IDS
Extra Income
Fund
1998 SEMIANNUAL REPORT
(icon of) clock
The primary goal of IDS Extra Income Fund, Inc. is to provide high current
income. Capital growth is a secondary goal.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
<PAGE>
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 spread the investment risk for shareholders.
CONTENTS
From the Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements (Fund) 7
Notes to Financial Statements (Fund) 10
Financial Statements (Portfolio) 16
Notes to Financial Statements (Portfolio) 19
Investments in Securities 23
IDS EXTRA INCOME FUND
<PAGE>
From the Chairman
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
If you're an experienced investor, you know that the past six months was a
highly volatile period in many financial markets. But history tells that
substantial market moves are nothing new. Though they're often unpredictable,
declines -- whether they're brief or long-lasting, moderate or substantial --
are always a possibility.
The potential for such volatility reinforces the need for investors to review
periodically their long-term goals and examine whether their investment program
remains on track to achieving them. Your quarterly investment statements are one
part of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a major
change in your financial situation or in the financial markets.
William R. Pearce
From the Portfolio Manager
(picture of) Jack Utter
Jack Utter
Portfolio manager
Concerns about a potential slowdown in economic growth led to a sell-off in the
high-yield bond market during the first half of the fiscal year. Although IDS
Extra Income Fund continued to provide substantial interest income, the decline
in bond values resulted in the Fund's Class A shares losing 7.86% for the period
- -- June through November 1998.
The environment for high-yield bonds was still relatively good when the period
began. The economy was rolling along, inflation showed no signs of increasing,
and the financial upheaval that struck Asia in the fall of 1997 seemed to have
settled down. But by mid-summer, another bout of the "Asian flu" hit, this time
in Russia and, soon after, Latin America.
Here at home, the upshot of the situation for investors was that the possibility
of a global recession was now considerably greater. Under that scenario, profits
could fall off sharply for American businesses as a whole and create a special
burden for the already financially strained companies that issue high-yield
bonds.
A 'FLIGHT TO QUALITY'
The result was a wave of selling that swamped the high-yield market as investors
embarked on a "flight to quality" whose primary destination was U.S. Treasury
bonds, which offered the safety and liquidity they sought. Although the downturn
in the high-yield market was widespread, the Fund's holdings in the energy,
telecommunications and emerging foreign-market sectors were particularly
affected.
Still, the period would end on a positive note. Taking encouragement from three
reductions in short-term interest rates by the Federal Reserve and positive new
economic data, the high-yield market staged a powerful rally in November. Also
encouraging was the fact that telecommunications and emerging-market bonds led
the rebound for the Fund.
While such positive price momentum will be difficult to maintain in the months
ahead, I think it's reasonable to expect a better overall environment for
high-yield bonds than we had in the first half of the fiscal year. The economy
should be able to stay on its growth track, inflation shows no signs of picking
up, and the Federal Reserve appears willing to lower interest rates further if
conditions warrant. In the meantime, income-seeking investors will find the
Fund's yield at its highest level in several years.
Jack Utter
IDS EXTRA INCOME FUND
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1998 $4.00
May 31, 1998 $4.58
Decrease $0.58
Distributions -- June 1, 1998 - Nov. 30, 1998
From income $0.23
From capital gains $ --
Total distributions $0.23
Total return* -7.86%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1998 $4.00
May 31, 1998 $4.58
Decrease $0.58
Distributions -- June 1, 1998 - Nov. 30, 1998
From income $0.21
From capital gains $ --
Total distributions $0.21
Total return* -8.21%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1998 $4.00
May 31, 1998 $4.58
Decrease $0.58
Distributions -- June 1, 1998 - Nov. 30, 1998
From income $0.23
From capital gains $ --
Total distributions $0.23
Total return* -7.82%**
*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.
SEMIANNUAL REPORT -- 1998
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<TABLE>
<CAPTION>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Nov. 30, 1998)
Chancellor Media
<S> <C> <C> <C>
8.00% 2008 1.35% $51,374,999
Outsourcing Solutions
11.00% 2006 .93 35,385,018
CSC Holdings
11.13% Pay-in-kind Series M Preferred .92 35,150,287
NTL
11.48% 2001 .83 31,599,999
Motor & Gears
10.75% 2006 .83 31,567,500
Warren (SD)
14.00% Series B Preferred .82 31,216,080
EchoStar Satellite Broadcasting
11.81% 2000 .77 29,508,749
Gaylord Container
9.88% 2008 .76 28,799,999
Outdoor Systems
8.88% 2007 .73 27,810,938
Trump Holdings & Funding
15.50% 2005 .73 27,699,375
For further detail about these holdings, please refer to the section entitled
"Investments in securities" herein.
(icon of) pie chart
The 10 holdings listed here
make up 8.67% of net assets
IDS EXTRA INCOME FUND
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<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Extra Income Fund, Inc.
Nov. 30, 1998 (Unaudited)
Assets
<S> <C>
Investment in High Yield Portfolio (Note 1) $3,810,149,690
- --------------
Liabilities
Dividends payable to shareholders 5,810,139
Accrued distribution fee 61,240
Accrued service fee 54,466
Accrued transfer agency fee 30,581
Accrued administrative services fee 13,363
Other accrued expenses 145,255
-------
Total liabilities 6,115,044
---------
Net assets applicable to outstanding capital stock $3,804,034,646
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 9,520,884
Additional paid-in capital 4,331,741,839
Undistributed net investment income 1,467,230
Accumulated net realized gain (loss) (200,256,731)
Unrealized appreciation (depreciation) on investments (338,438,576)
------------
Total-- representing net assets applicable to outstanding capital stock $3,804,034,646
==============
Net assets applicable to outstanding shares: Class A $2,803,240,489
Class B $ 998,932,638
Class Y $ 1,861,519
Net asset value per share of outstanding capital stock: Class A shares 701,591,572 $ 4.00
Class B shares 250,031,017 $ 4.00
Class Y shares 465,781 $ 4.00
See accompanying notes to financial statements.
SEMIANNUAL REPORT -- 1998
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<CAPTION>
Statement of operations
IDS Extra Income Fund, Inc.
Six months ended Nov 30, 1998 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 19,645,622
Interest 190,755,472
-----------
Total income 210,401,094
-----------
Expenses (Note 2):
Expenses allocated from High Yield Portfolio 11,021,947
Distribution fee-- Class B 3,835,951
Transfer agency fee 1,839,207
Incremental transfer agency fee-- Class B 34,035
Service fee
Class A 2,545,970
Class B 889,137
Class Y 918
Administrative services fees and expenses 851,034
Compensation of board members 6,255
Postage 291,803
Registration fees 190,480
Reports to shareholders 52,799
Audit fees 5,688
Other 6,046
-----
Total expenses 21,571,270
Earnings credits on cash balances (Note 2) (97,401)
-------
Total net expenses 21,473,869
----------
Investment income (loss) -- net 188,927,225
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (63,015,606)
Net change in unrealized appreciation (depreciation) on investments (455,731,197)
------------
Net gain (loss) on investments (518,746,803)
------------
Net increase (decrease) in net assets resulting from operations $(329,819,578)
-------------
See accompanying notes to financial statements.
IDS EXTRA INCOME FUND
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<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Extra Income Fund, Inc.
Nov. 30, 1998 May 31, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 188,927,225 $ 325,142,783
Net realized gain (loss) on security transactions (63,015,606) 107,292,068
Net change in unrealized appreciation (depreciation) on investments (455,731,197) 8,762,590
------------ ---------
Net increase (decrease) in net assets resulting from operations (329,819,578) 441,197,441
------------ -----------
Distributions to shareholders from:
Net investment income
Class A (158,902,326) (240,406,587)
Class B (51,534,459) (63,119,023)
Class Y (100,837) (46,439)
-------- -------
Total distributions (210,537,622) (303,572,049)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 412,506,565 905,358,041
Class B shares 253,418,074 584,338,366
Class Y shares 298,448 1,680,622
Reinvestment of distributions at net asset value
Class A shares 107,174,785 164,676,904
Class B shares 42,913,903 53,387,290
Class Y shares 98,817 45,553
Payments for redemptions
Class A shares (428,597,135) (651,156,321)
Class B shares (Note 2) (203,720,724) (231,593,965)
Class Y shares (113,707) (16,859)
-------- -------
Increase (decrease) in net assets from capital share transactions 183,979,026 826,719,631
----------- -----------
Total increase (decrease) in net assets (356,378,174) 964,345,023
Net assets at beginning of period 4,160,412,820 3,196,067,797
------------- -------------
Net assets at end of period $3,804,034,646 $4,160,412,820
============== ==============
Undistributed net investment income $ 1,467,230 $ 23,077,627
-------------- --------------
See accompanying notes to financial statements.
SEMIANNUAL REPORT -- 1998
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Notes to Financial Statements
IDS Extra Income Fund, Inc.
(Unaudited as to Nov. 30, 1998)
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 has 10 billion
authorized shares of capital stock.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year
of ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Investment in High Yield Portfolio
Effective June 10, 1996, the Fund began investing all of its assets in the High
Yield Portfolio (the Portfolio), a series of Income Trust, an open-end
investment company that has the same objectives as the Fund. This was
accomplished by transferring the Fund's assets to the Portfolio in return for a
proportionate ownership interest in the Portfolio. High Yield Portfolio invests
primarily in long-term corporate bonds in the lower-rating categories, commonly
known as junk bonds.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund at Nov. 30, 1998 was 99.95%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's `Notes to financial statements' (included elsewhere in this report).
Use of estimates Preparing financial statements that conform to generally
accepted accounting principles requires management to make estimates (e.g., on
assets and liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to the shareholders. No provision for income or excise taxes is
thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
Dividends from net investment income, declared daily and paid 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.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
Effective March 20, 1995, the Fund entered into an agreement with American
Express Financial Corporation (AEFC) to provide administrative services. Under
its Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.05% to 0.025% annually.
Additional administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees, registration
fees for shares, compensation of board members, corporate filing fees and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $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 services. Under
a Plan and Agreement of Distribution, the Fund pays a distribution fee at an
annual rate of 0.75% of the Fund's average daily net assets attributable to
Class B shares for distribution services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares and 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $7,617,291 for Class A and $594,011 for Class B
for the six months ended Nov. 30, 1998.
During the six months ended Nov. 30, 1998, the Fund's transfer agency fees were
reduced by $97,401 as a result of earnings credits from overnight cash balances.
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<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Nov. 30, 1998
Class A Class B Class Y
<S> <C> <C> <C>
Sold 98,435,194 59,722,484 72,420
Issued for reinvested distributions 25,816,955 10,352,256 23,904
Redeemed (102,340,091) (48,540,327) (28,271)
------------ ----------- -------
Net increase (decrease) 21,912,058 21,534,413 68,053
Year ended May 31, 1998
Class A Class B Class Y
Sold 197,884,919 127,715,399 362,086
Issued for reinvested distributions 35,993,198 11,659,883 9,921
Redeemed (142,256,690) (50,588,489) (3,656)
------------ ----------- ------
Net increase (decrease) 91,621,427 88,786,793 368,351
</TABLE>
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4. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had a capital loss carryover of
$136,345,785 at May 31, 1998, that if not offset by subsequent capital gains,
will expire in 1999 through 2004. It is unlikely the board will authorize a
distribution of any net realized gains until the available capital loss
carryover has been offset or expires.
5. BANK BORROWINGS
The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby
the Fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The Fund must have asset coverage for
borrowings not to exceed the aggregate of 333% of advances equal to or less than
5 business days plus 367% of advances over 5 business days. The agreement, which
enables the Fund to participate with other IDS Funds, permits the borrowings up
to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Nov.
30, 1998.
SEMIANNUAL REPORT -- 1998
<PAGE>
<TABLE>
<CAPTION>
6. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended May 31,
Per share income and capital changesa
Class A
1998c 1998 1997 1996b 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.58 $4.39 $4.34 $4.15 $4.02
Income from investment operations:
Net investment income (loss) .20 .40 .39 .28 .39
Net gains (losses) both realized and unrealized (.55) .17 .06 .20 .13
Total from investment operations (.35) .57 .45 .48 .52
Less distributions:
Dividends from net investment income (.23) (.38) (.40) (.29) (.39)
Net asset value, end of period $4.00 $4.58 $4.39 $4.34 $4.15
Ratios/supplemental data
Class A
1998c 1998 1997 1996b 1995
Net assets, end of period (in millions) $2,803 $3,112 $2,582 $2,145 $1,822
Ratio of expenses to average daily net assetsd .89%e .89% .92% .94%e .87%
Ratio of net investment income (loss) to
average daily net assets 9.73%e 8.90% 9.01% 8.90%e 9.93%
Portfolio turnover rate
(excluding short-term securities) 23% 81% 92% 61% 70%
Total returnf (7.86%) 13.24% 10.92% 11.73% 14.15%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b The Fund's fiscal year-end was changed from Aug. 31 to May 31, effective 1996.
c Six months ended Nov. 30, 1998 (Unaudited).
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Total return does not reflect payment of a sales charge.
IDS EXTRA INCOME FUND
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<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changesa
Class B Class Y
1998d 1998 1997 1996c 1995b 1998d 1998 1997 1996c 1995b
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $4.58 $4.39 $4.34 $4.15 $3.93 $4.58 $4.39 $4.34 $4.15 $3.93
Income from investment
operations:
Net investment
income (loss) .19 .37 .36 .25 .18 .20 .41 .40 .28 .20
Net gains (losses) both
realized and unrealized (.56) .16 .06 .20 .21 (.55) .16 .06 .20 .21
Total from investment
operations (.37) .53 .42 .45 .39 (.35) .57 .46 .48 .41
Less distributions:
Dividends from net
investment income (.21) (.34) (.37) (.26) (.17) (.23) (.38) (.41) (.29) (.19)
Net asset value,
end of period $4.00 $4.58 $4.39 $4.34 $4.15 $4.00 $4.58 $4.39 $4.34 $4.15
Ratios/supplemental data
Class B Class Y
1998d 1998 1997 1996c 1995b 1998d 1998 1997 1996c 1995b
Net assets, end of
period (in millions) $999 $1,046 $613 $270 $76 $2 $2 $-- $-- $2
Ratio of expenses to
average daily net assetse 1.65%f 1.65% 1.68% 1.70%f 1.72%f .82%f .82% .85% .76%f .78%f
Ratio of net investment
income (loss) to average
daily net assets 8.98%f 8.23% 8.18% 8.34%f 9.51%f 9.88%f 10.07% 8.68% 8.24%f 10.19%f
Portfolio turnover rate
(excluding short-term
securities) 23% 81% 92% 61% 70% 23% 81% 92% 61% 70%
Total returng (8.21%) 12.42% 10.07% 11.10% 10.18% (7.82%) 13.42% 11.05% 11.83% 10.60%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c The Fund's fiscal year-end was changed from Aug. 31 to May 31, effective 1996.
d Six months ended Nov. 30, 1998 (Unaudited).
e Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
f Adjusted to an annual basis.
g Total return does not reflect payment of a sales charge.
SEMIANNUAL REPORT -- 1998
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<CAPTION>
Financial Statements
Statement of assets and liabilities
High Yield Portfolio
Nov. 30, 1998 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $4,084,479,752) $3,746,059,791
Cash in bank on demand deposit 1,719,473
Accrued interest and dividends receivable 87,137,532
Receivable for investment securities sold 4,519,500
---------
Total assets 3,839,436,296
-------------
Liabilities
Payable for investment securities purchased 27,236,000
Accrued investment management services fee 172,920
Other accrued expenses 71,705
------
Total liabilities 27,480,625
----------
Net assets $3,811,955,671
==============
See accompanying notes to financial statements.
IDS EXTRA INCOME FUND
</TABLE>
<PAGE>
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<CAPTION>
Statement of operations
High Yield Portfolio
Six months ended Nov 30, 1998 (Unaudited)
Investment income
Income:
<S> <C>
Dividend $ 19,654,092
Interest 190,861,432
-----------
Total income 210,515,524
-----------
Expenses (Note 2):
Investment management services fee 11,015,616
Compensation of board members 9,118
Custodian fees 114,069
Audit fees 17,063
Other 50,684
------
Total expenses 11,206,550
Earnings credits on cash balances (Note 2) (179,751)
--------
Total net expenses 11,026,799
----------
Investment income (loss) -- net 199,488,725
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) (63,044,118)
Net change in unrealized appreciation (depreciation) on investments (455,945,080)
------------
Net gain (loss) on investments (518,989,198)
------------
Net increase (decrease) in net assets resulting from operations $(319,500,473)
-------------
See accompanying notes to financial statements.
SEMIANNUAL REPORT -- 1998
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<TABLE>
<CAPTION>
Statements of changes in net assets
High Yield Portfolio
Nov. 30, 1998 May 31, 1998
Six months ended Year ended
(Unaudited)
Operations
<S> <C> <C>
Investment income (loss)-- net $ 199,488,725 $ 343,256,750
Net realized gain (loss) on security transactions (63,044,118) 107,320,343
Net change in unrealized appreciation (depreciation) on investments (455,945,080) 8,772,357
------------ ---------
Net increase (decrease) in net assets resulting from operations (319,500,473) 459,349,450
Net contributions (withdrawals) from partners (32,544,821) 505,587,141
----------- -----------
Total increase (decrease) in net assets (352,045,294) 964,936,591
Net assets at beginning of period 4,164,000,965 3,199,064,374
------------- -------------
Net assets at end of period $3,811,955,671 $4,164,000,965
============== ==============
See accompanying notes to financial statements.
IDS EXTRA INCOME FUND
</TABLE>
<PAGE>
Notes to Financial Statements
High Yield Portfolio
(Unaudited as to Nov. 30, 1998)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The High Yield Portfolio (the Portfolio) is a series of Income Trust (the Trust)
and is registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. High Yield Portfolio
invests primarily in long-term corporate bonds in the lower-rating categories,
commonly known as junk bonds. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and write options traded on
any U.S. or foreign exchange or in the over-the-counter market where completing
the obligation depends upon the credit standing of the other party. The
Portfolio also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Portfolio gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Portfolio 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 Portfolio pays a premium whether or not the option is exercised. The
Portfolio also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
options on debt securities or futures are exercised, the Portfolio will realize
a gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts traded on any U.S. or foreign exchange. The
Portfolio also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options include
the possibility of an illiquid market and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Portfolio 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 Portfolio 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 Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange. Foreign
currency amounts related to the purchase or sale of securities and income and
expenses are translated at the exchange rate on the transaction date. The effect
of changes in foreign exchange rates on realized and unrealized security gains
or losses is reflected as a component of such gains or losses. In the statement
of operations, net realized gains or losses from foreign currency transactions,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on dividends,
interest income and foreign withholding taxes.
The Portfolio 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 Portfolio and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Portfolio is subject to the credit risk that
the other party will not complete its contract obligations.
Illiquid securities
As of Nov. 30, 1998, investments in securities included issues that are illiquid
which the Portfolio currently limits to 10% of net assets, at market value, at
the time of purchase. The aggregate value of such securities at Nov. 30, 1998
was $94,817,974 representing 2.49% of net assets. According to board guidelines,
certain unregistered securities are determined to be liquid and are not included
within the 10% limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
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 Portfolio does not amortize premium and discount. Interest income, including
level-yield amortization of premium and discount, is accrued daily.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.59% to 0.465% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses which include custodian fees, audit and certain legal fees,
fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees, expenses
incurred in connection with lending securities of the Portfolio and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the six months ended Nov. 30, 1998, the Portfolio's custodian fees were
reduced by $179,751 as a result of earnings credits from overnight cash
balances.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $963,792,189 and $854,019,495, respectively, for the six
months ended Nov. 30, 1998. For the same period, the portfolio turnover rate was
23%. Realized gains and losses are determined on an identified cost basis.
IDS EXTRA INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
High Yield Portfolio
Nov. 30, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Bonds (85.2%)
Issuer Coupon Principal Value(a)
rate amount
Government obligations (0.6%)
Argentine Republic
(U.S. Dollar)
<S> <C> <C> <C> <C>
03-31-23 5.75% $3,950,000(c) $2,890,906
City of Moscow
(U.S. Dollar) Zero Coupon
12-31-98 10.96 3,691,890(c,f) 315,287
Govt of Algeria
(U.S. Dollar)
03-04-00 7.06 1,568,182(c) 1,372,159
09-04-06 6.60 3,136,364(c) 1,489,773
Govt of Russia
(Russian Ruble)
09-27-00 14.00 30,008,878(c) 52,537
12-15-20 6.63 10,000,000(c) 675,000
Republic of Korea
(U.S. Dollar)
04-15-08 8.88 8,450,000(c) 8,397,196
United Mexican States
(U.S. Dollar)
12-31-19 6.25 6,000,000(c) 4,601,250
05-15-26 11.50 1,875,000(c) 2,000,391
Total 21,794,499
Mortgage-backed securities (0.8%)
Federal Home Loan Mtge Corp
08-01-17 7.50 3,878(d) 3,917
Federal Natl Mtge Assn
11-01-28 6.00 25,000,000 24,676,184
Merrill Lynch Mtge Investors
06-15-21 8.08 5,673,253 5,337,290
Total 30,017,391
Aerospace & defense (1.7%)
BE Aerospace
Sr Sub Nts
11-01-08 9.50 5,500,000(e) 5,816,250
Compass Aerospace
Sr Sub Nts
04-15-05 10.13 16,835,000(e) 16,835,000
L-3 Communications
Sr Sub Nts Series B
05-01-07 10.38 6,145,000 6,790,225
Sequa
Sr Sub Nts
12-15-03 9.38 20,750,000 21,165,000
Stellex Inds
Sr Sub Nts Series B
11-01-07 9.50 9,450,000 8,516,813
TransDigm
Sr Sub Nts
12-01-08 10.38 6,000,000(e) 6,150,000
Total 65,273,288
Automotive & related (1.7%)
EV Intl
Company Guaranty Series A
03-15-07 11.00 10,500,000 9,030,000
Hayes Lemmerz Intl
Company Guaranty Series B
07-15-07 9.13 10,000,000 10,450,000
MSX Intl
Company Guaranty
01-15-08 11.38 13,110,000 13,175,550
Oxford Automotive
Company Guaranty Series B
06-15-07 10.13 25,120,000 24,617,600
Penda
Sr Nts Series B
03-01-04 10.75 4,500,000 4,545,000
Venture Holdings Trust
Sr Nts Series B
07-01-05 9.50 4,000,000 3,960,000
Total 65,778,150
Banks and savings & loans (0.2%)
Alfa-Russia Finance
(U.S. Dollar) Medium-term Nts Bank Guaranty
07-28-00 10.38 5,000,000(c) 850,000
CEI Citicorp Holdings
(Argentine Peso)
02-14-07 11.25 5,000,000(c,e) 3,442,405
Wilshire Financial Services
01-01-04 13.00 14,700,000(b) 2,940,000
Series B
08-15-04 13.00 8,500,000(b) 1,700,000
Total 8,932,405
Commercial finance (0.5%)
Advance Holdings
Zero Coupon
04-15-03 12.98 3,300,000(e,g) 1,947,000
Netia Holdings
(U.S. Dollar) Company Guaranty Series B
11-01-07 10.25 17,750,000(c) 15,531,250
Total 17,478,250
Communications equipment & services (14.4%)
21st Century Telecom Group
Zero Coupon Sr Disc Nts
02-15-03 12.35 15,500,000(g) 6,510,000
American Cellular
Sr Nts
05-15-08 10.50 16,500,000(e) 16,335,000
AMSC Acquisition
Company Guaranty Series B
04-01-08 12.25 8,000,000 5,360,000
Bestel
(U.S. Dollar) Zero Coupon
05-15-01 12.75 11,400,000(c,e,g) 6,840,000
Birch Telecom
06-15-08 14.00 14,000,000(e) 12,880,560
Caprock Communications
Sr Nts Series B
07-15-08 12.00 17,000,000 15,810,000
Celcaribe
03-15-04 13.50 3,800,000(e) 6,773,500
Sr Nts
03-15-04 13.50 7,350,000 7,056,000
Comcast Cellular Holdings
Sr Nts Series B
05-01-07 9.50 20,000,000 21,550,000
Crown Castle Intl
Zero Coupon Sr Disc Nts
11-15-02 8.88 14,750,000(g) 10,103,750
CTI Holdings
(U.S. Dollar) Zero Coupon Sr Nts
04-15-03 11.50 9,450,000(c,g) 3,685,500
EchoStar Communications
Zero Coupon Sr Disc Nts
06-01-99 7.95 12,000,000(g) 12,165,000
EchoStar Satellite Broadcasting
Zero Coupon Sr Disc Nts
03-15-00 11.81 30,500,000(g) 29,508,749
Esprit Telecom Group
(U.S. Dollar) Sr Nts
12-15-07 11.50 11,000,000(c) 11,275,000
06-15-08 10.88 17,000,000(c) 16,915,000
Facilicom Intl
Sr Nts Series B
01-15-08 10.50 1,815,000 1,506,450
GST Equipment Funding
Sr Nts
05-01-07 13.25 6,750,000 6,741,562
GST Telecom/GST Network Funding
Zero Coupon Sr Disc Nts
05-01-03 10.50 15,000,000(e,g) 7,331,250
GST Telecommunications
Sr Sub Nts
11-15-07 12.75 6,750,000 6,150,938
ICO Global Communications
08-01-05 15.00 16,000,000 12,560,000
Iridium LLC/Capital
Company Guaranty Series A
07-15-05 13.00 10,000,000 9,100,000
Company Guaranty Series C
07-15-05 11.25 1,580,000 1,350,900
Company Guaranty Series D
07-15-05 10.88 11,200,000 9,464,000
IXC Communications
Sr Sub Nts
04-15-08 9.00 15,500,000 15,655,000
Jordan Telecommunications Products
Sr Nts Series B
08-01-07 9.88 25,950,000 25,560,749
Zero Coupon Sr Disc Nts Series B
08-01-00 7.43 21,900,000(g) 17,027,250
KMC Telecom Holdings
Zero Coupon Sr Disc Nts
02-15-03 12.68 12,000,000(g) 6,120,000
Level 3 Communications
Sr Nts
05-01-08 9.13 13,400,000 13,416,750
MJD Communications
Sr Sub Nts Series B
05-01-08 9.50 4,300,000 4,364,500
Nextel Communications
Zero Coupon Sr Disc Nts
01-15-99 11.50 20,500,000(g) 19,603,125
02-15-99 8.00 9,500,000(g) 9,345,625
NEXTLINK Communications
Sr Nts
04-15-06 12.50 15,000,000 16,575,000
11-15-08 10.75 8,750,000(e) 9,176,563
Northeast Optic Network
Sr Nts
08-15-08 12.75 8,000,000 7,700,000
NTL
Zero Coupon Sr Nts Series B
02-01-01 11.48 40,000,000(g) 31,599,999
Pathnet
Sr Nts
04-15-08 12.25 13,350,000 10,546,500
PhoneTel Technologies
Sr Nts
12-15-06 12.00 23,500,000(b) 6,815,000
Price Communications Cellular Holdings
Sr Nts
08-15-08 11.25 17,500,000 17,018,750
Poland Telecom
(U.S. Dollar) Company Guaranty
06-01-04 14.00 4,000,000(c) 2,120,000
Poland Telecom Finance
(U.S. Dollar) Company Guaranty Series B
12-01-07 14.00 16,500,000(c) 15,510,000
RCN
Zero Coupon Sr Disc Nts Series B
02-15-03 9.88 12,000,000(g) 6,600,000
Satelites Mexicanos
(U.S. Dollar) Sr Nts
11-01-04 10.13 10,000,000(c,e) 8,350,000
Talton Holdings
Company Guaranty Sr Nts Series B
06-30-07 11.00 7,600,000 7,201,000
Telehub Communications
Zero Coupon
07-31-01 10.32 12,000,000(e,g) 6,813,240
Triton Communications
Zero Coupon Company Guaranty
05-01-03 10.86 22,000,000(g) 9,790,000
Unisite
Zero Coupon Sub Nts
12-15-00 13.00 9,000,000(e,g,j) 9,925,200
Versatel Telecom
(U.S. Dollar) Sr Nts
05-15-08 13.25 16,600,000(c,e) 16,724,500
Vialog
Company Guaranty
11-15-01 12.75 21,600,000 17,496,000
Total 548,027,910
Computers & office equipment (3.0%)
Anacomp
Sr Sub Nts Series B
04-01-04 10.88 8,500,000 8,733,750
Concentric Network
Sr Nts
12-15-07 12.75 5,600,000 5,432,000
Cooperative Computing
Sr Sub Nts
02-01-08 9.00 20,250,000 18,275,625
Decisionone Holdings
Zero Coupon
08-01-02 9.89 8,450,000(g) 2,112,500
Globix
Sr Nts
05-01-05 13.00 17,075,000 13,318,500
ISG Resources
04-15-08 10.00 17,445,000 17,445,000
Learning
Cv Sr Nts
11-01-00 5.50 2,500,000 2,390,625
PSINet
Sr Nts
11-01-08 11.50 6,500,000(e) 6,955,000
Sr Nts Series B
02-15-05 10.00 11,025,000 11,135,250
Read-Rite
Sub Nts
09-01-04 6.50 4,375,000 3,133,594
Unisys
Sr Nts Series B
04-15-03 12.00 5,000,000 5,625,000
Verio
Sr Nts
04-01-05 10.38 7,000,000 7,035,000
12-01-08 11.25 11,000,000(e) 11,440,000
Total 113,031,844
Electronics (0.7%)
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.63 15,000,000(c,e) 10,753,923
Metromedia Fiber Network
Sr Nts
11-15-08 10.00 13,750,000(e) 14,265,625
Total 25,019,548
Energy (4.9%)
Belco Oil & Gas
Sr Sub Nts Series B
09-15-07 8.88 11,000,000 10,230,000
Canadian Forest Oil
(U.S. Dollar) Company Guaranty
09-15-07 8.75 8,500,000(c) 8,372,500
Clark R&M
Sr Sub Nts
11-15-07 8.88 10,100,000 9,191,000
Costilla Energy
Sr Nts
10-01-06 10.25 16,250,000 14,218,750
Energy Corp of America
Sr Sub Nts Series A
05-15-07 9.50 9,000,000 8,460,000
Forcenergy
Sr Sub Nts
11-01-06 9.50 5,000,000 4,262,500
Sr Sub Nts Series B
02-15-07 8.50 2,250,000 1,923,750
Houston Exploration
Sr Sub Nts Series B
01-01-08 8.63 7,550,000 7,474,500
HS Resources
Company Guaranty
11-15-06 9.25 4,250,000 4,138,438
Sr Sub Nts
12-01-03 9.88 9,700,000 9,663,625
Hurricane Hydrocarbons
(U.S. Dollar) Sr Nts
11-01-04 11.75 15,750,000(c,e) 8,347,500
Lodestar Holdings
(U.S. Dollar) Sr Nts
05-15-05 11.50 18,350,000(c,e) 14,129,500
Michael Petroleum
Sr Nts Series B
04-01-05 11.50 6,000,000 5,040,000
Nuevo Energy
Company Guaranty Series B
06-01-08 8.88 12,000,000 11,955,000
Ocean Energy
Company Guaranty Series B
07-01-08 8.38 14,000,000 14,280,000
Panda Global Energy
(U.S Dollar) Company Guaranty
04-15-04 12.50 24,500,000(c,e) 14,669,375
Rayovac
Sr Sub Nts Series B
11-01-06 10.25 6,114,000 6,434,985
Roil
(U.S. Dollar)
12-05-02 12.78 9,140,000(c,e) 2,285,000
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 3,800,000(c,e) 570,000
Tesoro Petroleum
Company Guaranty Series B
07-01-08 9.00 14,250,000 13,911,563
Transamerica Energy
06-15-02 11.50 13,960,000 5,584,000
Zero Coupon
06-15-99 17.58 9,600,000(g) 3,360,000
XCL
05-01-04 13.50 8,000,000(e) 8,080,000
Total 186,581,986
Energy equipment & services (1.4%)
Bayard Drilling
Company Guaranty Series B
06-30-05 11.00 6,300,000 6,874,875
Dailey Intl
Company Guaranty Series B
02-15-08 9.50 9,000,000 4,050,000
DI Inds
Sr Nts
07-01-07 8.88 6,000,000 4,807,500
Grant Geophysical
Company Guaranty Series B
02-15-08 9.75 7,250,000 5,510,000
Grey Wolf
Company Guaranty Series C
07-01-07 8.88 1,750,000 1,400,000
Northern Offshore ASA
(U.S. Dollar) Company Guaranty
05-15-05 10.00 21,000,000(c,e) 12,180,000
Plains Resources
Company Guaranty Series D
03-15-06 10.25 9,000,000 9,101,250
Pride Intl
Sr Nts
05-01-07 9.38 4,450,000 4,361,000
Seven Seas Petroleum
Sr Nts Series B
05-15-05 12.50 8,000,000 6,310,000
Total 54,594,625
Financial services (1.1%)
Arcadia Financial
Sr Nts
03-15-07 11.50 29,165,000 21,610,550
Gemini Inds
12-23-01 13.50 13,500,000(j) 13,500,000
Tri Polyta Finance BV
(U.S. Dollar) Company Guaranty
12-01-03 11.38 20,000,000(c) 5,600,000
Total 40,710,550
Food (2.1%)
Ameriserve Food Distributions
Company Guaranty
07-15-07 10.13 8,400,000 7,644,000
Aurora Foods
Sr Sub Nts Series D
02-15-07 9.88 10,000,000 10,900,000
Chiquita Brands Intl
Sr Nts
01-15-04 9.63 8,500,000 8,797,500
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 10,325,000(c,e) 6,969,375
RAB Enterprises
Sr Nts
05-01-05 10.50 9,600,000(e) 8,856,000
SC Intl
09-01-07 9.25 17,650,000 18,003,000
Specialty Foods
Sr Nts Series B
08-15-01 10.25 15,000,000 12,825,000
Stroh Brewery
Sr Sub Nts
07-01-06 11.10 14,887,000 7,145,760
Total 81,140,635
Furniture & appliances (0.2%)
Lifestyle Furnishings
Company Guaranty
08-01-06 10.88 6,500,000 7,150,000
Health care (0.2%)
Alaris Medical
Zero Coupon Sr Disc Nts
08-01-03 11.12 16,000,000(e,g) 8,800,000
Health care services (2.1%)
Abbey Healthcare Group
Sr Sub Nts
11-01-02 9.50 20,750,000 18,675,000
Fountain View
Company Guaranty Series B
04-15-08 11.25 8,600,000 7,578,750
Magellan Health Services
Sr Sub Nts
02-15-08 9.00 15,000,000 13,987,500
Oxford Health Plans
Sr Nts
05-15-05 11.00 11,500,000(e) 10,522,500
Paracelsus Healthcare
Sr Sub Nts
08-15-06 10.00 14,600,000 13,450,250
Physician Sales & Service
Company Guaranty
10-01-07 8.50 15,250,000 15,898,125
Total 80,112,125
Household products (0.3%)
Revlon Worldwide
Zero Coupon Sr Disc Nts Series B
03-15-01 10.94 14,000,000(f) 9,800,000
Industrial equipment & services (3.0%)
Clark Materials Handling
Sr Nts Series D
11-15-06 10.75 13,500,000 13,837,500
Day Intl Group
Sr Nts Series B
06-01-05 11.13 1,200,000 1,240,500
Goss Graphic Systems
Sr Sub Nts
10-15-06 12.00 14,000,000 13,370,000
Grove Holdings LLC/Capital
Zero Coupon
05-01-03 11.63 4,000,000(g) 1,880,000
Grove Inds
05-01-10 14.50 2,901,549(e) 2,292,224
HDA Parts System
Sr Sub Nts with Rights
08-01-05 12.00 5,000,000(e) 4,600,000
Motor & Gears
Sr Nts Series D
11-15-06 10.75 30,500,000 31,567,500
Norcal Waste Systems
Company Guaranty Series B
11-15-05 13.50 20,300,000 22,862,875
Park-Ohio Inds
Sr Sub Nts
12-01-07 9.25 15,000,000 15,225,000
Thermadyne Holdings
Zero Coupon
06-01-03 12.49 12,000,000(g) 5,640,000
Total 112,515,599
Insurance (0.8%)
Americo Life
Sr Sub Nts
06-01-05 9.25 15,000,000 15,281,250
Veritas Holdings
(U.S. Dollar) Sr Nts
12-15-03 9.63 15,256,000(c) 15,256,000
Total 30,537,250
Leisure time & entertainment (5.9%)
Affinity Group Holdings
Sr Nts
04-01-07 11.00 9,000,000 9,191,250
Coast Hotels & Casino
Company Guaranty Series B
12-15-02 13.00 19,800,000 21,705,750
Hammons (JQ) Hotels
1st Mtge
02-15-04 8.88 12,000,000 11,100,000
Hollywood Theaters
Company Guaranty
08-01-07 10.63 5,950,000 5,057,500
Icon Health & Fitness
Sr Sub Nts Series B
07-15-02 13.00 12,500,000(b) 5,875,000
Zero Coupon Sr Disc Nts Series B
11-15-01 13.37 21,750,000(g) 217,500
Isle of Capri Casinos/Capital
1st Mtge Series B
08-31-04 13.00 16,250,000 17,103,125
Lodgenet Entertainment
Sr Nts
12-15-06 10.25 15,000,000 15,300,000
Premier Cruises
Sr Nts
03-15-08 11.00 11,000,000(b,e) 4,510,000
Premier Parks
Sr Nts
04-01-06 9.25 8,300,000 8,725,375
Regal Cinemas
Sr Sub Nts
06-01-08 9.50 8,000,000(e) 8,420,000
Riviera Holdings
Company Guaranty
08-15-04 10.00 11,000,000 9,253,750
Trump Atlantic City Assn/Funding
1st Mtge Company Guaranty
05-01-06 11.25 26,945,000 25,463,025
Trump Holdings & Funding
Sr Nts
06-15-05 15.50 28,050,000 27,699,375
United Artists Theatres
Series A
07-01-15 9.30 13,367,368 12,264,560
Sr Sub Nts Series B
04-15-08 9.75 10,000,000 9,600,000
Venetian Casino/LV Sands
Company Guaranty
11-15-99 10.00 6,000,000(h) 5,340,000
11-15-04 12.25 15,105,000 14,538,563
Waterford Gaming/LLC
Sr Nts
11-15-03 12.75 12,771,000 13,792,680
Total 225,157,453
Media (11.0%)
Adams Outdoor Advertising
Sr Nts
03-15-06 10.75 10,800,000 11,556,000
Adelphia Communications
Sr Deb
09-15-04 11.88 5,000,000 5,412,500
Sr Nts Series B
02-01-08 8.38 19,500,000 20,036,250
Australis Holdings
(U.S. Dollar) Zero Coupon Sr Disc Nts
11-01-00 14.99 17,900,000(b,c,g) 179,000
Australis Media
(U.S. Dollar)
11-01-00 14.00 5,587,791(c) 4,380,700
(U.S. Dollar) Zero Coupon
05-15-00 12.32 43,500,000(b,c,g) 4,350
(U.S. Dollar) Zero Coupon Sr Disc Nts
05-15-00 13.83 469,560(b,c,g) 47
Benedek Broadcasting
Sr Nts
03-01-05 11.88 2,500,000 2,725,000
Benedek Communications
Zero Coupon Sr Disc Nts
05-15-01 13.25 9,500,000(g) 7,030,000
Big City Radio
Zero Coupon Company Guaranty
03-15-01 11.40 10,000,000(g) 6,700,000
Cable Systems USA
06-30-99 10.75 2,205,527(j) 2,183,471
Capstar Broadcasting
Zero Coupon Sr Disc Nts
02-01-02 7.49 8,000,000(e,g) 6,580,000
CBS Radio
Pay-in-kind Sub Deb
01-15-09 11.38 9,475,300(i) 10,943,972
Central Euro Media
(U.S. Dollar) Sr Nts
08-15-04 9.38 12,175,000(c) 10,079,457
Chancellor Media
Sr Nts
11-01-08 8.00 50,000,000(e) 51,374,999
Sr Sub Nts
10-01-04 9.38 3,500,000 3,640,000
Coaxial Communications/Phoenix
Company Guaranty
08-15-06 10.00 10,000,000(e) 10,175,000
Globo Communicacoes Participacoes
(U.S. Dollar) Sr Nts
12-05-08 10.63 15,000,000(c,e) 11,227,494
Golden Sky Systems
Sr Sub Nts
08-01-06 12.38 17,000,000(e) 17,148,750
Grupo Televisa
(U.S. Dollar) Sr Nts
05-15-06 11.88 3,250,000(c) 3,355,625
Jacor Communications
Company Guaranty
12-15-06 9.75 19,000,000 21,042,500
James Cable Partners LP
Sr Nts Series B
08-15-04 10.75 3,550,000 3,745,250
Liberty Group Publishing
Company Guaranty
02-01-08 9.38 7,500,000 7,078,125
MDC Communications
(U.S. Dollar) Sr Sub Nts
12-01-06 10.50 12,100,000(c) 12,342,000
OpTel
Sr Nts Series B
02-15-05 13.00 17,000,000 17,425,000
Outdoor Systems
Company Guaranty
10-15-06 9.38 10,000,000 10,800,000
06-15-07 8.88 26,175,000 27,810,938
Paxson Communications
Sr Sub Nts
10-01-02 11.63 13,000,000 13,357,500
Pegasus Communications
Series B
07-01-05 12.50 15,400,000 16,863,000
Sr Nts Series B
10-15-05 9.63 6,500,000 6,500,000
Price Communications Wireless
Sr Nts
12-15-06 9.13 15,000,000(e) 15,600,000
Sr Sub Nts
07-15-07 11.75 10,000,000 10,875,000
Radio Unica
Zero Coupon Sr Disc Nts
08-01-02 11.74 13,000,000(e,g) 6,906,250
Sinclair Broadcast Group
Sr Sub Nts
12-15-07 8.75 1,800,000 1,818,000
Spanish Broadcasting System
Sr Nts
06-15-02 12.50 4,000,000 4,360,000
Sr Nts Series B
03-15-04 11.00 3,150,000 3,307,500
Telemundo Holdings
Zero Coupon Sr Disc Nts
08-15-03 .00 17,000,000(e,g) 9,860,000
Telewest Communications
(U.S. Dollar) Sr Nts
11-01-08 11.25 8,000,000(c,e) 9,120,000
(U.S. Dollar) Zero Coupon
10-01-00 10.90 7,000,000(c,g) 5,897,500
Veninfotel
(U.S. Dollar) Cv Pay-in-kind
03-01-02 10.00 9,450,000(c,i,j) 14,175,000
Viacom Intl
07-01-03 7.00 15,000,000 15,001,703
Total 418,617,881
Metals (3.2%)
Bar Technologies
Company Guaranty
04-01-01 13.50 10,000,000(e) 10,700,000
Centaur Mining & Exploration
(U.S. Dollar) Company Guaranty
12-01-07 11.00 11,500,000(c) 10,522,500
EnviroSource
Sr Nts
06-15-03 9.75 26,648,000 24,516,160
Great Central Mines
(U.S. Dollar) Sr Nts
04-01-08 8.88 10,000,000(c) 10,150,000
Great Lakes Acquisition
Zero Coupon Series B
05-15-03 13.23 8,000,000(g) 3,840,000
Great Lakes Carbon
Company Guaranty Pay-in-kind Series B
05-15-08 10.25 8,875,000(i) 8,963,750
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.13 9,609,759(c,e) 8,552,685
Maxxam Group Holdings
Sr Nts Series B
08-01-03 12.00 12,000,000 12,495,000
Neenah
Sr Sub Nts
05-01-07 11.13 3,700,000 3,857,250
NSM Steel
Company Guaranty
02-01-06 12.00 14,350,000(b) 3,731,000
02-01-08 12.25 11,700,000(b) 1,755,000
Ormet
Company Guaranty
08-15-08 11.00 17,000,000(e) 16,235,000
Sheffield Steel
1st Mtge Series B
12-01-05 11.50 10,200,000 7,866,750
Total 123,185,095
Miscellaneous (1.7%)
Bistro Trust
Sub Nts
12-31-02 9.50 10,000,000(e) 9,516,000
Comforce Operating
Sr Nts Series B
12-01-07 12.00 9,000,000 9,225,000
ECM Funding LP
06-10-02 11.92 1,576,169(j) 1,576,169
Knology Holdings
Zero Coupon Sr Disc Nts
10-15-02 12.24 11,000,000(g) 4,963,750
Outsourcing Solutions
Sr Sub Nts Series B
11-01-06 11.00 37,395,000 35,385,018
Purina Mills
Sr Sub Nts
03-15-10 9.00 5,825,000 5,941,500
Total 66,607,437
Multi-industry conglomerates (1.7%)
Communications & Power Inds
Sr Sub Nts Series B
08-01-05 12.00 10,000,000 10,537,500
Jordan Inds
Zero Coupon Sr Sub Debs Series B
04-01-02 11.75 17,692,251(g) 11,300,925
Pierce Leahy
Sr Sub Nts
07-15-06 11.13 5,433,000(e) 5,989,883
Pierce Leahy Command
Company Guaranty
05-15-08 8.13 25,150,000 24,961,375
Prime Succession
Sr Sub Nts
08-15-04 10.75 10,000,000 9,562,500
Total 62,352,183
Paper & packaging (5.5%)
APP Intl Finance
(U.S. Dollar)
10-01-05 11.75 4,500,000(c) 3,555,000
Bear Island LLC/Finance
Sr Nts Series B
12-01-07 10.00 12,500,000 12,500,000
Berry Plastics
Sr Sub Nts
04-15-04 12.25 3,250,000(e) 3,424,688
BPC Holdings
Sr Nts Series B
06-15-06 12.50 11,750,000 12,308,125
Crown Packaging
Sr Sub Nts
09-01-05 11.00 20,000,000 18,800,000
Doman Inds
(U.S. Dollar)
03-15-04 8.75 10,500,000(c) 8,951,250
(U.S. Dollar) Sr Nts Series B
11-15-07 9.25 3,500,000(c) 2,905,000
Gaylord Container
Sr Nts
06-15-07 9.75 10,500,000 10,053,750
02-15-08 9.88 36,000,000 28,799,999
Graham Packaging/GPC Capital
Zero Coupon Sr Disc Nts Series B
01-15-03 10.84 5,000,000(g) 3,350,000
Grupo Industrial Durango
(U.S. Dollar)
08-01-03 12.63 5,000,000(c) 4,562,500
Repap New Brunswick
(U.S. Dollar) Sr Nts
06-01-04 9.00 5,450,000(c) 5,395,500
04-15-05 10.63 33,000,000(c) 26,070,000
Riverwood Intl
Company Guaranty
08-01-07 10.63 5,500,000 5,665,000
04-01-08 10.88 10,000,000 9,500,000
Company Guaranty Sr Nts
04-01-06 10.25 15,000,000 15,150,000
Silgan Holdings
06-01-09 9.00 8,250,000 8,250,000
Pay-in-kind
07-15-06 13.25 5,621,000(i) 6,084,733
Stone Container
1st Mtge
10-01-02 10.75 5,000,000 5,200,000
Sr Nts
08-01-16 12.58 9,000,000 9,393,750
Tjiwi Kimia Finance Mauritius
(U.S. Dollar) Company Guaranty
08-01-04 10.00 10,000,000(c) 6,250,000
Tjiwi Kimia Intl
(U.S. Dollar) Company Guaranty
08-01-01 13.25 7,000,000(c) 5,180,000
Total 211,349,295
Restaurants & lodging (0.7%)
American Restaurant Group
Company Guaranty Series B
02-15-03 11.50 9,000,000 8,426,250
Prime Hospitality
Sr Sub Nts Series B
04-01-07 9.75 18,700,000 18,933,750
Total 27,360,000
Retail (3.8%)
Advance Stores
Sr Sub Nts
04-15-08 10.25 5,500,000(e) 5,665,000
Amazon.com
Zero Coupon Sr Disc Nts
05-01-03 10.00 24,250,000(g) 16,641,563
CEX Holdings
Sr Sub Nts
06-01-08 9.63 10,000,000(e) 9,600,000
Corporate Express
Cv
07-01-00 4.50 5,000,000 4,418,750
Dairy Mart Convenience Stores
Sr Sub Nts Series B
03-15-04 10.25 24,950,000(j) 23,764,875
Maxim Group
Company Guaranty Series B
10-15-07 9.25 12,500,000 12,515,625
Musicland Group
Company Guaranty Series B
03-15-08 9.88 16,750,000 16,750,000
Pathmark Stores
Sr Sub Nts
05-01-03 9.63 8,500,000 8,457,500
Sub Nts
06-15-02 11.63 18,000,000 18,090,000
Pueblo Xtra Intl
Sr Nts Series C
08-01-03 9.50 9,410,000 9,174,750
Stater Brothers Holdings
Sr Nts
03-01-01 11.00 14,500,000 15,152,500
United Auto Group
Sr Sub Nts Series A
07-15-07 11.00 3,500,000 3,097,500
Total 143,328,063
Textiles & apparel (2.0%)
Anvil Knitwear
Sr Nts Series B
03-15-07 10.88 14,000,000 11,917,500
Galey & Lord
Company Guaranty
03-01-08 9.13 8,000,000 7,400,000
GFSI
Sr Sub Nts Series B
03-01-07 9.63 13,000,000(e) 12,236,250
GFSI Holdings
Zero Coupon Sr Disc Nts Series B
09-15-04 10.77 13,300,000(g) 11,571,000
Hosiery Corp of America
Sr Sub Nts
08-01-02 13.75 10,000,000 10,300,000
NTEX
(U.S. Dollar) Sr Nts
06-01-06 11.50 6,900,000(c,e) 6,624,000
Pillowtex
Company Guaranty Sr Sub Nts Series B
12-15-07 9.00 5,000,000 5,225,000
Polysindo Intl Finance
(U.S. Dollar) Company Guaranty
06-15-01 13.00 2,000,000(c) 620,000
06-15-06 11.38 7,900,000(c) 2,449,000
Steel Heddle Group
Sr Sub Nts
06-01-08 10.63 4,600,000(e) 3,795,000
Zero Coupon
06-01-03 13.75 6,200,000(e,g) 2,619,500
Total 74,757,250
Transportation (1.4%)
American Architectural
Company Guaranty
12-01-07 11.75 10,000,000 8,200,000
Autopistas Del Sol
(U.S. Dollar) Sr Nts
08-01-09 10.25 13,500,000(c,e) 9,888,750
Enterprises Shipholding
(U.S. Dollar) Sr Nts
05-01-08 8.88 19,750,000(c) 17,502,758
Global Ocean Carriers
Sr Nts
07-15-07 10.25 13,500,000 8,370,000
Greater Beijing Expressway
(U.S. Dollar) Sr Nts
06-15-04 9.75 3,500,000(c,e) 1,855,000
06-15-07 10.00 5,000,000(c,e) 2,500,000
Trico Marine Services
Company Guaranty Sr Nts Series F
08-01-05 8.50 5,000,000 4,550,000
Total 52,866,508
Utilities -- electric (0.6%)
Espirito Santo Centrais
(U.S. Dollar)
07-15-07 10.00 9,000,000(c) 6,715,870
Midland Funding
Series A
07-23-05 11.75 3,500,000 4,029,375
Series B
07-23-06 13.25 10,500,000 12,744,375
Total 23,489,620
Utilities -- gas (0.5%)
Bellwether Exploration
Sr Nts
04-01-07 10.88 9,000,000 9,056,250
Empire Gas
Sr Nts
07-15-99 7.00 11,350,000(h) 8,356,438
Total 17,412,688
Utilities -- telephone (7.7%)
Allegiance Telecom
Zero Coupon Sr Disc Nts Series B
02-15-03 12.00 30,450,000(g) 15,072,750
CCPR Services
Company Guaranty
02-01-07 10.00 26,850,000 26,581,500
Colt Telecommunications Group
(U.S. Dollar) Zero Coupon
12-15-01 12.00 8,500,000(c,g) 6,715,000
Geotek Communications
Cv Sr Sub Nts
02-15-01 12.00 4,135,000(b) 5,169
Grupo Iusacell
(U.S. Dollar)
07-15-04 10.00 4,550,000(c) 3,913,000
Hyperion Telecommunications
Sr Nts Series B
09-01-04 12.25 14,000,000 14,560,000
Zero Coupon Sr Disc Nts Series B
04-15-01 15.61 2,250,000(g) 1,665,000
Intermedia Communications
Sr Nts Series B
11-01-07 8.88 11,025,000 10,914,750
06-01-08 8.60 2,400,000 2,340,000
Zero Coupon Sr Disc Nts Series B
07-15-02 10.65 22,375,000(g) 15,886,250
ITC Deltacom
Sr Nts
06-01-07 11.00 9,457,000 10,308,130
03-01-08 8.88 17,250,000 17,077,499
11-15-08 9.75 4,500,000(e) 4,753,125
McLeod USA
Sr Nts
03-15-08 8.38 7,680,000 7,718,400
Metrocall
Sr Sub Nts
10-01-07 10.38 13,750,000 14,162,500
MetroNet Communications
(U.S. Dollar) Sr Nts
08-15-07 12.00 8,750,000(c) 9,668,750
11-01-08 10.63 5,200,000(c,e) 5,590,000
(U.S. Dollar) Zero Coupon Sr Disc Nts
11-01-02 10.74 8,300,000(c,g) 5,146,000
06-15-03 9.95 16,000,000(c,g) 10,080,000
Omnipoint Communications
Sr Nts
02-17-06 8.56 16,965,195(e,h) 14,717,307
08-15-06 11.63 24,100,000 15,906,000
Panamsat Intl Systems
Pay-in-kind
04-15-05 12.75 4,000(i) 4,570
Peoples Telephone
Sr Nts
07-15-02 12.25 14,250,000 15,710,625
Philippine Long Distance Telephone
(U.S. Dollar) Medium-term Nts Series E
03-06-07 7.85 15,000,000(c,e) 13,000,020
Primus Telecommunications Group
Sr Nts
08-01-04 11.75 11,550,000 12,040,875
Sr Nts Series B
05-15-08 9.88 10,000,000 9,450,000
Pronet
Sr Sub Nts
06-15-05 11.88 19,350,000 20,462,625
RSL Communications
(U.S. Dollar) Company Guaranty
11-15-06 12.25 10,167,000(c) 10,828,351
Total 294,278,196
Total bonds
(Cost: $3,574,322,278) $3,248,057,724
Common stocks (0.7%)
Issuer Shares Value(a)
Arena Brands 111,111(b,j) $2,388,887
Communications & Power Inds 3,500(b) 525,000
Concentric Network 100,000(b) 2,837,500
Core Capital 222,223(j) 2,844,454
EchoStar Satellite Broadcasting 150,000(b) 5,821,875
Foodmaker 21,000(b) 406,875
Gaylord Container Cl A 1,000,000(b) 5,250,000
Global TeleSystems Group 107,700(b) 4,674,853
Nextel Communications Cl A 41,056(b) 882,704
OpTel 17,000(b,e) 68,000
Pegasus Communications 16,923(b) 283,460
Specialty Foods 300,000(b) 6,000
Wilshire Real Estate Investment Trust 140,000 472,500
Wireless One 25,000(b) 9,375
Total common stocks
(Cost: $26,415,197) $26,471,483
Preferred stocks & other (10.0%)
Issuer Shares Value(a)
21st Century Telecom Group
13.75% Pay-in-kind 2,787(b,i) $1,811,550
Warrants 2,600 78,000
Allegiance Telecom
Warrants 30,450 60,900
American Mobile Satellite
Warrants 8,000 40,000
American Restaurant Group
12.00% Pay-in-kind Series B 3,500(b,i) 3,500,000
Warrants 3,500 35
American Telecasting
Warrants 85,225 852
APP Finance II Mauritius Cl B
12.00% 22,600(c) 13,729,500
Australis Holdings
Warrants 13,400(c) 134
Bar Technologies
Warrants 10,000(d) 550,000
Belco Oil & Gas
6.50% Cv 210,000 3,018,750
Bell Technology
Warrants 17,075 170,750
Benedek Communications
Warrants 70,000 140,000
Capstar Broadcasting
12.00% Pay-in-kind Exchangeable 45,000(b,i) 5,175,000
Celcaribe
Warrants 1,195,110 3,137,164
Century Maintenance
13.25% Pay-in-kind 120,000(b,e,i) 12,120,000
Chesapeake Energy
7.00% Cv 33,300 549,450
Clark Materials Handling
13.00% 6,706(b) 5,264,210
Clearnet Communications
Warrants 42,240 274,560
Communications & Power Inds
14.00% Pay-in-kind Series B 186,202(b,i) 20,342,570
Concentric Network
13.50% Pay-in-kind Series B 11,857(b,i) 9,959,880
Warrants 5,600 672,000
Core Capital
10.00% Cv Series A/I 222,223(j) 4,633,350
Crown Packaging
Warrants 10,000 1,000
CSC Holdings
11.13% Pay-in-kind Series M 312,447(b,i) 35,150,287
11.75% Pay-in-kind Series H 141,814(b,i) 16,450,425
Dairy Mart Convenience Stores
Warrants 311,333(e) 158,780
Earthwatch
12.00% Cv Series C 700,000(b,e) 875,000
EchoStar Communications
12.13% Pay-in-kind Series B 13,934(i) 14,735,205
Fairfield Mfg
11.25% Pay-in-kind 12,880(i) 12,236,000
Geotek Communications
Warrants 872,500(k) --
Global Crossing Holdings
10.50% Pay-in-kind 80,000(b,e,i) 8,020,000
HarCor Energy
Warrants 110,000 55,000
Hemmeter Enterprises
Warrants 36,000(k) --
Hosiery Corp of America
Warrants 10,000 400,000
Hyperion Telecommunications
12.88% Pay-in-kind Series B 5,117(b,i) 4,221,525
Intermedia Communications
7.00% Cv Series F 240,000(b) 3,870,000
13.50% Pay-in-kind Series B 130,800(b,i) 13,766,699
Warrants 22,750 1,070,615
Intl Wireless Communications
Warrants 14,750 148
Iridium World Communications
Warrants 17,150 2,658,250
IXC Communications
12.50% Pay-in-kind Series B 5,238(b,i) 5,565,375
Jitney-Jungle Stores of America Cl A
15.00% 109,500(b) 14,454,000
Kelley Oil & Gas
2.63% Cv 262,500 3,740,625
KMC Telecom Holdings
Warrants 12,000 37,500
Knology Holdings
Warrants 11,000 27,500
Lady Luck Gaming
Pay-in-kind 50,000(i,j) 1,750,000
Liberty Group Publishing
14.75% Cv 496,217(b) 12,405,425
MetroNet Communications
Warrants 8,750 396,995
Nakornthai Strip Mill
Warrants 7,407,184(c) 7
Nebco Evans Holdings
11.25% Pay-in-kind 122,882(b,i) 6,512,746
Nextel Communications
11.13% Pay-in-kind Series E 7,065(b,i) 6,217,200
Warrants 18,902(k) --
NTL
13.00% Pay-in-kind Series B 24,246(b,e,i) 25,094,609
Pagemart Nationwide
Warrants 50,750 247,406
Pathnet
Warrants 13,350 133,500
Paxson Communications
12.50% Pay-in-kind Exchangeable 217,090(b,i) 19,700,918
Pegasus Communications
12.75% Pay-in-kind 62,500(b,i) 6,546,875
12.75% Pay-in-kind Series A 2,499(b,i) 2,573,970
Poland Telecom
Warrants 20,500(c) 660,040
Price Communications
Warrants 41,280 1,238,400
Primus Telecommunications Group
Warrants 11,550 231,000
RSL Communications
Warrants 9,500 902,500
SFX Broadcasting
12.63% Pay-in-kind Series E 60,722(i) 7,286,640
SGW Holdings
12.50% Pay-in-kind Series B 127,978(b,i,j) 2,175,626
Cv Series A 87,091(j) 899,940
Warrants 2,750(j) 870,375
Sinclair Capital
11.63% 140,000 15,172,500
TransDigm
Warrants 11,195(j) 11,194,642
Unifi Communications
Warrants 10,000 100
Unisite
Warrants 4,504(j,k) --
Unisite Cl C 5,938(j) 2,935,985
Versatel Telecom
Warrants 11,000(c) 137,500
Vialog
Warrants 21,600 280,800
Warren (SD)
14.00% Series B 557,430(b) 31,216,080
Wireless One
Warrants 23,250 233
Total preferred stocks & other
(Cost: $391,714,460) $379,504,601
Short-term securities (2.4%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (0.8%)
Federal Home Loan Mtge Corp Disc Nts
12-15-98 4.99% $4,600,000 $4,591,109
12-17-98 4.85 16,100,000 16,065,402
Federal Natl Mtge Assn Disc Nt
12-18-98 5.01 9,800,000 9,776,954
Total 30,433,465
Commercial paper (1.5%)
Associates Corp North America
01-14-99 5.35 6,400,000 6,356,707
BMW US Capital
12-15-98 5.15 6,500,000 6,487,033
General Electric Capital
12-01-98 5.45 8,900,000 8,900,000
GTE Funding
12-01-98 5.19 9,000,000 9,000,000
Intl Lease Finance
12-16-98 5.16 3,800,000 3,791,862
Natl Rural Utilities
12-17-98 5.20 10,100,000 10,076,747
Pioneer Hi-Bred
12-07-98 5.10 2,500,000 2,497,888
12-08-98 5.21 6,100,000 6,093,832
Reed Elsevier
12-07-98 5.15 3,300,000(l) 3,297,179
Sysco
12-18-98 5.10 2,100,000(l) 2,094,982
Total 58,596,230
Letter of credit (0.1%)
Bank of America-
AES Hawaii
12-10-98 4.96 3,000,000 2,996,288
Total short-term securities
(Cost: $92,027,817) $92,025,983
Total investments in securities
(Cost: $4,084,479,752)(m) $3,746,059,791
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated. As of Nov. 30,
1998, the value of foreign securities represented 13.53% of net assets.
(d) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on Nov. 30, 1998.
(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(h) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Nov. 30, 1998.
(i) Pay-in-kind securities are securities in which the issuer has the option to
make interest or dividend payments in cash or in additional securities. The
securities issued as interest or dividends usually have the same terms,
including maturity date, as the pay-in-kind securities.
<PAGE>
<TABLE>
<CAPTION>
(j) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Nov. 30, 1998, is as follows:
Security Acquisition Cost
dates
Arena Brands
<S> <C> <C>
Common 06-20-97 $5,888,888
Cable Systems USA
10.75% 1999 02-05-96 2,124,518
Core Capital
Common 10-31-97 4,444,460
Preferred 10.00% Cv Series A/I 10-31-97 5,555,575
Dairy Mart Convenience Stores
Sr Sub Nts Series B 10.25% 2004 11-29-95 thru 10-22-96 5,744,975
ECM Funding LP
11.92% 2002 04-14-92 1,576,168
Gemini Inds
13.50% 2001 12-23-96 13,500,000
Lady Luck Gaming
Preferred Pay-in-kind 11-20-98 1,750,000
SGW Holdings
Preferred 12.50% Pay-in-kind Series B 08-15-97 thru 11-02-98 2,189,268
Preferred Cv Series A 08-15-97 899,998
Warrants 08-15-97 867,900
TransDigm
Warrants 09-03-93 thru 05-08-96 1,027,805
Unisite
Preferred Cl C 12-17-97 2,750,066
Warrants 12-17-97 --
Zero Coupon Sub Nts 13.00% 2000* 12-18-97 9,000,000
Veninfotel
(U.S. Dollar) Cv Pay-in-kind 10.00% 2002 03-05-97 thru 11-03-98 9,450,000
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
</TABLE>
<PAGE>
(l) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(m) At Nov. 30, 1998, the cost of securities for federal income tax purposes was
approximately $4,083,533,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.........................................$130,728,000
Unrealized depreciation.........................................(468,201,000)
Net unrealized depreciation....................................$(337,473,000)
SEMIANNUAL REPORT -- 1998
<PAGE>
Bulk Rate
U.S. POSTAGE
PAID
Permit No. 85
Spencer, IA
S-6470 M (1/99)
IDS Extra Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
