IDS
Tax-Exempt
Bond Fund
1995 semiannual report
(icon of) sheild with Greek column
The goal of IDS Tax-Exempt Bond Fund, Inc. is to earn as much current
income exempt from federal income taxes as possible with only modest
risk to the shareholder's investment by investing primarily in investment
grade bonds and other debt securities.
Distributed by
American Express
Financial Advisors Inc.
(icon of) sheild with Greek column
Double-barreled
benefit
Most of the public facilities that we take for granted -- schools,
water and sewer systems, highways, government buildings -- are,
in effect, largely funded by loans from citizens. These loans
take the form of state and local government bonds (called
"municipals"), which are bought by investors, including Tax-Exempt
Bond Fund. The government gets the funding it needs, while
the bond-buyers, including fund shareholders, get ongoing
interest income. But there's another, bigger benefit with
municipals: Investors pay no federal taxes on the income
they generate and potentially no state taxes.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 19
Director and officers 28
IDS mutual funds 29
To our shareholders
(picture of)
William R. Pearce
President of the fund
(picture of)
Terry L. Seierstad
Portfolio manager
From the president
As I indicated in the fund's annual report, new agreements between the fund
and American Express Financial Corporation were approved by shareholders in
November 1994. The new agreements became effective when the fund began
offering multiple classes of shares on March 20, 1995.
The advantage of offering more than a single class of shares is that
investors may choose how they wish to pay sales charges. These charges
compensate your American Express financial advisor (formerly called your
IDS planner), who is committed to providing you with outstanding services.
Adding new classes of mutual fund shares does make the presentation of
financial information in this report more complex. However, we will
continue our effort to make the reports easier to read and understand.
Meanwhile, your American Express financial advisor is available to answer
your questions.
William R. Pearce
From the portfolio manager
What a difference six months can make.
In our previous report to shareholders, we had the unpleasant task of
recounting what a bad bond market we had experienced throughout almost all
of 1994. This time, though, we're glad to report that bonds, including
municipals, enjoyed a strong recovery during the past six months (December
1994 through May 1995) that resulted in a substantial gain for shareholders
of Class A IDS Tax-Exempt Bond Fund. The positive return included not only
the regular dividend but net asset value (NAV) appreciation as well.
At the start of the fiscal year last December, bonds were still
reeling from the almost-unabated rise in interest rates that began early in
1994. Because rising rates drive down the value of bonds, this fund, like
virtually all bond mutual funds, suffered an ongoing net asset value
erosion last year.
Rate decline begins
As if on cue for this report, long-term interest rates began declining near
the end of 1994. Just as higher rates depress bond values, falling rates
enhance them. By January, the bond market was on its way to a remarkable
rally that would include six straight months of positive performance.
Municipal bonds performed especially well during the winter, as healthy
demand and a relatively low supply of bonds complemented the beneficial
interest-rate trend. The pace of municipals' advance slowed in the spring,
however, as talk of tax reform in Washington tempered investors' enthusiasm
for tax-free bonds. One of the options under discussion is a flat tax,
which, if it were ever implemented, would make municipal bonds less
attractive. In any event, should true tax reform become a reality, we think
it's unlikely that any change would come about before 1997.
Longer maturity helps
Looking at the portfolio's structure, in contrast to last year the longer-
than-average maturity level we maintained in the portfolio added to the
fund's success in the past six months. (The longer the maturity, the
greater a bond's reaction to a change in interest rates.) As for changes,
we added some lower-rated -- though still investment grade -- bonds during
the period. Such bonds offer higher yields and helped us shore up the
dividend in the falling-interest-rate environment.
While we think it's improbable that the bond market will be able to match
its recent spectacular run-up over the rest of the year, we believe the
environment remains generally good for bonds. The key determinant is
economic growth, which has slowed down. If that continues, it should keep
inflation and, in turn, interest rates from increasing at a threatening
rate and eventually may even prompt a further decline. In such a scenario,
we would expect municipal bonds to remain productive.
Terry L. Seierstad
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1995 $ 3.94
Nov. 30, 1994 $ 3.54
Increase $ 0.40
Distributions
Dec. 1, 1994 - May 31, 1995
From income $ 0.11
From capital gains$ --
Total distributions$ 0.11
Total return** +14.3%**
Class B
March 20, 1995 - May 31, 1995
(All figures per share)
Net asset value (NAV)
May 31, 1995 $ 3.94
March 20, 1995* $ 3.88
Increase $ 0.06
Distributions
March 20, 1995* - May 31, 1995
From income $ 0.05
From capital gains$ --
Total distributions$ 0.05
Total return** +2.8%**
Class Y
March 20, 1995 - May 31, 1995
(All figures per share)
Net asset value (NAV)
May 31, 1995 $ 3.94
March 20, 1995* $ 3.88
Increase $ 0.06
Distributions
March 20, 1995* - May 31, 1995
From income $ 0.05
From capital gains$ --
Total distributions$ 0.05
Total return** +2.8%**
* Commencement of operations.
** The prospectus discusses the effects of the sales charge on the
various classes.
***The total return is a hypothetical investment in the fund with all
distributions reinvested.
<PAGE>
PAGE
<TABLE>
<CAPTION>
IDS Tax-Exempt Bond Fund, Inc.
Your fund's ten largest holdings
(Pie Chart)
The ten holdings listed here make up 18.35% of the fund's net assets
_____________________________________________________________________________________
Percent Value
(of fund's net assets)(as of May 31, 1995)
_____________________________________________________________________________________
<S> <C> <C>
San Antonio Texas Water Refunding Revenue Bonds
6.40% 2007 2.32% $26,866,000
Illinois Public Building Commission of Chicago Building
Revenue Bonds Board of Education of Chicago Series 1990A
6.50% 2018 2.17 25,092,595
Delaware County Pennsylvania Industrial Development
Authority Pollution Control Refunding Revenue Bonds
Philadelphia Electric Company
7.375% 2021 2.14 24,726,887
Georgia Municipal Electric Authority
Special Obligation Bonds Project #1
4th Crossover Series X
6.50% 2020 1.88 21,742,337
San Antonio Texas Electric & Gas Systems
Refunding Revenue Bonds Series 1989
6.50% 2012 1.81 20,981,600
Eastern North Carolina Municipal Power Agency System
Refunding Revenue Bonds Series 1989A
6.50% 2024 1.75 20,201,400
Connecticut State General Obligation Bonds Series 1992A
6.40% 2006 1.69 19,604,520
Washington Issaquah School District #411 King County
Unlimited Tax General Obligation Refunding Bonds 1992
6.375% 2008 1.56 18,002,997
Dormitory Authority New York City Court Facility Lease
Revenue Bonds Series 1993A
5.25% 2021 1.54 17,869,600
New York State Mortgage Agency Homeowner Mortgage
Revenue Bonds Series TT
7.50% 2015 1.49 17,220,600
</TABLE>
<PAGE>
PAGE Financial statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Tax-Exempt Bond Fund, Inc.
May 31, 1995
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $1,069,952,247) $1,171,586,229
Accrued interest receivable 23,252,426
Receivable for investment securities sold 10,016,476
_____________________________________________________________________________________________________________
Total assets 1,204,855,131
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 4,731,749
Dividends payable to shareholders 992,178
Payable for investment securities purchased 41,962,029
Accrued investment management services fee 98,787
Accrued distribution and service fee 39,312
Accrued transfer agency fee 10,011
Accrued administrative services fee 8,700
Other accrued expenses 89,874
_____________________________________________________________________________________________________________
Total liabilities 47,932,640
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,156,922,491
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;$ 2,937,510
Additional paid-in capital 1,113,088,705
Excess of distributions over net investment income (26,987)
Accumulated net realized loss (Notes 1 and 5) (60,710,719)
Unrealized appreciation 101,633,982
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock$1,156,922,491
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $1,152,406,340
Class B $ 4,507,435
Class Y $ 8,716
Net asset value per share of outstanding capital stock: Class A shares 292,604,454 $ 3.94
Class B shares 1,144,331 $ 3.94
Class Y shares 2,213 $ 3.94
See accompanying notes to financial statements.<PAGE>
PAGE
Financial statements
Statement of operations
IDS Tax-Exempt Bond Fund, Inc.
Six months ended May 31, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $ 35,615,054
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 2,739,242
Distribution fee
Class A 63,516
Class B 3,303
Transfer agency fee 267,907
Incremental transfer agency fee - Class B 32
Service fee
Class A 398,668
Class B 771
Administrative services fee 89,907
Compensation of directors 11,727
Compensation of officers 3,628
Custodian fees 18,557
Postage 24,699
Registration fees 19,895
Reports to shareholders 23,046
Audit fees 15,375
Administrative 6,730
Other 11,432
_____________________________________________________________________________________________________________
Total expenses 3,698,435
_____________________________________________________________________________________________________________
Investment income -- net 31,916,619
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security transactions (Note 3) (2,130,085)
Net realized loss on financial futures contracts (19,500,425)
Net realized gain on exercised option contracts written (Note 4) 622,500
______________________________________________________________________________________________________________
Net realized loss on investments (21,008,010)
Net change in unrealized appreciation or depreciation 137,905,514
_____________________________________________________________________________________________________________
Net gain on investments 116,897,504
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $148,814,123
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE Financial statements
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Tax-Exempt Bond Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions May 31, 1995 Nov. 30, 1994
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $ 31,916,619$ 69,996,726
Net realized loss on investments (21,008,010) (29,604,611)
Net change in unrealized appreciation or depreciation 137,905,514 (141,085,176)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations148,814,123(100,693,061)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (31,925,470) (69,995,559)
Class B (18,045) --
Class Y (91) --
Net realized gain
Class A -- (28,014,289)
_____________________________________________________________________________________________________________
Total distributions (31,943,606) (98,009,848)
_____________________________________________________________________________________________________________
Capital share transactions (Note 6)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 154,674,296 128,446,824
Class B shares 4,458,552 --
Class Y shares 8,506 --
Reinvestment of distributions at net asset value
Class A shares 21,193,766 70,563,152
Class B shares 15,169 --
Class Y shares 91 --
Payments for redemptions
Class A shares (194,695,521)(237,258,569)
Class B shares (Note 2) (29,311) --
Class Y shares (20) --
_____________________________________________________________________________________________________________
Decrease in net assets from capital share transactions (14,374,472)(38,248,593)
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets 102,496,045 (236,951,502)
Net assets at beginning of period 1,054,426,4461,291,377,948
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$(26,987) and $0) $1,156,922,491$1,054,426,446
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE
Notes to financial statements
IDS Tax-Exempt Bond Fund, Inc.
(Unaudited as to May 31, 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. The
fund offers Class A, Class B and Class Y shares. Class A shares are sold
with a front-end sales charge. Class B shares, which the fund began
offering on March 20, 1995, may be subject to a contingent deferred sales
charge. Class B shares automatically convert to Class A after eight
years. Class Y shares, which the fund also began offering on March 20,
1995, have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differ among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Significant accounting policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each business day. Securities
for which market quotations are not readily available are valued at fair
value according to methods selected in good faith by the board of
directors. Determination of fair value involves, among other things,
reference to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the valuation
date are valued at the market price or approximate market value based on
current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate
buying and selling of securities for investment purposes, the fund may buy
and sell put and call options and write covered call options on the
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. The fund may write over-the-counter options where the completion of
the obligation is dependent upon the credit standing of the other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
fund will realize a gain or loss upon expiration or closing of the option
transaction. When options on debt securities or futures are exercised, the
fund will realize a gain or loss. When other options are exercised, the
proceeds on sales for a written call option, the purchase cost for a
written put option or the cost of a security for a purchased put or call
option is adjusted by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the fund may buy and sell interest rate futures contracts. 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.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the fund
on a forward-commitment or when-issued basis can take place one month or
more after the transaction date. During this period, such securities are
subject to market fluctuations, and they may effect the fund's net assets
the same as owned securities. The fund designates cash or liquid high-
grade debt securities at least equal to the amount of its commitment. As
of May 31, 1995, the fund had entered into outstanding when-issued or
forward commitments of $13,400,238.
<PAGE>
Federal taxes
Since the fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of the deferral
of losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and
losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year
that the income or realized gains (losses) were recorded by the fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly,
are reinvested in additional shares of the fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with
the last income dividend of the calendar year.
<PAGE>
Other
Security transactions are accounted for on the date securities are
purchased or sold. Interest income, including level-yield amortization of
premium and discount, is accrued daily.
__________________________________________________________________________
2. Expenses and sales charges
Under terms of a prior agreement that ended March 19, 1995, the fund paid
American Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee was a percentage of
the fund's average daily net assets consisting of a group asset charge in
reducing percentages from 0.46% to 0.32% annually on the 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.
Also under the terms of a prior agreement, the fund paid 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 was reduced by earnings
on monies pending shareholder redemptions.
Effective March 20, 1995, when the fund began offering multiple classes of
shares, the fund entered into agreements with American Express Financial
Corporation for managing its portfolio, providing administrative services
and serving as transfer agent as follows: Under its Investment Management
Services Agreement, American Express Financial Corporation determines
which securities will be purchased, held or sold. The management fee is a
percentage of the fund's average daily net assets in reducing percentages
from 0.45% to 0.35% annually. Under an Administrative Services Agreement,
the fund pays American Express Financial Corporation for administration
and accounting services at a percentage of the fund's average daily net
assets in reducing percentages from 0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, American Express Financial
Corporation maintains shareholder accounts and records. The fund pays
American Express Financial Corporation an annual fee per shareholder
account for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services as follows: Under the Distribution Agreement,
the fund pays a distribution fee at an annual rate of 0.75% of the fund's
average daily net assets attributable to Class B shares for distribution-
related services.
<PAGE>
Under a Shareholder Service Agreement, the fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the fund's average daily net
assets attributable to Class A and Class B shares.
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 for distributing fund
shares were $796,220 for Class A and $152 for Class B for the six months
ended May 31, 1995.
The fund has a retirement plan for its independent directors. Upon
retirement, directors receive monthly payments equal to one-half of the
retainer fee for as many months as they served as directors up to 120
months. There are no death benefits. The plan is not funded but the fund
recognizes the cost of payments during the time the directors serve on the
board. The retirement plan expense amounted to $2,766 for the six months
ended May 31, 1995.
<PAGE>
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $223,595,889 and $229,365,681,
respectively, for the six months ended May 31, 1995. Realized gains and
losses are determined on an identified cost basis.
__________________________________________________________________________
4. Option contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended May 31, 1995
_______________________________________________
Calls
Contracts Premium
_______________________________________________
Balance Nov. 30, 1994 -- $ --
Opened 500 622,500
Exercised (500) (622,500)
_______________________________________________
Balance May 31, 1995 -- $ --
_______________________________________________
__________________________________________________________________________
5. Capital loss carryover
For federal income tax purposes, the fund has a capital loss carryover of
approximately $53,861,000 at May 31, 1995, that will expire in 2002 and
2003 if not offset by subsequent capital gains.
<PAGE>
6. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
________________________________________________________________________________________
Six months ended May 31, 1995Year ended
11/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 41,332,652 1,148,013 2,195 33,342,008
Issued for reinvested
distributions 5,564,779 3,879 23 17,804,910
Redeemed (51,911,403) (7,561) (5) (61,882,421)
_______________________________________________________________________________________
Net increase (decrease) (5,013,972)1,144,331 2,213(10,735,503)
_______________________________________________________________________________________
*Commencement of operations was March 20, 1995.
</TABLE>
<PAGE>
7. Financial highlights
<TABLE>
<CAPTION>
The table below shows certain important financial information for evaluating the fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changes*
1995** 1994 1993 1992 1991*** 1990
Classes
A B Y
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $3.54 $3.88 $3.88 $4.19$3.98 $3.93 $3.88 $3.98
beginning of period
Income from investment operations:
Net investment income .11 .05 .05 .23 .22 .22 .22 .26
Net gains (losses) .40 .06 .06 (.56) .23 .11 .05 (.01)
(both realized
and unrealized)
Total from investment .51 .11 .11 (.33) .45 .33 .27 .25
operations
Less distributions:
Dividends from net (.11) (.05)(.05) (.23) (.22) (.22) (.22) (.26)
investment income
Distributions from -- -- -- (.09) (.02) (.06) -- (.09)
realized gains
Total distributions (.11) (.05)(.05) (.32) (.24) (.28) (.22) (.35)
Net asset value, $3.94 $3.94 $3.94 $3.54$4.19 $3.98 $3.93 $3.88
end of period
Ratios/supplemental data
1995** 1994 1993 1992 1991*** 1990
Classes
A B Y
Net assets, end of period$1,152$5 $- $1,054$1,291$1,273$1,188$1,094
(in millions)
Ratio of expenses to .67%+1.52%+ .59%+ .61% .63% .64% .60%+ .61%
average daily net assets
Ratio of net income 5.77%+ 4.84%+ 6.62%+5.82%5.54%5.68%6.11%+6.61%
to average daily net assets
Portfolio turnover rate21% 21% 21% 66% 43% 63% 69% 112%
(excluding short-term
securities)
Total return+++ 14.3%++ 2.8% 2.8% (8.3%)11.7%8.7%8.3%+ 6.1%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended May 31, 1995 for Class A and commencement of operations
March 20, 1995 for Class B and Y (Unaudited).
***The fund's fiscal year-end was changed from Dec. 31 to Nov. 30, effective 1991.
+Adjusted to an annual basis.
++For the fiscal period ended May 31, 1995, the annualized total
return is 28.6%.
+++Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
PAGE
<TABLE>
<CAPTION>
Investments in securities
IDS Tax-Exempt Bond Fund, Inc. (Percentages represent value of
May 31, 1995 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Municipal bonds (95.9%)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b)(c) Coupon Maturity Principal Value(a)
rate amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Alaska (0.7%)
North Slope Borough General Obligation Bonds Series 1994B Zero Coupon
(CGIC Insured) 7.05 % 2004$ 3,000,000(d)$ 1,840,770
North Slope Borough General Obligation Bonds Series 1994B Zero Coupon
(CGIC Insured) 7.15 2005 3,000,000 (d) 1,734,180
State Housing Finance Veterans Mortgage Corporation Collateralized Bonds
Series 1990 7.50 2030 3,850,000 4,109,066
______________
Total 7,684,016
_____________________________________________________________________________________________________________________________
Arizona (2.7%)
Phoenix Industrial Development Authority Single Family Mortgage
Revenue Capital Appreciation Bonds Escrowed to Maturity Zero Coupon6.66201439,000,000(d)11,957,400
Phoenix Junior Lien Street & Highway User Refunding Revenue Bonds
Series 1992 6.25 201110,350,000 10,815,854
Tucson Street & Highway User Revenue Bonds Series 1991B6.25 2010 8,250,000 8,646,908
______________
Total 31,420,162
_____________________________________________________________________________________________________________________________
California (11.6%)
Brea Redevelopment Agency Tax Allocation Bonds (MBIA Insured)5.5020173,340,000 3,248,016
Garden Grove Agency Community Development Tax Allocation
Refunding Revenue Bonds 5.875 2023 3,230,000 3,069,760
Loma Linda University Medical Center Hospital Refunding Revenue Bonds
Series C (MBIA Insured) 5.375 202210,000,000 9,445,500
Los Angeles Community Redevelopment Agency Bunker Hill Tax Allocation
Refunding Bonds (FSA Insured) 5.60 2028 6,400,000 6,143,360
Los Angeles County Metropolitan Transportation Authority
Sales Tax Revenue Bonds Series B (AMBAC Insured) 5.25 2023 9,000,000 8,387,910
Oakland Redevelopment Agency Special Tax Assessment Bonds Inverse Floater7.66220196,000,000(f)6,015,000
Orange County Certificate or Participation Civic Center Facility
Capital Appreciation Refunding Bond Zero Coupon (AMBAC Insured)7.00201813,795,000(d)3,185,955
Sacramento Cogeneration Authority Revenue Bonds Proctor & Gamble
Series 1995 6.50 2014 5,000,000 5,083,350
San Diego County Certificates of Participation Capital Asset Leasing
Master Refunding Bonds Series 1993 Inverse Floater (AMBAC Insured)6.22201211,700,000(f) 11,495,250
San Diego Sewer Revenue Bonds Series A (AMBAC Insured) 5.25 2020 3,300,000 3,086,787
See accompanying notes to investments in securities.<PAGE>
San Francisco Bay Area Rapid Transit District Sales Tax Revenue Bonds
Series 1995 (FGIC Insured) 5.50 2020 2,000,000 (e) 1,939,060
San Francisco City & County Redevelopment Financing Authority
Tax Allocation Refunding Bonds Series B 5.25 202116,660,000 14,838,562
San Jose Redevelopment Agency Merged Area Tax Allocation Bonds
Series 1993 (MBIA Insured) 4.75 2024 9,000,000 7,654,950
San Marcos Public Facility Authority Tax Allocation
Refunding Revenue Bonds Series A (CGIC Insured) 5.50 202310,000,000 9,571,800
Signal Hills Redevelopment Agency Tax Allocation
Refunding Revenue Bonds (MBIA Insured) 5.25 2023 5,575,000 5,194,283
Southern California Public Power Authority Revenue Bonds
Mead Adelanto Series A (AMBAC Insured) 4.875 2020 6,590,000 5,773,367
State Public Works Board California Community Colleges Lease
Revenue Bonds Series 1994B 7.00 2019 3,900,000 4,258,761
State Public Works Board University of California Lease
Refunding Revenue Bonds Series A (AMBAC Insured) 5.00 2023 6,000,000 5,176,440
State Public Works Board University of California Lease
Refunding Revenue Bonds Series A (AMBAC Insured) 5.50 2014 7,275,000 6,889,498
State Public Works Board University of California Lease
Revenue Bonds Series B 5.25 2020 3,000,000 2,703,060
Statewide Community Development Authority Certificate of Participation
St. Joseph Health System Revenue Bonds (Secondary AMBAC Insured)5.5020232,500,0002,406,525
Statewide Community Development Authority Insurance
Certificate of Participation Childrens Hospital of Los Angeles
Revenue Bonds (MBIA Insured) 4.75 2021 5,250,000 4,501,928
Ukaih Unified School District Building Mendocino County Certificate of
Participation Series 1993 6.00 2010 3,790,000 3,679,105
______________
Total 133,748,227
_____________________________________________________________________________________________________________________________
Connecticut (1.7%)
State General Obligation Bonds Series 1992A 6.40 200618,000,000 19,604,520
_____________________________________________________________________________________________________________________________
Delaware (0.2%)
State University Revenue Bonds Series 1989 6.00 2014 2,000,000 2,022,260
_____________________________________________________________________________________________________________________________
District of Columbia (2.1%)
General Obligation Bonds Series 1994B Zero Coupon (MBIA Insured)6.642013-1450,360,000(d)16,212,079
General Obligation Bonds Series 1994B Zero Coupon (MBIA Insured)6.68201222,070,000(d)7,855,154
______________
Total 24,067,233
_____________________________________________________________________________________________________________________________
Florida (5.2%)
Duvall County Housing Authority Single Family Mortgage
Refunding Revenue Bonds Series 1991 (FGIC Insured) 7.35 2024 3,430,000 3,685,055
Jacksonville Electric Revenue Bonds St. John's River Series A6.0020166,900,000 6,928,773
Jacksonville Electric Revenue Bonds St. John's River 2nd Series 19866.50202010,000,00010,068,800
Jacksonville Excise Taxes Refunding Revenue Bonds Series 1992
(AMBAC Insured) 6.50 2008 5,000,000 5,489,350
Lakeland Electric & Water Refunding Revenue Bonds Series 1986
(AMBAC Insured) 6.00 2012 5,500,000 5,522,440
Miami Health Facility Authority Revenue Bonds Inverse Floater
(AMBAC Insured) 6.15 2015 7,000,000 (f) 6,151,250
Orange County Florida Health Facility Authority Hospital
Refunding Revenue Bonds Adventist Health System Sunbelt Obligation
Group Series 1995 5.25 2020 2,750,000 (e) 2,560,305
St. John's River Water Management District Land Acquisition Revenue Bonds
Series 1989 (AMBAC Insured) 6.00 2009 7,000,000 7,151,690
State Board of Education Administration Capital Outlay Public Education
Bonds Series 1991C 6.50 2008-0911,225,000 12,164,544
______________
Total 59,722,207
_____________________________________________________________________________________________________________________________
Georgia (2.7%)
Municipal Electric Authority Refunding Revenue Bonds
Series EE Project #1 Bonds (AMBAC Insured) 5.50 2026 4,000,000 3,878,920
Municipal Electric Authority Refunding Revenue Bonds
Series 1989T 6.50 2025 5,000,000 5,109,850
Municipal Electric Authority Special Obligation Bonds Project #1
4th Crossover Series X (Secondary MBIA) 6.50 202019,550,000 21,742,337
______________
Total 30,731,107
_____________________________________________________________________________________________________________________________
Hawaii (1.5%)
City & County of Honolulu General Obligation Bonds Series 1992A6.3020065,880,000 6,407,730
City & County of Honolulu Refunding & Improvement General Obligation Bonds
Series 1993B Inverse Floater 6.32 2006 5,300,000 (f) 5,406,000
City & County of Honolulu Refunding & Improvement General Obligation Bonds
Series 1993B Inverse Floater 6.35 2008 5,300,000 (f) 5,366,250
______________
Total 17,179,980
_____________________________________________________________________________________________________________________________
Illinois (7.5%)
Cook & Will Counties TWP High School District #206
Capital Appreciation Bonds Series 1994C Zero Coupon (AMBAC Insured)6.5520102,605,000(d)1,041,948
Cook County School District #170 Chicago Heights Capital Appreciation Bonds
Series 1994C Zero Coupon (AMBAC Insured) 6.40 2008 2,155,000 (d) 995,933
Cook County School District #170 Chicago Heights Capital Appreciation Bonds
Series 1994C Zero Coupon (AMBAC Insured) 6.50 2009 2,155,000 (d) 927,424
Cook County School District #170 Chicago Heights Capital Appreciation Bonds
Series 1994C Zero Coupon (AMBAC Insured) 6.50 2010 2,155,000 (d) 861,957
Cook County Unlimited Tax General Obligation Bonds Series 19896.5020095,800,000 6,026,780
Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A 6.00 2019 3,055,000 2,871,181
Health Facilities Authority Refunding Revenue Bonds Masonic Medical Center
Series 1993 5.50 2019 5,000,000 4,448,100
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Hospital Series 1993 Inverse Floater (MBIA Insured)7.1220145,000,000(f)4,812,500
Metropolitan Pier & Exposition Authority Dedicated State Tax
Capital Appreciation Revenue Bonds McCormick Place Expansion
Series A Zero Coupon (FGIC Insured) 6.55 2021 5,000,000 (d) 1,009,450
Metropolitan Pier & Exposition Authority Dedicated State Tax
Capital Appreciation Revenue Bonds McCormick Place Expansion
Series A Zero Coupon (FGIC Insured) 6.48 202212,500,000 (d) 2,696,625
Metropolitan Pier & Exposition Authority McCormick Place Expansion Bonds
Series A Zero Coupon (FGIC Insured) 6.43 2017 8,250,000 (d) 2,161,830
Metropolitan Pier & Exposition Authority McCormick Place Expansion Bonds
Series A Zero Coupon (FGIC Insured) 6.50 2013 6,500,000 (d) 2,202,525
Metropolitan Pier & Exposition Authority McCormick Place Expansion Bonds
Series A Zero Coupon (FGIC Insured) 6.64 201011,000,000 (d) 4,521,440
Metropolitan Pier & Exposition Authority McCormick Place Expansion Bonds
Series A Zero Coupon (FGIC Insured) 6.72 2016 9,000,000 (d) 2,511,180
Northwest Suburban Joint Action Water Supply System Refunding Revenue Bonds
(MBIA Insured) 5.75 2012 4,815,000 4,815,144
Public Building Commission of Chicago Building Revenue Bonds
Board of Education of Chicago Series 1990A Escrowed to Maturity
(MBIA Insured) 6.50 201823,500,000 25,092,595
Public Building Commission of Chicago Building Revenue Bonds
State Development Finance Authority Power Refunding Bonds Series 1991A7.375202110,000,00010,847,500
State Development Finance Authority Regency Park Retirement Housing
Revenue Bonds Series 1991B Zero Coupon Escrowed to Maturity6.50202510,000,000(d)1,204,900
State Health Facility Authority Revenue Bonds Sisters Hospital Services
Series 1991B Inverse Floater 8.94 2015 5,200,000 (f) 5,830,500
State Health Facility Authority Retirement Housing Revenue Bonds
Zero Coupon 7.75 202013,745,000 (d) 2,363,453
______________
Total 87,242,965
_____________________________________________________________________________________________________________________________
Indiana (2.1%)
Municipal Power Agency Power Supply System Refunding Revenue Bonds
Series 1989A (AMBAC Insured) 6.50 2016 8,800,000 9,532,160
Seymour Economic Development Revenue Bonds Union Camp Series 19926.2520122,870,0002,964,480
Transportation Finance Authority Highway Revenue Bonds Series 1990A7.25201510,000,00011,956,700
______________
Total 24,453,340
_____________________________________________________________________________________________________________________________
Iowa (0.4%)
State Finance Authority Single Family Mortgage-Backed Securities
Program Bonds Series 1991A 7.25 2016 4,175,000 4,455,560
_____________________________________________________________________________________________________________________________
Kentucky (0.4%)
Jefferson County Pollution Control Revenue Bonds Louisville Gas & Electric
Series 1985A 9.25 2015 1,750,000 1,792,035
Owensboro Electric Light & Power Refunding Revenue Bonds Series B
Zero Coupon (AMBAC Insured) 6.65 2015 9,125,000 (d) 2,850,741
______________
Total 4,642,776
_____________________________________________________________________________________________________________________________
Louisiana (2.9%)
Industrial Development Board of Bastrop Percent Pollution Control
Refunding Revenue Bonds International Paper Company Series 1992A6.9020076,875,0007,363,125
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.35 201412,270,000 (d) 3,931,922
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.36 201516,000,000 (d) 4,804,480
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.62 2012 6,250,000 (d) 2,276,937
New Orleans General Obligation Bonds Series 1986 Escrowed to Maturity
(AMBAC Insured) 6.00 2004 4,685,000 5,002,877
New Orleans General Obligation Refunding Bonds Series 1991 (AMBAC Insured)6.0020041,165,0001,180,961
New Orleans Home Mortgage Authority Special Obligation Refunding Bonds
Series 1992 Escrowed to Maturity 6.25 2011 9,000,000 9,383,310
______________
Total 33,943,612
_____________________________________________________________________________________________________________________________
Maryland (2.3%)
Health & Educational Facility Authority Revenue Bonds
Frederick Memorial Hospital Series 1993 (FGIC Insured)5.00 202810,000,000 8,854,800
State Community Development Administration Department of Housing &
Community Development Single Family Program Bonds Series 1991-17.30201710,500,00011,241,405
State Health & Higher Educational Facility Authority Revenue Bonds
Anne Arndel Medical Center (AMBAC Insured) 5.00 2023 7,000,000 6,272,280
______________
Total 26,368,485
_____________________________________________________________________________________________________________________________
Massachusetts (1.5%)
Health & Educational Facilities Authority Revenue Bonds
Valley Regional Health System Series C (Connie Lee Insured)5.7520183,500,000 3,370,045
State Health & Education Authority Beverly Hospital Inverse Floater
(MBIA Insured) 6.72 2020 2,950,000 (f) 2,868,875
State Municipal Wholesale Electric Power Supply System Pre-Refunded
Revenue Bonds Series 1992B 6.75 201710,000,000 11,385,900
______________
Total 17,624,820
_____________________________________________________________________________________________________________________________
Michigan (1.3%)
Battle Creek Calhoun County Downtown Development Authority Bonds
Series 1994 7.65 2022 3,750,000 4,067,175
Detroit Water Supply System Refunding Revenue Bonds
Series 1992 (FGIC Insured) 6.25 2007 2,000,000 2,129,520
Royal Oak Hospital Finance Authority Revenue Bonds William Beaumont Hospital
(Secondary MBIA Insured) 5.25 2019 3,425,000 3,201,450
State Strategic Fund Percent Limited Obligation Refunding Revenue Bonds
Ford Motor Company Series 1991A 7.10 2006 5,000,000 5,490,250
______________
Total 14,888,395
_____________________________________________________________________________________________________________________________
Minnesota (3.8%)
Cambridge 1st Mortgage Nursing Home Revenue Bonds
Cambridge Nursing Care Center (FHA Insured) 10.15 2013 2,890,000 2,907,398
Minneapolis & St. Paul Housing & Redevelopment Authority
Health Care System Series 1990A 7.40 2005 4,500,000 5,063,310
Rochester Health Care Facility Revenue Bonds Mayo Foundation
Series A 4.951 201915,000,000 13,382,550
State Housing Finance Agency Single Family Mortgage Bonds
Series 1990C (FHA Insured) 7.70 2014 2,540,000 2,708,935
State Housing Finance Agency Single Family Mortgage Revenue Bonds
Series 1988E 7.65 2014 9,115,000 9,555,893
University of Minnesota St. Paul Link Revenue Bonds Inverse Floater4.80200310,000,000(f)9,846,500
______________
Total 43,464,586
_____________________________________________________________________________________________________________________________
Missouri (0.9%)
Lee's Summit Industrial Development Authority Bonds Pfizer Series 198410.5020091,450,0001,502,345
St. Louis Region Convention & Sports Complex Authority Series 1991C7.9020218,500,0009,317,105
______________
Total 10,819,450
_____________________________________________________________________________________________________________________________
New Hampshire (0.4%)
Business Finance Authority Pollution Control & Solid Waste Disposal
Revenue Bonds James River Series 1993 6.625 2022 5,000,000 4,996,250
_____________________________________________________________________________________________________________________________
New Jersey (1.5%)
Turnpike Authority Revenue Bonds Series 1991C 6.50 200516,000,000 17,127,840
_____________________________________________________________________________________________________________________________
New Mexico (0.3%)
Mortgage Finance Authority Single Family Mortgage Program
Series 1987A (FGIC Insured) 7.00 2017 3,650,000 3,762,968
_____________________________________________________________________________________________________________________________
New York (7.0%)
Dormitory Authority New York City Court Facility Lease
Revenue Bonds Series 1993A 5.25 202120,000,000 17,869,600
Dormitory Authority New York City University System Consolidated
2nd General Revenue Bonds Series A 5.75 2018 5,500,000 5,295,785
New York City General Obligation Bonds Series B 6.75 201711,150,000 11,538,578
New York City General Obligation Bonds Series 1995B 7.00 2016 8,850,000 9,364,805
New York City Municipal Water Finance Authority Water & Sewer System
Revenue Bonds Inverse Floater (MBIA Insured) 6.219 2013 5,000,000 (f)4,606,250
State Medical Care Facilities Mental Health Service Series A
(FGIC Insured) 5.50 2021 4,000,000 3,870,280
State Medical Care Facility Finance Agency Mental Health Services
Facility Improving Refunding Revenue Bonds Series 1993F5.3752014 7,510,000 6,875,255
State Mortgage Agency Homeowner Mortgage Revenue Bonds Series TT7.50201515,945,00017,220,600
State Urban Development Correctional Capital Facility Revenue Bonds
Series 4 5.375 2023 4,840,000 4,356,242
________________
Total 80,997,395
_____________________________________________________________________________________________________________________________
North Carolina (3.2%)
Eastern Municipal Power Agency System Refunding Revenue Bonds
Series 1989A 6.50 202420,000,000 20,201,400
Eastern Municipal Power Agency System Revenue Bonds Series D5.6020165,500,000 5,035,250
Eastern Municipal Power Agency System Series G 5.75 201612,750,000 11,915,768
______________
Total 37,152,418
_____________________________________________________________________________________________________________________________
Ohio (1.9%)
Adams County Ohio Valley School District County of Adams & Highland
School Improvement UT General Obligation Bonds Series 1995 (MBIA Insured)5.2520215,500,000(e)5,185,070
Columbus Sewerage System Refunding Revenue Bonds Series 19926.3020053,500,000 3,783,080
Lorain County Hospital Facilities Refunding Revenue Bonds Series 1995
EMH Regional Medical Center (AMBAC Insured) 5.375 2021 4,140,000 (e) 3,871,562
State Air Quality Development Authority Edison Pollution Control
Refunding Revenue Bonds Series A 5.95 2029 5,000,000 4,481,500
State Building Authority Bonds Toledo Government Center6.00 2007 4,620,000 4,649,106
______________
Total 21,970,318
_____________________________________________________________________________________________________________________________
Oregon (0.2%)
Hospital Facility Authority of Clackamas County Revenue Bonds
Kaiser-Permanente Series 1985 9.375 2015 2,750,000 2,859,120
_____________________________________________________________________________________________________________________________
Pennsylvania (3.9%)
Commonwealth General Obligation Bonds Series 1992-1 6.30 200511,000,000 11,832,810
Delaware County Industrial Development Authority Pollution Control
Refunding Revenue Bonds Philadelphia Electric Company7.375 202123,540,000 24,726,887
Doylestown Hospital Authority Revenue Bonds Series A (AMBAC Insured)5.0020232,600,0002,336,360
State Housing Finance Agency Single Family Mortgage Revenue Bonds
Series 1987L 7.125 2014 6,165,000 6,471,154
______________
Total 45,367,211
_____________________________________________________________________________________________________________________________
Puerto Rico (0.5%)
Highway & Transportation Authority Highway Refunding Revenue Bonds
Series W 5.50 2013 2,000,000 1,931,040
Highway & Transportation Authority Highway Refunding Revenue Bonds
Series X 5.00 2022 2,500,000 2,200,500
University Revenue Bonds Series M (MBIA Insured) 5.25 2025 2,000,000 1,898,800
_____________
Total 6,030,340
_____________________________________________________________________________________________________________________________
South Carolina (2.0%)
Horry County Hospital Refunding Revenue Bonds Conway Hospital Series 19926.7520124,000,0004,072,960
Piedmont Municipal Power Agency Electric Refunding Revenue Bonds
Series 1986 6.00 202413,060,000 12,918,168
Piedmont Municipal Power Agency Electric Refunding Revenue Bonds
Series 1986A 5.75 2024 2,390,000 2,289,740
Public Service Revenue Bonds Series D 6.375 2022 4,000,000 4,009,400
______________
Total 23,290,268
_____________________________________________________________________________________________________________________________
Tennessee (0.5%)
Chattanooga Municipal Improvement & Sewer Facility Unlimited Tax Bonds6.502009-116,000,0006,245,040
_____________________________________________________________________________________________________________________________
Texas (13.6%)
Austin Utility System Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.51 2010 5,055,000 (d) 2,064,058
Austin Utility System Capital Appreciation Refunding Revenue Bonds
Zero Coupon (MBIA Insured) 6.80 201016,000,000 (d) 6,533,120
Austin Utility System Combined Utility Refunding Revenue Bonds Series 1992
(AMBAC Insured) 6.25 200610,500,000 11,371,395
Coastal Water Authority Water Conveyance System Refunding Revenue Bonds
Series 1991 (AMBAC Insured) 6.25 2017 5,000,000 5,467,250
Corpus Christi Independent School District
Unlimited Tax School Building Bonds 6.00 2005-064,845,000 4,884,365
Cypress-Fairbanks Independent School District Harris County
Unlimited Tax Schoolhouse Bonds Series 1990 (FGIC Insured)6.5020081,500,000 1,630,335
Fort Worth Tarrant & Denton Counties Water & Sewer System
Refunding Revenue Bonds Series 1991B 6.30 200411,390,000 12,087,068
Fort Worth Tarrant & Denton Counties Water & Sewer System
Refunding Revenue Bonds Series 1991B 6.40 2005 8,760,000 9,290,068
Harris County Health Facilities Development Hermann Hospital Revenue Bonds
(MBIA Insured) 6.375 2024 8,820,000 9,176,504
Houston Water & Sewer System Junior Lien Refunding Revenue Bonds
Series C Zero Coupon (AMBAC Insured) 6.60 2008 8,000,000 (d) 3,755,840
Municipal Power Agency Bonds (BIG Insured) 6.25 2010 7,000,000 7,416,710
Municipal Power Agency Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.90 200918,000,000 (d) 7,991,640
North Central Texas Health Facilities Development Bonds
Kaiser Foundation of Texas 9.375 2015 4,500,000 4,679,550
San Antonio Electric & Gas Systems Refunding Revenue Bonds Series 19896.0020146,000,0006,048,420
San Antonio Electric & Gas Systems Refunding Revenue Bonds Series 19896.50201220,000,00020,981,600
San Antonio Electric & Gas Systems Refunding Revenue Bonds Series 1989A6.5020126,250,0006,556,750
San Antonio Water Refunding Revenue Bonds (FGIC Insured)6.40 200725,000,000 26,866,000
State Turnpike Authority Revenue Bonds 6.00 202010,000,000 10,504,300
______________
Total 157,304,973
_____________________________________________________________________________________________________________________________
Utah (1.4%)
Intermountain Power Authority Special Obligation Bonds
1st Crossover Series 6.00 201515,970,000 15,803,433
_____________________________________________________________________________________________________________________________
Virginia (1.4%)
Arlington County Industrial Development Authority Hospital Facility
Refunding Revenue Bonds Arlington Hospital (Secondary MBIA Insured)5.0020215,500,0004,944,005
Augusta County Industrial Development Authority Hospital
Refunding Revenue Bonds Augusta Hospital Series 1993 (AMBAC Insured)5.12520213,600,0003,296,664
State Transportation Board Revenue Bonds 6.00 2019 8,000,000 8,004,160
______________
Total 16,244,829
_____________________________________________________________________________________________________________________________
Washington (5.2%)
Auburn School District #408 King County Unlimited Tax
General Obligation Bonds Series 1992A 6.375 2006 8,000,000 8,733,520
Issaquah School District #411 King County Unlimited Tax
General Obligation Refunding Bonds 1992 6.375 200816,675,000 18,002,997
King County Housing Authority Pooled Housing Refunding Revenue Bonds
Series 1995A 6.80 2026 2,500,000 2,573,025
Public Power Supply System Nuclear Project #1 Revenue Bonds Series 1989A6.00201712,130,00011,939,559
Public Power Supply System Nuclear Project #3 Capital Appreciation
Refunding Revenue Bonds Series B Zero Coupon (MBIA Insured)6.61201310,360,000(d)3,464,488
State Public Power Supply System Nuclear Project #1 Revenue Refunding Bonds
Bonneville Power Administration Series 1993A Inverse Floater
(FSA Insured) 5.87 201115,000,000 (f)14,962,500
______________
Total 59,676,089
_____________________________________________________________________________________________________________________________
West Virginia (0.8%)
School Building Authority Capital Improvement Revenue Bonds Series 1990B
(MBIA Insured) 6.00 2020 9,730,000 9,780,012
_____________________________________________________________________________________________________________________________
Wyoming (0.6%)
Casper Industrial Development Revenue Bonds Albertson's9.875 2010 2,525,000 2,632,388
Community Development Authority Single Family Mortgage Bonds
Federally Insured or Guaranteed Mortgage Loan 7.40 2031 3,510,000 3,756,156
______________
Total 6,388,544
_____________________________________________________________________________________________________________________________
Total municipal bonds
(Cost: $1,007,450,482) $1,109,080,749
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (5.4%)
_____________________________________________________________________________________________________________________________
Issuer (c,h) Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Municipal notes
Burke County Georgia Pollution Control Revenue Bonds
Georgia Power & Light Series 1994
07-01-14 4.65% $ 300,000 (g)$ 300,000
Burke County Georgia Pollution Control Revenue Bonds
Georgia Power & Light V.R.D.B.
07-01-24 4.25 1,500,000 (g)1,500,000
Gulf Coast Amoco
10-12-17 3.70 2,600,000 (g)2,600,000
10-12-17 4.00 11,350,000 (g)11,350,000
Lincoln County Wyoming Pollution Control Revenue Bonds Exxon Series 1985
08-01-15 3.95 1,000,000 (g)1,000,000
Massachusetts State General Obligation Bonds V.R.D.B. Series B
12-01-97 4.15 1,700,000 (g)1,700,000
Monroe County Georgia Development Authority Gulf Power
Pollution Control Revenue Bonds
09-01-24 4.65 4,000,000 (g)4,000,000
New York City Municipal Water Finance Authority Adjustable Rate Bonds
Series 1994C (FGIC Insured)
06-15-23 4.00 8,500,000 (g)8,500,000
New York City Municipal Water Finance Authority Adjustable Rate Bonds
Series 1994G (FGIC Insured)
06-15-24 4.00 1,000,000 (g)1,000,000
Peninsula Port Authority Virginia Shell Oil
12-01-05 4.05 100,000 (g) 100,000
Port Authority District of Jefferson Texas Pollution Control
Refunding Revenue Bonds Texaco
10-01-24 4.10 2,200,000 (g)2,200,000
Texas T.R.A.N.
08-31-95 4.55 2,000,000 2,005,480
Valdez Alaska Marine Revenue Bonds Exxon Pipeline Series 1985
10-01-25 3.70 20,000,000 (g)20,000,000
Valdez Alaska Marine Revenue Bonds Exxon Pipeline Series 1993
12-01-33 4.00 6,250,000 (g)6,250,000
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $62,501,765) $ 62,505,480
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,069,952,247)(i) $1,171,586,229
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Investments in bonds, by rating category as a percentage of total bonds, are as follows:
(Unaudited)
_________________________________________
Rating 5-31-95 11-30-94
_______________________________________________________________________________________________________
AAA 45% 46%
AA 25 29
A 20 17
BBB and below 10 8
Non-rated - -
_______________________________________________________________________________________________________
Total 100% 100%
_______________________________________________________________________________________________________
(c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(d) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(e) At May 31, 1995, the cost of securities purchased, including interest purchased, on a when-issued basis was $13,400,238.
(f) 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 market short-term rates. Interest rate disclosed is the rate in effect on
May 31, 1995. Inverse floaters in the aggregate represent 4.6% of the fund's net assets as of May 31, 1995.
(g) Interest rate varies to reflect current market conditions; rates shown are the effective rates on May 31, 1995.
(h) The following abbreviations are used in portolio descriptions:
T.R.A.N. -- Tax and Revenue Anticipation Note
V.R.D.B. -- Variable Rate Demand Bond
(i) At May 31, 1995, the cost of securities for federal income tax purposes was approximate $1,069,562,000 and the
approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $103,089,000
Unrealized depreciation (1,065,000)
______________________________________________________________________________________________________
Net unrealized appreciation $102,024,000
______________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation
William H. Dudley
Executive vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Financial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Officers who also are officers and or/employees of American Express
Financial Corporation
Peter J. Anderson
Vice president of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.
<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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.
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IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
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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.
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IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
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IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
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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.
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For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
advisor or writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or send
money.
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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 Tax-Exempt Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
