-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OH2aTYd1nZ4Xp5scQb8e50MHo4jqFvQA3foLgVrLD5vyDSM4W14uwwTth2li5288 E3P4tj1rv4Tyr/X2fvRXEw== 0000820027-95-000212.txt : 19950424 0000820027-95-000212.hdr.sgml : 19950424 ACCESSION NUMBER: 0000820027-95-000212 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950421 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS BOND FUND INC CENTRAL INDEX KEY: 0000049697 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 411237361 STATE OF INCORPORATION: MN FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02503 FILM NUMBER: 95530301 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6126712772 MAIL ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 N-30D 1 BOND SEMIFILING FEB. 1995 PAGE IDS Bond Fund 1995 semiannual report The goal of IDS Bond Fund, Inc. is to provide shareholders with a high level of current income while attempting to conserve the value of the investment and to continue a high level of income for the longest period of time. The fund invests primarily in corporate bonds and other debt securities. Distributed by American Express Financial Advisors Inc. Striking a balance among bonds A bond is like an I.O.U. But with a bond, it's a corporation or the government - the bond issuer - that promises to pay the money back. In return for lending money to the issuer, bond investors get paid interest. IDS Bond Fund invests mainly in bonds issued by U.S. corporations, but it also holds some U.S. government bonds, as well as foreign bonds. The portfolio manager shifts this mix as investment conditions dictate. In doing so, the fund seeks to provide long-term return potential for investors. Contents From the president 3 From the portfolio manager 3 Ten largest holdings 5 Financial statements 6 Notes to financial statements 9 Investments in securities 18 Directors and officers 32 IDS mutual funds 33 To our shareholders William R. Pearce President of the fund Fred Quirsfeld Portfolio manager From the president All of the funds in the ids mutual fund group held shareholder meetings on Nov. 9, 1994. The meetings, which were well-attended, approved all of the proposals advanced by management. Among the proposals were: o The election of directors and the selection of KPMG Peat Marwick LLP as independent auditors for each of the funds in the group. o A new investment management agreement that created multiple classes of fund shares, effective March 1995. o A change in investment policy that will permit the fund to adopt a master/feeder structure if and when the board of each fund determines that it is in the best interest of shareholders. o And, finally, a change with respect to the number of "fundamental investment policies" that allows the board to modify them should it deem appropriate. No other business was presented at the meeting, which was concluded by a report to shareholders from the American Express Financial Corporation Investment Department. Thanks to all of you for your effort in reviewing the proxy material and voting your proxies. William R. Pearce From the portfolio manager An improving bond market and an emphasis on corporate bonds keyed a positive performance by your fund during the first half of the fiscal year. The total return for the period, which covered September 1994 through February 1995, was 3.4%. (Note: Although the net asset value was lower at the end of the period, the change was more than made up by dividend and capital gain distributions. When a capital gain is distributed, the amount is deducted from the net asset value.) As is always the case for bond mutual funds, the biggest influence on the fund's performance during the past six months was the interest-rate trend. In February 1994, the Federal Reserve began raising short-term interest rates to temper economic growth and thereby head off a potential spike in the inflation rate. Long-term rates took their cue from the Fed's actions and began a dramatic climb that didn't abate until late in the year. Along the way, bond prices experienced a substantial slide-an automatic result of rising interest rates. (Falling rates, on the other hand, boost bond prices.) Rally begins The turnaround for the bond market and the fund began last November. With inflation fears easing somewhat, long-term interest rates began to decline, even as short-term rates moved higher. The positive momentum soon turned into a powerful rally during January and February, as interest rates declined nearly half a percentage point during that time. In addition to the positive market trend, the fund also benefited from our heavy exposure to corporate bonds, including high-yield issues, which were especially good performers. Beyond that, we reduced our cash reserves and moved more money into securities with longer maturities. These bonds benefit most from declines in interest rates. The only disappointment of note was the performance of our relatively small holdings of bonds from emerging foreign markets, which performed quite poorly. Environment remains positive While we don't expect the bond market to repeat its remarkable early-year advance, we're confident that we'll have a much better overall investment environment than we had in 1994. Our optimism is based on our expectation of less robust economic growth, but no recession; only moderately higher inflation; and relatively stable long-term interest rates. Given that outlook, we recently began to increase the overall credit quality of the portfolio by adding more U.S. Treasury and mortgage-backed securities. They carry AAA ratings and, we believe, will perform well if the pace of the economy slows down. For the same reason, we've also extended our emphasis on quality to our holdings of corporate bonds-still the largest portion of the portfolio. We think these shifts will put the fund in good position to benefit from the resumption of what should, on a longer-term basis, be a productive period for bond investors. Fred Quirsfeld 6-month performance (All figures per share) Net asset value (NAV) Feb. 28, 1995 $ 4.77 Aug. 31, 1994 $ 4.91 Decrease $ (0.14) Distributions Sept. 1, 1994 - Feb. 28, 1995 From income $ 0.19 From capital gains $ 0.10 Total distributions $ 0.29 Total return* +3.4% *If you purchased shares in the fund during this period, your return also would have been affected by the sales charge, as described in the prospectus. PAGE
IDS Bond Fund, Inc. Your fund's ten largest holdings (Pie chart) The ten holdings listed here make up 8.44% of the fund's net assets _____________________________________________________________________________________ Percent Value (of fund's net assets) (as of Feb. 28, 1995) _____________________________________________________________________________________ Long Island Lighting 1.12% $ 24,787,760 9.625% General Refunding Mortgage 2024 Time Warner Entertainment 1.01 22,250,000 8.375% 2033 Ford Capital .93 20,574,938 9.50% 2010 Province of Quebec .83 18,300,000 11% 2015 USX .81 17,937,500 9.375% 2022 Scotland Bank .80 17,637,500 8.80% 2004 News American Holdings .77 16,957,500 8.875% 2023 Owens-Illinois .73 16,106,250 11% Sr Deb 2003 New York Telephone .72 16,068,750 9.375% 2031 Boeing .72 15,900,000 8.75% 2031 Excludes U.S. Treasury and government agency holdings that total 22% of the fund's net assets. /TABLE PAGE Financial statements Statement of assets and liabilities IDS Bond Fund, Inc. Feb. 28, 1995
_____________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________ (Unaudited) Investments in securities, at value (Note 1) (identified cost $2,266,636,831) $2,224,727,648 Receivable for investment securities sold 5,358,785 Dividends and accrued interest receivable 41,448,370 U.S. government securities held as collateral (Note 5) 10,599,239 _____________________________________________________________________________________________________________ Total assets 2,282,134,042 _____________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit 2,513,586 Dividends payable to shareholders 2,095,230 Payable for investment securities purchased 54,171,816 Payable upon return of securities loaned (Note 5) 11,499,239 Accrued investment management and services fee 869,339 Accrued distribution fee 60,634 Accrued transfer agency fee 155,220 Other accrued expenses 419,372 _____________________________________________________________________________________________________________ Total liabilities 71,784,436 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $2,210,349,606 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- authorized 10,000,000,000 shares of $.01 par value; outstanding 463,043,328 shares $ 4,630,433 Additional paid-in capital 2,271,083,983 Undistributed net investment income (Note 1) 3,026,664 Accumulated net realized loss (Note 6) (26,482,291) Unrealized depreciation (41,909,183) _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $2,210,349,606 _____________________________________________________________________________________________________________ Net asset value per share of outstanding capital stock $ 4.77 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE Financial statements Statement of operations IDS Bond Fund, Inc. Six months ended Feb. 28, 1995 _____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ (Unaudited) Income: Interest $93,989,681 Dividends 1,236,597 _____________________________________________________________________________________________________________ Total income 95,226,278 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management and services fee 5,633,716 Distribution fee 394,488 Transfer agency fee 1,008,392 Compensation of directors 163,359 Compensation of officers 12,268 Custodian fees 82,205 Postage 163,248 Registration fees 111,095 Reports to shareholders 35,401 Audit fees 17,500 Administrative 13,383 Other 18,593 _____________________________________________________________________________________________________________ Total expenses 7,653,648 _____________________________________________________________________________________________________________ Investment income -- net 87,572,630 _____________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________ Net realized loss on security and foreign currency transactions (including loss of $238,403 from foreign currency transactions)(Note 3) (29,262,894) Net realized gain on closed interest rate futures contracts 39,875 _____________________________________________________________________________________________________________ Net realized loss on investments and foreign currency (29,223,019) Net change in unrealized appreciation or depreciation 12,278,950 _____________________________________________________________________________________________________________ Net loss on investments and foreign currency (16,944,069) _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $70,628,561 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE
Financial statements Statements of changes in net assets IDS Bond Fund, Inc. _____________________________________________________________________________________________________________ Operations and distributions Feb. 28, 1995 Aug. 31, 1994 _____________________________________________________________________________________________________________ Six months ended Year ended (Unaudited) Investment income -- net $ 87,572,630 $ 184,268,545 Net realized gain (loss) on investments and foreign currency (29,223,019) 45,541,259 Net change in unrealized appreciation or depreciation 12,278,950 (279,119,373) _____________________________________________________________________________________________________________ Net increase (decrease) in net assets resulting from operations 70,628,561 (49,309,569) _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income (85,725,332) (184,867,231) Net realized gain (44,353,816) (27,971,600) Excess distribution of realized gain (Note 1) -- (29,043) _____________________________________________________________________________________________________________ Total distributions (130,079,148) (212,867,874) _____________________________________________________________________________________________________________ Capital share transactions _____________________________________________________________________________________________________________ Proceeds from sales of 33,661,717 and 62,340,332 shares (Note 2) 159,515,204 323,953,867 Net asset value of 18,949,118 and 26,592,240 shares issued in reinvestment of distributions 88,962,868 138,748,551 Payments for redemptions of 47,914,273 and 85,276,606 shares (227,351,063) (441,905,072) _____________________________________________________________________________________________________________ Increase in net assets from capital share transactions representing net addition of 4,696,562 and 3,655,966 shares 21,127,009 20,797,346 _____________________________________________________________________________________________________________ Total decrease in net assets (38,323,578) (241,380,097) Net assets at beginning of period 2,248,673,184 2,490,053,281 _____________________________________________________________________________________________________________ Net assets at end of period (including undistributed net investment income of $3,026,664 and $1,179,366) $2,210,349,606 $2,248,673,184 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE Notes to financial statements IDS Bond Fund, Inc. (Unaudited as to Feb. 28, 1995) ______________________________________________________________________________ 1. Summary of significant accounting policies The fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. Significant accounting policies followed by the fund are summarized below: Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price; securities for which market quotations are not readily available, including illiquid securities, are valued at fair value according to methods selected in good faith by the board of directors. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Options transactions In order to produce incremental earnings, protect gains, and facilitate buying and selling of securities for investment purposes, the fund may buy or write options traded on any U.S. or foreign exchange or in the over-the-counter market where the completion of the obligation is dependent upon the credit standing of the other party. The fund also may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that the fund gives up the opportunity of profit if the market price of the security increases. The risk in writing a put option is that the fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the fund pays a premium whether or not the option is exercised. The fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The fund will realize a gain or loss upon expiration or closing of the option transaction. When options on debt securities or futures are exercised, the fund will realize a gain or loss. When other options are exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions In order to gain exposure to the market, the fund may buy and sell interest rate futures contracts traded on any U.S. or foreign exchange. The fund also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The fund is subject to the credit risk that the other party will not complete the obligations of the contract. Federal taxes Since the fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. 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) were recorded by the fund. Dividends to shareholders Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount is accrued daily. ______________________________________________________________________________ 2. Expenses and sales charges Under terms of an agreement dated Nov. 14, 1991, the fund pays American Express Financial Corporation a fee for managing its investments, recordkeeping and other specified services. The fee is a percentage of the fund's average daily net assets consisting of a group asset charge in reducing percentages from 0.46% to 0.32% annually on the combined net assets of all non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.13% of average daily net assets. The fund also pays American Express Financial Corporation a distribution fee at an annual rate of $6 per shareholder account and a transfer agency fee at an annual rate of $15.50 per shareholder account. The transfer agency fee is reduced by earnings on monies pending shareholder redemptions. Effective March 1995, the fund entered into a new agreement for managing investments, recordkeeping and other services for the creation of multiple classes of fund shares. The management fee is a percentage of the fund's average daily net assets in reducing percentages from 0.52% to 0.395% annually. An administration and accounting fee for all classes of shares in reducing percentages from 0.05% to 0.025% annually of the fund's average daily net assets is also effective. Class B shares will incur a 12b-1 fee of 0.75% of average daily net assets. The fund also pays a transfer agency fee at an annual rate of $15.50 per shareholder account for Class A and Y shares and $16.50 per shareholder account for Class B shares. A shareholder service agreement will also be put in place at 0.175% of average daily net assets for Class A and B shares. American Express Financial Corporation will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges by American Express Financial Advisors Inc. for distributing fund shares were $3,376,597 for the six months ended Feb. 28, 1995. The fund has a retirement plan for its independent directors. Upon retirement, directors receive monthly payments equal to one-half of the retainer fee for as many months as they served as directors up to 120 months. There are no death benefits. The plan is not funded but the fund recognizes the cost of payments during the time the directors serve on the board. The retirement plan expense amounted to $13,741 for the six months ended Feb. 28, 1995. 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $568,677,282 and $546,937,070, respectively, for the six months ended Feb. 28, 1995. Realized gains and losses are determined on an identified cost basis. ______________________________________________________________________________ 4. Illiquid securities At Feb. 28, 1995, investments in securities included issues that are illiquid. The fund currently limits investments in illiquid securities to 10% of the net assets, at market value, at the time of purchase. The aggregate value of such securities at Feb. 28, 1995 was $8,255,835 which represents 0.4% of net assets. Pursuant to guidelines adopted by the fund's board of directors, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. ______________________________________________________________________________ 5. Lending of portfolio securities At Feb. 28, 1995, securities valued at $11,243,300 were on loan to brokers. For collateral, the fund received $900,000 in cash and U.S. government securities valued at $10,599,239. Income from securities lending amounted to $56,806, for the six months ended Feb. 28, 1995. The risks to the fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. ______________________________________________________________________________ 6. Capital loss carryover For federal income tax purposes, the fund had a capital loss carryover of approximately $61,536,000 at Feb. 28, 1995, that if not offset by subsequent capital gains, will expire in 2003. PAGE
7. Financial highlights The table below shows certain important financial information for evaluating the fund's results. Fiscal period ended Aug. 31, Per share income and capital changes* 1995** 1994 1993 1992 1991 1990 Net asset value, $4.91 $5.48 $5.11 $4.74 $4.39 $4.74 beginning of period Income from investment operations: Net investment income .19 .41 .40 .40 .41 .40 Net gains (losses) (.04) (.51) .38 .37 .33 (.36) (both realized and unrealized) Total from investment .15 (.10) .78 .77 .74 .04 operations Less distributions: Dividends from net (.19) (.41) (.41) (.40) (.39) (.39) investment income Distributions from (.10) (.06) -- -- -- -- realized gains Total distributions (.29) (.47) (.41) (.40) (.39) (.39) Net asset value, $4.77 $4.91 $5.48 $5.11 $4.74 $4.39 end of period Ratios/supplemental data 1995** 1994 1993 1992 1991 1990 Net assets, end of period $2,210 $2,249 $2,490 $2,174 $1,902 $1,730 (in millions) Ratio of expenses to .71%*** .68% .70% .72% .77% .77% average daily net assets Ratio of net income to 8.14%*** 7.71% 7.78% 8.29% 9.03% 8.83% average daily net assets Portfolio turnover rate 28% 40% 60% 64% 74% 81% (excluding short-term securities) Total return+ 3.4%++(2.0%) 15.8% 16.9% 17.6% 0.9% *For a share outstanding throughout the period. Rounded to the nearest cent. **Six months ended Feb. 28, 1995 (Unaudited). ***Adjusted to an annual basis. +Total return does not reflect payment of a sales charge. ++For the fiscal period ended Feb. 28, 1995, the annualized total return is 6.8%. /TABLE PAGE
Investments in securities IDS Bond Fund, Inc. (Percentages represent value of Feb. 28, 1995 (Unaudited) investments compared to net assets) _____________________________________________________________________________________________________________________________ Bonds (89.4%) _____________________________________________________________________________________________________________________________ Issuer Coupon Maturity Principal Value(a) rate year amount _____________________________________________________________________________________________________________________________ U.S. government obligations (7.9%) U.S. Treasury 7.125% 1999 $37,500,000 $ 37,619,996 7.25 2022 25,000,000 24,134,748 7.50 2016 15,975,000 15,837,294 7.875 2004 10,000,000 (c) 10,463,399 8.875 2017 28,500,000 32,415,615 Govt Trust Certs Israel 9.25 1995-01 11,100,000 11,835,375 Resolution Funding Corp 8.125 2019 40,925,000 42,780,126 ______________ Total 175,086,553 _________________________________________________________________________________________________________________________________ Mortgage-backed securities (14.8%) Federal Home Loan Mtge Corp 8.00 2024 20,000,000 19,843,750 Collateralized Mtge Obligation 3.24 2023 7,640,693 3,063,440 5.741 2023 4,000,000 2,240,000 7.00 2022 10,000,000 8,703,300 8.50 2022 10,000,000 10,091,100 13.895 2023 9,000,000 4,387,500 Federal Natl Mtge Assn 6.00 1995-24 49,679,235 43,950,598 6.50 1995-24 94,300,563 86,938,677 8.00 1995-24 12,000,000 11,891,250 8.50 1995-24 60,448,070 61,317,012 9.00 1995-24 33,393,378 34,489,098 Collateralized Mtge Obligation 5.00 2024 9,961,155 7,952,645 6.168 2023 1,970,023 1,307,603 14.00 2023 1,855,845 1,201,079 Inverse Floater 1.10 2023 450,569 (b) 105,884 Trust Series Z 7.00 2019 16,781,678 (d) 15,169,630 Govt Natl Mtge Assn 8.00 2025 5,100,000 5,055,375 Prudential Bache Collateralized Mtge Obligation Trust 7.965 2019 8,710,570 8,459,531 ______________ Total 326,167,472 ______________________________________________________________________________________________________________________________ See accompanying notes to investments in securities. Financial (8.4%) Banks and savings & loans (3.5%) BankAmerica Sub Nts 7.50 2002 15,000,000 14,625,000 Bankers Trust Sub Deb 7.50 2002 10,000,000 9,712,500 Barclays NA Capital 9.75 2021 10,000,000 11,100,000 CoreStates Capital Gtd Sub Nts 9.375 2003 10,000,000 10,912,500 Meridian Bancorp Sub Deb 7.875 2002 10,400,000 10,296,000 NationsBank Sub Nts 6.50 2003 12,000,000 10,920,000 Standard Credit Card 8.625 2002 10,000,000 10,257,800 ______________ Total 77,823,800 _____________________________________________________________________________________________________________________________ Financial services (2.7%) Camden Property Trust 7.33 2001 2,000,000 1,840,000 Corporate Property Investors 7.05 2003 5,000,000 (e) 4,706,250 7.18 2013 5,000,000 (e) 4,375,000 Developers Dividend Realty 7.00 1999 2,500,000 2,350,000 First Union REIT Sub Nts 8.875 2003 7,000,000 5,932,500 General Electric Capital Reset Nt 8.65 1996 14,750,000 (f) 15,045,000 Liberty Property Trust Cv 8.00 2001 2,000,000 2,050,000 Malan REIT Cv 9.50 2004 3,500,000 3,045,000 Property Trust Amer REIT 7.50 2014 10,000,000 9,087,500 Salomon 8.91 1998 7,000,000 7,052,500 Saul (BF) REIT 11.625 2002 5,000,000 4,750,000 ______________ Total 60,233,750 _____________________________________________________________________________________________________________________________ Insurance (2.2%) Amer Life Holding Sr Sub Nts 11.25 2004 5,000,000 5,068,750 Americo Life Sr Sub Nts 9.25 2005 5,000,000 4,387,500 General Amer Life 7.625 2024 5,000,000 (e) 4,381,250 Leucadia Natl 7.75 2013 7,780,000 6,924,200 Sr Sub Nts 10.375 2002 5,250,000 5,565,000 NAC Re Cv 5.25 2002 3,000,000 (e) 2,550,000 Nationwide Mutual 7.50 2024 4,000,000 (e) 3,385,000 New England Mutual Credit Sensitive Nts 7.875 2024 10,000,000 (e) 8,487,500 Principal Mutual 8.00 2044 10,000,000 (e) 8,762,500 ______________ Total 49,511,700 _____________________________________________________________________________________________________________________________ Industrial (30.3%) Aerospace & defense (1.8%) Allied Zero Coupon 9.57 1996 5,000,000 (g) 4,706,250 Allison Engine Acquisition Sr Sub Nts 10.00 2003 2,000,000 2,047,500 Boeing 8.75 2031 15,000,000 15,900,000 Fairchild Inds Sr Secured Nts 12.25 1999 5,000,000 4,868,750 Sequa Sr Sub Nts 9.375 2003 3,000,000 2,662,500 United Technologies 8.875 2019 10,000,000 10,687,500 ______________ Total 40,872,500 _____________________________________________________________________________________________________________________________ Airlines (1.6%) AMR 9.50 2001 4,000,000 4,185,000 9.75 2000 7,400,000 7,779,250 9.80 2021 10,000,000 10,175,000 Delta Air Lines 10.125 2010 10,000,000 10,262,500 10.375 2022 3,700,000 3,861,875 ______________ Total 36,263,625 _____________________________________________________________________________________________________________________________ Automotive & related (0.3%) Exide 10.75 2002 6,000,000 6,075,000 _____________________________________________________________________________________________________________________________ Beverages & tobacco (0.6%) Dr. Pepper/Seven-Up Zero Coupon 11.50 1997 4,929,000 (g) 4,158,844 RJR Nabisco 7.625 2003 5,000,000 4,561,000 Sr Nts 8.75 2004 5,000,000 4,887,500 ______________ Total 13,607,344 _____________________________________________________________________________________________________________________________ Building materials (1.8%) Building Material Zero Coupon 11.75 2004 6,000,000 (g) 3,240,000 Emhart SF Deb 9.25 2016 6,025,000 5,558,063 Nortek Sr Sub Nts 9.875 2004 5,000,000 4,575,000 Owens-Corning Fiberglas 9.375 2012 4,900,000 5,187,875 Pulte Sr Nts 7.00 2003 7,700,000 6,968,500 Schuller Intl Group Sr Nts 10.875 2004 7,500,000 7,921,875 Southdown Sr Sub Nts 14.00 2001 4,000,000 4,530,000 Toll Cv 4.75 2004 2,500,000 2,025,000 ______________ Total 40,006,313 _____________________________________________________________________________________________________________________________ Chemicals (1.2%) General Chemical Sr Sub Nts 9.25 2003 7,000,000 6,755,000 Goodrich (BF) 9.625 2001 7,000,000 7,577,500 Huntsman 1st Mtge 11.00 2004 5,750,000 6,109,375 Rexene Sr Nts 11.75 2004 5,000,000 5,250,000 ______________ Total 25,691,875 _____________________________________________________________________________________________________________________________ Communications equipment (0.6%) CenCall Communications Zero Coupon 16.49 1999 10,000,000 (g) 3,887,500 Comcast Cellular Zero Coupon 9.45 2000 12,500,000 (g) 9,062,500 ______________ Total 12,950,000 _____________________________________________________________________________________________________________________________ Computers & office equipment (0.4%) Conner Peripherals Cv 6.50 2002 5,000,000 3,750,000 Data General SF Deb 8.375 2002 4,700,000 4,112,500 ______________ Total 7,862,500 _____________________________________________________________________________________________________________________________ Electronics (0.5%) Berg Electronics 11.375 2003 5,000,000 5,150,000 Reliance Electric 6.80 2003 6,000,000 5,670,000 ______________ Total 10,820,000 _____________________________________________________________________________________________________________________________ Energy (2.5%) Atlantic Richfield 9.125 2011 9,000,000 9,787,500 Cross Timbers Oil Cv 5.25 2003 700,000 556,500 Oryx Energy 9.50 1999 4,000,000 3,950,000 PDV Amer 7.875 2003 10,000,000 7,800,000 Texaco Capital Gtd Deb 8.625 2032 10,000,000 10,600,000 Triton Energy Zero Coupon 9.75 1996 5,000,000 (g) 4,025,000 USX 9.375 2022 17,500,000 17,937,500 ______________ Total 54,656,500 _____________________________________________________________________________________________________________________________ Energy equipment & services (0.4%) McDermott 9.375 2002 4,000,000 4,330,000 OPI Intl Gtd Sr Nts 12.875 2002 5,000,000 5,568,750 ______________ Total 9,898,750 _____________________________________________________________________________________________________________________________ Food (0.3%) Specialty Foods Sr Nt 10.25 2001 7,500,000 (e) 7,218,750 _____________________________________________________________________________________________________________________________ Health care (0.5%) Healthtrust Sub Deb 8.75 2005 4,000,000 4,040,000 Sub Nts 10.75 2002 7,000,000 7,630,000 ______________ Total 11,670,000 _____________________________________________________________________________________________________________________________ Health care services (1.2%) Amer Medical Intl Sr Nts 11.00 2000 7,000,000 7,455,000 Charter Medical Sr Sub Nts 11.25 2004 5,000,000 5,275,000 Foundation Health Sr Nts 7.75 2003 5,650,000 5,445,187 Hillhaven Sr Sub Nts 10.125 2001 4,000,000 4,080,000 Natl Medical Enterprises Sr Sub Nts 10.125 2005 4,000,000 4,090,000 ______________ Total 26,345,187 _____________________________________________________________________________________________________________________________ Industrial equipment & services (0.2%) Mascotech Cv 4.50 2003 5,000,000 3,500,000 _____________________________________________________________________________________________________________________________ Leisure time & entertainment (2.0%) Bally's Grand 1st Mtge 10.375 2003 7,000,000 6,580,000 Bally's Park Place Funding 1st Mtge 9.25 2004 5,000,000 4,450,000 Caesars World Sr Sub Nts 8.875 2002 6,000,000 6,045,000 Disney (Walt) Sr Deb 7.55 2093 10,000,000 8,925,000 GB Property Funding 1st Mtge 10.875 2004 1,900,000 1,638,750 Kloster Cruise Sr Secured Nts 13.00 2003 7,000,000 5,460,000 MGM Grand Hotel Finance 1st Mtge 11.75 1999 10,000,000 10,725,000 ______________ Total 43,823,750 _____________________________________________________________________________________________________________________________ Media (4.5%) Ackerley Communication Sr Secured Nts 10.75 2003 4,000,000 (e) 4,000,000 Adelphia Communications Sr Deb 11.875 2004 4,000,000 3,700,000 Sr Nts 12.50 2002 3,000,000 2,895,000 Amer Media Operations 11.625 2004 5,000,000 5,300,000 Cablevision Systems Sr Sub Deb 10.75 2004 4,000,000 4,185,000 Continental Cablevision Sr Deb 8.875 2005 5,000,000 4,750,000 News Amer Holdings 8.875 2023 17,000,000 16,957,500 Outdoor Systems Sr Nts 10.75 2003 6,000,000 5,452,500 Panamsat Sr Nts 9.75 2000 3,000,000 2,947,500 Plitt Theatres 10.875 2004 2,000,000 1,920,000 Robin Media Group 11.125 1997 5,000,000 4,906,250 Tele-Communications Sr Deb 9.80 2012 8,000,000 8,410,000 Time Warner Zero Coupon Cv 6.59 2012 6,650,000 (g) 2,094,750 Time Warner Entertainment 8.375 2003 25,000,000 22,250,000 Turner Broadcasting Sr Nts 8.375 2013 6,000,000 5,077,500 Viacom Intl 8.00 2006 5,000,000 4,487,500 ______________ Total 99,333,500 _____________________________________________________________________________________________________________________________ Metals (0.5%) Magma Copper Sr Sub Nts 12.00 2001 10,000,000 10,800,000 _____________________________________________________________________________________________________________________________ Multi-industry conglomerates (1.1%) Boc Group Sr Nts 8.73 1996 6,000,000 (e) 6,081,600 Coltec Inds Sr Nts 9.75 2000 5,000,000 5,025,000 Mark IV Inds Sr Sub Nts 8.75 2003 8,000,000 7,640,000 Talley Inds Zero Coupon Sr Disc Deb 12.25 1998 1,500,000 (g) 840,000 Talley Mfg & Technology Sr Nts 10.75 2003 4,000,000 3,660,000 ______________ Total 23,246,600 _____________________________________________________________________________________________________________________________ Paper & packaging (4.9%) Container Corp Amer Sr Nts 9.75 2003 5,000,000 4,887,500 Sr Nts 10.75 2002 3,000,000 3,067,500 Crown Packaging Zero Coupon Sr Sub Nts 12.33 2000 5,000,000 (g) 2,475,000 Federal Paper Board 10.00 2011 10,000,000 11,162,500 Fort Howard 11.00 2002 9,366,182 9,647,168 Gaylord Container Sr Nts 11.50 2001 5,000,000 5,225,000 Intl Paper 5.125 2012 9,000,000 6,615,000 Owens-Illinois Sr Deb 11.00 2003 15,000,000 16,106,250 Plastic Containers Sr Secured Nts 10.75 2001 6,000,000 6,037,500 Pope & Talbot 8.375 2013 8,000,000 7,600,000 Riverwood Intl Sr Nts 10.75 2000 7,000,000 7,315,000 Scotia Pacific Holding 7.95 2015 4,617,877 4,438,934 Silgan Sr Sub Nts 11.75 2002 7,000,000 7,201,250 Stone Container 1st Mtge 10.75 2002 4,000,000 4,160,000 Sr Nts 9.875 2001 3,500,000 3,430,000 Sr Nts 12.625 1998 3,000,000 3,172,500 Warren (SD) Sr Nts 12.00 2004 5,000,000 (e) 5,350,000 ______________ Total 107,891,102 _____________________________________________________________________________________________________________________________ Restaurants & lodging (0.4%) Hammons (John Q) Hotel 1st Mtge 8.875 2004 7,000,000 6,475,000 Trump Taj Mahal Pay-in-Kind -- 1999 5,081,340 3,607,751 ______________ Total 10,082,751 _____________________________________________________________________________________________________________________________ Retail (1.5%) Eye Care Center 12.00 2003 5,000,000 4,068,750 Food 4 Less Supermarkets Zero Coupon 12.44 1997 2,500,000 (g) 1,937,500 Musicland Group Sr Sub Nts 9.00 2003 4,000,000 3,450,000 Pathmark Stores Sr Sub Nts 9.625 2003 5,000,000 4,700,000 Penn Traffic Sr Sub Nts 9.625 2005 7,000,000 6,597,500 Purity Supreme 11.75 1999 4,000,000 3,440,000 Ralphs Grocery Sr Sub Nts 10.25 2002 5,000,000 4,912,500 Super Rite Foods Sr Sub Nts 10.625 2002 5,000,000 5,081,250 ______________ Total 34,187,500 _____________________________________________________________________________________________________________________________ Soaps & cosmetics (0.5%) Revlon Consumer Products Sr Sub Nts 10.50 2003 5,000,000 4,681,250 Sweetheart Cup Sr Sub Nts 9.625 2000 6,500,000 6,191,250 ______________ Total 10,872,500 _____________________________________________________________________________________________________________________________ Textiles & apparel (0.5%) Dominion Textiles Sr Nts 8.875 2003 7,000,000 6,597,500 WestPoint Stevens Sr Nts 8.75 2001 5,000,000 4,737,500 ______________ Total 11,335,000 _____________________________________________________________________________________________________________________________ Miscellaneous (0.5%) ECM Funding LP 11.918 2002 3,040,841 (i) 3,344,925 EIP Funding 10.25 2012 4,000,000 3,945,000 Nationwide Trust Credit Sensitive Nts 9.875 2025 3,500,000 (e) 3,626,875 ______________ Total 10,916,800 _____________________________________________________________________________________________________________________________ Utilities (14.7%) Electric (9.7%) Arizona Public Service 1st Mtge 8.00 2025 5,800,000 5,408,500 1st Mtge 8.75 2024 6,000,000 6,045,000 Sale Lease-Backed Obligation 8.00 2015 8,956,000 8,385,055 Cajun Electric Power Cooperative Mtge Trust 8.92 2019 5,000,000 5,325,000 Commonwealth Edison 1st Mtge 8.00 2023 10,000,000 9,225,000 1st Mtge 8.375 2023 10,000,000 9,575,000 1st Mtge 9.75 2020 10,000,000 10,537,500 First Palo Verde Funding 10.15 2016 6,000,000 5,910,000 10.30 2014 4,500,000 4,432,500 Long Island Lighting Gen Ref Mtge 9.625 2024 25,888,000 24,787,760 Gen Ref Mtge 9.75 2021 12,500,000 12,078,125 Louisiana Power & Light 1st Mtge 10.125 2020 3,500,000 3,819,375 Louisiana Power & Light Waterford Sale Lease-Backed Obligation 10.30 2005 1,998,000 2,072,925 10.67 2017 7,500,000 7,978,125 Midland Cogeneration Venture 11.75 2005 7,900,000 7,544,500 Sub Secured Sale Lease-Backed Obligation 10.33 2002 8,639,521 8,574,724 North Atlantic Energy 1st Mtge 9.05 2002 7,000,000 6,798,750 Pacific Gas & Electric 1st Ref 7.25 2026 10,000,000 8,787,500 RGS Funding Sale Lease-Backed Obligation 9.82 2022 9,939,223 10,846,177 San Diego Gas & Electric 1st Mtge 9.625 2020 10,800,000 12,177,000 Sithe Independant Funding 8.50 2007 7,500,000 7,509,375 9.00 2013 2,700,000 2,713,500 Texas-New Mexico Power 1st Mtge 9.25 2000 3,000,000 3,007,500 Secured Deb 10.75 2003 5,000,000 5,075,000 Texas Utilities Electric 1st Collateral Trust 9.75 2021 5,000,000 5,425,000 1st Mtge 7.625 2025 10,000,000 9,050,000 Secured Facility Bond 9.45 2005 4,185,000 4,566,881 Tucson Electric Power 1st Mtge 8.50 2009 7,000,000 (h) 6,265,000 ______________ Total 213,920,772 ______________________________________________________________________________________________________________________________ Gas (2.6%) Coastal Sr Deb 10.25 2004 13,000,000 14,495,000 Equitable Resources 7.50 1999 5,000,000 5,006,250 Questar Pipeline 9.375 2021 5,000,000 5,475,000 Southern California Gas 1st Mtge 7.375 2023 6,900,000 6,227,250 Southwest Gas 9.75 2002 7,900,000 8,532,000 Tenneco 9.00 2012 9,000,000 9,517,500 Tennessee Gas Pipeline 6.00 2011 3,000,000 2,302,500 Transco Energy 9.875 2020 4,800,000 (h) 5,394,000 ______________ Total 56,949,500 _____________________________________________________________________________________________________________________________ Telephone & other (2.4%) Ameritech Capital Funding Gtd Deb 9.10 2016 12,000,000 12,990,000 GTE 10.25 2020 7,000,000 7,857,500 New York Tel 9.375 2031 15,000,000 16,068,750 Pacific Bell 6.625 2034 10,000,000 8,100,000 7.375 2043 10,000,000 8,900,000 ______________ Total 53,916,250 _____________________________________________________________________________________________________________________________ Foreign (13.3%)(j) ABN Amro (U.S. Dollar) 7.75 2023 9,000,000 8,415,000 Aegon Euro (U.S. Dollar) Cv 4.75 2004 1,775,000 1,899,250 Agnico Eagle Mines (U.S. Dollar) Cv 3.50 2004 2,900,000 1,986,500 Austria Republic Euro (U.S. Dollar) 10.00 1998 5,000,000 5,338,850 Avenor (U.S. Dollar) 9.375 2004 3,000,000 2,947,500 Bacnotan Consolidated Inds (U.S. Dollar) Cv 5.50 2004 2,500,000 (e) 2,225,000 Banca Italy N.Y. (U.S. Dollar) 8.25 2007 6,200,000 6,153,500 Banco Nacional de Comercia (U.S. Dollar) 7.25 2004 9,000,000 5,220,000 Brazil C Bonds (U.S. Dollar) 4.00 2014 13,219,720 5,370,511 Carter Holt Harvey (U.S. Dollar) 8.875 2004 6,500,000 6,808,750 Celcaribe (U.S. Dollar) Zero Coupon 14.71 2004 6,120,000 (e,g) 4,488,900 Centragas Euro (U.S. Dollar) 10.65 2010 750,000 (e) 735,937 Dart Kraft Euro (U.S. Dollar) 7.75 1998 13,754,000 13,925,925 Doman Inds (U.S. Dollar) 8.75 2004 5,000,000 4,587,500 Ford Capital (U.S. Dollar) 9.50 2010 18,350,000 20,574,938 Govt of Australia (Australian Dollar) 7.50 2005 15,000,000 9,404,550 Grand Metropolitan (U.S. Dollar) Cv 6.50 2000 1,775,000 (e) 1,846,000 Groupe Videotron (U.S. Dollar) 10.625 2005 5,000,000 5,150,000 Guang Dong Enterprise (U.S. Dollar) 8.75 2003 10,000,000 (e) 9,175,000 Hanson Inds (British Pound) Cv 9.50 2006 1,600,000 2,597,744 Helsinki City (U.S. Dollar) Sr Nts 9.25 2007 4,900,000 (i) 4,906,125 Hydro-Quebec Euro (Canadian Dollar) 10.875 2001 12,500,000 9,700,000 Indorayon (U.S. Dollar) Sr Nts 9.125 2000 4,000,000 3,280,000 Korea Electric Power (U.S. Dollar) 6.375 2003 3,100,000 2,724,125 (U.S. Dollar) 7.75 2013 4,000,000 3,595,000 Legrand (U.S. Dollar) 8.50 2025 7,000,000 7,043,750 Methanex (U.S. Dollar) 8.875 2001 6,000,000 6,180,000 Mexican/United States Govt Euro (U.S. Dollar) 6.25 2019 3,000,000 1,470,000 (U.S. Dollar) 6.77 2019 3,000,000 1,860,000 Petroleos Mexicanos (U.S. Dollar) 8.625 2023 5,000,000 3,125,000 Philippine Long Distance Telephone (U.S. Dollar) 10.625 2004 2,500,000 2,425,000 Poland Discount (U.S. Dollar) 6.812 2024 5,750,000 (e) 3,834,531 Poland Euro (U.S. Dollar) 3.25 2014 6,000,000 (f) 2,400,000 Province of Quebec (U.S. Dollar) 11.00 2015 16,000,000 18,300,000 PT Indah Kiat Pulp & Paper (U.S. Dollar) 11.875 2002 4,000,000 3,940,000 Qantas Air (U.S. Dollar) 7.50 2003 10,000,000 (e) 9,400,000 Republic of Argentina (U.S. Dollar) 4.25 2023 15,000,000 5,943,750 Republic of Brazil (U.S. Dollar) 6.75 2012 15,800,000 7,900,000 Republic of Brazil Euro (U.S. Dollar) 4.00 2024 16,000,000 6,180,000 Republic of Columbia (U.S. Dollar) 7.25 2004 9,750,000 8,165,625 Roche Holdings (U.S. Dollar) 2.75 2000 15,000,000 12,009,300 Rogers Cable System (Canadian Dollar) 7.01 2014 3,700,000 2,163,975 Rogers Cantel Mobile (U.S. Dollar) Sr Sec Gtd Nts 10.75 2001 8,000,000 8,240,000 Scotland Bank (U.S. Dollar) 8.80 2004 17,000,000 (e) 17,637,500 Tarkett Intl (U.S. Dollar) 9.00 2002 5,000,000 4,725,000 Tjiwi Kimia (U.S. Dollar) 13.25 2001 5,000,000 5,075,000 United Engineers Malaysia (U.S. Dollar) Cv 2.00 2004 3,750,000 (e) 3,740,625 WMC Finance (U.S. Dollar) 7.25 2013 10,000,000 8,800,000 ______________ Total 293,615,661 _____________________________________________________________________________________________________________________________ Total bonds (Cost: $2,003,166,379) $1,977,153,305 _____________________________________________________________________________________________________________________________
Preferred stocks and other (1.7%) _____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ ABN Amro Holdings 6% Cv 68,500 $ 2,419,900 Capital Gaming Warrants 25,000 15,000 Celcaribe 528,450 (e) 686,985 Crown Package Warrants 5,000 212,500 EUA Power Contingent Interest Certificates 5,000 (h,k) -- Envirodyne Common 242,372 (h) 1,014,933 Eye Care Center Warrants 5,000 25,000 First Chicago 2.875% Cm Cv 75,000 3,862,500 First Nationwide Bank 11.50% Cm 50,000 5,000,000 Foodmaker Warrants 5,000 62,500 Great Bay Power Common 75,552 (h) 604,416 Natl Health Investors 8.50% Cv 60,000 1,380,000 Pittston Minerals Group Cv 40,000 (e,l) 1,560,000 Property Tr Amer 1.75% Cv 75,000 1,706,250 Public Service of New Hampshire 10.60% Cm 240,500 6,137,560 Pullman Common Series B 182,094 1,456,752 Purity Supreme Warrants 13,862 (i) 277 Service 3.125% Cm Cv 70,000 3,920,000 Sonoco Products 2.25% Cv 69,400 3,626,150 Southdown Warrants 40,000 120,000 Supermarket General $3.52 Pay-in-Kind Cv 120,972 2,661,384 Thermadyne Holdings Common 6,693 97,049 Thermadyne Inds Common 120,000 (k) -- Triangle Wire Cable Common 211,111 844,444 Webcraft Technology Common 32,502 330 WestFed Holdings Non-Voting Common 13,019 (h,k) -- Pay-in-Kind Cm Sr 42,753 (h,i,k) -- ____________________________________________________________________________________________________________________________ Total preferred stocks and other (Cost: $53,293,142) $ 37,413,930 _____________________________________________________________________________________________________________________________ /TABLE PAGE
Short-term securities (9.5%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity _____________________________________________________________________________________________________________________________ U.S. government agencies (0.3%) Federal Home Loan Mtge Corp Disc Note 03-27-95 5.90% $6,300,000 $ 6,273,291 Federal Natl Mtge Assn Disc Note 03-20-95 5.88 1,600,000 1,595,060 ______________ Total 7,868,351 _____________________________________________________________________________________________________________________________ Commercial paper (9.2%) Amgen 03-10-95 5.88 3,000,000 2,995,628 03-17-95 6.01 6,600,000 6,582,488 Aon 03-15-95 6.01 3,400,000 3,392,093 AT&T Capital 03-21-95 6.05 8,300,000 8,272,333 Avco Financial Services 03-02-95 5.88 8,000,000 7,998,700 BBV Finance (Delaware) 04-04-95 6.33 2,700,000 2,683,307 Cargill 03-01-95 5.91 4,300,000 4,300,000 03-06-95 6.06 4,100,000 4,095,390 Ciesco LP 04-05-95 6.00 8,000,000 7,953,645 CIT Group Holdings 03-15-95 6.01 4,500,000 4,489,553 04-10-95 6.08 5,000,000 4,962,818 04-21-95 6.06 7,600,000 7,532,058 Commerzbank U.S. Finance 04-06-95 6.03 2,400,000 2,385,624 Consolidated Rail 03-16-95 6.02 3,700,000 (l) 3,690,765 04-28-95 6.04 4,200,000 (l) 4,159,535 Corporate Asset Funding 03-16-95 5.96 3,600,000 3,591,105 03-20-95 6.13 11,000,000 10,959,256 CPC Intl 03-13-95 6.04 2,100,000 (l) 2,094,897 04-18-95 6.09 8,000,000 (l) 7,932,060 Fleet Funding 03-21-95 6.06 4,800,000 (l) 4,784,000 Gannett 03-07-95 6.04 4,300,000 (l) 4,294,932 General Electric Capital Services 03-06-95 6.10 5,400,000 5,394,529 Kellogg 03-30-95 6.00 3,300,000 3,284,130 Mobile Australia Finance (Delaware) 03-17-95 6.15 2,400,000 (l) 2,392,601 Natl Australia Funding (Delaware) 03-17-95 5.98 12,300,000 12,267,473 Paribas Finance 03-14-95 5.98 6,800,000 6,785,389 Penney (JC) Funding 03-17-95 6.01 1,100,000 1,097,076 PepsiCo 03-20-95 6.01 6,400,000 6,379,801 Pitney Bowes Credit 04-17-95 6.11 7,500,000 7,435,827 Sandoz 03-03-95 6.06 600,000 599,799 04-04-95 6.02 8,900,000 8,849,735 Siemens 03-06-95 6.26 3,600,000 3,595,772 03-21-95 5.98 4,600,000 4,584,794 Southwestern Bell Capital 05-19-95 6.15 6,500,000 (l) 6,410,156 Sysco 03-22-95 6.01 5,200,000 (l) 5,199,835 Toyota Motor Credit 04-11-95 6.06 6,000,000 5,959,000 U S WEST Communications 04-10-95 6.06 5,000,000 4,963,482 04-13-95 6.08 8,000,000 7,942,476 ______________ Total 202,292,062 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $210,177,310) $ 210,160,413 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $2,266,636,831)(n) $2,224,727,648 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed is the rate in effect on Feb. 28, 1995. (c) Security is partially or fully on loan. See Note 5 to the financial statements. (d) This security is a collateralized mortgage obligation that pays no interest or principal during its initial accrual period until payment of a previous series within the trust have been paid off. Interest is accrued at an effective yield; similar to a zero coupon bond. (e) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board of directors. (f) Interest rate varies to reflect current market conditions; rate shown is the effective rate on Feb. 28, 1995. (g) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (h) Presently non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (i) Identifies issues considered to be illiquid (see Note 4 to the financial statements). Information concerning such security holdings at Feb. 28, 1995, is as follows: Acquisition Security date Cost _______________________________________________________________________________________________ ECM Funding LP 11.918% 2002 04-13-92 $3,040,841 Helsinki City Sr Nts 9.25% 2007 02-07-95 4,900,000 Purity Supreme Warrants 07-29-92 -- WestFed Holdings Pay-in-Kind Cm Sr 03-20-92 10,755 Pay-in-Kind Cm Sr 06-19-92 10,950 Pay-in-Kind Cm Sr 09-15-92 7,440 Pay-in-Kind Cm Sr 12-18-92 7,580 Pay-in-Kind Cm Sr 03-08-93 7,720 Pay-in-Kind Cm Sr 06-11-93 2,358 (j) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. (k) Presently negligible market value. (l) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board of directors. (m) At Feb. 28, 1995, the cost of securities for federal income tax purposes was approximately $2,264,629,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 50,997,000 Unrealized depreciation (90,898,000) _______________________________________________________________________________________ Net unrealized depreciation $(39,901,000) _______________________________________________________________________________________ /TABLE PAGE Directors and officers Directors and officers of the fund _____________________________________________________________________ President and interested director William R. Pearce President of all funds in the IDS MUTUAL FUND GROUP. _____________________________________________________________________ Independent directors Lynne V. Cheney Distinguished fellow, American Enterprise Institute for Public Policy Research. Robert F. Froehlke Former president of all funds in the IDS MUTUAL FUND GROUP. Heinz F. Hutter Former president and chief operating officer, Cargill, Inc. Anne P. Jones Attorney and telecommunications consultant. Donald M. Kendall Former chairman and chief executive officer, PepsiCo, Inc. Melvin R. Laird Senior counsellor for national and international affairs, The Reader's Digest Association, Inc. Lewis W. Lehr Former chairman and chief executive officer, Minnesota Mining and Manufacturing Company (3M). Edson W. Spencer Former chairman and chief executive officer, Honeywell, Inc. Wheelock Whitney Chairman, Whitney Management Company. C. Angus Wurtele Chairman of the board and chief executive officer, The Valspar Corporation. _____________________________________________________________________ Interested directors who are officers and/or employees of American Express Financial Corporation. William H. Dudley Exective vice president, American Express Financial Corporation. David R. Hubers President and chief executive officer, American Express Fianacial Corporation. PAGE John R. Thomas Senior vice president, American Express Financial Corporation. _____________________________________________________________________ Other officer Leslie L. Ogg Vice president of all funds in the IDS MUTUAL FUND GROUP and general counsel and treasurer of the publicly offered funds. PAGE IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposit (CDs) and other bank securities. (icon of) piggy bank IDS Tax-Free Money Fund Invests primarily in short-term bonds and notes issued by state and local governments to seek high current income exempt from federal income taxes. (icon of) shield with piggy bank enclosed Income investments The funds in this group invest their assets primarily in corporate bonds or government securities to seek interest income. Secondary objective is capital growth. Risk varies by bond quality. IDS Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests mainly in long-term, high-yielding corporate fixed-income securities in the lower rated, higher risk bond categories to seek high current income. Secondary objective is capital growth. (icon of) cornucopia PAGE IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column IDS Selective Fund Invests in high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests primarily in securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) federal building Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed PAGE IDS State Tax-Exempt Funds (CA, MA, MI, MN, NY, OH) Invests primarily in high- and medium-grade municipal securities to provide income to residents of each respective state that is exempt from federal, state and local income taxes. (New York is the only state that is exempt at the local level.) (icon of) shield with U.S. enclosed IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column IDS Insured Tax-Exempt Fund Invests primarily in municipal securities that are insured as to the timely payment of principal and interest. The insurance feature minimizes credit risk of the fund but does not guarantee the market value of the fund's shares. (icon of) shield with eagle head Growth and income investments These funds focus on securities of medium to large, well-established companies that offer long-term growth of capital and reasonable income from dividends and interest. Moderate risk. IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Managed Retirement Fund Invests in a combination of common stocks, fixed-income investments and money market securities to seek a maximum total return through a combination of growth of capital and current income. (icon of) bird in a nest PAGE IDS Equity Select Fund Invests primarily in a combination of moderate growth stocks, higher-yielding equities and bonds. Seeks growth of capital and income. (icon of) three apple trees IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by our research analysts as the best from each industry represented on the index. Offers potential for long-term growth as well as dividend income. (icon of) ribbon IDS Stock Fund Invests in common stocks of companies representing many sectors of the economy. Seeks current income and growth of capital. (icon of) building with columns IDS Equity Value Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) three growing flowers IDS Utilities Income Fund Invests primarily in the stocks of public utility companies to seek high current income and growth of income and capital with reduced volatility. (icon of) electrical cord IDS Diversified Equity Income Fund Invests primarily in high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) four puzzle pieces IDS Mutual Invests in a balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice PAGE Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Strategy Aggressive Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) flower IDS Global Growth Fund Invests in stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The fund frequently changes its industry mix. (icon of) dimension IDS Progressive Fund Invests primarily in undervalued common stocks. The fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star PAGE Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial planner or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. PAGE Quick telephone reference American Express Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchTone phones only), including current fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 AMERICAN EXPRESS FINANCIAL ADVISORS IDS Bond Fund IDS Tower 10 Minneapolis, MN 55440-0010 -----END PRIVACY-ENHANCED MESSAGE-----