that the Fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying
an option is that the Fund pays a premium whether or not the option
is exercised. The Fund also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their
primary exchanges and unrealized appreciation or depreciation is
recorded. The Fund will realize a gain or loss upon expiration or
closing of the option transaction. When options on debt securities
or futures are exercised, the Fund will realize a gain or loss.
When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or
the cost of a security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the
market, the Fund may buy and sell interest rate futures contracts
traded on any U.S. or foreign exchange. The Fund also may buy or
write put and call options on these futures contracts. Risks of
entering into futures contracts and related options include the
possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with
changes in the value of the underlying securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities in an amount (initial margin)
equal to a certain percentage of the contract value. Subsequent
payments (variation margin) are made or received by the Fund each
day. The variation margin payments are equal to the daily changes
in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing
rate of exchange. Foreign currency amounts related to the purchase
or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses. In the
statement of operations, net realized gains or losses from foreign
currency transactions may arise from sales of foreign currency,
closed forward contracts, exchange gains or losses realized between
the trade date and settlement dates on securities transactions, and
other translation gains or losses on dividends, interest income and
foreign withholding taxes.
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<PAGE>
PAGE 85
resulting unrealized appreciation or depreciation are determined
using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other
party will not complete the obligations of the contract.
Federal taxes
Since the Fund's policy is to comply with all sections of the
Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to shareholders, no
provision for income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) may
differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts, the
recognition of certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred due to "wash
sale" transactions. The character of distributions made during the
year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the
year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income has been decreased by $415 resulting in a net
reclassification adjustment to decrease accumulated net realized
loss by $415.
Dividends to shareholders
Dividends from net investment income, declared daily and payable
monthly, are reinvested in additional shares of the Fund at net
asset value or payable in cash. Capital gains, when available, are
distributed along with the last income dividend of the calendar
year.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date. For U.S. dollar denominated bonds, interest income includes
level-yield amortization of premium and discount. For foreign
bonds, except for original issue discount, the Fund does not
amortize premium and discount. Interest income, including
level-yield amortization of premium and discount, is accrued daily.
___________________________________________________________________
2. Expenses and sales charges
Under terms of a prior agreement that ended March 19, 1995, the
Fund paid AEFC 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<PAGE>
PAGE 86
combined net assets of all non-money market Funds in the IDS MUTUAL
FUND GROUP and an individual annual asset charge of 0.21% of
average daily net assets.
Also under the terms of a prior agreement, the Fund paid AEFC a
distribution fee at an annual rate of $6 per shareholder account
and a transfer agency fee at an annual rate of $15.50 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 AEFC for
managing its portfolio, providing administrative services and
serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage
of the Fund's average daily net assets in reducing percentages from
0.59% to 0.465% annually.
Under an Administrative Services Agreement, the fund pays AEFC for
administration and accounting services at a percentage of the
fund's average daily net assets in reducing percentages from 0.05%
to 0.025% annually.
Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee
per shareholder account for this service as follows:
o Class A $15.50
o Class B $16.50
o Class Y $15.50
Also effective March 20, 1995, the Fund entered into agreements
with American Express Financial Advisors Inc. for distribution and
shareholder servicing-related services as follows: Under a Plan and
Agreement of Distribution, the Fund pays a distribution fee at an
annual rate of 0.75% of the Fund's average daily net assets
attributable to Class B shares for distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for
service provided to shareholders by financial advisors and other
servicing agents. The fee is calculated at a rate of 0.175% of the
Fund's average daily net assets attributable to Class A and Class B
shares.
AEFC will assume and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive applicable state
expense limitation.
Sales charges by American Express Financial Advisors Inc. for
distributing Fund shares were $7,919,077 for Class A and $3,236 for
Class B for the year ended Aug. 31, 1995.
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<PAGE>
PAGE 87
but the Fund recognizes the cost of payments during the time the
directors serve on the board. The retirement plan expense amounted
to $9,546 for the year ended Aug. 31, 1995.
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,343,222,071 and
$1,128,488,834, respectively, for the year ended Aug. 31, 1995.
Realized gains and losses are determined on an identified cost
basis.
___________________________________________________________________
4. Lending of portfolio securities
At Aug. 31, 1995, securities valued at $10,753,225 were on loan to
brokers. For collateral, the Fund received $11,030,250 in cash.
Income from securities lending amounted to $122,931 for the year
ended Aug. 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.
___________________________________________________________________
5. Capital share transactions
Transactions in shares of capital stock for the periods indicated
are as follows:
<TABLE><CAPTION>
Period ended Aug. 31, 1995 Year ended
8/31/94
Class A Class B* Class Y* Class A
______________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 97,298,897 18,688,995 565,786 126,616,129
Issued for reinvested 26,443,241 236,714 14,823 23,746,710
distributions
Redeemed (89,533,246) (580,092) (199,123) (94,149,106)
______________________________________________________________________________
Net increase 34,208,892 18,345,617 381,486 56,213,733
______________________________________________________________________________
*Inception date was March 20, 1995.
</TABLE>
___________________________________________________________________
6. Illiquid securities
At Aug. 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 Aug. 31,<PAGE>
PAGE 88
1995 was $33,122,797, representing 1.7% 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. Capital loss carryover
For federal income tax purposes, the Fund had a capital loss
carryover of $289,111,735 at Aug. 31, 1995, that will expire in
2002 to 2004 if not offset by subsequent capital gains. It is
unlikely the board of directors will authorize a distribution of
any net realized capital gains until the available capital loss
carryover has been offset or expires.
___________________________________________________________________
8. Financial highlights
"Financial highlights" showing per share data and selected PAGE
information is presented on page 6 of the prospectus.
<PAGE>
PAGE 89
<TABLE>
<CAPTION>
Investments in securities (Percentages represent value of
IDS Extra Income Fund, Inc. investments compared to net assets)
Aug. 31, 1995
Investments in securities of unaffiliated issuers
_____________________________________________________________________________________________________________________________
Bonds (88.1%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Mortgage-backed securities (2.2%)
Federal Home Loan Mtge Corp 6.875% 1995-2017 $ 7,804 (b) $ 7,969
Collateralized Mtge Obligation 3.24 2023 9,550,866 4,999,019
Inverse Floater 5.39 2023 3,352,980 (l) 2,666,994
6.012 2023 4,000,000 (l) 2,660,920
6.061 2023 4,543,459 (l) 3,323,631
6.108 2023 1,855,844 1,504,310
6.356 2023 9,000,000 (l) 5,625,000
7.227 2023 4,407,829 (l) 2,972,420
7.262 2024 9,865,946 (l) 6,459,827
8.015 2022 7,643,243 (l) 6,233,752
Resolution Trust 8.00 2026 7,010,013 5,397,710
______________
Total 41,851,552
_____________________________________________________________________________________________________________________________
Financial (3.5%)
Banks and savings & loans (0.3%)
First Nationwide Holdings
Sr Nts 12.25 2001 6,000,000 6,427,500
_____________________________________________________________________________________________________________________________
Financial services (0.7%)
Malan Realty Investors REIT
Cv Sub Deb 9.50 2004 2,750,000 2,437,188
Olympic Financial
Sr Nts 13.00 2000 9,500,000 (m) 10,034,375
______________
Total 12,471,563
_____________________________________________________________________________________________________________________________
Insurance (2.5%)
Americo Life
Sr Sub Nts 9.25 2005 15,000,000 13,856,250
I.C.H.
Sr Sub Nts 11.25 1996 17,000,000 (d) 12,218,750
Life Partners
Sr Sub Nts 12.75 2002 10,000,000 11,037,500
Reliance Group Holdings
Sr Sub Deb 9.75 2003 10,000,000 (m) 9,762,500
_____________
Total 46,875,000
_____________________________________________________________________________________________________________________________
Industrial (68.9%)
Aerospace & defense (1.7%)
Alliant Techsystems
Sr Sub Nts 11.75 2003 8,000,000 8,700,000
Sequa
Sr Sub Nts 9.375 2003 16,000,000 14,900,000
TransDigm
Sr Secured Nts 13.00 2000 8,950,000 (e) 8,189,250
______________
Total 31,789,250
_____________________________________________________________________________________________________________________________
Automotive & related (0.5%)
Penda
Sr Nts 10.75 2004 10,000,000 8,912,500
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.6%)
Liggett Group 11.50 1999 15,000,000 10,875,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 90
Building materials (2.6%)
Amer Standard
Zero Coupon Sr Sub Disc Deb 10.46 1998 15,000,000 (f) 11,625,000
MDC Holdings 11.125 2003 4,000,000 3,595,000
Peters (JM)
Sr Nts 12.75 2002 6,000,000 5,407,500
Schuller Intl Group
Sr Nts 10.875 2004 12,000,000 13,230,000
Southdown
Sr Sub Nts 14.00 2001 5,000,000 5,637,500
Walter Inds
Sr Nts 12.19 2000 10,000,000 10,150,000
______________
Total 49,645,000
_____________________________________________________________________________________________________________________________
Chemicals (1.3%)
Harris Chemical North Amer
Sr Sub Nts 10.75 2003 10,000,000 8,537,500
Huntsman
1st Mtge 11.00 2004 15,000,000 16,481,250
______________
Total 25,018,750
_____________________________________________________________________________________________________________________________
Communications equipment (2.6%)
Celcaribe
Zero Coupon 14.874 2004 9,650,000 (c,f) 7,177,250
Cencall Communications
Zero Coupon Sr Nts 10.09 1999 18,000,000 (f) 9,337,500
Communications & Power Inds
Sr Sub Nts 12.00 2005 7,500,000 (c) 7,584,375
Panamsat
Zero Coupon 12.63 1998 22,000,000 (f) 16,912,500
Pegasus Media & Communications
Gtd Sr Nts 12.50 2005 7,500,000 (c) 7,612,500
U.S. Cellular
Zero Coupon Cv 6.00 2015 3,800,000 (f) 1,344,250
______________
Total 49,968,375
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.4%)
Anacomp 12.25 1997 3,160,000 (e) 3,128,400
Dictaphone
Sr Sub Nts 11.75 2005 4,500,000 4,516,875
______________
Total 7,645,275
_____________________________________________________________________________________________________________________________
Energy (2.9%)
Chesapeake Energy 12.00 2001 7,000,000 6,956,250
Harcor Energy
Sr Nts 14.875 2002 7,500,000 (c) 7,275,000
Mesa Capital 12.75 1998 25,000,000 (j) 23,125,000
Triton Energy
Zero Coupon Sr Nts 9.68 1996 7,500,000 (f) 6,787,500
Wainoco Oil
Sr Sub Nts 12.00 2002 10,800,000 10,867,500
______________
Total 55,011,250
_____________________________________________________________________________________________________________________________
Food (1.7%)
Chiquita Brands Intl
Sr Nts 9.625 2004 8,500,000 8,351,250
Specialty Foods 10.25 2001 5,000,000 (c) 5,031,250
11.25 2003 11,000,000 (c) 10,945,000
Zero Coupon 12.96 1999 17,000,000 (c,f) 8,755,000
______________
Total 33,082,500
_____________________________________________________________________________________________________________________________
Health care (2.4%)
Amerisource Distribution
Pay-in-Kind -- 2005 8,101,539 (n) 8,678,774
Hillhaven
Sr Sub Nts 10.125 2001 5,000,000 5,443,750
Tenet Healthcare
Sr Sub Nts 10.125 2005 20,000,000 21,050,000
Total Renal Care 12.00 2004 11,500,000 10,580,000
______________
Total 45,752,524
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 91
Health care services (0.7%)
Charter Medical
Sr Sub Nts 11.25 2004 12,500,000 13,500,000
_____________________________________________________________________________________________________________________________
Household products (1.0%)
Darling-Delaware
Sr Sub Nts 11.00 2000 9,932,000 9,919,585
Playtex Family Products
Sr Sub Nts 9.00 2003 10,000,000 9,437,500
______________
Total 19,357,085
_____________________________________________________________________________________________________________________________
Industrial equipment & services (2.9%)
ACF Inds 11.60 2000 3,802,000 3,830,515
Borg-Warner Security
Sr Sub Nts 9.125 2003 10,000,000 8,862,500
Fairchild Inds
Sr Secured Nts 12.25 1999 15,000,000 15,281,250
Sr Sub Nts 12.25 1996 5,400,000 5,393,250
Specialty Equipment
Sr Sub Nts 11.375 2003 15,500,000 16,042,500
Terex 13.75 2002 6,000,000 (c) 4,620,000
______________
Total 54,030,015
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (9.0%)
Alliance Entertainment
Sr Sub Nts 11.25 2005 10,000,000 (c) 10,037,500
AMC Entertainment
Sr Nts 11.875 2000 5,000,000 5,450,000
Bally's Grand
1st Mtge 10.375 2003 10,000,000 (m) 9,775,000
Bally's Health & Tennis
Sr Sub Nts 13.00 2003 10,000,000 9,050,000
Bally's Park Place Funding
1st Mtge Nts 9.25 2004 15,000,000 14,118,750
Cinemark (USA)
Sr Sub Nts 12.00 2002 7,500,000 8,109,375
GNF Bally 10.625 2003 5,000,000 4,343,750
Hollywood Casino 14.00 1998 6,500,000 7,158,125
Hollywood Casino-Tunica 13.50 1998 16,000,000 19,060,000
MGM Grand Hotel Finance 11.75 1999 10,000,000 10,687,500
12.00 2002 14,000,000 15,382,500
Plitt Theatres 10.875 2004 14,850,000 14,515,875
Trump Castle Funding
Mtge Nts 11.75 2003 14,711,250 11,860,945
Trump Taj Mahal Funding
Pay-in-Kind -- 1999 30,082,622 (n) 25,269,402
United Artists 11.50 2002 6,000,000 (c) 6,397,500
______________
Total 171,216,222
_____________________________________________________________________________________________________________________________
Media (12.0%)
Ackerley Communications
Sr Secured Nts 10.75 2003 7,000,000 (c) 7,358,750
Adelphia Communications
Pay-in-Kind -- 2004 31,592,759 (n) 26,735,372
Sr Deb 11.875 2004 5,000,000 5,031,250
Amer Telecasting
Zero Coupon 12.50 2004 8,000,000 (f) 4,620,000
Benedek Broadcasting
Sr Nts 11.875 2005 10,625,000 (c) 11,222,656
Big Flower Press
Sr Sub Nts 10.75 2003 7,000,000 (c) 7,026,250
Cablevision Systems
Sr Sub Deb 9.875 2013 8,000,000 8,720,000
Sr Sub Deb 10.75 2004 11,500,000 12,261,875
Comcast Cellular
Zero Coupon 11.73 2000 50,000,000 (f) 37,312,500
Continental Cablevision
Sr Sub Deb 11.00 2007 9,800,000 10,829,000
Outdoor Systems
Sr Nts 10.75 2003 8,500,000 8,213,125
Paramount Communications
Sub Deb 7.00 2003 15,000,000 14,287,950
People's Choice TV
Zero Coupon 7.21 2004 20,500,000 (f,m) 9,583,750
Robin Media Group 11.125 1997 8,250,000 7,971,563
11.625 1999 5,000,000 4,918,750
<PAGE>
PAGE 92
Scandinavian Broadcasting
Cv Sub Deb 7.25 2005 4,000,000 4,350,000
U.S. Banknote
Sr Nts 11.625 2002 13,000,000 9,880,000
Universal Outdoor
Sr Nts 11.00 2003 13,000,000 12,756,250
Viacom
Sub Deb 8.00 2006 20,000,000 19,500,000
Videotron Holdings
Zero Coupon Sr Disc Nts 5.43 2005 10,000,000 (f,m) 5,875,000
______________
Total 228,454,041
_____________________________________________________________________________________________________________________________
Metals (2.4%)
Carbide/Graphite Group
Sr Nts 11.50 2003 10,000,000 10,550,000
EnviroSource
Sr Nts 9.75 2003 8,000,000 7,320,000
Kaiser Aluminum & Chemical
Sr Nts 9.875 2002 11,500,000 11,543,125
NS Group 13.50 2003 14,000,000 13,370,000
Sahaviriya Steel Inds
Cv 3.50 2005 3,000,000 (c) 3,030,000
_____________
Total 45,813,125
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (3.7%)
G-I Holdings
Zero Coupon Sr Nts 11.37 1998 50,000,000 (f) 36,375,000
Saul (BF) REIT
Sr Nts 11.625 2002 9,300,000 8,695,500
Talley Inds
Zero Coupon Sr Disc Deb 12.20 1998 24,000,000 (f) 16,800,000
Talley Mfg & Technology
Sr Nts 10.75 2003 8,500,000 8,500,000
_____________
Total 70,370,500
_____________________________________________________________________________________________________________________________
Paper & packaging (5.8%)
Gaylord Container
Zero Coupon Sr Sub Disc Deb 12.66 1996 28,000,000 (f) 28,000,000
Ivex Holdings
Zero Coupon Sr Deb 14.02 2000 10,000,000 (f) 5,662,500
Plastic Containers
Sr Secured Nts 10.75 2001 9,000,000 9,236,250
Repap Wisconsin
Sr Secured Nts 9.875 2006 7,500,000 7,462,500
Sappi BVI Finance
Cv 7.50 2002 3,000,000 (c) 3,093,750
Silgan
Zero Coupon 13.19 1995 20,000,000 (f) 18,625,000
Stone Container
Sr Nts 11.50 2004 4,500,000 4,848,750
Sr Nts 12.625 1998 4,500,000 4,950,000
Sr Sub Nts 11.00 1999 6,500,000 6,751,875
Sweetheart Cup
Sr Sub Nts 10.50 2003 13,500,000 13,230,000
Warren (SD)
Sr Nts 12.00 2004 6,500,000 7,255,625
______________
Total 109,116,250
_____________________________________________________________________________________________________________________________
Restaurants & lodging (2.1%)
Flagstar
Sr Sub Deb 11.25 2004 15,000,000 11,681,250
Hammons (John Q) Hotels
1st Mtge 8.875 2004 12,000,000 11,370,000
Santa Fe Hotel
1st Mtge 11.00 2000 13,805,000 11,044,000
Trump Plaza Funding
1st Mtge 10.875 2001 7,000,000 (m) 6,475,000
______________
Total 40,570,250
_____________________________________________________________________________________________________________________________
Retail (8.5%)
Apparel Retail
Zero Coupon 12.67 2005 11,500,000 (f) 7,144,375
Big V Supermarkets
Sr Sub Nts 11.00 2004 6,000,000 4,927,500
Dairy Mart Convenience Stores
Sr Sub Nts 10.25 2004 19,700,000 16,540,250<PAGE>
PAGE 93
Di Giorgio
Sr Nts 12.00 2003 16,000,000 12,060,000
GND Holdings
Zero Coupon -- 1999 579,120 (d,e,f) --
Zero Coupon Jr Sub Nt -- 1999 3,370,437 (d,e,f) --
Grand Union
Sr Nts 12.00 2004 12,500,000 11,937,500
Kash n' Karry Food Stores
Pay-in-kind -- 2003 16,549,690 (n) 16,715,187
Pathmark Stores
Sr Sub Nts 9.625 2003 10,000,000 10,000,000
Zero Coupon Jr Sub Nts 11.71 1999 13,500,000 (f) 8,910,000
Penn Traffic
Sr Sub Nts 9.625 2005 20,000,000 16,200,000
Pueblo Xtra Intl
Sr Nts 9.50 2003 14,040,000 13,478,400
Ralphs Grocery
Sr Nts 10.45 2004 10,000,000 9,800,000
Sr Sub Nts 11.00 2005 3,500,000 3,303,125
Service Merchandise
Sr Sub Deb 9.00 2004 7,000,000 5,906,250
Stater Brothers Holdings
Sr Nt 11.00 2001 14,500,000 14,481,875
Super Rite Foods
Sr Sub Nts 10.625 2002 9,500,000 10,307,500
______________
Total 161,711,962
_____________________________________________________________________________________________________________________________
Soaps & cosmetics (1.2%)
Coty
Sr Sub Nts 10.25 2005 10,000,000 10,362,500
Revlon Consumer Products
Sr Nts 9.375 2001 2,500,000 2,481,250
Sr Nts 9.50 1999 10,000,000 10,050,000
______________
Total 22,893,750
_____________________________________________________________________________________________________________________________
Textiles & apparel (2.0%)
Dominion Textiles
Sr Nts 8.875 2003 5,000,000 4,981,250
Hat Brand Holdings 12.625 2002 5,000,000 (e) 5,375,000
Hosiery Corp of America 13.75 2002 10,000,000 10,370,000
WestPoint Stevens
Sr Sub Deb 9.375 2005 18,000,000 17,550,000
___________
Total 38,276,250
_____________________________________________________________________________________________________________________________
Miscellaneous (0.9%)
ECM Funding LP 11.918 2002 3,030,092 (e) 3,333,102
KinderCare Learning Centers
Sr Nts 10.375 2001 6,000,000 6,217,500
Samsonite
Sr Sub Nts 11.125 2005 7,500,000 (c) 7,659,375
______________
Total 17,209,977
_____________________________________________________________________________________________________________________________
Transportation (1.4%)
Braniff
Sr Reset Nts -- 1999 5,000,000 (d,e,h,j) --
GPA Delaware 8.75 1998 10,000,000 8,900,000
GPA Group 7.00 1997 1,301,192 (e,o) 1,236,132
7.25 1997 1,032,961 (e,o) 981,313
7.50 1997 2,135,619 (e,o) 2,028,838
7.562 1997 3,362,590 (e,o) 3,194,461
7.75 1997 492,220 (e,o) 467,609
7.875 1997 447,473 (e,o) 425,099
Trans Ocean Container 12.25 2004 8,750,000 8,892,188
______________
Total 26,125,640
_____________________________________________________________________________________________________________________________
Utilities (4.4%)
Electric (1.8%)
California Energy
Ltd Resource Sr Secured Nts 9.875 2003 7,000,000 (m) 7,078,750
First Palo Verde Funding 10.15 2016 6,150,000 6,284,193
Midland Funding II 13.25 2006 12,500,000 13,234,375
Texas-New Mexico Power
Secured Deb 10.75 2003 7,000,000 7,446,250
______________
Total 34,043,568
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 94
Gas (0.6%)
TransTexas Gas
Sr Secured Nts 11.50 2002 10,000,000 10,525,000
_____________________________________________________________________________________________________________________________
Telephone (2.0%)
Geotek Communications
Zero Coupon 7.38 2005 20,750,000 (c,f) 10,375,000
Intermedia Communications of Florida
Sr Nts 13.50 2005 19,750,000 (c) 19,769,672
Pagemart Nationwide (Warrants Attached)
Zero Coupon Sr Nts 7.67 2000 14,500,000 (c,f) 8,700,000
______________
Total 38,844,672
_____________________________________________________________________________________________________________________________
Foreign (7.7%)(g)
Argentina Republic Euro
(U.S. Dollar) 7.312 2005 22,750,000 13,920,156
Doman Inds
(U.S. Dollar) 8.75 2004 16,500,000 16,025,625
Fresh Delmonte
(U.S. Dollar) 10.00 2003 11,000,000 9,033,750
Gulf Canada Resources
(U.S. Dollar) 9.25 2004 13,500,000 13,348,125
Mexican Cetes Treasury Bill
(Mexican Peso) Zero Coupon 45.94 1996 17,281,150 (f) 2,329,309
Poland Discount
(U.S. Dollar) 7.125 2024 5,000,000 3,806,250
Poland PDI Euro
(U.S. Dollar) 3.25 2014 10,000,000 6,118,750
PT Indah Kiat Pulp & Paper
(U.S. Dollar) 11.875 2002 20,000,000 20,625,000
Repap New Brunswick
(U.S. Dollar) Sr Nts 10.625 2005 6,000,000 6,082,500
Republic of Brazil
(U.S. Dollar) 7.31 2012 6,500,000 3,432,812
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 9.625 2002 5,000,000 5,075,000
Rogers Cantel
(U.S. Dollar) Sr Sub Nts 11.125 2002 10,000,000 10,437,500
Sherritt
(U.S. Dollar) 10.50 2014 10,000,000 10,262,500
Tarkett Intl
(U.S. Dollar) 9.00 2002 10,000,000 10,125,000
Tjiwi Kimia
(U.S. Dollar) 13.25 2001 15,000,000 16,143,750
______________
Total 146,766,027
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,642,843,562) $1,674,150,373
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 95
<TABLE>
<CAPTION>
Stocks and other (7.8%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Amer Telecasting
Warrants 40,000 40,000
Berg Electronics
Common 770,400 (d) 4,237,200
Pay-in-kind 404,759 (c,n) 11,130,872
Celcaribe
Common 951,210 (c,d) 1,236,573
Cherokee
Warrants 44,107 3,867
Chevy Chase Savings
13% Preferred 180,000 5,197,500
Communications & Power Inds
Common 3,500 (c,d) 354,375
14% Preferred 50,000 (c) 4,650,000
Crown Packaging
Warrants 10,000 200,000
Dial Page
Warrants 18,902 189
Dr. Pepper Bottling Holdings
Common 100,000 (d) 425,000
EnviroSource
7.25% Cv Preferred 112,000 14,560,000
EUA Power
Contingent Interest Certificates 5,000 (d,e,h) --
Federated Dept Stores
Warrants 72,890 314,338
First Chicago
2.875% Cv Preferred 50,000 3,025,000
First Nationwide Bank
11.50% Preferred 106,500 11,448,750
Foodmaker
Warrants 7,000 129,500
Gaylord Container
Common 437,500 (d) 5,140,625
Warrants 562,500 5,484,375
Great Bay Power
Common 75,553 (d) 623,304
Harcor Energy
Warrants 165,000 (c) 189,750
Harvard Inds
Pay-in-Kind 438,224 (n) 10,955,600
Hat Brand Holdings
Warrants 90,346 (e) 993,802
Hemmetter Enterprises
Warrants 36,000 (c) 54,000
Homestead Savings
Warrants 42,500 (d,h) --
Hosiery Corp of Amer
Warrants 10,000 (c) 30,000
Houlihan's Restaurant
Warrants 5,886 29,430
IFINT Diversified Holdings
Common 42,418 (e) 1,696,720
Intermedia Communications
Warrants 19,750 197,763
K-III Communications
Pay-in-Kind Sr Exchangeable 106,168 (n) 10,192,148
Maryland Cable
Common 378,000 (d) 3,780
Methanex
Common 200,000 (d) 1,475,000
MFS Communications
Common 4,111 (d) 153,216
2.68% Cv Preferred 210,000 8,715,000
Natl Health Investors
8.50% Cv Preferred 60,000 1,597,500
NVR
Common 100,000 (d) 981,250
Olympic Financial
Common 100,000 (d) 2,287,500
Pagemart
Common 50,750 (c,d) 507,500<PAGE>
PAGE 96
Panamsat
Pay-in-kind 10,297 (n) 11,432,244
Pantry Pride
14.875% Preferred 100,000 9,800,000
Pullman
Common 273,141 (d) 2,185,128
Reliance Group Holdings
Warrants 277,791 555,582
Southdown
Warrants 50,000 (e) 225,000
Specialty Foods Acquisition
Common 300,000 (d) 525,000
Supermarket General
Pay-in-Kind Cv 275,000 (n) 7,975,000
Tele-Communications
6% Preferred 75,000 4,650,000
TransDigm
Warrants 7,500 (e) 749,968
Triangle Wire & Cable
Common 548,889 (d,e) 1,097,778
Webcraft Technology
Common 32,502 (d,e) 325
WestFed Holdings
Non-Voting Common 21,699 (d,e,h) --
Pay-in-Kind Cm Sr 71,264 (d,e,h,n) --
_____________________________________________________________________________________________________________________________
Total stocks and other
Cost: $159,052,558) $ 147,457,452
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (1.6%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Notes
09-14-95 5.68% $ 100,000 99,795
09-19-95 5.72 1,700,000 1,695,164
______________
Total 1,794,959
_____________________________________________________________________________________________________________________________
Commercial paper (1.5%)
Cafco
09-18-95 5.76 8,500,000 8,477,041
Colgate-Palmolive
09-18-95 5.78 1,100,000 (i) 1,097,013
Metlife Funding
09-21-95 5.76 4,100,000 4,086,948
PACCAR Financial
09-20-95 5.75 5,500,000 5,483,396
09-22-95 5.75 900,000 896,997
Reed Elsevier
09-13-95 5.75 7,600,000 (i) 7,585,509
Southwestern Bell Telephone
09-08-95 5.77 1,400,000 1,398,438
______________
Total 29,025,342
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $30,820,301) $ 30,820,301
_____________________________________________________________________________________________________________________________
Total investments in securities of unaffiliated issuers
(Cost: $1,832,716,421) $1,852,428,126
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 97
<TABLE>
<CAPTION>
Investments in securities of affiliated issuers (k)
_____________________________________________________________________________________________________________________________
Common stocks (1.3%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Envirodyne Inds 727,116 (d) $ 3,181,133
Kash n' Karry Food Stores 828,135 (d) 21,738,544
_____________________________________________________________________________________________________________________________
Total investments in securities of affiliated issuers
(Cost: $31,062,250) $ 24,919,677
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,863,778,671)(p) $1,877,347,803
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate
on Aug. 31, 1995.
(c) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as
amended. Unless otherwise noted, this security has been determined to be liquid under guidelines established by the board
of directors.
(d) Presently non-income producing. For long-term debt securities, item identified is in default as to payment of
interest and/or principal.
(e) Identifies issues considered to be illiquid (see Note 6 to the financial statements). Information concerning such
security holdings at Aug. 31, 1995 is as follows:
Security Acquisition Cost
dates
_____________________________________________________________________________________________
Anacomp
12.25% 1997 08-25-92 $3,321,950
Braniff
15% Sr Reset Nts 04-03-89 4,550,000
ECM Funding LP
11.918% 2002 04-13-92 3,030,092
EUA Power
Contingent Interest Certificates 05-25-90 --
GND Holdings
Zero Coupon 12% 1999 11-03-93 492,252
Zero Coupon Jr Sub Nt 6.18% 1999 04-14-92 2,224,487
GPA Group
7% 1997 07-20-95 1,301,192
7.25% 1997 07-17-95 1,032,961
7.50% 1997 07-17-95 2,135,619
7.562% 1997 07-17-95 3,362,590
7.75% 1997 07-20-95 492,220
7.875% 1997 08-18-95 447,473
Hat Brand Holdings
12.625% 2002 09-03-92 5,000,000
Warrants 09-03-92 --
IFINT Diversified Holdings
Common 08-18-94 749,736
Southdown
Warrants 10-30-91 150,000
TransDigm
13% Sr Secured Nts 2000 09-29-93 thru 07-25-95 8,146,642
Warrants 09-29-93 thru 07-25-95 701,646
Triangle Wire & Cable
Common 01-13-92 13,000,117
Webcraft Technology
Common 12-22-86 16,874
WestFed Holdings
Non-Voting Common 09-30-88 655
Pay-in-Kind Cm Sr 09-30-88 thru 06-11-93 5,995,474
(f) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(g) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated
in the currency indicated.
(h) Presently negligible market value.
(i) 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.
(j) Interest rate varies to reflect current market conditions; rate shown is the effective rate on Aug. 31, 1995.
(k) Investments representing 5% or more of the outstanding voting securities of the issuer.<PAGE>
PAGE 98
(l) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or
in a multiple of, a decline (increase) in the LIBOR (London InterBank Offered Rate) Index. Interest rate disclosed is the
rate in effect on Aug. 31, 1995. Inverse floaters in the aggregate represent 1.7% of the Fund's net assets as of Aug. 31, 1995.
(m) Security is partially or fully on loan. See note 4 to the financial statements.
(n) Pay-in-kind securities are securities in which the issuer has the option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the same terms, including maturity date, as the pay-in-kind
securities.
(o) The fund is committed, if requested by the investee company, to invest additional amounts. At Aug. 31, 1995, the
outstanding commitment is $599,973.
(p) At Aug. 31, 1995, the cost of securities for federal income tax purposes was $1,859,031,154 and the
aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $97,081,929
Unrealized depreciation (78,765,280)
___________________________________________________________________________________________
Net unrealized appreciation $18,316,649
___________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 99
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
List of financial statements filed as part of this Post-
Effective Amendment to the Registration Statement:
- Independent Auditors' Report dated Oct. 6, 1995
- Statement of Assets and Liabilities, Aug. 31, 1995
- Statement of Operations, Year ended Aug. 31, 1995
- Statements of Changes in Net Assets for the two-year period
ended Aug. 31, 1994 and Aug. 31, 1995
- Notes to Financial Statements
- Investments in Securities, Aug. 31, 1995
(b) EXHIBITS:
1. Copy of Articles of Incorporation, as amended Nov. 14, 1991,
filed as Exhibit No. 1 to Post-Effective Amendment No. 17 to
Registration Statement No. 2-86637, is herein incorporated by
reference.
2. Copy of Amended By-laws dated May 14, 1987, filed as Exhibit 2
to Post-Effective Amendment No. 7 to Registration Statement
No. 2-86637, are herein incorporated by reference.
3. Not Applicable.
4. Form of Stock certificate for common stock filed as Exhibit
No. 4 to Registrant's Post-Effective Amendment No. 4, is
herein incorporated by reference.
5. Form of Investment Management and Services Agreement between
Registrant and American Express Financial Corporation, dated
March 20, 1995, filed electronically as Exhibit 5 to
Registrant's Post-Effective Amendment No. 23 to Registration
Statement No. 2-86637 is incorporated herein by reference.
6. Form of Distribution Agreement between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, filed
electronically as Exhibit 6 to Registrant's Post-Effective
Amendment No. 23 to Registration Statement No. 2-86637 is
incorporated herein by reference.
7. All employees are eligible to participate in a profit sharing
plan. Entry into the plan is Jan. 1 or July 1. The
Registrant contributes each year an amount up to 15 percent of
their annual salaries, the maximum deductible amount permitted
under Section 404(a) of the Internal Revenue Code.
8. Form of Custodian Agreement between Registrant and American
Express Trust Company, dated March 20, 1995, filed
electronically as Exhibit 8 to Registrant's Post-Effective
Amendment No. 23 to Registration Statement No. 2-86637 is
incorporated herein by reference.
<PAGE>
PAGE 100
9(a). Form of Transfer Agency Agreement between Registrant and
American Express Financial Corporation, dated March 20,
1995, filed electronically as Exhibit 9(a) to
Registrant's Post-Effective Amendment No. 23 to
Registration Statement No. 2-86637 is incorporated herein
by reference.
9(b). Copy of License Agreement dated Jan. 25, 1988, between
Registrant and IDS Financial Corporation, filed as
Exhibit 9(c) to Post-Effective Amendment No. 15 to
Registration Statement No. 2-86637, is incorporated
herein by reference.
9(c). Form of Shareholder Service Agreement between Registrant
and American Express Financial Advisors Inc., dated March
20, 1995, filed electronically as Exhibit 9(c) to
Registrant's Post-Effective Amendment No. 23 to
Registration Statement No. 2-86637 is incorporated herein
by reference.
9(d). Form of Administrative Services Agreement between
Registrant and American Express Financial Corporation,
dated March 20, 1995, filed electronically as Exhibit
9(d) to Registrant's Post-Effective Amendment No. 23 to
Registration Statement No. 2-86637 is incorporated herein
by reference.
10. Opinion and consent of counsel as to the legality of the
securities being registered is filed with Registrant's most
recent 24f-2 Notice.
11. Independent Auditors' Consent is filed electronically
herewith.
12. None.
13. Not applicable.
14. Forms of Keogh, IRA and other retirement plans, filed as
Exhibits 14(a) through 14(n) to IDS Growth Fund, Inc., Post-
Effective Amendment No. 34 to Registration Statement No. 2-
38355 on Sept. 8, 1986, are herein incorporated by reference.
15. Form of Plan and Agreement of Distribution between Registrant
and American Express Financial Advisors Inc., dated March 20,
1995, filed electronically as Exhibit 15 to Registrant's Post-
Effective Amendment No. 23 to Registration Statement No. 2-
86637 is incorporated herein by reference.
16. Copy of schedule for computation of each performance quotation
provided in the Registration Statement in response to Item
22(b), filed as Exhibit 16 to Registrant's Post-Effective
Amendment No. 18 to Registration Statement No. 2-86637 is
herein incorporated by reference.
<PAGE>
PAGE 101
17. Financial Data Schedule is filed electronically herewith as
Exhibit 17 to Registrant's Post-Effective Amendment No. 45 to
Registration Statement No. 2-51586.
18. Copy of plan pursuant to Rule 18f-3 Under the 1940 Act filed
as Exhibit 18 to Registrant's Post-Effective Amendment No. 24
to Registration Statement No. 2-86637 is herein incorporated
by reference.
19(a). Directors' Power of Attorney, dated November 10, 1994, to
sign Amendments to this Registration Statement, filed
electronically as Exhibit 18(a) to Registrant's Post-
Effective Amendment No. 22, is incorporated herein by
reference.
19(b). Officers' Power of Attorney, dated June 1, 1993, to sign
Amendments to this Registration Statement filed
electronically as Exhibit 17(b) to Registrant's Post-
Effective Amendment No. 19 to Registration Statement No.
2-86637 is herein incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders as of
Title of Class October 16, 1995
Capital Stock 124,344
Item 27. Indemnification
The Articles of Incorporation of the registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding<PAGE>
PAGE 102
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
PAGE 103
<PAGE>
PAGE 1
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering
American Express Service Corporation Vice President
Douglas A. Alger, Vice President--Total Compensation
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Accounting
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Risk Management Products
American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products
Carl E. Beihl, Vice President--Strategic Technology Planning
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Financial Planning
Systems
American Express Service Corporation Vice President
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director and Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Harold E. Burke, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Alan R. Dakay, Vice President--Institutional Products Group
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President -
Institutional Products
Group
American Partners Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
William H. Dudley, Director and Executive Vice President--Investment Operations
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director, Senior Vice President and Technology Advisor
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Technology Advisor
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Vice President and
Portfolio Manager
<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Tax & Business Director
Services Inc.
American Express Trust Company Director
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
Investors Syndicate Development Corp. Vice President
Robert G. Gilbert, Vice President--Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
<PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Vice President-Investments
<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Services
American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and President
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas R. Jordal, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
James E. Kaarre, Vice President--Marketing Information
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Chairman of the Board of
Managers and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
American Express Service Corporation Vice President
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edward Labenski, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Service Corporation Director
American Express Trust Company Director
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
American Express Service Corporation Vice President
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International, Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Tax and Business Director
Services Inc.
IDS Certificate Company Director and Chairman of
the Board
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Communications
American Express Minnesota Foundation Director and President
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert J. Neis, Vice President--Information Systems Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
James R. Palmer, Vice President--Insurance Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
George M. Perry, Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James M. Punch, Vice President--TransAction Services
American Express Financial Advisors IDS Tower 10 Vice President-Trans
Minneapolis, MN 55440 Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
ReBecca K. Roloff, Vice President--1994 Program Director
American Express Financial Advisors IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
Robert A. Rudell, Vice President--American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director and Chairman of
the Board
IDS Sales Support Inc. Director and President
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
<PAGE>
PAGE 18
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 19
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
<PAGE>
PAGE 20
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Select Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Vice President and
Corporate Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 21
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Michael L. Weiner, Vice President--Corporate Tax Operations
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 22
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 23
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 American Express
Institutional Services
Alvan D. Arthur Group Vice President- None
IDS Tower 10 Central California/
Minneapolis, MN 55440 Western Nevada
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
<PAGE>
PAGE 24
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Group Vice President- None
Ste 900 e Westside Tower Los Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001
Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel
<PAGE>
PAGE 25
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group
Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
<PAGE>
PAGE 26
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Scott M. Digiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
William H. Dudley Director and Executive Director
IDS Tower 10 Vice President-
Minneapolis MN 55440 Investment Operations
Roger S. Edgar Senior Vice President None
IDS Tower 10 and Technology Advisor
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154
Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
<PAGE>
PAGE 27
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Douglas L. Forsberg Group Vice President- None
Suite 100 Portland/Eugene
7931 N. E. Halsey
Portland, OR 97213
William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131
Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110
John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154
<PAGE>
PAGE 28
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
Suite 250 North Texas
801 E. Campbell Road
Richardson, TX 75081
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief Director
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
Ste 108 Trestle Bridge V Greater Michigan
5136 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
<PAGE>
PAGE 30
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
MInneapolis, MN 55440 Manager
Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
<PAGE>
PAGE 31
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
Ronald E. Newton Group Vice President- None
319 Southbridge St. Rhode Island/Central
Auburn, MA 01501 Massachusetts
Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaronick Avenue
Harrison, NY 10528
James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428
<PAGE>
PAGE 32
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759
Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
<PAGE>
PAGE 33
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Russell L. Scalfano Group Vice President- None
Suite 201 Exec Pk East Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Group Vice Presidnet- None
Ste 1700 Orlando FinCtr Orlando/Jacksonville
800 North Magnolia Ave.
Orlando, FL 32803
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
IDS Tower 10 Eastern Iowa Area
Minneapolis, MN 55440
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
<PAGE>
PAGE 34
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714
Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Brn Road North Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President- Director
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and Treasurer
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
PAGE 35
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648
Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer
Thomas L. White Group Vice President- None
Suite 200 Cambridge Ct Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
32 Ellicott St Ste 100 Field Management
Batavia, NY 14020
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
IDS Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
<PAGE>
PAGE 36
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
PAGE 104
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Extra Income
Fund, Inc., certifies that it meets the requirements for the
effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Minneapolis and State of Minnesota on the 25th day
of October, 1995.
IDS EXTRA INCOME FUND, INC.
By
Melinda S. Urion, Treasurer
By /s/ William R. Pearce**
William R. Pearce, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on the 25th day
of October, 1995.
Signature Capacity
/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director
/s/ Leslie L. Ogg** Vice President,
Leslie L. Ogg General Counsel and
Secretary
/s/ Lynne V. Cheney* Director
Lynne V. Cheney
/s/ William H. Dudley* Director
William H. Dudley
/s/ Robert F. Froehlke* Director
Robert F. Froehlke
/s/ David R. Hubers* Director
David R. Hubers
/s/ Heinz F. Hutter* Director
Heinz F. Hutter
<PAGE>
PAGE 105
Signature Capacity
/s/ Anne P. Jones* Director
Anne P. Jones
/s/ Donald M. Kendall* Director
Donald M. Kendall
/s/ Melvin R. Laird* Director
Melvin R. Laird
/s/ Lewis W. Lehr* Director
Lewis W. Lehr
/s/ Edson W. Spencer* Director
Edson W. Spencer
/s/ John R. Thomas* Director
John R. Thomas
/s/ Wheelock Whitney* Director
Wheelock Whitney
/s/ C. Angus Wurtele* Director
C. Angus Wurtele
*Signed pursuant to Directors' Power of Attorney dated November 10,
1994 to sign Amendments to this Registration Statement filed
electronically as Exhibit 18(a) to Registrant's Post-Effective
Amendment No. 22, by:
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated June 1, 1993
to sign Amendments to this Registration Statement filed
electronically as Exhibit 17(b) to Registrant's Post-Effective
Amendment No. 20 to Registration Statement No. 2-86637 by:
Leslie L. Ogg
<PAGE>
PAGE 106
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 26
TO REGISTRATION STATEMENT No. 2-86637
This Post-Effective Amendment comprises the following papers and
documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other information.
Exhibits.
The signatures.
<PAGE>
PAGE 1
IDS EXTRA INCOME FUND, INC.
Registration Number 2-86637/811-3848
EXHIBIT INDEX
Exhibit 11: Independent Auditors' Consent
Exhibit 17: Financial Data Schedules
<PAGE>
PAGE 1
INDEPENDENT AUDITORS' CONSENT
________________________________________________________
The Board of directors and shareholders
IDS Extra Income Fund, Inc.:
The audits referred to in our report dated October 6, 1995 included
the related supplementary financial statement data in Schedule III
on pages 2 and 3 of Part C of this Registration Statement. The
supplementary financial statement data is the responsibility of
Fund Management. Our responsibility is to express an opinion on
this supplementary financial statement data based on our audit. In
our opinion, such supplementary financial statement data, when
considered with the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
We consent to the use of our report incorporated herein by
reference and to the references to our Firm under the headings
"Financial Highlights" in Part A and "INDEPENDENT AUDITORS" in Part
B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 25, 1995
<PAGE>
PAGE 2
SCHEDULE III
<TABLE>
<CAPTION>
IDS EXTRA INCOME FUND, INC.
INVESTMENTS IN AFFILIATES
(AS DEFINED IN SECTION 2 (a) OF THE INVESTMENT COMPANY ACT OF 1940)
YEAR ENDED AUGUST 31, 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
_____________________________________________________________________________________________________________________
Amount of equity in
Name of issuer and Number of shares held net profit and loss Amount of Value at
title of issuer at close of year for the year dividend income Aug. 31, 1995
_____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Common stocks:
Leaseway
Transportation -- $2,400,246.72 (a) $ -0-
Envirodyne 727,116 NA (a) $ 3,181,132.50
Kash n'Karry 828,135 NA (a) $21,738,543.75
Note:
(a) Non-income producing.
</TABLE>
<PAGE>
PAGE 3
SCHEDULE III (CONT'D)
<TABLE>
<CAPTION>
IDS EXTRA INCOME FUND, INC.
CHANGES IN INVESTMENTS IN AFFILIATES
FOR THE FISCAL YEAR ENDED AUGUST 31, 1995
Gross Gross
Shares held purchases sales Shares held Market value Amount of
Name of issuer at beginning and and at close at dividend
and title of issuer of year additions reductions of year Aug. 31, 1995 income
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Common stock:
Leaseway
Transportation 721,428 -- 721,428 -- $ -0- (a)
_________ _________ _______ _________ __________ _______
721,428 -- 721,428 -- $ -0- --
========= ========= ======= ========= ========== =======
Note:
(a) Non-income producing.
</TABLE>
[ARTICLE] 6
[SERIES]
[NUMBER] 1
[NAME] IDS EXTRA INCOME FUND CLASS A
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 1863778671
[INVESTMENTS-AT-VALUE] 1877347803
[RECEIVABLES] 40046061
[ASSETS-OTHER] 4764166
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1922158030
[PAYABLE-FOR-SECURITIES] 8479267
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14211695
[TOTAL-LIABILITIES] 22690962
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 2162707300
[SHARES-COMMON-STOCK] 438700879
[SHARES-COMMON-PRIOR] 404491987
[ACCUMULATED-NII-CURRENT] 7554854
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (284364218)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 13569132
[NET-ASSETS] 1899467068
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 170484760
[OTHER-INCOME] 0
[EXPENSES-NET] (14685788)
[NET-INVESTMENT-INCOME] 164956308
[REALIZED-GAINS-CURRENT] (94618530)
[APPREC-INCREASE-CURRENT] 154638498
[NET-CHANGE-FROM-OPS] 224976276
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (163086676)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 97298897
[NUMBER-OF-SHARES-REDEEMED] (89533246)
[SHARES-REINVESTED] 26443241
[NET-CHANGE-IN-ASSETS] 273842327
[ACCUMULATED-NII-PRIOR] 163697253
[ACCUMULATED-GAINS-PRIOR] 31955638
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9856787
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14685788
[AVERAGE-NET-ASSETS] 1648675945
[PER-SHARE-NAV-BEGIN] 4.02
[PER-SHARE-NII] .39
[PER-SHARE-GAIN-APPREC] .13
[PER-SHARE-DIVIDEND] (.39)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 4.15
[EXPENSE-RATIO] .87
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[SERIES]
[NUMBER] 2
[NAME] IDS EXTRA INCOME FUND CLASS B
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 1863778671
[INVESTMENTS-AT-VALUE] 1877347803
[RECEIVABLES] 40046061
[ASSETS-OTHER] 4764166
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1922158030
[PAYABLE-FOR-SECURITIES] 8479267
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14211695
[TOTAL-LIABILITIES] 22690962
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 2162707300
[SHARES-COMMON-STOCK] 18345617
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 7554854
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (284364218)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 13569132
[NET-ASSETS] 1899467068
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 170484760
[OTHER-INCOME] 0
[EXPENSES-NET] (14685788)
[NET-INVESTMENT-INCOME] 164956308
[REALIZED-GAINS-CURRENT] (94618530)
[APPREC-INCREASE-CURRENT] 154638498
[NET-CHANGE-FROM-OPS] 224976276
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (1285639)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 18688995
[NUMBER-OF-SHARES-REDEEMED] (580092)
[SHARES-REINVESTED] 236714
[NET-CHANGE-IN-ASSETS] 273842327
[ACCUMULATED-NII-PRIOR] 163697253
[ACCUMULATED-GAINS-PRIOR] 31955638
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9856787
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14685788
[AVERAGE-NET-ASSETS] 33430671
[PER-SHARE-NAV-BEGIN] 3.93
[PER-SHARE-NII] .18
[PER-SHARE-GAIN-APPREC] .21
[PER-SHARE-DIVIDEND] (.17)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 4.15
[EXPENSE-RATIO] 1.72
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[SERIES]
[NUMBER] 3
[NAME] IDS EXTRA INCOME FUND CLASS Y
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] AUG-31-1995
[PERIOD-END] AUG-31-1995
[INVESTMENTS-AT-COST] 1863778671
[INVESTMENTS-AT-VALUE] 1877347803
[RECEIVABLES] 40046061
[ASSETS-OTHER] 4764166
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1922158030
[PAYABLE-FOR-SECURITIES] 8479267
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14211695
[TOTAL-LIABILITIES] 22690962
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 2162707300
[SHARES-COMMON-STOCK] 381486
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 7554854
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (284364218)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 13569132
[NET-ASSETS] 1899467068
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 170484760
[OTHER-INCOME] 0
[EXPENSES-NET] (14685788)
[NET-INVESTMENT-INCOME] 164956308
[REALIZED-GAINS-CURRENT] (94618530)
[APPREC-INCREASE-CURRENT] 154638498
[NET-CHANGE-FROM-OPS] 224976276
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (64716)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 565786
[NUMBER-OF-SHARES-REDEEMED] (199123)
[SHARES-REINVESTED] 14823
[NET-CHANGE-IN-ASSETS] 273842327
[ACCUMULATED-NII-PRIOR] 163697253
[ACCUMULATED-GAINS-PRIOR] 31955638
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9856787
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14685788
[AVERAGE-NET-ASSETS] 1501387
[PER-SHARE-NAV-BEGIN] 3.93
[PER-SHARE-NII] .20
[PER-SHARE-GAIN-APPREC] .21
[PER-SHARE-DIVIDEND] (.19)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 4.15
[EXPENSE-RATIO] .78
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
