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FINANCIAL PLANNING
Retirement Annuity Mutual Funds
1994 annual report
(prospectus enclosed)
(Icon of) A snowflake, shaking hands and a basket of apples.
Offers six funds with separate goals and objectives to provide
investment flexibility with no initial sales charge.
IDS
An American Express company
AMERICAN
EXPRESS
Managed by IDS Life Insurance Company
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PAGE 2
(Icon of) A snowflake, shaking hands and a basket of apples.
The Retirement Annuity Mutual Funds provide several alternatives to
consider for investment through your annuity contracts.
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PAGE 3
Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the
funds performed.
The prospectus, which is bound into the middle of this annual
report, describes the funds in detail.
See page 2 of the prospectus for a detailed prospectus contents.
1994 annual report
From the president 4
Capital Resource Fund
From the portfolio manager 5
Ten largest holdings 6
Long-term performance 7
International Equity Fund
From the portfolio manager 8
Ten largest holdings 9
Long-term performance 10
Aggressive Growth Fund
From the portfolio manager 11
Ten largest holdings 12
Long-term performance 13
Special Income Fund
From the portfolio manager 14
Ten largest holdings 15
Long-term performance 16
Moneyshare Fund
From the portfolio manager 17
Managed Fund
From the portfolio managers 18
Ten largest holdings 19
Long-term performance 20
All funds
Independent auditors' report 21
Financial statements 22
Notes to financial statements 29
Investments in securities 37
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1994 prospectus
The funds in brief 3p
Sales charge and fund expenses 4p
Performance 5p
Investment policies and risks 16p
How to invest, transfer or redeem shares 23p
Distributions and taxes 24p
How the funds are organized 25p
About IDS 31p
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PAGE 4
To our contract owners
(Photo of) William R. Pearce, President of the funds
From the president
Your funds, like all the funds in the IDS MUTUAL FUND GROUP, are
preparing for an important meeting of the shareholders on Nov. 9,
1994. By the time you receive this annual report and prospectus,
you should have received the proxy statement.
The proxy statement presents the agenda for the shareholder meeting
as briefly and simply as possible, and in compliance with all the
applicable requirements. While it is long, and sometimes complex,
the issues it presents are important -- as is your response.
So, we encourage you to study the proxy statement carefully and
vote the shares you own promptly.
By way of an update, the new design of this report has received
favorable reviews and some constructive recommendations. We will
continue to try different ways to present information so you will
have what you need to understand your investment.
William R. Pearce
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(Photo of) Curt Weaver, Portfolio manager
From the portfolio manager
Despite a highly volatile market for growth stocks, Capital
Resource Fund had a productive fiscal year, generating an increase
in accumulation unit value of 6.3% for the period ended Aug. 31,
1994.
Our success was largely a result of the diversification we
maintained in the portfolio. The mix included growth stocks of
both large and small companies, as well as companies that appeared
ready to generate better earnings. Holdings covered a broad range
of business sectors, with stocks of consumer, financial services,
technology and health-care companies comprising the majority of the
portfolio. Although they made up a small portion of the portfolio,
foreign stocks also made a positive contribution.
While the market as a whole has been lackluster in 1994, the
volatility in individual stocks has been more frequent and extreme
than in recent years. This pattern created opportunities to buy
certain issues at lower-than-normal prices. Conversely, other
stocks rose to what appeared to be unsustainable price levels. In
those cases, we either reduce or eliminated our positions.
Looking ahead, we expect the high level of volatility to continue.
Our view reflects the uncertainty about the direction of long-term
interest rates and inflation, as well as whether the current level
of stock prices is justified given historical price levels. The
environment does not preclude positive stock performance, but we
think it's reasonable to expect a less generous return than we've
enjoyed for most of the past several years.
Curt Weaver
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PAGE 5
<TABLE>
<CAPTION>
Your fund's ten largest holdings
Capital Resource Fund
(Pie chart) The ten holdings listed here make up 19.05% of the fund's net assets.
Percent Value
(of fund's net assets) (as of Aug. 31, 1994)
_______________________________________________________________________________________________
<S> <C> <C>
State Street Boston 2.48% 72,000,000
Investment processing services for financial
institutions and corporate and government clients.
UST 2.26 65,625,000
Moist smokeless tobacco and wines.
Walgreens 2.08 60,200,000
A leading retail drug chain and pharmacy benefit
management company.
UNUM Corp. 2.03 58,950,000
UNUM Corp. through various subsidiaries, offers
a broad range of disability, health, life insurance
and group pension products.
Stryker Corp. 1.93 55,912,500
Stryker Corp. develops, manufactures and distributes
specialty surgical and medical products worldwide,
including powered surgical instruments, orthopedic
implants, endosopic systems, and patient-handling equipment.
Tele-Communications, Inc. 1.79 51,983,750
Tele-Communications, Inc. is the largest cable system
operator with over 10 million subscribers in the United
States. Approximately 70% of its business is regulated.
Northern Trust 1.78 51,637,500
Investment processing services for financial institutions
and corporate and government clinics.
Reader's Digest 1.69 48,875,000
Reader's Digest is a publisher and direct mail marketer
of magazines, books, recorded music and other products
worldwide.
Philip Morris 1.67 48,495,000
Philip Morris is the largest cigarette company and has
become the second largest packaged-food company in the
world as a result of the Kraft acquisition.
Cardinal Health 1.34 38,750,000
A wholesale distributor of pharmaceutical, surgical and
hospital supplies and health and beauty aids.
Excludes short-term securities.
_______________________________________________________________________________________________
</TABLE>
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PAGE 6
Your fund's long-term performance
Capital Resource Fund
How your $10,000 has grown in Capital Resource Fund
Average annual total return
(as of Aug. 31, 1994)
1 year 5 years 10 years
+7.6% +10.5% +13.7%
S&P 500
Capital Resource Fund
$35,932
$10,000
'84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94
On the chart above you can see how the fund's total return compared
to a widely cited performance index, Standard & Poor's 500 Stock
Index (S&P 500).
The S&P 500, an unmanaged list of common stocks, is frequently used
as a general measure of market performance. However, the S&P 500
companies are generally larger than those in which the fund
invests.
Your investment and return value fluctuate so that your
accumulation units, when redeemed, may be worth more or less than
the original cost. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results. The above chart does not reflect expenses that apply to
the variable accounts or the annuity contracts.
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PAGE 7
To our contract owners
International Equity Fund
(Photo of) Paul Hopkins, Portfolio manager
From the portfolio manager
International Equity Fund took advantage of generally strong stock
markets and currencies in many foreign countries during the past
fiscal year, ultimately posting a 13.52% gain in accumulation unit
value for the fiscal year ended Aug. 31, 1994.
Although we maintained investments in many countries, our greatest
exposure was to Japan. The strategy proved to be highly productive
this year, as that market rose and the yen appreciated against the
dollar. (U.S. investors benefit from appreciating currencies in
foreign countries, but are penalized when those currencies fall in
value versus the dollar.) Prior to this year, we enjoyed our
greatest gains in Southeast Asia, including Malaysia, Singapore and
Hong Kong, which made spectacular advances during the fourth
quarter of 1993. After experiencing downturns early in 1994, these
markets, particularly Singapore and Malaysia, have since rebounded.
Elsewhere, our new positions in Mexico and Argentina, established
this past summer when stock prices in those countries had declined,
provided a boost late in the fiscal year. In other major markets
where we were invested, Europe provided good results until the
spring of this year, when we reduced our holdings there in time to
avoid much of the impact of a subsequent downturn. Australia, too,
was positive overall for the portfolio. The only disappointment of
note was the United Kingdom.
At the close of the period, our greatest investment concentrations
were in Japan, the United Kingdom and Australia, in that order. We
have no exposure to the United States, as we continue to believe
the potential is better in other markets.
Paul Hopkins
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PAGE 8
<TABLE>
<CAPTION>
Your fund's ten largest holdings
International Equity Fund
(Pie chart) The ten holdings listed here make up 15.05% of the fund's net assets.
Percent Value
(of fund's net assets) (as of Aug. 31, 1994)
______________________________________________________________________________________________
<S> <C> <C>
Telefonica (Spain) 2.07% 23,064,147
Spain's monopoly operator of basic telephone and
telex services.
Cemex ADR Series 'B' (Mexico) 1.71 19,067,047
The sixth-largest U.S. telephone holding company,
it provides local phone service in parts of
California and Nevada.
Tokio Marine & Fire (Japan) 1.56 17,347,400
Tokio Marine is the largest and one of the oldest
non-life insurance companies in Japan. The company
is part of the prestigious Mitsubishi industrial group.
Pasminco (Australia) 1.48 16,399,679
Australia's largest miner/smelter of lead and zinc.
Sumitomo Electric Industries (Japan) 1.46 16,233,087
Japan's leading wire and cable manufacturer, it
dominates the market for optical fiber cable used
in communications.
Lyonnaise des Eaux Dumez (France) 1.42 15,786,810
A leading water utility that has diversified into
communications and construction.
Empresas Ica Sociedad Controladora (Mexico) 1.41 15,635,000
The largest construction company in Mexico.
Siebe (United Kingdom) 1.40 15,513,750
A United Kingdom engineering company with
significant U.S. presence via Foxboro in control
devices and process systems.
Rank Organisation (United Kingdom) 1.29 14,313,200
A major leisure-time company with interests in
film, television, travel and lodging.
Perez Companc 'B' Shares (Argentina) 1.25 13,869,450
Perex Companc is one of the largest groups in
Argentina, with equity holdings in more than 50
countries.
Excludes short-term securities.
_______________________________________________________________________________________________
</TABLE>
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PAGE 9
Your fund's long-term performance
International Equity Fund
How your $10,000 has grown in International Equity Fund
Average annual total return International
(as of Aug. 31, 1994) Equity Fund
$13,861
Since
1 year 1/13/92
+15.1% +13.2%
Morgan Stanley Capital
International World Index
$10,000
1/13/92 '92 '93 '94
On the chart above you can see how the fund's total return compared
to a widely cited performance index, the Morgan Stanley Capital
International World Index (World Index).
The World Index, compiled from a composite of securities listed on
the markets of North America, Europe, Australasia and the Far East
is widely recognized by investors as the measurement index for
portfolios that invest in the major markets of the world.
Your investment and return value fluctuate so that your
accumulation units, when redeemed, may be worth more or less than
the original cost. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results. The above chart does not reflect expenses that apply to
the variable accounts or the annuity contracts.
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PAGE 10
To our contract owners
Aggressive Growth Fund
(Photo of) Ray E. Hirsch, Portfolio manager
From the portfolio manager
In a market characterized by substantial volatility among growth
stocks, Aggressive Growth Fund finished its fiscal year, ended Aug.
31, 1994, with a loss in accumulation unit value of 3.92%.
The period included four major moves by small and mid-size growth
stocks -- the core of this fund's portfolio: a slump in the fall of
1993, a strong year-end rally, an unusually steep decline in the
spring of this year, and a sharp gain in August, the final month of
the fiscal year.
The main focuses of the portfolio remained on technology and
healthcare-related stocks, whose fortunes largely drove the ups and
downs of growth stocks throughout the period. We complemented
those sectors mainly with holdings among companies in the financial
services, retailing, environmental protection and transportation
industries, as well as some foreign stocks. None of the latter
groups, however, had a great impact on the fund's performance.
Although we expect ongoing fluctuations along the way, our outlook
is buoyed by the fund's powerful performance in August. The
rebound was sparked by technology stocks, which we think have the
potential to lead growth stocks to higher ground in the current
year. We are maintaining an aggressive position with the portfolio
in an effort to take full advantage of the advances that may lie
ahead.
Ray E. Hirsch
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<TABLE>
<CAPTION>
Your fund's ten largest holdings
Aggressive Growth Fund
(Pie chart) The ten holdings listed here make up 17.21% of the fund's net assets.
Percent Value
(of fund's net assets) (as of Aug. 31, 1994)
_______________________________________________________________________________________________
<S> <C> <C>
Oracle Systems 2.66 $20,276,563
One of the largest independent vendors of
database-management software offering a variety of
new products, enhancements and applications software.
Parametric Technology 2.31 17,613,750
A producer of software products for the automation
of complex engineering tasks that are essential
to the development of virtually all manufactured products.
HBO & Company 2.27 17,324,750
A health-care information service company that
provides a variety of computer-based information
systems and services to hospitals and their affiliates.
IDEXX Laboratories 1.63 12,429,150
IDEXX develops, manufactures and distributes
biotechnology-based detection systems. The
company's products are currently used for animal
health, food quality assurance and biomedical
research applications.
Brinker International 1.51 11,518,750
An operator of several restaurant chains, including
Chili's Grady's Grill, Spageddi's Italian Food and
Macaroni Grill, across 40 states.
Tellabs 1.49 11,373,750
Tellabs designs, manufactures and markets a broad
range of products and equipment for use by
telephone companies, the Bell System, specialized
common carriers and other providers of
telecommunication services.
Applied Materials 1.46 11,110,000
A leading independent producer of wafer-fabrication
systems for the semiconductor industry, including
manufacturers of advanced microprocessors, logic
and memory devices.
Cisco Systems 1.33 10,173,125
The leading designer and builder of devices that
link personal computers in powerful networks, Cisco
is a leader in the fast-growing business network market.
Kohl's Corp. 1.28 9,725,000
This company operates 96 specialty department stores
in eight Midwestern states, featuring moderately
priced apparel, shoes, accessories, soft home products
and housewares targeted to middle income customers.
Cardinal Health 1.27 9,687,500
A wholesale distributor of pharmaceutical, surgical
and hospital supplies and health and beauty aids.
Excludes short-term securities.
_______________________________________________________________________________________________
</TABLE>
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Your fund's long-term performance
Aggressive Growth Fund
How your $10,000 has grown in Aggressive Growth Fund
Average annual total return
(as of Aug. 31, 1994)
Since
1 year 1/13/92
-1.8% +5.5%
S&P 500
Aggressive
Growth Fund
$11,522
$10,000
1/13/92 '92 '93 '94
On the chart above you can see how the fund's total return compared
to a widely cited performance index, the Standard & Poor's 500
Stock Index (S&P 500).
The S&P 500, an unmanaged list of larger stocks, is frequently used
as a general measure of market performance. However, the S&P 500
companies are generally larger than those in which Aggressive
Growth Fund invests.
Your investment and return value fluctuate so that your
accumulation units, when redeemed, may be worth more or less than
the original cost. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results. The above chart does not reflect expenses that apply to
the variable accounts or the annuity contracts.
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PAGE 13
To our contract owners
Special Income Fund
(Photo of) William Westhoff, Portfolio manager
From the portfolio manager
Rising interest rates reversed a lengthy, positive performance by
the bond market, which ultimately resulted in a loss in
accumulation unit value of 2.47% during the fiscal year ended Aug.
31, 1994.
Interest-rate changes always have an effect on bond prices: A rate
decline boosts most bonds' prices, while a rate rise depresses
them. With the exception of an interest-rate spike in October,
generally favorable market conditions prevailed through the first
several months of the period. Our heavy exposure to corporate
bonds paid off particularly well during those months.
The real turning point for the market and the fund came in
February, when the Federal Reserve Board actively began raising
interest rates to head off a potential run-up in the inflation
rate. The Fed's action set in motion a higher-rate trend that
largely continued through summer and penalized virtually all bond
funds, including this one.
We responded to the new environment by reducing the average
maturity of the bonds in the portfolio, which lessened its
sensitivity to rate changes. In addition, we enhanced the
portfolio's overall credit quality by reducing our holdings among
low-grade corporate bonds. Finally, to help maintain the yield, we
increased our holdings of collateralized mortgage obligations and
certain foreign bonds. Although we think most of the bond market's
woes are behind us, we believe it is prudent to stay with this
somewhat conservative approach at least for the near term.
William N. Westhoff
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PAGE 14
<TABLE>
<CAPTION>
Your fund's ten largest holdings
Special Income Fund
(Pie chart) The ten holdings listed here make up 21.68% of the fund's net assets.
Percent Value
(of fund's net assets) (as of Aug. 31, 1994)
___________________________________________________________________________________
<S> <C> <C>
FNMA 4.35% $67,785,160
6.50% 2023
U.S. Treasury Bond 3.38 52,682,000
8.125% 2019
U.S. Treasury Note 3.29 51,302,995
7.50% 2001
FNMA 2.60 40,490,972
9.00% 2005
GNMA Adjustable Rate Mtge 1.57 24,486,481
6.00% 2024
Govt of Canada 1.38 21,482,550
7.659% 2001
GNMA 1.36 21,198,160
6.00% 2024
GMAC 1.28 19,925,000
6.375% 1996
Hydro Quebec 1.26 19,700,000
8.50% 2029
FHLMC Collateralized Mtge Obligation 1.21 18,964,645
9.00% 2007
Excludes short-term securities.
___________________________________________________________________________________
</TABLE>
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PAGE 15
Your fund's long-term performance
Special Income Fund
How your $10,000 has grown in Special Income Fund
Average annual total return Special Income Fund
(as of Aug. 31, 1994) $28,794
1 year 5 years 10 years
- -1.3% +8.6% +11.2%
Lehman Aggregate
Bond Index
$10,000
'84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94
On the chart above you can see how the fund's total return compared
to a widely cited performance index, the Lehman Aggregate Bond
Index.
The Lehman Aggregate Bond Index is made up of a representative list
of government and corporate bonds as well as asset-backed
securities and mortgage-backed securities. The index is frequently
used as a general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in Special Income Fund.
Your investment and return value fluctuate so that your
accumulation units, when redeemed, may be worth more or less than
the original cost. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results. The above chart does not reflect expenses that apply to
the variable accounts or the annuity contracts.
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PAGE 16
To our contract owners
Moneyshare Fund
(Photo of) Terry Fettig, Portfolio manager
From the portfolio manager
Short-term interest rates rose during the fiscal year, resulting in
a substantially higher yield for Moneyshare Fund. For the seven-
day period ended Aug. 31, 1994, the fund's compound annualized
yield was 4.17%, and the simple annualized yield was 4.25%. The
fund maintained a stable $1 per share price throughout the 12-month
period. (Although the fund seeks to maintain a stable asset value
of $1 per share, there is no assurance that it will be able to do
so. An investment in the fund is neither insured nor guaranteed by
the U.S. government.)
The interest-rate increase began in earnest in early February, when
the Federal Reserve (the nation's central bank) started to raise
short-term interest rates in an effort to head off the possibility
of a rapidly rising inflation rate. By the end of the fiscal
period, the Fed had raised rates five times.
The Fed's actions were based on the fact that the economy was
gathering substantial momentum, and when that happens, higher
inflation usually follows. By raising interest rates, the Fed
tries to temper economic growth, thereby reducing the upward
pressure on inflation.
Although inflation, at this point, has yet to become a problem,
it's likely that the Fed will push short-term interest rates
somewhat higher in the months ahead. Given that outlook, we will
continue to keep the average maturity of the securities in the
fund's portfolio relatively short. This will allow us to readily
add higher-yielding securities should they become available.
Terry Fettig
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PAGE 17
To our contract owners
Managed Fund
(Photo of) Michael Ducar, Portfolio manager
(Photo of) Deborah Pederson, Portfolio manager
From the portfolio managers
Despite an often-difficult environment for both stocks and bonds --
characterized by periods of rising interest rates -- Managed Fund
posted an increase in accumulation unit value of 0.27% for the
fiscal year ended Aug. 31, 1994.
During the first part of the period, the stock side of the
portfolio benefited from strong gains by our health-care stocks and
selected foreign holdings. Stocks of media-related companies and
companies undergoing restructuring also contributed positive
results. Sectors that performed best later in the year included
banking, chemicals, telecommunications equipment and energy.
Over the near term, we intend to continue our long-standing policy
of owning stocks of companies that are widely regarded as being
exceptionally well-managed and dominant in their businesses. In
addition, we are looking to invest in companies that are able to
raise their prices. We also expect to maintain our exposure to
stocks of companies that are benefiting from restructuring,
improving foreign business activity and construction of the
"information highway."
On the bond side, rising interest rates, especially evident in the
fall of 1993 and late winter of this year, reduced the portfolio's
return. The portfolio held longer-than-average maturities, making
it more sensitive to interest rate changes.
To lessen the portfolio's volatility, we reduced the average
maturity of our securities. Concurrently, to maintain the
portfolio's yield level, we increased our holdings among high-
yield, mortgage-backed and foreign bonds.
As we have for some time, we think the appreciation potential for
stocks should be enhanced by strong earnings gains. Therefore, we
plan to increase our percentage of assets in stocks (which were
about 57% at period-end) during the current fiscal year.
Michael P. Ducar
Deborah L. Pederson
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PAGE 18
<TABLE>
<CAPTION>
Your fund's ten largest holdings
Managed Fund
(Pie chart) The ten holdings listed here make up 11.94% of the fund's net assets.
Bonds Percent Value
(of fund's net assets) (as of Aug. 31, 1994)
_______________________________________________________________________________________________
<S> <C> <C>
U.S. Treasury Bond
5.375% 1998 1.92% $47,956,495
U.S. Treasury Note
6.75% 1997 1.35 33,849,737
U.S. Treasury Note
8.00% 1999 1.18 29,440,037
Common Stocks
General Electric 1.39 34,825,000
A diversified company with interests in manufacturing,
broadcasting (NBC), services and technology.
Travelers Corp. 1.26 31,450,000
Among the world's largest multi-line financial services
companies, focusing on insurance, managed health care
and investments.
Royal Dutch Petroleum 1.08 27,030,000
Royal Dutch Petroleum Co., which includes Royal Dutch
(the Dutch version) and Shell Transport (the English
version), is a major oil company.
Xerox 1.07 26,781,250
A large, multinational company focused on the
document-processing business. The company also
operates several financial services businesses.
LIN Broadcasting .97 24,120,000
LIN Broadcasting Corp. engages in cellular telephone
operations, television broadcasting, and specialty
publishing.
First Chicago Corp. .94 23,420,800
First Chicago Corp. is a $50 billion Chicago-based
bank holding company. Key businesses include
nationwide credit card operations; retail and middle
market activities in Chicago and Midwest states
nationwide corporate banking.
Federal National Mortgage .78 19,552,500
Sometimes called "Fannie Mae," this U.S.
government-sponsered, publicly held company is the
largest mortgage lender in the country.
Excludes short-term securities.
_______________________________________________________________________________________________
</TABLE>
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PAGE 19
Your fund's long-term performance
Managed Fund
How your $10,000 has grown in Managed Fund
Average annual total return
(as of Aug. 31, 1994)
Since
1 year 5 years 4/30/86
+1.5% +10.6% +10.8%
Managed Fund
$23,621
S&P 500
$10,000
4/30/86 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94
On the chart above you can see how the fund's total return compared
to a widely cited performance index, the Standard & Poor's 500
Stock Index (S&P 500).
The S&P 500, an unmanaged list of common stocks, is frequently used
as a general measure of market performance. However, the S&P 500
Companies are generally larger than those in which the fund
invests.
Your investment and return value fluctuate so that your
accumulation units, when redeemed, may be worth more or less than
the original cost. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results. The above chart does not reflect expenses that apply to
the variable accounts or the annuity contracts.
<PAGE>
PAGE 20
Independent auditors' report
The board of directors and shareholders
IDS Life Capital Resource Fund, Inc.
IDS Life Capital Resource Fund
IDS Life International Equity Fund
IDS Life Aggressive Growth Fund
IDS Life Special Income Fund, Inc.
IDS Life Moneyshare Fund, Inc. and
IDS Life Managed Fund, Inc.:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments in securities,
of IDS Life Capital Resource Fund, IDS Life International Equity
Fund, IDS Life Aggressive Growth Fund, IDS Life Special Income
Fund, Inc., IDS Life Moneyshare Fund, Inc. and IDS Life Managed
Fund, Inc. as of August 31, 1994, and the related statements of
operations for the year then ended and the statements of changes in
net assets for each of the years in the two-year period ended
August 31, 1994. We have also audited the financial highlights for
each of the years in the ten-year period ended August 31, 1994 for
IDS Life Capital Resource Fund, IDS Life Special Income Fund, Inc.,
and IDS Life Moneyshare Fund, Inc., each of the years in the eight-
year period ended August 31, 1994 and the period from April 30,
1986 (commencement of operations) to August 31, 1986 for IDS Life
Managed Fund, Inc., and for each of the years in the two year
period ended August 31, 1994 and the period from January 13, 1992
(commencement of operations) to August 31, 1992 for IDS Life
International Equity Fund and IDS Life Aggressive Growth Fund.
These financial statements and the financial highlights are the
responsibility of Fund management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and
sold but not received or delivered, and securities on loan, we
request confirmations from brokers and, where replies are not
received, we carry out other appropriate auditing procedures. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
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PAGE 21
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of IDS Life Capital Resource Fund, IDS Life
International Equity Fund, IDS Life Aggressive Growth Fund, IDS
Life Special Income Fund, Inc., IDS Life Moneyshare Fund, Inc., and
IDS Life Managed Fund, Inc. at August 31, 1994 and the results of
their operations for the year then ended, the changes in their net
assets for each of the years in the two-year period ended August
31, 1994, and the financial highlights for the periods stated in
the first paragraph above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 7, 1994
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PAGE 22
<TABLE>
<CAPTION>
Statements of assets and liabilities
IDS Retirement Annuity Mutual Funds
August 31, 1994
Capital International Aggressive
Resource Equity Growth
Assets Fund Fund Fund
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated
issuers (identified cost, $2,604,258,441;
$1,028,599,769 and $692,773,878, respectively) $2,838,605,236 $1,117,944,570 $751,958,797
Investments in securities of affiliated issuers
(identified cost, $133,848,767 and $11,409,422 for
Capital Resource Fund and International Equity Fund) 119,216,250 11,164,270 --
Cash in bank on demand deposit -- 92,817 --
Receivable for investment securities sold 19,240,791 6,901,468 17,299,402
Dividends and accrued interest receivable 4,389,139 2,244,657 138,197
Receivable for forward foreign currency contracts
held, at value (Notes 1 and 4) -- 204,324,117 40,207
U.S. Government Securities held as collateral for
securities loaned (Note 6) -- 25,972,821 --
Receivable (for capital stock sold) from:
IDS Life Accounts 287,097,514 26,001,377 --
IDS Life of New York Accounts 13,057,060 1,495,744 133,407
_______________________________________________________________________________________________________________
Total assets 3,281,605,990 1,396,141,841 769,570,010
_______________________________________________________________________________________________________________
Liabilities
_______________________________________________________________________________________________________________
Cash overdraft 11,352,432 -- 560,997
Dividends payable to separate accounts (Note 1) 307,235,414 29,335,649 441,418
Payable for investment securities purchased 37,313,238 6,174,019 4,637,025
Accrued investment management and services fee 1,619,721 864,931 411,076
Payable for forward foreign currency contracts
held, at value (Notes 1 and 4) -- 207,657,272 40,210
Payable for securities loaned (Note 6) 24,360,900 40,373,021 --
Payable (for capital stock redeemed) to:
IDS Life Accounts -- -- 719,669
IDS Life of New York Accounts -- -- --
Other accrued expenses 281,834 444,228 109,915
_______________________________________________________________________________________________________________
Total liabilities 382,163,539 284,849,120 6,920,310
_______________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $2,899,442,451 $1,111,292,721 $762,649,700
_______________________________________________________________________________________________________________
Represented by
_______________________________________________________________________________________________________________
Capital stock - authorized 10,000,000,000
shares for each fund of $.01 par value; outstanding,
123,760,195; 86,049,715 and 66,571,368 shares,
respectively $ 1,237,602 $ 860,497 $ 665,714
Additional paid-in capital 2,678,638,133 1,020,105,251 739,501,080
Undistributed (excess of distributions over) net
investment income (90,532) 1,561,858 (7,868)
Accumulated net realized loss on investments
in securities (57,028) -- (36,694,170)
Unrealized appreciation of investments (Note 4) 219,714,276 88,765,115 59,184,944
_______________________________________________________________________________________________________________
Total - representing net assets applicable to
outstanding capital stock $2,899,442,451 $1,111,292,721 $762,649,700
_______________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 23.43 $ 12.91 $ 11.46
_______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 23
<TABLE>
<CAPTION>
Statements of assets and liabilities (continued)
IDS Retirement Annuity Mutual Funds
August 31, 1994
Special Moneyshare Managed
Income Fund Fund
Assets Fund
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated
issuers (identified cost, $1,587,372,733;
$179,326,203 and $2,437,261,148, respectively) $1,549,555,411 $179,326,203 $2,567,426,079
Investments in securities of affiliated issuers
(iIdentified cost, $7,346,560) -- -- 11,687,500
Cash in bank on demand deposit 7,256,786 273,645 --
Receivable for investment securities sold 7,126,274 -- 15,659,385
Dividends and accrued interest receivable 28,197,338 -- 17,486,773
Receivable for forward foreign currency contracts
held, at value (Notes 1 and 4) -- -- 5,120,714
U.S. Government Securities held as collateral for
securities loaned (Note 6) 31,276,684 -- 88,397,723
Receivable (for capital stock sold) from:
IDS Life Accounts 12,911,649 564,916 82,188,753
IDS Life of New York Accounts 583,712 22,507 4,881,323
_______________________________________________________________________________________________________________
Total assets 1,636,907,854 180,187,271 2,792,848,250
_______________________________________________________________________________________________________________
Liabilities
_______________________________________________________________________________________________________________
Cash overdraft -- -- 484,833
Dividends payable to separate accounts (Note 1) 14,916,083 667,673 93,194,699
Payable for investment securities purchased 17,496,750 -- 68,849,197
Accrued investment management and services fee 907,683 102,853 1,420,667
Payable for forward foreign currency contracts
held, at value (Notes 1 and 4) -- -- 5,119,013
Payable for securities loaned (Note 6) 43,670,434 -- 123,993,723
Payable (for capital stock redeemed) to:
IDS Life Accounts 663,401 -- --
IDS Life of New York Accounts 122,417 102,875 177,666
Other accrued expenses 214,083 71,099 253,449
_______________________________________________________________________________________________________________
Total liabilities 77,990,851 944,500 293,493,247
_______________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,558,917,003 $179,242,771 $2,499,355,003
_______________________________________________________________________________________________________________
Represented by
_______________________________________________________________________________________________________________
Capital stock - authorized 10,000,000,000
shares for each fund of $.01 par value ($.001 for
Managed Fund); outstanding, 141,040,088;
179,257,043 and 183,064,969 shares, respectively $ 1,410,401 $ 1,792,570 $ 183,065
Additional paid-in capital 1,596,567,631 177,450,882 2,364,315,577
Undistributed (excess of distributions over) net
investment income (1,399,857) -- 859,703
Accumulated net realized loss on investments
in securities (51,822) (681) (390,944)
Unrealized appreciation (depreciation) of investments
(Notes 4 and 7) (37,609,350) -- 134,387,602
_______________________________________________________________________________________________________________
Total - representing net assets applicable to
outstanding capital stock $1,558,917,003 $179,242,771 $2,499,355,003
_______________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 11.05 $ 1.00 $ 13.65
_______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 24
<TABLE>
<CAPTION>
Statements of operations
IDS Retirement Annuity Mutual Funds
Year ended August 31, 1994
Capital International Aggressive
Resource Equity Growth
Fund Fund Fund
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Income:
Investment income
Dividends (net of foreign taxes withheld of $213,010;
$2,135,666 and $11,792, respectively) $ 33,895,154 $11,304,669 $ 1,306,036
Interest 14,231,526 3,192,544 2,920,022
_______________________________________________________________________________________________________________
Total income 48,126,680 14,497,213 4,226,058
_______________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 16,497,309 6,212,919 3,298,361
Custodial fees and expenses 321,840 418,682 83,221
Directors and officers compensation 136,293 19,404 13,507
Printing & postage 204,989 118,632 48,735
Audit fees 19,804 19,202 14,151
Registration fees 183,944 70,947 63,502
Other 31,974 6,943 5,209
_______________________________________________________________________________________________________________
Total expenses 17,396,153 6,866,729 3,526,686
_______________________________________________________________________________________________________________
Investment income - net 30,730,527 7,630,484 699,372
_______________________________________________________________________________________________________________
Realized and unrealized gain (loss) on investments - net
_______________________________________________________________________________________________________________
Net realized gain on security transactions (including $2,751,665
and $158,504 realized loss on investments of affiliated issuers
for Capital Resource Fund and International Equity
Fund, respectively) (Note 3) 300,809,352 29,864,892 (31,675,665)
Net realized loss on foreign currency transactions -- (5,215,991) --
Net realized gain on closed option contracts written -- -- 113,854
_______________________________________________________________________________________________________________
Net realized gain (loss) on investments 300,809,352 24,648,901 (31,561,811)
Net change in unrealized appreciation or depreciation
of investments (including $(20,297,388) and $528,764
net unrealized appreciation (depreciation) of affiliated
issuers for Capital Resource Fund and International
Equity Fund, respectively) (135,555,243) 63,468,345 16,989,673
_______________________________________________________________________________________________________________
Net gain (loss) on investments 165,254,109 88,117,246 (14,572,138)
_______________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting
from operations 195,984,636 95,747,730 (13,872,766)
_______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 25
<TABLE>
<CAPTION>
Statements of operations
IDS Retirement Annuity Mutual Funds
Year ended August 31, 1994
Special Moneyshare Managed
Income Fund Fund
Fund
_______________________________________________________________________________________________________________
<S> <C> <C> <C>
Income:
Investment income
Dividends (net of foreign taxes withheld of
$2,091 and $470,454 for Special Income Fund and
Managed Fund) $ 1,212,744 $ -- $ 21,459,800
Interest 127,269,011 6,399,834 69,399,879
_______________________________________________________________________________________________________________
Total income 128,481,755 6,399,834 90,859,679
_______________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 10,547,321 936,246 14,142,061
Custodial fees and expenses 134,936 20,724 276,033
Directors and officers compensation 82,084 6,378 95,471
Printing & postage 115,584 13,189 165,820
Audit fees 15,000 8,050 18,686
Registration fees 99,693 250 175,369
Other 4,938 1,318 6,567
_______________________________________________________________________________________________________________
Total expenses 10,999,556 986,155 14,880,007
_______________________________________________________________________________________________________________
Investment income - net 117,482,199 5,413,679 75,979,672
_______________________________________________________________________________________________________________
Realized and unrealized gain (loss) on investments - net
_______________________________________________________________________________________________________________
Net realized gain (loss) on security transactions
(including $6,289,370 realized gain on investments of
affiliated issuers for Managed Fund) (Note 3) 15,699,716 (681) 72,428,276
Net realized gain on closed options contracts written 1,260,549 -- --
Net realized gain on closed interest rate futures contracts 3,235,237 -- 105,287
_______________________________________________________________________________________________________________
Net realized gain (loss) on investments 20,195,502 (681) 72,533,563
Net change in unrealized appreciation or
depreciation of investments (including $4,340,940 net
unrealized appreciation of affiliated issuers for
Managed Fund) (163,872,465) -- (113,344,204)
_______________________________________________________________________________________________________________
Net loss on investments (143,676,963) (681) (40,810,641)
_______________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting
from operations $ (26,194,764) $ 5,412,998 $ 35,169,031
_______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 26
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Retirement Annuity Mutual Funds
Year ended August 31,
1994 1993 1994 1993
Operations and distributions Capital Resource Fund International Equity Fund
_________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Investment income - net $ 30,730,527 $ 18,923,276 $ 7,630,484 $ 1,585,568
Net realized gain on investments 300,809,352 108,358,686 24,648,901 5,410,841
Net change in unrealized appreciation or
depreciation of investments (135,555,243) 39,507,165 63,468,345 24,540,228
_________________________________________________________________________________________________________________
Net increase in net assets
resulting from operations 195,984,636 166,789,127 95,747,730 31,536,637
_________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (30,730,527) (18,926,975) (2,495,587) (1,591,006)
Net realized gain on investments (300,690,606) (108,355,686) (24,648,901) (5,282,378)
Excess distributions of net
investment income (Note 1) (14,735) -- -- --
Excess distributions of net realized
gain (Note 1) -- -- (5,473,905) __
_________________________________________________________________________________________________________________
Total distributions (331,435,868) (127,282,661) (32,618,393) (6,873,384)
_________________________________________________________________________________________________________________
Capital share transactions (Note 8)
_________________________________________________________________________________________________________________
Proceeds from sales 426,174,442 488,472,812 731,788,058 221,527,461
Reinvested distributions at net asset value 331,435,868 127,282,661 32,618,393 6,873,384
Payments for redemptions (31,015,165) (27,734,257) (7,151,829) (1,370,426)
_________________________________________________________________________________________________________________
Increase in net assets from capital
share transactions 726,595,145 588,021,216 757,254,622 227,030,419
_________________________________________________________________________________________________________________
Total increase in net assets 591,143,913 627,527,682 820,383,959 251,693,672
_________________________________________________________________________________________________________________
Net assets at beginning of year 2,308,298,538 1,680,770,856 290,908,762 39,215,090
_________________________________________________________________________________________________________________
Net assets at end of year $2,899,442,451 $2,308,298,538 $1,111,292,721 $290,908,762
_________________________________________________________________________________________________________________
Undistributed (excess of distributions over)
net investment income $ (90,532) $ -- $ 1,561,858 $ 22,955
_________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 27
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Retirement Annuity Mutual Funds
Year ended August 31,
1994 1993 1994 1993
Aggressive Growth Fund Special Income Fund
___________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Operations and distributions
Investment income - net $ 699,372 $ 462,778 $ 117,482,199 $ 95,483,128
Net realized gain (loss) on investments (31,561,811) (3,520,916) 20,195,502 34,001,630
Net change in unrealized appreciation or
depreciation of investments 16,989,673 42,628,385 (163,872,465) 63,473,308
___________________________________________________________________________________________________________________
Net increase (decrease) in net assets
resulting from operations (13,872,766) 39,570,247 (26,194,764) 192,958,066
___________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (707,260) (454,869) (119,630,572) (95,482,717)
Net realized gain on investments -- -- (2,399,451) --
Excess distributions of net investment
income (Note 1) (7,868) -- (1,451,679) --
___________________________________________________________________________________________________________________
Total distributions (715,128) (454,869) (123,481,702) (95,482,717)
___________________________________________________________________________________________________________________
Capital share transactions (Note 8)
___________________________________________________________________________________________________________________
Proceeds from sales 482,655,450 204,517,754 200,309,350 276,289,300
Reinvested distributions at net asset value 715,128 454,869 123,481,702 95,482,717
Payments for redemptions (5,228,787) (1,867,146) (166,515,324) (53,554,925)
___________________________________________________________________________________________________________________
Increase in net assets from capital
share transactions 478,141,791 203,105,477 157,275,728 318,217,092
___________________________________________________________________________________________________________________
Total increase in net assets 463,553,897 242,220,855 7,599,262 415,692,441
___________________________________________________________________________________________________________________
Net assets at beginning of year 299,095,803 56,874,948 1,551,317,741 1,135,625,300
___________________________________________________________________________________________________________________
Net assets at end of year $762,649,700 $229,095,803 $1,558,917,003 $1,551,317,741
___________________________________________________________________________________________________________________
Undistributed (excess of distributions over)
net investment income $ (7,868) $ 7,888 $ (1,399,857) $ 2,148,373
___________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 28
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Retirement Annuity Mutual Funds
Year ended August 31,
1994 1993 1994 1993
Moneyshare Fund Managed Fund
__________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Operations and distributions
Investment income - net $ 5,413,679 $ 5,667,964 $ 75,979,672 $ 54,326,631
Net realized gain (loss) on investments (681) 1,739 72,533,563 45,526,006
Net change in unrealized appreciation or
depreciation of investments -- -- (113,344,204) 128,277,837
__________________________________________________________________________________________________________________
Net increase in net assets resulting from
operations 5,412,998 5,669,703 35,169,031 228,130,474
__________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (5,413,679) (5,667,964) (75,894,536) (54,377,963)
Net realized gain on investments -- (1,739) (71,974,644) (45,526,006)
__________________________________________________________________________________________________________________
Total distributions (5,413,679) (5,669,703) (147,869,180) (99,903,969)
__________________________________________________________________________________________________________________
Capital share transactions (Note 8)
__________________________________________________________________________________________________________________
Proceeds from sales 54,005,120 19,671,690 629,387,611 476,037,560
Reinvested distributions at net asset value 5,413,679 5,669,703 147,869,180 99,903,969
Payments for redemptions (59,822,520) (91,893,900) (23,003,414) (15,561,672)
__________________________________________________________________________________________________________________
Increase (decrease) in net assets from
capital share transactions (403,721) (66,552,507) 754,253,377 560,379,857
__________________________________________________________________________________________________________________
Total increase (decrease) in net assets (404,402) (66,552,507) 641,553,228 688,606,362
__________________________________________________________________________________________________________________
Net assets at beginning of year 179,647,173 246,199,680 1,857,801,775 1,169,195,413
__________________________________________________________________________________________________________________
Net assets at end of year $179,242,771 $179,647,173 $2,499,355,003 $1,857,801,775
__________________________________________________________________________________________________________________
Undistributed (excess of distributions over)
net investment income $ -- $ -- $ 859,703 $ (91,496)
__________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 29
Notes to financial statements
Retirement Annuity Mutual Funds
__________________________________________________________________
1. Summary of significant accounting policies
Each fund is registered under the Investment Company Act of 1940
as amended (the 1940 Act), as a diversified, open-end management
investment company. Shares of each fund are sold through the
purchase of an annuity contract offered by IDS Life Insurance
Company (IDS Life) or its affiliates.
The significant accounting policies followed by the funds are
summarized as follows:
Valuation of securities
Securities traded on national securities exchanges or included in
the NASDAQ National Market System are valued at the last quoted
sales price at the close of each business day; securities traded
over-the-counter but not included in the NASDAQ National Market
System and securities for which a last quoted sales price is not
readily available are valued at the mean of the bid and asked
prices. Bonds and other securities are valued at fair value as
determined by the board of directors when market quotations are
not readily available. Determination of fair value involves,
among other things, references to market indexes, matrixes and
data from independent brokers. Short-term securities in Capital
Resource Fund, International Equity Fund, Aggressive Growth Fund,
Special Income Fund and Managed Fund maturing in more than 60
days from the valuation date are valued at the market price or
approximate market value based on the current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Pursuant to Rule 2a-7 of the 1940 Act, all securities in
Moneyshare Fund are valued at amortized cost which approximates
market value in order to maintain a constant net asset value of
$1 per share.
Option transactions
In order to produce incremental earnings, protect gains, and
facilitate buying and selling of securities for investment
purposes, the funds may buy and sell put and call options and
write covered call options on portfolio securities and write
cash-secured puts. The risk in writing a call option is that the
funds give up the opportunity for profit if the market price of
the security increases. The risk in writing a put option is that
the funds 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 funds pay a premium whether or not the option
is exercised. The funds also have the additional risk of not
being able to enter into a closing transaction if a liquid
secondary market does not exist. The funds also may write over-
the-counter options where the completion of the obligation is
dependent upon the credit standing of the other party.
<PAGE>
PAGE 30
__________________________________________________________________
1. Summary of significant accounting policies (continued)
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The funds will realize a gain or loss
upon expiration or closing of the option transaction. When an
option is exercised the proceeds on sales for a written call
option, the purchase cost for a written put option or the cost of
a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in
the market, the funds may buy and sell stock index and interest
rate futures contracts. Risks of entering into futures contracts
and related options include the possibility that there may be an
illiquid market and 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 funds may be 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 funds each
day. The variation margin payments are equal to the daily changes
in the contract value and recorded as unrealized gains and losses.
The funds recognize a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and forward 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, income and expenses are
translated at the exchange rate on the transaction date. It is
not practicable to identify that portion of realized and
unrealized gain (loss) arising from changes in the exchange rates
from the portion arising from changes in the market value of
investments.
The funds also may enter into forward foreign currency exchange
contracts for operational purposes. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by
the funds and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates
from an independent pricing service. The funds are subject to
the credit risk that the other party will not complete the
obligations of the contract.
Illiquid securities
At Aug. 31, 1994, investments in securities for Capital Resource
Fund and Special Income Fund included issues that are illiquid.
The Funds currently limit investments in illiquid securities to
10% (15% for Capital Resource Fund), of the net assets, at market
<PAGE>
PAGE 31
__________________________________________________________________
1. Summary of significant accounting policies (continued)
value, at the time of purchase. The aggregate value of such
securities at Aug. 31, 1994, was $7,205,000 and $6,850,672, which
represents 0.2 percent and 0.4 percent of net assets for Capital
Resource Fund and Special Income Fund, respectively. Pursuant to
guidelines adopted by the board of directors, certain
unregistered securities are determined to be liquid and are not
included within the limitations specified above.
Federal income taxes
Since each fund intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to the
Variable Accounts, no provision for income or excise taxes is
required. Each fund is treated as a separate entity for federal
income tax purposes.
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, the timing and amount of
market discount recognized as ordinary income, foreign tax
credits and losses deferred due to "wash sale" transactions. The
character of distributions made during the year from net
investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. The
effect on dividend distributions of certain book-to-tax
differences is presented as "excess distributions" in the
statement of changes in net assets. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized
gains (losses) are recorded by the funds.
On the Statements of Assets and Liabilities, due to permanent
book-to-tax differences, undistributed net investment income and
accumulated net realized gain (loss) have been increased
(decreased), resulting in net reclassification adjustments to
additional paid-in capital as follows:
<TABLE>
<CAPTION>
Capital International Special
Resource Equity Income Managed
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Undistributed net investment income $(75,797) $(3,595,994) $51,822 $866,063
Accumulated net realized gain (loss) 75,797 5,473,905 (51,822) (866,063)
________________________________________________________________________________________
Additional paid-in capital reduction
(increase) -- $ 1,877,911 -- --
________________________________________________________________________________________
</TABLE>
Dividends
At Aug. 31, 1994, dividends were declared of $2.769 per share for
Capital Resource Fund, $.359 for International Equity Fund, $.007
for Aggressive Growth Fund, $.106 for Special Income Fund, $.004 <PAGE>
PAGE 32
__________________________________________________________________
1. Summary of significant accounting policies (continued)
for Moneyshare Fund and $.527 for Managed Fund payable Sept. 1,
1994. Distributions to the Variable Accounts are recorded as
of the close of business on the record date and are payable on the
first business day following the record date. Dividends from net
investment income are declared daily and paid monthly for Special
Income Fund and Moneyshare Fund and declared and paid quarterly for
Capital Resource Fund, International Equity Fund, Aggressive Growth
Fund, and Managed Fund. Capital gain distributions (if any) will
be made annually. However, an additional capital gain distribution
may be made during the fiscal year in order to comply with the
Internal Revenue Code, as applicable to regulated investment
companies.
Other
Security transactions are accounted for on the date the securities
are purchased or sold. Dividend income is recognized on the
ex-dividend date and interest income, including amortization of
premium and discount on a level yield basis, is accrued daily.
__________________________________________________________________
2. Investment management and services agreement
Under the terms of an agreement effective Nov. 13, 1991, (Jan. 9,
1992 for International Equity Fund and Aggressive Growth Fund), the
fee paid to IDS Life for investment management and services for
Capital Resource Fund, International Equity Fund, Aggressive Growth
Fund, Special Income Fund and Managed Fund is computed in two
parts. The first part is a graduated group asset charge based on
the combined net assets of all non-money market funds in the IDS
MUTUAL FUND GROUP. It is equal on an annual basis to 0.46 percent
on the first $5 billion of daily net assets and scaling down
thereafter in reduced percentages of each succeeding billion to
0.32 percent on all net assets in excess of $50 billion. The daily
group asset charge equals the daily rate multiplied by that Fund's
net assets for that day. The second part is based on the average
daily net assets of each Fund and is equal to 0.25 percent of its
daily net assets on an annual basis, except International Equity
Fund. International Equity Fund's individual asset charge is equal
to 0.50 percent annually of its daily net assets. Both parts of
the fee are payable monthly.
Under the terms of an agreement effective Oct. 14, 1988, the
investment management and services fee for Moneyshare Fund will be
paid to IDS Life monthly. The fee is computed on a graduated fee
scale equal on an annual basis to 0.54 percent of the first $1
billion of average daily net assets and scaling down thereafter in
reduced percentages of each succeeding $500 million to 0.46 percent
of all average daily net assets in excess of $2.5 billion.
IDS Life, in turn, pays to IDS Financial Corporation a fee based on
a percentage of each Fund's average daily net assets for the year.
This fee is equal to 0.50 percent for International Equity Fund and
0.25 percent for each remaining fund. In addition to paying its
own management fee, brokerage commissions, taxes, and costs of
<PAGE>
PAGE 33
__________________________________________________________________
2. Investment management and services agreement (continued)
certain legal services, each fund will reimburse IDS Life an amount
equal to the cost of certain expenses incurred and paid by IDS Life
in connection with each fund's operations. The reimbursement paid
by Moneyshare Fund will be limited to 0.25 percent of the fund's
average daily net assets.
The funds have 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 a
director 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 for the year ended Aug. 31, 1994 amounted to $27,344 for
Capital Resource Fund, $3,010 for International Equity Fund, $825
for Aggressive Growth Fund, $16,735 for Special Income Fund, $109
for Moneyshare Fund and $18,746 for Managed Fund.
__________________________________________________________________
3. Securities transactions
For the year ended Aug. 31, 1994, cost of purchases and proceeds
from sales of securities aggregated, respectively, $1,247,035,599
and $1,247,689,373 for Moneyshare Fund; cost of purchases and
proceeds from sales of securities (other than short-term
obligations) aggregated, respectively, $2,669,038,596 and
$1,938,239,960 for Capital Resource Fund; $939,042,753 and
$321,789,560 for International Equity Fund; $700,724,799 and
$262,860,744 for Aggressive Growth Fund; $1,072,069,174 and
$874,675,968 for Special Income Fund; $2,008,330,837 and
$1,554,727,782 for Managed Fund. Net realized gains (losses) on
investment sales are determined on the basis of identified costs.
Brokerage commissions paid to brokers affiliated with IDS Life were
$490,014 for Capital Resource Fund, $4,372 for International Equity
Fund, $60,325 for Aggressive Growth Fund, $666 for Special Income
Fund and $237,717 for Managed Fund for the year ended Aug. 31,
1994.
__________________________________________________________________
4. Forward foreign currency contracts
At Aug. 31, 1994, International Equity Fund, Aggressive Growth Fund
and Managed Fund had entered into forward foreign currency exchange
contracts that obligate the funds to deliver currencies at
specified future dates. The unrealized appreciation or
depreciation of the contracts is reflected in the accompanying
financial statements. The terms of the open contracts are as
follows:
<PAGE>
PAGE 34
<TABLE>
<CAPTION>
International Equity Fund
___________________________________________________________________________________________
U.S. dollar value U.S. dollar value
Currency to as of Currency to as of
Exchange date be delivered Aug. 31, 1994 be received Aug. 31, 1994
___________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sept. 1, 1994 837,399 1,286,622 1,290,515 1,290,515
British Pound U.S. Dollar
Sept. 2, 1994 366,511 366,511 2,832,033 366,478
U.S. Dollar Hong Kong Dollar
Sept. 2, 1994 189,818 189,818 484,320 189,261
U.S. Dollar Malaysian Dollar
Sept. 8 1994 5,980,788 5,980,788 3,858,468 5,928,344
U.S. Dollar British Pound
Sept. 30, 1994 49,749,519 49,749,519 4,807,296,000 49,749,519
U.S. Dollar Japanese Yen
Sept. 30, 1994 4,807,296,000 49,749,519 46,800,000 46,800,000
Japanese Yen U.S. Dollar
Dec. 30, 1994 9,952,000,000 100,334,495 100,000,000 100,000,000
Japanese Yen U.S. Dollar
___________ ___________
$207,657,272 $204,324,117
___________________________________________________________________________________________
Aggressive Growth Fund
___________________________________________________________________________________________
U.S. dollar value U.S. dollar value
Currency to as of Currency to as of
Exchange date be delivered Aug. 31, 1994 be received Aug. 31, 1994
___________________________________________________________________________________________
September 2, 1994 40,210 $40,210 310,707 $40,207
U.S. Dollar Hong Kong Dollar
___________________________________________________________________________________________
Managed Fund
___________________________________________________________________________________________
U.S. dollar value U.S. dollar value
Currency to as of Currency to as of
Exchange date be delivered Aug. 31, 1994 be received Aug. 31, 1994
___________________________________________________________________________________________
September 7, 1994 5,119,013 $5,119,013 8,086,888 $5,120,714
U.S. Dollar Deutschemark
___________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 35
___________________________________________________________________
5. Options contracts written
The number of contracts and premium amounts associated with call
option contracts written by Aggressive Growth Fund during the year
ended Aug. 31, 1994 is as follows:
Calls
Contracts Premium
___________________________________________________________________
Balance Aug. 31, 1993 400 $116,956
___________________________________________________________________
Opened 400 63,798
Closed or expired (800) (180,754)
___________________________________________________________________
Balance Aug. 31, 1994 -- --
___________________________________________________________________
The number of contracts and premium amounts associated with option
contracts written by Special Income Fund during the year ended Aug.
31, 1994 is as follows:
Puts Calls
Contracts Premiums Contracts Premium
___________________________________________________________________
Balance Aug. 31, 1993 -- $ -- -- $ --
___________________________________________________________________
Opened 250 174,032 2,150 1,086,516
Closed or expired (250) (174,032) (1,500) (743,408)
Exercised -- -- (650) (343,108)
___________________________________________________________________
Balance Aug. 31, 1994 -- $ -- -- $ --
___________________________________________________________________
___________________________________________________________________
6. Lending of portfolio securities
Presented below is information regarding securities on loan at Aug.
31,1994.
<TABLE>
<CAPTION>
Capital International Special
Resource Equity Income Managed
____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Value of securities on loan to brokers $24,117,887 $39,524,083 $42,756,900 $120,249,463
____________________________________________________________________________________________________
Collateral received for securities loaned:
Cash $24,360,900 $14,400,200 $12,393,750 $ 35,596,000
U.S. Government Securities, at value - 25,972,821 31,276,684 88,397,723
____________________________________________________________________________________________________
Total collateral received for securities
loaned $24,360,900 $40,373,021 $43,670,434 $123,993,723
____________________________________________________________________________________________________
</TABLE>
For the year ended Aug. 31, 1994, income from security lending
transactions amounted to $101,606, $220,281, $144,847 and $432,444
for Capital Resource Fund, International Equity Fund, Special
Income Fund and Managed Fund, respectively, and has been included
with interest income in the statement of operations.
<PAGE>
PAGE 36
___________________________________________________________________
6. Lending of portfolio securities (continued)
The risks related to security lending transactions are the borrower
may not provide additional collateral when required or return the
securities when due.
__________________________________________________________________
7. Interest rate futures contracts
The funds pledge securities or cash as collateral when making
initial deposits on future contracts. On Aug. 31, 1994,
information about the funds' open futures contracts is as follows:
<TABLE>
<CAPTION>
Collateral
pledged to Market
Long (L) Type of cover initial value Net
or contract and Number of margin of open unrealized
Short (S) maturity contracts deposit contracts gain (loss)
______________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Special Income S U.S. Treasury
Fund September 1994
T-Bond
S U.S. Treasury 735 $3,097,702 $76,233,281 $206,719
December 1994
T-Bond 15 63,218 1,543,594 (7,969)
______________________________________________________________________________________________________
Managed Fund S U.S. Treasury
December 1994
T-Bond 250 984,140 25,726,563 (132,813)
______________________________________________________________________________________________________
</TABLE>
__________________________________________________________________
8. Capital share transactions
Transactions in shares of each Fund for the years ended Aug. 31,
1994 and 1993 were as follows:
<TABLE>
<CAPTION>
Number of shares: Year ended Aug. 31, 1994
____________________________________________________________________________________________________________________
Capital International Aggressive Special
Resource Equity Growth Income Moneyshare Managed
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Shares at beginning of year 93,921,903 25,082,644 25,614,230 128,401,403 179,660,778 129,702,882
Sold 17,017,814 58,988,542 41,343,092 16,667,636 54,009,530 44,299,470
Issued for reinvested
distributions 14,130,743 2,534,743 61,199 10,704,857 5,414,112 10,732,030
Redeemed (1,310,265) (556,214) (447,153) (14,733,808) (59,827,377) (1,669,413)
____________________________________________________________________________________________________________________
Net increase (decrease) 29,838,292 60,967,071 40,957,138 12,638,685 (403,735) 53,362,087
____________________________________________________________________________________________________________________
Shares at end of year 123,760,195 86,049,715 66,571,368 141,040,088 179,257,043 183,064,969
____________________________________________________________________________________________________________________
<PAGE>
PAGE 37
___________________________________________________________________
8. Capital share transactions (continued)
Number of shares: Year ended Aug. 31, 1993
____________________________________________________________________________________________________________________
Capital International Aggressive Special
Resource Equity Growth Income Moneyshare Managed
____________________________________________________________________________________________________________________
Shares at beginning of year 70,326,867 3,918,115 6,317,009 100,862,698 246,218,236 89,413,058
Sold 19,540,273 20,687,061 19,426,351 23,925,544 19,673,158 34,320,745
Issued for reinvested
distributions 5,182,272 600,004 40,959 8,314,028 5,670,122 7,071,464
Redeemed (1,127,509) (122,536) (170,089) (4,700,867) (91,900,738) (1,102,385)
____________________________________________________________________________________________________________________
Net increase (decrease) 23,595,036 21,164,529 19,297,221 27,538,705 (66,557,458) 40,289,824
____________________________________________________________________________________________________________________
Shares at end of year 93,921,903 25,082,644 25,614,230 128,401,403 179,660,778 129,702,882
____________________________________________________________________________________________________________________
</TABLE>
___________________________________________________________________
9. Tax loss carryforward
For federal income tax purposes, Aggressive Growth Fund had a
capital loss carryover at Aug. 31, 1994 of $34,506,813, which, if
not offset by subsequent capital gains, will expire in 2001 through
2003. It is unlikely the board of directors will authorize a
distribution of any net realized gain for a Fund until its capital
loss carryover has been offset or expires.
___________________________________________________________________
10. Financial highlights
"Financial Highlights" showing per share data and selected ratio
information is presented on pages 5-10 of the prospectus.
<PAGE>
PAGE 38
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
Capital Resource Fund
__________________________________________________________________________________
Investment in securities of unaffiliated issuers
Bonds (3.3%)
Issuer Principal Value(a)
Amount
__________________________________________________________________________________
<S> <C> <C>
Foreign (0.8%)
Henderson Land (U.S. Dollar)
4.00% 1996 12,000,000(e) 11,430,000
Rogers Communication (U.S. Dollar)
Zero Coupon Cv with attached put
5.49% 2013 30,000,000(h) 11,025,000
Total 22,455,000
Health care services (0.8%)
Medaphis
6.50% Cv 2000 5,500,000 (f) 7,205,000
Service Corp Int'l
6.50% Cv 2001 12,000,000 15,960,000
Total 23,165,000
Insurance (0.4%)
USF&G
Zero Coupon Cv
4.55% 2009 21,200,000(h) 10,494,000
Media (0.5%)
Comcast
1.125% Cv 2007 29,800,000 12,776,750
Viacom Int'l
Zero Coupon with interest certificate
8.00% 2006 2,837,000(b,h) 2,333,433
Total 15,110,183
Retail (0.8%)
Waban
6.50% Cv 2002 25,000,000 24,125,000
Total bonds
(Cost: $98,494,167) 95,349,183
__________________________________________________________________________________
Common & preferred stocks & warrants (89.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
Aerospace & defense (0.9%)
Northrop Grumman 300,000 13,500,000
Sundstrand 250,000 12,437,500
Total 25,937,500
Airlines (0.5%)
AMR
$3 Cv Pfd 200,000 (e) 9,125,000
Northwest Airlines 300,000 (b) 5,700,000
Total 14,825,000
Automotive & related (0.6%)
Goodyear 540,000 18,900,000
Banks and savings & loans (2.5%)
BankAmerica 550,000 27,156,250
Continental Bank 300,000 11,475,000
First Chicago 286,300 14,887,600
First Chicago
$5.50 Cv Pfd 315,000 8,701,875
NationsBank 200,000 (g) 11,150,000
Total 73,370,725
Beverages & tobacco (6.0%)
Coca-Cola 490,000 22,540,000
Pepsico 250,000 8,281,250
Philip Morris 795,000 48,495,000
RJR Nabisco 2,300,000 (b) 16,100,000
<PAGE>
PAGE 39
Common & preferred stocks & warrants (89.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
RJR Nabisco
$.835 Cv Pfd 2,000,000 14,000,000
UST 2,100,000 65,625,000
Total 175,041,250
Building materials (0.6%)
MagneTek 200,000 (b) 2,750,000
Martin Marietta 225,000 4,387,500
Sherwin Williams 300,000 9,937,500
Total 17,075,000
Chemicals (0.9%)
A. Schulman 390,000 10,335,000
Sigma-Aldrich 450,000 15,637,500
Total 25,972,500
Computers & office equipment (7.1%)
Automatic Data Processing 510,000 27,603,750
BISYS Group 490,000 (b) 10,657,500
Banyan Systems 750,000 (b) 12,562,500
Ceridian 400,000 10,700,000
Ceridian
$3.025 Cv Pfd 238,500 15,562,125
Cisco Systems 400,000 (b) 9,925,000
Compaq Computer 415,000 (b) 15,510,625
Fiserv 500,000 (b) 11,375,000
Lotus Development 760,800 (b) 31,097,700
Pitney Bowes 1,000,000 38,500,000
Reynolds & Reynolds 500,000 13,187,500
VMARK Software 200,000 (b) 4,050,000
Wellfleet Communications 220,000 (b) 4,977,500
Total 205,709,200
Electronics (1.6%)
Intel 350,000 23,012,500
Premier Industrial 318,800 7,173,000
Vishay Intertechnology 350,000 (b) 15,050,000
Total 45,235,500
Energy (1.4%)
Atlantic Richfield
$9.00 Cv Pfd 550,000 17,050,000
Snyder Oil
$6.00 Cv Pfd 350,000 8,968,750
Exxon 250,000 14,875,000
Total 40,893,750
Financial services (8.3%)
Countrywide Credit 475,000 7,065,625
Envoy 245,000 (b) 4,961,250
Federal National Mortgage 350,000 31,106,250
Fleet Mortgage Group 250,000 (b) 4,500,000
Insurance Auto Auctions 150,000 (b,g) 5,456,250
MGIC Investment 935,000 28,751,250
North American Mortgage 400,000 13,000,000
Northern Trust 1,350,000 51,637,500
RFS Hotel Investors 200,000 3,400,000
Salomon Elk
$7.25 Cv Pfd 100,000 3,662,500
SBH/AM
$3.185 Cv Pfd 210,000 10,578,750
State Street Boston 1,800,000 72,000,000
Student Loan 300,000 5,775,000
Total 241,894,375
Food (3.4%)
CPC Int'l 200,000 10,700,000
General Mills 400,000 21,600,000
Pet 240,000 4,860,000
Pioneer Hi-Bred 650,000 20,312,500
Quaker Oats 150,000 12,056,250
Sara Lee 625,000 14,453,125
Tootsie Roll 216,659 13,649,517
Total 97,631,392
<PAGE>
PAGE 40
Common & preferred stocks & warrants (89.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
Foreign (8.3%)
A Guiness 900,000 6,885,900
Ace Limited 800,000 18,500,000
Archer Resource 300,000 (b) 4,321,830
Arjo 800,000 (b,e) 13,051,200
Arnoldo Mondadori 415,000 4,089,410
Astra 850,000 (b) 19,370,650
Banca Pop Bergano 222,000 2,725,716
Celsius Industries 500,000 (b) 11,718,000
Danka Business Systems 13,000 266,500
Ericsson 8,645,000 16,209,375
Femsa Coke 450,000 (b) 15,693,750
Kimberly/Mex 250,000 5,187,425
Loewen Group 200,000 5,025,000
Loewen Group Private 100,000 (b) 2,507,390
Mutual Risk Management 500,000 12,812,500
New Zealand Telephone 275,000 (g) 13,784,375
Nokia Pref Free 225,000 24,422,175
Paribas 150,000 10,287,450
Petroleum Geo Serv 800,000 (b) 15,200,000
Renaissance Energy 100,000 (b) 2,015,030
Rogers Communications 1,000,000 (b) 16,776,700
Tamro Yhtymae 1,500,000 (b) 6,288,000
Vaisala 94,500 4,591,661
YPF 375,000 9,703,125
Total 241,433,162
Health care (6.3%)
Amgen 600,000 (b) 31,650,000
Boston Scientific 350,000 (b) 5,818,750
Chiron 110,000 (b) 7,672,500
Genentech 250,000 (b) 12,843,750
Haemonetics 500,000 (b) 9,375,000
Medtronic 170,000 16,787,500
Merck 450,000 15,356,250
Pfizer 275,000 18,768,750
STERIS 400,000 (b) 9,000,000
Stryker 1,575,000 (g) 55,912,500
Xoma Warrants 4,142 (b) 456
Total 183,185,456
Health care services (5.4%)
Beverly Enterprises 925,000 (b) 12,603,125
Cardinal Health 1,000,000 38,750,000
Caremark Int'l 500,000 12,125,000
Charter Medical 250,000 (b) 7,062,500
Community Psych Centers 800,000 11,200,000
Coram Healthcare 325,000 (b) 5,037,500
Express Script 100,000 (b) 3,450,000
Gulf South Medical 200,000 (b) 5,950,000
Health Management Systems 70,000 (b) 1,785,000
Medaphis 200,000 (b) 7,050,000
MEDSTAT Group 415,000 (b) 5,706,250
Regency Health 600,000 (b) 6,525,000
Service Corp Int'l 470,000 12,455,000
Shared Medical Systems 400,000 10,000,000
Stewart Enterprises 625,000 15,625,000
Total 155,324,375
Household products (2.0%)
Gillette 250,000 18,093,750
International Flavors & Fragrances 700,000 30,712,500
Newell 200,000 9,525,000
Total 58,331,250
Industrial machines & services (3.8%)
Deere & Company 350,000 25,987,500
Fastenal 215,000 8,438,750
Flair 250,000 4,812,500
General Signal 615,000 22,140,000
Giddings & Lewis 650,000 12,187,500
Greenfields 200,000 4,350,000
Illinois Tool Works 325,000 14,056,250
Nordson 300,000 17,700,000
Total 109,672,500
<PAGE>
PAGE 41
Common & preferred stocks & warrants (89.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
Industrial transportation (1.0%)
Arnold Industries 45,000 911,250
Union Pacific 500,000 28,812,500
Total 29,723,750
Insurance (4.1%)
Aetna Life & Casualty 300,000 14,812,500
Horace Mann Educators 350,000 9,406,250
Travelers 940,000 34,780,000
Unum 1,200,000 58,950,000
Total 117,948,750
Leisure time & entertainment (2.0%)
3Do Company 260,000 (b,g) 5,005,000
Blockbuster Entertainment 1,000,000 25,875,000
Walt Disney 625,000 25,703,125
Total 56,583,125
Media (7.0%)
CBS 25,000 (g) 8,034,375
Comcast 1,250,000 20,000,000
Information Resource 650,000 (b) 9,262,500
Merrill Corporation 350,000 7,350,000
Reader's Digest 1,150,000 48,875,000
Scholastic 400,000 (b) 18,000,000
Tele-Communications 'A' 2,300,000 (b) 51,893,750
Turner Broadcasting'B' 1,050,000 19,031,250
Viacom 'B' 552,461 (b) 18,231,213
Viacom 'R' 302,461 (b) 1,550,113
Viacom Wts C 162,500 (b) 253,906
Viacom Wts E 97,500 (b) 316,875
Total 202,798,982
Metals (0.9%)
Bethlehem Steel
$3.50 Cv Pfd 200,000 (e) 12,325,000
Cyprus Amax Minerals 250,000 8,125,000
Nat'l Steel 302,000 (b) 6,568,500
Total 27,018,500
Multi-Industry (2.5%)
Emerson Electric 265,000 16,463,125
General Electric 525,000 26,118,750
Interim Services 300,000 (b) 6,825,000
Minnesota Mining & Manufacturing 400,000 22,050,000
Total 71,456,875
Natural gas (0.6%)
Enron 275,000 8,387,500
Tenneco 200,000 9,850,000
Total 18,237,500
Paper & packaging (1.6%)
Bowater
$1.75 Cv Pfd 172,700 4,554,962
Crown Cork & Seal 650,000 (b) 24,212,500
Kimberly Clark 274,600 16,304,375
Total 45,071,837
Restaurants & lodging (0.9%)
McDonalds 900,000 25,425,000
Retail (3.9%)
CML Group 500,000 5,687,500
Funco 85,000 (b) 1,466,250
General Nutrition 250,000 (b) 5,640,625
Home Shopping Network 900,000 (b) 10,575,000
Viking Office Products 200,000 (b) 5,750,000
Walgreens 1,600,000 60,200,000
Wal-Mart Stores 1,000,000 24,625,000
Total 113,944,375
Telecommunication equipment & services (1.8%)
DSC Communications 250,000 (b) 7,156,250
MFS Communications 925,000 (b) 32,606,250
NEXTEL Communications 500,000 (b) 13,062,500
Total 52,825,000
<PAGE>
PAGE 42
Common & preferred stocks & warrants (89.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
Textiles & apparel (0.5%)
Donn-Kenny 250,000 (b) 5,687,500
Norton & McNaughton 395,000 (b) 8,245,625
Total 13,933,125
Utilities - telephone (2.6%)
AirTouch Communications 600,000 (b) 16,950,000
LCI Int'l 250,000 (b) 5,000,000
LCI Int'l
$1.25 Cv Pfd 400,000 11,000,000
MCI Communications 850,000 20,665,625
U.S. West 525,000 21,196,875
Total 74,812,500
Total common & preferred stocks & warrants
(Cost: $2,342,704,815) $2,580,212,254
__________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (5.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.4%)
FHLMC Disc Nts
09-01-94 4.31% $ 4,700,000 $ 4,700,000
09-01-94 4.57 6,400,000 6,400,000
Total 11,100,000
________________________________________________________________________________________
Commercial paper (5.0%)
Aerospace & defense (0.4%)
Toyota Motor
09-07-94 4.44 4,800,000 4,796,456
09-15-94 4.63 6,002,000 5,991,216
Total 10,787,672
Automotive & related (0.1%)
Ford Motor
09-20-94 4.53 4,000,000 3,989,750
Banks and savings & loans (0.7%)
Commerzbank 4.63 5,500,000 5,465,347
10-17-94
Kredietbank 4.38 1,000,000 1,000,000
09-01-94
Paribas
09-02-94 4.38 15,000,000 14,998,179
Total 21,463,526
Building materials (0.1%)
Ciesco L P
09-13-94 4.58 2,000,000 1,996,967
Energy equipment (0.5%)
ABB Treasury
09-21-94 4.48 6,500,000 (c) 6,482,282
09-21-94 4.49 1,900,000 (c) 1,894,821
09-21-94 4.52 5,100,000 (c) 5,086,098
Total 13,463,201
Financial services (1.6%)
Beneficial
09-20-94 4.51 6,000,000 5,985,813
09-27-94 4.77 2,100,000 2,092,796
10-07-94 4.77 7,500,000 7,464,375
Commercial Credit
09-28-94 4.75 4,300,000 4,284,746
Household Finance
10-24-94 4.81 6,800,000 6,751,349
Merrill Lynch
09-16-94 4.53 7,400,000 7,386,125
<PAGE>
PAGE 43
Short-term securities (5.6%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
________________________________________________________________________________________
USAA Capital
09-02-94 4.44 1,500,000 1,499,816
09-20-94 4.48 9,850,000 9,822,929
Total 45,287,949
Food (0.1%)
Cargill
09-19-94 4.53 4,500,000 (c) 4,489,212
Health care (0.2%)
American Cyanamid
09-14-94 4.56 3,200,000 3,194,742
09-16-94 4.50 2,300,000 2,295,716
Total 5,490,458
Insurance (0.1%)
Aon
09-22-94 4.76 4,200,000 4,188,387
Media (0.2%)
Dun & Bradstreet
10-11-94 4.58 4,500,000 4,476,566
Reed Elsevier
09-13-94 4.48 800,000 (c) 798,813
Total 5,275,379
Natural gas (0.2%)
Columbia Fuel
09-26-94 4.53 5,000,000 4,983,035
Utilities - electric (0.1%)
Bayshore Fuel
09-14-94 4.71 2,900,000 2,894,923
Utilities - telephone (0.1%)
AT&T Capital
09-23-94 4.73 4,600,000 4,586,732
Miscellaneous (0.6%)
American General
09-23-94 4.53 6,800,000 (c) 6,780,054
Colgate-Palmolive
09-22-94 4.64 8,600,000 (c) 8,576,823
Pepsico
09-27-94 4.74 1,200,000 1,195,909
Total 16,552,786
Total commercial paper
(Cost: $145,465,637) $ 145,449,977
Bankers acceptance (0.1%)
First Bank
09-06-94 4.38 4,000,000 3,997,572
Letter of credit (0.1%)
Bank of America - Hyundai
09-13-94 4.53 2,500,000 2,496,250
Total short-term securities
(Cost: $163,059,459) $ 163,043,799
Total investments in securities of unaffiliated issuers
(Cost: $2,604,258,441) $2,838,605,236
________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 44
<TABLE>
<CAPTION>
Investments in securities of affiliated issuers (d)
Common stocks (4.1%)
Issuer Shares Value(a)
_____________________________________________________________________________________
<S> <C> <C>
Career Horizon 350,000 (b) $ 6,125,000
Ciber 350,000 (b) 2,996,875
Cima Labs 225,000 (b) 1,996,875
Concord Holdings 500,000 (b) 3,187,500
Damark Int'l 750,000 (b) 7,406,250
Digital Link 525,000 (b) 5,906,250
HCC Insurance 660,000 (b) 13,695,000
Homecare Management 500,000 (b) 7,125,000
Nature's Bounty 1,575,000 (b) 12,600,000
Park Place 465,000 (b) 9,997,500
Saber Software 435,000 (b) 3,480,000
Summa Four 550,000 (b) 8,250,000
Wall Data 800,000 (b) 31,200,000
Webco Metals 600,000 (b) 5,250,000
Total 119,216,250
Total investments in securities of affiliated issuers
(Cost: $133,848,767) $ 119,216,250
Total investments in securities
(Cost: $2,738,107,208)(i) $2,957,821,486
_____________________________________________________________________________________
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing. For long-term debt securities, items identified are in default as to payment of interest or
principal.
(c) 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." These
securities have been determined to be liquid under guidelines established by the board of directors.
(d) Investments representing 5 percent or more of the outstanding voting securities of the issuer.
(e) Represents securities sold under Rule 144A which are exempt from registration under the Securities Act of 1933, as amended.
These securities have been determined to be liquid under guidelines established by the board of directors.
(f) Identifies issue considered to be illiquid as to its marketability (see Note 1 to the financial statements). Information
concerning such security holding at Aug. 31, 1994, is as follows:
Acquisition Purchase
Security Date Cost
__________________________________________________________________________________
Medaphis Cv
6.50%, 2000 12-22-92 $10,000,000
__________________________________________________________________________________
(g) Security is partially or fully on loan. See Note 6 to the financial statements.
(h) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(i) At Aug. 31, 1994, the cost of securities for federal income tax purposes was $2,739,140,795 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . .$290,904,962
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . (72,224,271)
___________________________________________________________________________________
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . . .$218,680,691
___________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 45
Retirement Annuity Mutual Funds
Prospectus/Oct. 28, 1994
This prospectus describes six funds that receive payments from the
variable accounts of your variable annuity contract. Each of these
funds has different investment objectives and policies.
IDS Life Aggressive Growth Fund is a stock fund investing primarily
in common stocks of small and medium-size companies.
IDS Life International Equity Fund is an international stock fund.
IDS Life Capital Resource Fund is a stock fund.
IDS Life Managed Fund is a managed fund.
IDS Life Special Income Fund is a bond fund.
IDS Life Moneyshare Fund is a money market fund. An investment in
Moneyshare Fund is neither insured nor guaranteed by the U.S.
government and there can be no assurance that the fund will be able
to maintain a stable net asset value of $1 per share.
This prospectus contains facts that can help you decide if the
funds are the right investment for you. Read this along with your
variable annuity prospectus before you invest and keep both
prospectuses for future reference.
Additional facts about the funds are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated Oct. 28, 1994, is incorporated here by
reference. For a free copy, contact IDS Life Insurance Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
IDS LIFE IS NOT A BANK, AND THE SECURITIES IT OFFERS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
IDS Life Capital Resource Fund, Inc.
IDS Life Aggressive Growth Fund
IDS Life International Equity Fund
IDS Life Capital Resource Fund
IDS Life Managed Fund, Inc.
IDS Life Special Income Fund, Inc.
IDS Life Moneyshare Fund, Inc.
<PAGE>
PAGE 46
Retirement Annuity Mutual Funds
IDS Tower 10
Minneapolis, MN 55440-0010
612-671-3733
TTY: 800-285-8846
<PAGE>
PAGE 47
Table of contents
The funds in brief
Goals and types of fund investments
Manager and distributor
Variable accounts
Sales charge and fund expenses
Sales charge
Expenses
Performance
Financial highlights
Total returns
Yield calculation
Key terms
Investment policies and risk
Facts about investments and their risks
Valuing assets
How to invest, transfer or redeem shares
How to invest
How to transfer among variable accounts
Redeeming shares
Distributions and taxes
Dividend and capital gain distributions
Taxes
How the funds are organized
Shares
Voting rights
Shareholder meetings
Portfolio managers
Directors and officers
Investment manager
Investment advisory agreements
About IDS
General information
<PAGE>
PAGE 48
The funds in brief
Goals and types of fund investments
Capital Resource Fund's goal is capital appreciation and it invests
primarily in U.S. common stocks.
International Equity Fund's goal is capital appreciation and it
invests primarily in common stocks of foreign issuers.
Aggressive Growth Fund's goal is capital appreciation and it
invests primarily in common stocks of small and medium-size
companies.
Special Income Fund's goal is to provide a high level of current
income while conserving the value of the investment for the longest
period of time. It invests primarily in investment-grade bonds.
Moneyshare Fund's goal is to provide maximum current income
consistent with liquidity and conservation of capital. It invests
in money market securities.
Managed Fund's goal is maximum total investment return through a
combination of capital growth and current income. It invests
primarily in stocks, convertible securities, bonds, and money
market instruments.
Because any investment involves risk, achieving these goals cannot
be guaranteed. Only the contract owners can change the goals. See
Voting rights.
Manager and distributor
The funds are managed by IDS Life, a subsidiary of IDS Financial
Corporation (IDS). IDS has an agreement with IDS Life to furnish
investment advice for the funds managed by IDS Life.
Variable accounts
You may not buy (nor will you own) shares of the fund directly.
You invest by buying a variable annuity and allocating your
purchase payments among the variable accounts that invest in the
funds.
Sales charge
There is no sales charge for the sale or redemption of fund shares,
but there may be charges associated with your redemption (surrender
or withdrawal) of your annuity contract. Any charges that apply to
the variable accounts and your annuity contract are described in
the variable annuity prospectus.
<PAGE>
PAGE 49
Expenses
The funds pay IDS Life a fee for managing their investment
portfolios and for certain administrative services. The funds also
pay certain nonadvisory expense. See "Investment manager" under
"How the funds are organized".
Performance
Financial highlights
<TABLE>
<CAPTION>
Capital Resouce Fund
Financial highlights
Fiscal year ended August 31,
Per share income and capital changes*
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $24.58 $23.90 $23.15 $17.54 $20.17 $15.06 $17.71 $15.97 $14.71 $14.40
Income (loss) from investment operations:
Net investment income .29 .23 .21 .40 .52 .39 .31 .52 .61 .49
Net gains (losses) on securities (both realized
and unrealized) 1.56 1.89 1.75 6.61 (2.06) 5.38 (2.54) 4.23 2.87 1.11
Total from investment operations 1.85 2.12 1.96 7.01 (1.54) 5.77 (2.23) 4.75 3.48 1.60
Less distributions:
Dividends from net investment income (.29) (.23) (.21) (.40) (.52) (.39) (.31) (.52) (.61) (.49)
Distributions from realized gains (2.71) (1.21) (1.00) (1.00) (.57) (.27) (.11) (2.49) (1.61) (.80)
Total distributions (3.00) (1.44) (1.21) (1.40) (1.09) (.66) (.42) (3.01) (2.22) (1.29)
Net asset value, end of year $23.43 $24.58 $23.90 $23.15 $17.54 $20.17 $15.06 $17.71 $15.97 $14.71
Ratios/supplemental data
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Net assets, end of year
(in millions) $2,899 $2,308 $1,681 $1,191 $ 702 $ 660 $ 454 $ 493 $ 301 $ 187
Ratio of expenses to average
daily net assets .68% .68% .70% .70% .70% .73% .69% .59% .54% .64%
Ratio of net income to average
daily net assets 1.20% 0.94% 0.91% 1.94% 2.69% 2.22% 2.01% 2.94% 3.74% 3.48%
Portfolio turnover rate
(excluding short-term
securities) 85% 65% 63% 74% 82% 42% 111% 171% 115% 136%
Total Return** 7.61% 8.87% 8.54% 40.68% (7.79)% 38.72% (12.59)% 30.32% 23.90% 11.26%
*For a share outstanding throughout the year. Rounded to the nearest cent.
**Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges.
</TABLE>
<PAGE>
PAGE 50
<TABLE>
<CAPTION>
International Equity Fund
Financial highlights
Fiscal period ended August 31,
Per share income and capital changes*
1994 1993 1992**
<S> <C> <C> <C>
Net asset value, beginning of period $11.60 $10.01 $10.00
_____________________________________________________________________________________________
Income from investment operations:
Net investment income .14 .15 .05
Net gains on securities (both
realized and unrealized) 1.61 1.81 .01
_____________________________________________________________________________________________
Total from investment operations 1.75 1.96 .06
_____________________________________________________________________________________________
Less distributions:
Dividends from net investment income (.08) (.15) (.05)
Distributions from realized gains (.29) (.22) -
Excess distributions from realized gains (.07) - -
_____________________________________________________________________________________________
Total distributions (.44) (.37) (.05)
_____________________________________________________________________________________________
Net asset value, end of period $12.91 $11.60 $10.01
_____________________________________________________________________________________________
Ratios/supplemental data
1994 1993 1992**
Net assets, end of period (in millions) $1,111 $ 291 $ 39
_____________________________________________________________________________________________
Ratio of expenses to average
daily net assets .98% 1.10% 1.57%***
Ratio of net income to average
daily net assets 1.09% 1.37% 0.93%***
Portfolio turnover rate (excluding
short-term securities) 51% 62% 22%
_____________________________________________________________________________________________
Total Return## 15.11% 19.76% 0.55%#
_____________________________________________________________________________________________
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Commencement of operations. Period from Jan. 13, 1992 to Aug. 31, 1992.
***Adjusted to an annual basis.
#For the period from Jan. 13, 1992 to Aug. 31, 1992, the annualized total return is 0.87%.
##Total return does not reflect payment of the expenses that apply to the variable accounts
or any annuity charges.
</TABLE>
<PAGE>
PAGE 51
<TABLE>
<CAPTION>
Aggressive Growth Fund
Financial highlights
Fiscal period ended August 31,
Per share income and capital changes*
1994 1993 1992**
<S> <C> <C> <C>
Net asset value, beginning of period $11.68 $9.00 $10.00
_____________________________________________________________________________________________
Income (loss) from investment operations:
Net investment income .01 .02 .02
Net gains (losses) on securities (both
realized and unrealized) (.22) 2.68 (1.00)
_____________________________________________________________________________________________
Total from investment operations (.21) 2.70 (0.98)
_____________________________________________________________________________________________
Less distributions:
Dividends from net investment income (.01) (.02) (.02)
_____________________________________________________________________________________________
Net asset value, end of period $11.46 $11.68 $ 9.00
_____________________________________________________________________________________________
Ratios/supplemental data
1994 1993 1992**
Net assets, end of period (in millions) $ 763 $ 299 $ 57
_____________________________________________________________________________________________
Ratio of expenses to average
daily net assets .69% .75% .98%***
Ratio of net income to average
daily net assets 0.14% 0.28% 0.21%***
Portfolio turnover rate (excluding
short-term securities) 59% 55% 28%
_____________________________________________________________________________________________
Total Return## (1.77)% 29.98% (9.76)%#
_____________________________________________________________________________________________
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Commencement of operations. Period from Jan. 13, 1992 to Aug. 31, 1992.
***Adjusted to an annual basis.
#For the period from Jan. 13, 1992 to Aug. 31, 1992, the annualized total return is (14.98)%.
##Total return does not reflect payment of the expenses that apply to the variable accounts or
any annuity charges.
</TABLE>
<PAGE>
PAGE 52
<TABLE>
<CAPTION>
Special Income Fund
Financial highlights
Fiscal year ended August 31,
Per share income and capital changes*
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $12.08 $11.26 $10.72 $10.10 $11.11 $10.88 $11.09 $11.91 $11.34 $10.51
______________________________________________________________________________________________________________________
Income (loss) from investment operations:
Net investment income .84 .85 .90 .97 .99 1.03 1.03 1.08 1.16 1.28
Net gains (losses) on securities (both
realized and unrealized) (.99) .82 .54 .62 (1.01) .23 (.21) (.56) 1.26 .96
______________________________________________________________________________________________________________________
Total from investment operations (.15) 1.67 1.44 1.59 (.02) 1.26 .82 .52 2.42 2.24
______________________________________________________________________________________________________________________
Less distributions:
Dividends from net investment income (.85) (.85) (.90) (.97) (.99) (1.03) (1.03) (1.08) (1.16) (1.28)
Distributions from realized gains (.02) - - - - - - (.26) (.69) (.13)
Excess distributions from net investment
income (.01) - - - - - - - - -
_______________________________________________________________________________________________________________________
Total distributions (.88) (.85) (.90) (.97) (.99) (1.03) (1.03) (1.34) (1.85) (1.41)
_______________________________________________________________________________________________________________________
Net asset value, end of period $11.05 $12.08 $11.26 $10.72 $10.10 $11.11 $10.88 $11.09 $11.91 $11.34
_______________________________________________________________________________________________________________________
Ratios/supplemental data
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Net assets, end of year
(in millions) $1,559 $1,551 $1,136 $ 800 $ 641 $ 565 $ 428 $ 409 $ 307 $ 152
Ratio of expenses to
average daily net assets .67% .69% .71% .70% .71% .73% .69% .58% .55% .69%
Ratio of net income to
average daily net assets 7.20% 7.41% 8.22% 9.31% 9.42% 9.37% 9.45% 9.11% 10.27% 11.54%
Portfolio turnover rate
(excluding short-term
securities) 57% 77% 92% 97% 118% 132% 169% 101% 170% 86%
_______________________________________________________________________________________________________________________
Total Return** (1.30)% 15.47% 13.96% 16.54% (0.12)% 12.19% 7.76% 4.48% 23.17% 22.44%
_______________________________________________________________________________________________________________________
*For a share outstanding thourghout the period. Rounded to the nearest cent.
**Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges.
</TABLE>
<PAGE>
PAGE 53
<TABLE>
<CAPTION>
Moneyshare Fund
Financial highlights
Fiscal year ended August 31,
Per share income and capital changes*
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
_________________________________________________________________________________________________________________________
Income from investment operations:
Net investment income .03 .03 .04 .07 .08 .09 .07 .06 .07 .08
_________________________________________________________________________________________________________________________
Total from investment
operations .03 .03 .04 .07 .08 .09 .07 .06 .07 .08
_________________________________________________________________________________________________________________________
Less distributions:
Dividends from net investment
income (.03) (.03) (.04) (.07) (.08) (.09) (.07) (.06) (.07) (.08)
_________________________________________________________________________________________________________________________
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
_________________________________________________________________________________________________________________________
Ratios/supplemental data
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
Net assets, end of year
(in millions) $ 179 $ 180 $ 246 $ 285 $ 274 $ 160 $ 102 $ 67 $ 61 $ 64
_________________________________________________________________________________________________________________________
Ratio of expenses to average
daily net assets .57% .60% .60% .57% .62% .54% .58% .54% .62% .63%
_________________________________________________________________________________________________________________________
Ratio of net income to average
daily net assets 3.12% 2.67% 3.93% 6.55% 7.85% 8.68% 6.77% 5.87% 7.00% 8.41%
_________________________________________________________________________________________________________________________
Total Return** 3.15% 2.73% 3.98% 6.77% 8.18% 8.99% 7.01% 6.01% 7.20% 8.77%
_________________________________________________________________________________________________________________________
*For a share outstanding throughout the year. Rounded to the nearest cent.
**Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges.
</TABLE>
<PAGE>
PAGE 54
<TABLE>
<CAPTION>
Managed Fund
Financial highlights
Fiscal period ended August 31,
Per share income and capital changes*
1994 1993 1992 1991 1990 1989 1988 1987 1986**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.32 $13.08 $12.59 $10.93 $12.08 $9.87 $11.34 $10.10 $10.00
Income (loss) from investment operations:
Net investment income .47 .49 .56 .58 .65 .48 .42 .45 .16
Net gains(losses) on securities (both
realized and unrealized) (.26) 1.60 .95 2.11 (.67) 2.25 (1.47) 1.45 .10
Total from investment operations .21 2.09 1.51 2.69 (.02) 2.73 (1.05) 1.90 .26
Less distributions:
Dividends from net investment income (.47) (.49) (.56) (.58) (.65) (.48) (.42) (.45) (.16)
Distributions from net realized gains (.41) (.36) (.46) (.45) (.48) (.04) - (.21) -
Total distributions (.88) (.85) (1.02) (1.03) (1.13) (.52) (.42) (.66) (.16)
Net asset value, end of period $13.65 $14.32 $13.08 $12.59 $10.93 $12.08 $ 9.87 $11.34 $10.10
Ratios/supplemental data
1994 1993 1992 1991 1990 1989 1988 1987 1986**
Net assets, end of period (in millions) $2,499 $1,858 $1,169 $810 $545 $462 $381 $340 $48
Ratio of expenses to average daily net
assets .68% .69% .71% .70% .71% .73% .69% .67% .64%***
Ratio of net income to average
daily net assets 3.46% 3.70% 4.35% 4.86% 5.42% 5.06% 4.42% 4.10% 4.48%***
Portfolio turnover rate (excluding
short-term securities) 79% 58% 50% 52% 37% 69% 62% 48% 10%
Total Return++ 1.51%# 16.33% 12.14% 25.24% (0.23)% 28.47% (9.06)% 19.13% 2.55%+
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Commencement of operations. Period from April 30, 1986 to Aug. 31 31, 1986.
***Adjusted to an annual basis.
+For the period from April 30, 1986 to Aug. 31, 1986, the annualized total return is 7.57%.
++Total return does not reflect payment of the expenses that apply to the variable accounts or any annuity charges.
</TABLE>
The information in these tables has been audited by KPMG Peat
Marwick LLP, independent auditors. The independent auditors'
report and additional information about the performance of the
funds is contained in the fund's annual report which, if not
included with this prospectus, may be obtained without charge.
Total returns
Average annual total returns as of Aug. 31, 1994
Purchase 1 year 5 years 10 years
made ago ago ago
Capital Resource 7.61% 10.53% 13.65%
Fund
S&P 500 5.47% 9.62% 14.89%
<PAGE>
PAGE 55
Cumulative total returns as of Aug. 31, 1994
Purchase 1 year 5 years 10 years
made ago ago ago
Capital Resource 7.61% 64.97% 259.32%
Fund
S&P 500 5.47% 58.32% 300.54%
Average annual total returns as of Aug. 31, 1994
Since
Purchase 1 year inception
made ago Jan. 13, 1992
International 15.11% 13.20%
Equity Fund
Morgan Stanley 8.91% 10.73%
Capital International
World Index
Cumulative total returns as of Aug. 31, 1994
Since
Purchase 1 year inception
made ago Jan. 13, 1992
International 15.11% 38.61%
Equity Fund
Morgan Stanley 8.91% 30.78%
Capital International
World Index
Average annual total returns as of Aug. 31, 1994
Since
Purchase 1 year inception
made ago Jan. 13, 1992
Aggressive Growth -1.77% 5.53%
Fund
S&P 500 5.47% 8.20%
Cumulative total returns as of Aug. 31, 1994
Since
Purchase 1 year inception
made ago Jan. 13, 1992
Aggressive Growth -1.77% 15.22%
Fund
S&P 500 5.47% 23.07%
<PAGE>
PAGE 56
Average annual total returns as of Aug. 31, 1994
Purchase 1 year 5 years 10 years
made ago ago ago
Special Income Fund -1.30% 8.62% 11.16%
Lehman Aggregate -1.52% 8.79% 11.16%
Bond Index
Cumulative total returns as of Aug. 31, 1994
Purchase 1 year 5 years 10 years
made ago ago ago
Special Income Fund -1.30% 51.18% 187.94%
Lehman Aggregate -1.52% 52.40% 188.11%
Bond Index
Average annual total returns as of Aug. 31, 1994
Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986
Managed Fund 1.51% 10.59% 10.84%
S&P 500 5.47% 9.62% 12.37%
Cumulative total returns as of Aug. 31, 1994
Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986
Managed Fund 1.51% 65.46% 136.21%
S&P 500 5.47% 58.32% 164.52%
These examples show total returns from hypothetical investments in
each fund. These returns are compared to those of popular indexes
for the same periods. The results do not reflect the expenses that
apply to the variable accounts or the annuity contract. Inclusion
of these charges would reduce total return for all periods shown.
For purposes of calculation, information about each fund assumes
the deduction of applicable fund expenses, makes no adjustments for
taxes that may have been paid on the reinvested income and capital
gains, and covers a period of widely fluctuating securities prices.
Returns shown should not be considered a representation of the
fund's future performance.
Each fund's investments may be different from those in the indexes.
The indexes reflect reinvestment of all distributions and changes
in market prices, but exclude brokerage commissions or other fees.
<PAGE>
PAGE 57
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of
common stocks, is frequently used as a general measure of market
performance.
The Morgan Stanley Capital International World Index, compiled from
a composite of securities listed on the markets of North America,
Europe, Australasia and the Far East is widely recognized by
investors as the measurement index for portfolios that invest in
the major markets of the world.
Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed securities
and mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in Special Income Fund.
Yield calculation
Special Income Fund may calculate a 30-day annualized yield by
dividing:
o net investment income per share deemed earned during a 30-day
period by
o the net asset value per share on the last day of the period,
and
o converting the result to a yearly equivalent figure.
This yield calculation does not include any annuity charges or
contingent deferred sales charges, which would reduce the yield
quoted.
A fund's yield varies from day to day, mainly because share values
and net asset values (which are calculated daily) vary in response
to changes in interest rates. Net investment income normally
changes much less in the short run. Thus, when interest rates rise
and share values fall, yield tends to rise. When interest rates
fall, yield tends to follow.
Moneyshare Fund calculates annualized simple and compound yields
based on a seven-day period.
Past yields should not be considered an indicator of future yields.
Key terms
Average annual total return - The annually compounded rate of
return over a given time period (usually two or more years) --
total return for the period converted to an equivalent annual
figure.
<PAGE>
PAGE 58
Capital gains or losses - Increase or decrease in value of the
securities the funds hold. Gains are realized when securities that
have increased in value are sold. A fund also may have unrealized
gains or losses when securities increase or decrease in value but
are not sold.
Close of business - Normally 3 p.m. Central time each business day
(any day the New York Stock Exchange is open).
Distributions - Payments to the variable accounts of two types:
investment income (dividends) and realized net long-term capital
gains (capital gains distributions).
Investment income - Dividends and interest earned on securities
held by the funds.
Net asset value (NAV) - Value of a single fund share. It is the
total market value of all of a fund's investments and other assets,
less any liabilities, divided by the number of shares outstanding.
The NAV is the price the variable account receives when it sells
shares. It usually changes from day to day, and is calculated at
the close of business. For Special Income Fund, NAV generally
declines as interest rates increase and rises as interest rates
decline.
Total return - Sum of all returns for a given period, assuming
reinvestment of all distributions. Calculated by taking the total
value of shares at the end of the period (including shares acquired
by reinvestment), less the price of shares purchased at the
beginning of the period.
Variable accounts - The separate accounts or subaccounts, each of
which invests in shares of one of the funds.
Yield - Net investment income earned per share for a specified time
period, divided by the net asset value at the end of the period.
Investment policies and risk
Capital Resource Fund - Under normal market conditions, Capital
Resource Fund invests in U.S. common stocks listed on national
securities exchanges and other securities convertible into common
stock. The portfolio manager selects investments believed to have
potential for capital growth.
The fund also may invest in preferred stocks, bonds, debt
securities, foreign securities, money market instruments and
derivative instruments. The fund does not have a minimum rating
requirement for corporate bonds.
International Equity Fund - Under normal market conditions,
International Equity Fund invests at least 80% of its total assets
in foreign equity securities having a potential for superior
growth. Superior means fund performance better than the Morgan
Stanley Capital International World Index.
<PAGE>
PAGE 59
The fund's investments will be primarily in common stocks and
securities convertible into common stocks of foreign issuers.
However, if the investment manager believes they have more
potential for capital growth, the fund may invest in bonds issued
or guaranteed either by countries that are members of the
Organization for Economic Cooperation and Development (OECD) or by
international agencies such as the World Bank or the European
Investment Bank. These bonds will not be purchased unless, in the
judgment of the investment manager, they are comparable in quality
to bonds rated AA by Standard & Poor's Corporation (S&P).
The percentage of fund assets invested in particular countries or
regions of the world will change according to their political
stability and economic condition. Ordinarily, the fund will invest
in companies domiciled in at least three foreign countries.
Normally, investments in U.S. issuers will constitute less than 20%
of the fund's portfolio. However, as a temporary measure, the fund
may invest any portion of its assets in securities of U.S. issuers
that appear to have greater potential for superior growth than
foreign securities. U.S. investments would include common stocks,
convertible securities and corporate and government bonds. The
bonds must bear one of the four highest ratings given by Moody's or
S&P or must be of comparable quality. The fund also may invest in
money market instruments and derivative instruments. No more than
5% of the fund's total assets may be invested in options on
individual securities.
Aggressive Growth Fund - Under normal market conditions, Aggressive
Growth Fund invests primarily in common stocks of U.S. and foreign
companies that are small and medium size growth companies. Many of
these companies emphasize technological innovation or productivity
improvements.
The fund invests in warrants to purchase common stock, debt
securities or in securities of large, well-established companies
when the portfolio manager believes those investments offer the
best opportunity for capital growth. The fund also may invest in
foreign securities, derivative instruments and money market
instruments.
Special Income Fund - Under normal market conditions, Special
Income Fund primarily invests in debt securities. At least 50% of
its net assets are invested in corporate bonds of the four highest
ratings, in other corporate bonds the investment manager believes
have the same investment qualities, and in government bonds.
The fund also may invest in corporate bonds with lower ratings,
convertible securities, preferred stocks, derivative instruments,
money market instruments and foreign bonds. The fund does not have
a minimum rating requirement for corporate bonds.
Moneyshare Fund - Under normal market conditions, Moneyshare Fund
invests primarily in high-quality, short-term, debt securities and
other money market instruments denominated in U.S. dollars. The
fund intends to maintain a constant net asset value of $1 per
<PAGE>
PAGE 60
share, although there is no assurance it will be able to do so.
The fund will not purchase any security with a remaining maturity
of more than 13 months and will maintain a dollar-weighted average
portfolio maturity of 90 days or less. The fund also may invest in
foreign securities. For a description of money market securities,
see Appendix C in the SAI.
Managed Fund - Under normal market conditions, Managed Fund invests
at least 50% of its total assets in common stocks. The fund also
invests in preferred stocks, convertible securities, warrants,
bonds and money market instruments. Ordinarily, investments other
than common stock would constitute 50% or less of the fund's
portfolio. However, the fund may invest any portion of its assets
in securities other than common stocks. This allows the investment
manager flexibility to best achieve the fund's goal.
The fund does not have a minimum rating requirement for corporate
bonds. The fund also may invest in derivative instruments and
foreign securities.
The various types of investments the portfolio managers use to
achieve investment performance are described in more detail in the
next section and in the SAI.
Facts about investments and their risks
Common stocks: Stock prices are subject to market fluctuations.
Stocks of smaller or foreign companies may be subject to abrupt or
erratic price movements. Also, small companies often have limited
product lines, smaller markets or fewer financial resources.
Therefore, some of the securities in which a fund invests involve
substantial risk and may be considered speculative.
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the convertible securities
trade more like common stock.
Investment grade bonds: The price of an investment grade bond
fluctuates as interest rates change or if its credit rating is
upgraded or downgraded.
Debt securities below investment grade: The price of these bonds
may react more to the ability of a company to pay interest and
principal when due than to changes in interest rates. They have
greater price fluctuations, are more likely to experience a
default, and sometimes are referred to as "junk bonds." Reduced
market liquidity for these bonds may occasionally make it more
difficult to value them. In valuing bonds, a fund relies both on
independent rating agencies and the investment manager's credit
<PAGE>
PAGE 61
analysis. Securities that are subsequently downgraded in quality
may continue to be held and will be sold only when the fund's
investment manager believes it is advantageous to do so.
Bond ratings and holdings for fiscal year ended Aug. 31, 1994
For Special Income Fund
<TABLE>
<CAPTION>
IDS
S&P Rating Protection of Assessment
Percent of (or Moody's principal and of unrated
net assets equivalent) interest securities
<C> <C> <C> <C>
2.66% AAA Highest quality 0.29%
2.88 AA High quality 0.08
11.86 A Upper medium grade 0.25
24.56 BBB Medium grade 0.39
13.22 BB Moderately speculative 0.41
13.56 B Speculative 0.97
0.60 CCC Highly speculative 0.24
-- CC Poor quality --
-- C Lowest quality --
-- D In default 0.07
2.75 Unrated Unrated securities 0.05
</TABLE>
(See Appendix to the SAI for further information regarding
ratings.)
For the fiscal year ended Aug. 31, 1994, Capital Resource and
Managed Funds held less than 5% of their average daily net assets
in bonds rated below investment grade.
Debt securities sold at a deep discount: Some bonds are sold at
deep discounts because they do not pay interest until maturity.
They include zero coupon bonds and PIK (pay-in-kind) bonds. To
comply with tax laws, a fund has to recognize a computed amount of
interest income and pay dividends to shareholders even though no
cash has been received. In some instances, a fund may have to sell
securities to have sufficient cash to pay the dividends.
Mortgage-backed securities: All funds except Moneyshare may invest
in U.S. government securities representing part ownership of pools
of mortgage loans. A pool, or group, of mortgage loans issued by
such lenders as mortgage bankers, commercial banks and savings and
loan associations, is assembled and mortgage pass-through
certificates are offered to investors through securities dealers.
In pass-through certificates, both principal and interest payments,
including prepayments, are passed through to the holder of the
certificate. Prepayments on underlying mortgages result in a loss
of anticipated interest, and the actual yield (or total return) to
the fund, which is influenced by both stated interest rates and
market conditions, may be different than the quoted yield on the
certificates.
Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made including the possibility of seizure or nationalization of
<PAGE>
PAGE 62
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency must be purchased. This is done
by using a forward contract in which the price of the foreign
currency in U.S. dollars is established on the date the trade is
made, but delivery of the currency is not made until the securities
are received. As long as the fund holds foreign currencies or
securities valued in foreign currencies, the price of a fund share
will be affected by changes in the value of the currencies relative
to the U.S. dollar. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the
price of the security, and it may be difficult to complete the
transaction.
Derivative instruments: The portfolio managers may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies,
or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow a portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties, and inability to close such instruments. A fund will use
derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The fund's custodian will maintain, in a segregated
account, cash or liquid high-grade debt securities that are marked
to market daily and are at least equal in value to the fund's
obligations to the extent such obligations are not covered. No
more than 5% of each fund's net assets can be used at any one time
for good faith deposits on futures and premiums for options on
futures that do not offset existing investment positions. For
further information, see the options and futures appendixes in the
SAI.
Securities and derivative instruments that are illiquid: Illiquid
means the security or derivative instrument cannot be sold quickly
in the normal course of business. Some investments cannot be
resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. Each
portfolio manager will follow guidelines established by the board
of directors and consider relevant factors such as the nature of
<PAGE>
PAGE 63
the security and the number of likely buyers when determining
whether a security is illiquid. No more than 10% of each fund's
net assets (15% for Capital Resource) will be held in securities
and derivative instruments that are illiquid.
Money market instruments: Short-term debt securities rated in the
top two grades are used to meet daily cash needs and at various
times to hold assets until better investment opportunities arise.
Generally, less than 25% of each of Capital Resource, International
Equity, Aggressive Growth, Special Income and Managed Fund's total
assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that
amount for a limited period of time.
The investment policies described above may be changed by the board
of directors.
Lending portfolio securities: Each fund may lend its securities to
earn income so long as borrowers provide collateral equal to the
market value of the loans. The risks are that borrowers will not
provide collateral when required or return securities when due.
Unless shareholders approve otherwise, loans may not exceed 30% of
a fund's net assets.
Valuing assets
Moneyshare Fund's securities are valued at amortized cost. In
valuing assets of Capital Resource, International Equity,
Aggressive Growth, Special Income and Managed Funds:
o Securities and assets with available market values are valued
on that basis.
o Securities maturing in 60 days or less are valued at amortized
cost.
o Securities and assets without readily available market values
are valued according to methods selected in good faith by the
board of directors.
o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.
How to invest, transfer or redeem shares
How to invest
You may invest in the funds only by buying a variable annuity
contract. For further information concerning maximum and minimum
payments and submitting and acceptance of your application, see
your annuity prospectus.
<PAGE>
PAGE 64
How to transfer among variable accounts
You can transfer all or part of your value in a variable account to
one or more of the other variable accounts with different
investment objectives. Please refer to your variable annuity
prospectus for more information about transfers.
Redeeming shares
The funds will buy (redeem) any shares presented by the variable
accounts. Surrender or withdrawal details are described in your
variable annuity prospectus.
Payment generally will be mailed within seven days of the
redemption request. The amount may be more or less than the amount
invested. Shares will be redeemed at net asset value at the close
of business on the day the request is accepted at the Minneapolis
office. If the request arrives after the close of business, the
price per share will be the net asset value at the close of
business on the next business day.
Distributions and taxes
The funds distribute to shareholders (the variable accounts) net
investment income and net capital gains. They do so to qualify as
regulated investment companies and to avoid paying corporate income
and excise taxes.
Dividend and capital gain distributions
Capital Resource, International Equity, Aggressive Growth and
Managed Funds distribute their net investment income (dividends and
interest earned on securities held by the fund, less operating
expenses) to shareholders (the variable accounts) at the end of
each calendar quarter. For Special Income and Moneyshare Funds,
net investment income is distributed monthly. Short-term capital
gains distributed are included in net investment income. Net
realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they are
distributed, both net investment income and net capital gains are
included in the value of each share. After they are distributed,
the value of each share drops by the per-share amount of the
distribution. (Since the distributions are reinvested, the total
value of the holdings will not change.) The reinvestment price is
the net asset value at close of business on the day the
distribution is paid.
Taxes
The Internal Revenue Service has issued final regulations relating
to the diversification requirements under section 817(h) of the
Internal Revenue Code. Each fund intends to comply with these
requirements.
Federal income taxation of variable accounts, life insurance
companies and annuities is discussed in your annuity prospectus.
<PAGE>
PAGE 65
Income received by International Equity Fund may be subject to
foreign tax and withholding. Tax conventions between certain
countries and the United States may reduce or eliminate those
taxes.
How the funds are organized
IDS Life Capital Resource Fund, Inc. is a series mutual fund. It
has three series of stock representing three separate, diversified
funds - Capital Resource, International Equity and Aggressive
Growth. It was incorporated in Nevada on April 27, 1981, but
changed its state of incorporation to Minnesota on June 13, 1986.
International Equity and Aggressive Growth Funds began operations
on Jan. 13, 1992. IDS Life Special Income Fund, Inc. and IDS Life
Moneyshare Fund, Inc. were originally incorporated in Nevada on
April 27, 1981, but changed their state of incorporation to
Minnesota on June 13, 1986. IDS Life Managed Fund, Inc. was
incorporated in Minnesota on March 5, 1985.
All funds are open-end management investment companies as defined
in the Investment Company Act of 1940. The headquarters of the
Funds is IDS Tower 10, Minneapolis, MN 55440-0010. The funds are
part of the IDS MUTUAL FUND GROUP, a family of funds that began in
1940.
Shares
A fund is owned by the variable accounts, its shareholders. All
shares issued by each fund are of the same class -- capital stock.
Par value is 1 cent per share ($.001 for Managed Fund). Both full
and fractional shares can be issued.
Voting rights
For a discussion of the rights of annuity contract owners
concerning the voting of shares held by the variable accounts,
please see your annuity prospectus. All shares have equal voting
rights. In any matter requiring the vote of shareholders (the
fund's management and fundamental policies), IDS Life and its
affiliates will ask for instructions from the person with voting
rights. The number of votes you have is in proportion to the
amount you have allocated to each variable account. Your
instructions will be weighted in the same proportion and IDS Life
and its affiliates will vote them that way. If you do not give us
instructions, and for the shares for which we have voting rights,
we will vote your shares in the same proportion as those for which
we have received instructions.
Shareholder meetings
The funds do not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors. Meetings of the shareholders also may be called
on demand by the holders of 3% or more of the outstanding shares of
each fund if no meeting has been held during the preceding 15
months.
<PAGE>
PAGE 66
Portfolio managers
Capital Resource
Curt Weaver joined IDS in 1979 and serves as senior portfolio
manager. He has managed this fund since 1987. He also serves IDS
Stock Fund as a member of the Growth Income team.
International Equity
Peter Lamaison joined IDS in 1981 and serves as president and chief
executive officer of IDS International, Inc. and senior portfolio
manager. He has managed this fund since 1992. He also serves as
portfolio manager of IDS International Fund and Strategy -
Worldwide Growth Fund.
Wes Wadman joined IDS in 1964 and serves as executive vice
president of IDS International, Inc. and as executive vice
president of IDS Advisory Group Inc. He has served as portfolio
manager of this fund since its inception.
Paul Hopkins joined IDS in 1992 and serves as chief investment
officer and executive vice president of IDS International, Inc. He
was appointed to the portfolio management team of this fund in
January 1994. He also serves as portfolio manager of IDS
International Fund and IDS Strategy-Worldwide Growth Fund. Prior
to joining IDS, he was director of international equities for
Bankers Trust.
Aggressive Growth
Ray Hirsch joined IDS in 1986 and serves as senior portfolio
manager. He has managed this fund since it's inception in 1992.
He also serves as portfolio manager for IDS Strategy - Aggressive
Equity Fund and IDS Discovery Fund. He also manages investments
for IDS Growth Spectrum Advisors, a division of IDS Advisory Group,
Inc.
Special Income
William Westhoff joined IDS in 1971 and serves as senior vice
president - fixed income management and senior portfolio manager.
He managed this fund from 1986 to 1989 and resumed management in
1993.
Moneyshare
Terry Fettig joined IDS in 1986. He serves as portfolio manager
for this fund, IDS Cash Management Fund, IDS Planned Investment
Account and IDS Tax-Free Money Fund. From 1986 to 1992 he was a
fixed income securities analyst. From 1992 to 1993 he was an
associate portfolio manager.
<PAGE>
PAGE 67
Managed
Mike Ducar joined IDS in 1974 and serves as senior portfolio
manager. He has managed the equity portfolio of this fund since
1991. He had served as director-investment research and vice
president of investment services. He also is a member of IDS
Growth Income team.
Deb Pederson joined IDS in 1986 and serves as portfolio manager.
She has managed the fixed income portfolio of this fund since
January 1994. She also manages the fixed income portfolio of IDS
Life Series Fund, Inc. - Managed Portfolio and the low grade
invested assets of IDS Life, IDS Life Insurance Company of New York
and American Enterprise Life Insurance Company.
Directors and officers
Shareholders elect a board of directors who oversee the operations
of the fund and choose its officers. Its officers are responsible
for day-to-day business decisions based on policies set by the
board. The board has named an executive committee that has
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP. On Aug. 31, 1994, the fund's directors and
officers did not own any shares of the funds.
Directors and officers of the funds
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,
Incorporated.
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).
<PAGE>
PAGE 68
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 director who is a partner in a law firm that has
represented an IDS subsidiary
Anne P. Jones
Partner, law firm of Sutherland, Asbill & Brennan.
Interested directors who are officers and/or employees of IDS
David R. Hubers
President and chief executive officer, IDS.
James A. Mitchell
Executive Vice President, IDS.
John R. Thomas
Senior vice president, IDS.
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.
Refer to the SAI for the directors' and officers' biographies.
Investment manager
Each fund pays IDS Life for managing its portfolio, providing
administrative services and serving as transfer agent.
Under its Investment Management and Services Agreement, IDS Life
determines which securities will be purchased, held or sold
(subject to the direction and control of the fund's board of
directors). For these services, Aggressive Growth, International
Equity, Capital Resource, Managed and Special Income pay IDS Life a
two-part fee.
<PAGE>
PAGE 69
The first part is based on the combined average daily net assets of
all funds in the IDS MUTUAL FUND GROUP, as follows:
Net assets of IDS MUTUAL FUND GROUP* Annual fee
First $5 billion 0.46%
Each additional $5 billion Decreasing percentages
More than $50 billion 0.32%
*Includes all funds, except the money market funds.
The second part is equal to 0.25% of each fund's average daily net
assets during the fiscal year except for International Equity Fund
whose individual asset charge is equal to .50% of its average daily
net assets.
For the fiscal year ended Aug. 31, 1994, Aggressive Growth paid IDS
Life a total investment management fee of .64% of its average daily
net assets. International Equity paid .89%, Capital Resource paid
.64%, Managed paid .64%, and Special Income paid .65%. Under the
Agreement, each fund also pays taxes, brokerage commissions and
nonadvisory expenses. Total fees and expenses for fiscal year 1994
were .69% for Aggressive Growth, .98% for International Equity,
.68% for Capital Resource, .68% for Managed and .67% for Special
Income.
For its services, Moneyshare Fund pays IDS Life a fee based on an
annual rate of 0.54% on the first $1 billion of daily net assets,
decreasing thereafter in reduced percentages of each succeeding
$500 million to 0.46% on all net assets of more than $2.5 billion.
Under the agreement with IDS Life, Moneyshare Fund reimburses IDS
Life for nonadvisory expenses incurred by IDS Life in connection
with the fund's operations in an amount not to exceed 0.25% of the
fund's average daily net assets. For fiscal year 1994, Moneyshare
Fund's total fees and expenses were .57% of its average daily net
assets.
Investment advisory agreements
IDS Life and IDS have an Investment Advisory Agreement under which
IDS executes purchases and sales and negotiates brokerage as
directed by IDS Life. For its services, IDS Life pays IDS a fee
based on a percentage of each fund's average daily net assets for
the year. This fee is equal to 0.50% for International Equity Fund
and 0.25% for each remaining fund.
IDS has a Sub-investment Advisory Agreement with IDS International,
Inc. (International), a wholly owned subsidiary of IDS.
International's principal place of business is located at IDS Tower
10, Minneapolis, MN 55440-0010 while it also conducts investment
advisory business in London, England. International has had assets
under management since 1981. International determines the
securities which will be purchased, held or sold and executes
<PAGE>
PAGE 70
purchases and sales for International Equity Fund as directed by
IDS. For its services, IDS pays International a fee equal on an
annual basis to 0.50% of International Equity Fund's net assets.
General information
The IDS family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.
IDS has been providing financial services since 1894. Besides
managing investments for all publicly offered funds in the IDS
MUTUAL FUND GROUP, IDS also manages investments for itself and its
subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on Aug. 31, 1994 were more
than $105 billion.
IDS Life is a stock life insurance company organized in 1957 under
the laws of the State of Minnesota and located at IDS Tower 10,
Minneapolis, MN 55440-0010. IDS Life conducts a conventional life
insurance business in the District of Columbia and all states
except New York.
Other IDS subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.
IDS is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is
a wholly owned subsidiary of American Express Company, a financial
services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285. The fund may pay brokerage
commissions to broker-dealer affiliates of American Express and
IDS.
Retirement Annuity Mutual Funds
IDS Tower 10
Minneapolis, MN
55440-0010
Managed by IDS Life Insurance Company
<PAGE>
PAGE 71
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
International Equity Fund
Investments in securities of unaffiliated issuers
Bonds (0.4%)
Issuer Principal Value(a)
Amount
__________________________________________________________________________________
<S> <C> <C>
Banco de Galicia, 7.00% 2002 $ 4,000,000 $ 4,180,000
(Cost: $4,000,000)
__________________________________________________________________________________
Common & preferred stocks & warrants (87.5%)
Issuer Shares Value(a)
__________________________________________________________________________________
Argentina (2.4%)
Energy (0.6%)
YPF Sociedad Anonima Ads 244,600 6,329,025
Multi-industry (1.2%)
Perez Companc 'B' Shares 2,450,000 (b) 13,869,450
Telecommunications (0.6%)
Telefonica de Argentina 90,000 (d) 6,558,750
Australia (6.9%)
Banking (0.9%)
Westpac Banking 3,139,000 10,399,507
Energy (1.2%)
Broken Hill Proprietary 575,000 8,776,225
Broken Hill Proprietary
Warrants 06-29-95 2,376,000 (b) 4,067,712
Total 12,843,937
Industrial transportation (1.2%)
Brambles 1,183,616 13,183,115
Metals (2.6%)
CRA 858,800 12,634,666
Pasminco 10,154,600 (b) 16,399,679
Total 29,034,345
Merchandising (1.0%)
Woolworth 5,113,219 11,571,215
Belgium (0.3%)
Industrial equipment & services
Bekaert 3,400 2,806,850
Canada (0.4%)
Telecommunications
BCE Mobile Telecom 150,300 (b) 4,166,015
Chile (0.6%)
Telecommunications
Chile Telephone 76,000 6,935,000
Denmark (1.1%)
Telecommunications
TeleDanmark 'B' 220,000 11,832,040
Finland (0.3%)
Banking
Kansallis-Osake-Pankki 1,712,000 (b) 3,622,592
France (5.5%)
Banking (0.5%)
Credit Commercial de France 142,563 5,863,759
Building materials (0.7%)
Lafarge-Coppee 92,614 7,663,253
Electronics (0.3%)
Alcatel Alsthom Electricite 30,000 3,326,400
<PAGE>
PAGE 72
Common & preferred stocks & warrants (87.5%)
Issuer Shares Value(a)
__________________________________________________________________________________
Energy (1.8%)
Societe Nationale Elf Aquitaine 173,500 13,360,368
Total Petroleum 'B' 114,750 (d) 6,850,231
Total 20,210,599
Financial services (0.8%)
Cie de Suez 180,000 9,189,540
Multi-industry (1.4%)
Lyonnaise des Eaux Dumez 154,500 15,786,810
Germany (1.6%)
Chemicals (0.5%)
Henkel Pfd Shares 13,250 (b) 5,197,630
Construction (0.1%)
Hochtief 1,715 1,077,270
Merchandising (0.4%)
Karstadt 11,401 4,533,687
Multi-industry (0.6%)
Preussag 21,000 6,489,147
Hong Kong (5.0%)
Banking (0.6%)
Hang Seng Bank 997,000 7,159,457
Business & public service (0.9%)
Wharf (Holdings) 2,201,000 (d) 9,455,496
Merchandising (0.8%)
Dairy Farm Int'l 5,500,000 8,327,000
Multi-industry (1.9%)
Hutchison Whampoa 2,260,000 11,315,820
Swire Pacific 'A' 1,200,000 10,093,200
Total 21,409,020
Real estate (0.5%)
Great Eagle Holdings 8,689,000 5,335,046
Shipping (0.3%)
Shun Tak Enterprise 4,342,000 3,929,510
Italy (0.3%)
Automobiles
Fiat Priv 1,500,000 3,711,000
Japan (25.3%)
Appliances & durables (1.1%)
Matsushita Kotobuki Electronics 73,000 2,202,994
Sony 172,100 10,507,910
Total 12,710,904
Banking (2.6%)
Fuji Bank 499,000 11,269,416
Sumitomo Bank 425,000 8,451,550
Sumitomo Trust & Banking 669,0000 9,158,610
Total 28,879,576
Building materials (0.3%)
Nihon Cement 401,000 3,125,394
Broadcast publishing (0.3%)
Tokyo Broadcasting Systems 200,000 3,257,600
Chemicals (0.3%)
Konica 530,000 3,739,150
Construction (0.8%)
Maeda Road 510,000 9,326,370
Data processing (0.2%)
Fujitsu Warrants 6Dec98 11,000 (b) 1,942,222
<PAGE>
PAGE 73
Common & preferred stocks & warrants (87.5%)
Issuer Shares Value(a)
__________________________________________________________________________________
Electrical (0.9%)
Hitachi 1,022,000 10,131,086
Electrical & electronic (1.8%)
Matsushita Communications 125,000 3,609,875
Toshiba 1,409,000 10,685,856
Yokogawa Electric Corp 520,000 5,299,840
Total 19,595,571
Electronic component (1.4%)
Kyocera 145,000 10,751,460
Rohm 110,000 (d) 4,737,590
Total 15,489,050
Financial services (1.7%)
Daiwa Securities 261,000 4,094,829
Nomura Securities 471,000 10,401,564
Yamaichi Securities 500,000 4,301,500
Total 18,797,893
Food (0.3%)
Nichirei 423,000 3,055,752
Industrial component (1.5%)
Sumitomo Electric Industries 1,083,000 (d) 16,233,087
Insurance (1.6%)
Tokio Marine & Fire 1,400,000 17,347,400
Machinery & engineering (3.0%)
Chiyoda 64,000 1,611,648
Fanuc 239,000 11,010,013
Fuji Machine Mfg Co Ltd. 162,000 5,439,312
Ishikawajima-Harima 1,015,000 4,949,140
Mitsubishi Heavy Industries 1,340,000 10,510,960
Total 33,521,073
Merchandising (3.0%)
Amway 60,000 1,978,560
Aoyama Trading 74,000 2,883,928
Family Mart 75,500 4,896,477
Ito-Yokado 250,000 13,240,500
Joshin Denki 108,000 1,726,704
Keiyo 500 10,392
Marui 472,000 8,772,592
Total 33,509,153
Metals - steel (1.0%)
Nippon Steel 2,806,000 10,514,082
Miscellaneous materials & commodities (0.8%)
Asahi Glass 720,000 (d) 8,993,520
Real estate (1.1%)
Mitsui Fudosan 1,050,000 12,695,550
Recreation & goods (0.5%)
Nintendo 79,000 4,973,445
Telecommunications (0.3%)
Kokusai Denshin Denwa 29,000 3,361,622
Transportation (0.5%)
Nippon Express 536,000 5,730,912
Wholesale, int'l trade (0.3%)
Itochu 535,000 3,827,390
Malaysia (2.3%)
Banking (0.4%)
Malayan Banking 603,500 3,867,228
Leisure (0.4%)
Resorts World 656,000 4,306,640
Multi-industry (0.9%)
Sime Darby 3,100,000 9,690,600
<PAGE>
PAGE 74
Common & preferred stocks & warrants (87.5%)
Issuer Shares Value(a)
__________________________________________________________________________________
Utilities (0.6%)
Tenaga Nasional 1,261,000 7,095,647
Mexico (3.9%)
Building materials (2.0%)
Cemex ADR Series 'B' 1,051,975 19,067,047
Cemex ADR Series 'A' 202,500 (b) 3,543,750
Total 22,610,797
Construction housing (1.7%)
Empresas Ica Sociedad Controladora 530,000 (d) 15,635,000
Grupo Mexicano de Desarollo Series 'B' 144,500 2,691,312
Total 18,326,312
Merchandising (0.2%)
Benavides 'B' Shares 586,900 2,518,740
Netherlands (3.5%)
Broadcast publishing (1.2%)
Elsevier 140,000 13,514,480
Chemicals (0.9%)
Akzo Nobel N.V. 84,200 10,425,812
Financial services (0.3%)
International Nederlanden Groep 70,000 3,197,040
Household products (0.8%)
Unilever NV 75,000 8,605,800
Machinery, engineering (0.3%)
Stork VMF 116,035 3,114,263
New Zealand (1.0%)
Forest products
Carter Holt Harvey 4,570,000 10,977,140
Norway (1.0%)
Energy (0.7%)
Saga Petroleum 'A' 599,080 7,181,172
Shipping (0.3%)
First Olsen Tankers 408,000 (b) 3,358,656
Singapore (5.3%)
Automobiles (0.9%)
Cycle & Carriage 1,306,000 10,360,498
Banking (1.6%)
Development Bank of Singapore 791,500 8,178,570
Overseas Union Bank 1,714,350 9,027,767
Total 17,206,337
Beverages & tobacco (0.9%)
Fraser & Neave 916,600 10,571,148
Machinery & engineering (1.9%)
Keppel 1,467,000 10,855,800
Sembawang Shipyard 1,243,000 10,026,038
Total 20,881,838
Spain (4.2%)
Banking (1.4%)
Banco de Galicia 232,500 (d) 7,440,000
Banco Popular 70,000 8,232,420
Total 15,672,420
Energy (0.7%)
Repsol 240,000 7,702,800
Telecommunications (2.1%)
Telefonica 1,663,000 23,064,147
Sweden (1.9%)
Electronics (0.6%)
Asea 'B' Free Shares 94,500 7,231,518
<PAGE>
PAGE 75
Common & preferred stocks & warrants (87.5%)
Issuer Shares Value(a)
__________________________________________________________________________________
Health care (0.8%)
Astra 'A' Shares 400,000 9,115,600
Metals (0.5%)
Trelleborg 'B' Free 400,000 5,179,200
Switzerland (0.9%)
Banking (0.7%)
Swiss Bank Corp. (Rgd) 55,000 (b) 7,727,555
Insurance (0.2%)
Swiss Re (Rgd) 6,495 2,679,103
Thailand (0.4%)
Banking
Siam Commercial Bank 426,000 4,423,158
United Kingdom (13.4%)
Airline (1.2%)
British Airways 2,133,700 13,702,621
Appliances & durables (0.5%)
Thorn 335,000 5,265,195
Banking (0.5%)
National Westminster 802,000 6,124,072
Building materials (1.4%)
CRH 500,000 2,949,500
Tarmac 5,000,000 12,330,000
Total 15,279,500
Business & public service (0.3%)
WPP 2,000,000 3,656,000
Data processing (1.3%)
Rank Organisation 2,200,000 14,313,200
Energy (0.6%)
Shell Transport Trading 569,600 6,563,501
Health care (0.7%)
Wellcome 728,900 8,052,158
Industrial component (0.7%)
T & N 2,110,000 7,714,160
Insurance (0.6%)
Sun Alliance Group 1,150,000 6,077,750
Machinery & engineering (1.4%)
Siebe 1,750,000 15,513,750
Merchandising (0.9%)
Next 2,500,000 10,332,500
Metals (0.8%)
RTZ 650,000 8,817,900
Multi-industry (2.0%)
Ampolex 3,128,000 (b) 9,896,992
BTR 2,000,000 11,846,000
Total 21,742,992
Real estate (0.5%)
MEPC 857,000 6,188,397
Total common & preferred stocks & warrants
(Cost: $883,358,621) $972,523,612
__________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 76
<TABLE>
<CAPTION>
Short-term securities (12.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
__________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.5%)
FNMA Disc Nts
09-19-94 4.49% 5,900,000 5,886,784
Commercial paper (11.9%)
American Cyanamid
09-16-94 4.50 3,900,000 3,892,736
Ameritech
09-07-94 4.37 5,000,000 (c) 4,996,367
BBV Delaware
09-23-94 4.44 5,100,000 5,086,224
Bell
09-02-94 4.37 6,700,000 6,699,189
Bell South Telecom
09-27-94 4.74 3,800,000 3,787,046
CPC Int'l
10-13-94 4.80 2,200,000 (c) 2,187,757
Chevron
09-07-94 4.39 3,900,000 (c) 3,897,153
Colgate-Palmolive
09-26-94 4.72 6,050,000 (c) 6,030,211
Consolidated Railway
10-04-94 4.75 5,000,000 (c) 4,978,321
10-07-94 4.81 1,900,000 (c) 1,890,908
Dresdner U.S. Financial
09-16-94 4.59 4,000,000 3,992,367
Eiger Capital
09-15-94 4.51 3,100,000 (c) 3,094,575
09-23-94 4.71 4,832,000 (c) 4,818,121
General Mills
09-13-94 4.49 2,700,000 2,695,968
Goldman Sachs
09-09-94 4.39 4,300,000 4,295,824
J.C. Penney
09-08-94 4.44 900,000 899,225
09-21-94 4.64 4,700,000 4,687,937
10-03-94 4.72 3,200,000 3,186,631
Kellogg
09-29-94 4.72 4,500,000 4,483,550
Melville
09-06-94 4.36 4,600,000 4,597,221
Merrill Lynch
10-13-94 4.79 3,400,000 3,381,079
Metlife Funding
09-27-94 4.74 6,500,000 6,477,842
10-04-94 4.75 5,000,000 4,978,321
Motorola
09-08-94 4.36 3,000,000 2,997,462
Reed Elsevier
09-22-94 4.77 9,100,000 (c) 9,074,785
09-22-94 4.75 3,300,000 (c) 3,290,895
SBT Funding
09-19-94 4.64 3,609,000 (c) 3,600,663
St. Paul Companies
09-02-94 4.41 1,100,000 (c) 1,099,866
09-12-94 4.47 5,700,000 (c) 5,692,232
10-05-94 4.76 3,800,000 (c) 3,782,989
Sandoz
09-14-94 4.56 3,900,000 3,893,592
U.S.A.A. Capital
09-20-94 4.57 1,000,000 997,599
U.S. West
09-14-94 4.44 2,300,000 2,296,329
Total 131,760,985
Letters of credit (0.3%)
Bank of America
09-13-94 4.68 3,000,000 2,995,160
09-26-94 4.75 600,000 598,029
Total 3,593,189
<PAGE>
PAGE 77
Short-term securities (12.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
__________________________________________________________________________________
Total short-term securities
(Cost: $141,241,148) $ 141,240,958
Total investments in securities of unaffiliated issuers
(Cost: $1,028,599,769) $1,117,944,570
__________________________________________________________________________________
Investments in securities of affiliated issuers (e)
Common stock (1.0%)
Issuer Shares Value(a)
__________________________________________________________________________________
United Kingdom (1.0%)
Multi-industry
Hanson Trust 2,844,400 (b) $ 11,164,270
Total investments in securities of affiliated issuers
(Cost: $11,409,422) $ 11,164,270
Total investments in securities
(Cost: $1,040,009,191)(f) $1,129,108,840
__________________________________________________________________________________
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) 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." These
securities have been determined to be liquid under guidelines established by the board of directors.
(d) Security is partially or fully on loan. See Note 6 to the financial statements.
(e) Investments representing 5 percent or more of the outstanding voting securities of the issuer.
(f) At Aug. 31, 1994, the cost of securities for federal income tax purposes was $1,040,061,190 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . $ 106,111,279
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . .(17,063,629)
__________________________________________________________________________________
Net unrealized appreciation . . . . . . . . . . . . . . . . . . . . $ 89,047,650
__________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 78
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
Aggressive Growth Fund
_________________________________________________________________________________
Common & preferred stocks (86.8%)
Issuer Shares Value(a)
_________________________________________________________________________________
<S> <C> <C>
Airlines (0.8%)
Mesa Airlines 144,000 (b) $ 1,098,000
Southwest Airlines 200,000 5,300,000
Total 6,398,000
_________________________________________________________________________________
Automotive & related (0.5%)
Ek Chor China Motorcycle 110,000 2,653,750
Gentex 60,000 (b) 1,320,000
Total 3,973,750
_________________________________________________________________________________
Banks and savings & loans (5.8%)
Amsouth Bancorporation 135,000 4,471,875
B&T Financial 103,000 3,064,250
First Fidelity Bancorporation 150,000 6,881,250
First Tennesee National 35,000 1,662,500
Mercantile Bancorporation 190,000 7,267,500
Meridian Bancorporporation 55,000 1,766,875
PNC Financial 205,000 5,740,000
Premier Bancorporation 224,400 (b) 3,814,800
Roosevelt Financial Chesterfield MO 100,000 1,606,250
Signet Banking 200,000 7,825,000
Total 44,100,300
_________________________________________________________________________________
Beverages & tobacco (0.4%)
Celestial Seasonings 155,000 (b) 2,790,000
_________________________________________________________________________________
Building materials (0.3%)
Granite Construction 100,000 2,025,000
_________________________________________________________________________________
Chemicals (0.6%)
Airgas 180,000 (b) 4,455,000
_________________________________________________________________________________
Communications equipment (3.5%)
ADC Telecommunications 65,000 (b) 3,022,500
CommNet Cellular 160,000 (b) 3,900,000
ECI Telecom 225,000 4,064,062
Newbridge Networks 125,000 (b) 4,000,000
Tellabs 270,000 (b) 11,373,750
Total 26,360,312
_________________________________________________________________________________
Computers & office equipment (17.8%)
Adobe Systems 225,000 7,143,750
American Management Systems 168,300 (b) 4,417,875
Broderbund Software 50,000 (b) 2,775,000
Cabletron Systems 80,000 (b) 8,470,000
Cisco Systems 410,000 (b) 10,173,125
Compuware 107,700 (b) 4,469,550
Danka Business Systems 300,000 6,150,000
FORE Systems 30,000 (b) 1,140,000
Informix 240,000 (b) 5,670,000
Intuit 85,000 (b) 3,633,750
Lotus Development 69,000 (b) 2,820,375
Microsoft 70,000 (b) 4,068,750
NetFRAME Systems 180,000 (b) 1,710,000
Octus 35,000 (b) 87,500
Oracle Systems 475,000 (b) 20,276,563
Parametric Technology 610,000 (b) 17,613,750
Powersoft 150,000 (b) 6,562,500
Read-Rite 220,000 (b) 3,877,500
Sanmina 175,000 (b) 3,543,750
Silicon Graphics 305,000 (b) 8,006,250
Storage Technology 34,800 1,248,450
<PAGE>
PAGE 79
Common & preferred stocks (86.8%)
Issuer Shares Value(a)
_________________________________________________________________________________
Sun Microsystems 9,300 (b) 246,450
Sybase Software 112,500 (b) 4,893,750
Synopsys 170,000 (b) 7,055,000
Total 136,053,638
_________________________________________________________________________________
Electronics (7.6%)
Amtech 130,000 1,267,500
Applied Materials 220,000 (b) 11,110,000
Atmel 225,000 (b) 6,187,500
California Micro Devices 100,000 (b) 1,487,500
Cypress Semiconductor 100,000 (b) 1,975,000
Electroglas 13,900 (b) 611,600
LAM Research 107,500 (b) 3,816,250
Lattice Semiconductor 95,000 (b) 1,793,125
Linear Technology 170,000 7,565,000
Maxim Integrated Products 70,000 (b) 4,252,500
Medar 126,000 (b) 1,417,500
Microchip Technologies 187,500 (b) 6,890,625
Noise Cancellation Technologies 700,000 (b) 831,250
Sensormatic Electronics 155,000 5,366,875
Zilog 115,000 (b) 3,737,500
Total 58,309,725
_________________________________________________________________________________
Energy (0.4%)
Enron Oil & Gas 50,200 966,350
HS Resources 97,000 (b) 1,891,500
Total 2,857,850
_________________________________________________________________________________
Energy equipment and services (0.3%)
Corrpro 180,000 (b) 2,565,000
_________________________________________________________________________________
Financial services (3.9%)
ADVANTA B 260,000 7,670,000
First Financial Management 125,000 7,593,750
MBNA 135,000 3,408,750
Paychex 235,000 7,696,250
RFS Hotel 100,000 1,700,000
Tanger Factory 65,000 1,820,000
Total 29,888,750
_________________________________________________________________________________
Food (0.4%)
Performance Food Group 146,000 (b) 3,321,500
_________________________________________________________________________________
Foreign (5.0%)
Cifra ADR Series B 1,250,000 3,586,125
First Pacific 5,149,100 3,743,396
Grupo Insacell, Class D 2,700 (b) 79,987
Grupo Insacell, Class L 6,300 (b) 198,450
Grupo Sidek ADR 398,000 (b) 8,407,750
Grupo Situr 10,000(b,c) 330,000
Grupo Situr ADR 25,000 (b) 825,000
Grupo Televisa 33,000 1,934,625
Nokia Pref Free 23,000 2,496,489
Nokia 74,200 4,062,450
Renaissance Energy 110,300 (b) 2,222,578
Renaissance Energy 27,700(b, c) 558,163
SAP Preferred 7,500 3,419,340
Tarragon Oil & Gas 200,000 (b) 2,589,440
Television Broadcast 700,000 3,306,100
Total 37,759,893
_________________________________________________________________________________
Health care (8.9%)
Advanced Tissue Science 150,000 (b) 862,500
Affymax N.V. 105,000 (b) 1,732,500
Amgen 75,000 (b) 3,956,250
Amylin Pharmaceuticals 150,000 (b) 1,200,000
Anesta 90,000 (b) 725,625
Biogen 40,000 (b) 2,015,000
Cephalon 76,000 (b) 950,000
Chiron 73,000 (b) 5,091,750
Forest Labs 136,800 (b) 6,429,600
<PAGE>
PAGE 80
Common & preferred stocks (86.8%)
Issuer Shares Value(a)
_________________________________________________________________________________
Genentech 137,600 (b) 7,069,200
Gensia 70,000 (b) 787,500
Heart Technology 235,000 (b) 5,640,000
I-Stat 130,000 (b) 1,836,250
IDEXX Laboratories 385,400 (b) 12,429,150
Interpore 176,000 (b) 1,672,000
Molecular Dynamics 110,000 (b) 742,500
PLC Systems 430,000 (b) 2,472,500
ProCyte 85,000 (b) 913,750
STERIS 215,000 (b) 4,837,500
Target Therapeutics 8,500 (b) 210,375
Ventritex 195,000 (b) 4,875,000
Viagene 65,000 (b) 247,813
Viratek 131,250 1,410,937
Total 68,107,700
_________________________________________________________________________________
Health care services (10.4%)
Advocat 250,000 (b) 2,812,500
American Medical Resp 160,000 (b) 3,540,000
Beverly Enterprises 165,000 (b) 2,248,125
Cardinal Health 250,000 9,687,500
Coastal Healthcare 54,000 (b) 1,863,000
HBO & Company 529,000 17,324,750
HEALTHSOUTH Rehabilitation 22,600 (b) 813,600
Healthsource 128,900 (b) 4,221,475
Horizon Healthcare 120,000 (b) 3,045,000
Medaphis 60,000 (b) 2,115,000
Medicus Systems 80,000 980,000
Mid Atlantic Medical 280,000 (b) 7,420,000
PhyCor 260,000 (b) 8,027,500
Quantum Health Resources 100,000 (b) 3,587,500
Sun Healthcare 87,240 (b) 1,962,900
US Healthcare 60,000 2,595,000
United Healthcare 140,300 7,330,675
Total 79,574,525
_________________________________________________________________________________
Household products (0.5%)
AER Energy Resources 200,000 (b) 1,700,000
Duracraft 40,000 (b) 1,430,000
Valence Technology 190,000 (b) 570,000
Total 3,700,000
_________________________________________________________________________________
Industrial equipment & services (1.3%)
Calgon Carbon 200,000 2,550,000
Energy Biosystems 100,000 (b) 750,000
Ensys Environmental Products 45,000 (b) 213,750
Sanifill 260,000 (b) 6,240,000
Total 9,753,750
_________________________________________________________________________________
Industrial transportation (1.2%)
American Freightways 250,000 (b) 6,000,000
Heartland Express 91,800 (b) 2,937,600
Total 8,937,600
_________________________________________________________________________________
Insurance (0.9%)
Equitable of Iowa 180,000 7,020,000
_________________________________________________________________________________
Leisure time & entertainment (1.5%)
Imax 55,000 (b) 508,750
Int'l Game Technology 245,000 5,726,875
Iwerks Entertainment 20,000 (b) 102,500
Rio Hotel & Casino 220,000 (b) 3,162,500
Savoy Pictures Entertainment 52,400 (b) 615,700
Scientific Games 45,000 (b) 1,586,250
Total 11,702,575
_________________________________________________________________________________
Media (2.0%)
Catalina Marketing 75,000 (b) 3,862,500
Comcast 150,000 2,400,000
Comcast, Class A 65,000 1,040,000
Infinity Broadcasting, Class A 28,125 (b) 885,938
<PAGE>
PAGE 81
Common & preferred stocks (86.8%)
Issuer Shares Value(a)
_________________________________________________________________________________
Information Resources 150,000 (b) 2,137,500
Multimedia 75,500 (b) 2,359,375
Westcott Communications 158,000 (b) 2,251,500
Total 14,936,813
_________________________________________________________________________________
Multi-industry conglomorates(0.1%)
Career Horizon 40,000 (b) 700,000
_________________________________________________________________________________
Restaurants & lodging (5.1%)
Boston Chicken 90,500 (b) 3,665,250
Brinker Int'l 475,000 11,518,750
Buffets 325,000 (b) 6,418,750
Charter House Enterprises 215,000 (b) 1,639,375
Cracker Barrel Old Country 230,000 5,865,000
Hospitality Franchis 130,000 (b) 3,818,750
Outback Steakhouse 140,000 (b) 4,252,500
Starbucks 49,200 (b) 1,389,900
Total 38,568,275
_________________________________________________________________________________
Retail (6.2%)
Bed Bath & Beyond 150,000 (b) 4,406,250
Best Buy 180,000 (b) 6,412,500
CUC Int'l 205,000 7,021,250
Kohl's 200,000 (b) 9,725,000
Men's Wearhouse 62,000 (b) 1,379,500
PETsMART 255,000 (b) 8,861,250
Price/Costco 200,000 (b) 3,137,500
Tiffany & Co 50,000 1,893,750
Viking Office Products 160,000 (b) 4,600,000
Total 47,437,000
_________________________________________________________________________________
Textiles & apparel (0.5%)
Donnkenny 175,000 (b) 3,981,250
_________________________________________________________________________________
Utilities - gas (0.4%)
Enron 110,000 3,355,000
_________________________________________________________________________________
Utilities - telephone (0.5%)
ALC Communications 101,500 (b) 3,628,625
_________________________________________________________________________________
Total common & preferred stocks
(Cost: $603,076,122) $662,261,831
_________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (11.8%)
Annualized Amount Value(a)
yield on payable at
date of maturity
Issuer purchase
______________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (1.0%)
FHL Bank Disc Nts
09-01-94 4.31 $1,000,000 $ 1,000,000
FHLMC Disc Nts
09-21-94 4.65 2,000,000 1,994,855
FNMA Disc Nts
09-23-94 4.67 2,000,000 1,994,317
10-04-94 4.72 2,800,000 2,787,937
Total 7,777,109
______________________________________________________________________________________
Commercial paper (10.5%)
American General
09-02-94 4.39 2,200,000 (d) 2,199,732
Ameritech Capital Funding
09-07-94 4.37 6,300,000 (d) 6,295,422
Aon
09-08-94 4.38 2,400,000 2,397,961
Associates North America
09-08-94 4.38 4,100,000 4,096,516
<PAGE>
PAGE 82
Annualized Amount Value(a)
yield on payable at
date of maturity
Issuer purchase
______________________________________________________________________________________
Bellsouth Telecommunications
09-27-94 4.74 6,100,000 6,079,206
Beneficial
10-07-94 4.77 1,700,000 1,691,925
Consolidated Rail
10-07-94 4.81 6,200,000 (d) 6,170,333
Dresdner US Finance
09-16-94 4.59 4,000,000 3,992,367
Eiger Capital
09-15-94 4.58 3,800,000 (d) 3,793,247
Gateway Fuel
09-12-94 4.44 2,600,000 2,596,488
General Electric Capital
09-13-94 4.58 1,100,000 1,098,332
Hewlett-Packard
10-05-94 4.74 500,000 497,771
Lincoln National
09-23-94 4.77 4,900,000 (d) 4,885,776
Metlife Funding
09-02-94 4.41 2,300,000 2,299,719
09-15-94 4.47 1,700,000 1,696,714
10-04-94 4.75 4,100,000 4,082,223
Motorola
09-09-94 4.46 3,200,000 3,196,836
Nestle Capital
09-29-94 4.72 1,100,000 1,095,979
Paribas Finance
09-13-94 4.44 3,000,000 2,995,570
PepsiCo
09-29-94 4.72 3,100,000 3,088,667
Pfizer
09-12-94 4.46 3,200,000 3,195,649
Reed Publishing
09-13-94 4.58 4,000,000 (d) 3,993,933
Southwestern Bell
09-14-94 4.66 3,400,000 (d) 3,393,883
Toyota Motor Credit
09-16-94 4.63 3,000,000 2,994,225
09-28-94 4.72 2,100,000 2,092,597
______________________________________________________________________________________
Total commercial paper 79,921,071
______________________________________________________________________________________
Banker's Acceptance (0.3%)
First Bank
09-06-94 4.38 2,000,000 1,998,786
______________________________________________________________________________________
Total short-term securities
(Cost: $89,697,756) $ 89,696,966
______________________________________________________________________________________
Total investments in securities
(Cost: $692,773,878)(e) $751,958,797
______________________________________________________________________________________
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended.
These securities have been determined to be liquid under guidelines established by the board of directors.
(d) Commerical 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." These
securities have been determined to be liquid under guidelines established by the board of directors.
(e) At Aug. 31, 1994, the cost of securities for federal income tax purposes was $694,961,236 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . .$ 91,901,778
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . (34,904,217)
______________________________________________________________________________________
Net unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . .$ 56,997,561
______________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 83
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
Special Income Fund
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (8.2%)
Federal Home Loan Bank
Stepup Notes 8.00% 2014 $10,000,000 $ 9,962,500
Resolution Financial Trust Company Strips
Zero Coupon 8.18 2015 70,000,000 (h,k) 14,188,300
U.S. Treasury Bond 8.125 2019 50,000,000 (m) 52,682,000
U.S. Treasury Note 7.50 2001 50,000,000 (h) 51,302,995
_____________
Total 128,135,795
______________________________________________________________________________________________________
Mortgage backed securities (18.3%)
FHLMC
Collateralized Mtge Obligation 9.00 2007 18,169,719 18,964,645
Collateralized Mtge Obligation 7.00 2022 10,455,000 9,076,247
Collateralized Mtge Obligation 8.50 2022 10,000,000 10,171,900
Collateralized Mtge Obligation 7.00 2022 12,940,000 11,664,375
Inverse Floater 5.176 2023 5,200,000 (g) 2,063,750
FNMA
Inverse Floater
Collateralized Mtge Obligation 5.297 1999 4,347,681 (g) 3,380,322
9.00 2005 38,712,611 40,490,972
Inverse Floater 3.188 2007 10,000,000 (g) 387,500
8.50 2007 18,311,983 18,952,902
Inverse Floater 4.256 2023 450,569 (g) 180,228
8.50 2023 14,224,449 14,495,602
6.50 2023 73,829,991 67,785,160
6.00 2024 10,100,000 8,976,375
9.00 2024 15,000,000 15,574,200
GNMA
6.00 2023 20,136,765 17,481,229
6.00 2024 24,418,327 21,198,160
Adjustable Rate Mortgage 6.00 2024 24,906,783 (i) 24,486,481
____________
Total 285,330,048
______________________________________________________________________________________________________
Aerospace & defense (0.6%)
AEC Acquisition 10.00 2003 3,700,000 3,542,750
Fairchild Industries 12.25 1999 2,000,000 1,942,500
Rohr
Cv 7.75 2004 1,750,000 2,082,500
Sequa
Sr Sub Nt 9.375 2003 2,000,000 1,832,500
____________
Total 9,400,250
______________________________________________________________________________________________________
Airlines (2.1%)
AMR 9.50 2001 10,000,000 10,425,000
9.80 2021 5,000,000 4,887,500
Delta Air Lines
Sr Deb 10.375 2011 12,500,000 12,796,875
United Air Lines 10.67 2004 5,000,000 5,131,250
____________
Total 33,240,625
______________________________________________________________________________________________________
Automotive & related (4.1%)
Auburn Hills Trust
Gtd Exchangeable Certs 12.375 2020 12,500,000 (j) 17,125,000
Ford Motor Company 9.50 2011 7,500,000 8,371,875
Ford Motor Credit 7.50 2003 5,000,000 4,918,750
GMAC 6.375 1996 20,000,000 19,925,000
5.95 1998 10,000,000 9,487,500
6.00 2011 5,000,000 3,931,250
____________
Total 63,759,375
<PAGE>
PAGE 84
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
Banks and savings & loans (3.1%)
BankAmerica 7.50 2002 7,500,000 7,350,000
Chase Manhatten 7.50 2003 10,000,000 (h) 9,762,500
Continental Bank 12.50 2001 7,700,000 9,557,625
Fleet Norstar Finl 9.90 2001 5,000,000 5,537,500
9.00 2001 5,000,000 5,343,750
H.F. Ahmanson 8.25 2002 5,000,000 5,081,250
Southbury Finance 7.75 1999 5,000,000 5,050,000
_____________
Total 47,682,625
______________________________________________________________________________________________________
Beverages & tobacco (0.6%)
RJR Nabisco
with attached put 8.375 2017 5,500,000 4,991,250
Royal Crown
Sr Nts 9.75 2000 5,000,000 4,731,250
_____________
Total 9,722,500
______________________________________________________________________________________________________
Building materials (1.4%)
Bacnotan Construction Industry
Cv 5.50 2004 1,750,000 (d) 1,706,250
Building Materials
Zero Coupon Cv 12.09 1999 6,400,000 (d,l) 3,384,000
Centex 9.05 1996 5,000,000 5,100,000
Masco 9.00 2001 5,000,000 5,318,750
Nortek 9.875 2004 2,500,000 2,284,375
Southdown
Sub Nts 14.00 2001 3,000,000 3,397,500
Toll
Cv 4.75 2004 1,750,000 1,382,500
_____________
Total 22,573,375
______________________________________________________________________________________________________
Chemicals (0.7%)
General Chemical 9.25 2003 5,000,000 4,656,250
G-I Holdings
Zero Coupon
Sub Nts 11.69 1998 4,000,000 (k) 2,415,000
Huntsman 11.00 2004 3,500,000 3,648,750
_____________
Total 10,720,000
______________________________________________________________________________________________________
Computers & office equipment (0.3%)
Conner Peripherals
Cv 6.50 2002 3,000,000 2,452,500
Convex Computer
Cv 6.00 2012 4,000,000 2,430,000
_____________
Total 4,882,500
______________________________________________________________________________________________________
Electronics (0.4%)
ADT Operations 9.25 2003 3,500,000 3,342,500
Berg Electronics 11.375 2003 3,000,000 (d) 3,015,000
_____________
Total 6,357,500
______________________________________________________________________________________________________
Energy (4.0%)
Atlantic Richfield 8.75 2032 10,000,000 10,450,000
Clark Oil 10.50 2001 2,500,000 2,581,250
Cross Timbers Oil
Cv Sub Nts 5.25 2003 750,000 630,000
Occidental Petroleum 10.98 2000 5,000,000 5,718,750
with attached put 9.25 2019 8,725,000 9,444,813
Oryx Energy 10.00 2001 5,000,000 5,225,000
PDV America 7.875 2003 7,500,000 6,225,000
Triton Energy
Zero Coupon Cv 9.98 1996 5,000,000 (l) 3,781,250
USX 9.125 2013 10,000,000 10,112,500
9.375 2022 7,500,000 7,715,625
_____________
Total 61,884,188
<PAGE>
PAGE 85
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
Energy equipment & services (0.4%)
Global Marine
Sr Secured Nts 12.75 1999 2,500,000 2,734,375
McDermott 9.375 2002 3,000,000 3,243,750
_____________
Total 5,978,125
______________________________________________________________________________________________________
Financial services (2.4%)
American General Financial
with attached put 8.125 2009 4,500,000 4,725,000
Corporate Property Investors 7.05 2003 5,000,000 (d) 4,662,500
Developers Div Realty 7.00 1999 1,500,000 1,479,375
First Union 8.875 2003 4,000,000 3,425,000
GPA Delaware 8.75 1998 4,000,000 (b) 3,320,000
Goldman Sachs 7.125 2003 7,000,000 (d) 6,536,250
Household Finance
Sr Sub Nts 9.55 2000 6,500,000 7,117,500
Liberty Property Trust
Cv 8.00 2001 1,250,000 1,260,937
Malon Realty
Cv 9.50 2004 2,750,000 2,640,000
Taubman Realty
Cv 7.00 2003 2,000,000 1,750,000
_____________
Total 36,916,562
______________________________________________________________________________________________________
Food (0.2%)
Specialty Foods
Zero Coupon Cv 13.42 1999 1,000,000 (d,l) 360,000
10.25 2001 2,500,000 (d) 2,225,000
11.25 2003 1,000,000 (d) 840,000
_____________
Total 3,425,000
______________________________________________________________________________________________________
Foreign (15.5%)(c)
ABN Amro
(U.S. Dollar) 7.75 2023 5,000,000 4,700,000
Agnico Eagle Mines
(U.S. Dollar) Cv 3.50 2004 2,000,000 1,690,000
Alcan Aluminum
(U.S. Dollar) 8.875 2022 6,750,000 6,901,875
Argentina Euro
(U.S. Dollar) 5.00 2005 5,000,000 3,787,500
Argentina Republic
(U.S. Dollar) 4.25 2023 13,000,000 6,825,000
Avenor
(U.S. Dollar) 9.375 2004 4,000,000 3,785,000
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 5,000,000 4,993,750
Banco De Galicia
(U.S. Dollar) Cv 7.00 2002 1,500,000 1,567,500
BNCE
(U.S. Dollar) 7.25 2004 5,000,000 4,306,250
Brazil C Bonds
(U.S. Dollar) 4.00 2014 12,250,000 6,584,375
Brazil Idu
(U.S. Dollar) 4.313 2001 4,900,000 3,913,875
Doman Industries
(U.S. Dollar) 8.75 2004 5,000,000 4,425,000
Ford Capital BV
(U.S. Dollar) 9.875 2002 5,000,000 5,587,500
Govt of Canada
(Canadian Dollar) 7.659 2001 27,000,000 21,482,550
Govt of Sweden
(Swedish Krona) 1.327 2003 37,000,000 4,524,360
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 7,500,000 (d) 7,200,000
Gulf Canada Resources
(U.S. Dollar) 9.00 1999 5,000,000 4,806,250
Hanson Ind
(British Pound) Cv 14.582 2006 2,000,000 3,405,160
Henderson Land
(U.S. Dollar) Cv 4.00 1996 1,750,000 (d) 1,666,875
Hydro Quebec
(U.S. Dollar) 8.50 2029 20,000,000 19,700,000
<PAGE>
PAGE 86
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
Korean Electric Power
(U.S. Dollar) 6.375 2003 3,100,000 2,712,500
Lend Lease Euro
(Australian Dollar) Cv 4.75 2003 1,200,000 (d) 1,368,000
MacMillan Bloedel
(U.S. Dollar) 8.50 2004 7,500,000 7,490,625
Methanex
(U.S. Dollar) 8.875 2001 5,000,000 4,931,250
Mexican/United States Govt Euro
(U.S. Dollar) 5.188 2019 2,000,000 1,732,500
(U.S. Dollar) 6.063 2019 6,500,000 5,630,625
(U.S. Dollar) 6.25 2019 11,500,000 7,705,000
Noranda Forest
(U.S. Dollar) 7.50 2003 5,000,000 4,818,750
Ogden
(U.S. Dollar) Cv 6.00 2002 2,200,000 1,925,000
Petroleos Mexicanos
(U.S. Dollar) 8.625 2023 5,000,000 4,275,000
Philip Long Distance Telephone
(U.S. Dollar) 10.625 2004 2,500,000 2,509,375
Province of Quebec
(U.S. Dollar) 11.00 2015 2,500,000 2,937,500
PT Indah Kiat Euro
(U.S. Dollar) 11.875 2002 5,000,000 5,037,500
Pueblo Extra Int'l
(U.S. Dollar) Sr Nts 9.50 2003 4,000,000 3,390,000
Qantas Air
(U.S. Dollar) 7.50 2003 7,500,000 (d) 7,031,250
Republic of Columbia
(U.S. Dollar) 7.25 2004 5,300,000 4,723,625
Republic of Italy
(U.S. Dollar) 6.875 2023 7,500,000 6,178,125
Republic of Venezuela
(U.S. Dollar) 6.75 2020 2,500,000 1,218,750
Roche Holding
(U.S. Dollar) 2.75 2000 5,000,000 3,965,600
Rogers Cable Systems
(Canadian Dollar) 7.039 2014 2,700,000 1,693,710
Rogers Communications
(U.S. Dollar) Cv 2.00 2005 4,000,000 2,580,000
Rogers Cantel Mobile
(U.S. Dollar) 10.75 2001 3,000,000 3,146,250
Tarkett
(U.S. Dollar) 9.00 2002 4,000,000 (d) 3,700,000
Telecom Argentina
(U.S. Dollar) 8.375 2000 5,000,000 (d) 4,631,250
Tolmex
(U.S. Dollar) 8.375 2003 5,000,000 4,587,500
United Engineers Malaysia
(U.S. Dollar) Cv with attached put 2.00 1999 1,500,000 (d) 1,436,250
United Kingdom Treasury
(British Pound) 12.292 2003 6,300,000 9,328,725
WMC Finance USA
(U.S. Dollar) 7.25 2013 10,000,000 8,800,000
______________
Total 241,337,480
______________________________________________________________________________________________________
Furniture & appliances (0.6%)
Black & Decker 6.625 2000 10,000,000 9,412,500
______________________________________________________________________________________________________
Health care (1.0%)
Alco Health Distribution
Pay-in-kind 11.25 2005 3,780,050 (k) 3,827,301
Alza
Zero Coupon Cv with attached put 5.04 1999 4,750,000 1,769,375
Chiron
Cv 1.90 2000 1,750,000 1,356,250
Healthtrust
10.75 2002 3,000,000 3,127,500
8.75 2005 5,500,000 5,060,000
_____________
Total 15,140,426
<PAGE>
PAGE 87
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
Health care services (1.0%)
American Medical Int'l 11.00 2000 1,600,000 1,698,000
9.50 2006 1,400,000 1,358,000
Charter Medical
Sr Sub Nt 11.25 2004 5,000,000 (d) 5,175,000
Foundation Health 7.75 2003 3,250,000 3,124,063
Hillhaven 10.125 2001 5,000,000 5,018,750
_____________
Total 16,373,813
______________________________________________________________________________________________________
Household products (0.5%)
Mary Kay Cosmetics
Sr Sub Nts 12.75 2000 2,000,000 (e) 2,165,000
Revlon Consumer Products 10.50 2003 2,500,000 2,056,250
Sweetheart Cup
Sr Sub Nt 9.625 2000 4,000,000 3,835,000
_____________
Total 8,056,250
______________________________________________________________________________________________________
Industrial machines & services (0.9%)
American Standard
Zero Coupon Cv 10.56 1998 5,000,000 (l) 3,300,000
Clark Equipment 9.75 2001 5,000,000 5,406,250
IDEX 9.75 2002 3,000,000 3,018,750
Mascotech
Cv 4.50 2003 3,500,000 2,559,375
_____________
Total 14,284,375
______________________________________________________________________________________________________
Industrial transportation (0.4%)
CSX 9.23 1998 5,000,000 5,337,500
Interpool
Cv 5.25 2018 300,000 228,750
_____________
Total 5,566,250
______________________________________________________________________________________________________
Insurance (0.9%)
Americo Life 9.25 2005 2,500,000 2,209,375
NAC Re
Cv 5.25 2002 2,000,000 (e) 1,712,500
Nationwide Mutual 7.50 2024 4,000,000 (d) 3,495,000
New England Mutual
Credit Sensitive Nts 7.875 2024 5,000,000 (d) 4,262,500
USF&G
Zero Coupon Cv Sub Nts 4.55 2009 2,700,000 (k) 1,336,500
Uslico
Cv 8.50 2014 600,000 616,500
____________
Total 13,632,375
______________________________________________________________________________________________________
Leisure time & entertainment (1.3%)
Bally's Grand
1st Mtge 10.375 2003 3,500,000 3,027,500
Bally's Park Place 9.25 2004 3,500,000 2,940,000
Bell Sports 4.25 2000 1,500,000 1,087,500
GB Property
1st Mtge 10.875 2004 2,500,000 1,937,500
GNF Bally 10.625 2003 3,500,000 2,222,500
Kloster Cruise 13.00 2003 3,000,000 3,045,000
MGM Grand Hotel 12.00 2002 3,000,000 3,281,250
Showboat 9.25 2008 3,000,000 2,550,000
____________
Total 20,091,250
______________________________________________________________________________________________________
Media (4.2%)
Ackerley Communications
Sr Secured Nts 10.75 2003 2,500,000 (d) 2,400,000
Adelphia Communications 12.50 2002 3,000,000 2,996,250
Cablevision Systems 10.75 2004 2,000,000 2,047,500
Cablevision Industries
Sr Nts 10.75 2002 3,000,000 2,962,500
Comcast
Cv 1.125 2007 3,500,000 1,500,625
Continental Cablevision
Sr Deb 8.875 2005 5,000,000 4,600,000
<PAGE>
PAGE 88
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
News America Holdings 7.50 2000 7,000,000 6,825,000
12.00 2001 5,000,000 5,725,000
8.875 2023 7,000,000 6,755,000
Panamsat
Sr Nts 9.75 2000 3,000,000 3,003,750
Robin Media Group 11.125 1997 3,000,000 2,906,250
Time Warner Entertainment 8.375 2033 7,500,000 6,637,500
Zero Coupon Cv with attached put 7.71 1995 10,000,000 (l) 9,350,000
Zero Coupon Cv 6.71 2012 4,750,000 (k) 1,466,562
Turner Broadcasting System
Sr Nts 8.375 2013 7,500,000 6,450,000
____________
Total 65,625,937
______________________________________________________________________________________________________
Metals (1.1%)
A.K. Steel 10.75 2004 2,000,000 2,045,000
Armco 11.375 1999 3,500,000 3,640,000
Inco Limited
Cv 5.75 2004 1,750,000 1,944,688
Kaiser Aluminum
Sr Nts 9.875 2002 3,000,000 2,797,500
Magma Copper 12.00 2001 5,000,000 5,525,000
Rep Engineered Steel 9.875 2001 2,000,000 1,950,000
____________
Total 17,902,188
______________________________________________________________________________________________________
Multi-industry (1.2%)
Albany Int'l
Cv 5.25 2002 4,250,000 3,750,625
Coltec Industries 9.75 2000 3,000,000 3,030,000
Mark IV Industries 8.75 2003 3,500,000 3,268,125
Tally
Zero Coupon Cv 12.62 1998 1,750,000 (l) 947,188
Tally Mfg & Tech 10.75 2003 2,500,000 2,340,625
Westinghouse Electric 8.375 2002 5,000,000 4,975,000
____________
Total 18,311,563
______________________________________________________________________________________________________
Natural gas (2.1%)
Coastal 9.75 2003 7,500,000 8,043,750
Tenneco Credit 9.625 2001 10,000,000 10,987,500
Transco Energy 11.25 1999 5,000,000 5,368,750
9.875 2020 6,000,000 5,925,000
Transcontinental Gas Pipeline 8.875 2002 2,400,000 2,418,000
____________
Total 32,743,000
______________________________________________________________________________________________________
Paper & packaging (4.3%)
Bowater 9.50 2012 10,000,000 10,487,500
Chesapeake 9.875 2003 5,000,000 5,400,000
Container Corp America
Sr Nts 10.75 2002 2,500,000 2,562,500
9.75 2003 3,000,000 2,895,000
Crown Cork & Seal 8.00 2023 5,000,000 4,781,250
Federal Paperboard 10.00 2011 6,000,000 6,637,500
Fort Howard 9.00 2006 5,000,000 4,337,500
Gaylord Container
Zero Coupon Cv 12.97 1996 3,000,000 (l) 2,490,000
Owens Illinois 11.00 2003 5,000,000 5,350,000
Plastic Container 10.75 2001 2,000,000 2,012,500
Pope & Talbot 8.375 2013 4,000,000 3,775,000
Repap Wisconsin
Sr Secured Nts 9.25 2002 3,000,000 2,613,750
Riverwood Int'l
Cv 6.75 2003 1,500,000 (d) 1,670,625
Scotia Pacific 7.95 2015 7,087,226 6,759,442
Silgan 11.75 2002 2,000,000 2,065,000
Zero Coupon Cv Sr Sub Nt 15.81 1995 2,000,000 (l) 1,602,500
Stone Container 12.625 1998 1,500,000 1,571,250
_____________
Total 67,011,317
______________________________________________________________________________________________________
Restaurants & lodging (0.8%)
Family Restaurant
Sr Nts 9.75 2002 2,000,000 1,790,000
Hammons (John Q) Hotel 8.875 2004 3,400,000 3,021,750
<PAGE>
PAGE 89
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
Host Marriott 10.875 2001 4,589,411 4,658,252
Trump Taj Mahal
Pay-in-kind 11.35 1999 3,556,938 2,525,426
_____________
Total 11,995,428
______________________________________________________________________________________________________
Retail (2.9%)
Eye Care Center 12.00 2003 3,000,000 2,610,000
Food 4 Less Supermarket
Zero Coupon Cv 9.30 1997 5,000,000 (l) 3,593,750
General Host
Sr Nts 11.50 2002 1,100,000 1,018,875
Grand Union
Sr Sub Nt 11.25 2000 2,500,000 2,325,000
Sr Sub Nt 12.25 2002 4,000,000 3,210,000
J.C. Penney 9.05 2001 5,000,000 5,400,000
Kroger 9.25 2005 3,000,000 3,011,250
Pathmark Stores 9.625 2003 5,000,000 4,500,000
Penn Traffic
Sr Nts 10.25 2002 3,000,000 3,048,750
8.625 2003 2,500,000 2,300,000
9.625 2005 3,000,000 2,775,000
Purity Supreme 11.75 1999 2,500,000 2,300,000
Revco 9.125 2000 2,000,000 2,085,006
Specialty Retailers 10.00 2000 2,600,000 2,567,500
Stop & Shop 9.75 2002 3,000,000 3,153,750
Super-Rite Foods
Sr Sub Nts 10.625 2002 2,000,000 1,995,000
____________
Total 45,893,881
______________________________________________________________________________________________________
Telecommunications equipment & services (0.5%)
Celcaribe
Unit 13.50 2004 17,000 (d) 1,415,250
CenCall Communications
Zero Coupon Cv 10.38 1999 2,750,000 (l) 1,512,500
Comcast Cell
Zero Coupon with attached put 9.76 2000 4,000,000 (k) 2,435,000
Nextel Communications
Zero Coupon Cv 9.98 1999 5,000,000 (l) 2,675,000
____________
Total 8,037,750
______________________________________________________________________________________________________
Textiles & apparel (1.1%)
Dominion Textiles 8.875 2003 4,000,000 3,710,000
Synthetic Industries 12.75 2002 3,500,000 3,784,375
VF 9.50 2001 5,000,000 5,437,500
WestPoint Stevens
Sr Sub Nt 8.75 2001 2,500,000 2,315,625
9.375 2005 2,000,000 1,802,500
____________
Total 17,050,000
______________________________________________________________________________________________________
Utilities - electric (5.4%)
Arizona Public Service 8.75 2024 2,500,000 2,453,125
Boston Edison 9.875 2020 5,000,000 5,412,500
Cincinnati Gas & Electric 9.70 2019 5,000,000 5,381,250
EUA Power Series-C
Pay-in-kind 17.50 1992 1,106,700 (b,e) 110,670
EUA Power Series-B with interest certificate
Pay-in-kind 17.50 1993 2,000,000 (b,e) 200,000
Long Island Lighting 9.625 2024 9,000,000 8,583,750
Louisiana Power & Light
Sale Lease-Backed Obligation 10.30 2005 2,999,000 3,160,196
Sale Lease-Backed Obligation 10.67 2017 4,000,000 4,155,000
Midland Cogeneration Venture 10.33 2002 2,197,932 2,142,983
10.33 2002 1,893,357 (d) 1,846,023
11.75 2005 5,000,000 5,093,750
North Atlantic Energy 9.05 2002 5,000,000 4,887,500
Pacific Gas & Electric 8.25 2022 6,000,000 5,842,500
RGS Funding AEGCO
Sale Lease-Backed Obligation 9.82 2022 2,485,617 2,675,145
RGS Funding IME
Sale Lease-Backed Obligation 9.82 2022 2,485,617 2,675,145
Sithe Independent Funding 9.00 2013 7,500,000 (d) 7,462,500
Texas-New Mexico Power 11.25 1997 5,000,000 5,262,500
<PAGE>
PAGE 90
Bonds (94.3%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
______________________________________________________________________________________________________
1st Mtge 9.25 2000 3,500,000 3,504,375
Texas Utilities
1st Mtge 9.70 2002 6,000,000 6,607,500
1st Mtge 9.75 2021 6,350,000 6,770,688
_____________
Total 84,227,100
______________________________________________________________________________________________________
Utilities - telephone (1.6%)
Bell Telephone Company of Pennsylvania 7.375 2033 10,000,000 8,950,000
GTE 10.25 2020 7,000,000 8,155,000
New England Tel & Tel 9.00 2031 7,500,000 7,846,875
_____________
Total 24,951,875
______________________________________________________________________________________________________
Miscellaneous (0.2%)
KinderKare Learning Center 10.375 2001 3,000,000 3,007,500
______________________________________________________________________________________________________
Total bonds
(Cost: $1,507,357,776) $1,470,660,726
______________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Common & preferred stocks & warrants (1.8%)
__________________________________________________________________________________
Issuer Shares Value(a)
__________________________________________________________________________________
<S> <C> <C>
ABN Amro Holdings
6% Cv Pfd 41,100 1,378,864
ATL Richfield
9.00% Cv Pfd 120,000 3,720,000
Envirodyne Industries 90,890 (b) 454,450
Eye Care Center 3,000 (b) 30,000
Federated Department Stores
Warrants Exp 02-15-96 6,000 (b) 15,000
First Chicago
2.875% Cm Cv Pfd 42,500 2,231,250
First Madison Bank
$11.00 Pfd 25,000 (b) 2,590,625
Merry Land & Investment
1.75% Cm Cv Pfd 42,500 1,120,938
Nat'l Health Investors
8.50% Cv Pfd 40,000 1,005,000
Occidental Petroleum
3.875% Cv Pfd 31,000 (d) 1,674,000
Pittston Mineral
6.25% Cv Pfd 25,000 1,087,500
Property Trust America
1.75% Cv Pfd 52,745 1,279,066
Public Service of New Hampshire
10.60% Pfd 182,000 4,671,940
Purity Supreme
Warrants Exp 08-06-97 8,664 (b,e) 173
Sonoco Products
$2.25 Cv Pfd 49,600 2,492,400
Southdown, Warrants, Exp 10-15-96 30,000 (b,e) 165,000
Specialty Foods 15,000 (b) 11,250
Synder Oil
6% Cv Pfd 100,000 2,562,500
Triangle Wire Cable 84,444 (b,e) 823,329
_____________
Total 27,313,285
__________________________________________________________________________________
Total common & preferred stocks & warrants
(Cost: $28,433,027) $27,313,285
__________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 91
<TABLE>
<CAPTION>
Short-term securities (3.3%)
___________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
___________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.5%)
FHLMC Disc Nts
09-21-94 4.65 $1,100,000 $ 1,097,170
FNMA Disc Nts
09-23-94 4.67 2,000,000 1,994,317
09-29-94 4.65 4,700,000 4,683,075
____________
Total 7,774,562
___________________________________________________________________________________
Commercial paper (2.8%)
American Cyanamid
09-16-94 4.50 1,800,000 1,796,648
BBV Delaware
09-19-94 4.47 2,200,000 2,194,931
Bell South Telecom
09-27-94 4.74 3,500,000 3,488,069
Cafco
09-12-94 4.47 2,100,000 2,096,812
Ciesco
09-07-94 4.43 6,900,000 6,894,917
CPC Int'l
09-27-94 4.72 2,800,000 (f) 2,790,475
Eiger Capital
09-06-94 4.44 500,000 (f) 499,692
09-22-94 4.75 3,800,000 (f) 3,789,493
Fleet Funding
10-12-94 4.77 500,000 (f) 497,295
J.C. Penney
10-03-94 4.72 4,900,000 4,879,529
Lincoln Nat'l
09-27-94 4.74 3,200,000 (f) 3,189,092
Mobil Australia
09-27-94 4.75 1,400,000 (f) 1,395,217
St. Paul Companies
09-02-94 4.41 5,600,000 (f) 5,599,316
Southern California Gas
09-09-94 4.46 4,700,000 (f) 4,695,352
_____________
Total 43,806,838
___________________________________________________________________________________
Total short-term securities
(Cost: $51,581,930) $ 51,581,400
___________________________________________________________________________________
Total investments in securities
(Cost: $1,587,372,733)(n) $1,549,555,411
___________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing. For long-term debt securities, items identified are in default as to payment of interest or
principal.
(c) Foreign securities values are stated in U.S. dollars; principal amounts are denominated in the currency indicated.
(d) Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended.
These securities have been determined to be liquid under guidelines established by the board of directors.
(e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information
concerning such security holdings at Aug. 31 1994, is as follows:
<PAGE>
PAGE 92
Security Acquisition Purchase
date cost
_________________________________________________________________________________________
<S> <C> <C>
EUA Power Series-C, Pay-in-kind 05-16-88 to 10-25-89 $ 712,153
17.50% 1992
EUA Power Series-B with interest certificate
17.50% 1993, Pay-in-kind 05-03-88 2,000,000
Mary Kay Cosmetics
12.75% 2000 12-05-90 2,000,000
NAC Re Cv
5.25% 2002 01-20-94 1,870,000
Purity Supreme Warrants
Exp 08-06-97 07-29-92 -
Southdown Warrants
Exp 10-15-96 10-31-91 90,000
Triangle Wire Cable
13.50% 2002 01-13-92 2,000,018
_________________________________________________________________________________________
(f) 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." These
securities have been determined to be liquid under guidelines established by the board of directors.
(g) Inverse floaters represent securitites that pay interest at a rate that increases (decreases) with a decline (increase) in the
LIBOR (London InterBank Offered Rate) Index. The rate shown is the rate in effect at Aug. 31, 1994.
(h) Security is partially or fully on loan. See Note 6 to the financial statements.
(i) Adjustable rate mortgage; interest rate varies to reflect current market conditions; shown is the effective rate on Aug. 31,
1994.
(j) Interest rate varies, rate shown is the effective rate on Aug. 31, 1994.
(k) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(l) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield from the date of acquisition to
interest reset date shown in the maturity year column.
(m) Partially pledged as initial deposit on the following open interest rate futures purchase contracts (see Note 7 to the
financial statements).
Type of security Par value
_______________________________________________________________
U.S. Treasury Sept 94 T-Bond 73,500,000
U.S. Treasury Dec 94 T-Bond 1,500,000
_______________________________________________________________
(n) At Aug. 31, 1994, the cost of securities for federal income tax purposes was $1,586,926,032 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation . . . . . . . . . . . . . . .$ 25,568,839
Unrealized depreciation . . . . . . . . . . . . . . . (62,939,460)
_________________________________________________________________
Net unrealized depreciation . . . . . . . . . . . . .$(37,370,621)
_________________________________________________________________
</TABLE>
<PAGE>
PAGE 93
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
Moneyshare Fund
______________________________________________________________________________________
Short-term securities
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
______________________________________________________________________________________
<S> <C> <C> <C>
Commercial paper (79.2%)
Banks and savings & loans (3.5%)
BBV Finance Deleware
09-19-94 4.47 $4,200,000 $ 4,190,676
Commerzbank US Finance
09-09-94 4.49 2,100,000 2,097,923
Total 6,288,599
______________________________________________________________________________________
Communications equipment (2.7%)
US West Communications
10-05-94 4.53 4,900,000 4,879,175
______________________________________________________________________________________
Energy (3.1%)
Chevron Transport
10-04-94 4.77 5,500,000 (b) 5,476,052
______________________________________________________________________________________
Energy equipment & services (4.4%)
ABB Treasury Center
10-06-94 4.63 3,000,000 (b) 2,986,583
10-21-94 4.73 5,000,000 (b) 4,967,500
Total 7,954,083
______________________________________________________________________________________
Financial services (23.8%)
A.I. Credit
10-27-94 4.66 2,100,000 2,084,941
Associates North America
09-08-94 4.38 1,500,000 1,498,725
09-12-94 4.49 5,000,000 4,993,155
CIT Group Holdings
09-23-94 4.58 5,200,000 5,185,541
Corporate Asset Funding
10-19-94 4.83 3,600,000 3,576,960
Eiger Capital
09-15-94 4.58 2,900,000 (b) 2,894,846
09-29-94 4.75 4,700,000 (b) 4,682,673
Fleet Funding
09-20-94 4.67 2,000,000 (b) 1,995,092
09-27-94 4.75 1,007,000 (b) 1,003,560
General Electric Capital
10-06-94 4.76 6,000,000 5,972,350
Goldman Sachs Group LP
09-07-94 4.68 4,000,000 3,996,900
Merrill Lynch
10-03-94 4.83 4,700,000 4,679,947
Total 42,564,690
______________________________________________________________________________________
Food (9%)
CPC Int'l
10-27-94 4.84 4,800,000 (b) 4,764,160
Cargill
09-27-94 4.74 5,100,000 5,082,615
General Mills
09-07-94 4.46 700,000 699,481
09-13-94 4.49 5,600,000 5,591,637
Total 16,137,893
______________________________________________________________________________________
Health care (3.1%)
Amgen
10-21-94 4.78 5,500,000 5,463,715
<PAGE>
PAGE 94
______________________________________________________________________________________
Short-term securities
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
______________________________________________________________________________________
Insurance (12.1%)
American General
09-22-94 4.50 5,800,000 5,784,877
Aon
09-26-94 4.77 4,700,000 4,684,497
Lincoln National
09-14-94 4.47 3,400,000 (b) 3,394,536
St. Paul Companies
09-21-94 4.58 3,300,000 (b) 3,291,640
USAA Capital
09-16-94 4.57 4,500,000 4,491,469
Total 21,647,019
______________________________________________________________________________________
Media (2.2%)
Gannett Company
10-06-94 4.78 4,000,000 3,981,528
______________________________________________________________________________________
Retail (5.1%)
Colgate Palmolive
09-22-94 4.64 700,000 (b) 698,113
Penney (JC) Funding
09-08-94 4.44 2,500,000 2,497,846
09-21-94 4.64 6,000,000 5,984,600
Total 9,180,559
______________________________________________________________________________________
Utilities - electric (2.7%)
Bayshore Fuel
10-04-94 4.77 4,900,000 4,878,665
______________________________________________________________________________________
Utilities - gas (4.4%)
Columbia Fuels
09-01-94 4.61 3,000,000 3,000,000
09-26-94 4.53 3,000,000 2,990,625
Southern California Gas
11-17-94 4.90 2,000,000 (b) 1,979,253
Total 7,969,878
______________________________________________________________________________________
Utilities - telephone (3.1%)
Southwestern Bell Capital
09-07-94 4.47 5,589,000 (b) 5,584,845
______________________________________________________________________________________
Total commercial paper
(Cost: $142,006,701) $142,006,701
______________________________________________________________________________________
Letters of credit (20.8%)
Domestic (4.3%)
Bank of America
Hyundai Motor Finance
09-19-94 4.53 4,000,000 3,991,000
First Bank
Builders Finance
10-06-94 4.80 2,200,000 2,189,840
First Chicago
Commed Fuel
09-14-94 4.73 1,500,000 1,497,454
Total 7,678,294
______________________________________________________________________________________
International (16.5%)(c)
Banque Paribas
Cogentrix of Richmond
09-15-94 4.68 2,000,000 1,996,360
Barclays Bank
Centerior Fuel
09-22-94 4.78 5,000,000 4,986,088
09-28-94 4.72 3,500,000 3,487,610
Canadian Imperial Bank
Commed Fuel
09-02-94 4.62 2,700,000 2,699,653
<PAGE>
PAGE 95
______________________________________________________________________________________
Short-term securities
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
______________________________________________________________________________________
Canadian Imperial Bank
Hahn Issuing
09-08-94 4.48 5,000,000 4,995,644
Credit Suisse
Pemex Capital
09-12-94 4.50 900,000 898,763
Credit Suisse
Commed Fuel
10-18-94 4.82 1,100,000 1,093,078
National Australia
Woodside Finance
09-13-94 4.73 2,100,000 (b) 2,096,689
09-14-94 4.52 4,000,000 (b) 3,993,471
Toronto Dominion
Franciscan Services
09-15-94 4.65 3,400,000 3,393,852
Total 29,641,208
______________________________________________________________________________________
Total letters of credit
(Cost: $37,319,502) $ 37,319,502
______________________________________________________________________________________
Total investments in securities
(Cost: $179,326,203)(d) $179,326,203
______________________________________________________________________________________
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) 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." These securities have been determined to be liquid under guidelines established by the board of directors.
(c) Foreign securities values are stated in U.S. dollars; principal amounts are denominated in U.S. dollars.
(d) At Aug. 31, 1994, this cost also represents the cost of securities for federal income tax purposes.
</TABLE>
<PAGE>
<PAGE> 96
<TABLE>
<CAPTION>
Investments in securities
Retirement Annuity Mutual Funds (Percentages represent value of
August 31, 1994 investments compared to total net assets)
Managed Fund
Investments in securities of unaffiliated issuers
Bonds (33.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (7.9%)
Federal Home Loan Bank
Stepup Notes 8.00% 2014 $ 7,000,000 $ 6,973,750
Resolution Financial Trust
Company Strips 6.36 1999 26,000,000 (f) 19,367,660
U.S. Treasury Bonds 5.50 1996 5,000,000 (h) 4,964,400
5.625 1997 15,000,000 14,671,200
6.875 1997 5,000,000 5,064,000
5.125 1998 7,500,000 7,156,124
5.375 1998 50,000,000 (h) 47,956,495
6.375 1999 15,000,000 (l) 14,762,098
6.25 2003 13,500,000 12,738,194
U.S. Treasury Notes 6.75 1997 33,500,000 33,849,737
8.00 1999 28,000,000 29,440,037
Total 196,943,695
_____________________________________________________________________________________________
Mortgage-backed securities (5.4%)
FHLMC 10.00 2005 13,250,272 14,099,118
Inverse Floater
Collateralized Mtge Obligation 6.01 2000 1,350,401 (g) 1,074,834
Collateralized Mtge Obligation 8.50 2022 7,000,000 7,120,330
6.00 2023 10,459,105 7,218,247
6.50 2023 4,879,819 3,409,920
FNMA 7.40 2004 10,000,000 9,991,599
6.50 2023 2,869,004 2,634,104
8.50 2023 9,483,293 9,664,068
6.50 2024 19,693,507 18,081,101
6.00 2024 6,182,265 3,778,044
6.00 2024 17,170,000 15,259,837
Collateralized Mtge Obligation 4.50 2007 4,500,000 3,527,190
7.50 2014 5,937,510 5,330,519
7.00 2016 4,626,053 4,137,079
6.50 2019 7,431,008 6,625,486
7.00 2019 5,551,859 4,928,108
7.00 2022 12,079,705 9,844,114
6.50 2023 5,771,508 4,206,044
6.50 2023 4,176,655 2,881,266
Total 133,811,008
_____________________________________________________________________________________________
Aerospace & defense (0.2%)
United Technologies 8.875 2019 4,000,000 4,255,000
_____________________________________________________________________________________________
Airlines (0.4%)
Delta 9.75 2021 5,000,000 4,800,000
United 10.67 2004 4,750,000 4,874,688
Total 9,674,688
_____________________________________________________________________________________________
Automotive & related (1.1%)
Auburn Hills Trust
Gtd Exchangable Certs 12.375 2020 6,450,000 8,836,500
GMAC 6.05 1996 10,000,000 9,925,000
8.375 1997 1,400,000 1,445,500
5.95 1998 7,000,000 6,685,000
Total 26,892,000
_____________________________________________________________________________________________
Banks and savings & loans (1.4%)
Chrysler Building NY 9.125 1999 1,460,000 1,574,975
Citicorp 7.75 2006 9,500,000 9,321,875
First USA Bank 6.88 1996 6,700,000 6,758,625
<PAGE>
PAGE 97
Investments in securities of unaffiliated issuers
Bonds (33.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________
Midatlantic Bank 9.20 2001 10,980,000 11,693,700
Riggs Natl
Sub Nts 8.50 2006 4,900,000 4,679,500
Total 34,028,675
_____________________________________________________________________________________________
Beverages & tobacco (0.7%)
American Brands 7.875 2023 5,500,000 5,211,250
Coca-Cola 7.375 2093 3,000,000 2,752,500
RJR Nabisco
attached put 8.375 2017 5,000,000 4,537,500
RJR Nabisco Capital 10.50 1998 4,850,000 5,171,313
Total 17,672,563
_____________________________________________________________________________________________
Building materials (0.6%)
Building Material 12.09 2004 6,400,000 (d,f) 3,384,000
Kaufman & Broad Home 9.375 2003 2,500,000 2,321,875
NVR
Sr Nts 11.00 2003 5,000,000 4,775,000
Nortek 9.875 2004 3,100,000 2,832,625
Owens Corning Fiberglass 9.375 2012 1,500,000 1,556,250
Total 14,869,750
_____________________________________________________________________________________________
Chemicals (0.1%)
Praxair 8.70 2022 3,000,000 3,056,250
_____________________________________________________________________________________________
Communications equipment (0.4%)
Celcaribe
Unit 13.50 2004 17,000 (d) 1,415,250
Comcast Cellular
attached put 11.73 2000 5,000,000 (f) 3,043,750
Dial Call 12.62 2004 5,000,000 (f) 3,075,000
Nextel Communications
Sr Nts 11.36 2004 3,000,000 (j) 1,605,000
Total 9,139,000
_____________________________________________________________________________________________
Computers & office equipment (0.7%)
Conner Peripherals
Cv 6.75 2001 10,000,000 8,062,500
Silicon Graphics
Cv 3.45 2013 20,000,000 (d,f) 9,400,000
Total 17,462,500
_____________________________________________________________________________________________
Energy (0.5%)
BP North America 9.50 1998 2,000,000 2,147,500
Standard Oil 9.00 2019 4,000,000 4,140,000
USX 9.375 2012 5,000,000 5,168,750
Total 11,456,250
_____________________________________________________________________________________________
Financial services (1.2%)
American General Financial
attached put 8.125 2009 2,000,000 2,100,000
Associates Corp NA 7.25 1998 10,000,000 10,062,500
AVCO Financial 7.25 1999 4,750,000 4,744,063
Camden Property Trust 7.33 2001 2,000,000 1,985,000
Corporate Property Investors 7.05 2003 2,000,000 (d) 1,865,000
7.18 2013 2,200,000 (d) 2,024,000
General Electric Capital 8.65 2018 1,000,000 1,037,500
Int'l Lease Finance 9.82 1995 2,000,000 2,092,500
Liberty Property Trust
Cv 8.00 2001 1,250,000 1,260,937
Salomon Brothers 6.75 2006 4,000,000 3,530,000
Total 30,701,500
_____________________________________________________________________________________________
Foreign (3.6%)(c)
ABN Amro
(U.S. Dollar) 7.75 2023 3,500,000 3,290,000
Doman Inds
(U.S. Dollar) 8.75 2004 5,000,000 4,425,000
<PAGE>
PAGE 98
Investments in securities of unaffiliated issuers
Bonds (33.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________
Government of Canada
(Canadian Dollar) 7.757 2001 5,500,000 4,376,075
Gov't Certificates of Israel
(U.S. Dollar) 9.25 2001 3,000,000 3,277,500
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 5,000,000 (d) 4,800,000
Henderson Capital Int'l Euro
(U.S. Dollar) Cv 4.00 1996 3,000,000 (d) 2,857,500
Hydro Quebec
(Canadian Dollar) 10.875 2001 5,000,000 3,947,600
(U.S. Dollar) 9.375 2030 2,550,000 2,754,000
(U.S. Dollar) 9.50 2030 10,000,000 10,937,500
KFW Int'l Finance
(U.S. Dollar) 8.20 2006 4,000,000 4,160,000
Methanex
(U.S. Dollar) 8.875 2001 5,000,000 4,931,250
Mexican U.S. Series D
(Euro Dollar) 5.813 2019 3,500,000 3,031,875
Philippines Long Distance Telephone
(U.S. Dollar) 10.625 2004 1,400,000 1,405,250
PT Indah Kiat Pulp&Paper
(U.S. Dollar) 11.875 2002 2,500,000 2,518,750
Republic of Argentina
(U.S. Dollar) 4.25 2023 5,000,000 2,625,000
(U.S. Dollar) 5.00 2005 3,500,000 2,651,250
Republic of Brazil
(U.S. Dollar) 4.00 2014 2,000,000 1,075,000
Republic of Colombia
(U.S. Dollar) 7.25 2004 5,000,000 4,456,250
Republic of Italy
(U.S. Dollar) 6.875 2023 5,000,000 4,118,750
Roche Holding
(U.S. Dollar) 2.75 2000 7,000,000 5,551,840
Rogers Cable System
(Canadian Dollar) 9.65 2014 5,000,000 3,136,500
Swedish Govt
(Swedish Krona) 10.25 2003 22,000,000 2,690,160
TJIWI Kimia
(U.S. Dollar) 13.25 2001 2,400,000 (h) 2,514,000
U. K. Treasury
(U.S. Dollar) 8.00 2003 3,700,000 5,478,775
Total 91,009,825
_____________________________________________________________________________________________
Health care (0.8%)
Johnson & Johnson 8.00 1998 15,000,000 15,450,000
Schering-Plough 7.44 1996 5,000,000 (d,f) 4,331,250
Total 19,781,250
_____________________________________________________________________________________________
Health care services (0.6%)
Charter Medical
Sr Sub 11.25 2004 5,000,000 (d) 5,175,000
Foundation Health
Sr Nts 7.75 2003 9,600,000 9,228,000
Total 14,403,000
_____________________________________________________________________________________________
Household products (0.3%)
Sweetheart Cup 9.625 2000 7,000,000 6,711,250
_____________________________________________________________________________________________
Industrial equipment & services (--%)
Ingersoll-Rand 8.25 1996 1,010,000 1,040,300
_____________________________________________________________________________________________
Insurance (0.5%)
Nationwide Mutual 7.50 2024 4,000,000 (d) 3,495,000
New England Mutual
Credit Sensitive Nts 7.875 2024 5,000,000 (d) 4,262,500
Principal Mutual 8.00 2044 5,000,000 (d) 4,443,750
Total 12,201,250
_____________________________________________________________________________________________
Media (1.6%)
Aldelphia Communications 9.875 2005 3,000,000 2,647,500
<PAGE>
PAGE 99
Investments in securities of unaffiliated issuers
Bonds (33.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________
Continental Cablevision
Sr Deb 8.875 2005 5,000,000 4,600,000
News America Holdings 7.75 2024 5,000,000 4,256,250
Newscorp 7.75 2024 3,750,000 3,192,187
Rogers Communications
Cv Zero Coupon attached put 5.49 2013 25,000,000 (f) 9,187,500
Time Warner
Zero Coupon Cv 6.68 2012 36,900,000 (f) 11,392,875
Time Warner Entertainment 8.375 2033 5,000,000 4,425,000
Total 39,701,312
_____________________________________________________________________________________________
Metals (0.2%)
A.K. Steel 10.75 2004 2,000,000 2,045,000
Wheeling Pitts 9.375 2003 4,500,000 4,128,750
Total 6,173,750
_____________________________________________________________________________________________
Multi-industry conglomerates (0.3%)
Crane 7.25 1999 4,650,000 4,586,062
Tally Inds 11.49 2005 5,000,000 (j) 2,706,250
Total 7,292,312
_____________________________________________________________________________________________
Paper & packaging (1.1%)
Container 10.75 2002 2,500,000 2,562,500
Crown Cork & Seal 8.00 2023 4,000,000 3,825,000
Federal Paperboard 10.00 2011 3,000,000 3,318,750
Fort Howard
Sr Sub Nts 9.00 2006 7,000,000 6,072,500
Int'l Paper 5.125 2012 4,325,000 3,135,625
Pope and Talbot 8.375 2013 3,800,000 3,586,250
Repap Wisconsin
Sr Sec Nts 9.25 2002 5,000,000 4,356,250
Scott Paper 8.875 1998 200,000 210,750
Total 27,067,625
_____________________________________________________________________________________________
Restaurant & lodging (0.1%)
Flagstar 11.25 2004 2,000,000 1,735,000
_____________________________________________________________________________________________
Retail (0.6%)
Broadway Stores
Cv 6.25 2000 10,000,000 (d) 11,400,000
J.C. Penney 9.05 2001 2,500,000 2,700,000
Total 14,100,000
_____________________________________________________________________________________________
Utilities - electric (0.8%)
Arizona Public Service
Sale Lease-Backed Obligation 8.00 2015 3,600,000 3,402,000
Carolina Power & Light 8.125 2003 407,027 414,150
Long Island Lighting 8.20 2023 5,000,000 3,925,000
Pennsylvania Power & Light 9.25 2019 2,130,000 2,284,425
Potomac Electric 5.125 2001 1,000,000 883,750
RGS Funding AEGCO
Sale Lease-Backed Obligation 9.82 2022 1,491,370 1,605,087
RGS Funding IME
Sale Lease-Backed Obligation 9.82 2022 1,491,370 1,605,087
Sithe Independent Funding 9.00 2013 1,500,000 (d) 1,492,500
Texas Utilities 7.375 2025 5,000,000 4,775,000
Total 20,386,999
_____________________________________________________________________________________________
Utilities-gas (1.0%)
ARKLA 9.875 1997 10,000,000 10,525,000
Coastal 10.25 2004 5,000,000 5,587,500
Transcontinental Energy 9.375 2001 10,000,000 10,037,500
Total 26,150,000
_____________________________________________________________________________________________
Utilities - telephone (1.2%)
AT & T
Zero Coupon Cv 0.00 1999 5,000,000 (d,f) 4,850,000
<PAGE>
PAGE 100
Investments in securities of unaffiliated issuers
Bonds (33.5%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________
GTE 9.375 2000 5,000,000 5,468,750
GTE South 9.00 2029 2,000,000 2,100,000
Mountain States Tel & Tel 5.50 2005 1,210,000 1,031,525
New England Tel & Tel 4.625 1999 1,500,000 1,361,250
6.375 2008 1,165,000 1,023,744
New Jersey Bell 5.875 2006 2,513,000 2,180,027
New York Telephone 4.875 2006 3,200,000 2,532,000
Pacific Northwest Bell 4.375 2002 912,000 739,860
U.S. WEST Communications 6.875 2033 10,000,000 8,137,500
Wisconsin Bell 4.375 2002 1,000,000 818,750
Total 30,243,406
_____________________________________________________________________________________________
Miscellaneous (0.3%)
KinderKare Learning Center 10.375 2001 2,750,000 2,756,875
Carco Auto
Asset-Backed Obligation 7.875 1998 3,325,000 3,387,045
Standard Credit Card Trust 5.95 2004 3,000,000 2,684,550
Total 8,828,470
_____________________________________________________________________________________________
Total bonds
(Cost: $860,935,086) $836,788,628
_____________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Common & preferred stocks (54.3%)
Issuer Shares Value(a)
__________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (2.0%)
Allied Signal 260,000 $ 9,717,500
Northrop 350,000 15,750,000
Raytheon 120,000 8,115,000
United Technologies 260,000 (h) 16,542,500
Total 50,125,000
__________________________________________________________________________________
Airlines (0.8%)
AMR
Cv Pfd, $3.00 200,000 (d) 9,125,000
British Airways 50,000 3,200,000
Mesa Airlines 600,000 (b) 4,575,000
Southwest Airlines 110,000 2,915,000
Total 19,815,000
__________________________________________________________________________________
Automotive & related (1.4%)
Chrysler 160,000 (h) 7,700,000
General Motors 120,000 6,030,000
General Motors
Class H 500,000 18,750,000
Goodyear 50,000 (h) 1,750,000
Total 34,230,000
__________________________________________________________________________________
Banks and savings & loans (2.2%)
BankAmerica 300,000 (h) 14,812,500
Citicorp
Cv Pfd, $1.22, 11-30-95 600,000 11,700,000
First Chicago 450,400 (h) 23,420,800
First Chicago NEXTELL
Cv Pfd, $5.50 170,000 4,696,250
Total 54,629,550
__________________________________________________________________________________
Beverages & tobacco (0.7%)
Coca-Cola 365,000 16,790,000
__________________________________________________________________________________
Building materials (0.2%)
Tyco Int'l 100,000 4,400,000
<PAGE>
PAGE 101
Common & preferred stocks (54.3%)
Issuer Shares Value(a)
__________________________________________________________________________________
Chemicals (1.2%)
Dow Chemical 200,000 15,025,000
Henkel
Pfd Shares ORD 13,000 (b) 5,099,562
Rohm & Haas 150,000 9,337,500
Total 29,462,062
__________________________________________________________________________________
Communications equipment (2.4%)
LIN Broadcasting 180,000 (b) 24,120,000
Motorola 350,000 18,900,000
Northern Telcom 300,000 10,612,500
Scientific Atlanta 160,000 7,160,000
Total 60,792,500
__________________________________________________________________________________
Computers & office equipment (3.1%)
Computer Associates 404,000 16,210,500
Hewlett Packard 90,000 8,088,750
Oracle Systems 250,000 (b) 10,671,875
Pitney Bowes 410,000 15,785,000
Xerox 250,000 26,781,250
Total 77,537,375
__________________________________________________________________________________
Electronics (1.4%)
Intel 260,000 17,095,000
Vishay Intertechnology 390,000 16,770,000
Total 33,865,000
__________________________________________________________________________________
Energy (2.1%)
Amoco 310,000 17,941,250
Atlantic Richfield
9% Cv Pfd 280,000 8,680,000
Mobil 200,000 16,850,000
Ultramar 100,000 2,612,500
Vastar 230,000 6,296,250
Total 52,380,000
__________________________________________________________________________________
Financial services (5.2%)
Aimco 100,000 1,837,500
Bay Apartment 100,000 2,037,500
Dean Witter 305,700 (h) 13,030,462
Duke Realty 170,000 4,335,000
Equity Residential 100,000 3,300,000
Federal National Mortgage 220,000 19,552,500
First Financial Management 230,000 (h) 13,972,500
First Industrial 170,000 3,761,250
First Madison Bank
11.50% Pfd 20,000 (b) 2,072,500
Merry Land & Investment 110,000 2,158,750
National Golf 155,000 (b) 3,332,500
Oasis 120,000 3,015,000
Paragon 200,000 4,225,000
Post Properties 80,000 2,380,000
RFS Hotel 170,000 2,890,000
ROC Communities 190,000 3,942,500
SBH-Hewlett ELK
5.25% Cv Pfd 75,000 (b,k) 6,337,500
Southwestern Property Trust 100,000 1,225,000
Summit Properties 140,000 2,782,500
Travelers 850,000 (h) 31,450,000
Weeks 170,000 (b) 3,421,250
Total 131,059,212
__________________________________________________________________________________
Foreign (4.8%)
BBC Brown Boveri 5,000 4,534,355
British Gas ADR 100,000 4,637,500
Cable & Wireless 140,000 2,992,500
Cemex ADR 160,000 2,900,000
Empressa ICA 100,000 2,950,000
Ericsson 90,000 4,871,250
Grupo Carso ADR 200,000 (b) 4,586,780
Grupo Televisa 200,000 (d) 11,725,000
<PAGE>
PAGE 102
Common & preferred stocks (54.3%)
Issuer Shares Value(a)
__________________________________________________________________________________
Grupo Tribasa 100,000 (b) 3,412,500
New Zealand Telecom 2,000,000 6,262,000
News Corp Ltd ADR 170,000 (h) 9,222,500
Royal Dutch Petroleum 240,000 (h) 27,030,000
RTZ 600,000 8,139,600
Telefonos de Mexico ADR 210,000 13,177,500
Tsudakoma 119,000 1,224,748
YPF 500,000 12,937,500
Total 120,603,733
__________________________________________________________________________________
Food (0.2%)
Pet 200,000 4,050,000
__________________________________________________________________________________
Furniture & appliances (0.7%)
Black & Decker 150,000 3,468,750
Mohawk Inds 200,000 (b) 3,550,000
Singer 300,000 9,637,500
Total 16,656,250
__________________________________________________________________________________
Health care (1.4%)
Abbott Labs 210,000 6,300,000
Genetech Red Comm 340,000 (b,h) 17,467,500
Johnson & Johnson 40,000 2,005,000
Pfizer 70,000 4,777,500
Schering-Plough 80,000 5,590,000
Total 36,140,000
__________________________________________________________________________________
Health care services (2.7%)
Beverly Enterprises 600,000 (b) 8,175,000
Columbia Healthcare 340,000 14,450,000
FHP Int'l
Series A Pfd 208,000 (b) 5,356,000
Hillhaven 100,000 (b) 2,075,000
Humana 600,000 (b) 12,750,000
Quorum Health 120,000 (b) 2,205,000
United Healthcare 200,000 10,450,000
U.S. HealthCare 265,000 11,461,250
Total 66,922,250
__________________________________________________________________________________
Household products (1.4%)
Gillette 250,000 18,093,750
Proctor & Gamble 270,000 16,436,250
Total 34,530,000
__________________________________________________________________________________
Industrial equipment & services (1.0%)
Caterpillar 50,000 (h) 5,775,000
Illinois Tool Works 230,000 9,947,500
York Int'l 200,000 8,250,000
Total 23,972,500
__________________________________________________________________________________
Industrial transportation (1.7%)
CSX 220,000 16,995,000
Norfolk Southern 160,000 10,280,000
Union Pacific 290,000 16,711,250
Total 43,986,250
__________________________________________________________________________________
Leisure time & entertainment (0.3%)
Walt Disney 210,000 8,636,250
__________________________________________________________________________________
Media (3.8%)
CBS 46,269 14,869,700
Comcast 500,000 8,000,000
Comcast
Class SPL 250,000 4,000,000
Gannett 270,000 13,500,000
McGraw-Hill 150,000 10,443,750
Tele-Communications Class A 750,000 (b) 16,921,875
<PAGE>
PAGE 103
Common & preferred stocks (54.3%)
Issuer Shares Value(a)
__________________________________________________________________________________
Time Warner 470,000 17,918,750
Turner Broadcasting Class B 500,000 9,062,500
Viacom Class B 30,000 (b) 990,000
Total 95,706,575
__________________________________________________________________________________
Metals (1.5%)
Bethelem Steel
$3.50 Cv Pfd 100,000 (d) 6,162,500
Cyprus Amax Minerals 140,000 (h) 4,550,000
Inco Ltd 125,000 3,593,750
Kaiser Aluminum
$.65 Cv Pfd 200,000 1,725,000
LTV 400,000 (b) 7,650,000
Nucor 100,000 6,900,000
Phelps Dodge 100,000 6,350,000
Total 36,931,250
__________________________________________________________________________________
Multi-industry conglomerates (3.3%)
ALCO Standard
2.375% Cv Pfd 100,000 7,525,000
Emerson Electric 300,000 18,637,500
General Electric 700,000 34,825,000
MN Mining & Manufacturing 195,000 10,749,375
Olsten 330,000 11,880,000
Total 83,616,875
__________________________________________________________________________________
Paper & packaging (0.6%)
International Paper 210,000 16,196,250
__________________________________________________________________________________
Restaurants & lodging (0.8%)
McDonalds 500,000 14,125,000
Wendy's Int'l 400,000 6,350,000
Total 20,475,000
__________________________________________________________________________________
Retail (3.1%)
CUC Int'l 370,000 (b) 12,672,500
Dayton Hudson 30,000 2,542,500
Home Depot 251,000 (h) 11,357,750
Home Shopping Network 580,000 (b) 6,815,000
Penney (JC) 190,000 9,998,750
Sears Roebuck
Cv Pfd $3.75 260,000 14,397,500
Sysco 250,000 6,406,250
Wal-Mart Stores 500,000 12,312,500
Total 76,502,750
__________________________________________________________________________________
Textiles & apparel (0.4%)
Burlington Industry 420,000 (b) 5,617,500
Unifi 150,000 3,600,000
Total 9,217,500
__________________________________________________________________________________
Utilities-gas (1.0%)
Enron 400,000 12,200,000
Tenneco
$2.80 Cv Pfd 300,000 12,412,500
Total 24,612,500
__________________________________________________________________________________
Utilities - telephone (2.9%)
Airtouch Communications 630,000 (b) 17,797,500
Century Telephone 230,000 6,928,750
Comsat 220,000 5,527,500
MCI Communications 450,000 10,940,625
McCaw Cellular Communications 270,000 (b) 14,613,750
Pacific Telesis 400,000 13,200,000
US WEST 100,000 4,037,500
Total 73,045,625
Total common & preferred stocks
(Cost: $1,202,547,864) $1,356,887,257
</TABLE>
<PAGE>
PAGE 104
<TABLE>
<CAPTION>
__________________________________________________________________________________
Short-term securities (15.0%)
__________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
__________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.4%)
FHLMC
09-01-94 4.31% $ 8,800,000 $ 8,800,000
Total U.S. government agency
(Cost: $8,800,000) $ 8,800,000
__________________________________________________________________________________
Certificate of deposit (0.4%)
Nat'l Detroit
09-22-94 4.70 10,000,000 $ 10,000,140
Total Certificate of deposit
(Cost:$10,000,116) $ 10,000,140
__________________________________________________________________________________
Commercial paper (14.2%)
American Cyanamid
09-08-94 4.47 10,000,000 9,991,328
ABB Treasury
09-21-94 4.48 10,000,000 (e) 9,972,741
American General
09-22-94 4.50 2,900,000 2,892,012
09-23-94 4.53 6,200,000 (e) 6,181,814
Amgen
09-09-94 4.60 6,300,000 6,293,602
09-23-94 4.53 5,000,000 4,985,052
10-21-94 4.78 9,600,000 9,536,667
Associates
09-22-94 4.53 8,000,000 7,977,531
Bayshore Fuel
09-14-94 4.71 5,003,000 4,994,242
BBV Delaware
09-19-94 4.47 8,700,000 8,679,955
Beneficial
09-20-94 4.51 4,000,000 3,990,542
Campbell Soup
09-23-94 4.71 4,200,000 (e) 4,187,937
Chevron Trans
09-07-94 4.39 7,600,000 (e) 7,594,452
10-04-94 4.77 4,800,000 (e) 4,779,100
Ciesco (LP)
09-13-94 4.58 6,000,000 5,990,900
10-03-94 4.60 3,700,000 3,685,120
11-02-94 4.68 5,000,000 4,957,300
CIT Group
10-04-94 4.55 7,400,000 7,367,370
11-02-94 4.81 7,300,000 7,237,658
Colgate-Palmolive
09-06-94 4.48 6,600,000 (e) 6,595,903
Columbia Fuel
09-26-94 4.53 4,500,000 4,484,732
Commercial Credit
09-28-94 4.75 5,700,000 5,679,779
Commerzbank
09-12-94 4.71 9,400,000 9,385,731
Consolidated Railway
10-05-94 4.78 600,000 (e) 597,308
10-28-94 4.81 5,000,000 (e) 4,962,158
CPC Int'l
09-27-94 4.72 4,600,000 (e) 4,584,352
10-03-94 4.67 4,000,000 (e) 3,983,467
Duke Power
09-12-94 4.56 6,800,000 6,790,546
Eiger Capital
09-29-94 4.75 8,300,000 (e) 8,269,401
Fleet Funding
09-15-94 4.42 3,900,000 (e) 3,893,327
10-12-94 4.77 5,000,000 (e) 4,972,951
<PAGE>
PAGE 105
__________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
__________________________________________________________________________________
GE Capital
09-16-94 4.44 7,600,000 7,586,003
10-06-94 4.76 2,100,000 2,090,322
General Mills
09-06-94 4.36 5,200,000 5,196,858
Goldman Sachs
09-07-94 4.68 7,000,000 6,994,575
09-09-94 4.39 6,700,000 6,693,493
Intel
09-30-94 4.53 4,700,000 4,681,399
Kellogg
09-29-94 4.72 8,000,000 7,970,755
Kredietbank
09-12-94 4.48 10,000,000 9,986,342
09-12-94 4.56 5,500,000 5,492,353
Lincoln Nat'l
09-15-94 4.49 5,000,000 (e) 4,991,289
Merrill Lynch
09-27-94 4.77 7,600,000 7,573,928
10-13-94 4.79 4,000,000 3,977,740
Metlife Funding
11-03-94 4.68 2,700,000 2,676,576
Mobil Aust
09-20-94 4.75 6,800,000 (e) 6,783,025
Motorola
09-09-94 4.46 5,600,000 5,594,462
Nat'l Australia
09-26-94 4.75 5,700,000 5,681,277
10-17-94 4.65 4,000,000 3,974,798
Nat'l Detroit Bank
10-17-94 4.61 5,000,000 5,001,471
Norfolk Southern
09-06-94 4.36 2,100,000 2,098,731
09-15-94 4.55 4,300,000 (e) 4,292,408
PACCAR Financial
09-15-94 4.51 5,000,000 4,990,335
Paribas Financial
09-13-94 4.44 5,600,000 5,591,731
Penney (JC)
09-21-94 4.64 5,500,000 5,485,883
Reed Elsevier
10-24-94 4.72 5,300,000 (e) 5,261,129
Southwest Bell Capital
09-14-94 4.66 6,000,000 (e) 5,989,205
09-22-94 4.74 1,300,000 (e) 1,296,413
Southern California Gas
09-07-94 4.46 1,470,000 (e) 1,468,910
09-08-94 4.47 7,438,000 (e) 7,431,550
USAA Capital
09-20-94 4.57 7,000,000 6,983,190
10-03-94 4.75 5,400,000 5,377,296
US WEST Communications
10-05-94 4.53 5,800,000 5,773,098
10-24-94 4.78 4,500,000 4,468,531
__________________________________________________________________________________
Total commercial paper
(Cost: $354,978,082) $ 354,950,054
__________________________________________________________________________________
Total short-term securities
(Cost: $373,778,198) $ 373,750,194
__________________________________________________________________________________
Total investments in securities of unaffiliated issuers
(Cost: $2,437,261,148) $2,567,426,079
__________________________________________________________________________________
<PAGE>
PAGE 106
Investments in securities of affiliated issuer (i)
Common stock (0.5%)
Issuer Shares Value(a)
_____________________________________________________________________________________
PacifiCare Health
Systems Class B 170,000 (b,h) $ 11,687,500
_____________________________________________________________________________________
Total investments in securities of affiliated issuer
(Cost: $7,346,560) $ 11,687,500
_____________________________________________________________________________________
Total investments in securities
(Cost: $2,444,607,708)(m) $2,579,113,579
_____________________________________________________________________________________
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Foreign securities values are stated in U.S. dollars; principal amounts are denominated in the currency indicated.
(d) Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as
amended. These securities have been determined to be liquid under guidelines established by the board of directors.
(e) 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." These
securities have been determined to be liquid under guidelines established by the board of directors.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquistion.
(g) Inverse floaters represent securities that pay interest at a rate that increases (decreases) with a decrease (increase) in the
LIBOR (London InterBank Offered Rate) Index. The rate shown is the rate in effect at Aug. 31, 1994.
(h) Security is partially or fully on loan. See Note 6 to the financial statements.
(i) Investments representing 5% of more of the outstanding voting securities of the issuer.
(j) For these securities, the interest rate disclosed represents the annualized effective yield on the date of acquistion to
interest reset date shown in the maturity year column.
(k) ELKS are equity-linked securities that are structured as an interest-bearing debt security of a brokerage firm and linked to
the common stock of another company. The terms of ELKS differ from those of ordinary debt securities in that the principal
amount received at maturity is not fixed, but is based on the price of the common stock the ELK is linked to.
(l) Partially pledged as initial deposit on the following open interest rate futures purchase contracts (see Note to the
financial statements):
Type of security Par Value
_________________________________________________
U. S. Treasury Dec 94 T-Bond $25,000,000
_________________________________________________
(m) Aug. 31, 1994, the cost of securities for federal income tax purposes was $2,443,378,214 and the aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . .$187,350,207
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . (51,614,842)
___________________________________________________________________________________
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . $135,735,365
___________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 107
Quick telephone reference
IDS Life Insurance Company
Surrenders and exchanges, dollar-cost averaging and automated
partial surrenders
National/Minnesota: 800-437-0602
Mpls./St. Paul area: 671-4738
TTY Service
For the hearing impaired
800-285-8846
IDS Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
Your IDS financial planner:
Retirement Annuity Mutual Funds
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 108
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report and
prospectus are placed
in maroon strip at the top
of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report and prospectus. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
