<PAGE>
1997 ANNUAL REPORT
IDS
Tax-Exempt
Bond Fund
(prospectus enclosed)
(icon of) shield with Greek column
The goal 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.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment policies, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) shield 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.
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Contents
(icon of) one open book inside of another
The purpose of this annual report is to tell investors how the Fund performed.
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
1997 annual report
From the chairman 4
From the portfolio manager 4
The Fund's ten largest holdings 6
Making the most of the Fund 7
The Fund's long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 21
IDS mutual funds 32
Federal income tax information 36
1998 prospectus
The Fund in brief 3p
Goal 3p
Investment policies and risks 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative purchase arrangements 4p
Sales charge and Fund expenses 5p
Performance 7p
Financial highlights 7p
Total returns 9p
Yield 10p
Investment policies and risks 12p
Facts about investments and their risks 12p
Alternative investment option 14p
Valuing Fund shares 15p
How to purchase, exchange or redeem shares 16p
Alternative purchase arrangements 16p
How to purchase shares 18p
How to exchange shares 21p
How to redeem shares 22p
Reductions and waivers of the sales charge 27p
Special shareholder services 32p
Services 32p
Quick telephone reference 32p
Distributions and taxes 33p
Dividend and capital gain distributions 33p
Reinvestments 34p
Taxes 34p
How to determine the correct TIN 36p
How the Fund is organized 37p
Shares 37p
Voting rights 37p
Shareholder meetings 37p
Board members and officers 37p
Investment manager 39p
Administrator and transfer agent 40p
Distributor 41p
About American Express Financial Corporation 42p
General information 42p
Appendices 43p
1998 federal tax-exempt and taxable
equivalent yield calculations 43p
Descriptions of derivative instruments 45p
(This annual report is not part of the prospectus.)
<PAGE>
(picture of) William R. Pearce
Chairman of the board
(picture of) Terry L. Seierstad
Portfolio manager
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, 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. We saw
evidence of that in late October, when declines in certain Asian markets
spawned a sharp drop in several financial markets worldwide, including the
U.S.
That fact reinforces the need for investors to review periodically their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
(signature of) William R. Pearce
William R. Pearce
<PAGE>
From the portfolio manager
A well-positioned portfolio allowed IDS Tax-Exempt Bond Fund to capitalize
on an improving bond market and post a healthy gain for the past fiscal
year. For investors in the Fund's Class A shares, the total return, which
includes net asset value change and dividends, was 7.8% from December 1996
through November 1997. Most of the return came in the form of dividends.
The first several months of the period were something of a struggle,
however. Throughout most of the winter, concerns that inflation was about
to pick up led to a wave of bond-selling that, aside from a brief respite
in early February, drove interest rates up and bonds prices down until
late April.
Things got better from that point. Reassured by reports of still-tame
inflation and encouraged that Congress and the president had agreed to
bring the federal budget into balance, investors began moving back into
the bond market. The positive trend continued largely uninterrupted
through the end of November, resulting in falling interest rates and
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a strong bond rally that more than made up for the previous downturn.
Duration strategy helps
As for the Fund, its performance basically tracked that of the broad bond
market -- slipping early, then recovering well. Although the Fund's net
asset value did fluctuate with the swings in long-term interest rates,
volatility was limited by the close-to-neutral duration of the portfolio.
(Duration, a function of the average maturity of the portfolio's
investments, determines how sensitive the net asset value is to changes in
interest rates. The longer the duration, the greater the sensitivity.)
About mid-period, I lengthened the duration somewhat in anticipation of an
interest-rate decline. This strategy enhanced the Fund's value over the
ensuing months.
Also benefiting performance was the credit-quality "barbell" investment
approach I employed for most of the period. This involves investing
roughly equal amounts of assets in two categories -- AAA and BBB. The
higher yields offered by the BBB holdings provided a good complement to
the superior quality of the AAA securities. In addition, early in the
period, prices of BBB securities held up better than higher-rated
securities when interest rates rose. Late in the period, I reduced the BBB
holdings somewhat in favor of more AAA bonds, as I felt BBBs had lost some
of their price-appreciation potential.
As we begin a new fiscal year, I think the investment environment remains
favorable for bonds. Inflation appears to be still under control, and it
seems unlikely that the economy will grow at a strong-enough pace to drive
consumer prices meaningfully higher in the months head. On top of that,
the federal budget deficit continues to come down, another positive trend
that tends to hold down interest rates. Barring a major change in those
factors, I expect municipal bonds to continue to perform well.
(signature of Terry L. Seierstad)
Terry L. Seierstad
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $ 4.11
Nov. 30, 1996 $ 4.01
Increase $ 0.10
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $ 0.21
From capital gains $ --
Total distribution $ 0.21
Total return* +7.8%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $ 4.11
Nov. 30, 1996 $ 4.01
Increase $ 0.10
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $0.18
From capital gains $ --
Total distribution $0.18
Total return* +6.9%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $ 4.11
Nov. 30, 1996 $ 4.01
Increase $ 0.10
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $ 0.21
From capital gains $ --
Total distribution $ 0.21
Total return* +7.9%**
*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.
(This annual report is not part of the prospectus.)
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The Fund's ten largest holdings
(icon of) pie chart
The ten holdings listed here make up 22.15% of the Fund's net assets
Percent Value
(of Fund's net assets) (as of Nov. 30, 1997)
San Antonio Texas Water Refunding Revenue Bonds
(FGIC Insured)
6.40% 2007 2.67% $27,268,500
San Antonio Texas Electric & Gas Systems
Refunding Revenue Bonds Series 1989-89A
6.50% 2012 2.66 27,233,588
Delaware County Pennsylvania Industrial Development
Authority Pollution Control Refunding Revenue Bonds
Philadelphia Electric Series A
7.375% 2021 2.51 25,674,372
Public Building Commission of Chicago Illinois Building
Revenue Bonds Board of Education of Chicago
Series 1990A Escrowed to Maturity (MBIA Insured)
6.50% 2018 2.41 24,595,335
New York State Urban Development Correctional Capital
Facilities Revenue Bonds Series 4
5.375% 2023 2.26 23,096,263
Georgia Municipal Electric Authority Special
Obligation Bonds Project 1 4th Crossover Series X
(Secondary MBIA Insured)
6.50% 2020 2.24 22,935,278
Eastern North Carolina Municipal Power Agency
Power System Refunding Revenue Bonds Series 1989A
6.50% 2024 1.98 20,294,600
Dormitory Authority New York City Court
Facility Lease Revenue Bonds Series 1993A
5.25% 2021 1.87 19,091,600
Washington Issaquah School District 411 King County
Unlimited Tax General Obligation Refunding Bonds
Series 1992
6.375% 2008 1.87 19,069,530
New York State Mortgage Agency Homeowner
Mortgage Revenue Bonds Series TT
7.50% 2015 1.68 17,150,442
(This annual report is not part of the prospectus.)
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Making the most of the Fund
Build your assets systematically
One of the best ways to invest in the Fund is by dollar-cost averaging --
a time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly.
You'll automatically buy more shares when the Fund's share price is low,
fewer shares when it is high.
Using this strategy does not ensure a profit or avoid a loss if the market
declines, and requires that you be able to keep on investing on a regular
basis, even when the price of your shares falls or the market declines.
Investing in this manner can be an effective way to accumulate shares to
meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00 XXXXX
Feb 100 18 5.56 XXXXXx
March 100 17 5.88 XXXXXx
April 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more shares when the
per share market price is low...
(arrow in table pointing to September) and fewer shares when the per share
market price is high.
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
(This annual report is not part of the prospectus.)
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The Fund's long-term performance
Three ways to benefit from a mutual fund:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and
short-term gains exceed its expenses.
All three make up your total return and you potentially can increase your
investment if, like most investors, you reinvest your dividends and
capital gain distributions to buy additional shares of the Fund or another
fund.
How your $10,000 has grown in IDS Tax-Exempt Bond Fund
Lehman Brothers
Municipal Bond Index
$20,258
$20,000 Tax-Exempt
Bond Fund
Class A
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Assumes: oHolding period from 12/1/87 to 11/30/97. oReturns do not reflect
taxes payable on distributions. oReinvestment of all income and capital
gain distributions for the Fund, with a value of $22,152. Also see
"Performance" in the Fund's current prospectus.
Lehman Brothers Municipal Bond Index is made up of a representative list
of general obligation, revenue, insured and prefunded bonds. The index is
frequently used as a general measure of tax-exempt bond market
performance. However, the securities used to create the index may not be
representative of the bonds held in Tax-Exempt Bond Fund.
Average annual total return
(as of Nov. 30, 1997)
1 year Since Inception 5 years 10 years
Class A +2.39% --% +5.71% +7.31%
Class B +2.94% 5.67* --% --%
Class Y +7.87% 7.96* --% --%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to
widely cited performance measure, Lehman Brothers Municipal Bond Index. In
comparing Tax-Exempt Bond Fund (Class A) to the index, you should take
into account the fact that the Fund's performance reflects the maximum
sales charge of 5%, while such charges are not reflected in the
performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. Average annual
total return figures reflect the impact of the applicable sales charge up
to a maximum of 5%. This was a period of widely fluctuating security
prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
The financial statements contained in Post-Effective Amendment #43 to
Registration Statement No. 2-57328 filed on or about January 27, 1997 are
incorporated herein by reference.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
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. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
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. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised mainly of 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
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 a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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 funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. 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
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.
<PAGE>
Federal income tax information
IDS Tax-Exempt Bond Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. The dividends listed below were reported to you on Form
1099-DIV, Dividends and Distributions.
IDS Tax-Exempt Bond Fund
Fiscal year ended Nov. 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.01673
Jan. 29, 1997 0.01902
Feb. 26, 1997 0.01732
March 26, 1997 0.01568
April 28, 1997 0.01898
May 28, 1997 0.01689
June 26, 1997 0.01662
July 25, 1997 0.01637
Aug. 27, 1997 0.01838
Sept. 25, 1997 0.01674
Oct. 28, 1997 0.01860
Nov. 25, 1997 0.01615
Total 0.20748
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00029
Total distributions $0.20777
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.01426
Jan. 29, 1997 0.01624
Feb. 26, 1997 0.01501
March 26, 1997 0.01337
April 28, 1997 0.01631
May 28, 1997 0.01443
June 26, 1997 0.01421
July 25, 1997 0.01394
Aug. 27, 1997 0.01560
Sept. 25, 1997 0.01430
Oct. 28, 1997 0.01581
Nov. 25, 1997 0.01378
Total $0.17726
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00029
Total distributions $0.17755
Class Y
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.01728
Jan. 29, 1997 0.01965
Feb. 26, 1997 0.01784
March 26, 1997 0.01619
April 28, 1997 0.01958
May 28, 1997 0.01722
June 26, 1997 0.01682
July 25, 1997 0.01660
Aug. 27, 1997 0.01864
Sept. 25, 1997 0.01697
Oct. 28, 1997 0.01883
Nov. 25, 1997 0.01637
Total $0.21199
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00029
Total distributions $0.21228
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax adviser about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus)
<PAGE>
Source of income by state
Percentages of income from municipal securities earned by the Fund from
various states during the year ended Nov. 30, 1997 are listed below.
Alabama 0.431%
Alaska 0.752
Arizona 3.388
California 8.854
Colorado 1.637
Connecticut 0.843
Delaware 0.207
Florida 3.461
Georgia 2.843
Hawaii 0.630
Idaho 0.380
Illinois 8.613
Indiana 2.841
Iowa 0.429
Kansas 0.126
Kentucky 0.785
Louisiana 2.409
Maryland 2.678
Massachusetts 2.310
Michigan 2.748
Minnesota 3.243
Mississippi 0.071
Missouri 1.609
Nevada 0.237
New Hampshire 0.043
New Jersey 1.704
New Mexico 0.085
New York 13.970
North Carolina 3.986
North Dakota 0.449
Ohio 0.896
Oklahoma 0.325
Pennsylvania 4.300
Rhode Island 0.163
South Carolina 0.441
Tennessee 0.031
Texas 13.400
Utah 0.012
Virginia 0.491
Washington 4.510
Washington, DC 2.020
West Virginia 0.991
Wisconsin 0.158
Wyoming 0.500
(This annual report is not part of the prospectus.)
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Tax-Exempt Bond Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
