<PAGE>
PAGE 1
IDS Extra Income Fund
1995 annual report
(prospectus enclosed)
(Icon of) cornucopia
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 annual report includes a prospectus that describes in detail
the fund's objective, investment policies, risks, sales charges,
fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
Distributed by American Express Financial Advisors Inc.<PAGE>
PAGE 2
(Icon of) cornucopia
Bonds with something extra
Bonds aren't necessarily conservative securities strictly for
people willing to settle for modest returns. High-yield corporate
bonds, for example, are actually quite aggressive investments,
offering high potential returns to investors willing to take more
risk.
These are the bonds that Extra Income Fund invests in. High-yield
bonds are issued by a wide range of companies - from well-
established ones that might be experiencing financial difficulty to
new, rapidly growing ones that have yet to build a credit history.
Importantly, the Fund spreads its investments among many bonds
representing many types of businesses. This helps to reduce the
investment risk for shareholders.<PAGE>
PAGE 3
Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the Fund
performed.
The prospectus, which is bound into the middle of this annual
report, describes the Fund in detail.
1995 annual report
From the president 4
From the portfolio manager 4
Ten largest holdings 6
Making the most of your Fund 7
Long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 23
IDS mutual funds 35
Federal income tax information 38
1995 prospectus
The Fund in brief
Goals 3p
Types of Fund investments and their risks 3p
Proposed conversion to master/feeder structure 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative purchase arrangements 3p
Sales charge and Fund expenses 4p
Performance
Financial highlights 6p
Total returns 7p
Yield 9p
Investment policies and risks
Facts about investments and their risks 10p
Valuing Fund shares 15p
How to purchase, exchange or redeem shares
Alternative purchase arrangements 16p
How to purchase shares 19p
How to exchange shares 22p
How to redeem shares 22p
Reductions and waivers of the sales charge 27p
Special shareholder services
Services 31p
Quick telephone reference 31p
<PAGE>
PAGE 4
Distributions and taxes
Dividend and capital gain distributions 32p
Reinvestments 33p
Taxes 33p
How to determine the correct TIN 35p
How the Fund is organized
Shares 36p
Voting rights 36p
Shareholder meetings 36p
Special considerations regarding
master/feeder structure 37p
Directors and officers 39p
Investment manager and transfer agent 41p
Distributor 42p
About American Express Financial Corporation
General information 43p
Appendices
Description of corporate bond ratings 44p
Descriptions of derivative instruments 46p
(This annual report is not part of the prospectus.)<PAGE>
PAGE 5
To our shareholders
(Picture of William Pearce)
William R. Pearce
President of the fund
(Picture of Jack Utter)
Jack Utter
Portfolio manager
From the president
As I indicated in the Fund's previous reports, new agreements
between the Fund and American Express Financial Corporation (AEFC)
were approved by shareholders in November 1994. The new agreements
became effective when the Fund began offering multiple classes of
shares on March 20, 1995.
The advantage of offering more than a single class of shares is
that investors may choose how they wish to pay sales charges. A
portion of these charges compensates your American Express
financial advisor (formerly called your IDS planner), who is
committed to providing you with outstanding services.
Adding new classes of mutual fund shares does make the presentation
of financial information in this report more complex. However, we
will continue our effort to make the reports easier to read and
understand. Meanwhile, your American Express financial advisor is
available to answer your questions.
(signature)
William R. Pearce
From the portfolio manager
After enduring one of its worst years in history during 1994, the
bond market took the turning of the calendar as a cue to stage a
strong recovery during 1995. The Fund was in a good position to
benefit from the upturn, and ultimately rewarded patient
shareholders with a substantial total return for the fiscal year
(September 1994 through August 1995).
The period began with bonds still suffering from the impact of its
number-one nemesis - higher interest rates, which had plagued the
market since early 1994. (Rising interest rates depress bond
values, while falling rates enhance them. Bond mutual funds are
similarly affected.) While high-yield bonds are less sensitive to
interest-rate changes than other sectors of the market, they
nevertheless were affected.
A welcome relief
Much to the relief of bond investors, January ushered in not only a
new year but a new psychology in the bond market. The change was
both rapid and remarkable. Late last year, talk centered on the
possibility of strong economic growth leading to even higher
interest rates. However, the new year brought new talk: the
economy might gradually slow down, take the upward pressure off
inflation and allow interest rates to find some relative stability.<PAGE>
PAGE 6
Very soon, money began flowing back into the bond market, and
prices responded quickly and positively. At first, the upswing was
driven by professional investors such as mutual fund managers, many
of whom were holding substantial supplies of cash generated by
their bond-selling in previous months. Mutual fund investors then
began moving back into the market, fostering even more buying and,
naturally, still-higher bond prices.
Casinos, 'zeros' gain ground
The positive forces remained in place throughout most of the spring
and summer. Particularly productive during the upswing were the
Fund's holdings among bonds issued by casinos and communications
companies, as well as zero coupon bonds. Complementing them were
gains from bonds of paper/packaging and chemical companies, as well
as a modest amount of mortgage-backed instruments. In other
categories, bonds issued by retailers and restaurants were
relatively poor performers, but because of the portfolio's minor
exposure to those areas, Fund performance was largely unaffected.
As it has for some time, the fund maintained an essentially fully
invested portfolio - that is, it held only a small amount of cash
reserves, preferring instead to keep the great majority of assets
invested in high-yield bonds.
As we begin a new fiscal year, I'm encouraged by prospects for a
continuation of the positive framework the market has recently
enjoyed: modest economic growth, low inflation and a less
restrictive interest-rate policy by the Federal Reserve. I expect
those factors to remain in place in the months ahead, which would
bode well for the bond market as a whole, including high-yield
assets.
(signature)
Jack Utter
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
- ------------------------------
Aug. 31, 1995 $4.15
Aug. 31, 1994 $4.02
Increase $0.13
Distributions
Sept. 1, 1994 - Aug. 31, 1995
- ------------------------------
From income $0.39
From capital gains $ --
Total distributions $0.39
Total return** +14.2%***
<PAGE>
PAGE 7
Class B
March 20, 1995 - Aug. 31, 1995
(All figures per share)
Net asset value (NAV)
- ------------------------------
Aug. 31, 1995 $4.15
March 20, 1995* $3.93
Increase $0.22
Distributions
March 20, 1995* - Aug. 31, 1995
- ------------------------------
From income $0.17
From capital gains $ --
Total distributions $0.17
Total return** +9.9%***
Class Y
March 20, 1995 - Aug. 31, 1995
(All figures per share)
Net asset value (NAV)
- ------------------------------
Aug. 31, 1995 $4.15
March 20, 1995* $3.93
Increase $0.22
Distributions
March 20, 1995* - Aug. 31, 1995
- ------------------------------
From income $0.19
From capital gains $ --
Total distributions $0.19
Total return** +10.4%***
*Inception date.
**The prospectus discusses the effect of sales charges, if any, on
the various classes.
***The total return is a hypothetical investment in the Fund with
all distributions reinvested.
(This annual report is not part of the prospectus.)
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
Your fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 13.69% of the Fund's
net assets
_____________________________________________________________________________________
Percent Value
(of fund's net assets) (as of Aug. 31, 1995)
_____________________________________________________________________________________
<S> <C> <C>
Comcast Cellular 1.96% $37,312,500
Zero Coupon 2000
G-I Holdings 1.92 36,375,000
Zero Coupon Sr Nts 1998
Gaylord Container 1.47 28,000,000
Zero Coupon Sr Sub Disc Deb 1996
Adelphia Communications 1.41 26,735,372
Pay-in-Kind 2004
Trump Taj Mahal Funding 1.33 25,269,402
Pay-in-Kind 1999
Mesa Capital 1.22 23,125,000
7.312 2005
Kash n' Karry Food Stores 1.41 21,738,544
Common Stock
Tenet Healthcare 1.11 21,050,000
10.125% Sr Sub Nts 2005
PT Indah Kiat Pulp & Paper 1.09 20,625,000
11.875% 2002
Intermedia Communications of Florida 1.04 19,769,672
11% 2015
Total
</TABLE>
<PAGE>
PAGE 9
Making the most of your fund
Average annual total return
(as of Aug. 31, 1995)
Class A
1 year 5 years 10 years
+8.45% +14.02% +9.58%
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.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Figures for Class A reflect the deduction of the maximum 5% sales
charge. This was a period of widely fluctuating security prices.
Past performance is no guarantee of future results.
Build your assets systematically
To keep your assets growing steadily, one of the best ways to use
the fund is by dollar-cost averaging -- a time-tested strategy that
can make market fluctuations work for you. To dollar-cost average,
simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the fund's share price is low,
fewer shares when it is high.
This does not ensure a profit or avoid a loss if the market
declines. But, if you can continue to invest regularly through
changing market conditions, it can be an effective way to
accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00
Feb 100 18 5.56
Mar 100 17 5.88
Apr 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more
shares when the per share market price is low
(arrow in table pointing to August) and fewer shares when the per
share market price is high.
<PAGE>
PAGE 10
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
Three ways to benefit from a mutual fund:
o your shares increase in value when the fund's investments do
well
o you receive capital gains when the gains on investments sold
by the fund exceed losses
o you receive income when the fund's dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the fund or another fund.
Class A*
How your $10,000 has grown in IDS Extra Income Fund
Average annual total return
(as of Aug. 31, 1995) X
1 year 5 years 10 years $24,982 Extra Income
+8.45% +14.02% +9.58% Fund
--- Lehman Aggregate
Bond Index
x $9,500
(line graph showing Extra Income Fund tracking slightly below
Lehman Aggregate Bond Index)
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95
* The graph above is for Class A only. Class B and Class Y are not
shown. 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.
(The following two paragraphs appear in the margin next to the
graph:)
Assumes: -Holding period from 8/31/85 to 8/31/95. -Returns do not
reflect taxes payable on distributions. -Also see "Performance" in
the Fund's current prospectus. -Reinvestment of all income and
capital gain distributions for the Fund, with a value of $16,964.
The Lehman Aggregate Bond Index is made up of a representative list
of government and corporate bonds as well as asset-backed
securities 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 Extra Income Fund.<PAGE>
PAGE 11
On the graph above you can see how the Fund's total return compared
to a widely cited performance measure, the Lehman Aggregate Bond
Index. In comparing Extra Income Fund with this index, you should
take into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in
the performance of the index. If you were actually to buy either
individual bonds or bond mutual funds, any sales charges that you
pay would reduce your total return as well.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Average annual total return figures reflect the deduction of the
maximum sales charge as discussed in the prospectus. This was a
period of widely fluctuating security prices. Past performance is
no guarantee of future results.
<PAGE>
PAGE 12
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 13
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 14
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 15
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 16
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 17
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 18
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 19
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 20
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 21
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
information is presented on page 6 of the prospectus.
<PAGE>
PAGE 22
<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 23
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 24
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 25
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 26
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 27
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 28
<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 29
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 30
<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 31
(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 32
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposits (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income. Secondary
objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher
rated, lower risk bond categories, or the equivalent, and in
government bonds.
(icon of) greek column
<PAGE>
PAGE 33
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the
timely payment of principal and interest by the U.S. government,
its agencies and instrumentalities. Seeks a high level of current
income and safety of principal consistent with its type of
investments.
(icon of) federal building
Tax-exempt income investments
These funds provide tax-free income by investing in municipal
bonds. The income is generally free from federal income tax. Risk
varies by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to
provide income to residents of each respective state that is exempt
from federal, state and local income taxes. (New York is the only
state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk
bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with eagle head
<PAGE>
PAGE 34
Growth and income investments
These funds focus on securities of medium to large, well-
established companies that offer long-term growth of capital and
reasonable income from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20% of
its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income investments
and money market securities to seek a maximum total return through
a combination of growth of capital and current income.
(icon of) bird in a nest
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of capital and
income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stock of companies representing many sectors of
the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
<PAGE>
PAGE 35
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high
current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Growth investments
Funds in this group seek capital growth, primarily from common
stocks. They are high risk mutual funds with a potential for high
reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
<PAGE>
PAGE 36
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy. These
companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth potential
due to superiority in technology, marketing or management. The
fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against
inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic
companies that explore for, mine and process or distribute gold and
other precious metals. This is the most aggressive and most
speculative IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including
charges and expenses, you can obtain a prospectus by contacting
your financial advisor or writing to American Express Shareholder
Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it
carefully before you invest or send money.
<PAGE>
PAGE 37
Federal income tax information
IDS Extra Income Fund, Inc.
___________________________________________________________________
The Fund is required by the Internal Revenue Code of 1986 to tell
its shareholders about the tax treatment of the dividends it pays
during its fiscal year. Some of the dividends listed below were
reported to you on a Form 1099-DIV, Dividends and Distributions,
last January. Dividends paid to you since the end of last year will
be reported to you on a tax statement sent next January.
Shareholders should consult a tax advisor on how to report
distributions for state and local purposes.
IDS Extra Income Fund, Inc.
Fiscal year ended Aug. 31, 1995
Class A
Income distributions
taxable as dividend income, 5.48% qualifying for
deduction by corporations
Payable date Per share
Sept. 28, 1994 $0.03500
Oct. 27, 1994 0.03500
Nov. 29, 1994 0.04000
Dec. 29, 1994 0.03500
Jan. 26, 1994 0.03250
Feb. 24, 1994 0.03000
March 29, 1995 0.03100
April 27, 1995 0.03101
May 26, 1995 0.03103
June 27, 1995 0.03105
July 27, 1995 0.03107
Aug. 28, 1995 0.03046
Total distributions $0.39312
Class B
Income distributions
taxable as dividend income, 5.48% qualifying for
deduction by corporations.
Payable date Per share
March 29, 1995 $0.03062
April 27, 1995 0.02880
May 26, 1995 0.02864
June 27, 1995 0.02838
July 27, 1995 0.02853
Aug. 28, 1995 0.02790
Total distributions $0.17287
<PAGE>
PAGE 38
Class Y
Income distributions
taxable as dividend income, 5.48% qualifying for
deduction by corporations.
Payable date Per share
March 29, 1995 $0.03117
April 27, 1995 0.03157
May 26, 1995 0.03159
June 27, 1995 0.03168
July 27, 1995 0.03166
Aug. 28, 1995 0.03105
Total distributions $0.18872
<PAGE>
PAGE 39
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
AMERICAN
EXPRESS
FINANCIAL
ADVISORS
IDS EXTRA INCOME FUND, INC.
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 40
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report and
prospectus are placed
in blue strip at the top
of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report and prospectus. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
