PAGE
IDS
Extra Income
Fund
1995 semiannual report
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 in
long-term,
high-yielding, corporate bonds
in the lower
rating categories.
Distributed by
American Express
Financial Advisors Inc.
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 IDS 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.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 19
Directors and officers 32
IDS mutual funds 33
To our shareholders
William R. Pearce
President of the fund
Jack Utter
Portfolio manager
From the president
All of the funds in the
IDS MUTUAL FUND GROUP held shareholder meetings on Nov. 9, 1994. The meetings,
which were well-attended, approved all of the proposals advanced by management.
Among
the proposals were:
o The election of directors and the selection of KPMG Peat Marwick LLP as
independent auditors
for each of the funds in the group.
o A new investment
management agreement that created multiple classes of fund shares, effective
March 1995.
o A change in investment policy that will permit the fund to adopt a
master/feeder structure if and when the board of each fund determines that it
is in the best
interest of shareholders.
o And, finally, a change
with respect to the
number of "fundamental investment policies" that allows the board to
modify them should it deem appropriate.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the American Express Financial Corporation Investment
Department.
Thanks to all of you for your effort in reviewing the proxy material and voting
your proxies.
William R. Pearce
From the portfolio manager
Change, it has been said, is the only constant. If so, one need look no
further than the investment world for verification. 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 in January and
February. The fund was in good position to benefit from the upturn, and
ultimately rewarded patient shareholders with a positive total return (net
asset value change plus dividends) for the first half of the fiscal year.
The period began in September 1994 with the overall bond market still suffering
from the impact of its number-one nemesis - higher
interest rates. The rate trend was spawned early in the year by the Federal
Reserve Board, which set a course of raising rates to temper economic growth
and thereby keep inflation in check. (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.
In the high-yield bond market, the situation was worsened by a sudden sell-off
of bonds by large money managers. This forced down bond prices even further.
IDS Extra Income's net asset value felt the negative impact of the selling
through the end of 1994.
A welcome relief
Much to the relief of investors (mutual fund managers included), January
ushered in not only a new year but a
new psychology in the bond market.
The change was both rapid and remarkable. Whereas only weeks before talk still
centered on the possibility of strong economic growth leading to even higher
interest rates, the new word was that the
economy might gradually slow down, take the upward pressure off
inflation and allow
interest rates to find some relative stability.
Very soon, money began flowing back into the bond market, and prices responded
quickly and positively. Also lending support to the market was the minimal
number of new bonds being issued.
Losers become winners
The positive forces remained in place through February, which turned out to be
the fund's strongest month in more than a year. Particularly productive during
the upswing were our holdings among bonds issued by casinos and communications
companies, as well as zero coupon bonds -three segments that
had given us negative results in prior months. Complementing them were gains
from our bonds of paper/packaging and chemical companies.
Although we don't
expect a repeat of that performance in the months ahead, at this writing we
think the environment remains reasonably good for
high-yield bonds. The economy appears healthy, while inflation has yet to
present a
problem. Moreover, the supply/demand situation for bonds continues
to be favorable for
bond-holders. Therefore, barring a major change in those conditions, we look
forward to positive results as the fiscal
year progresses.
Jack Utter
6-month performance
(All figures per share)
Net asset value (NAV)
Feb. 28, 1995 $3.92
Aug. 31, 1994 $4.02
Decrease $(0.10)
Distributions
Sept. 1, 1994 - Feb. 28, 1995
From income $0.21
From capital gains $ .-
Total distributions $0.21
Total return* +2.9%
*If you purchased shares in the fund during this period, your return also would
have been affected by the sales charge, as described in
the prospectus.
IDS Extra Income Fund, Inc.
Your fund's ten largest holdings
The ten holdings listed here make up 12.28% of the fund's net assets
Percent Value
(of fund's net assets) (as of Feb. 28, 1995)
Gaylord Container 1.58% $25,760,000
Zero Coupon Sr Sub Disc Deb 1996
Comcast Cellular 1.54 25,012,500
Zero Coupon 2000
Bally's Grand 1.27 20,680,000
10.375% 1st Mortgage 2003
PT Indah Kiat Pulp & Paper 1.21 19,700,000
11.875% 2002
G-I Holdings 1.19 19,425,000
Zero Coupon Sr Nts 1998
Trump Taj Mahal Funding 1.16 18,856,251
Pay-in-Kind 1999
Penn Traffic 1.16 18,850,000
9.625% Sr Sub Nts 2005
Silgan 1.08 17,600,000
Zero Coupon 1995
Amerisource Distribution 1.06 17,175,215
Pay-in-Kind 2005
WestPoint Stevens 1.03 16,740,000
9.375% Sr Sub Deb 2005
Totals 12.28% 199,798,966
<PAGE>
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Extra Income Fund, Inc.
Feb. 28, 1995
_____________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers (identified cost $1,692,224,506) $1,610,403,132
Investments in securities of affiliated issuers (identified cost $22,904,652) 12,784,076
Dividends and accrued interest receivable 33,530,366
Receivable for investment securities sold 29,087,527
_____________________________________________________________________________________________________________
Total assets 1,685,805,101
_____________________________________________________________________________________________________________
Liabilities
____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 3,261,769
Dividends payable to shareholders 1,878,742
Payable for investment securities purchased 52,868,289
Accrued investment management and services fee 730,539
Accrued distribution fee 52,448
Accrued transfer agency fee 134,264
Other accrued expenses 96,137
_____________________________________________________________________________________________________________
Total liabilities 59,022,188
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,626,782,913
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 414,951,368 shares $ 4,149,514
Additional paid-in capital 1,984,944,684
Undistributed net investment income (Note 1) 2,992,563
Accumulated net realized loss (Note 5) (273,361,898)
Unrealized depreciation (91,941,950)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,626,782,913
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 3.92
_____________________________________________________________________________________________________________
See accompanying notes to financial statements. <PAGE>
PAGE
Statement of operations
IDS Extra Income Fund, Inc.
Six months ended Feb. 28, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $81,542,958
Dividends (net of foreign taxes withheld of $14,613) 4,067,540
_____________________________________________________________________________________________________________
Total income 85,610,498
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 4,694,442
Distribution fee 340,189
Transfer agency fee 871,427
Compensation of directors 18,205
Compensation of officers 9,368
Custodian fees 45,694
Postage 128,919
Registration fees 73,763
Reports to shareholders 30,126
Audit fees 16,500
Administrative 11,018
Other 15,817
_____________________________________________________________________________________________________________
Total expenses 6,255,468
_____________________________________________________________________________________________________________
Investment income -- net 79,355,030
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions (including loss of $345
from foreign currency transactions) (Note 3) (83,615,795)
Net change in unrealized appreciation or depreciation 49,127,416
_____________________________________________________________________________________________________________
Net loss on investments and foreign currency (34,488,379)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $44,866,651
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Extra Income Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions Feb. 28, 1995 Aug. 31, 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Six months ended Year ended
(Unaudited)
Investment income -- net $ 79,355,030 $ 163,697,253
Net realized gain (loss) on investments and foreign currency (83,615,795) 31,955,638
Net change in unrealized appreciation or depreciation 49,127,416 (206,694,603)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 44,866,651 (11,041,712)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (83,398,459) (161,824,143)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
49,684,796 and 126,616,129 shares (Note 2) 192,616,218 557,279,130
Net asset value of 13,874,510 and 23,746,710 shares
issued in reinvestment of distributions 53,801,855 103,446,970
Payments for redemptions of
53,099,925 and 94,149,106 shares (206,728,093) (409,030,424)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions
representing net addition of
10,459,381 and 56,213,733 shares 39,689,980 251,695,676
_____________________________________________________________________________________________________________
Total increase in net assets 1,158,172 78,829,821
Net assets at beginning of period 1,625,624,741 1,546,794,920
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$2,992,563 and $7,035,992) $1,626,782,913 $1,625,624,741
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE
Notes to financial statements
IDS Extra Income Fund, Inc.
(Unaudited as to Feb. 28, 1995)
______________________________________________________________________________
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. Significant
accounting policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available, including illiquid securities, are valued at fair
value according to methods selected in good faith by the board of directors.
Determination of fair value involves, among other things, reference to market
indexes, matrixes and data from independent brokers. Short-term securities
maturing in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
Options transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the fund may buy or write
options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The fund also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the fund
gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the fund pays a premium whether or not the
option is exercised. The fund also has the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or closing of the option
transaction. When 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 the market, the fund may buy and sell interest
rate futures contracts traded on any U.S. or foreign exchange. The fund also
may buy or write put and call options on these futures contracts. Risks of
entering into futures contracts and related options include the possibility
that there may be an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the
underlying securities.
Upon entering into a futures contract, the fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
The fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
Federal taxes
Since the fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and losses
deferred due to "wash sale" transactions. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also,
due to the timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized gains
(losses) were recorded by the fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last
income dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased
or sold. Dividend income is recognized on the ex-dividend date and interest
income, including level-yield amortization of premium and discount, is accrued
daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, the fund pays American
Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee is a percentage of the
fund's average daily net assets consisting of a group asset charge in reducing
percentages from 0.46% to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual
asset charge of 0.21% of average daily net assets.
The fund also pays American Express Financial Corporation a distribution fee
at an annual rate of $6 per shareholder account and a transfer agency fee at
an annual rate of $15.50 per shareholder account. The transfer agency fee is
reduced by earnings on monies pending shareholder redemptions.
Effective March 1995, the fund entered into a new agreement for managing
investments, recordkeeping and other services for the creation of multiple
classes of fund shares. The management fee is a percentage of the fund's
average daily net assets in reducing percentages from 0.59% to 0.465%
annually. An administration and accounting fee for all classes of shares in
reducing percentages from 0.05% to 0.025% annually of the fund's average daily
net assets is also effective. Class B shares will incur a 12b-1 fee of 0.75%
of average daily net assets. The fund also pays a transfer agency fee at an
annual rate of $15.50 per shareholder account for Class A and Y shares and
$16.50 per shareholder account for Class B shares. A shareholder service
agreement will also be put in place at 0.175% of average daily net assets for
Class A and B shares.
American Express Financial Corporation will assume and pay any expenses
(except taxes and brokerage commissions) that exceed the most restrictive
applicable state expense limitation.
Sales charges by American Express Financial Advisors Inc. for distributing
fund shares were $4,137,848 for the six months ended Feb. 28, 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 but the fund recognizes the cost of
payments during the time the directors serve on the board. The retirement plan
expense amounted to $6,939 for the six months ended Feb. 28, 1995.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $553,181,556 and $514,468,385, respectively, for the
six months ended Feb. 28, 1995. Realized gains and losses are determined on
an identified cost basis.
Income from securities lending amounted to $29,479, for the six months ended
Feb. 28, 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.
______________________________________________________________________________
4. Illiquid securities
At Feb. 28, 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 Feb. 28, 1995 was $40,047,783 which represents 2.5% of net
assets. Pursuant to guidelines adopted by the fund's board of directors,
certain unregistered securities are determined to be liquid and are not
included within the 10% limitation specified above.
______________________________________________________________________________
5. Capital loss carryover
For federal income tax purposes, the fund had a capital loss carryover of
approximately $276,024,000 at Feb. 28, 1995, that if not offset by subsequent
capital gains, will expire in 1999 through 2003.
6. Financial highlights
<TABLE>
<CAPTION>
The table below shows certain important financial
information for evaluating the funds's results.
Fiscal period ended Aug. 31,
Per share income and capital changes*
1995** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $4.02 $4.44 $4.24 $3.72 $3.47 $4.46
beginning of period
Income from investment operations:
Net investment income .20 .43 .47 .44 .42 .46
Net gains (losses) (.09) (.42) .16 .52 .24 (1.01)
(both realized
and unrealized)
Total from investment .11 .01 .63 .96 .66 (.55)
operations
Less distributions:
Dividends from net (.21) (.43) (.43) (.44) (.41) (.44)
investment income
Net asset value, $3.92 $4.02 $4.44 $4.24 $3.72 $3.47
end of period
Ratios/supplemental data
1995** 1994 1993 1992 1991 1990
Net assets, end of period $1,627 $1,626 $1,547 $1,304 $990 $931
(in millions)
Ratio of expenses to .80%*** .79% .81% .83% .88% .84%
average daily net assets
Ratio of net income to 10.20%*** 9.85% 10.03% 11.13% 12.45% 12.28%
average daily net assets
Portfolio turnover rate 34% 74% 70% 89% 88% 88%
(excluding short-term
securities)
Total return+ 2.9%++ (0.2%) 15.8% 26.9% 21.2% (12.5)%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Feb. 28, 1995 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++For the fiscal period ended Feb. 28, 1985, the annualized total return is 5.9%.
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Investments in securities (Percentages represent value of
IDS Extra Income Fund, Inc. investments compared to net assets)
Feb. 28, 1995 (Unaudited)
Investments in securities of unaffiliated issuers
_____________________________________________________________________________________________________________________________
Bonds (87.8%)
_____________________________________________________________________________________________________________________________
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% 1995-17 $ 8,336 (b) $ 8,440
Collateralized Mtge Obligation 3.24 2023 9,550,866 3,829,300
5.741 2023 4,000,000 2,240,000
6.168 2023 3,407,782 2,261,915
7.262 2024 9,865,946 5,524,930
13.895 2023 9,000,000 4,387,500
14.00 2023 1,855,844 1,201,079
19.069 2020 5,117,762 5,220,117
Inverse Floater 1.255 2023 12,000,000 (k) 5,280,000
Resolution Trust 8.00 2026 7,310,133 5,592,252
______________
Total 35,545,533
_____________________________________________________________________________________________________________________________
Financial (2.7%)
Banks and savings & loans (0.4%)
First Nationwide Holdings
Sr Nts 12.25 2001 6,000,000 6,180,000
_____________________________________________________________________________________________________________________________
Financial services (0.1%)
Malan Realty REIT
Cv Sub Deb 9.50 2004 2,750,000 2,392,500
_____________________________________________________________________________________________________________________________
Insurance (2.2%)
Americo Life
Sr Sub Nts 9.25 2005 13,000,000 11,407,500
I.C.H.
Sr Sub Nts 11.25 1996 6,000,000 4,290,000
Life Partners
Sr Sub Nts 12.75 2002 10,000,000 10,912,500
Reliance Group Holdings
Sr Sub Deb 9.75 2003 10,000,000 9,200,000
_____________
Total 35,810,000
_____________________________________________________________________________________________________________________________
Industrial (72.2%)
Aerospace & defense (0.8%)
Sequa 9.625 1999 2,250,000 2,160,000
Sr Sub Nts 9.375 2003 12,000,000 10,650,000
______________
Total 12,810,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
Beverages & tobacco (1.1%)
Liggett Group 11.50 1999 15,000,000 10,800,000
Seven-Up/RC Bottling
Sr Sub Nts 11.50 1999 9,500,000 7,790,000
_____________
Total 18,590,000
_____________________________________________________________________________________________________________________________
Building materials (2.8%)
Amer Standard
Zero Coupon Sr Sub Disc Deb 10.46 1998 21,500,000 (f) 14,673,750
Associated Materials
Sr Sub Nts 11.50 2003 5,700,000 5,215,500
Building Materials
Zero Coupon Sr Nt 11.70 1999 15,000,000 (f) 8,100,000
Schuller Intl Group
Sr Nts 10.875 2004 12,000,000 12,675,000
Southdown
Sr Sub Nts 14.00 2001 5,000,000 5,662,500
______________
Total 46,326,750
_____________________________________________________________________________________________________________________________
Chemicals (1.8%)
Huntsman 11.00 2004 15,000,000 15,937,500
Rexene
Sr Reset Nts 11.75 2004 12,000,000 (j) 12,600,000
______________
Total 28,537,500
_____________________________________________________________________________________________________________________________
Communications equipment (2.6%)
Celcaribe
Zero Coupon 14.874 2004 7,950,000 (c,f) 5,846,250
Cencall Communications
Zero Coupon Sr Nts 10.09 1999 38,000,000 (f) 14,772,500
Pagemart Nationwide
Zero Coupon 15.00 2005 120,000 (c,f) 6,540,000
Panamsat
Zero Coupon (Warrants Attached) 12.63 1998 22,000,000 (f) 14,630,000
______________
Total 41,788,750
_____________________________________________________________________________________________________________________________
Computers & office equipment (1.0%)
Anacomp 12.25 1997 3,160,000 (e) 3,128,400
Computervision
Sr Sub Nts 11.375 1999 15,000,000 13,650,000
______________
Total 16,778,400
_____________________________________________________________________________________________________________________________
Energy (3.4%)
Chesapeake Energy 12.00 2001 7,000,000 7,131,250
Clark R&M Holdings
Zero Coupon 11.00 2000 15,000,000 (f) 8,812,500
Mesa Capital 12.75 1998 17,000,000 (j) 15,980,000
Petroleum Heat & Power 12.25 2005 5,000,000 5,187,500
Triton Energy
Zero Coupon Sr Nts 9.68 1996 15,000,000 (f) 12,075,000
Wainoco Oil
Sr Sub Nts 12.00 2002 6,000,000 6,277,500
______________
Total 55,463,750
_____________________________________________________________________________________________________________________________
Food (3.2%)
Chiquita Brands Intl
Sr Nts 9.625 2004 8,500,000 8,117,500
Di Giorgio
Sr Nts 12.00 2003 10,000,000 9,250,000
Fresh Del Monte Produce
Sr Nts 10.00 2003 5,000,000 3,500,000
Specialty Foods 11.25 2003 16,000,000 (c) 15,320,000
Zero Coupon 12.96 1999 22,000,000 (c,f) 10,450,000
White Rose Foods
Zero Coupon Sr Nts 12.75 1998 10,000,000 (f) 5,375,000
______________
Total 52,012,500
_____________________________________________________________________________________________________________________________
Health care (1.7%)
Amerisource Distribution
Pay-in-Kind -- 2005 16,203,033 17,175,215
Total Renal Care 12.00 2004 11,500,000 9,890,000
______________
Total 27,065,215
_____________________________________________________________________________________________________________________________
Health care services (2.6%)
Charter Medical
Sr Sub Nts 11.25 2004 10,000,000 10,550,000
Healthtrust
Sub Deb 8.75 2005 10,000,000 10,100,000
Natl Medical Enterprises
Sr Sub Nts 10.125 2005 12,000,000 12,270,000
Surgical Health
Sr Sub Nts 11.50 2004 8,000,000 8,720,000
_____________
Total 41,640,000
_____________________________________________________________________________________________________________________________
Household products (0.6%)
Playtex Family Products
Sr Sub Nts 9.00 2003 10,000,000 9,175,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (1.1%)
Borg-Warner Security
Sr Sub Nts 9.125 2003 10,000,000 8,150,000
Fairchild Inds
Sr Secured Nts 12.25 1999 10,000,000 9,737,500
______________
Total 17,887,500
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (11.7%)
Bally's Grand
1st Mtge 10.375 2003 22,000,000 20,680,000
Bally's Health & Tennis
Sr Sub Nts 13.00 2003 15,000,000 11,325,000
Bally's Park Place Funding
1st Mtge Nts 9.25 2004 15,000,000 13,350,000
Cinemark (USA)
Sr Sub Nts 12.00 2002 7,500,000 7,912,500
GB Property Funding
1st Mtge 10.875 2004 10,000,000 8,625,000
GNF Bally 10.625 2003 15,000,000 11,325,000
Hemmetter Enterprises
Pay-in-Kind -- 2000 3,487,400 (c) 2,371,432
Hollywood Casino 14.00 1998 7,500,000 7,950,000
Hollywood Casino-Tunica 13.50 1998 10,000,000 (c,e) 10,000,000
Kloster Cruise
Sr Secured Nts 13.00 2003 18,500,000 14,430,000
Marvel (Parent) Holdings
Zero Coupon Sr Secured Disc Nts 12.25 1998 7,000,000 (f) 4,550,000
MGM Grand Hotel Finance 12.00 2002 14,000,000 15,417,500
Plitt Theatres 10.875 2004 9,500,000 9,120,000
Santa Fe Hotel 11.00 2000 12,550,000 11,859,750
Showboat
1st Mtge 9.25 2008 10,000,000 8,725,000
Sr Sub Nts 13.00 2009 5,000,000 5,162,500
Trump Castle Funding
Mtge Nts 11.75 2003 14,711,250 8,937,084
Trump Taj Mahal Funding
Pay-in-Kind -- 1999 26,558,100 18,856,251
______________
Total 190,597,017
_____________________________________________________________________________________________________________________________
Media (10.7%)
Ackerley Communications
Sr Secured Nts 10.75 2003 7,000,000 (c) 7,000,000
Adelphia Communications
Pay-in-Kind -- 2004 10,958,002 7,999,341
Sr Deb 11.875 2004 5,000,000 4,625,000
Sr Nts 12.50 2002 10,000,000 9,650,000
Amer Telecasting
Zero Coupon 12.50 2004 25,000,000 (f) 10,625,000
Big Flower Press
Sr Sub Nts 10.75 2003 7,000,000 (c) 6,615,000
Cablevision Inds 9.25 2008 13,000,000 12,772,500
Cablevision Systems
Sr Sub Deb 9.875 2013 8,000,000 7,800,000
Sr Sub Deb 10.75 2004 11,500,000 12,031,875
Comcast Cellular
Zero Coupon 11.73 2000 34,500,000 (f) 25,012,500
Continental Cablevision
Sr Sub Deb 11.00 2007 9,800,000 10,437,000
Diamond Cable 13.25 2004 12,000,000 (j) 6,990,000
Outdoor Systems
Sr Nts 10.75 2003 8,300,000 7,542,625
Paramount Communications
Sub Deb 7.00 2003 5,000,000 4,343,750
Robin Media Group 11.125 1997 14,000,000 13,737,500
11.625 1999 5,000,000 4,906,250
Universal Outdoor 11.00 2003 10,000,000 9,050,000
Viacom
Sub Deb 8.00 2006 15,000,000 13,462,500
______________
Total 174,600,841
_____________________________________________________________________________________________________________________________
Metals (1.0%)
Carbide/Graphite Group
Sr Nts 11.50 2003 10,000,000 10,450,000
Republic Engineered Steels
1st Mtge 9.875 2001 6,000,000 5,610,000
_____________
Total 16,060,000
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (1.7%)
G-I Holdings
Zero Coupon Sr Nts 11.37 1998 30,000,000 (f) 19,425,000
Saul (BF) REIT
Sr Nt 11.625 2002 9,300,000 8,835,000
_____________
Total 28,260,000
_____________________________________________________________________________________________________________________________
Paper & packaging (7.2%)
Container Corp Amer
Sr Nts 11.25 2004 6,500,000 6,841,250
Crown Packaging Holdings
Zero Coupon Sr Sub Nts 12.25 2000 15,000,000 (f) 7,425,000
Fort Howard
Jr Sub Disc Deb 14.125 2004 13,000,000 13,097,500
Gaylord Container
Zero Coupon Sr Sub Disc Deb 12.66 1996 28,000,000 (f) 25,760,000
Malette
Sr Nt 12.25 2004 4,500,000 4,680,000
Plastic Containers
Sr Secured Nts 10.75 2001 9,000,000 9,056,250
Silgan
Zero Coupon 13.19 1995 20,000,000 (f) 17,600,000
Stone Container
Sr Nts 11.50 2004 4,500,000 4,815,000
Sr Nts 12.625 1998 4,500,000 4,758,750
Sr Sub Nts 11.00 1999 6,500,000 6,630,000
Sweetheart Cup
Sr Sub Nts 10.50 2003 10,000,000 9,650,000
Warren (SD)
Sr Nts 12.00 2004 6,500,000 (c) 6,955,000
______________
Total 117,268,750
_____________________________________________________________________________________________________________________________
Restaurants & lodging (0.7%)
Hammons (John Q.) Hotels
1st Mtge 8.875 2004 12,000,000 11,100,000
_____________________________________________________________________________________________________________________________
Retail (9.3%)
Apparel Retail
Zero Coupon 12.67 2005 18,000,000 (f) 10,080,000
Big V Supermarkets
Sr Sub Nts 11.00 2004 13,500,000 11,154,375
Dairy Mart Convenience Store
Sr Sub Nts 10.25 2004 12,000,000 9,060,000
Farm Fresh
Sr Nts 12.25 2000 14,500,000 13,485,000
Food 4 Less Supermarkets
Zero Coupon 15.25 1997 4,250,000 (f) 3,293,750
GND Holdings
Zero Coupon 12.00 1999 579,120 (d,e,f) 58
Zero Coupon Jr Sub Nt 6.18 1999 3,370,437 (d,e,f) 337
Grand Union
Zero Coupon Sr Sub Nts 12.25 2002 10,000,000 (f) 3,100,000
Kash n' Karry Food Stores 11.50 2003 12,000,000 11,040,000
Mary Kay Inds
Sr Nts 12.75 2000 8,000,000 8,480,000
Pathmark Stores
Sr Sub Nts 9.625 2003 10,000,000 9,400,000
Zero Coupon Jr Sub Nts 11.71 1999 26,000,000 (f) 14,300,000
Penn Traffic
Sr Sub Nts 9.625 2005 20,000,000 18,850,000
Revlon Consumer Products 10.50 2003 10,000,000 9,362,500
Specialty Retailers 10.00 2000 4,150,000 3,828,375
Stater Brothers Holdings
Sr Nt 11.00 2001 11,500,000 10,982,500
Super Rite Foods
Sr Sub Nts 10.625 2002 14,000,000 14,227,500
______________
Total 150,644,395
_____________________________________________________________________________________________________________________________
Textiles & apparel (2.4%)
Bibb
Sr Sub Nts 14.00 1999 9,000,000 (d) 3,600,000
Dominion Textiles
Sr Nts 8.875 2003 5,000,000 4,712,500
Hat Brand Holdings 12.625 2002 5,000,000 (e) 5,362,500
Hosiery Corp of America 13.75 2002 10,000,000 9,350,000
WestPoint Stevens
Sr Sub Deb 9.375 2005 18,000,000 16,740,000
___________
Total 39,765,000
_____________________________________________________________________________________________________________________________
Miscellaneous (4.8%)
Darling-Delaware
Sr Sub Nts 11.00 2000 9,932,000 9,435,400
ECM Funding LP 11.918 2002 4,257,176 (e) 4,682,894
EnviroSource
Sr Nts 9.75 2003 8,000,000 7,100,000
KinderCare Learning Centers
Sr Nts 10.375 2001 6,000,000 6,112,500
Primeco
Sr Sub Nts 12.75 2005 6,000,000 6,000,000
RXI Holdings 14.00 2002 5,000,000 5,000,000
Specialty Equipment
Sr Sub Nts 11.375 2003 5,000,000 4,900,000
Talley Inds
Zero Coupon 12.20 1998 24,000,000 (f) 13,440,000
Talley Mfg & Technology
Sr Nts 10.75 2003 8,500,000 7,777,500
TransDigm
Sr Secured Nts 13.00 2000 6,000,000 (e) 5,490,000
U.S. Banknote
Sr Nt 11.625 2002 10,000,000 8,675,000
______________
Total 78,613,294
_____________________________________________________________________________________________________________________________
Transportation (1.1%)
Braniff
Sr Reset Nts 15.00 1999 5,000,000 (d,h,j) --
GPA Delaware 8.75 1998 15,000,000 11,775,005
Trans Ocean Container 12.25 2004 7,250,000 6,914,687
______________
Total 18,689,692
_____________________________________________________________________________________________________________________________
Utilities (3.0%)
Electric (1.6%)
First Palo Verde Funding 10.15 2016 6,150,000 6,057,750
Midland Funding II 13.25 2006 12,500,000 12,734,375
Texas-New Mexico Power
Secured Deb 10.75 2003 7,000,000 7,105,000
______________
Total 25,897,125
_____________________________________________________________________________________________________________________________
Gas (0.9%)
TransTexas Gas
Sr Secured Nts 10.50 2000 15,000,000 14,850,000
_____________________________________________________________________________________________________________________________
Telephone (0.5%)
Viatel
Zero Coupon 15.00 2005 125,000 (e,f) 7,875,000
_____________________________________________________________________________________________________________________________
Foreign (6.6%)(g)
Argentina Republic Euro
(U.S. Dollar) 4.25 2023 24,500,000 9,708,125
Avenor
(U.S. Dollar) 9.375 2004 3,500,000 3,438,750
Doman Inds
(U.S. Dollar) 8.75 2004 16,500,000 15,138,750
Gulf Canada Resources
(U.S. Dollar) 9.25 2004 13,500,000 13,061,250
PT Indah Kiat Pulp & Paper
(U.S. Dollar) 11.875 2002 20,000,000 19,700,000
Republic of Brazil
(U.S. Dollar) 4.00 2014 7,109,860 2,888,381
(U.S. Dollar) 6.75 2012 6,500,000 3,250,000
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 9.625 2002 5,000,000 5,000,000
Sherritt
(U.S. Dollar) 10.50 2014 10,000,000 10,012,500
Tarkett Intl
(U.S. Dollar) 9.00 2002 10,000,000 9,450,000
Tjiwi Kimia
(U.S. Dollar) 13.25 2001 15,000,000 15,225,000
______________
Total 106,872,756
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,481,048,575) $1,429,097,268
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Preferred stocks and other (8.3%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Algoma Finance
5.50% 195,021 (g) $ 3,148,887
Amer Telecasting
Warrants 100,000 200,000
Anacomp
$8.25 50,000 1,800,000
Warrants 166,930 187,797
Berg Electronics
Common 770,400 (d) 3,659,400
Pay-in-kind 378,992 (c) 10,422,266
Capital Gaming Intl
Warrants 95,000 53,750
Celcaribe
Common 674,790 (c) 877,227
Cherokee
Warrants 44,107 3,867
Chesapeake Energy
Warrants 102,500 1,537,500
Chevy Chase Savings
13% 180,000 4,950,000
Color Tile
13% 150,000 3,300,000
Crown Packaging
Warrants 10,000 425,000
Dial Page
Warrants 18,902 189
EnviroSource
7.25% Cv 112,000 (d) 13,552,000
EUA Power
Contingent Interest Certificates 5,000 (d,h) --
Federated Dept Stores
Warrants 72,890 116,169
First Chicago
2.875% Cv 50,000 2,575,000
First Nationwide Bank
11.50% 106,500 10,650,000
Foodmaker
Warrants 7,000 87,500
Gaylord Container
Warrants 1,000,000 10,375,000
Gilbert Robinson Holdings
Warrants 5,886 29,430
GND Holdings
12% Series A 46,550 (d) 465
12% Series B 48,256 (d) 483
Great Bay Power
Common 75,553 (d) 604,416
Harvard Inds
Pay-in-Kind 442,453 11,614,391
Hat Brand Holdings
Warrants 90,346 (e) 993,802
Hemmetter Enterprises
Warrants 36,000 (c) 54,000
Homestead Savings
Warrants 42,500 42
Hosiery Corp of Amer
Warrants 10,000 (c) 10,000
IFINT Diversified Holdings
Common 42,418 (e) 2,036,064
K-III Communications
Pay-in-Kind Sr Exchangeable 100,257 9,825,207
Kash n' Karry Food Stores
Common 556,965 (d) 10,510,835
Maryland Cable
Common 378,000 (d) 3,780
Methanex
Common 200,000 (d) 2,100,000
Natl Health Investors
8.50% Cv 60,000 1,380,000
NVR
Common 100,000 (d) 600,000
Pantry Pride
14.875% 100,000 9,700,000
Pullman
Common 273,141 (d) 2,185,128
Reliance Group Holdings
Warrants 277,791 833,373
Southdown
Warrants 50,000 150,000
Specialty Foods Acquisition
Common 300,000 (d) 600,000
Supermarket General
Pay-in-Kind Cv 275,000 6,050,000
Tele-Communications
6% 75,000 4,518,750
TransDigm
Warrants 4,787 (e) 478,728
Triangle Wire & Cable
Common 548,889 (d) 2,195,556
Webcraft Technology
Common 32,502 (d) 335
WestFed Holdings
Non-Voting Common 21,699 (d,h) --
Pay-in-Kind Cm Sr 71,264 (d,e,h) --
_____________________________________________________________________________________________________________________________
Total preferred stocks and other
Cost: $164,266,404) $ 134,396,337
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (2.9%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (0.5%)
Federal Home Loan Bank Disc Note
03-09-95 5.87% $2,300,000 $ 2,297,015
Federal Natl Mtge Assn Disc Notes
03-14-95 5.91 1,500,000 1,496,815
03-20-95 5.88 3,700,000 3,688,576
______________
Total 7,482,406
_____________________________________________________________________________________________________________________________
Commercial paper (2.4%)
Cargill
03-01-95 5.91 4,900,000 4,900,000
Commerzbank U.S. Finance
04-06-95 6.03 3,500,000 3,479,035
Duke Power
03-13-95 5.98 6,000,000 5,988,100
Pitney Bowes
03-31-95 5.97 3,600,000 3,582,210
St. Paul Companies
03-16-95 6.00 5,900,000 (i) 5,885,324
UBS Finance
03-28-95 5.95 1,700,000 1,692,452
Wal-Mart Stores
03-01-95 5.81 13,900,000 13,900,000
______________
Total 39,427,121
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $46,909,527) $ 46,909,527
_____________________________________________________________________________________________________________________________
Total investments in securities of unaffiliated issuers
(Cost: $1,692,224,506) $1,610,403,132
_____________________________________________________________________________________________________________________________
Investments in securities of affiliated issuers (l)
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Common stocks (0.8%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Envirodyne Inds 727,116 (d) $ 3,044,798
Leaseway Transportation 721,428 (d) 9,739,278
_____________________________________________________________________________________________________________________________
Total investments in securities of affiliated issuers
(Cost: $22,904,652) $ 12,784,076
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,715,129,158)(m) $1,623,187,208
_____________________________________________________________________________________________________________________________
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; shown is the effective rate
on Feb. 28, 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 4 to the financial statements). Information concerning such
security holdings at Feb. 28, 1995, is as follows:
Security Acquisition Cost
date
_____________________________________________________________________________________________
Anacomp
12.25% 1997 08-25-92 $ 3,321,950
ECM Funding LP
11.918% 2002 04-13-92 4,257,176
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
Hat Brand Holdings
12.625% 2002 09-03-92 5,000,000
Warrants 09-03-92 --
Hollywood Casino-Tunica
13.50% 1998 05-27-94 10,000,000
IFINT Diversified Holdings
Common 08-18-94 1,181,313
TransDigm
13% Sr Secured Nts 2000 09-29-93 3,680,000
13% Sr Secured Nts 2000 02-16-94 1,920,000
Warrants 09-29-93 320,000
Warrants 02-16-94 160,006
Viatel
Zero Coupon 15% 2005 12-15-94 7,766,500
WestFed Holdings
Pay-in-Kind Cm Sr 03-20-92 17,925
Pay-in-Kind Cm Sr 06-19-92 18,255
Pay-in-Kind Cm Sr 09-15-92 12,400
Pay-in-Kind Cm Sr 12-18-92 12,630
Pay-in-Kind Cm Sr 03-08-93 12,860
Pay-in-Kind Cm Sr 06-11-93 3,933
(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 Feb. 28, 1995.
(k) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or
in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed is the
rate in effect on Feb. 28, 1995.
(l) Investments representing 5% or more of the outstanding voting securities of the issuer.
(m) At Feb. 28, 1995, the cost of securities for federal income tax purposes was approximately $1,710,914,000 and the
approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 59,980,000
Unrealized depreciation (147,707,000)
___________________________________________________________________________________________
Net unrealized depreciation $(87,727,000)
___________________________________________________________________________________________
/TABLE
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation
William H. Dudley
Exective vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Fianacial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and general
counsel and treasurer of the publicly offered funds.<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and
safety of principal consistent with its type of investments.
(icon of) federal building
Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies
by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk bond
categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with eagle head
Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
(icon of) bird in a nest
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) chess piece
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
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
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including current
fund prices and performance, account values and recent account
transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Extra Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
