1996 semiannual report
IDS
Tax-Exempt
Bond Fund
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.
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 18
Board members and officers 28
IDS mutual funds 29
To our shareholders
William R. Pearce
President of the Fund
Terry L. Seierstad
Portfolio manager
From the president
If you're an experienced investor, you know that the 1990s have contained
some unusually strong periods for the U.S. financial markets. Perhaps just
as important, you also
know that history
shows that bull markets don't last forever.
Though they're often unpredictable, declines - whether they're brief or
long-lasting, moderate or substantial - are
always a possibility.
That fact reinforces the need for investors to review periodically their
long-term goals and assess whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
From the portfolio manager
After rallying spectacularly throughout most of 1995, the bond market
reversed direction early in 1996, as rising long-term interest rates sent
prices spiraling down from February through May. The downturn coincided
with the first half of
IDS Tax-Exempt Bond Funds fiscal year, and ultimately resulted in a
negative total return for the December 1995 through May 1996 period.
The primary forces that propelled the bond market in 1995 - moderate
economic growth and low inflation - were still in force when the period
began.
They, combined with hope for an agreement
to balance the federal budget, allowed the market to carry its momentum
through December and into the new year.
Inflation worries send rates up, market down
It was then that the first hints that the economy may not be so sluggish as
previously thought began to appear. The possibility of an economic
reawakening soon fueled fears of an imminent rise in the inflation rate -
despite considerable data to the contrary - which subsequently were
exacerbated by a breakdown in the balanced-budget talks. Together, these
factors sent long-term interest rates higher and, consequently, bond prices
lower.
In anticipation of that possibility, I began shortening the average
maturity of the holdings in the portfolio in December, and resumed that
strategy in February and March. (The longer a portfolio's maturity, the
more sensitive it is to interest-rate swings. For example, when rates fell
in 1995, the long structure of the portfolio substantially enhanced the
Fund's performance.) While this effort provided some cushion against
the markets subsequent fall, it wasn't enough
to avoid the negative impact on the Fund's
net asset value.
Near-term caution
seems prudent
Although I remain quite optimistic about the
long-term outlook for bonds in general and municipals in particular, at
this writing (mid-June) I continue to lean toward the cautious side. My
reasoning is based on my belief that there will be enough uncertainty in
the market - spawned by conflicting economic data and political rhetoric
about tax cuts - to keep it off balance at least through the summer.
Therefore, my current plans are to reduce the portfolio's maturity a bit
more while adding some higher yielding securities to shore up the Fund's
dividend.
At some point before the year is out, I expect the fundamental forces of
declining federal budget deficits, moderate economic growth and well-
behaved inflation to win out, putting the bond market and the Fund back on
a positive track.
Terry L. Seierstad
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $3.89
Nov. 30, 1995 $4.06
Decrease $0.17
Distributions
Dec. 1, 1995 - May 31, 1996
From income $0.10
From capital gains$ --
Total distributions $0.10
Total return* -1.6%
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $3.89
Nov. 30, 1995 $4.06
Decrease $0.17
Distributions
Dec. 1, 1995 - May 31, 1996
From income $0.09
From capital gains $ --
Total distributions $0.09
Total return* -1.6%
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $3.89
Nov. 30, 1995 $4.06
Decrease $0.17
Distributions
Nov. 30, 1995 - May 31, 1996
From income $0.11
From capital gains $ --
Total distributions $0.11
Total return* -1.6%
* The prospectus discusses the effect of sales charges, if
any, on the various classes.
**The total return is a hypothetical investment
in the Fund with all distributions reinvested.
<PAGE>
PAGE
<TABLE>
<CAPTION>
IDS Tax-Exempt Bond Fund, Inc.
The Fund's ten largest holdings
The ten holdings listed here make up 22.05% of the Fund's assets
_____________________________________________________________________________________
Percent Value
(of Fund's net assets)(as of May 31, 1996)
_____________________________________________________________________________________
<S> <C> <C>
Washington State Public Power Supply System
Nuclear Project #1 Refunding Revenue Bonds
Bonneville Power Administration Series 1993A Inverse Floater
5.61% 2011 2.73% $29,850,600
New York Urban Development Correctional Capital
Facility Revenue Bonds Series 4
5.375% 2023 2.65 29,067,036
San Antonio Texas Electric & Gas Systems Refunding
Revenue Bonds Series 1989-1989A
6.50% 2012 2.49 27,257,475
San Antonio Texas Water Refunding Revenue Bonds
6.40% 2007 2.43 26,615,250
Delaware County Pennsylvania Industrial Development
Authority Pollution Control Refunding Revenue Bonds
Philadelphia Electric Company
7.375% 2021 2.27 24,845,999
Illinois Public Building Commission of Chicago Building
Revenue Bonds Board of Education of Chicago Series 1990A
6.50% 2018 2.24 24,563,140
Georgia Municipal Electric Authority
Special Obligation Bonds Project #1
4th Crossover Series X
6.50% 2020 1.93 21,110,872
San Antonio Texas Electric & Gas Systems
Refunding Revenue Bonds Series 1989
6.50% 2012 1.90 20,767,600
Eastern North Carolina Municipal Power Agency System
Refunding Revenue Bonds Series 1989A
6.50% 2024 1.78 19,537,800
Washington Issaquah School District #411 King County
Unlimited Tax General Obligation Refunding Bonds 1992
6.375% 2008 1.63 17,903,281
</TABLE>
<PAGE>
PAGE Financial statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Tax-Exempt Bond Fund, Inc.
May 31, 1996
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $1,021,929,980) $1,088,099,223
Cash in bank on demand deposit 37,939,470
Accrued interest receivable 19,327,832
Receivable for investment securities sold 32,298,118
_____________________________________________________________________________________________________________
Total assets 1,177,664,643
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Dividends payable to shareholders 464,066
Payable for investment securities purchased 81,559,415
Accrued investment management services fee 13,534
Accrued distribution fee 358
Accrued service fee 5,291
Accrued transfer agency fee 1,405
Accrued administrative services fee 1,195
Other accrued expenses 147,686
_____________________________________________________________________________________________________________
Total liabilities 82,192,950
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,095,471,693
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 2,813,867
Additional paid-in capital 1,064,298,179
Undistributed net investment income 2,265
Accumulated net realized loss (Notes 1 and 5) (40,986,861)
Unrealized appreciation (Note 6) 69,344,243
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,095,471,693
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $1,078,115,177
Class B $ 17,347,419
Class Y $ 9,097
Net asset value per share of outstanding capital stock: Class A shares 276,929,224 $ 3.89
Class B shares 4,455,159 $ 3.89
Class Y shares 2,337 $ 3.89
See accompanying notes to financial statements.<PAGE>
PAGE
Financial statements
Statement of operations
IDS Tax-Exempt Bond Fund, Inc.
Six months ended May 31, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $ 33,745,276
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 2,566,769
Distribution fee -- Class B 59,427
Transfer agency fee 267,958
Incremental transfer agency fee - Class B 434
Service fee
Class A 971,339
Class B 13,862
Administrative services fee 226,094
Compensation of board members 16,082
Compensation of officers 6,003
Custodian fees 30,644
Postage 54,128
Registration fees 53,973
Reports to shareholders 35,618
Audit fees 17,000
Administrative 4,428
Other 8,407
_____________________________________________________________________________________________________________
Total expenses 4,332,166
Earnings credits on cash balances (Note 2) (7,656)
_____________________________________________________________________________________________________________
Total net expenses 4,324,510
_____________________________________________________________________________________________________________
Investment income -- net 29,420,766
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized gain on security transactions (Note 3) 222,954
Net realized gain on financial futures contracts 3,260,375
_____________________________________________________________________________________________________________
Net realized gain on investments 3,483,329
Net change in unrealized appreciation or depreciation (51,253,878)
_____________________________________________________________________________________________________________
Net loss on investments (47,770,549)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations $(18,349,783)
_____________________________________________________________________________________________________________
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, 1996 Nov. 30, 1995
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $ 29,420,766 $ 62,026,347
Net realized gain(loss) on investments 3,483,329 (4,584,252)
Net change in unrealized appreciation or depreciation (51,253,878) 156,869,653
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations (18,349,783) 214,311,748
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (29,164,914) (61,798,018)
Class B (349,470) (228,530)
Class Y (246) (338)
Net realized gain
Class A (85,487) --
Class B (1,073) --
Class Y (1) --
_____________________________________________________________________________________________________________
Total distributions (29,601,191) (62,026,886)
_____________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 55,316,655 218,907,812
Class B shares 5,340,749 13,834,432
Class Y shares -- 8,505
Reinvestment of distributions at net asset value
Class A shares 19,944,567 41,880,852
Class B shares 302,241 191,220
Class Y shares 247 334
Payments for redemptions
Class A shares (112,334,101) (304,525,136)
Class B shares (Note 2) (1,252,287) (904,711)
Class Y shares -- (20)
_____________________________________________________________________________________________________________
Decrease in net assets from capital share transactions (32,681,929) (30,606,712)
_____________________________________________________________________________________________________________
Total decrease in net assets (80,632,903) (121,678,150)
Net assets at beginning of period 1,176,104,596 1,054,426,446
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$2,265 and $96,129) $1,095,471,693 $1,176,104,596
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
PAGE
Notes to financial statements
IDS Tax-Exempt Bond Fund, Inc.
(Unaudited as to May 31, 1996)
______________________________________________________________________________
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 invests
primarily in investment-grade bonds and other debt securities. 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 may be subject to a contingent deferred sales
charge and such shares automatically convert to Class A after eight years.
Class Y shares 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) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
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
may 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.
<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
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio, providing
administrative services and serving as transfer agent as follows: Under its
Investment Management Services Agreement, AEFC 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 AEFC 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, AEFC maintains shareholder
accounts and records. The Fund pays AEFC 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 a Plan and Agreement of Distribution, the
Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average
daily net assets attributable to Class B shares for distribution-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.
AEFC 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 $708,846 for Class A and $7,335 for Class B for the six
months ended May 31, 1996. The Fund also pays custodian fees to American
Express Trust Company, an affiliate of AEFC.
During the six months ended May 31, 1996, the Fund's custodian and transfer
agency fees were reduced by $7,656 as a result of earnings credits from
overnight cash balances.
Prior to April 30, 1996, the Fund had a retirement plan for its independent
board members. The plan was terminated April 30, 1996. The retirement plan
expense amounted to $6,932 for the period. The total liability for the plan is
$68,499, which will be paid out at some future date.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $466,290,649 and $441,530,891, respectively, for the
six months ended May 31, 1996. Realized gains and losses are determined on an
identified cost basis.
______________________________________________________________________________
4. Capital loss carryover
For federal income tax purposes, the Fund has a capital loss carryover of
approximately $15,269,000 at May 31, 1996, that will expire in 2002 if not
offset by subsequent capital gains.
______________________________________________________________________________
5. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
</TABLE>
<TABLE>
<CAPTION>
________________________________________________________________________________________
Six months ended May 31, 1996
Class A Class B Class Y
________________________________________________________________________________________
<S> <C> <C> <C>
Sold 13,798,509 1,329,644 --
Issued for reinvested 4,976,555 75,496 62
distributions
Redeemed (28,084,210) (313,320) --
_______________________________________________________________________________________
Net increase (decrease) (9,309,146) 1,091,820 62
_______________________________________________________________________________________
Year ended Nov. 30, 1995
Class A Class B* Class Y*
________________________________________________________________________________
Sold 57,695,876 3,544,563 2,195
Issued for reinvested
distributions 10,859,855 48,794 85
Redeemed (79,935,787) (230,018) (5)
_______________________________________________________________________________________
Net increase (decrease) (11,380,056) 3,363,339 2,275
_______________________________________________________________________________________
*Inception date was March 20, 1995.
<?TABLE>
_______________________________________________________________________________________
6. Interest rate futures contracts
At May 31, 1996, investments in securities included securities valued at
$28,107,603 that were pledged as collateral to cover initial margin deposits
on 400 open contracts. The market value of the open contracts at May 31, 1996
was $43,225,000 with a net unrealized gain of $3,175,000.
______________________________________________________________________________
7. Financial highlights
</TABLE>
<TABLE>
<CAPTION>
The tables below show certain important financial information for evaluating
the Fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changes*
Class A
1996*** 1995 1994 1993 1992 1991**
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $4.06 $3.54 $4.19 $3.98 $3.93 $3.88
beginning of period
Income from investment operations:
Net investment income .10 .21 .23 .22 .22 .22
Net gains (losses) (.17) .52 (.56) .23 .11 .05
(both realized
and unrealized)
Total from investment (.07) .73 (.33) .45 .33 .27
operations
Less distributions:
Dividends from net (.10) (.21) (.23) (.22) (.22) (.22)
investment income
Distributions from -- -- (.09) (.02) (.06) --
realized gains
Total distributions (.10) (.21) (.32) (.24) (.28) (.22)
Net asset value, $3.89 $4.06 $3.54 $4.19 $3.98 $3.93
end of period
Ratios/supplemental data
Class A
1996*** 1995 1994 1993 1992 1991**
Net assets, end of $1,095 $1,162 $1,054 $1,291 $1,273 $1,188
period (in millions)
Ratio of expenses to .74%+ .71% .61% .63% .64% .60%+
average daily net assets
Ratio of net income 5.12%+ 5.52% 5.82% 5.54% 5.68% 6.11%+
to average
daily net assets
Portfolio turnover rate 41% 54% 66% 43% 63 63% 69%
(excluding short-term
securities)
Total return++ (1.6%) 21.1% (8.3%) 11.7% 8.7% 8.3%+
*For a share outstanding throughout the period. Rounded to the nearest cent.
**The Fund's fiscal year-end was changed from Dec. 31 to Nov. 30, effective 1991.
***Six months ended May 31, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
</TABLE> <PAGE>
<TABLE>
<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changes*
Class B Class Y
1996*** 1995** 1996*** 1995**
<S> <C> <C> <C> <C>
Net asset value, $4.06 $3.88 $4.06 $3.88
beginning of period
Income from investment operations:
Net investment income .09 .14 .11 .16
Net gains (.17) .18 (.17) .18
(both realized
and unrealized)
Total from investment (.08) .32 (.06) .34
operations
Less distributions:
Dividends from net (.09) (.14) (.11) (.16)
investment income
Net asset value, $3.89 $4.06 $3.89 $4.06
end of period
Ratios/supplemental data
1996*** 1995** 1996*** 1995**
Net assets, end of $17 $14 $9 --
period (in millions)
Ratio of expenses to 1.50%+ 1.52%+ .56%+ .58%
average daily net assets
Ratio of net income 4.38%++ 4.55%+ 5.30%+ 5.52%
to average
daily net assets
Portfolio turnover rate 41% 54% 41% 54%
(excluding short-term
securities)
Total return++ .(1.6%) 8.6% (1.6%) 9.2%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y.
***Six months ended May 31, 1996 (Unaudited)
+Adjusted to an annual basis
++Total return does not reflect payment of a sales charge.
</TABLE>
PAGE
<TABLE>
<CAPTION>
Investments in securities
IDS Tax-Exempt Bond Fund, Inc. (Percentages represent value of
May 31, 1996 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Municipal bonds (94.6%)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b,c) Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Alabama (0.3%)
Mobile Industrial Development Board Solid Waste
Refunding Revenue Bonds Mobile Energy Services 6.95% 2020 $ 3,750,000 $3,878,287
______________________________________________________________________________________________________________________________
Alaska (0.7%)
North Slope Borough General Obligation Bonds
Series 1994B Zero Coupon (CGIC Insured) 7.05 2004 3,000,000 (d) 1,944,000
North Slope Borough General Obligation Bonds
Series 1994B Zero Coupon (CGIC Insured) 7.15 2005 3,000,000 (d) 1,826,190
State Housing Finance Veterans Mortgage Corporation
Collateralized Bonds Series 1990 7.50 2030 3,565,000 3,722,288
______________
Total 7,492,478
_____________________________________________________________________________________________________________________________
Arizona (3.3%)
Maricopa County Arizona Industrial Development Authority
Multi-family Housing Revenue Bonds Series A 6.625 2026 2,500,000 2,472,500
Phoenix Arizona Industrial Development Authority
Refunding Revenue Bonds Christian Care Apartments 6.25 2016 2,000,000 1,869,480
Phoenix Industrial Development Authority
Single Family Mortgage
Revenue Capital Appreciation Bonds
Escrowed to Maturity Zero Coupon 6.66 2014 39,000,000 (d) 12,655,890
Phoenix Junior Lien Street & Highway User
Refunding Revenue Bonds Series 1992 6.25 2011 10,350,000 10,720,737
Tucson Street & Highway User Revenue Bonds
Series 1991B 6.25 2010 8,250,000 8,781,630
______________
Total 36,500,237
_____________________________________________________________________________________________________________________________
California (9.0%)
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A 5.00 2035 17,000,000 13,547,300
Los Angeles County Certificate of Participation
Inverse Floater 6.71 2015 3,600,000 (e) 3,629,304
Los Angeles County Public Works Financial Authority
Lease Revenue Bonds (MBIA Insured) 4.75 2013 10,000,000 8,676,600
Orange County Certificate of Participation Civic Center Facility
Capital Appreciation Refunding Bonds
Zero Coupon (AMBAC Insured) 7.00 2018 13,795,000 (d) 3,409,296
Regional Airports Improvement Corporation
Lease Refunding Revenue Bonds 6.35 2025 5,000,000 4,921,150
Sacramento Cogeneration Authority Revenue Bonds
Proctor & Gamble Series 1995 6.50 2014 5,000,000 5,046,000
Sacramento Power Cogeneration Authority
Revenue Bonds Series 1995 6.00 2022 2,700,000 2,521,692
San Francisco City & County Redevelopment Financing Authority
Tax Allocation Refunding Bonds Series B 5.25 2021 16,660,000 14,315,105
San Jose Redevelopment Agency Merged Area
Tax Allocation Bonds Series 1993 (MBIA Insured) 4.75 2024 9,000,000 7,374,060
Southern California Public Power Authority Revenue Bonds
Mead Adelanto Series A (AMBAC Insured) 4.875 2020 6,590,000 5,577,578
State Public Works Board California Community Colleges
Lease Revenue Bonds Series 1994B 7.00 2019 3,900,000 4,235,868
State Public Works Board University of California
Lease Refunding Revenue Bonds
Series A (AMBAC Insured) 5.00 2023 6,000,000 5,020,980
State Public Works Board University of California
Lease Refunding Revenue Bonds
Series A (AMBAC Insured) 5.50 2014 7,275,000 6,893,208
State Public Works Board State of California
Lease Revenue Bonds
Series 1996A (AMBAC Insured) 5.50 2017 4,000,000 3,778,680
Statewide Community Development Authority
Insurance Certificate of Participation
Childrens Hospital of Los Angeles Revenue Bonds
(MBIA Insured) 4.75 2021 5,250,000 4,288,988
Ukiah Unified School District Building Mendocino County
Certificate of Participation Series 1993 6.00 2010 3,790,000 3,690,588
Upland Certificate of Participation
San Antonio Community Hospital 5.00 2018 2,745,000 2,292,926
______________
Total 99,219,323
_______________________________________________________________________________________________________________________________
Colorado (1.2%)
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund Highway Revenue Bonds 7.00 2026 3,750,000 3,870,975
Castle Rock Ranch Improvement Public Facility Revenue Bonds
Series 1996 6.375 2011 5,750,000 5,783,810
Colorado Health Facility Authority Hospital
Improvement Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995 6.00 2016 4,000,000 3,722,960
______________
Total 13,377,745
_____________________________________________________________________________________________________________________________
Connecticut (0.8%)
State General Obligation Bonds Series 1992A 6.40 2006 8,000,000 8,609,360
_____________________________________________________________________________________________________________________________
Delaware (0.2%)
State University Revenue Bonds Series 1989 6.00 2014 2,000,000 2,011,500
_____________________________________________________________________________________________________________________________
District of Columbia (2.5%)
District of Columbia Redevelopment Limited Agency
Special Tax Revenue Bonds 5.625 2010 2,000,000 1,876,820
General Obligation Bonds
Series 1994B Zero Coupon (MBIA Insured) 6.64 2013-14 50,360,000 (d) 17,366,775
General Obligation Bonds
Series 1994B Zero Coupon (MBIA Insured) 6.68 2012 22,070,000 (d) 8,373,358
______________
Total 27,616,953
_____________________________________________________________________________________________________________________________
Florida (4.2%)
Duvall County Housing Authority Single Family Mortgage
Refunding Revenue Bonds Series 1991 (FGIC Insured) 7.35 2024 3,430,000 3,600,437
Jacksonville Excise Taxes Refunding Revenue Bonds
Series 1992 (AMBAC Insured) 6.50 2008 5,000,000 5,362,600
Miami Health Facility Authority Revenue Bonds
Inverse Floater (AMBAC Insured) 5.11 2015 14,000,000 (e) 12,841,220
St. John's River Water Management District Land Acquisition
Revenue Bonds Series 1989 (AMBAC Insured) 6.00 2009 7,000,000 7,309,050
State Board of Education Administration Capital Outlay
Public Education Bonds Series 1991C 6.50 2008-09 11,225,000 12,288,007
Volusia County Educational Facilities Authority
Embry-Riddle Aeronautical University
Revenue Bonds Series 1996A 6.125 2026 5,000,000 4,835,850
______________
Total 46,237,164
_____________________________________________________________________________________________________________________________
Georgia (2.4%)
Municipal Electric Authority Refunding Revenue Bonds
Series 1989T 6.50 2025 5,000,000 5,057,500
Municipal Electric Authority Special Obligation Bonds
Project #1 4th Crossover Series X (Secondary MBIA Insured) 6.50 2020 19,550,000 21,110,872
______________
Total 26,168,372
_____________________________________________________________________________________________________________________________
<PAGE>
Hawaii (0.6%)
City & County of Honolulu General Obligation Bonds
Series 1992A 6.30 2006 5,880,000 6,370,510
_____________________________________________________________________________________________________________________________
Idaho (0.3%)
Health Facilities Authority Revenue Bonds
Bannock Regional Medical Center Series 1995 6.125 2025 2,250,000 2,105,820
Health Facilities Authority Revenue Bonds
Bannock Regional Medical Center Series 1995 6.375 2017 1,450,000 1,409,980
______________
Total 3,515,800
_______________________________________________________________________________________________________________________________
Illinois (9.4%)
Alton Madison County Hospital Facility
Refunding Revenue Bonds St. Anthony's Health Center
Series 1996 6.00 2010-14 4,740,000 4,390,940
Cook & Will Counties TWP High School District #206
Capital Appreciation Bonds Series
1994C Zero Coupon (AMBAC Insured) 6.55 2010 2,605,000 (d) 1,097,669
Cook County School District #170 Chicago Heights
Capital Appreciation Bonds
Series 1994C Zero Coupon (AMBAC Insured) 6.40 2008 2,155,000 (d) 1,048,149
Cook County School District #170 Chicago Heights
Capital Appreciation Bonds
Series 1994C Zero Coupon (AMBAC Insured) 6.50 2009-10 4,310,000 (d) 1,884,590
Cook County Unlimited Tax General Obligation Bonds Series 1989 6.50 2009 5,800,000 6,047,660
Educational Facilities Revenue Bonds
Columbian College 6.125 2018 3,015,000 2,759,569
Educational Facilities Revenue Bonds
Columbian College 6.875 2017 2,760,000 2,780,258
Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A 6.00 2019 3,055,000 2,895,407
Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center Series 1993 5.50 2019 5,000,000 4,447,000
Health Facilities Authority
University of Chicago
Revenue Linked Bonds (MBIA Insured) 5.75 2014 10,000,000 9,649,400
Health Facilities Authority
University of Chicago
Revenue Linked Bonds (MBIA Insured) 6.72 2015 10,400,000 10,849,592
Metropolitan Pier & Exposition Authority
Dedicated State Tax Capital Appreciation Revenue Bonds
McCormick Place Expansion
Series A Zero Coupon (FGIC Insured) 6.48 2020 12,500,000 (d) 2,842,500
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) 1,057,950
Metropolitan Pier & Exposition Authority McCormick Place
Expansion Bonds Series A Zero Coupon (FGIC Insured) 6.43 2017 8,250,000 (d) 2,264,708
Metropolitan Pier & Exposition Authority McCormick Place
Expansion Bonds Series A Zero Coupon (FGIC Insured) 6.50 2013 6,500,000 (d) 2,308,020
Metropolitan Pier & Exposition Authority McCormick Place
Expansion Bonds Series A Zero Coupon (FGIC Insured) 6.64 2010 11,000,000 (d) 4,764,210
Metropolitan Pier & Exposition Authority McCormick Place
Expansion Bonds Series A Zero Coupon (FGIC Insured) 6.72 2016 9,000,000 (d) 2,652,840
Public Building Commission of Chicago Building Revenue Bonds
Board of Education of Chicago Series 1990A
Escrowed to Maturity (MBIA Insured) 6.50 2018 23,500,000 24,563,140
Public Building Commission of Chicago Building Revenue Bonds
State Development Finance Authority
Power Refunding Bonds Series 1991A 7.375 2021 10,000,000 10,891,800
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Series 1991B
Zero Coupon Escrowed to Maturity 6.50 2025 10,000,000 (d) 1,242,800
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Zero Coupon 7.75 2020 13,745,000 (d) 2,487,708
______________
Total 102,925,910
_____________________________________________________________________________________________________________________________
<PAGE>
Indiana (2.2%)
Municipal Power Agency Power Supply System Refunding
Revenue Bonds Series 1989A (AMBAC Insured) 6.50 2016 8,800,000 9,387,840
Seymour Economic Development Revenue Bonds
Union Camp Series 1992 6.25 2012 2,870,000 2,952,168
Transportation Finance Authority Highway Revenue Bonds
Series 1990A 7.25 2015 10,000,000 11,455,300
______________
Total 23,795,308
_____________________________________________________________________________________________________________________________
Iowa (0.4%)
State Finance Authority Single Family Mortgage-Backed
Securities Program Bonds Series 1991A 7.25 2016 4,175,000 4,391,223
_____________________________________________________________________________________________________________________________
Kentucky (0.3%)
Owensboro Electric Light & Power Refunding Revenue Bonds
Series B Zero Coupon (AMBAC Insured) 6.65 2015 9,125,000 (d) 3,053,773
_____________________________________________________________________________________________________________________________
Louisiana (3.0%)
Industrial Development Board of Bastrop Percent Pollution Control
Refunding Revenue Bonds International Paper Company
Series 1992A 6.90 2007 6,875,000 7,368,144
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.35 2014 12,270,000 (d) 4,130,941
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.36 2015 16,000,000 (d) 5,070,080
New Orleans Capital Appreciation Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.62 2012 6,250,000 (d) 2,380,187
New Orleans General Obligation Refunding Bonds
Series 1991 (AMBAC Insured) 6.00 2004 1,165,000 1,178,386
New Orleans Home Mortgage Authority Special Obligation
Refunding Bonds Series 1992 Escrowed to Maturity 6.25 2011 9,000,000 9,449,370
Public Facilities Authority Multi-family Housing
Windsor Housing Foundation Revenue Bonds Series 1996A 6.125 2015 3,385,000 3,293,368
______________
Total 32,870,476
_____________________________________________________________________________________________________________________________
Maryland (2.3%)
Health & Educational Facility Authority Revenue Bonds
Frederick Memorial Hospital Series 1993 (FGIC Insured) 5.00 2028 10,000,000 8,532,800
State Community Development Administration
Department of Housing & Community Development
Single Family Program Bonds Series 1991-1 7.30 2017 10,500,000 11,015,130
State Health & Higher Educational Facility Authority
Revenue Bonds Anne Arndel Medical Center (AMBAC Insured) 5.00 2023 7,000,000 6,059,900
______________
Total 25,607,830
_____________________________________________________________________________________________________________________________<PAGE>
Massachusetts (2.0%)
Health & Educational Facilities Authority
Beverly Hospital Revenue Linked Bonds
(MBIA Insured) 5.70 2020 5,900,000 5,618,452
Health & Educational Facilities Authority Revenue Bonds
Valley Regional Health System Series C (Connie Lee Insure 5.75 2018 3,500,000 3,331,895
Health & Educational Facilities Authority Revenue Bonds
Melrose - Wakefield Hospital Series 1992B 6.375 2016 1,430,000 1,417,917
State Municipal Wholesale Electric Power Supply System
Pre-Refunded Revenue Bonds Series 1992B 6.75 2017 10,000,000 11,139,500
______________
Total 21,507,764
_____________________________________________________________________________________________________________________________
Michigan (2.2%)
Battle Creek Calhoun County Downtown Development
Authority Bonds Series 1994 7.65 2022 3,750,000 4,090,200
Detroit Downtown Development Authority
Junior Lien Tax Increment Bonds 6.50 2025 6,000,000 5,884,380
Detroit Water Supply System Refunding Revenue Bonds
Series 1992 (FGIC Insured) 6.25 2007 2,000,000 2,111,400
State Hospital Finance Authority Refunding Revenue Bonds
Presbyterian Villages Obligated Group Series 1995 6.40 2015 1,000,000 949,500
State Hospital Finance Authority Refunding Revenue Bonds
Presbyterian Villages Obligated Group Series 1995 6.50 2025 1,000,000 940,240
State Hospital Finance Authority Refunding Revenue Bonds
Central Michigan Community Hospital 6.25 2016 2,225,000 2,132,306
State Hospital Finance Authority Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995 6.625 2016 2,000,000 1,967,580
State Strategic Fund Percent Limited Obligation
Refunding Revenue Bonds Ford Motor Company
Series 1991A 7.10 2006 5,000,000 5,598,300
______________
Total 23,673,906
_____________________________________________________________________________________________________________________________
Minnesota (2.6%)
Minneapolis & St. Paul Housing & Redevelopment Authority
Health Care System Series 1990A 7.40 2005 4,500,000 4,938,120
Rochester Health Care Facility Revenue Bonds
Mayo Foundation Series A 4.95 2019 15,000,000 12,848,100
State Housing Finance Agency Single Family
Mortgage Bonds Series 1990C (FHA Insured) 7.70 2014 2,340,000 2,467,390
State Housing Finance Agency Single Family
Mortgage Revenue Bonds Series 1988E 7.65 2014 8,015,000 8,430,417
______________
Total 28,684,027
_____________________________________________________________________________________________________________________________
Missouri (1.0%)
Lee's Summit Industrial Development Authority Bonds
Pfizer Series 1984 10.50 2009 1,450,000 1,517,135
St. Louis Region Convention & Sports Complex Authority
Series 1991C 7.90 2021 8,500,000 9,213,405
______________
Total 10,730,540
_____________________________________________________________________________________________________________________________
New Hampshire (0.5%)
Business Finance Authority Pollution Control & Solid Waste Disposal
Revenue Bonds James River Series 1993 6.625 2022 5,000,000 4,928,450
_____________________________________________________________________________________________________________________________
New Jersey (1.5%)
Turnpike Authority Revenue Bonds Series 1991C 6.50 2005 16,000,000 16,780,320
_____________________________________________________________________________________________________________________________
New York (12.8%)
Dormitory Authority New York City Court Facility Lease
Revenue Bonds Series 1993A 5.25 2021 20,000,000 17,063,600
Dormitory Authority New York City University System
Consolidated 2nd General Revenue Bonds Series A 5.75 2018 5,500,000 5,147,725
Dormitory Authority New York State Department of Health
Refunding Revenue Bonds 5.50 2020 3,060,000 2,710,211
Dormitory Authority New York State University
Education Facility Revenue Bonds Series 1994B 5.75 2024 13,770,000 12,594,730
New York City General Obligation Bonds Series B 6.75 2017 11,150,000 11,254,587
New York City General Obligation Bonds Series 1995B 7.00 2016 8,850,000 9,265,331
New York City General Obligation Bonds Series 1996F 5.75 2019 8,955,000 8,046,067
New York City General Obligation Bonds Series 1996I 5.875 2018 3,000,000 2,743,710
New York City General Obligation Bonds Series 1996J 5.875 2019 10,000,000 9,119,100
New York City Municipal Water Finance Authority
Water & Sewer System
Revenue Linked Bonds (MBIA Insured) 5.21 2013 10,000,000 9,393,500
State Medical Care Facility Finance Agency
Mental Health Services Facility Improvement
Refunding Revenue Bonds Series 1993F 5.375 2014 7,510,000 6,693,438
State Mortgage Agency Homeowner
Mortgage Revenue Bonds Series TT 7.50 2015 15,945,000 (h) 16,883,523
State Urban Development Correctional Capital Facility
Revenue Bonds Series 4 5.375 2023 33,815,000 29,067,036
________________
Total 139,982,558
_____________________________________________________________________________________________________________________________
North Carolina (3.3%)
Eastern Municipal Power Agency System
Refunding Revenue Bonds Series 1989A 6.50 2024 20,000,000 19,537,800
Eastern Municipal Power Agency System Revenue Bonds
Series D 5.60 2016 5,500,000 4,966,995
Eastern Municipal Power Agency System Revenue Bonds
Series G 5.75 2016 12,750,000 11,675,303
______________
Total 36,180,098
_____________________________________________________________________________________________________________________________
Ohio (0.8%)
Columbus Sewerage System Refunding Revenue Bonds
Series 1992 6.30 2005 3,500,000 3,749,585
State Air Quality Development Authority Edison Pollution Control
Refunding Revenue Bonds Series A 5.95 2029 5,000,000 4,508,750
Water & Air Quality Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Series 1995 7.70 2025 300,000 302,184
______________
Total 8,560,519
_____________________________________________________________________________________________________________________________
Oklahoma (0.2%)
Valley View Hospital Authority
Refunding Revenue Bonds Series 1996 6.00 2014 2,695,000 2,492,605
_____________________________________________________________________________________________________________________________<PAGE>
Pennsylvania (2.9%)
Delaware County Industrial Development Authority Pollution Control
Refunding Revenue Bonds Philadelphia Electric Company 7.375 2021 23,540,000 24,845,999
State Housing Finance Agency Single Family Mortgage
Revenue Bonds Series 1987L 7.125 2014 6,165,000 6,412,895
______________
Total 31,258,894
_____________________________________________________________________________________________________________________________
Rhode Island (0.1%)
Providence Special Tax Increment Obligation Bonds
Series D
6.65 2016 1,500,000 1,493,595
_____________________________________________________________________________________________________________________________
South Carolina (0.4%)
Horry County Hospital Refunding Revenue Bonds
Conway Hospital Series 1992 6.75 2012 4,000,000 4,052,280
_____________________________________________________________________________________________________________________________
Tennessee (0.1%)
Metropolitan Government Nashville & Davidson County
Electric System Revenue Bonds
Series 1996A Zero Coupon (MBIA Insured) 5.85 2010 3,150,000 (d) 1,408,775
_____________________________________________________________________________________________________________________________
Texas (11.5%)
Austin Utility System Capital Appreciation
Refunding Revenue Bonds Zero Coupon (AMBAC Insured) 6.51 2010 5,055,000 (d) 2,178,048
Austin Utility System Capital Appreciation
Refunding Revenue Bonds Zero Coupon (MBIA Insured) 6.80 2010 16,000,000 (d) 6,893,920
Austin Utility System Combined Utility
Refunding Revenue Bonds Series 1992 (AMBAC Insured) 6.25 2006 10,500,000 (h) 11,224,080
Coastal Water Authority Water Conveyance System
Refunding Revenue Bonds Series 1991 (AMBAC Insured) 6.25 2017 5,000,000 5,000,400
Cypress-Fairbanks Independent School District Harris County
Unlimited Tax Schoolhouse Bonds
Series 1990 (FGIC Insured) 6.50 2008 1,500,000 1,600,965
Harris County Health Facilities Development Hermann Hospital
Revenue Bonds (MBIA Insured) 6.375 2024 8,820,000 9,071,105
Houston Water & Sewer System Junior Lien
Refunding Revenue Bonds
Series C Zero Coupon (AMBAC Insured) 6.60 2008 8,000,000 (d) 3,948,240
Municipal Power Agency Bonds (BIG Insured) 6.25 2010 7,000,000 7,335,580
Municipal Power Agency Capital Appreciation
Refunding Revenue Bonds
Zero Coupon (AMBAC Insured) 6.90 2009 18,000,000 (d) 8,406,000
San Antonio Electric & Gas Systems Refunding Revenue Bonds
Series 1989 6.00 2014 6,000,000 6,002,280
San Antonio Electric & Gas Systems Refunding Revenue Bonds
Series 1989-89A 6.50 2012 26,250,000 27,257,475
San Antonio Water Refunding Revenue Bonds (FGIC Insured) 6.40 2007 25,000,000 26,615,250
State Turnpike Authority Revenue Bonds 6.00 2020 10,000,000 10,371,400
______________
Total 125,904,743
_____________________________________________________________________________________________________________________________
Virginia (0.7%)
Arlington County Industrial Development Authority Hospital Facility
Refunding Revenue Bonds Arlington Hospital
(Secondary MBIA Insured) 5.00 2021 5,500,000 4,782,415
Augusta County Industrial Development Authority Hospital
Refunding Revenue Bonds Augusta Hospital
Series 1993 (AMBAC Insured) 5.125 2021 3,600,000 3,184,164
______________
Total 7,966,579
_____________________________________________________________________________________________________________________________
Washington (7.7%)
Auburn School District #408 King County Unlimited Tax
General Obligation Bonds Series 1992A 6.375 2006 8,000,000 8,618,960
Issaquah School District #411 King County Unlimited Tax
General Obligation Refunding Bonds 1992 6.375 2008 16,675,000 17,903,281
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A 6.80 2026 2,500,000 2,584,400
Public Power Supply System Nuclear Project #1
Revenue Bonds Series 1989A 6.00 2017 12,130,000 11,790,360
Public Power Supply System Nuclear Project #3
Capital Appreciation Refunding Revenue Bonds
Series B Zero Coupon (MBIA Insured) 6.61 2013 10,360,000 (d) 3,668,683
State Public Power Supply System Nuclear Project #1
Refunding Revenue Bonds Bonneville Power Administration
Series 1993A Inverse Floater (FSA Insured) 5.61 2011 30,000,000 (e) 29,850,600
State Public Power Supply System Nuclear Project #2
Revenue Bonds Inverse Floater 5.40 2012 10,950,000 (e) 10,014,103
______________
Total 84,430,387
_____________________________________________________________________________________________________________________________
West Virginia (0.9%)
School Building Authority Capital Improvement
Revenue Bonds Series 1990B (MBIA Insured) 6.00 2020 9,730,000 9,619,467
_____________________________________________________________________________________________________________________________
Wyoming (0.3%)
Community Development Authority Single Family Mortgage Bonds
Federally Insured or Guaranteed Mortgage Loan 7.40 2031 3,510,000 3,691,467
_____________________________________________________________________________________________________________________________
Total municipal bonds
(Cost: $970,819,980) $1,036,989,223
___________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (4.7%)
_____________________________________________________________________________________________________________________________
Issuer (c,f,g) Effective Amount Value(a)
yield payable at
maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Municipal notes
Burke County Georgia Pollution Control Revenue Bonds
Georgia Power & Light Series 1994
07-01-24 3.85% $ 5,400,000 $ 5,400,000
Columbia Alabama Industrial Development Board
Pollution Control Revenue Bonds
Alabama Power Series D
10-01-22 3.65 2,400,000 2,400,000
Illinois Development Finance Authority
Pollution Control Revenue Bonds
Amoco Oil Company Series 1994 V.R.
11-01-12 3.75 1,510,000 1,510,000
Jackson County Mississippi Port Facility
Refunding Bonds
Chevron Series 1993
06-01-23 3.70 7,000,000 7,000,000
Lincoln County Wyoming Pollution Control
Revenue Bonds
Exxon Series 1984A V.R.
11-01-14 3.60 4,000,000 4,000,000
Maricopa County Arizona Pollution Control
Revenue Bonds
Arizona Public Service Series 1994B V.R.
05-01-29 3.75 1,300,000 1,300,000
Maricopa County Arizona Pollution Control
Revenue Bonds
Arizona Public Service V.R.
05-01-29 3.70 3,200,000 3,200,000
Michigan State Refunding Revenue Bonds
University of Michigan Hospital Series A V.R.
12-01-19 3.70 12,000,000 12,000,000
Missouri Health & Educational Facilities Authority
Washington University Series 1996B V.R.
09-01-30 3.80 2,000,000 2,000,000
Missouri Health & Educational Facilities Authority
Washington University Series B V.R.
09-01-30 3.80 3,000,000 3,000,000
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds V.R.
(FGIC Insured)
06-15-23 3.60 4,300,000 4,300,000
Tustin California General Improvement Bonds
V.R.
09-02-13 3.50 5,000,000 5,000,000
____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $51,110,000) $ 51,110,000
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,021,929,980)(i) $1,088,099,223
_____________________________________________________________________________________________________________________________<PAGE>
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 5-31-96 11-30-95
_______________________________________________________________________________________________________
AAA 42% 44%
AA 17 18
A 16 17
BBB 25 21
BB and below - -
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) 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, 1996. Inverse floaters in the aggregate represent 5.1% of the Fund's net assets as of May 31, 1996.
(f) Interest rate varies to reflect current market conditions; rates shown are the effective rates on May 31, 1996.
(g) The following abbreviation is used in portfolio description:
V.R. -- Variable Rate
(h) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 6 to the financial statements):
Type of security Notional amount
Purchase contracts
U.S. Treasury Bonds June 1996 $40,000,000
(i) At May 31, 1996, the cost of securities for federal income tax purposes was approximately $1,021,182,000 and the
approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $69,989,000
Unrealized depreciation (3,072,000)
______________________________________________________________________________________________________
Net unrealized appreciation $66,917,000
______________________________________________________________________________________________________
</TABLE>
PAGE
Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board members
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.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Readers's Digest Association, Inc.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
_____________________________________________________________________
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
Officers who also are officers and/or employees of AEFC
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.
(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) two coins<PAGE>
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) shield with eagle head
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 U.S. equity securities, U.S. and foreign debt
securities, foreign equity securities and money market
instruments. The fund provides diversification among these
major investments categories and has a target mix that
represents the way the fund's investments will be allocated
over the long term.
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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
