<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. 31 (File No. 2-63552) /X/
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 32 (File No. 811-2901) /X/
------------------------
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
IDS Tower 10, Minneapolis, MN 55440
Leslie L. Ogg
901 S. Marquette Avenue, Suite 2810
Minneapolis, MN 55440-0010
(612) 330-9283
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/X/ on March 20, 1995 pursuant to paragraph (b) of rule 485
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i) of rule 485
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/X/ This Post-Effective Amendment designates a new effective
date for a previously filed Post-Effective Amendment.
------------------------
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SECURITIES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO SECTION 24(F) OF THE INVESTMENT COMPANY ACT
OF 1940. REGISTRANT FILED ITS 24F-2 NOTICE FOR THE FISCAL PERIOD ENDED NOVEMBER
30, 1994, ON OR ABOUT JANUARY 30, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
SHOWING LOCATION IN THE PROSPECTUS OF THE INFORMATION CALLED FOR
BY THE ITEMS ENUMERATED IN PARTS A AND B OF FORM N-1A.
Negative answers omitted from Part A or Part B are so indicated.
<TABLE>
<CAPTION>
PART A
- ---------------------------------------------------------------------------------
ITEM NO. SECTION IN PROSPECTUS
- ------------ ------------------------------------------------------------------
<C> <S>
1 Cover page of prospectus
2 The fund in brief; Sales charge and fund expenses
3(a) Financial highlights
(b) NA
(c) Performance
(d) Financial highlights
4(a) The fund in brief; Investment policies and risks; How the fund is
organized
(b) Investment policies and risks
(c) Investment policies and risks
5(a) Directors and officers; Directors and officers of the fund
(listing)
(b) How the fund is organized; About American Express Financial
Corporation
(b)(i) About American Express Financial Corporation -- General
information
(b)(ii) Investment manager and transfer agent
(b)(iii) Investment manager and transfer agent
(c) Portfolio manager
(d) The fund in brief
(e) Investment manager and transfer agent
(f) Distributor
(g) Investment manager and transfer agent
5A(a) *
(b) *
6(a) Shares; Voting rights
(b) NA
(c) NA
(d) Voting rights
(e) Cover page; Special shareholder services
(f) Dividends and capital gain distributions; Reinvestments
(g) Taxes
7(a) Distributor
(b) Key terms; Valuing assets
(c) How to buy, exchange or sell shares
(d) How to buy shares
(e) NA
(f) Distributor
8(a) How to sell shares
(b) NA
(c) How to buy shares: Three ways to invest
(d) How to buy, exchange or sell shares: Redemption policies --
"Important..."
9 None
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B
- ---------------------------------------------------------------------------------
ITEM NO. SECTION IN SAI
- ------------ ------------------------------------------------------------------
<C> <S>
10 Cover page of SAI
11 Table of Contents
12 NA
13(a) Additional Investment Policies; all appendices except Dollar-Cost
Averaging
(b) Additional Investment Policies
(c) Additional Investment Policies
(d) Portfolio Transactions
14(a) Directors and officers of the fund;** Directors and Officers
(b) Directors and Officers
(c) Directors and Officers
15(a) NA
(b) NA
(c) Directors and Officers
16(a)(i) How the fund is organized; About American Express Financial
Corporation**
(a)(ii) Agreements: Investment Management Services Agreement, Plan and
Agreement of Distribution
(a)(iii) Agreements: Investment Management Services Agreement
(b) Agreements: Investment Management Services Agreement
(c) NA
(d) Agreements: Administrative Services Agreement, Shareholder Service
Agreement
(e) NA
(f) Agreements: Distribution Agreement
(g) NA
(h) Custodian; Independent Auditors
(i) Agreements: Transfer Agency Agreement; Custodian
17(a) Portfolio Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with American
Express Financial Corporation
(c) Portfolio Transactions
(d) Portfolio Transactions
(e) Portfolio Transactions
18(a) Shares and Voting rights**
(b) NA
19(a) Investing in the Fund
(b) Valuing Fund Shares; Investing in the Fund
(c) NA
20 Taxes
21(a) Agreements: Distribution Agreement
(b) Agreements: Distribution Agreement
(c) NA
22(a) Performance Information (for money market funds only)
(b) Performance Information (for all funds except money market funds)
23 Financial Statements
<FN>
- ------------------------
*Designates information is located in annual report.
**Designates page number in prospectus.
</TABLE>
<PAGE>
This prospectus IDS
contains facts that can HIGH
help you decide if the YIELD
fund is the right TAX-EXEMPT
investment for you. FUND
Read it before you
invest and keep it for PROSPECTUS
future reference. MARCH 20, 1995
Additional facts about [GRAPHIC]
the fund are in a
Statement of Additional THE GOAL OF IDS HIGH
Information (SAI), YIELD TAX-EXEMPT FUND,
filed with the INC. IS TO PROVIDE HIGH
Securities and Exchange YIELD GENERALLY EXEMPT
Commission. The SAI, FROM FEDERAL INCOME
dated March 20, 1995, TAXES.
is incorporated here by
reference. For a free American Express
copy, contact American Shareholder Service
Express Shareholder P.O. Box 534
Service. Minneapolis, MN
55440-0534
THESE SECURITIES HAVE 612-671-3733
NOT BEEN APPROVED OR TTY: 800-846-4852
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION,
NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES
COMMISSION PASSED UPON
THE ACCURACY OR
ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
SHARES IN THE FUND
ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY, ANY
BANK, AND SHARES ARE
NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION,
THE FEDERAL RESERVE
BOARD, OR ANY
OTHER AGENCY.
<PAGE>
- ------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------
THE FUND IN BRIEF
Goal 3P
Types of fund investments 3P
Manager and distributor 3P
Portfolio manager 3P
Alternative sales arrangements 3P
- ------------------------------------------
SALES CHARGE AND FUND EXPENSES
- ------------------------------------------
PERFORMANCE
Financial highlights 6P
Total returns 7P
Yield 8P
Key terms 9P
- ------------------------------------------
INVESTMENT POLICIES AND RISKS
Facts about investments and their
risks 10P
Alternative investment option 13P
Valuing assets 13P
- ------------------------------------------
HOW TO BUY, EXCHANGE OR SELL SHARES
Alternative sales arrangements 14P
How to buy shares 17P
How to exchange shares 19P
How to sell shares 19P
Reductions and waivers of the
sales charge 24P
- ------------------------------------------
SPECIAL SHAREHOLDER SERVICES
Services 29P
Quick telephone reference 29P
- ------------------------------------------
DISTRIBUTIONS AND TAXES
Dividend and capital gain
distributions 30P
Reinvestments 31P
Taxes 31P
- ------------------------------------------
HOW THE FUND IS ORGANIZED
Shares 35P
Voting rights 35P
Shareholder meetings 36P
Directors and officers 36P
Investment manager and transfer
agent 38P
Distributor 39P
- ------------------------------------------
ABOUT AMERICAN EXPRESS FINANCIAL CORPORATION
General information 40P
- ------------------------------------------
APPENDICES
A. Description of bond ratings 41P
B. 1995 Federal tax information 43P
C. Descriptions of derivative
instruments 46P
2P
<PAGE>
----------------------------------------------------------
The fund in brief
GOAL
IDS High Yield Tax-Exempt Fund seeks to provide shareholders with
a high yield generally exempt from federal income taxes. Because
any investment involves risk, achieving this goal cannot be
guaranteed. Only shareholders can change the goal.
TYPES OF FUND INVESTMENTS
The fund is a diversified mutual fund that usually invests in
medium- and lower-quality bonds and notes issued by or on behalf
of state and local governmental units whose interest generally is
exempt from federal income tax. The fund also may invest in
derivative instruments and money market instruments. Some of the
fund's investments may be considered speculative and involve
additional investment risks.
MANAGER AND DISTRIBUTOR
The fund is managed by American Express Financial Corporation, a
provider of financial services since 1894. American Express
Financial Corporation currently manages more than $37 billion in
assets for the IDS MUTUAL FUND GROUP. Shares of the fund are sold
through American Express Financial Advisors Inc., a wholly
owned subsidiary of American Express Financial Corporation.
PORTFOLIO MANAGER
Kurt Larson joined American Express Financial Corporation in 1961
and serves as vice president and senior portfolio manager. He has
managed this fund since 1979.
ALTERNATIVE SALES ARRANGEMENTS
The fund offers its shares in three classes. Class A shares are
subject to a sales charge at the time of purchase. Class B shares
are subject to a contingent deferred sales charge (CDSC) on
redemptions made within 6 years of purchase and an annual
distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors. Other differences
between the classes include the fees paid by each class. The fund
offers these alternatives so you may choose the method of
purchasing shares that is most beneficial given the amount of
purchase, length of time you expect to hold the shares and other
circumstances.
3P
<PAGE>
----------------------------------------------------------
Sales charge and fund expenses
When you buy Class A shares, you pay a maximum sales charge of 5%
of the public offering price. This charge can be reduced,
depending on your total investments in IDS funds. See "Reductions
of the sales charge." No sales charge applies at the time of
purchase of Class B shares, although Class B shares may be
subject to a CDSC on redemptions made within 6 years and are
subject to annual distribution (12b-1) fees. Class Y shares are
sold without a sales charge to qualifying institutional
investors. Shareholder transaction expenses are incurred directly
by an investor on the purchase or redemption of fund shares. Fund
operating expenses are paid out of fund assets for each class of
shares. Operating expenses are reflected in the fund's daily
share price and dividends, and are not charged directly to
shareholder accounts.
-------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
<S> <C> <C> <C>
Maximum sales charge on
purchases (as a percentage of
offering price)............... 5% 0% 0%
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original
purchase price)............... 0% 5% 0%
-----------------------------------------------------------
</TABLE>
-------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES*
(% OF AVERAGE DAILY NET ASSETS):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
<S> <C> <C> <C>
-----------------------------------------------------------
Management fee............... 0.44% 0.44% 0.44%
-----------------------------------------------------------
12b-1 fee.................... 0.00% 0.75% 0.00%
-----------------------------------------------------------
Other expenses**............. 0.28% 0.28% 0.10%
-----------------------------------------------------------
Total........................ 0.72% 1.47% 0.54%
<FN>
*Expenses for Class A are based on actual expenses for the
last fiscal year, restated to reflect current fees. Expenses
for Class B and Class Y are estimated based on the restated
expenses for Class A, except that the 12b-1 fee and transfer
agent fee (under other expense) for Class B are based on
agreements for that class.
**Other expenses include an administrative services fee, a
shareholder services fee, a transfer agent fee and other
non-advisory expenses.
</TABLE>
4P
<PAGE>
- --------------------------------------------------------------------------------
EXAMPLE: Suppose for each year for the next 10 years, fund
expenses are as above and annual return is 5%. If you sold your
shares at the end of the following years, for each $1,000
invested, you would pay total expenses of:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years**
<S> <C> <C> <C> <C>
------------------------------------------------------------------------
Class A...................... $57 $72 $88 $135
------------------------------------------------------------------------
Class B...................... $65 $86 $99 $154
------------------------------------------------------------------------
Class B*..................... $15 $46 $79 $154
------------------------------------------------------------------------
Class Y...................... $6 $17 $30 $68
<FN>
*Assuming Class B shares are not redeemed at the end of the
period.
**Based on conversion of Class B shares to Class A shares after
8 years.
</TABLE>
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE.
ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN. Because
Class B pays annual distribution (12b-1) fees, long-term
shareholders of Class B may indirectly pay an equivalent of more
than a 6.25% sales charge, the maximum permitted by the National
Association of Securities Dealers.
5P
<PAGE>
----------------------------------------------------------
Performance
FINANCIAL HIGHLIGHTS
FISCAL PERIOD ENDED NOV. 30,
- ------------------------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991** 1990 1989 1988 1987 1986 1985
---------------------------------------------------------------------------------------
Net asset value, $4.76 $4.65 $4.55 $4.44 $4.57 $4.42 $4.34 $4.69 $4.30 $3.93
beginning of period
INCOME FROM INVESTMENT OPERATIONS:
---------------------------------------------------------------------------------------
Net investment .30 .30 .31 .30 .34 .34 .34 .35 .36 .38
income
---------------------------------------------------------------------------------------
Net gains (losses) (.56) .13 .12 .11 (.12) .15 .08 (.34) .49 .40
(both realized and
unrealized)
---------------------------------------------------------------------------------------
Total from (.26) .43 .43 .41 .22 .49 .42 .01 .85 .78
investment
operations
LESS DISTRIBUTIONS:
---------------------------------------------------------------------------------------
Dividends from net (.30) (.30) (.32) (.30) (.34) (.34) (.34) (.35) (.36) (.38)
investment income
---------------------------------------------------------------------------------------
Distributions from (.02) (.02) (.01) -- (.01) -- -- (.01) (.10) (.03)
realized gains
---------------------------------------------------------------------------------------
Total distributions (.32) (.32) (.33) (.30) (.35) (.34) (.34) (.36) (.46) (.41)
---------------------------------------------------------------------------------------
Net asset value, end $4.18 $4.76 $4.65 $4.55 $4.44 $4.57 $4.42 $4.34 $4.69 $4.30
of period
</TABLE>
- --------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 ** 1990 1989 1988 1987 1986 1985
---------------------------------------------------------------------------------------
Net assets, end of $5,769 $6,733 $6,036 $5,291 $4,750 $4,594 $4,070 $3,740 $3,730 $2,555
period (in millions)
---------------------------------------------------------------------------------------
Ratio of expenses to .59% .61% .62% .60%+ .60% .60% .59% .60% .60% .62%
average daily net
assets
---------------------------------------------------------------------------------------
Ratio of net income 6.50% 6.32% 6.86% 7.26%+ 7.62% 7.50% 7.66% 7.80% 7.84% 9.22%
to average daily net
assets
---------------------------------------------------------------------------------------
Portfolio turnover 17% 10% 12% 10% 22% 7% 13% 15% 12% 21%
rate (excluding
short-term
securities)
---------------------------------------------------------------------------------------
Total return++ (5.8%) 9.6% 9.7% 10.1%+ 5.5% 11.7% 11.2% (1.8%) 22.7% 21.1%
<FN>
*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.
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
</TABLE>
The information in this table has been audited by KPMG Peat
Marwick LLP, independent auditors. The independent auditors'
report and additional information about the performance of the
fund are contained in the fund's annual report which, if not
included with this prospectus, may be obtained without charge.
Information on Class B and Class Y shares is not included because
no shares of those classes were outstanding for the periods
shown.
6P
<PAGE>
- --------------------------------------------------------------------------------
TOTAL RETURNS
-------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
AS OF NOV. 30, 1994
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
PURCHASE MADE AGO AGO AGO
<S> <C> <C> <C>
High Yield Tax-Exempt:
------------------------------------------------------------
Class A -10.48% +4.56% +8.52%
------------------------------------------------------------
Lehman Brothers Municipal
Bond Index -5.23% +6.63% +9.18%
</TABLE>
-------------------------------------------------------------
CUMULATIVE TOTAL RETURNS
AS OF NOV. 30, 1994
<TABLE>
<CAPTION>
10
1 YEAR 5 YEARS YEARS
PURCHASE MADE AGO AGO AGO
<S> <C> <C> <C>
High Yield Tax-Exempt:
-----------------------------------------------------------
Class A -10.48% +24.94% +126.55%
-----------------------------------------------------------
Lehman Brothers Municipal
Bond Index -5.23% +37.82% +140.58%
</TABLE>
These examples show total returns from hypothetical investments
in Class A shares of the fund. These returns are compared to
those of a popular index for the same periods. No shares for
Class B and Class Y were outstanding during the periods
presented.
For purposes of calculation, information about the fund assumes:
- a sales charge of 5% for Class A shares
- no adjustments for taxes an investor may have paid on the
reinvested income and capital gains
- a period of widely fluctuating securities prices. Returns shown
should not be considered a representation of the fund's future
performance.
The fund invests primarily in debt securities that may be
different from those in the index. The index reflects
reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.
Lehman Brothers Municipal Bond Index is made up of a
representative list of general obligation, revenue, insured and
pre-refunded 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 the fund.
7P
<PAGE>
- ---------------------------------------------------------------------------
Performance
YIELD
The fund's SEC standardized yield for the 30-day period ended
Nov. 30, 1994, was 6.17%.
The fund calculates this 30-day SEC standardized yield by
dividing:
- net investment income per share deemed earned during a 30-day
period by
- the public offering price per share on the last day of the
period, and
- converting the result to a yearly equivalent figure.
The fund's non-standardized (distribution) yield was 6.55% for
the same 30-day period ended Nov. 30, 1994.
The fund computes distribution yield by dividing:
- the total dividends paid over the 30-day period by
- the sum of each day's public offering price for that period,
and
- converting the result to a yearly equivalent figure.
The fund also may calculate a tax equivalent yield by dividing
the tax-exempt portion of its yield by one minus a stated income
tax rate. A tax equivalent yield demonstrates the taxable yield
necessary to produce an after-tax yield equivalent to that of a
fund that invests in exempt obligations.
THESE YIELD CALCULATIONS DO NOT INCLUDE ANY CONTINGENT DEFERRED
SALES CHARGE, RANGING FROM 5% TO 0% ON CLASS B SHARES, WHICH
WOULD REDUCE THE YIELDS QUOTED.
The fund's yield varies from day to day, mainly because share
values and offering prices (which are calculated daily) vary in
response to changes in interest rates. Net investment income
normally changes much less in the short run. Thus, when interest
rates rise and share values fall, yield tends to rise. When
interest rates fall, yield tends to follow.
Past yields should not be considered an indicator of future
yields.
8P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
KEY TERMS
NET ASSET VALUE (NAV)
Value of a single fund share. For each class, it is the total
market value of all of a fund's investments and other assets
attributable to that class, less any liabilities attributable to
that class, divided by the number of shares of that class
outstanding.
When you buy shares, you pay the NAV plus any applicable sales
charge. When you sell shares, the price you receive is the NAV
minus any applicable sales charge. The NAV usually changes daily,
and is calculated at the close of business, normally 3 p.m.
Central time, each business day (any day the New York Stock
Exchange is open). NAV generally declines as interest rates
increase and rises as interest rates decline.
PUBLIC OFFERING PRICE
Price at which you buy shares. It is the NAV plus the sales
charge for Class A. It is the NAV for Class B and Class Y. NAVs
and public offering prices of IDS funds are listed each day in
major newspapers and financial publications for classes of funds
large enough to be listed.
INVESTMENT INCOME
Dividends and interest earned on securities held by the fund.
CAPITAL GAINS OR LOSSES
Increase or decrease in value of the securities the fund holds.
Gains or losses are realized when securities that have increased
or decreased in value are sold. A fund also may have unrealized
gains or losses when securities increase or decrease in value but
are not sold.
DISTRIBUTIONS
Payments to shareholders of two types: investment income
(dividends) and realized net long-term capital gains (capital
gains distributions).
TOTAL RETURN
Sum of all of your returns for a given period, assuming you
reinvest all distributions. Calculated by taking the total value
of shares you own at the end of the period (including shares
acquired by reinvestment), less the price of shares you purchased
at the beginning of the period.
AVERAGE ANNUAL TOTAL RETURN
The annually compounded rate of return over a given time period
(usually two or more years) -- total return for the period
converted to an equivalent annual figure.
YIELD
Net investment income earned per share for a specified time
period, divided by the offering price at the end of the period.
9P
<PAGE>
----------------------------------------------------------
Investment policies and risks
Under normal market conditions, the fund will invest at least 80%
of its net assets in bonds and notes issued by or on behalf of
state and local governmental units whose interest is exempt from
federal income tax according to the opinion of counsel for the
issuer and is not subject to the alternative minimum tax. This
policy may not be changed without shareholder approval. Other
investments include derivative instruments, money market
instruments and bonds subject to the alternative minimum tax
computation.
The various types of investments the portfolio manager uses to
achieve investment performance are described in more detail in
the next section and in the SAI.
FACTS ABOUT INVESTMENTS AND THEIR RISKS
BONDS AND NOTES EXEMPT FROM FEDERAL INCOME TAXES: The fund
usually invests in medium- and lower-quality notes rated A, BBB
or BB by Standard & Poor's Corporation, Moody's Investors
Service, Inc. or Fitch Investors Services, Inc., or are
securities the portfolio manager believes have similar qualities
even though they are not rated or have been given a lower rating
by a rating agency. The fund invests in higher-quality bonds and
notes when the difference in yield between higher- and
lower-quality securities does not warrant the increase in risk or
there is not an adequate supply of lower-quality securities.
Medium-quality bonds and notes, those rated A and BBB, are
considered to have adequate protection of principal and interest,
but with some speculative characteristics over the longer term.
Lower-quality securities, those rated BB, are considered to have
moderate protection of principal and interest. Securities that
are subsequently downgraded in quality may continue to be held
and will be sold only when the fund's portfolio manager believes
it is advantageous to do so. Any security rated B or below is
considered speculative since it is more likely to experience a
default and may be referred to as a "junk bond."
10P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
BOND RATINGS AND HOLDINGS FOR FISCAL 1994
<TABLE>
<CAPTION>
AMERICAN
EXPRESS
S&P RATING FINANCIAL
(OR CORPORATION'S
PERCENT MOODY'S OR PROTECTION ASSESSMENT
OF NET FITCH'S OF PRINCIPAL OF UNRATED
ASSETS EQUIVALENT) AND INTEREST SECURITIES
<S> <C> <C> <C>
- --------------------------------------------------------
20.90% AAA Highest quality 4.97%
- --------------------------------------------------------
9.31 AA High quality --
- --------------------------------------------------------
Upper medium
22.94 A grade 0.07
- --------------------------------------------------------
22.76 BBB Medium grade 2.03
- --------------------------------------------------------
Moderately
2.81 BB speculative 7.25
- --------------------------------------------------------
0.58 B Speculative 2.15
- --------------------------------------------------------
Highly
-- CCC speculative 0.05
- --------------------------------------------------------
-- CC Poor quality --
- --------------------------------------------------------
-- C Lowest quality --
- --------------------------------------------------------
-- D In default 0.16
- --------------------------------------------------------
Unrated
18.03 Unrated securities 1.35
</TABLE>
(See Appendix A to this prospectus for further information
regarding ratings.)
BONDS SOLD AT A DEEP DISCOUNT: Some bonds are sold at deep
discounts because they do not pay interest until maturity. They
include zero coupon bonds and PIK (pay-in-kind) bonds. To comply
with tax laws, the fund has to recognize a computed amount of
interest income and pay dividends to shareholders even though no
cash has been received. In some instances, the fund may have to
sell securities to have sufficient cash to pay the dividends.
CONCENTRATION: The fund may invest more than 25% of its total
assets in industrial revenue bonds, but it does not intend to
invest more than 25% of its total assets in industrial revenue
bonds issued for companies in the same industry or state. As the
similarity in issuers increases, the potential for fluctuation in
the net asset value of the fund's shares also increases.
11P
<PAGE>
- ---------------------------------------------------------------------------
Investment policies and risks
DERIVATIVE INSTRUMENTS: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to
reduce transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or
no initial payment and a daily change in price based on or
derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of
instruments can be used to achieve the desired investment
performance characteristics. A small change in the value of the
underlying security, currency or index will cause a sizable gain
or loss in the price of the derivative instrument. Derivative
instruments allow the portfolio manager to change the investment
performance characteristics very quickly and at lower costs.
Risks include losses of premiums, rapid changes in prices,
defaults by other parties, and inability to close such
instruments. The fund will use derivative instruments only to
achieve the same investment performance characteristics it could
achieve by directly holding those securities and currencies
permitted under the investment policies. The fund will designate
cash or appropriate liquid assets to cover its portfolio
obligations. The use of derivative instruments may produce
taxable income. No more than 5% of the fund's net assets can be
used at any one time for good faith deposits on futures and
premiums for options on futures that do not offset existing
investment positions. For further information, see Appendix C to
this prospectus.
12P
<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND DERIVATIVE INSTRUMENTS THAT ARE ILLIQUID: Illiquid
means the security or derivative instrument cannot be sold
quickly in the normal course of business. Some investments cannot
be resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
of directors and consider relevant factors such as the nature of
the security and the number of likely buyers when determining
whether a security is illiquid. No more than 10% of the fund's
net assets will be held in securities and derivative instruments
that are illiquid.
MONEY MARKET INSTRUMENTS: Short-term tax-exempt debt securities
rated in the top two grades are used to meet daily cash needs and
at various times to hold assets until better investment
opportunities arise. Under extraordinary conditions where, in the
opinion of the portfolio manager, appropriate short-term tax-
exempt securities are not available, the fund is authorized to
make certain taxable investments as described in the SAI.
The investment policies described above may be changed by the
board of directors.
ALTERNATIVE INVESTMENT OPTION
In the future, the board of the fund may determine for operating
efficiencies to use a master/feeder structure. Under that
structure, the fund's investment portfolio would be managed by
another investment company with the same goal as the fund, rather
than investing directly in a portfolio of securities.
VALUING ASSETS
- Securities (except bonds) and assets with available market
values are valued on that basis.
- Securities maturing in 60 days or less are valued at amortized
cost.
- Bonds and assets without readily available market values are
valued according to methods selected in good faith by the board
of directors.
13P
<PAGE>
----------------------------------------------------------
How to buy, exchange or sell shares
ALTERNATIVE SALES ARRANGEMENTS
The fund offers three different classes of shares -- Class A,
Class B and Class Y. The primary differences among the classes
are in the sales charge structures and in their ongoing expenses.
These differences are summarized in the table below. You may
choose the class that best suits your circumstances and
objectives.
<TABLE>
<CAPTION>
SERVICE FEE
SALES CHARGE AND (AS A % OF AVERAGE
DISTRIBUTION (12B-1) FEE DAILY NET ASSETS) OTHER INFORMATION
<S> <C> <C> <C>
----------------------------------------------------------
Class A Maximum initial sales charge Service fee of 0.175% Initial sales charge waived
of 5% or reduced for certain
purchases
----------------------------------------------------------
Class B No initial sales charge; Service fee of 0.175% Shares convert to Class A
distribution fee of 0.75% of after 8 years; CDSC waived
daily net assets; maximum in certain circumstances
CDSC of 5% declines to 0%
after 6 years
----------------------------------------------------------
Class Y None None Available only to certain
qualifying institutional
investors
</TABLE>
CONVERSION OF CLASS B SHARES TO CLASS A SHARES -- Eight calendar
years after Class B shares were originally purchased, Class B
shares will convert to Class A shares and will no longer be
subject to a distribution fee. The conversion will be on the
basis of relative net asset values of the two classes, without
the imposition of any sales charge. Class B shares purchased
through reinvested dividends and distributions will convert to
Class A shares in a pro-rata portion as the Class B shares
purchased other than through reinvestment.
14P
<PAGE>
- --------------------------------------------------------------------------------
CONSIDERATIONS IN DETERMINING WHETHER TO PURCHASE CLASS A OR CLASS B SHARES --
You should consider the information below in determining whether to purchase
Class A or Class B shares.
SALES CHARGES ON PURCHASE OR REDEMPTION
IF YOU PURCHASE CLASS A SHARES IF YOU PURCHASE CLASS B SHARES
- - You will not have all of your purchase - All of your money is invested in
price invested. Part of your purchase shares of stock. However, you
price will go to pay the sales charge. will pay a sales charge if you
You will not pay a sales charge when redeem your shares within 6 years
you redeem your shares. of purchase.
- - You will be able to take advantage of - No reductions of the sales charge
reductions in the sales charge. If are available for large
your investments in IDS funds total purchases.
$250,000 or more, you are better off
paying the reduced sales charge in
Class A than paying the higher fees in
Class B. If you qualify for a waiver
of the sales charge, you should
purchase Class A shares.
- - The sales charges and distribution fee are structured so that you will have
approximately the same total return at the end of 8 years regardless of which
class you chose.
ONGOING EXPENSES
- - Your shares will have a lower expense - The distribution and transfer
ratio than Class B shares because agent fees for Class B will cause
Class A does not pay a distribution your shares to have a higher
fee and the transfer agent fee for expense ratio and to pay lower
Class A is lower than the fee for dividends than Class A shares.
Class B. As a result, Class A shares After 8 years, Class B shares
will pay higher dividends than Class B will convert to Class A shares
shares. and will no longer be subject to
higher fees.
You should consider how long you plan to hold your shares and whether the
accumulated higher fees and CDSC on Class B shares prior to conversion would be
less than the initial sales charge on Class A shares. Also consider to what
extent the difference would be offset by the lower expenses on Class A shares.
To help you in this analysis, the Example in the "Sales charge and fund
expenses" section of the prospectus illustrates the charges applicable to each
class of shares.
15P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
CLASS Y SHARES -- Class Y shares are offered to certain
institutional investors. Class Y shares are sold without a
front-end sales charge or a CDSC and are not subject to either a
service fee or a distribution fee. The following investors are
eligible to purchase Class Y shares:
- Qualified employee benefit plans* if the plan:
-- uses a daily transfer recordkeeping service offering
participants daily access to IDS funds and has
-- at least $10 million in plan assets or
-- 500 or more participants; or
-- does not use daily transfer recordkeeping and has
-- at least $3 million invested in funds of the IDS MUTUAL
FUND GROUP or
-- 500 or more participants.
- Trust companies or similar institutions, and charitable
organizations that meet the definition in Section 501(c)(3) of
the Internal Revenue Code.* These must have at least $10 million
invested in funds of the IDS MUTUAL FUND GROUP.
- Nonqualified deferred compensation plans* whose participants
are included in a qualified employee benefit plan described
above.
* Eligibility must be determined in advance by American
Express Financial Advisors. To do so, contact your
financial advisor.
Financial advisors may receive different compensation for selling
Class A, Class B and Class Y shares.
16P
<PAGE>
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
If you're investing in this fund for the first time, you'll need
to set up an account. Your financial advisor will help you fill
out and submit an application. Once your account is set up, you
can choose among several convenient ways to invest.
IMPORTANT: When opening an account, you must provide your correct
Taxpayer Identification Number (Social Security or Employer
Identification number). See "Distributions and taxes."
When you buy shares for a new or existing account, the price you
pay per share is determined at the close of business on the day
your investment is received and accepted at the Minneapolis
headquarters.
PURCHASE POLICIES:
- Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be
included in your account that day and to receive that day's
share price. Otherwise your purchase will be processed the next
business day and you will pay the next day's share price.
- The minimums allowed for investment may change from time to
time.
- Wire orders can be accepted only on days when your bank,
American Express Financial Corporation, the fund and Norwest
Bank Minneapolis are open for business.
- Wire purchases are completed when wired payment is received and
the fund accepts the purchase.
- American Express Financial Corporation and the fund are not
responsible for any delays that occur in wiring funds, including
delays in processing by the bank.
- You must pay any fee the bank charges for wiring.
- The fund reserves the right to reject any application for any
reason.
- If your application does not specify which class of share you
are purchasing, it will be assumed that you are investing in
Class A shares.
17P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
THREE WAYS TO INVEST
- --------------------------------------------------------------
- --
1
BY REGULAR Send your check and MINIMUM AMOUNTS
ACCOUNT application (or your name and Initial investment: $2,000
account number if you have an Additional investments: $100
established account) to: Account balances: $300 *
American Express
Financial Advisors Inc.
P.O. Box 74
Minneapolis, MN 55440-0074
Your financial advisor will
help you with this process.
- --------------------------------------------------------------
- --
2
BY Contact your financial MINIMUM AMOUNTS
SCHEDULED advisor to set up one of the Initial investments: $100
INVESTMENT following scheduled plans: Additional investments: $100/mo.
PLAN - automatic payroll deduction Account balances: none
- bank authorization (on active plans of
- direct deposit of Social monthly payments)
Security check
- other plan approved by the
fund
- --------------------------------------------------------------
- --
3
BY WIRE If you have an established If this information is not
account, you may wire included, the order may be
money to: rejected and all money
Norwest Bank Minneapolis received by the fund, less
Routing No. 09000019 any costs the fund or
Minneapolis, MN American Express Financial
Attn: Domestic Wire Dept. Corporation will be returned
promptly.
Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal
account # (your account
number) for (your name).
*If your account balance falls below $300, you will be asked in
writing to bring it up to $300 or establish a scheduled
investment plan. If you don't do so within 30 days, your
shares can be redeemed and the proceeds mailed to you.
18P
<PAGE>
- --------------------------------------------------------------------------------
HOW TO EXCHANGE SHARES
You can exchange your shares of the fund at no charge for shares
of the same class of any other publicly offered fund in the IDS
MUTUAL FUND GROUP available in your state. Exchanges into IDS
Tax-Free Money Fund must be made from Class A shares. For
complete information, including fees and expenses, read the
prospectus carefully before exchanging into a new fund.
If your exchange request arrives at the Minneapolis headquarters
before the close of business, your shares will be redeemed at the
net asset value set for that day. The proceeds will be used to
purchase new fund shares the same day. Otherwise, your exchange
will take place the next business day at that day's net asset
value.
For tax purposes, an exchange represents a sale and purchase and
may result in a gain or loss. However, you cannot create a tax
loss (or reduce a taxable gain) by exchanging from the fund
within 91 days of your purchase. For further explanation, see the
SAI.
HOW TO SELL SHARES
You can sell (redeem) your shares at any time. American Express
Shareholder Service will mail payment within seven days after
receiving your request.
When you sell shares, the amount you receive may be more or less
than the amount you invested. Your shares will be redeemed at net
asset value, minus any applicable sales charge, at the close of
business on the day your request is accepted at the Minneapolis
headquarters. If your request arrives after the close of
business, the price per share will be the net asset value, minus
any applicable sales charge, at the close of business on the next
business day.
A redemption is a taxable transaction. If the fund's net asset
value when you sell shares is more or less than the cost of your
shares, you will have a gain or loss, which can affect your tax
liability.
19P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
- --------------------------------------------------------------
- --
1
BY LETTER Include in your letter: REGULAR MAIL:
- the name of the fund(s) American Express Shareholder
- the class of shares to be Service
exchanged or redeemed Attn: Redemptions
- your account number(s) (for P.O. Box 534
exchanges, both funds must be Minneapolis, MN 55440-0534
registered in the same EXPRESS MAIL:
ownership) American Express Shareholder
- your Taxpayer Identification Service
Number (TIN) Attn: Redemptions
- the dollar amount or number 733 Marquette Ave.
of shares you want to Minneapolis, MN 55402
exchange or sell
- signature of all registered
account owners
- for redemptions, indicate how
you want your sales proceeds
delivered to you
- any paper certificates of
shares you hold
- --------------------------------------------------------------
- --
2
BY PHONE - The fund and American Ex- NOT apply by writing American
American Ex- press Financial Corporation Express Shareholder Service.
press will honor any telephone Each registered owner must sign
Telephone exchange or redemption re- the request.
Transaction quest believed to be authen- - American Express Financial
Service: tic and will use reasonable Corporation answers phone
800-437-3133 procedures to confirm that requests promptly, but you
or they are. This includes or may experience delays when
612-671-3800 asking identifying questions call volume is high. If you
and tape recording calls. So are unable to get through,
long as reasonable proce- use mail procedure as an
dures are followed, neither alternative.
the fund nor American Ex- - Phone privileges may be
press Financial Corporation modified or discontinued at
will be liable for any loss any time.
resulting from fraudulent re- MINIMUM AMOUNT
quests. Redemption: $100
- Phone exchange and re- MAXIMUM AMOUNT
demption privileges auto- Redemption: $50,000
matically apply to all ac-
counts except custodial, cor-
porate or qualified retire-
ment accounts unless you
request these privileges
20P
<PAGE>
- --------------------------------------------------------------------------------
EXCHANGE POLICIES:
- You may make up to three exchanges within any 30-day period,
with each limited to $300,000. These limits do not apply to
scheduled exchange programs and certain employee benefit plans
or other arrangements through which one shareholder represents
the interests of several. Exceptions may be allowed with
pre-approval of the fund.
- Exchanges must be made into the same class in the new fund.
- If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.
- Once we receive your exchange request, you cannot cancel it.
- Shares of the new fund may not be used on the same day for
another exchange.
- If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured
party.
- American Express Financial Corporation and the fund reserve the
right to reject any exchange, limit the amount, or modify or
discontinue the exchange privilege, to prevent abuse or adverse
effects on the fund and its shareholders. For example, if
exchanges are too numerous or too large, they may disrupt the
fund's investment strategies or increase its costs.
21P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
REDEMPTION POLICIES:
- A "change of mind" option allows you to change your mind after
requesting a redemption and to use all or part of the proceeds
to buy new shares in the same account at the net asset value,
rather than the offering price on the date of a new purchase. If
you reinvest in this manner, any CDSC you paid on the amount you
are reinvesting also will be reinvested in the fund. To take
advantage of this option, send a written request within 30 days
of the date your redemption request was received. Include your
account number and mention this option. This privilege may be
limited or withdrawn at any time, and it may have tax
consequences.
- A telephone redemption request will not be allowed within 30
days of a phoned-in address change.
IMPORTANT: If you request a redemption of shares you recently
purchased by a check or money order that is not guaranteed, the
fund will wait for your check to clear. Please expect a minimum
of 10 days from the date of purchase before a check is mailed to
you. (A check may be mailed earlier if your bank provides
evidence satisfactory to the fund and American Express Financial
Corporation that your check has cleared.)
22P
<PAGE>
- --------------------------------------------------------------------------------
THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES
- --------------------------------------------------------------
- --
1
BY REGULAR - Mailed to the address on
OR EXPRESS record.
MAIL - Payable to names listed on the
account.
NOTE: The express mail delivery
charges you pay will vary
depending on the courier you
select.
NOTE: The express mail delivery
charges you pay will vary
depending on the courier you
select.
- --------------------------------------------------------------
- --
2
BY WIRE - Minimum wire redemption:
$1,000.
- Request that money be wired to
your bank.
- Bank account must be in the
same ownership as the IDS fund
account.
NOTE: Pre-authorization required.
For instructions, contact your
financial advisor or American
Express Shareholder Service.
- --------------------------------------------------------------
- --
3
BY - Minimum payment: $50.
SCHEDULED - Contact your financial advisor
PAYOUT or American Express Shareholder
PLAN Service to set up regular
payments to you on a monthly,
bimonthly, quarterly,
semiannual or annual basis.
- Buying new shares while under a
payout plan may be
disadvantageous because of the
sales charges.
23P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
REDUCTIONS AND WAIVERS OF THE SALES CHARGE
CLASS A -- INITIAL SALES CHARGE ALTERNATIVE
On purchases of Class A shares, you pay a 5% sales charge on the
first $50,000 of your total investment and less on investments
after the first $50,000:
-------------------------------------------------------------
TOTAL INVESTMENT SALES CHARGE AS A PERCENT OF:*
<TABLE>
<CAPTION>
PUBLIC OFFERING NET AMOUNT
PRICE INVESTED
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Up to $50,000 5.0% 5.26%
----------------------------------------------------------------------------------
Next $50,000 4.5 4.71
----------------------------------------------------------------------------------
Next $400,000 3.8 3.95
----------------------------------------------------------------------------------
Next $500,000 2.0 2.04
----------------------------------------------------------------------------------
More than $1,000,000 0.0 0.00
<FN>
*To calculate the actual sales charge on an investment greater
than $50,000, amounts for each applicable increment must be
totaled. See the SAI.
</TABLE>
REDUCTIONS OF THE SALES CHARGE ON CLASS A SHARES
Your sales charge may be reduced, depending on the totals of:
- the amount you are investing in this fund now,
- the amount of your existing investment in this fund, if any,
and
- the amount you and your immediate family (spouse or unmarried
children under 21) are investing or have in other funds in the
IDS MUTUAL FUND GROUP that carry a sales charge.
Other policies that affect your sales charge:
- IDS Tax-Free Money Fund and Class A shares of IDS Cash
Management Fund do not carry sales charges. However, you may
count investments in these funds if you acquired shares in them
by exchanging shares from IDS funds that carry sales charges.
- Employee benefit plan purchases made through a payroll
deduction plan or through a plan sponsored by an employer,
association of employers, employee organization or other similar
entity, may be added together to reduce sales charges for all
shares purchased through that plan.
For more details, see the SAI.
24P
<PAGE>
- --------------------------------------------------------------------------------
WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES
Sales charges do not apply to:
- Current or retired trustees, directors, officers or employees
of the fund or American Express Financial Corporation or its
subsidiaries, their spouses and unmarried children under 21.
- Current or retired American Express financial advisors, their
spouses and unmarried children under 21.
- Qualified employee benefit plans* using a daily transfer
recordkeeping system offering participants daily access to IDS
funds.
(Participants in certain qualified plans for which the initial
sales charge is waived may be subject to a deferred sales charge
of up to 4% on certain redemptions. For more information, see the
SAI.)
- Shareholders who have at least $1 million invested in funds of
the IDS MUTUAL FUND GROUP. If the investment is redeemed in the
first year after purchase, a CDSC of 1% will be charged on the
redemption.
- Purchases made within 30 days after a redemption of shares (up
to the amount redeemed):
-- of a product distributed by American Express Financial
Advisors in a qualified plan subject to a deferred sales charge
or
-- a qualified plan where American Express Trust Company acts as
trustee or recordkeeper.
Send the fund a written request along with your payment,
indicating the amount of the redemption and the date on which it
occurred.
- Purchases made with dividend or capital gain distributions from
another fund in the IDS MUTUAL FUND GROUP that has a sales
charge.
* Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.
25P
<PAGE>
- --------------------------------------------------------------------------------
How to buy, exchange or sell shares
CLASS B -- CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE
Where a CDSC is imposed on a redemption, it is based on the
amount of the redemption and the number of calendar years,
including the year of purchase, between purchase and redemption.
The following table shows the declining scale of percentages that
apply to redemptions during each year after a purchase:
<TABLE>
<CAPTION>
IF A REDEMPTION THE PERCENTAGE
IS MADE RATE FOR THE
DURING THE CDSC IS:
<S> <C>
-----------------------------------------------------------------
First year 5%
-----------------------------------------------------------------
Second year 4%
-----------------------------------------------------------------
Third year 4%
-----------------------------------------------------------------
Fourth year 3%
-----------------------------------------------------------------
Fifth year 2%
-----------------------------------------------------------------
Sixth year 1%
-----------------------------------------------------------------
Seventh year 0%
</TABLE>
26P
<PAGE>
- --------------------------------------------------------------------------------
If the amount you are redeeming reduces the current net asset
value of your investment in Class B shares below the total dollar
amount of all your purchase payments during the last 6 years
(including the year in which your redemption is made), the CDSC
is based on the lower of the redeemed purchase payments or market
value.
The following example illustrates how the CDSC is applied. Assume
you had invested $10,000 in Class B shares and that your
investment had appreciated in value to $12,000 after 15 months,
including reinvested dividend and capital gain distributions. You
could redeem any amount up to $2,000 without paying a CDSC
($12,000 current value less $10,000 purchase amount). If you
redeemed $2,500, the CDSC would apply only to the $500 that
represented part of your original purchase price. The CDSC rate
would be 4% because a redemption after 15 months would take place
during the second year after purchase.
Because the CDSC is imposed only on redemptions that reduce the
total of your purchase payments, you never have to pay a CDSC on
any amount you redeem that represents appreciation in the value
of your shares, income earned by your shares or capital gains. In
addition, when determining the rate of any CDSC, your redemption
will be made from the oldest purchase payment you made. Of
course, once a purchase payment is considered to have been
redeemed, the next amount redeemed is the next oldest purchase
payment. By redeeming the oldest purchase payments first, lower
CDSCs are imposed than would otherwise be the case.
27P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
WAIVERS OF THE SALES CHARGE FOR CLASS B SHARES
The CDSC on Class B shares will be waived on redemptions of
shares:
- In the event of the shareholder's death,
- Purchased by any trustee, director, officer or employee of a
fund or American Express Financial Corporation or its
subsidiaries,
- Purchased by any American Express financial advisor,
- Held in a trusteed employee benefit plan,
- Held in IRAs or certain qualified plans for which American
Express Trust Company acts as custodian, such as Keogh
plans, tax-sheltered custodial accounts or corporate pension
plans, provided that the shareholder is:
-- at least 59 1/2 years old, and
-- taking a retirement distribution (if the redemption is
part of a transfer to an IRA or qualified plan in a product
distributed by American Express Financial Advisors, or a
custodian-to-custodian transfer to a product not distributed
by American Express Financial Advisors, the CDSC will not be
waived), or
-- redeeming under an approved substantially equal periodic
payment arrangement.
28P
<PAGE>
----------------------------------------------------------
Special shareholder services
SERVICES
To help you track and evaluate the performance of your
investments, American Express Financial Corporation provides
these services:
QUARTERLY STATEMENTS listing all of your holdings and
transactions during the previous three months.
YEARLY TAX STATEMENTS featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information -- which simplifies tax calculations.
A PERSONALIZED MUTUAL FUND PROGRESS REPORT detailing returns on
your initial investment and cash-flow activity in your account.
It calculates a total return to reflect your individual history
in owning fund shares. This report is available from your
financial advisor.
-------------------------------------------------------------
QUICK TELEPHONE REFERENCE
AMERICAN Redemptions and exchanges, National/Minnesota:
EXPRESS dividend payments or 800-437-3133
TELEPHONE reinvestments and automatic Mpls./St. Paul area:
TRANSACTION payment arrangements 671-3800
SERVICE
----------------------------------------------------
AMERICAN Fund performance, objectives and 612-671-3733
EXPRESS account inquiries
SHAREHOLDER
SERVICE
----------------------------------------------------
TTY SERVICE For the hearing impaired 800-846-4852
----------------------------------------------------
AMERICAN Automated account information National/Minnesota:
EXPRESS (TouchTone-Registered Trademark- 800-272-4445
INFOLINE phones only), including current Mpls./St. Paul area:
fund prices and performance, 671-1630
account values and recent
account transactions
----------------------------------------------------
29P
<PAGE>
----------------------------------------------------------
Distributions and taxes
The fund distributes to shareholders investment income and net
capital gains. It does so to qualify as a regulated investment
company and to avoid paying corporate income and excise taxes.
Dividend and capital gains distributions will have tax
consequences you should know about.
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
The fund distributes its net investment income (dividends and
interest earned on securities held by the fund, less operating
expenses) to shareholders of record monthly. Short-term capital
gains distributed are included in net investment income. Net
realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they're
distributed, net capital gains are included in the value of each
share. After they're distributed, the value of each share drops
by the per-share amount of the distribution. (If your
distributions are reinvested, the total value of your holdings
will not change.)
Dividends paid by each class will be calculated at the same time,
in the same manner and in the same amount, except the expenses
attributable solely to Class A, Class B and Class Y will be paid
exclusively by that class. Class B shareholders will receive
lower per share dividends than Class A and Class Y shareholders
because expenses for Class B are higher than for Class A or Class
Y. Class A shareholders will receive lower per share dividends
than Class Y shareholders because expenses for Class A are higher
than for Class Y.
30P
<PAGE>
- --------------------------------------------------------------------------------
REINVESTMENTS
Dividends and capital gain distributions are automatically
reinvested in additional shares in the same class of the fund,
unless:
- you request the fund in writing or by phone to pay
distributions to you in cash, or
- you direct the fund to invest your distributions in any
publicly available IDS fund for which you've previously opened
an account. You pay no sales charge on shares purchased through
reinvestment from this fund into any IDS fund.
The reinvestment price is the net asset value at close of
business on the day the distribution is paid. (Your quarterly
statement will confirm the amount invested and the number of
shares purchased.)
If you choose cash distributions, you will receive only those
declared after your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at
the then-current net asset value and make future distributions in
the form of additional shares.
TAXES
Dividends distributed from interest earned on tax-exempt
securities (exempt-interest dividends) are exempt from federal
income taxes but may be subject to state and local taxes.
Dividends distributed from other income earned and capital gain
distributions are not exempt from federal income taxes.
Distributions are taxable in the year the fund pays them
regardless of whether you take them in cash or reinvest them.
31P
<PAGE>
- ---------------------------------------------------------------------------
Distributions and taxes
Interest on certain private activity bonds is a preference item
for purposes of the individual and corporate alternative minimum
taxes. To the extent a fund earns such income, it will flow
through to its shareholders and may be taxable to those
shareholders who are subject to the alternative minimum tax.
Because interest on municipal bonds and notes is tax-exempt for
federal income tax purposes, any interest on borrowed money used
directly or indirectly to purchase fund shares is not deductible
on your federal income tax return. You should consult a tax
advisor regarding its deductibility for state and local income
tax purposes.
Each January, you will receive a statement showing the kinds and
total amount of all distributions you received during the
previous year. You must report all distributions on your tax
returns, even if they are reinvested in additional shares.
"Buying a dividend" creates a tax liability. This means buying
shares shortly before a capital gain distribution. You pay the
full pre-distribution price for the shares, then receive a
portion of your investment back as a distribution, which is
taxable.
Redemptions and exchanges subject you to a tax on any capital
gain. If you sell shares for more than their cost, the difference
is a capital gain. Your gain may be either short term (for shares
held for one year or less) or long term (for shares held for more
than one year).
32P
<PAGE>
- --------------------------------------------------------------------------------
YOUR TAXPAYER IDENTIFICATION NUMBER (TIN) IS IMPORTANT. As with
any financial account you open, you must list your current and
correct Taxpayer Identification Number (TIN) -- either your
Social Security or Employer Identification number. The TIN must
be certified under penalties of perjury on your application when
you open an account at American Express Financial Corporation.
If you don't provide the TIN, or the TIN you report is incorrect,
you could be subject to backup withholding of 31% of taxable
distributions and proceeds from certain sales and exchanges. You
also could be subject to further penalties, such as:
- a $50 penalty for each failure to supply your correct TIN
- a civil penalty of $500 if you make a false statement that
results in no backup withholding
- criminal penalties for falsifying information
You also could be subject to backup withholding because you
failed to report interest or dividends on your tax return as
required.
33P
<PAGE>
- ---------------------------------------------------------------------------
Distributions and taxes
-------------------------------------------------------------
HOW TO DETERMINE THE CORRECT TIN
FOR THIS TYPE OF ACCOUNT USE THE SOCIAL SECURITY
OR
EMPLOYER IDENTIFICATION
NUMBER OF
----------------------------------------------------
Individual or joint The individual or first
account person listed on the
account
----------------------------------------------------
Custodian account of a The minor
minor (Uniform
Gifts/Transfers to Minors
Act)
----------------------------------------------------
A living trust The grantor-trustee (the
person who puts the money
into the trust)
----------------------------------------------------
An irrevocable trust, The legal entity (not the
pension trust or estate personal representative
or trustee, unless no
legal entity is
designated in the account
title)
----------------------------------------------------
Sole proprietorship or The owner or partnership
partnership
----------------------------------------------------
Corporate The corporation
----------------------------------------------------
Association, club or The organization
tax-exempt organization
----------------------------------------------------
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors office for Federal Form
W-9, "Request for Taxpayer Identification Number and
Certification."
IMPORTANT: This information is a brief and selective summary of
certain federal tax rules that apply to this fund. Tax matters
are highly individual and complex, and you should consult a
qualified tax advisor about your personal situation.
34P
<PAGE>
----------------------------------------------------------
How the fund is organized
The fund is a diversified, open-end management investment
company, as defined in the Investment Company Act of 1940.
Originally incorporated on Dec. 21, 1978 in Nevada, the fund
changed its state of incorporation on June 13, 1986 by merging
into a Minnesota corporation incorporated on April 7, 1986. The
fund headquarters are at 901 S. Marquette Ave., Suite 2810,
Minneapolis, MN 55402-3268.
SHARES
The fund is owned by its shareholders. The fund issues shares in
three classes -- Class A, Class B and Class Y. Each class has
different sales arrangements and bears different expenses. Each
class represents interests in the assets of the fund. Par value
is 1 cent per share. Both full and fractional shares can be
issued.
The fund no longer issues stock certificates.
VOTING RIGHTS
As a shareholder, you have voting rights over the fund's
management and fundamental policies. You are entitled to one vote
for each share you own. Each class has exclusive voting rights
with respect to the provisions of the fund's distribution plan
that pertain to a particular class and other matters for which
separate class voting is appropriate under applicable law.
35P
<PAGE>
- ---------------------------------------------------------------------------
How the fund is organized
SHAREHOLDER MEETINGS
The fund does not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors.
DIRECTORS AND OFFICERS
Shareholders elect a board of directors that oversees the
operations of the fund and chooses its officers. Its officers are
responsible for day-to-day business decisions based on policies
set by the board. The board has named an executive committee that
has authority to act on its behalf between meetings. The
directors also serve on the boards of all of the other funds in
the IDS MUTUAL FUND GROUP, except for Mr. Dudley, who is a
director of all publicly offered funds.
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<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
DIRECTORS AND OFFICERS OF THE FUND
President and WILLIAM R. PEARCE
interested director President of all funds in the IDS MUTUAL FUND GROUP.
- ------------------------------------------------------------------
Independent LYNNE V. CHENEY
directors Distinguished fellow, American Enterprise Institute for
Public Policy Research.
ROBERT F. FROEHLKE
Former president of all funds in the IDS MUTUAL FUND
GROUP.
HEINZ F. HUTTER
Former president and chief operating officer, Cargill,
Inc.
ANNE P. JONES
Attorney and telecommunications consultant.
DONALD M. KENDALL
Former chairman and chief executive officer, PepsiCo,
Inc.
MELVIN R. LAIRD
Senior counsellor for national and international
affairs,
The Reader's Digest Association, Inc.
LEWIS W. LEHR
Former chairman and chief executive officer, Minnesota
Mining and Manufacturing Company (3M).
EDSON W. SPENCER
Former chairman and chief executive officer, Honeywell,
Inc.
WHEELOCK WHITNEY
Chairman, Whitney Management Company.
C. ANGUS WURTELE
Chairman of the board and chief executive officer,
The Valspar Corporation.
- ------------------------------------------------------------------
Interested directors WILLIAM H. DUDLEY
who are officers Executive vice president, American Express Financial
and/or employees Corporation.
of American Express DAVID R. HUBERS
Financial President and chief executive officer, American Express
Corporation Financial Corporation.
JOHN R. THOMAS
Senior vice president, American Express Financial
Corporation.
- ------------------------------------------------------------------
Other officer LESLIE L. OGG
Vice president of all funds in the IDS MUTUAL FUND
GROUP and general counsel and treasurer of the publicly
offered funds.
Refer to the SAI for the directors' and officers' biographies.
37P
<PAGE>
- ---------------------------------------------------------------------------
How the fund is organized
INVESTMENT MANAGER AND TRANSFER AGENT
The fund pays American Express Financial Corporation for managing
its portfolio, providing administrative services and serving as
transfer agent (handling shareholder accounts).
Under its Investment Management Services Agreement, American
Express Financial Corporation determines which securities will be
purchased, held or sold (subject to the direction and control of
the fund's board of directors). Effective March 1995, the fund
pays American Express Financial Corporation a fee for these
services based on the average daily net assets of the fund, as
follows:
<TABLE>
<CAPTION>
ASSETS ANNUAL RATE
(BILLIONS) AT EACH ASSET VALUE
<S> <C> <C>
----------------------------------------
First $ 1.0 0.490%
----------------------------------------
Next 1.0 0.465
----------------------------------------
Next 1.0 0.440
----------------------------------------
Next 3.0 0.415
----------------------------------------
Next 3.0 0.390
----------------------------------------
Over 9.0 0.360
</TABLE>
For the fiscal year ended Nov. 30, 1994, under a prior agreement,
the fund paid American Express Financial Corporation a total
investment management fee of 0.50% of its average daily net
assets. Under the Agreement, the fund also pays taxes, brokerage
commissions and nonadvisory expenses.
Under an Administrative Services Agreement, the fund pays
American Express Financial Corporation for administration and
accounting services at an annual rate of 0.04% decreasing in
gradual percentages to 0.02% as assets increase.
In addition, under a separate Transfer Agency Agreement, American
Express Financial Corporation maintains shareholder accounts and
records. The fund pays American Express Financial Corporation an
annual fee per shareholder account for this service as follows:
- Class A $15.50
- Class B $16.50
- Class Y $15.50
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<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTOR
The fund sells shares through American Express Financial
Advisors, a wholly owned subsidiary of American Express Financial
Corporation, under a Distribution Agreement. Financial advisors
representing American Express Financial Advisors provide
information to investors about individual investment programs,
the fund and its operations, new account applications, exchange
and redemption requests. The cost of these services is paid
partially by the fund's sales charge.
Portions of sales charges may be paid to securities dealers who
have sold the fund's shares, or to banks and other financial
institutions. The proceeds paid to others range from 0.8% to 4%
of the fund's offering price depending on the monthly sales
volume.
For Class B shares, to help defray costs not covered by sales
charges, including costs for marketing, sales administration,
training, overhead, direct marketing programs, advertising and
related functions, the fund pays American Express Financial
Advisors a distribution fee, also known as a 12b-1 fee. This fee
is paid under a Plan and Agreement of Distribution that follows
the terms of Rule 12b-1 of the Investment Company Act of 1940.
Under this Agreement, the fund pays a distribution fee at an
annual rate of 0.75% of the fund's average daily net assets
attributable to Class B shares for distribution-related services.
The total 12b-1 fee paid by the fund under a prior agreement for
the fiscal year ended Nov. 30, 1994 was 0.02% of its average
daily net assets. This fee will not cover all of the costs
incurred by American Express Financial Advisors.
Under a Shareholder Service Agreement, the fund also 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.
Total expenses paid by the fund in the fiscal year ended Nov. 30,
1994 were 0.59% of its average daily net assets.
Total fees and expenses (excluding taxes and brokerage
commissions) cannot exceed the most restrictive applicable state
expense limitation.
39P
<PAGE>
----------------------------------------------------------
About American Express Financial Corporation
GENERAL INFORMATION
The American Express Financial Corporation family of companies
offers not only mutual funds but also insurance, annuities,
investment certificates and a broad range of financial management
services.
Besides managing investments for all publicly offered funds in
the IDS MUTUAL FUND GROUP, American Express Financial Corporation
also manages investments for itself and its subsidiaries, IDS
Certificate Company and IDS Life Insurance Company. Total assets
under management on Nov. 30, 1994 were more than $104 billion.
American Express Financial Advisors serves individuals and
businesses through its nationwide network of more than 175
offices and more than 7,800 advisors.
Other American Express Financial Corporation subsidiaries provide
investment management and related services for pension, profit
sharing, employee savings and endowment funds of businesses and
institutions.
American Express Financial Corporation is located at IDS Tower
10, Minneapolis, MN 55440-0010. It is a wholly owned subsidiary
of American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center,
New York, NY 10285. The fund may pay brokerage commissions to
broker-dealer affiliates of American Express and American Express
Financial Corporation.
40P
<PAGE>
----------------------------------------------------------
Appendix A
-------------------------------------------------------------
DESCRIPTION OF BOND RATINGS
Bond ratings concern the quality of the issuing state or local
governmental unit. They are not an opinion of the market value of
the security. Such ratings are opinions on whether the principal
and interest will be repaid when due. A security's rating may
change which could affect its price. Ratings by Moody's Investors
Service, Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D.
Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB,
B, CCC, CC, C and D.
AAA/AAA
Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.
AA/AA
Judged to be high-grade although margins of protection for
interest and principal may not be quite as good as Aaa or AAA
rated securities.
A
Considered upper-medium grade. Protection for interest and
principal is deemed adequate but may be susceptible to future
impairment.
BAA/BBB
Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these
obligations may have certain speculative characteristics.
BA/BB
Considered to have speculative elements. The protection of
interest and principal payments may be very moderate.
B
Lack characteristics of the desirable investments. There may be
small assurance over any long period of time of the payment of
interest and principal.
CAA/CCC
Are of poor standing. Such issues may be in default or there may
be risk with respect to principal or interest.
CA/CC
Represent obligations that are highly speculative. Such issues
are often in default or have other marked shortcomings.
C
Are obligations with a higher degree of speculation. These
securities have major risk exposures to default.
D
Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
41P
<PAGE>
- ---------------------------------------------------------------------------
Appendix A
NON-RATED SECURITIES will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the fund's objectives and policies. When assessing the risk
involved in each non-rated security, the fund will consider the
financial condition of the issuer or the protection afforded by
the terms of the security.
DEFINITIONS OF ZERO-COUPON AND PAY-IN-KIND SECURITIES
A ZERO-COUPON SECURITY is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at
face value on the maturity date.
A PAY-IN-KIND SECURITY is a security in which the issuer has the
option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the
same terms, including maturity date, as the pay-in-kind
securities.
42P
<PAGE>
----------------------------------------------------------
Appendix B
-------------------------------------------------------------
1995 FEDERAL TAX-EXEMPT AND TAXABLE EQUIVALENT YIELD
CALCULATION
These tables will help you determine your federal taxable yields
equivalents for given rates of tax-exempt income.
STEP 1: CALCULATING YOUR MARGINAL TAX RATE.
Using your Taxable Income and Adjusted Gross Income figures as
guides you can locate your Marginal Tax Rate in the table below.
First locate your Taxable Income in a filing status and income
range in the left-hand column. Then, locate your Adjusted Gross
Income at the top of the chart. At the point where your Taxable
Income line meets your Adjusted Gross Income column the
percentage indicated is an approximation of your Marginal Tax
Rate. For example: Let's assume you are married filing jointly,
your taxable income is $138,000 and your adjustable gross income
is $175,000.
Under Taxable Income married filing jointly status, $138,000 is
in the $94,250-$143,600 range. Under Adjusted Gross Income,
$175,000 is in the $172,050 to $294,550 column. The Taxable
Income line and Adjusted Gross Income column meet at 33.17
percent. This is the rate you'll use in Step 2.
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<PAGE>
- ---------------------------------------------------------------------------
Appendix B
<TABLE>
<CAPTION>
ADJUSTED GROSS INCOME*
--------------------------------------------------------------
$0 TO $114,700 TO $172,050 TO OVER
TAXABLE INCOME** $114,700(1) $172,050(2) $294,550(3) $294,550(2)
- ------------------------------------------- -------------- -------------- -------------- --------------
<C> <C> <C> <S> <C> <C> <C> <C>
Married Filing Jointly
$ 0 - $ 39,000 .......... 15.00%
39,000 - 94,250 .......... 28.00 28.84%
94,250 - 143,600 .......... 31.00 31.93 33.17%
143,600 - 256,500 .......... 36.00 37.08 38.52 37.08%
256,500 + .......... 39.60 42.37*** 40.79
<CAPTION>
$0 TO $114,700 TO OVER
$114,700(1) $237,200(3) $237,200(2)
-------------- -------------- --------------
<C> <C> <C> <S> <C> <C> <C> <C>
Single
$ 0 - $ 23,350 .......... 15.00%
23,350 - 56,550 .......... 28.00
56,550 - 117,950 .......... 31.00 32.55%
117,950 - 256,500 .......... 36.00 37.80 37.08%
256,500 + .......... 39.60 41.58 40.79
<FN>
*Gross income with certain adjustments before taking itemized deductions and
personal exemptions.
**Amount subject to federal income tax after itemized deductions and personal
exemptions.
***This rate is applicable only in the limited case where your adjusted gross
income is less than $294,550 and your taxable income exceeds $256,500.
(1) No Phase-out -- Assumes no phase-out of itemized deductions or personal
exemptions.
(2) Itemized Deductions Phase-out -- Assumes a single taxpayer has one personal
exemption and joint taxpayers have two personal exemptions.
(3) Itemized Deductions and Personal Exemption Phase-outs -- Assumes a single
taxpayer has one personal exemption, joint taxpayers have two personal
exemptions and itemized deductions continue to phase-out.
</TABLE>
44P
<PAGE>
- --------------------------------------------------------------------------------
If these assumptions do not apply to you, it will be necessary to
construct your own personalized tax equivalency table.
STEP 2: DETERMINING YOUR FEDERAL TAXABLE YIELD EQUIVALENTS
Using 33.17 percent, you may determine that a tax-exempt yield of
4% is equivalent to earning a taxable 5.99% yield.
<TABLE>
<CAPTION>
FOR THESE TAX-EXEMPT RATES:
--------------------------------------------------------------------------------------
4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50%
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARGINAL TAX
RATES EQUAL THE TAXABLE RATES SHOWN BELOW:
15.00%......... 4.71 5.29 5.88 6.47 7.06 7.65 8.24 8.82
28.00%......... 5.56 6.25 6.94 7.64 8.33 9.03 9.72 10.42
28.84%......... 5.62 6.32 7.03 7.73 8.43 9.13 9.84 10.54
31.00%......... 5.80 6.52 7.25 7.97 8.70 9.42 10.14 10.87
31.93%......... 5.88 6.61 7.35 8.08 8.81 9.55 10.28 11.02
32.55%......... 5.93 6.67 7.41 8.15 8.90 9.64 10.38 11.12
33.17%......... 5.99 6.73 7.48 8.23 8.98 9.73 10.47 11.22
36.00%......... 6.25 7.03 7.81 8.59 9.38 10.16 10.94 11.72
37.08%......... 6.36 7.15 7.95 8.74 9.54 10.33 11.13 11.92
37.80%......... 6.43 7.23 8.04 8.84 9.65 10.45 11.25 12.06
38.52%......... 6.51 7.32 8.13 8.95 9.76 10.57 11.39 12.20
39.60%......... 6.62 7.45 8.28 9.11 9.93 10.76 11.59 12.42
40.79%......... 6.76 7.60 8.44 9.29 10.13 10.98 11.82 12.67
41.58%......... 6.85 7.70 8.56 9.41 10.27 11.13 11.98 12.84
42.37%......... 6.94 7.81 8.68 9.54 10.41 11.28 12.15 13.01
</TABLE>
45P
<PAGE>
----------------------------------------------------------
Appendix C
-------------------------------------------------------------
DESCRIPTIONS OF DERIVATIVE INSTRUMENTS
What follows are brief descriptions of derivative instruments the
fund may use. At various times the fund may use some or all of
these instruments and is not limited to these instruments. It may
use other similar types of instruments if they are consistent
with the fund's investment goal and policies. For more
information on these instruments, see the Statement of Additional
Information.
OPTIONS AND FUTURES CONTRACTS. An option is an agreement to buy
or sell an instrument at a set price during a certain period of
time. A futures contract is an agreement to buy and sell an
instrument for a set price on a future date. The fund may buy and
sell options and futures contracts to manage its exposure to
changing interest rates, security prices and currency exchange
rates. Options and futures may be used to hedge the fund's
investments against price fluctuations or to increase market
exposure.
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES. Asset-backed and
mortgage-backed securities include interests in pools of consumer
loans or mortgages, such as collateralized mortgage obligations
and stripped mortgage-backed securities. Interest and principal
payments depend on payment of the underlying loans or mortgages.
The value of these securities may also be affected by changes in
interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved. Stripped
mortgage-backed securities include interest only (IO) and
principal only (PO) securities. Cash flows and yields on IOs and
POs are extremely sensitive to the rate of principal payments on
the underlying mortgage loans or mortgage-backed securities.
INDEXED SECURITIES. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other
financial indicators. Most indexed securities are short- to
intermediate-term fixed income securities whose values at
maturity or interest rates rise or fall according to the change
in one or more specified underlying instruments. Indexed
securities may be more volatile than the underlying instrument
itself.
46P
<PAGE>
- --------------------------------------------------------------------------------
INVERSE FLOATERS. Inverse floaters are created using the interest
payment on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. The remainder, minus a servicing fee, is
paid to holders of inverse floaters. Inverse floaters are
extremely sensitive to changes in interest rates.
STRUCTURED PRODUCTS. Structured products are over-the-counter
financial instruments created specifically to meet the needs of
one or a small number of investors. The instrument may consist of
a warrant, an option or a forward contract embedded in a note or
any of a wide variety of debt, equity and/or currency
combinations. Risks of structured products include the inability
to close such instruments, rapid changes in the market and
defaults by other parties.
47P
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS HIGH YIELD TAX-EXEMPT FUND
March 20, 1995
This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the prospectus and the financial
statements contained in the Annual Report which may be obtained
from your American Express financial advisor or by writing to
American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.
This SAI is dated March 20, 1995, and it is to be used with the
prospectus dated March 20, 1995, and the Annual Report for the
fiscal year ended Nov. 30, 1994.
-1-
<PAGE>
TABLE OF CONTENTS
Goal and Investment Policies.........................See Prospectus
Additional Investment Policies................................p.
Portfolio Transactions........................................p.
Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation.......................p.
Performance Information.......................................p.
Valuing Fund Shares...........................................p.
Investing in the Fund.........................................p.
Redeeming Shares..............................................p.
Pay-out Plans.................................................p.
Exchanges.....................................................p.
Capital Loss Carryover........................................p.
Taxes.........................................................p.
Agreements....................................................p.
Directors and Officers........................................p.
Custodian.....................................................p.
Independent Auditors..........................................p.
Financial Statements..............................See Annual Report
Prospectus....................................................p.
Appendix A: Description of Short-Term Securities.............p.
Appendix B: Options and Interest Rate Futures Contracts
and Additional Information on Investment
Policies.........................................p.
Appendix C: Dollar-Cost Averaging............................p.
-2-
<PAGE>
ADDITIONAL INVESTMENT POLICIES
These are investment policies in addition to those presented in the
prospectus. Unless holders of a majority of the outstanding shares
agree to make the change the fund will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the fund may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The fund has not borrowed in the past and has
no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the
fund's total assets.
'Invest more than 5% of its total assets, at market value, in
securities of any one company, government or political subdivision
thereof, except the limitation will not apply to investments in
securities issued by the U.S. government, its agencies or
instrumentalities, and except that up to 25% of the fund's total
assets may be invested without regard to this 5% limitation. For
purposes of this policy, the terms of a municipal security
determine the issuer.
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real
estate business. For purposes of this policy, real estate includes
real estate limited partnerships.
'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the fund from buying or selling options and futures
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.
'Lend portfolio securities in excess of 30% of its net assets.
This policy may not be changed without shareholder approval. The
current policy of the fund's board of directors is to make these
loans, either long- or short-term, to broker-dealers. In making
such loans the fund gets the market price in cash, U.S. government
securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board of
directors. If the market price of the loaned securities goes up,
the fund will get additional collateral on a daily basis. The
risks are that the borrower may not provide additional collateral
when required or return the securities when due. During the
existence of the loan, the fund receives cash payments equivalent
to all interest or other distributions paid on the loaned
securities. A loan will not be made unless the investment manager
believes the opportunity for additional income outweighs the risks.
-3-
<PAGE>
Unless changed by the board of directors, the fund will not:
'Buy on margin or sell short, but it may enter into interest rate
futures contracts.
'Pledge or mortgage its assets beyond 15% of total assets. If the
fund were ever to do so, valuation of the pledged or mortgaged assets
would be based on market values. For purposes of this restriction,
collateral arrangements for margin deposits on futures contracts are
not deemed to be a pledge of assets.
'Invest more than 5% of its total assets in securities whose issuer or
guarantor of principal and interest has been in operation for less than
three years.
'Invest in voting securities, securities of investment companies or
exploration or development programs, such as oil, gas or mineral
programs.
'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the fund's net assets may be
invested in warrants not listed on an Exchange.
'Invest more than 10% of the fund's net assets in securities and
derivative instruments that are illiquid. In determining the
liquidity of municipal lease obligations, the investment manager,
under guidelines established by the board of directors, will
consider the essential nature of the leased property, the likelihood
that the municipality will continue appropriating funding for the
leased property, and other relevant factors related to the general
credit quality of the municipality and the marketability of the
municipal lease obligation.
The fund may invest up to 20% of its net assets in certain taxable
investments for temporary defensive purposes. It may purchase
short-term U.S. and Canadian government securities. It may invest
in bank obligations including negotiable certificates of deposit,
non-negotiable fixed time deposits, bankers' acceptances and
letters of credit. The issuing bank or savings and loan generally
must have capital, surplus and undivided profits (as of the date of
its most recently published annual financial statements) in excess
of $100 million (or the equivalent in the instance of a foreign
branch of a U.S. bank) at the date of investment.
The fund may purchase short-term corporate notes and obligations
rated in the top two classifications by Moody's or S&P or the
equivalent. It also may use repurchase agreements with broker-
dealers registered under the Securities Exchange Act of 1934 and
with commercial banks. Repurchase agreements involve investments
in debt securities where the seller (broker-dealer or bank) agrees
to repurchase the securities from the fund at cost plus an agreed-
to interest rate within a specified time. A risk of a repurchase
agreement is that if the seller seeks the protection of the
bankruptcy laws, the fund's ability to liquidate the security
involved could be impaired, and it might subsequently incur a loss
if the value of the security declines or if the other party to a
repurchase agreement defaults on its obligation.
-4-
<PAGE>
The fund may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities
Act of 1933 (4(2) paper). In determining the liquidity of 4(2)
paper, the investment manager, under guidelines established by the
board of directors, will evaluate relevant factors such as the
issuer and the size and nature of its commercial paper programs,
the willingness and ability of the issuer or dealer to repurchase
the paper, and the nature of the clearance and settlement
procedures for the paper.
Notwithstanding any of the fund's other investment policies, the
fund may invest its assets in an open-end management investment
company having substantially the same investment objectives,
policies and restrictions as the fund for the purpose of having
those assets managed as part of a combined pool.
For a description of short-term securities, see Appendix A. For a
discussion on options and interest rate futures contracts and
additional information on investment policies, see Appendix B.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, American Express Financial
Corporation is authorized to determine, consistent with the fund's investment
goal and policies, which securities will be purchased, held or sold. In
determining where the buy and sell orders are to be placed, American Express
Financial Corporation has been directed to use its best efforts to obtain the
best available price and most favorable execution except where otherwise
authorized by the board of directors.
Normally, the fund's securities are traded on a principal rather
than an agency basis. In other words, American Express Financial Corporation
will trade directly with the issuer or with a dealer who buys or sells for its
own account, rather than acting on behalf of another client. American Express
Financial Corporation does not pay the dealer commissions. Instead, the
dealer's profit, if any, is the difference, or spread, between the dealer's
purchase and sale price for the security.
On occasion, it may be desirable to compensate a broker for
research services or for brokerage services by paying a commission
that might not otherwise be charged or a commission in excess of
the amount another broker might charge. The board of directors has
adopted a policy authorizing American Express Financial Corporation to do so to
the extent authorized by law, if American Express Financial Corporation
determines, in good faith, that such commission is reasonable in relation to
the value of the brokerage or research services provided by a broker or dealer,
viewed either in the light of that transaction or American Express Financial
Corporation's overall responsibilities to the funds in the IDS MUTUAL FUND GROUP
and other funds for which it acts as investment advisor.
Research provided by brokers supplements American Express Financial
Corporation's own research activities. Such services include economic data on,
and analysis of, U.S. and foreign economies; information on specific industries;
information about specific companies, including earnings estimates;
purchase recommendations for stocks and bonds; portfolio strategy
services; political, economic, business and industry trend
assessments; historical statistical information; market data
-5-
<PAGE>
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. American Express Financial Corporation has
obtained, and in the future may obtain, computer hardware from brokers,
including but not limited to personal computers that will be used exclusively
for investment decision-making purposes, which include the research,
portfolio management and trading functions and other services to
the extent permitted under an interpretation by the Securities and
Exchange Commission.
Each investment decision made for the fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by American Express Financial Corporation or any
of its subsidiaries. When the fund buys or sells the same security as another
fund or account, American Express Financial Corporation carries out the purchase
or sale in a way the fund agrees in advance is fair. Although sharing in large
transactions may adversely affect the price or volume purchased or sold by the
fund, the fund hopes to gain an overall advantage in execution.
American Express Financial Corporation has assured the fund it will continue to
seek ways to reduce brokerage costs.
-6-
<PAGE>
On a periodic basis, American Express Financial Corporation makes a
comprehensive review of the broker-dealers and the overall reasonableness of
their commissions. The review evaluates execution, operational efficiency and
research services.
The fund paid total brokerage commissions of $204,722 for the
fiscal year ended Nov. 30, 1994, $-0- for fiscal year 1993, and
$84,000 for fiscal year 1992. Substantially all firms through whom
transactions were executed provide research services.
No transactions were directed to brokers because of research
services they provided to the fund.
The fund acquired no securities of its regular brokers or dealers
or of the parents of those brokers or dealers that derived more
than 15% of gross revenue from securities-related activities during
the fiscal year ended Nov. 30, 1994.
The portfolio turnover rate was 17% in the fiscal year ended
Nov. 30, 1994, and 10% in fiscal year 1993.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH
AMERICAN EXPRESS FINANCIAL CORPORATION
Affiliates of American Express Company (American Express) (of which
American Express Financial Corporation is a wholly owned subsidiary) may
engage in brokerage and other securities transactions on behalf of the fund
according to procedures adopted by the fund's board of directors and to the
extent consistent with applicable provisions of the federal
securities laws. American Express Financial Corporation will use an American
Express affiliate only if (i) American Express Financial Corporation determines
that the fund will receive prices and executions at least as favorable as those
offered by qualified independent brokers performing similar brokerage and other
services for the fund and (ii) the affiliate charges the fund commission
rates consistent with those the affiliate charges comparable
unaffiliated customers in similar transactions and if such use is
consistent with terms of the Investment Management Services
Agreement.
American Express Financial Corporation may direct brokerage to compensate an
affiliate. American Express Financial Corporation will receive research on
South Africa from New Africa Advisers a wholly-owned subsidiary of Sloan
Financial Group. American Express Financial Corporation owns 100% of IDS
Capital Holdings Inc. which in turn owns 40% of Sloan Financial Group.
New Africa Advisers will send research to American Express Financial
Corporation and in turn American Express Financial Corporation will direct
trades to a particular broker. The broker will have an agreement to pay
New Africa Advisers. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.
No brokerage commissions were paid to brokers affiliated with American Express
Financial Corporation for the three most recent fiscal years.
-7-
<PAGE>
PERFORMANCE INFORMATION
The fund may quote various performance figures to illustrate past
performance. Average annual total return and current yield quotations
used by a fund are based on standardized methods of computing performance
as required by the SEC. An explanation of the methods used by the
fund to compute performance follows below.
AVERAGE ANNUAL TOTAL RETURN
The fund may calculate average annual total return for a class for
certain periods by finding the average annual compounded rates of
return over the period that would equate the initial amount
invested to the ending redeemable value, according to the following
formula:
n
P(1+T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
AGGREGATE TOTAL RETURN
The fund may calculate aggregate total return for a class for
certain periods representing the cumulative change in the value of
an investment in the fund over a specified period of time according
to the following formula:
ERV - P
-------
P
-8-
<PAGE>
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
ANNUALIZED YIELD
The fund may calculate an annualized yield for a class by dividing
the net investment income per share deemed earned during a 30-day
period by the public offering price per share (including the
maximum sales charge) on the last day of the period and annualizing
the results.
Yield is calculated according to the following formula:
6
Yield = 2[(a-b + 1) - 1]
---
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
The fund's annualized yield was 6.17% for the 30-day period ended
Nov. 30, 1994.
DISTRIBUTION YIELD
Distribution yield is calculated according to the following
formula:
F
D divided by POP equals DY
--- -----
30 30
where: D = sum of dividends for 30 day period
POP = sum of public offering price for 30 day period
F = annualizing factor
DY = distribution yield
The fund's distribution yield was 6.55% for the 30-day period ended
Nov. 30, 1994.
TAX-EQUIVALENT YIELD
Tax-equivalent yield is calculated by dividing that portion of the
yield (as calculated above) which is tax-exempt by one minus a
stated income tax rate and adding the result to that portion, if
any, of the yield that is not tax-exempt. The following table
shows the fund's tax equivalent yield, based on federal but not
state tax rates, for the 30-day period ended Nov. 30, 1994.
-9-
<PAGE>
<TABLE>
<CAPTION>
Marginal
Income Tax Tax-Equivalent Yield
Bracket Distribution Annualized
- ---------- -------------------- ----------
<S> <C> <C>
15.0% 7.71% 7.26%
28.0% 9.10 8.57
33.0% 9.78 9.21
</TABLE>
In its sales material and other communications, the fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.
VALUING FUND SHARES
The value of an individual share for each class is determined by
using the net asset value before shareholder transactions for the
day. On Dec. 1, 1994, the first business day following the end of
the fiscal year, the computation looked like this:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A* $5,781,979,788 divided by 1,380,760,762 equals $4.19
<FN>
*Shares of Class B and Class Y were not outstanding on that date.
</TABLE>
In determining net assets before shareholder transactions, the
fund's portfolio securities are valued as follows as of the close
of business of the New York Stock Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
-10-
<PAGE>
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange (the
"Exchange"). Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current rate of exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange that will
not be reflected in the computation of the fund's net asset value.
If events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
fund's board of directors (the "board").
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.
'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When
possible, bonds are valued by a pricing service
independent from the fund. If a valuation of a bond is not
available from a pricing service, the bond will be valued by a
dealer knowledgeable about the bond if such a dealer is available.
The New York Stock Exchange, American Express Financial Corporation, and the
fund will be closed on the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
INVESTING IN THE FUND
Sales Charge
Shares of the fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge if applicable. For Class B and Class Y, there is no
initial sales charge so the public offering price is the same as
the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made Dec. 1, 1994, was determined
by dividing the net asset value of one share, $4.19, by 0.95
(1.00-0.05 for a maximum 5% sales charge) for a public
-11-
<PAGE>
offering price of $4.41. The sales charge is paid to American
Express Financial Advisors by the person buying the shares.
Class A - Calculation of the Sales Charge
Sales charges are determined as follows:
<TABLE>
<CAPTION>
Within each increment,
sales charge as a
percentage of:
----------------------------------------
Public Net
Amount of Investment Offering Price Amount Invested
-------------------- -------------- ---------------
<S> <C> <C>
First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
More than 1,000,000 0.00 0.00
</TABLE>
Sales charges on an investment greater than $50,000 are calculated
for each increment separately and then totaled. The resulting
total sales charge, expressed as a percentage of the public
offering price and of the net amount invested, will vary depending
on the proportion of the investment at different sales charge
levels.
For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.
The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE>
<CAPTION>
On total investment, sales
charge as a percentage of
-------------------------------------------
Public Net
Offering Price Amount Invested
-------------- ---------------
Amount of Investment ranges from:
- -------------------- -------------------------------------------
<S> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 1,000,000 3.80-2.00 3.95-2.04
More than 1,000,000 0.00 0.00
</TABLE>
-12-
<PAGE>
Class A - Reducing the Sales Charge
Sales charges are based on the total amount of your investments in
the fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.
The total amount invested includes any shares held in the fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.
Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the fund or American Express Financial Corporation or
its subsidiaries and deceased advisors.
The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Stock Fund and $5,000 in this fund. If you
invest $40,000 more in this fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.
Class A - Letter of Intent
You can reduce the sales charges in Class A by filing a letter-of-
intent stating that you intend to invest $1 million over a period
of 13 months. The agreement can start at any time and will remain
in effect for 13 months. Your investment will be charged normal
sales charges until you have invested $1 million. At that time,
the sales charges previously paid will be reversed. If you do not
invest $1 million by the end of 13 months, there is no penalty,
you'll just miss out on the sales charge adjustment. A letter-of-
intent is not an option (absolute right) to buy shares.
Here's an example. You file a letter-of-intent to invest $1
million and make an investment of $100,000 at that time. You pay
the normal 5% sales charge on the first $50,000 and 4.5% sales
charge on the next $50,000 of this investment. Let's say you make
a second investment of $900,000 (bringing the total up to $1
million) one month before the 13-month period is up. What sales
charge do you pay? American Express Financial Corporation makes an adjustment
on your last purchase so that there's no sales charge on the total $1 million
investment, just as if you had invested $1 million all at once.
Systematic Investment Programs
After you make your investment of $2,000 or more, you can arrange
to make additional payments of $100 or more on a regular basis.
-13-
<PAGE>
These minimums do not apply to all systematic investment programs.
You decide how often you want to make payments - monthly, quarterly
or semiannually. You are not obligated to make any payments. You
can omit payments or discontinue the investment program alto-
gether. The fund also can change the program or end it at any
time. If there is no obligation, why do it? Putting money aside
is an important part of financial planning. With a systematic
investment program, you have a goal to work for.
How does this work? Your regular investment amount will purchase
more shares when the net asset value per share decreases, and fewer
shares when the net asset value per share increases. Each purchase
is a separate transaction. After each purchase your new shares
will be added to your account. Shares bought through these
programs are exactly the same as any other fund shares. They can
be bought and sold at any time. A systematic investment program is
not an option or an absolute right to buy shares.
The systematic investment program itself cannot ensure a profit,
nor can it protect against a loss in a declining market. If you
decide to discontinue the program and redeem your shares when their
net asset value is less than what you paid for them, you will incur
a loss.
For a discussion on dollar-cost averaging, see Appendix C.
Automatic Directed Dividends
Dividends, including capital gain distributions, paid by another
fund in the IDS MUTUAL FUND GROUP subject to a sales charge, may be
used to automatically purchase shares in the same class of this
fund without paying a sales charge. Dividends may be directed to
existing accounts only. Dividends declared by a fund are exchanged
to this fund the following day. Dividends can be exchanged into
one fund but cannot be split to make purchases in two or more
funds. Automatic directed dividends are available between accounts
of any ownership EXCEPT:
'Between a non-custodial account and an IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;
'Between two American Express Trust Company custodial accounts with
different owners (for example, you may not exchange dividends from
your IRA to the IRA of your spouse);
'Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange dividends from your
IRA to your 401(k) plan account, although you may exchange
dividends from one IRA to another IRA).
Dividends may be directed from accounts established under the
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors
Act (UTMA) only into other UGMA or UTMA accounts with identical
ownership.
The fund's investment goal is described in its prospectus along
with other information, including fees and expense ratios. Before
-14-
<PAGE>
exchanging dividends into another fund, you should read its
prospectus. You will receive a confirmation that the automatic
directed dividend service has been set up for your account.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.
DURING AN EMERGENCY, the board can suspend the computation of net asset value,
stop accepting payments for purchase of shares or suspend the duty of the fund
to redeem shares for more than seven days. Such emergency situations would
occur if:
'The New York Stock Exchange closes for reasons other than the usual weekend
and holiday closings or trading on the Exchange is restricted, or
'Disposal of the fund's securities is not reasonably practicable or
it is not reasonably practicable for the fund to determine the fair
value of its net assets, or
'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.
Should the fund stop selling shares, the board may make a deduction
from the value of the assets held by the fund to cover the cost of
future liquidations of the assets so as to distribute fairly these
costs among all shareholders.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments. If you redeem Class B shares you may be
subject to a contingent deferred sales charge as discussed in the
prospectus. While the plans differ on how the pay-out is figured,
they all are based on the redemption of your investment. Net
investment income dividends and any capital gain distributions will
automatically be reinvested, unless you elect to receive them in
cash.
Applications for a systematic investment in a class of any fund
subject to a sales charge normally will not be accepted while a
pay-out plan for any of those funds is in effect. Occasional
investments, however, may be accepted.
To start any of these plans, please write or call American Express
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534,
612-671-3733. Your authorization must be received in the
Minneapolis headquarters at least five days before the date you
want your payments to begin. The initial payment must be at least
$50. Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you
change or cancel it.
-15-
<PAGE>
The following pay-out plans are designed to take care of the needs
of most shareholders in a way American Express Financial Corporation can handle
efficiently and at a reasonable cost. If you need a more irregular schedule
of payments, it may be necessary for you to make a series of individual
redemptions, in which case you'll have to send in a separate redemption
request for each pay-out. The fund reserves the right to change or stop any
pay-out plan and to stop making such plans available.
Plan #1: Pay-out for a fixed period of time
If you choose this plan, a varying number of shares will be
redeemed at regular intervals during the time period you choose.
This plan is designed to end in complete redemption of all shares
in your account by the end of the fixed period.
Plan #2: Redemption of a fixed number of shares
If you choose this plan, a fixed number of shares will be redeemed
for each payment and that amount will be sent to you. The length
of time these payments continue is based on the number of shares in
the account.
Plan #3: Redemption of a fixed dollar amount
If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until the account is closed.
Plan #4: Redemption of a percentage of net asset value
Payments are made based on a fixed percentage of the net asset
value of the shares in your account computed on the day of each
payment. Percentages range from 0.25% to 0.75%. For example, if
you are on this plan and arrange to take 0.5% each month, you will
get $50 if the value of your account is $10,000 on the payment
date.
EXCHANGES
If you buy shares in one of the funds and then exchange into
another fund, it is considered a sale and subsequent purchase of
shares. Under tax laws, if this exchange is done within 91 days,
any sales charge waived on Class A shares on a subsequent purchase
of shares applies to the new shares acquired in the exchange.
Therefore, you cannot create a tax loss or reduce a tax gain
attributable to the sales charge when exchanging shares within 91
days.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, the fund had a capital loss
carryover of $77,922,805 at Nov. 30, 1994, that will expire in 2002.
-16-
<PAGE>
It is unlikely that the board of directors will authorize a
distribution of any net realized capital gains until the available
capital loss carryover has been offset or has expired except as
required by Internal Revenue Service rules.
TAXES
All distributions of net investment income during the year will
have the same percentage designated as tax-exempt. This annual
percentage is expected to be substantially the same as the
percentage of tax-exempt income actually earned during any
particular distribution period. For the (fiscal) year ended Nov.
30, 1994, 100% of the income distribution was designated as exempt
from federal income taxes.
Capital gain distributions received by individual and corporate
shareholders should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the fund are paid to shareholders as part of their
ordinary income dividend and are taxable.
If you are a "substantial user" (or related person) of facilities
financed by industrial development bonds, you should consult your
tax advisor before investing. The income from such bonds may not
be tax-exempt for you.
Interest on private activity bonds generally issued after August
1986 is a preference item for purposes of the individual and
corporate alternative minimum taxes. "Private-activity" (non-
governmental purpose) municipal bonds include industrial revenue
bonds, student-loan bonds and multi- and single-family housing
bonds. An exception is made for private-activity bonds issued for
qualified--501(c)(3)--organizations, including non-profit colleges,
universities and hospitals. These bonds will continue to be tax-
exempt and will not be subject to the alternative minimum tax for
individuals. To the extent a fund earns income subject to the
alternative minimum tax, it will flow through to that fund's
shareholders and may subject some shareholders, depending on their
tax status, to the alternative minimum tax. The fund reports the
percentage of its income earned from these bonds to shareholders
with their other tax information.
State law determines whether interest income on a particular
municipal bond is tax-exempt for state tax purposes. It also
determines the tax treatment of those bonds when earned by a mutual
fund and paid to the fund's shareholders. The fund will tell you
the percentage of interest income from municipal bonds it received
during the year on a state-by-state basis. Your tax advisor should
help you report this income for state tax purposes.
Under federal tax law and an election made by the fund under
federal tax rules, by the end of a calendar year the fund must
declare and pay dividends representing 98% of ordinary income
through Dec. 31 and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Nov. 30 of that calendar
year. The fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
-17-
<PAGE>
amount actually distributed. The fund intends to comply with
federal tax law and avoid any excise tax.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax advisor for more
complete information as to the application of federal, state and
local income tax laws to fund distributions.
AGREEMENTS
Investment Management Services Agreement
The fund has an Investment Management Services Agreement with American Express
Financial Corporation. For its services, American Express Financial Corporation
is paid a fee based on the following schedule:
<TABLE>
<CAPTION>
Assets Annual rate at
(billions) each asset level
- ---------- ----------------
<S> <C>
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over 9.0 0.360
</TABLE>
In March 1995, the daily rate applied to the fund's assets is
expected to be approximately 0.44% on an annual basis. The fee is
calculated for each calendar day on the basis of net assets as of
the close of business two business days prior to the day for which
the calculation is made.
The management fee is paid monthly. Under a prior agreement, the
total amount paid was $32,334,785 for the fiscal year ended Nov.
30, 1994, $33,286,494 for fiscal year 1993, and $33,001,690 for
fiscal year 1992.
Under the current Agreement, the fund also pays taxes, brokerage
commissions and nonadvisory expenses, that include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for shares; fund office expenses; consultants' fees;
compensation of directors, officers and employees; corporate filing
fees; organizational expenses; expenses incurred in connection with
lending portfolio securities of the fund; and expenses properly
payable by the fund, approved by the board of directors. Under a
prior agreement, the fund paid nonadvisory expenses of $1,279,548
for the fiscal year ended Nov. 30, 1994, $1,834,752 for fiscal year
1993, and $1,283,709 for fiscal year 1992.
Administrative Services Agreement
The fund has an Administrative Services Agreement with American Express
Financial Corporation. Under this agreement, the fund pays American Express
Financial Corporation for providing administration and accounting services.
The fee is calculated as follows:
-18-
<PAGE>
<TABLE>
<CAPTION>
Assets Annual rate
(billions) each asset level
---------- ----------------
<S> <C>
First $1.0 0.040%
Next 1.0 0.035
Next 1.0 0.030
Next 3.0 0.025
Next 3.0 0.020
Over 9.0 0.020
</TABLE>
Transfer Agency Agreement
The fund has a Transfer Agency Agreement with American Express Financial
Corporation. This agreement governs American Express Financial Corporation's
responsibility for administering and/or performing transfer agent functions,
for acting as service agent in connection with dividend and distribution
functions and for performing shareholder account administration agent functions
in connection with the issuance, exchange and redemption or repurchase of the
fund's shares. Under the agreement, American Express Financial Corporation
will earn a fee from the fund determined by multiplying the number of
shareholder accounts at the end of the day by a rate determined for each class
and dividing by the number of days in the year. The rate for Class A and
Class Y is $15.50 per year and for Class B is $16.50 per year. The fees paid
to American Express Financial Corporation may be changed from time to time upon
agreement of the parties without shareholder approval. The fund paid fees of
$3,069,187 for the fiscal year ended Nov. 30, 1994.
Distribution Agreement
Under a Distribution Agreement, sales charges deducted for
distributing fund shares are paid to American Express Financial
Advisors daily. These charges amounted to $16,213,287 for the
fiscal year ended Nov. 30, 1994. After paying commissions to
personal financial planners, and other expenses, the amount
retained was $5,755,330. The amounts were $30,119,652 and
$10,653,657 for fiscal year 1993, and $30,785,947 and $10,781,734
for fiscal year 1992.
Additional information about commissions and compensation for the
fiscal year ended Nov. 30, 1994, is contained in the following
table:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
- ----------- ------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
American
Express
Financial
Corporation None None None* $1,211,164**
American
Express
Financial
Advisors $16,213,287 None None None
<FN>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with American Express Financial Corporation."
-19-
<PAGE>
**Distribution fees paid pursuant to the Plan and Supplemental
Agreement of Distribution.
</TABLE>
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.
Plan and Agreement of Distribution
For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the fund's shares except compensation to
the sales force. A substantial portion of the costs are not
specifically identified to any one fund in the IDS MUTUAL FUND
GROUP. Under the Plan, American Express Financial Advisors is paid
a fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares.
The Plan must be approved annually by the board, including a majority of
the disinterested directors, if it is to continue for more than a year. At
least quarterly, the board must review written reports concerning the
amounts expended under the Plan and the purposes for which such
expenditures were made. The Plan and any agreement related to it
may be terminated at any time by vote of a majority of directors
who are not interested persons of the fund and have no direct or
indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, or by vote of a majority of the
outstanding voting securities of the fund or by American Express
Financial Advisors. The Plan (or any agreement related to it) will
terminate in the event of its assignment, as that term is defined
in the Investment Company Act of 1940, as amended. The Plan may
not be amended to increase the amount to be spent for distribution
without shareholder approval, and all material amendments to the
Plan must be approved by a majority of the directors, including a
majority of the directors who are not interested persons of the
fund and who do not have a financial interest in the operation of
the Plan or any agreement related to it. The selection and
nomination of disinterested directors is the responsibility of the
other disinterested directors. No interested person of the fund,
and no director who is not an interested person, has any direct or
indirect financial interest in the operation of the Plan or any
related agreement.
Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the fund's average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the
fund exceed this limitation for the fund's fiscal year in progress,
-20-
<PAGE>
American Express Financial Corporation will assume all expenses in excess of
the limitation. American Express Financial Corporation then may bill the fund
for such expenses in subsequent months up to the end of that fiscal year, but
not after that date. No interest charges are assessed by American Express
Financial Corporation for expenses it assumes.
DIRECTORS AND OFFICERS
The following is a list of the fund's directors who, except for Mr.
Dudley, also are directors of all other funds in the IDS MUTUAL
FUND GROUP. Mr. Dudley is a director of all publicly offered
funds. All shares have cumulative voting rights when voting on the
election of directors.
LYNNE V. CHENEY+'
Born in 1941.
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed Corp., and the Interpublic Group of Companies, Inc.
(advertising).
WILLIAM H. DUDLEY+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of American Express Financial Corporation.
ROBERT F. FROEHLKE+
Born in 1922.
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectual
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
DAVID R. HUBERS**
Born in 1943.
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of American Express Financial
Corporation. Previously, senior vice president, finance and chief financial
officer of American Express Financial Corporation.
HEINZ F. HUTTER+
Born in 1929.
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.
-21-
<PAGE>
ANNE P. JONES+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
DONALD M. KENDALL'
Born in 1921.
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
MELVIN R. LAIRD+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
LEWIS W. LEHR'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
WILLIAM R. PEARCE+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
EDSON W. SPENCER
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
-22-
<PAGE>
JOHN R. THOMAS**
Born in 1937.
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of American Express Financial Corporation.
WHEELOCK WHITNEY+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. ANGUS WURTELE
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of
the fund.
**Interested person by reason of being an officer, director,
employee and/or shareholder of American Express Financial Corporation or
American Express.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
Besides Mr. Pearce, who is president, the fund's other officer is:
LESLIE L. OGG
Born in 1938.
901 S. Marquette Ave.
Minneapolis, MN
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.
During the fiscal year that ended Nov. 30, 1994, the members of the
board, for attending up to 51 meetings, received the following
compensation, in total, from all funds in the IDS MUTUAL FUND
GROUP.
Members who are not officers of the fund or officers or directors of American
Express Financial Corporation receive an annual base fee of $7,500. They
receive a fee for all board and committee meetings they attend. The fee is
shared equally among each fund in the IDS MUTUAL FUND GROUP holding concurrent
meetings. The fees are $500 for Board, Executive, Audit and Investment Review
committees, $750 for Personnel with out-of-state members receiving an
additional $500 if an extra day of travel is required. The Chair of Contracts
receives an additional $5000. In addition members who retire after age 70 or
earlier for health reasons receive monthly retirement benefits of 1/2 of the
base fee on the date they retire divided by 12 for each month of service up
to 120 months.
<TABLE>
<CAPTION>
Board compensation
Aggregate Retirement Estimated Total cash
compensation benefits annual compensation
from the accrued as benefit on from the IDS
Board member fund fund expenses retirement MUTUAL FUND GROUP
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lynne V. Cheney $6,229 $ 1,156 $4,000 $54,600
(part of year)
Robert F. Froehlke 8,353 9,080 4,000 74,800
Heinz F. Hutter 686 1,933 1,933 11,300
(part of year)
Anne P. Jones 8,270 2,283 4,000 71,300
Donald M. Kendall 8,191 11,866 4,000 68,000
Melvin R. Laird 8,265 8,095 4,000 71,100
Lewis W. Lehr 8,286 11,887 3,900 72,000
Edson W. Spencer 8,255 5,715 2,133 70,700
Wheelock Whitney 8,310 4,514 4,000 73,300
C. Angus Wurtele 679 3,967 3,967 11,000
(part of year)
</TABLE>
On Nov. 30, 1994, the fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended Nov. 30, 1994, no director or officer earned more than
-23-
<PAGE>
$60,000 from this fund. All directors and officers as a group
earned $184,053, including $59,968 of retirement plan expense, from
this fund.
CUSTODIAN
The fund's securities and cash are held by First Bank National
Association, 180 E. Fifth St., St. Paul, MN 55101-1631, through a
custodian agreement. The custodian is permitted to deposit some or
all of its securities in central depository systems as allowed by
federal law.
INDEPENDENT AUDITORS
The financial statements contained in the Annual Report to
shareholders, for the fiscal year ended Nov. 30, 1994, were audited
by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest
Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The
independent auditors also provide other accounting and tax-related
services as requested by the fund.
FINANCIAL STATEMENTS
The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1994 Annual Report to
shareholders, pursuant to Section 30(d) of the Investment Company
Act of 1940, as amended, are hereby incorporated in this SAI by
reference. No other portion of the Annual Report however, is
incorporated by reference.
PROSPECTUS
The prospectus for IDS High Yield Tax-Exempt Fund dated March 20,
1995, is hereby incorporated in this SAI by reference.
-24-
<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM SECURITIES
SHORT-TERM TAX-EXEMPT SECURITIES
A portion of the fund's assets are in cash and short-term
securities for day-to-day operating purposes. The investments will
usually be in short-term municipal bonds and notes. These include:
(1) Tax anticipation notes sold to finance working capital needs
of municipalities in anticipation of receiving taxes on a future
date.
(2) Bond anticipation notes sold on an interim basis in
anticipation of a municipality issuing a longer term bond in the
future.
(3) Revenue anticipation notes issued in anticipation of revenues
from sources other than taxes, such as federal revenues available
under the Federal Revenue Sharing Program.
(4) Tax and revenue anticipation notes issued in anticipation of
revenues from taxes and other sources of revenue, except bond
placements.
(5) Construction loan notes insured by the Federal Housing
Administration which remain outstanding until permanent financing
by the Federal National Mortgage Association (FNMA) or the
Government National Mortgage Association (GNMA) at the end of the
project construction period.
(6) Tax-exempt commercial paper with a stated maturity of 365
days or less issued by agencies of state and local governments to
finance seasonal working capital needs or as short-term financing
in anticipation of longer-term financing.
(7) Project notes issued by local housing authorities to finance
urban renewal and public housing projects. These notes are
guaranteed by the full faith and credit of the U.S. government.
(8) Variable rate demand notes, on which the yield is adjusted at
periodic intervals not exceeding 31 days and on which the principal
may be repaid after not more than seven days' notice, are
considered short-term regardless of the stated maturity.
SHORT-TERM TAXABLE SECURITIES AND REPURCHASE AGREEMENTS
Depending on market conditions, a portion of the fund's investments
may be in short-term taxable securities. These include:
(1) Obligations of the U.S. government, its agencies and
instrumentalities resulting principally from lending programs of
the U.S. government;
-25-
<PAGE>
(2) U.S. Treasury bills with maturities up to one year. The
difference between the purchase price and the maturity value or
resale price is the interest income to the fund;
(3) Certificates of deposit or receipts with fixed interest rates
issued by banks in exchange for deposit of funds;
(4) Bankers' acceptances arising from short-term credit
arrangements designed to enable business to obtain funds to finance
commercial transactions;
(5) Letters of credit which are short-term notes issued in bearer
form with a bank letter of credit obligating the bank to pay the
bearer the amount of the note;
(6) Commercial paper rated in the two highest grades by Standard
& Poor's or Moody's. Commercial paper is generally defined as
unsecured short-term notes issued in bearer form by large well-
known corporations and finance companies. These ratings reflect a
review of management, economic evaluation of the industry
competition, liquidity, long-term debt and ten-year earning trends;
Standard & Poor's rating A-1 indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Standard & Poor's ratings A-2 indicates that capacity for timely
payment on issues with this designation is strong.
Moody's rating PRIME-1 (P-1) indicates a superior capacity for
repayment of short-term promissory obligations.
Moody's rating PRIME-2 (P-2) indicates a strong capacity for
repayment of short-term promissory obligations.
(7) Repurchase agreements involving acquisition of securities by
the fund with a concurrent agreement by the seller, usually a bank
or securities dealer, to reacquire the securities at cost plus
interest within a specified time. From this investment, the fund
receives a fixed rate of return that is insulated from market rate
changes while it holds the security.
-26-
<PAGE>
APPENDIX B
OPTIONS AND INTEREST RATE FUTURES CONTRACTS AND ADDITIONAL
INFORMATION ON INVESTMENT POLICIES
The fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. The fund may enter
into interest rate futures contracts traded on any U.S. or foreign
exchange. The fund also may buy or write put and call options on
these futures. Options in the over-the-counter market will be
purchased only when the investment manager believes a liquid
secondary market exists for the options and only from dealers and
institutions the investment manager believes present a minimal
credit risk. Some options are exercisable only on a specific date.
In that case, or if a liquid secondary market does not exist, the
fund could be required to buy or sell securities at disadvantageous
prices, thereby incurring losses.
OPTIONS. An option is a contract. A person who buys a call option
for a security has the right to buy the security at a set price for
the length of the contract. A person who sells a call option is
called a writer. The writer of a call option agrees to sell the
security at the set price when the buyer wants to exercise the
option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person
who writes a put option agrees to buy the security at the set price
if the purchaser wants to exercise the option, no matter what the
market price of the security is at that time. An option is covered
if the writer owns the security (in the case of a call) or sets
aside the cash (in the case of a put) that would be required upon
exercise.
The price paid by the buyer for an option is called a premium. In
addition the buyer generally pays a broker a commission. The
writer receives a premium, less a commission, at the time the
option is written. The cash received is retained by the writer
whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
market price rises above the exercise price. A writer of a put
option may have to pay an above-market price for the security if
its market price decreases below the exercise price.
Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options and futures contracts may benefit the
fund and its shareholders by improving the fund's liquidity and by
helping to stabilize the value of its net assets.
BUYING OPTIONS. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
between the price of the underlying security in the securities
market and its price on the options market. It is anticipated the
-27-
<PAGE>
trading technique will be utilized only to effect a transaction
when the price of the security plus the option price will be as
good or better than the price at which the security could be bought
or sold directly. When the option is purchased, the fund pays a
premium and a commission. It then pays a second commission on the
purchase or sale of the underlying security when the option is
exercised. For record-keeping and tax purposes, the price obtained
on the purchase of the underlying security will be the combination
of the exercise price, the premium and both commissions. When
using options as a trading technique, commissions on the option
will be set as if only the underlying securities were traded.
Put and call options also may be held by the fund for investment
purposes. Options permit the fund to experience the change in the
value of a security with a relatively small initial cash
investment. The risk the fund assumes when it buys an option is
the loss of the premium. To be beneficial to the fund, the price
of the underlying security must change within the time set by the
option contract. Furthermore, the change must be sufficient to
cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the
exercise of the option and subsequent sale (in the case of a call)
or purchase (in the case of a put) of the underlying security.
Even then the price change in the underlying security does not
ensure a profit since prices in the option market may not reflect
such a change.
WRITING COVERED OPTIONS. The fund will write covered options when
it feels it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the fund's
goal.
'All options written by the fund will be covered. For covered call
options if a decision is made to sell the security, the fund will
attempt to terminate the option contract through a closing purchase
transaction.
'The fund will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by the fund, it will conform to the requirements of those states.
For example, California limits the writing of options to 50% of the
assets of a fund.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the fund is
taxed as a regulated investment company under the Internal Revenue
Code, any gains on options and other securities held less than
three months must be limited to less than 30% of its annual gross
income.
If a covered call option is exercised, the security is sold by the
fund. The fund will recognize a capital gain or loss based upon
the difference between the proceeds and the security's basis.
-28-
<PAGE>
Options on many securities are listed on options exchanges. If the
fund writes listed options, it will follow the rules of the options
exchange. Options are valued at the close of the New York Stock
Exchange. An option listed on a national exchange, CBOE or NASDAQ
will be valued at the last quoted sales price or, if such a price
is not readily available, at the mean of the last bid and asked
prices.
FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. They have been established by boards of trade which have
been designated contracts markets by the Commodity Futures Trading
Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and
the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures
contracts based on such debt securities as long-term U.S. Treasury
bonds, Treasury notes, GNMA modified pass-through mortgage-backed
securities, three-month U.S. Treasury bills and bank certificates
of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the
futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale
is effected by the fund entering into a futures contract purchase
for the same aggregate amount of the specific type of financial
instrument and same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the fund immediately
is paid the difference and realizes a gain. If the offsetting
purchase price exceeds the sale price, the fund pays the difference
and realizes a loss. Similarly, closing out a futures contract
purchase is effected by the fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
fund realizes a gain, and if the offsetting sale price is less than
the purchase price, the fund realizes a loss. At the time a
futures contract is made, a good-faith deposit called initial
margin is set up within a segregated account at the fund's
custodian bank. The initial margin deposit is approximately 1.5%
of a contract's face value. Daily thereafter, the futures contract
is valued and the payment of variation margin is required so that
each day the fund would pay out cash in an amount equal to any
decline in the contract's value or receive cash equal to any
increase. At the time a futures contract is closed out, a nominal
commission is paid, which is generally lower than the commission on
a comparable transaction in the cash markets.
The purpose of a futures contract, in the case of a portfolio
holding long-term debt securities, is to gain the benefit of
changes in interest rates without actually buying or selling long-
term debt securities. For example, if the fund owned long-term
bonds and interest rates were expected to increase, it might enter
into futures contracts to sell securities which would have much the
same effect as selling some of the long-term bonds it owned.
-29-
<PAGE>
Futures contracts are based on types of debt securities referred to
above, which have historically reacted to an increase or decline in
interest rates in a fashion similar to the debt securities the fund
owns. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the
fund's futures contracts would increase at approximately the same
rate, thereby keeping the net asset value of the fund from
declining as much as it otherwise would have. If, on the other
hand, the fund held cash reserves and interest rates were expected
to decline, the fund might enter into interest rate futures
contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the fund's
earnings. Even if short-term rates were not higher, the fund would
still benefit from the income earned by holding these short-term
investments. At the same time, by entering into futures contracts
for the purchase of securities, the fund could take advantage of
the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities
when interest rates are expected to increase or by buying bonds
with long maturities and selling bonds with short maturities when
interest rates are expected to decline. But by using futures
contracts as an investment tool, given the greater liquidity in the
futures market than in the cash market, it might be possible to
accomplish the same result more easily and more quickly.
Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest
rates. If the investment manager's prediction is incorrect, the
fund would have been better off had it not entered into futures
contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell futures contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are no daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily
and that change is reflected in the net asset value of the fund.
RISKS. There are risks in engaging in each of the management tools
described above. The risk the fund assumes when it buys an option
is the loss of the premium paid for the option. Purchasing options
also limits the use of monies that might otherwise be available for
long-term investments.
-30-
<PAGE>
The risk involved in writing options on futures contracts the fund
owns, or on securities held in its portfolio, is that there could
be an increase in the market value of such contracts or securities.
If that occurred, the option would be exercised and the asset sold
at a lower price than the cash market price. To some extent, the
risk of not realizing a gain could be reduced by entering into a
closing transaction. The fund could enter into a closing
transaction by purchasing an option with the same terms as the one
it had previously sold. The cost to close the option and terminate
the fund's obligation, however, might be more or less than the
premium received when it originally wrote the option. Furthermore,
the fund might not be able to close the option because of
insufficient activity in the options market.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the fund's portfolio securities.
The correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the
difference between a contract or security price and their cost of
borrowed funds. Such distortions are generally minor and would
diminish as the contract approached maturity.
Another risk is that the fund's investment manager could be
incorrect in anticipating as to the direction or extent of various
interest rate movements or the time span within which the movements
take place. For example, if the fund sold futures contracts for
the sale of securities in anticipation of an increase in interest
rates, and interest rates declined instead, the fund would lose
money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, the
fund intends to identify futures contracts as mixed straddles and
not mark them to market, that is, not treat them as having been
sold at the end of the year at market value. Such an election may
result in the fund being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
Federal income-tax treatment of gains or losses from transactions
in options on futures contracts and indexes is presently unclear,
although the fund's tax advisors currently believe marking to
market is not required. Depending on developments, and although no
assurance is given, the fund may seek Internal Revenue Service
(IRS) rulings clarifying questions concerning such treatment.
Certain provisions of the Internal Revenue Code may also limit the
fund's ability to engage in futures contracts and related options
transactions. For example, at the close of each quarter of the
fund's taxable year, at least 50% of the value of its assets must
consist of cash, government securities and other securities,
subject to certain diversification requirements. Less than 30% of
its gross income must be derived from sales of securities held less
than three months.
-31-
<PAGE>
The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, the fund
may be required to defer closing out a contract beyond the time
when it might otherwise be advantageous to do so. The fund
also may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale
holding period rules with respect to such underlying securities.
Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the fund's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.
WHEN-ISSUED SECURITIES
The fund may purchase some securities in advance of when they are
issued. Price and rate of interest are set on the date the
commitments are given but no payment is made or interest earned
until the date the securities are issued, usually within two
months, but other terms may be negotiated. The commitment requires
the fund to buy the security when it is issued so the commitment is
valued daily the same way as owning a security would be valued.
The fund designates cash or liquid high-grade debt securities to at
least equal the amount of its commitment. Under normal market
conditions, the fund does not intend to commit more than 5% of its
total assets to these practices. The fund may sell the commitment
just like it can sell a security. Frequently, the fund has the
opportunity to sell the commitment back to the institution.
INVERSE FLOATERS
The Fund may invest in securities called "inverse floaters."
Inverse floaters are created by underwriters using the interest
payments on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. What is left over, less a servicing fee, is
paid to holders of the inverse floaters. As interest rates go
down, the holders of the inverse floaters receive more income and
an increase in the price for the inverse floaters. As interest
rates go up, the holders of the inverse floaters receive less
income and a decrease in the price for the inverse floaters.
-32-
<PAGE>
APPENDIX C
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.
While this does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many
shareholders who can continue investing through changing market
conditions to accumulate shares in a fund to meet long term goals.
DOLLAR-COST AVERAGING
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
REGULAR MARKET PRICE SHARES
INVESTMENT OF A SHARE ACQUIRED
- -------------------------------------------------------------------
<S> <C> <C>
$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
---- ------ -----
$500 $25.00 103.4
</TABLE>
AVERAGE MARKET PRICE OF A SHARE OVER 5 PERIODS:
$5.00 ($25.00 DIVIDED BY 5).
THE AVERAGE PRICE YOU PAID FOR EACH SHARE:
$4.84 ($500 DIVIDED BY 103.4).
-33-
<PAGE>
Independent auditors' report
______________________________________________________________________________
The board of directors and shareholders
IDS High Yield Tax-Exempt Fund, Inc.:
We have audited the accompanying statement of assets
and liabilities, including the schedule of investments
in securities, of IDS High Yield Tax-Exempt Fund, Inc.
as of November 30, 1994, and the related statement of
operations for the year then ended and the statements
of changes in net assets for each of the years in the
two-year period ended November 30, 1994, and the
financial highlights for each of the years in the
three-year period ended November 30, 1994, the eleven
months ended November 30, 1991, and for each of the
years in the six-year period ended December 31, 1990.
These financial statements and the financial
highlights are the responsibility of fund management.
Our responsibility is to express an opinion on these
financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements and the financial highlights are free of
material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. Investment
securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not
received or delivered, we request confirmations from
brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well
as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of IDS High Yield Tax-Exempt Fund,
Inc. at November 30, 1994, and the results of its
operations for the year then ended and the changes in
its net assets for each of the years in the two-year
period ended November 30, 1994, and the financial
highlights for the periods stated in the first
paragraph above, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 6, 1995
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS High Yield Tax-Exempt Fund, Inc.
Nov. 30, 1994
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $5,729,117,366) $5,652,724,879
Accrued interest receivable 141,217,924
Receivable for investment securities sold 1,388,125
_____________________________________________________________________________________________________________
Total assets 5,795,330,928
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 8,685,126
Dividends payable to shareholders 2,240,168
Payable for investment securities purchased 11,950,440
Accrued investment management and services fee 2,391,655
Accrued distribution fee 96,091
Accrued transfer agency fee 243,125
Other accrued expenses 671,058
_____________________________________________________________________________________________________________
Total liabilities 26,277,663
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $5,769,053,265
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 1,380,760,792 shares $ 13,807,608
Additional paid-in capital 5,930,215,986
Accumulated net realized loss (Notes 1 and 6) (98,750,811)
Unrealized depreciation (Note 4) (76,219,518)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $5,769,053,265
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 4.18
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
IDS High Yield Tax-Exempt Fund, Inc.
Year ended Nov. 30, 1994
<CAPTION>
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
<S> <C>
Income:
Interest $ 454,192,920
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 32,334,785
Distribution fee 1,211,164
Transfer agency fee 3,069,187
Compensation of directors 132,294
Compensation of officers 51,759
Custodian fees 205,185
Postage 446,874
Registration fees 132,018
Reports to shareholders 65,790
Audit fees 37,750
Administrative 78,329
Other 129,549
_____________________________________________________________________________________________________________
Total expenses 37,894,684
_____________________________________________________________________________________________________________
Investment income -- net 416,298,236
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security transactions (Note 3) (36,845,837)
Net realized loss on financial futures contracts (44,216,938)
Net realized gain on expired option contracts written (Note 5) 4,225,164
______________________________________________________________________________________________________________
Net realized loss on investments (76,837,611)
Net change in unrealized appreciation or depreciation (714,013,228)
_____________________________________________________________________________________________________________
Net loss on investments (790,850,839)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations $(374,552,603)
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
IDS High Yield Tax-Exempt Fund, Inc.
Year ended Nov. 30,
<CAPTION>
_____________________________________________________________________________________________________________
Operations and distributions 1994 1993
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 416,298,236 $ 408,915,669
Net realized gain (loss) on investments (76,837,611) 30,340,901
Net change in unrealized appreciation or depreciation (714,013,228) 147,320,430
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations (374,552,603) 586,577,000
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (416,298,458) (408,908,716)
Net realized gain (30,681,908) (27,741,401)
_____________________________________________________________________________________________________________
Total distributions (446,980,366) (436,650,117)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
222,781,222 and 210,362,306 shares (Note 2) 1,010,567,033 999,841,120
Net asset value of 70,023,194 and 63,612,850 shares
issued in reinvestment of distributions 316,177,064 301,687,871
Payments for redemptions of
327,007,352 and 158,383,974 shares (1,469,116,761) (754,206,709)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions
representing net reduction of
34,202,936 and net addition of 115,591,182 shares (142,372,664) 547,322,282
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets (963,905,633) 697,249,165
Net assets at beginning of year 6,732,958,898 6,035,709,733
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$0 and $222) $5,769,053,265 $6,732,958,898
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS High Yield Tax-Exempt Fund, Inc.
______________________________________________________________________________
1. Summary of significant accounting policies
The fund is registered under the Investment Company
Act of 1940 (as amended) as a diversified, open-end
management investment company. Significant accounting
policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each
business day. Securities 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 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 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 also may write over-the-counter
options where the completion of the obligation is
dependent upon the credit standing of the other
party.
Option contracts are valued daily at the closing
prices on their primary exchanges and unrealized
appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or
closing of the option transaction. When options on
debt securities or futures are exercised, the fund
will realize a gain or loss. When other options are
exercised, the proceeds on sales for a written call
option, the purchase cost for a written put option or
the cost of a security for a purchased put or call
option is adjusted by the amount of premium received
<PAGE>
or paid.
Futures transactions
In order to gain exposure to or protect itself from
changes in the market, the fund may buy and sell
interest rate futures contracts. Risks of entering
into futures contracts and related options include
the possibility that there may be an illiquid market
and that a change in the value of the contract or
option may not correlate with changes in the value of
the underlying securities.
Upon entering into a futures contract, the fund is
required to deposit either cash or securities in an
amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation
margin) are made or received by the fund each day.
The variation margin payments are equal to the daily
changes in the contract value and are recorded as
unrealized gains and losses. The fund recognizes a
realized gain or loss when the contract is closed or
expires.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been
purchased by the fund on a forward-commitment or
when-issued basis can take place one month or more
after the transaction date. During this period, such
securities are subject to market fluctuations, and
they may effect the fund's net assets the same as
owned securities. The fund designates cash or liquid
high-grade debt securities at least equal to the
amount of its commitment. As of Nov. 30, 1994, the
fund had entered into outstanding when-issued or
forward commitments of $11,950,440.
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
<PAGE>
the income or realized gains (losses) were recorded
by the fund.
On the statement of assets and liabilities, as a
result of permanent book-to-tax differences,
accumulated net realized loss has been decreased by
$10,772, resulting in a net reclassification
adjustment to decrease paid-in-capital by $10,772.
Dividends to shareholders
Dividends from net investment income, declared daily
and payable monthly, are reinvested in additional
shares of the fund at net asset value or payable in
cash. Capital gains, when available, are distributed
along with the last income dividend of the calendar
year.
Other
Security transactions are accounted for on the date
securities are purchased or sold. Interest income,
including level-yield amortization of premium and
discount, is accrued daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, the
fund pays American Express Financial Corporation a
fee for managing its investments, recordkeeping and
other specified services. The fee is a percentage of
the fund's average daily net assets consisting of a
group asset charge in reducing percentages from 0.46%
to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP
and an individual annual asset charge of 0.11% of
average daily net assets.
The fund also pays American Express Financial
Corporation a distribution fee at an annual rate of
$6 per shareholder account and a transfer agency fee
at an annual rate of $15.50 per shareholder account.
The transfer agency fee is reduced by earnings on
monies pending shareholder redemptions.
American Express Financial Corporation will assume
and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive
applicable state expense limitation.
Sales charges by American Express Financial Advisors
Inc. for distributing fund shares were $16,213,287
for the year ended Nov. 30, 1994.
The fund has a retirement plan for its independent
directors. Upon retirement, directors receive monthly
payments equal to one-half of the retainer fee for as
many months as they served as directors up to 120
months. There are no death benefits. The plan is not
<PAGE>
funded but the fund recognizes the cost of payments
during the time the directors serve on the board.
The retirement plan expense amounted to $59,968 for
the year ended Nov. 30, 1994.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of
securities (other than short-term obligations)
aggregated $1,075,060,850 and $1,222,139,047,
respectively, for the year ended Nov. 30, 1994.
Realized gains and losses are determined on an
identified cost basis.
______________________________________________________________________________
4. Interest rate futures contracts
At Nov. 30, 1994, investments in securities included
securities valued at $33,203,330 that were pledged as
collateral to cover initial margin deposits on 135
open purchase contracts and 135 open sale contracts.
The market value of the open contracts at Nov. 30,
1994, was $24,540,468 with a net unrealized gain of
$172,969.
______________________________________________________________________________
5. Option contracts written
The number of contracts and premium amounts
associated with option contracts written is as
follows:
<TABLE>
<CAPTION>
Year ended Nov. 30, 1994
________________________________________________
Puts Calls
Contracts Premium Contracts Premium
________________________________________________
<S> <C> <C> <C> <C>
Balance Nov. 30, 1993 -- -- -- --
Open 2,000 $ 3,001,630 2,623 $ 1,223,534
Expired (2,000) (3,001,630) (2,623) (1,223,534)
________________________________________________
Balance Nov. 30, 1994 -- $ -- -- $ --
________________________________________________
</TABLE>
______________________________________________________________________________
6. Capital loss carryover
For federal income tax puposes, the fund has a
capital loss carryover of $77,922,805 at Nov. 30,
1994, that will expire in 2002 if not offset by
subsequent capital gains. It is unlikely the board of
directors will authorize a distribution of any net
realized capital gains until the available capital
loss carryover has been offset or expires.
______________________________________________________________________________
IDS High Yield Tax-Exempt Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS High Yield Tax-Exempt Fund, Inc. (Percentages represent value of
Nov. 30, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Municipal bonds (97.1%)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b)(c) Coupon Maturity Principal Value(a)
rate amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Alabama (0.7%)
Baldwin County Eastern Shore Health Care Authority Hospital Revenue Bonds
Thomas Hospital Series 1991 8.50 % 2016 $ 4,765,000 $ 4,974,612
Camden Industrial Development Board Solid Waste Disposal Revenue Bonds
MacMillan Bloedel Series 1991A 7.75 2019 8,500,000 8,503,740
Columbia Industrial Development Board Pollution Control
Refunding Revenue Bonds Alabama Power Series D 9.375 2015 8,500,000 8,836,770
Columbia Industrial Development Board Pollution Control Revenue Bonds
Alabama Power Farley Plant Series E 9.25 2015 11,500,000 12,105,015
Marengo County Limited Obligation Capital Outlay Warrants Series 1988 8.50 2018 3,000,000 3,357,180
Mobile Medical Clinic Board Psychiatric Revenue Bonds Charter Medical 11.50 2008 2,740,000 2,786,087
______________
Total 40,563,404
_____________________________________________________________________________________________________________________________
Alaska (0.3%)
Anchorage Municipality Senior Lien Electric Revenue Bonds Series 1986
(AMBAC Insured) 6.00 2019 10,150,000 8,757,115
North Slope Borough General Obligation Bonds Series 1984B
Zero Coupon (CGIC Insured) 7.051 2004 7,000,000 (f,h) 3,721,620
North Slope Borough General Obligation Bonds Series 1984B
Zero Coupon (CGIC Insured) 7.151 2005 7,000,000 (f,h) 3,448,760
North Slope Borough General Obligation Refunding Bonds Series 1984G 10.40 1995 310,000 320,531
______________
Total 16,248,026
_____________________________________________________________________________________________________________________________
Arizona (0.5%)
Chandler Industrial Development Authority Beverly Enterprises
Series 1994 7.625 2008 2,960,000 2,820,554
Scottsdale Industrial Development Authority Beverly Enterprises
Series 1994 7.625 2008 3,225,000 3,135,022
Maricopa County Hospital System Revenue Bonds Samaritan Health Services
Series 1981 12.00 2008 4,865,000 5,683,255
Maricopa County Industrial Development Authority Hospital System
Refunding Revenue Bonds Samaritan Health Services Series 1985A 9.25 2015 7,000,000 7,390,180
Maricopa County Pollution Control Refunding Revenue Bonds
Palo Verde Public Service 6.375 2023 3,500,000 2,903,670
Maricopa-Stanfield Irrigation & Drainage District Pinal County
General Obligation Refunding Bonds Series 1989 6.00 2004 12,950,000 9,324,000
______________
Total 31,256,681
_____________________________________________________________________________________________________________________________
Arkansas (0.3%)
Pope County Pollution Control Revenue Bonds Arkansas Power & Light
Series 1985 11.00 2015 7,380,000 7,924,792
Pope County Solid Waste Disposal Revenue Bonds Arkansas Power & Light
<PAGE>
Series 1991 8.00 2021 3,250,000 3,334,337
Texarkana Public Facility Board SCH Health Care Systems Revenue Bonds
Series 1985A 9.375 2015 5,000,000 5,123,700
______________
Total 16,382,829
_____________________________________________________________________________________________________________________________
California (4.9%)
Burbank Redevelopment Agency Tax Allocation Bonds
Golden State Series 1993A 6.00 2013-23 9,500,000 8,019,625
Community Development Authority Health Facilities Unihealth America
Certificate of Participation Series 1993 Inverse Floater (AMBAC Insured) 7.17 2011 22,400,000 (d) 15,848,000
East Bay Municipal Utility District Water Revenue Bonds
Series 1993 Inverse Floater (MBIA Insured) 6.67 2008 15,500,000 (d) 10,908,125
Eden Township Hospital District Insured Health Facilities
Refunding Revenue Bonds Certificate of Participation
Eden Hospital Health Services Series 1993 5.85 2018 3,750,000 3,045,300
Los Angeles International Airport Regional Airports Improvement
Corporation Refunding Revenue Bonds United Airlines Series 1984 8.80 2021 11,650,000 12,218,753
Los Angeles International Airport Regulatory Airports Improvement
Sublease Revenue Bonds Western Airlines Issue 1985 11.25 2025 10,000,000 10,664,100
Los Angeles Water & Power Electric Plant Refunding Revenue Bonds
Series 1992 6.375 2020 10,000,000 9,175,700
Modesto Santa Clara Redding Public Power Bonds San Juan Series C
(AMBAC Insured) 5.50 2021 4,500,000 3,662,505
Northern California Power Agency Geothermal #3 Refunding Revenue Bonds
Series 1985A 7.00 2010 13,510,000 13,740,075
Northern California Power Agency Geothermal #3 Revenue Bonds 5.00 2009 49,635,000 40,413,313
Novato Community Facility District #1 Vintage Oaks Public
Improvement Special Tax Refunding Bonds 7.25 2021 5,000,000 4,588,300
Orange County Special Tax Community Facilities Bonds
Aliso Veijo District 88-1 Series 1992A 7.35 2018 6,000,000 6,585,000
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A 6.15 2012 4,890,000 4,277,528
Regional Airports Improvement Facilities Sublease Revenue Bonds
Continental Airlines Los Angeles International Airport
Series 1988 9.00 2008-17 12,800,000 13,256,519
Sacramento Municipal Utility District Electric Refunding Revenue Bonds
Series R 6.00 2015-17 20,385,000 17,794,049
Sacramento Municipal Utility District Electric Refunding Revenue Bonds
Series 1993D Inverse Floater (FSA Insured) 5.82 2005 15,800,000 (d) 12,284,500
Sacramento Municipal Utility District Electric Refunding Revenue Bonds
Series 1993D Inverse Floater (FSA Insured) 6.02 2006 16,400,000 (d) 12,566,500
Sacramento Municipal Utility District Electric Refunding Revenue Bonds
Series 1993D Inverse Floater (MBIA Insured) 6.47 2015 15,000,000 (d) 10,350,000
San Joaquin Hills Orange County Transporation Corridor Agency
Senior Lien Toll Road Revenue Bonds 6.75 2032 14,785,000 13,053,972
San Jose Redevelopment Agency Merged Area Tax Allocation Bonds
Series 1993 Inverse Floater (MBIA Insured) 6.586 2014 30,600,000 (d) 20,004,750
San Marcos Public Facility Authority Refunding Revenue Bonds
Civic Center Public Improvement Series A 6.20 2022 12,300,000 10,419,330
Sierra Unified School District Fresno County Certificate of Participation
Capital Financing Refunding Bonds Series 1993 6.125 2018 6,470,000 5,522,016
Southern California Public Power Authority Power Revenue Bonds
Palo Verde Series 1993 Inverse Floater (FGIC Insured) 7.12 2017 20,000,000 (d) 12,325,000
Southern California Public Power Authority Power Revenue Bonds
Series 1986B 5.75 2017 2,025,000 1,725,462
Southern California Public Power Authority Transmission
Refunding Revenue Bonds Series 1986B 7.00 2022 1,500,000 1,569,086
Ukiah Unified School District Mendocino County
Certificate of Participation Series 1993 6.00 2010 5,000,000 4,379,750
<PAGE>
University of California Refunding Revenue Bonds
Multiple Purpose Project (AMBAC Insured) 5.25 2016 6,000,000 4,812,420
______________
Total 283,209,678
_____________________________________________________________________________________________________________________________
Colorado (3.8%)
Arapahoe County Industrial Development Revenue Bonds
Dillion Real Estate-Kroger 8.00 2009 4,000,000 (e) 4,022,080
Aurora Centretech Metropolitan District Arapahoe County Series 1987B 6.00 2023 5,732,785 4,815,539
Briargate Public Building Authority Landowner Assessment Lien Bonds
Series 1985A 10.25 2000 5,000,000 (e) 2,500,000
Colorado Springs Cottonwood General Improvement District
General Obligation Bonds Series 1986 9.25 2031 3,500,000 1,225,000
Colorado Springs Hospital Revenue Bonds Memorial Hospital Series 1990 7.875 2010 5,000,000 5,041,300
Colorado Springs Stetson Hills Public Building Authority
Landowner Assessment Lien Bonds Series 1988A 9.75 2008 2,869,110 (e) 143,456
Colorado Springs Utilities System Refunding Revenue Bonds Series 1991C 6.50 2015 24,895,000 23,825,262
Colorado Springs Utilities System Refunding Revenue Bonds Series 1991C 6.75 2001-21 30,000,000 30,555,100
Colorado Springs Utilities System PreRefunded Revenue Bonds Series 1991C 6.50 2015 1,505,000 1,578,595
Denver Airport System Revenue Bonds Series 1985 8.375 2011 6,000,000 6,070,260
Denver City & County Airport Systems Revenue Bonds Series 1991A 8.75 2023 10,000,000 10,298,800
Denver City & County Airport Systems Revenue Bonds Series 1991D 7.75 2021 8,650,000 8,166,638
Denver City & County Airport Systems Revenue Bonds Series 1992A 7.25 2025 20,975,000 19,225,265
Denver City & County Airport Systems Revenue Bonds Series 1992B 7.25 2023 20,500,000 18,334,790
Denver City & County Airport Systems Revenue Bonds Series 1994A 7.50 2012 5,000,000 4,768,150
Denver City & County Airport Systems Revenue Bonds Series 1994A 7.50 2023 19,340,000 17,809,239
Denver City & County GVR Metropolitan District
General Obligation Refunding & Improvement Bonds Series 1985 10.25 2002 4,000,000 3,960,000
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1991 8.00 2006 2,115,000 1,988,100
Denver Urban Renewal Authority Tax Increment Revenue Bonds
South Broadway Montgomery Ward Urban Renewal Series 1992 8.50 2016 14,740,000 14,703,150
El Paso County School District #20 General Obligation Refunding Bonds
Series 1993A 6.10 2005 2,215,000 2,134,042
El Paso County School District #20 General Obligation Refunding Bonds
Series 1993A 6.15 2008 1,000,000 943,470
El Paso County School District #20 General Obligation Refunding Bonds
Series 1993A 6.20 2007 1,250,000 1,169,337
Hotchkiss Industrial Development Revenue Bonds Dillion Real Estate-Kroger 8.00 2009 1,500,000 1,502,175
Housing Finance Authority Single Family Program Senior Bonds
Series 1991B (FGIC Insured) 7.25 2011 3,360,000 3,311,650
Housing Finance Authority Single Family Program Senior Bonds
Series 1991B (FGIC Insured) 7.30 2018 3,035,000 2,926,377
Northern Colorado Water District Revenue Bonds Series D 6.00 2015 4,000,000 3,567,280
Superior Metropolitan District #2 Limited Tax General Obligation
Refunding Bonds MDC Holdings Series 1994B 7.50 1998 3,300,000 3,288,615
Superior Metropolitan District #2 Limited Tax General Obligation
Refunding Bonds MDC Holdings Series 1994B 8.25 2013 2,580,000 2,472,853
Superior Metropolitan District #2 Limited Tax General Obligation
Refunding Bonds MDC Holdings Series 1994B 8.50 2013 12,000,000 11,778,240
Thornton Industrial Development Revenue Bonds Dillion Real Estate-Kroger 8.00 2009 4,500,000 4,500,000
Westminster Industrial Development Revenue Bonds Dillion Real Estate-Kroger 8.00 2009 3,500,000 3,513,615
Winter Park Restated Parking Facility Lease/Purchase & Declaration
of Trust Refunding Certificate of Participation Series 1985 11.00 2004 1,000,000 1,009,980
______________
Total 221,148,358
_____________________________________________________________________________________________________________________________
Connecticut (0.2%)
Development Authority Solid Waste & Electric Revenue Bonds Ogden Martin 10.00 2014 7,500,000 7,948,875
State Transporation Infrastructure Special Tax Obligation Revenue Bonds
<PAGE>
Series B 5.70 1997 4,300,000 4,347,773
______________
Total 12,296,648
_____________________________________________________________________________________________________________________________
District of Columbia (1.0%)
General Obligation Refunding Bonds Series A 7.875 2006 12,625,000 13,365,204
General Obligation Refunding Bonds Series 1994A (MBIA Insured) 6.00 2010 27,875,000 25,068,545
General Obligation Refunding Bonds Series 1994A (MBIA Insured) 6.10 2011 7,580,000 6,904,698
General Obligation Refunding Bonds Series 1994B-2 (FSA Insured) 5.50 2006 12,405,000 11,104,956
Housing Finance Agency Multiple Family Mortgage Revenue Bonds
Temple Courts Section 8 Series 1985 (FHA Insured) 12.00 2022 1,320,000 1,401,734
______________
Total 57,845,137
_____________________________________________________________________________________________________________________________
Florida (4.9%)
Broward County Airport System Revenue Bonds Series 1989B 7.625 2013 15,000,000 15,556,500
Broward County Resource Recovery Revenue Bonds L.P. South Project 7.95 2008 42,040,000 44,613,269
Charlotte County Development Authority 1st Mortgage
Refunding Revenue Bonds Royal Palm Retirement Centre Series 1991 9.50 2014 4,310,000 4,261,900
Crossings at Fleming Island Community Development District Utility
Revenue Bonds Series 1994 7.375 2019 14,000,000 12,185,600
Department of Transportation Turnpike Revenue Bonds Series 1991A
(AMBAC Insured) 6.25 2020 20,000,000 18,502,800
Gateway Centre Development District Pinellas County Special Assessment
Revenue Bonds Series 1988 9.125 2009 2,980,000 3,086,058
Hillsborough County Utility Refunding Revenue Bonds Series 1991A
(MBIA Insured) 6.50 2016 24,760,000 23,866,412
Hillsborough County Utility Refunding Revenue Bonds Series 1991A 7.00 2001-14 24,000,000 23,769,637
Jacksonville Electric Authority St. John's River Power Park System
Revenue Bonds Series 1989 6.00 2015 10,300,000 9,209,230
Jacksonville Health Facilities Authority Hospital Refunding Revenue Bonds
Riverside Hospital Series 1989 7.625 2013 1,600,000 1,584,768
Lakeland Electric & Water Refunding Revenue Bonds Series 1986 7.00 2009 5,000,000 5,033,350
Lakewood Ranch Community Development District #1 Special Assessment Bonds
Series 1994 8.25 2014 10,005,000 9,814,605
Lee County Industrial Development Authority Industrial Development
Revenue Bonds Gulf Utility Series 1988A 9.625 2018 5,545,000 6,044,216
Lee County Industrial Development Authority Industrial Development
Revenue Bonds Gulf Utilities Series 1988B 9.50 2020 4,000,000 4,343,720
Municipal Power Agency Refunding Revenue Bonds St. Lucie Series 1986 7.375 2016 6,000,000 6,353,820
Orange County Health Facilities Authority 1st Mortgage Revenue Bonds
RHA/Princeton Hospital Series 1991 9.00 2021 10,000,000 9,752,600
Palm Beach County Health Facilities Authority Hospital Revenue Bonds
Good Samaritan Health Series 1993 6.30 2022 4,250,000 3,583,685
Palm Beach County Solid Waste Industrial Development Revenue Bonds
Okeelanta Power Limited Partnership Series 1993A 6.70 2015 10,000,000 8,819,500
Palm Beach County Solid Waste Industrial Development Revenue Bonds
Okeelanta Power Limited Partnership Series 1993A 6.85 2021 11,700,000 10,265,814
Pinellas County Capital Improvement Revenue Bonds Series 1991 5.40 1997 5,570,000 5,605,815
Polk County Industrial Development Authority 1st Mortgage
Refunding Revenue Bonds Spring Haven II 8.75 2014 6,665,000 6,646,205
Port Everglades Port Authority Revenue Bonds Junior Lien 5.00 2016 18,635,000 14,534,927
Riverwood Community Development District Charlotte County
Special Assessment Revenue Bonds Series 1992A 8.50 2012 5,800,000 5,696,180
Riverwood Community Development District Charlotte County
Special Assessment Revenue Bonds Series 1992B 8.50 2012 1,440,000 1,414,224
State Board of Education Refunding Bonds Series 1989A 6.00 2025 16,750,000 14,764,288
Sumter County Village Community Development District #1
Capital Improvement Revenue Bonds Series 1992 8.40 2012 6,095,000 5,931,715
Sunrise Utility System Refunding & Improvement Revenue Bonds 10.75 2018 5,000,000 6,198,600
<PAGE>
______________
Total 281,439,438
_____________________________________________________________________________________________________________________________
Georgia (3.4%)
Atlanta Special Purpose Facility Revenue Bonds Delta Air Lines
Series 1989B 6.25 2019 8,685,000 6,888,855
Atlanta Special Purpose Facility Revenue Bonds Delta Air Lines
Series 1989B 7.90 2018 13,500,000 12,955,140
Burke County Development Authority Pollution Control Revenue Bonds
Georgia Power 1st Series 1985 10.125 2015 8,175,000 8,570,098
Burke County Development Authority Pollution Control Revenue Bonds
Georgia Power 3rd Series 1985 10.50 2015 20,575,000 22,058,457
Effingham County Pollution Control Revenue Bonds Fort Howard
Series 1988 7.90 2005 19,850,000 19,661,822
Fulco Hospital Authority Revenue Anticipation Certificate
Georgia Baptist Health Care Systems Series 1992A 6.375 2022 20,300,000 16,356,928
Monroe County Development Authority Pollution Control Revenue Bonds
Georgia Power-Scherer 1st Series 1985 10.50 2015 14,725,000 15,554,312
Monroe County Pollution Control Revenue Bonds Gulf Power 1st Series 1984 10.50 2014 10,000,000 10,201,800
Municipal Electric Authority Power Refunding Bonds Series 1989R 6.00 2014 9,130,000 8,123,144
Municipal Electric Authority Power Revenue Bonds 6.00 2020 3,350,000 2,862,039
Municipal Electric Authority Power Revenue Bonds 7.00 2019 1,340,000 1,370,887
Municipal Electric Authority Power Revenue Bonds 9.875 2017 20,000,000 20,492,800
Municipal Electric Authority Power Revenue Bonds Series 5 (FGIC Insured) 6.00 2025 34,490,000 30,220,483
Municipal Electric Authority Power Revenue Bonds Series J 10.75 2020 7,000,000 7,257,110
Municipal Electric Authority Power Revenue Bonds Series L 5.00 2020 1,150,000 845,480
Municipal Electric Authority Power Revenue Bonds Series 1986A 7.875 2018 2,625,000 2,759,662
Rockdale County Development Authority Solid Waste Disposal Revenue Bonds
Visy Paper Series 1993 7.50 2026 10,000,000 9,153,100
______________
Total 195,332,117
_____________________________________________________________________________________________________________________________
Hawaii (0.3%)
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B Inverse Floater 6.32 2006 10,000,000 (d) 7,512,500
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B Inverse Floater 6.62 2008 10,000,000 (d) 7,275,000
______________
Total 14,787,500
_____________________________________________________________________________________________________________________________
Idaho (--%)
The Regents of the University Student Fee Refunding Revenue Bonds
Series 1986 (FGIC Insured) 7.00 2010 1,050,000 1,063,828
_____________________________________________________________________________________________________________________________
Illinois (8.6%)
Bradley Kankakee County Tax Increment Refunding Revenue Bonds
Series 1993 8.40 2012 5,800,000 5,643,110
Broadview Cook County Senior Lien Tax Increment Revenue Bonds
Series 1993 8.25 2013 12,000,000 11,505,240
Chicago General Obligation Refunding Bonds Series 1985 9.875 2013 18,510,000 19,449,197
Chicago General Obligation Bonds Series 1994A (AMBAC Insured) 5.875 2022 17,850,000 15,177,676
Chicago O'Hare International Airport General Airport Revenue Bonds
Series 1984AB 10.625 2015 5,500,000 5,696,515
Chicago O'Hare International Airport General Airport Revenue Bonds
Series 1990A 6.00 2018 29,000,000 24,848,360
Chicago O'Hare International Airport General Airport Revenue Bonds
Series 1990A 7.50 2016 21,000,000 22,273,230
Chicago O'Hare International Airport General Airport
Refunding Revenue Bonds Series 1993A 5.00 2016 14,450,000 10,925,356
Chicago O'Hare International Airport Special Revenue Facility Bonds
<PAGE>
Delta Airlines Series 1992 6.45 2018 10,000,000 8,333,700
Chicago O'Hare International Airport Special Revenue Facility Bonds
United Airlines Series C 8.20 2018 24,065,000 24,398,060
Chicago O'Hare International Airport Terminal Special Revenue Bonds 7.50 2017 32,250,000 32,847,915
Chicago O'Hare International Airport Terminal Special Revenue Bonds
(FGIC Insured) 7.875 2025 17,750,000 17,007,517
Chicago Public Building Commission Revenue Bonds
Chicago Board of Education Series 1993A (MBIA Insured) 5.75 2018 13,000,000 10,912,850
Chicago Ridge Special Service Area #1 Unlimited Ad Valorem Tax Bonds
Series 1990 9.00 2008 2,700,000 2,745,981
Chicago Wastewater Transmission Revenue Bonds Series 1994 (MBIA Insured) 6.375 2024 22,500,000 20,400,525
Civic Center Bonds Dedicated Tax Revenue Bonds Series 1985 9.50 2015 10,000,000 10,774,200
Cook County Bedford Park Senior Lien Tax Increment Revenue Bonds
Mark IV Series 1992 9.75 2012 1,740,000 1,854,040
Development Finance Authority Belmont House Limited II
Subordinate Revenue Bonds Series 1989B 11.00 2004 7,000,000 (e) 350,000
Development Finance Authority Pollution Control Refunding Revenue Bonds
Central Illinois Public Service Series 1993B-2 5.90 2028 2,500,000 2,022,100
Development Finance Authority Pollution Control Refunding Revenue Bonds
Commonwealth Edison Series 1994 5.70 2009 2,000,000 1,723,800
Development Finance Authority Pollution Control Refunding Revenue Bonds
Commonwealth Edison Series 1994 5.85 2014 4,500,000 3,708,180
Development Finance Authority Pollution Control Refunding Revenue Bonds
Illinois Power Series 1991A 7.375 2021 19,250,000 18,628,610
Development Finance Authority Pollution Control Revenue Bonds
Commonwealth Edison Series 1985 10.625 2015 5,280,000 5,475,096
Development Finance Authority Pollution Control Revenue Bonds
Illinois Power Series 1986A 7.625 2016 25,000,000 25,194,000
Development Finance Authority Pollution Control Revenue Bonds
Illinois Power Series 1986B 7.625 2016 2,000,000 2,015,520
Development Finance Authority Pollution Control Revenue Bonds
Illinois Power Series 1986C 7.625 2016 15,560,000 15,680,746
Development Finance Authority Solid Waste Disposal Facility Revenue Bonds
Ford Heights Waste Tire to Energy Series 1994 7.875 2011 10,000,000 9,578,700
Education Facilities Authority Refunding Revenue Bonds DePaul University
Series 1985A 9.625 2010 3,000,000 3,204,930
Educational Facilities Authority Refunding Revenue Bonds
Art Institute of Chicago Series 1993 5.75 2018 1,750,000 1,453,410
Educational Facilities Authority Refunding Revenue Bonds
Art Institute of Chicago Series 1993 5.80 2027 3,350,000 2,732,863
Educational Facilities Authority Refunding Revenue Bonds
Loyola University of Chicago Series 1993 Inverse Floater (FGIC Insured) 7.82 2012 11,000,000 (d) 8,030,000
Granite City Madison County Hospital Refunding Revenue Bonds
St. Elizabeth Medical Center Series 1989A 8.125 2008 3,500,000 3,450,755
Hanover Park Cook & DuPage Counties 1st Mortgage Revenue Bonds
Windsor Park Manor Series 1989 9.50 2014 7,000,000 7,567,000
Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A 6.00 2019 6,350,000 5,268,341
Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center Series 1993 5.50 2019 2,000,000 1,526,560
Health Facilities Authority Refunding Revenue Bonds
Peoria Methodist Medical Center Series 1985A 8.00 2014 4,000,000 4,067,000
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Series 1993 Inverse Floater
(MBIA Insured) 7.73 2014 10,000,000 (d) 7,062,500
Health Facilities Authority Revenue Bonds Masonic Medical Center
Series 1985 10.25 2015 4,100,000 4,345,877
Health Facility Authority Revenue Bonds Delnore Community Hospital
Series 1989 8.00 2019 7,000,000 7,746,340
Health Facility Authority Revenue Bonds Sarah Bush Lincoln Health Center
<PAGE>
Series 1992 7.25 2012-22 4,000,000 3,708,680
Health Facility Authority Revenue Bonds South Suburban Hospital
Series 1992 7.00 2009-18 9,000,000 8,686,620
Hodgkins General Obligation Tax Increment Bonds Series 1991 9.50 2009 13,000,000 13,726,960
Jefferson County Housing Development Rome Meadows Elderly Housing
Section 8 8.90 2006 2,000,000 2,046,000
Lansing Cook County Tax Increment Revenue Bonds Series 1987 10.00 2007 10,000,000 10,645,200
Lansing Tax Increment Refunding Revenue Bonds Landings Redevelopment Area
Limited Sales Tax Pledge Series 1992 7.00 2008 10,000,000 9,765,100
Marion General Obligation Hospital Alternate Revenue Source Bonds
Series 1991 7.50 2016 3,800,000 3,680,946
Metropolitan Fair & Exposition Authority Dedicated State Tax
Revenue Bonds 6.00 2014 5,585,000 4,973,945
Northwest Suburban Water Supply Joint Action Water Agency (MBIA Insured) 5.75 2012 2,000,000 1,748,600
Northwest Water Commission Cook & Lake County Water Revenue Bonds
(MBIA Insured) 6.50 2012 5,025,000 5,254,291
Pekin Pollution Control Revenue Bonds Commonwealth Edison Series 1979B 6.75 2004 2,250,000 2,226,060
Regional Transportation Authority General Obligation Bonds
Counties of Cook, Dupage, Kane, Lake, McHenery and Will
Series 1993A (FGIC Insured) 5.80 2013 10,000,000 8,784,300
Richland County Hospital Revenue Bonds Richland Memorial Hospital
Series B 10.70 2009 2,000,000 2,151,900
Streamwood Collateralized Industrial Development Revenue Bonds
Woodland Heights 10.75 2014 5,705,000 5,903,819
Tinley Park Cook & Will Counties Limited Sales Tax Revenue Bonds
Series 1988 10.25 1999 895,000 (e) 402,750
Tinley Park Cook & Will Counties Unlimited Ad Valorem Tax Bonds
of Special Service 10.65 2007 1,440,000 864,000
Robbins Cook County Resource Recovery Revenue Bonds
Robbins Resource Recovery Partners Series 1994A 9.25 2014 18,000,000 18,281,340
Waukegan Pollution Control Revenue Bonds Commonwealth Edison Series B 6.875 2009 5,000,000 4,694,000
______________
Total 493,170,311
_____________________________________________________________________________________________________________________________
Indiana (2.8%)
Brazil 1st Mortgage Revenue Bonds Hoosier Care II Series 1990 10.375 2020 4,280,000 4,590,771
Carmel Retirement Rental Housing Refunding Revenue Bonds
Beverly Enterprises Series 1992 8.75 2008 7,000,000 7,410,830
Evansville Hospital Authority Hospital Refunding Revenue Bonds
Daughters of Charity Health System St. Mary's Medical Center 10.125 2015 3,000,000 3,185,970
Hanover 1st Mortgage Revenue Bonds Hoosier Care II Series 1990 10.375 2020 6,995,000 7,502,907
Health Facility Authority Hospital Revenue Bonds
Community Hospital of Anderson Series 1993 6.00 2023 10,000,000 8,162,800
Health Facility Authority Hospital Revenue Bonds Union Hospital
(MBIA Insured) Series 1993 5.125 2018 10,000,000 7,616,900
Indianapolis Resource Recovery Revenue Bonds
Ogden Martin System of Indianapolis Series 1985AB 7.80 2004 9,400,000 9,993,740
Indianapolis Resource Recovery Revenue Bonds
Ogden Martin System of Indianapolis Series 1985B 7.90 2008 2,050,000 2,153,218
Kokomo Hospital Authority Hospital Refunding Revenue Bonds
St. Joseph's Hospital Series 1988A 8.75 2013 5,000,000 5,605,100
La Porte County Hospital Authority Hospital Refunding Revenue Bonds
La Porte Hospital Series 1993 6.00 2023 2,990,000 2,307,293
La Porte County Hospital Authority Hospital Refunding Revenue Bonds
La Porte Hospital Series 1993 6.25 2012 5,070,000 4,434,881
Lawrenceburg Pollution Control Refunding Revenue Bonds
Indiana-Michigan Electric Series E 5.90 2019 8,100,000 6,456,510
Marion County Hospital Authority Hospital Facility Revenue Bonds
Methodist Hospital Series 1989 6.50 2008-13 19,670,000 19,207,441
Muncie Economic Development 1st Mortgage Revenue Bonds
<PAGE>
Delaware Advancement Series 1986 8.25 2016 3,000,000 3,079,620
Municipal Power Agency Power Supply System Refunding Revenue Bonds 5.75 2018 6,470,000 5,333,350
Princeton Pollution Control Revenue Bonds State Public Service Series 1987C
(MBIA Insured) 7.60 2012 16,000,000 16,577,280
Rockport Pollution Control Refunding Revenue Bonds
Indiana-Michigan Electric Series B 7.60 2016 5,500,000 5,518,975
St. Joseph County Hospital Facility Revenue Bonds
Memorial Hospital of South Bend 9.40 2010 2,000,000 2,367,340
Sullivan Pollution Control Refunding Revenue Bonds
Indiana-Michigan Elecric Series C 5.95 2009 18,500,000 16,130,150
Vincennes Community School Building 1st Mortgage Refunding Bonds
Series 1986 6.00 2016 10,000,000 8,766,200
Vincennes Economic Development Revenue Bonds Southwest Indiana
Regional Youth Village Facility Series 1993 8.50 2024 16,575,000 15,388,064
______________
Total 161,789,340
_____________________________________________________________________________________________________________________________
Iowa (0.8%)
Davenport Health Facility 1st Mortgage Revenue Bonds
Ridgecrest Retirement Village Series 1985 8.20 2006 3,000,000 3,124,350
Davenport Health Facility 1st Mortgage Revenue Bonds
Ridgecrest Retirement Village Series 1985 12.75 2005 1,000,000 1,056,450
Iowa City Refunding Revenue Bonds Mercy Hospital Series 1986 6.00 2012 6,300,000 5,450,760
Keokuk Hospital Facilities Refunding Revenue Bonds
Keokuk Area Hospital Series 1991 7.625 2021 5,350,000 5,095,340
Muscatine Electric Refunding Revenue Bonds Series 1986 5.00 2007-08 7,720,000 6,244,998
Muscatine Electric Refunding Revenue Bonds Series 1986 6.00 2005-06 23,280,000 21,984,503
Sioux City Hospital Facility Revenue Bonds
St. Lukes Regional Medical Center 10.875 2013 3,740,000 4,269,995
______________
Total 47,226,396
_____________________________________________________________________________________________________________________________
Kentucky (1.4%)
Development Finance Authority Hospital Facility Revenue Bonds
St. Luke Hospital Series 1989B 6.00 2019 22,695,000 18,793,956
Development Finance Authority Medical Center
Refunding Revenue Improvement Bonds Ashland Hospital Series 1987 9.75 2011 4,000,000 4,530,040
Jefferson County Multi-family Housing Revenue Bonds Brownsboro Gardens
Series 1986A (FHA Insured) 8.00 2026 5,550,000 5,399,928
Louisville Airport Lease Revenue Bonds Series 1989A 7.875 2019 4,000,000 4,214,760
Louisville & Jefferson County Riverport Authority Mortgage Revenue Bonds
Series 1986 7.875 2016 7,185,000 7,477,358
Louisville Parking Authority of River City PARC 1st Mortgage
Refunding Revenue & Improvement Bonds Series 1985 9.25 2015 5,000,000 5,270,050
McCracken County Revenue Bonds Lourdes Hospital 6.00 2012 8,300,000 7,200,499
Muhlenberg County Hospital Refunding Revenue Bonds
Muhlenberg Community Hospital Series 1988 9.50 2010 4,350,000 4,629,662
Perry County Solid Waste Disposal Revenue Bonds
TJ International Series 1994 7.00 2024 2,000,000 1,772,640
Turnpike Authority Economic Road Development Refunding Revenue Bonds
Series 1993 Inverse Floater (AMBAC Insured) 7.285 2012 15,000,000 (d) 10,893,750
Turnpike Authority Toll Road Refunding Revenue Bonds Series 1981A 13.375 2010 7,870,000 8,432,154
______________
Total 78,614,797
_____________________________________________________________________________________________________________________________
Louisiana (3.0%)
Calcasieu Parish Industrial Development Polution Control
Refunding Revenue Bonds Gulf State Utilities Series 1992 6.75 2012 7,000,000 6,539,190
Energy & Power Authority Refunding Revenue Bonds Rodemacher Unit #2
Series 1991 (FGIC Insured) 6.00 2013 28,000,000 25,389,560
<PAGE>
Hodge Village Combined Utility System Revenue Bonds Stone Container
Series 1990 9.00 2010 23,000,000 23,042,320
New Orleans Audobon Park Commission Aquarium Revenue Bonds Series 1992A 7.00 1997 1,400,000 1,453,046
New Orleans Audobon Park Commission Aquarium Revenue Bonds Series 1992A 8.00 2012 7,100,000 7,149,629
New Orleans Housing Development Elderly Assisted Tivoli Place Section 8 7.875 2010 1,500,000 1,526,970
Public Facilities Authority Revenue Bonds Alton Ochsner Medical Foundation
Series 1985A 6.00 2005 4,165,000 4,300,571
St. Charles Parish Pollution Control Revenue Bonds Louisiana Power & Light
Series 1984 8.25 2014 28,600,000 29,999,970
St. Charles Parish Pollution Control Revenue Bonds Louisiana Power & Light
Series 1991 7.50 2021 20,700,000 19,963,494
St. Charles Parish Pollution Control Revenue Bonds Louisiana Power & Light
2nd Series 1984 8.00 2014 29,155,000 30,079,505
St. James Parish Pollution Control Revenue Bonds B.F. Goodrich
Series 1981 14.50 2011 500,000 588,225
Southern Louisiana Port Commission Dock & Wharf Facilities B.F. Goodrich 14.50 2011 3,335,000 3,962,614
Southern Louisiana Port Commission Terminal Refunding Revenue Bonds
Gatx Terminal Series 1993 7.00 2023 13,180,000 12,149,587
West Feliciana Parish Demand Pollution Control Revenue Bonds
Gulf State Utilities Series 1985B 9.00 2015 6,000,000 6,576,900
______________
Total 172,721,581
_____________________________________________________________________________________________________________________________
Maine (0.4%)
Bucksport Solid Waste Disposal Revenue Bonds
Champion International Series 1985 6.25 2010 14,185,000 12,532,164
Health & Higher Educational Facilities Authority Revenue Bonds
St. Mary's Hospital Series 1989 8.625 2022 3,500,000 3,943,695
Skowhegan Pollution Control Refunding Revenue Bonds
Scott Paper Series 1993 5.90 2013 10,000,000 8,360,400
______________
Total 24,836,259
_____________________________________________________________________________________________________________________________
Maryland (0.6%)
Frederick County Economic Refunding Revenue Bonds Alumax Series 1992 7.25 2017 9,880,000 9,448,244
Harford County Industrial Development Revenue Bonds Dorsey 8.00 2005 600,000 600,510
Prince George's County Hospital Revenue Bonds Dimensions Health
Series 1992 7.00 2022 7,000,000 7,519,330
Prince George's County Hospital Revenue Bonds Dimensions Health
Series 1992 7.25 2017 11,400,000 12,388,380
State Transportation Authority Facility Revenue Bonds
Series 1992 Capital Appreciation Zero Coupon (FGIC Insured) 6.33 2010-11 9,700,000 (f) 3,333,104
State Transportation Authority Facility Revenue Bonds
Series 1992 Zero Coupon (FGIC Insured) 6.35 2012 5,000,000 (f) 1,537,300
______________
Total 34,826,868
______________________________________________________________________________________________________________________________
Massachusetts (2.2%)
Bay Transportation Authority Refunding Revenue Bonds
Series 1994A (MBIA Insured) 6.00 2012 8,000,000 7,316,800
Greater Lawrence Sanitary District North Andover
General Obligation Bonds 8.50 2005 4,495,000 4,639,379
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series C 5.90 2011 2,000,000 1,607,000
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series C 6.00 2020 4,000,000 3,078,200
Health & Educational Facilities Authority Revenue Bonds
Beverly Hospital Inverse Floater (MBIA Insured) 7.37 2020 8,000,000 (d) 5,210,000
Health & Educational Facilities Authority Revenue Bonds
Charlton Memorial Hospital Series B 7.25 2013 6,455,000 6,325,513
<PAGE>
Industrial Finance Agency 1st Mortgage Revenue Bonds
Berkshire Retirement Community Lennox Series 1988 9.00 2000 885,000 926,436
Industrial Finance Agency 1st Mortgage Revenue Bonds
Berkshire Retirement Community Lennox Series 1988 9.875 2018 2,800,000 3,098,004
Industrial Finance Agency 1st Mortgage Revenue Bonds
Berkshire Retirement Community Lennox Series 1989 9.875 2018 550,000 608,536
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison Series 1993 5.875 2008 500,000 434,280
Industrial Finance Agency Resource Recovery Revenue Bonds
SEMASS Series 1991A 9.00 2015 18,885,000 19,910,455
Industrial Finance Agency Resource Recovery Revenue Bonds
SEMASS Series 1991B 9.25 2015 25,000,000 26,511,500
Municipal Wholesale Electric Power Supply System Revenue Bonds
Series 1992B 6.75 2017 10,130,000 10,728,987
Municipal Wholesale Electric Power Supply System Revenue Bonds
Series 1993A Inverse Floater (AMBAC Insured) 6.92 2018 6,530,000 (d) 3,762,913
State General Obligation Consolidated Loan Bonds Series 1989
(AMBAC Insured) 6.90 1997 2,500,000 2,595,550
Water Resources Authority General Refunding Revenue Bonds Series 1992B 5.50 2015 22,175,000 18,379,084
Water Resources Authority General Revenue Bonds Series 1992A 6.50 2019 3,500,000 3,268,370
Water Resources Authority General Revenue Bonds Series 1993B
(MBIA Insured) 5.00 2022 10,000,000 7,454,200
______________
Total 125,855,207
_____________________________________________________________________________________________________________________________
Michigan (3.1%)
Crawford County Economic Development Corporation Environmental
Improvement Revenue Bonds Weyerhaeuser Series 1991A 7.125 2007 10,800,000 10,829,808
Detroit Unlimited Tax General Obligation Bonds Series 1993 6.35 2014 4,000,000 3,519,080
Dexter Community School District School Building & Site
1993 Unlimited Tax General Obligation Refunding Bonds 5.00 2017 4,255,000 3,186,527
Van Buren County Downtown Development Authority
Tax Increment Revenue Bonds Series 1994 8.40 2016 4,000,000 3,944,160
Flint Economic Development Limited Obligation Economic Development
Revenue Bonds Hillhaven Series 1982 12.50 2010 2,500,000 2,563,100
Midland County Economic Development Corporation Pollution Control Limited
Obligation Refunding Revenue Bonds Midland Cogeneration Series 1990B 9.50 2009 30,500,000 31,933,195
Midland County Economic Development Corporation Pollution Control Limited
Obligation Refunding Revenue Bonds Midland Cogeneration Series 1990C 8.50 2009 18,900,000 19,020,771
Monroe County Pollution Control Revenue Bonds Detroit Edison 7.75 2019 40,250,000 (g) 41,554,100
Monroe County Pollution Control Revenue Bonds Detroit Edison Series 1985A 10.50 2016 10,000,000 10,704,200
Regents of the University of Michigan Hospital Refunding Revenue Bonds
Series 1986A 7.75 2012 5,000,000 5,342,600
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Daughters of Charity Health System Providence Hospital 10.00 2015 4,900,000 5,196,989
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Detroit Medical Center Series 1993A 6.50 2018 10,000,000 8,887,800
State Hospital Finance Authority Hospital Revenue Bonds
McLaren Obligated Group Series 1991A 7.50 2021 7,500,000 8,259,075
State Job Development Authority Pollution Control Revenue Bonds Chrysler 5.70 1999 4,350,000 4,237,161
Strategic Fund Limited Obligation Refunding Revenue Bonds Ford Motor
Series 1991A 7.10 2006 16,400,000 16,791,304
______________
Total 175,969,870
_____________________________________________________________________________________________________________________________
Minnesota (3.2%)
Appleton Correctional Facility Revenue Bonds Series 1990A 9.875 2020 15,000,000 (e) 9,750,000
Apple Valley 1st Mortgage Nursing Home Revenue Bonds
Apple Valley Health Care (FHA Insured) 10.50 2012 475,000 491,578
Becker Solid Waste Disposal Facility Revenue Bonds
<PAGE>
Liberty Paper Series 1994B 9.00 2015 18,000,000 16,766,100
Bloomington Community Development Refunding Revenue Note
24th Avenue Motel 8.50 2005 1,588,754 1,628,473
Bloomington Health Care Facility Revenue Bonds
Friendship Village of Bloomington Series 1992 8.50 2002 5,270,000 5,478,112
Brainerd Economic Development Authority Health Care Facility Revenue Bonds
Benedictine Health System St. Joseph Medical Center Series 1990 8.375 2020 4,670,000 5,263,604
Duluth Economic Development Authority Health Care Facility Revenue Bonds
Benedictine Health System St. Mary's Medical Center Series 1990 8.375 2020 8,300,000 9,355,013
Duluth Housing & Redevelopment Authority Lakeshore Lutheran Home
1st Mortgage Revenue Bonds 8.00 2000 200,000 194,652
Duluth Housing & Redevelopment Authority Lakeshore Lutheran Home
1st Mortgage Revenue Bonds 8.25 2009 750,000 721,717
International Falls Solid Waste Disposal Revenue Bonds Boise Cascade
Series 1990 7.75 2015 10,000,000 9,918,600
Maplewood Elder Care Facility Revenue Bonds Care Institute Series 1994 7.75 2024 8,000,000 7,152,800
Mille Lacs Capital Improvement Authority Infrastructure Revenue Bonds
Series 1992A 9.25 2012 4,825,000 5,236,717
Minneapolis Water & Sewer Revenue Bonds Series 1992 5.00 1995 7,800,000 7,800,702
Osseo Independent School District #279 General Obligation
School Building Bonds Series 1994A Inverse Floater 6.595 2012 2,435,000 (d) 1,725,806
Regents of the University of Minnesota General Obligation Bonds
Series 1993A Inverse Floater 5.768 2003 12,000,000 (d) 9,390,000
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993 Inverse Floater
(AMBAC Insured) 4.995 2005 9,200,000 (d) 6,244,500
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993 Inverse Floater
(AMBAC Insured) 5.995 2013 18,000,000 (d) 10,462,500
St. Louis Park Health Care Park Nicollet Medical Center Facility
Revenue Bonds Series 1990A 9.25 2020 6,000,000 6,975,240
St. Paul Housing & Redevelopment Authority Health Care Facility
Revenue Bonds Lyngblomsten Care Center Series 1993A 7.125 2017 2,890,000 2,614,785
St. Paul Housing & Redevelopment Authority Health Care Facility
Revenue Bonds Lyngblomsten Care Center Series 1993A 9.60 2006 2,125,000 2,124,639
St. Paul Housing & Redevelopment Authority Health Care Facility
Revenue Bonds Lyngblomsten Multi-family Rental Housing Series 1993B 7.00 2024 2,870,000 2,482,005
Southern Minnesota Municipal Power Agency Power Supply System
Refunding Revenue Bonds Series 1986B 7.00 2016 2,000,000 2,084,100
Southern Minnesota Municipal Power Agency Power Supply System
Refunding Revenue Bonds Series 1992 5.75 2018 32,210,000 27,338,560
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1985A 7.00 2018 8,265,000 8,455,591
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1985C 7.00 2016 3,885,000 3,974,588
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1994A Zero Coupon (MBIA Insured) 6.87 2021 13,500,000 (f) 2,143,665
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1994A Zero Coupon (MBIA Insured) 6.73 2022 17,500,000 (f) 2,576,000
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1994A Zero Coupon (MBIA Insured) 6.74 2023 27,500,000 (f) 3,751,275
Southern Minnesota Municipal Power Agency Power Supply System
Revenue Bonds Series 1994A Zero Coupon (MBIA Insured) 6.75 2024-27 87,410,000 (f) 10,004,189
______________
Total 182,105,511
_____________________________________________________________________________________________________________________________
Mississippi (1.3%)
Claiborne County Pollution Control Revenue Bonds Middle South Energy 9.50 2013-16 21,750,000 23,265,187
Claiborne County Pollution Control Revenue Bonds Middle South Energy
Series C 9.875 2014 15,375,000 17,245,215
<PAGE>
Claiborne County Pollution Control Revenue Bonds Middle South Energy
Series D 12.50 2015 16,000,000 16,968,000
Harrison County Waste Water Management District Refunding Bonds
Series 1986 5.00 2015 4,250,000 3,353,845
Jackson Industrial Development Revenue Bonds Dorsey 8.00 2005 499,000 503,047
Lowndes County Solid Waste Disposal Pollution Control Revenue Bonds
Weyerhaeuser Series 1989 7.875 2005 12,250,000 12,685,978
Lowndes County Solid Waste Disposal Pollution Control
Refunding Revenue Bonds Weyerhaeuser Series 1989 Inverser Floater 8.31 2022 4,000,000 (d) 3,606,440
______________
Total 77,627,712
_____________________________________________________________________________________________________________________________
Missouri (0.8%)
Nevada Combined Waterworks & Sewage System Refunding Revenue Bonds
Series 1985 10.00 2004 5,000,000 5,176,900
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor Series 1991B 7.00 2021 5,810,000 6,154,475
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor Series 1991C 7.90 2021 2,700,000 2,748,708
State Environment & Improvement Energy Resources Authority
Pollution Control Revenue Bonds Chrysler 5.70 1999 9,250,000 8,931,245
Sikeston Electric System Refunding Revenue Bonds Series 1992
(MBIA Insured) 5.60 2000 4,040,000 3,994,913
Sikeston Electric System Refunding Revenue Bonds Series 1992
(MBIA Insured) 5.80 2002 4,165,000 4,112,771
St. Louis Industrial Development Authority Refunding Revenue Bonds
Kiel Center Multipurposes Arena Series 1992 7.875 2024 15,400,000 14,631,386
______________
Total 45,750,398
_____________________________________________________________________________________________________________________________
Nebraska (--%)
Omaha Public Power District Electric System Revenue Bonds Series 1986A 6.00 2015 1,370,000 1,260,345
_________________________________________________________________________________________________________________________________
Nevada (0.5%)
Clark County Collateralized Pollution Control Revenue Bonds
State Power 7.80 2009 11,850,000 11,953,806
Clark County Industrial Development Revenue Bonds State Power Series 1990 7.80 2020 5,000,000 4,994,450
Humboldt County Collateralized Pollution Control & Water Facilities
Washoe County Hospital Revenue Bonds Washoe Medical Center Series 1989A 7.60 2019 2,750,000 2,997,638
Las Vegas Redevelopment Agency Tax Increment Subordinate Lien
Revenue Bonds Series 1994A 6.00 2010 2,000,000 1,801,780
Las Vegas Redevelopment Agency Tax Increment Subordinate Lien
Revenue Bonds Series 1994A 6.10 2014 2,000,000 1,761,520
Washoe County Hospital Revenue Bonds Washoe Medical Center Series 1993A 6.00 2015 7,250,000 6,034,755
______________
Total 29,543,949
_____________________________________________________________________________________________________________________________
New Hampshire (2.5%)
Business Financial Authority Pollution Control Refunding Revenue Bonds
United Illuminating Series 1993A 5.875 2033 13,200,000 10,044,276
Industrial Development Authority Pollution Control Revenue Bonds
State Public Service Series 1991A 7.65 2021 10,000,000 9,810,200
Industrial Development Authority Pollution Control Revenue Bonds
State Public Service Series 1991B 7.50 2021 35,735,000 34,461,404
Industrial Development Authority Pollution Control Revenue Bonds
State Public Service Series 1991C 7.65 2021 25,000,000 24,525,500
Industrial Development Authority Pollution Control Revenue Bonds
United Illuminating Series 1987A 9.375 2012 15,000,000 16,365,000
Industrial Development Authority Pollution Control Revenue Bonds
United Illuminating Series 1989A 8.00 2014 8,000,000 8,041,920
<PAGE>
State Higher Education & Health Facility Authority Hospital Revenue Bonds
Hitchcock Clinic Series 1994 (MBIA Insured) 6.00 2024 13,000,000 11,197,940
State Higher Education & Health Facility Authority Hospital Revenue Bonds
Mary Hitchcock Memorial Hospital Series 1993 Inverse Floater
(FGIC Insured) 5.17 2013 17,000,000 (d) 13,679,560
State Turnpike System Refunding Revenue Bonds Series 1992 5.75 2020 20,615,000 17,173,120
______________
Total 145,298,920
_____________________________________________________________________________________________________________________________
New Jersey (0.3%)
Economic Development Authority 1st Mortgage Gross Revenue Bonds
Mega Care Union Hospital 8.625 2007 2,500,000 2,746,900
Health Care Facility Finance Authority Revenue Bonds
St. Peter Medical Center Series 1994F (MBIA Insured) 5.00 2016 10,000,000 7,807,600
Health Care Facility Finance Authority Revenue Bonds
Zurbrugg Memorial Hospital Series C 8.50 2012 3,500,000 3,674,475
Middlesex County Industrial Financing Authority Pollution Control
Revenue Bonds Amerada Hess Series 1984 11.625 2014 1,500,000 1,545,315
______________
Total 15,774,290
_____________________________________________________________________________________________________________________________
New Mexico (1.5%)
Albuquerque Airport Revenue Bonds Series 1987B 8.75 2019 15,000,000 16,240,200
Albuquerque Health Care System Revenue Bonds Lovelace Medical Fund 10.25 2011 55,000 55,843
Cibola County Correctional Facility Certificate of Participation
Series 1993 8.50 2015 17,355,000 17,187,351
Farmington Pollution Control Refunding Revenue Bonds State Public Service
San Juan Series 1994A 6.40 2023 11,000,000 9,199,960
Farmington Pollution Control Revenue Bonds State Public Service 6.50 2009 4,935,000 4,447,471
Farmington Pollution Control Revenue Bonds State Public Service San Juan
Series 1978A 6.00 2008 9,000,000 7,701,660
Farmington Power Refunding Revenue Bonds Generating Division 9.875 2013 5,000,000 6,351,850
Las Vegas Hospital Facility Refunding Revenue Bonds
Northeastern Regional Hospital Series 1987 9.625 2013 5,925,000 6,301,475
Lordsberg Pollution Control Refunding Revenue Bonds Phelps Dodge 6.50 2013 20,000,000 18,777,600
______________
Total 86,263,410
_____________________________________________________________________________________________________________________________
New York (7.2%)
Battery Park City Authority Refunding Revenue Bonds
Series 1993A 5.50 2010 9,940,000 8,420,273
Dormitory Authority New York State University Education Facility
Pre-Refunded Revenue Bonds Series 1990A 7.70 2012 10,000,000 11,038,900
Dormitory Authority New York State University Education Facility
Revenue Bonds Series 1993A 5.50 2013 24,530,000 20,069,220
Dormitory Authority New York City University System Consolidated
2nd General Resource Revenue Bonds Series 1990C 5.00 2017 20,820,000 15,319,772
Dormitory Authority New York City University System Consolidated
2nd General Resource Revenue Bonds Series 1990C 6.00 2016 39,465,000 33,701,137
Dormitory Authority New York City University System Consolidated
2nd General Resource Revenue Bonds Series 1990D 7.00 2009 5,000,000 4,932,250
Dormitory Authority New York City University System Consolidated
2nd General Resource Revenue Bonds Series 1994A 5.75 2018 5,500,000 4,515,115
Dormitory Authority New York Court Facility Lease Revenue Bonds
Series 1993A 5.375 2016 11,000,000 8,602,770
Metropolitan Transportation Authority Commuter Facility Revenue Bonds
Series H 6.00 2014 6,150,000 5,317,413
Metropolitan Transportation Authority Transit Facility Revenue Bonds
Series G 6.00 2014 4,970,000 4,297,161
Metropolitan Transportation Transit Facilities Service Contract Series 3 6.00 2019 6,395,000 5,387,276
<PAGE>
New York City General Obligation Bonds Series 1992B 7.40 2000 30,000,000 31,513,800
New York City General Obligation Bonds Series 1994B 7.00 2016 16,500,000 15,927,615
New York City Industrial Development Agency Special Facility Revenue Bonds
American Airlines Series 1990 8.00 2020 16,130,000 16,289,687
New York City Municipal Water Financial Authority Water & Sewer System
Revenue Bonds Series 1994B Inverse Floater (MBIA Insured) 6.79 2009 15,500,000 (d) 10,462,500
New York City Municipal Water Financial Authority Water & Sewer System
Revenue Bonds Series A 6.25 2021 55,500,000 48,646,305
New York City Municipal Water Financial Authority Water & Sewer System
Revenue Bonds Series B 5.00 2017 6,255,000 4,774,191
Port Authority Special Project Bonds La Guardia Airport Passenger Terminal
Continental & Eastern Airlines 9.00 2006 2,645,000 2,818,433
Port Authority Special Project Bonds La Guardia Airport Passenger Terminal
Continental & Eastern Airlines Series 2 9.00 2010 8,800,000 9,377,016
Port Authority Special Project Bonds La Guardia Airport Passenger Terminal
Continental & Eastern Airlines Series 2 9.125 2015 17,500,000 18,876,725
State Energy Research & Development Authority Electric Facility
Revenue Bonds Consolidated Edison 7.125 2022 10,750,000 10,403,743
State Energy Research & Development Authority Electric Facility
Revenue Bonds Consolidated Edison 7.375 2024 23,000,000 22,901,560
State Energy Research & Development Authority Electric Facility
Revenue Bonds Consolidated Edison 7.50 2021 9,000,000 9,014,580
State Energy Research & Development Authority Electric Facility
Revenue Bonds Consolidated Edison Series 1990A 7.50 2025 30,975,000 31,082,793
State Energy Research & Development Authority Electric Facility
Revenue Bonds Long Island Lighting Series 1992B 7.15 2022 12,550,000 11,296,631
State Facilities Finance Agency Insured Hospital Mortgage Revenue Bonds
Series 1985B (FHA Insured) 9.75 2025 9,500,000 9,765,810
State Housing Finance Agency State University Construction
Refunding Bonds Series 1986A 6.50 2013 3,500,000 3,453,555
State Local Government Assistance Corporation Series 1991A 6.50 2020 11,000,000 10,313,270
State Medical Facilities Finance Agency Mental Health Services
Improvement Refunding Revenue Bonds Series 1993D 5.25 2023 15,000,000 10,824,000
State Medical Facilities Finance Agency Mental Health Services
Improvement Refunding Revenue Bonds Series 1993F 5.25 2019 5,790,000 4,267,809
State Urban Development Correctional Facility Revenue Bonds Series A 7.00 2016 1,800,000 1,875,312
State Urban Development Correctional Facility Revenue Bonds Series B 7.00 2016 10,750,000 11,199,780
______________
Total 416,686,402
_____________________________________________________________________________________________________________________________
North Carolina (5.0%)
Eastern Municipal Power Agency Power Supply System
Refunding Revenue Bonds Series 1985D 8.50 2011 20,795,000 20,880,051
Eastern Municipal Power Agency Power Supply System
Refunding Revenue Bonds Series 1985D 10.25 2009 29,460,000 30,504,357
Eastern Municipal Power Agency Power Supply System
Refunding Revenue Bonds Series 1993B 6.25 2012 24,655,000 21,884,764
Eastern Municipal Power Agency Power Supply System Revenue Bonds
Series 1985A 7.50 2019 2,650,000 2,658,639
Eastern Municipal Power Agency Power Supply System Revenue Bonds
Series 1985D 7.50 2012 1,000,000 1,002,016
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1986A 4.00 2018 8,675,000 5,911,232
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1986A 5.00 2017 6,500,000 5,187,316
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1988A 6.00 2026 3,125,000 2,718,042
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1989A 5.50 2011 37,800,000 31,184,244
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
<PAGE>
Series 1989A 6.50 2024 16,750,000 14,993,930
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1989A 7.50 2010 29,160,000 30,781,420
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1991A 5.75 2019 55,000,000 44,495,550
Eastern Municipal Power Agency Power System Refunding Revenue Bonds
Series 1994B 7.25 2007 5,000,000 5,096,250
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1985 9.00 2013 21,500,000 22,025,245
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1985A 7.00 2020 9,000,000 8,891,345
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1985B 8.50 2017 13,000,000 13,740,610
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1988 7.00 2016 5,140,000 4,953,469
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1993
Inverse Floater (MBIA Insured) 6.97 2012 7,400,000 (d) 5,022,750
Municipal Power Agency #1 Catawba Electric Revenue Bonds Series 1993
Inverse Floater (MBIA Insured) 7.17 2020 15,000,000 (d) 9,525,000
Offiss Incorporation Recreational Facilities Gross Revenue Bonds
Smoky Mountain Golf Course Series 1994 7.50 2019 5,695,000 5,086,148
______________
Total 286,542,378
_____________________________________________________________________________________________________________________________
North Dakota (0.4%)
Fargo Hospital Refunding Revenue & Improvement Bonds Dakota Hospital
Series 1992 6.875 2012 3,000,000 2,758,410
Fargo Hospital Refunding Revenue & Improvement Bonds Dakota Hospital
Series 1992 7.00 2022 4,250,000 3,831,970
General Obligation Bonds Real Estate Series 1986A 6.00 2013 10,000,000 9,257,400
Hettinger Hospital Refunding Revenue Bonds Community Memorial Hospital
Series 1985 10.00 2005 3,415,000 3,612,933
State Board of Higher Education University of North Dakota Housing &
Auxiliary Facilities Refunding Revenue Bonds Series 1985A 9.25 2014 5,060,000 5,302,020
______________
Total 24,762,733
_____________________________________________________________________________________________________________________________
Ohio (2.5%)
Air Quality Development Authority Pollution Control Revenue Bonds
Cincinnati Gas & Electric 10.125 2015 10,000,000 10,762,800
Air Quality Development Authority Pollution Control Revenue Bonds
Dayton Power & Light 9.50 2015 7,050,000 7,468,347
Air Quality Development Authority Pollution Control Revenue Bonds
Ohio Edison Series 1989A 7.625 2023 6,750,000 6,488,303
Bellefontaine Hospital Facilities Refunding Revenue Bonds
Mary Rutan Health Association Series 1993 6.00 2013 5,330,000 4,517,548
Butler County Hospital Facilities Refunding Revenue & Improvement Bonds
Fort Hamilton-Hughes Memorial Center Series 1991 7.50 2010 8,650,000 8,281,164
Cleveland Parking Facilities Improvement Revenue Bonds Series 1992 8.10 2022 15,000,000 14,753,100
Coshocton County Solid Waste Disposal Refunding Revenue Bonds
Stone Container Series 1992 7.875 2013 17,500,000 16,812,950
Erie County Hospital Improvement & Refunding Revenue Bonds
Firelands Community Hospital Series 1992 6.75 2015 6,540,000 5,983,969
Franklin County Refunding Revenue Bonds Online Computer Library Center
Series 1985 9.75 2009 2,500,000 2,595,375
Marion County Health Care Facilities Refunding & Improvement
Revenue Bonds United Church Homes Series 1993 6.30 2015 1,800,000 1,469,448
Marion County Health Care Facilities Refunding & Improvement
Revenue Bonds United Church Homes Series 1993 6.375 2010 2,000,000 1,750,520
Montgomery County Health Facilities Refunding Revenue Bonds
Friendship Village of Dayton Series 1990A 9.25 2016 9,000,000 8,964,720
Montgomery County Health Facilities Refunding Revenue Bonds
Friendship Village of Dayton Series 1985 11.75 2015 3,500,000 3,817,450
Montgomery County Industrial Development Revenue Bonds SPM Systems
<PAGE>
Series 1991 10.00 2005 7,290,000 3,645,000
Sandusky County Hospital Refunding Revenue Bonds
Memorial Hospital Association Series 1985 11.25 2009 4,000,000 4,080,000
Water Development Authority Collateralized Pollution Control Revenue Bonds
Cleveland Electric Series 1989 8.00 2023 10,000,000 10,202,000
Water Development Authority Collateralized Pollution Control Revenue Bonds
Toledo Edison Series 1989 8.00 2023 8,500,000 8,140,280
Water Development Authority Pollution Control Revenue Bonds
Duquesne Light Series 1985A 11.125 2015 2,970,000 3,094,562
Water Development Authority Pollution Control Revenue Bonds Ohio Edison 8.10 2023 10,000,000 10,073,500
Water Development Authority Pollution Control Revenue Bonds
Pennsylvania Power Series 1984 12.00 2014 3,400,000 3,502,748
Water Development Authority Pollution Control Refunding Revenue Bonds
Toledo Edison Series 1994A 8.00 2023 10,000,000 9,576,800
___________
Total 145,980,584
_____________________________________________________________________________________________________________________________
Oklahoma (1.5%)
Grand River Dam Authority Refunding Revenue Bonds Series 1985 9.375 2005 3,500,000 3,662,960
Grand River Dam Authority Refunding Revenue Bonds Series 1987 5.00 2012 10,105,000 8,083,596
Hinton Economic Development Authority Certificate of Participation
Series 1994 8.75 2015 12,800,000 12,797,952
Hinton Economic Development Authority Certificate of Participation
Dominion Leasing Series 1990A 9.75 2015 19,090,000 20,625,409
Jackson County Memorial Hospital Authority Hospital
Refunding Revenue Bonds Jackson County Memorial Hosital Series 1994 7.30 2015 6,580,000 (h) 6,104,398
Midwest City Memorial Hospital Authority Hospital Revenue Bonds
Series 1992 7.375 2022 7,815,000 7,423,625
Municipal Power Authority Power Supply System Revenue Bonds
Series 1985C 9.625 2023 6,740,000 7,211,396
Oklahoma City Central Oklahoma Transportation & Parking Authority
Parking System Refunding Revenue Bonds Series 1986 (AMBAC Insured) 6.90 2008 8,180,000 8,243,558
Oklahoma County Industrial Authority Hospital Revenue Bonds
Southwest Medical Center Series 1992A 7.20 2022 14,735,000 13,547,948
______________
Total 87,700,842
_____________________________________________________________________________________________________________________________
Oregon (0.4%)
State Veterans Welfare Department Pre-Refunded Bonds Series LXVII 12.40 2000 2,000,000 2,278,080
Western Generation Agency Revenue Bonds Wauna Cogeneration
Series 1994A 7.125 2021 17,000,000 15,277,050
Western Generation Agency Revenue Bonds Wauna Cogeneration
Series 1994B 7.40 2016 9,000,000 8,345,610
______________
Total 25,900,740
_____________________________________________________________________________________________________________________________
Pennsylvania (5.1%)
Alleghany County Industrial Development Authority
Environment Improvement Revenue Bonds USX Corporation Series 1994A 6.70 2020 6,000,000 5,311,740
Beaver County Industrial Development Authority Collateralized Pollution
Control Revenue Bonds Cleveland Electric Illuminating Series 1985 10.50 2015 6,000,000 6,394,020
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Cleveland Electric Illuminating Series 1984 11.125 2014 25,800,000 26,715,384
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Duquesne Light Series 1984B 11.625 2014 2,000,000 2,060,420
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Toledo Edison Series 1984A 13.25 2014 6,000,000 6,135,840
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Toledo Edison Series 1985B 12.25 2015 5,450,000 5,770,242
Beaver County Industrial Development Authority Pollution Control
<PAGE>
Revenue Bonds Toledo Edison-Beaver Valley Series 1985C 10.75 2015 4,500,000 4,715,910
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Ohio Edison 7.75 2024 34,650,000 34,364,830
Beaver County Industrial Development Authority Pollution Control
Revenue Bonds Ohio Edison Series A 10.50 2015 10,000,000 10,702,000
Bulter County Industrial Development Authority Health Care
Refunding Revenue Bonds Pittsburgh Lifetime Care Community Sherwood Oaks
Series 1993 5.75 2011 2,000,000 1,685,100
Bulter County Industrial Development Authority Health Care
Refunding Revenue Bonds Pittsburgh Lifetime Care Community Sherwood Oaks
Series 1993 5.75 2016 3,000,000 2,403,180
Convention Center Authority Refunding Revenue Bonds Philadelphia
Series 1994A 6.75 2019 5,300,000 4,756,644
Delaware County Authority 1st Mortgage Revenue Bonds
Whitehorse Village Continuing Care Series 1989 9.70 2009-19 11,000,000 11,618,520
Delaware County Industrial Development Authority Pollution Control
Refunding Revenue Bonds Philadelphia Electric Series A 7.375 2021 900,000 886,005
Economic Development Financing Authority Resource Recovery Revenue Bonds
Northampton Generating SNR Series 1994A 6.50 2013 9,000,000 7,758,270
Economic Development Financing Authority Resource Recovery Revenue Bonds
Northampton Generating SUB Series 1994C 6.95 2021 5,000,000 4,274,300
Fayette County Hospital Authority Hospital Refunding Revenue Bonds
Uniontown Hospital Series 1987 7.625 2015 9,000,000 8,865,990
Montgomery County Higher Education and Health Authority
Retirement Community Revenue Bonds G.D.L. Farms Series A 9.50 2020 3,000,000 3,518,760
Northhampton County Pollution Control Revenue Bonds Metropolitan Edison 10.50 1995 2,000,000 2,092,600
Philadelphia Airport Revenue Bonds Philadelphia Airport System Series 1985 8.875 2005 1,680,000 1,761,766
Philadelphia Airport Revenue Bonds Philadelphia Airport System Series 1985 9.00 2015 5,750,000 6,034,567
Philadelphia Authority Industrial Development Commercial Development
Revenue Bonds Grace Retail 11.50 2008 2,290,000 2,358,700
Philadelphia Gas Works Revenue Bonds Series 13 7.70 2021 4,150,000 4,604,757
Philadelphia Hospital & Higher Education Facility Authority Hospital
Revenue Bonds Albert Einstein Medical Center 7.625 2011 15,545,000 15,542,357
Philadelphia Municipal Authority Lease Refunding Revenue Bonds
Series 1993D 6.25 2013 2,500,000 2,220,800
Philadelphia Municipal Authority Lease Refunding Revenue Bonds
Series 1993D 6.30 2017 1,550,000 1,356,266
Philadelphia Water & Sewer Revenue Bonds 12th Series 6.00 2016 10,000,000 10,148,500
Philadelphia Water & Sewer Revenue Bonds 12th Series 7.25 2014 12,000,000 12,513,120
Philadelphia Water & Sewer Revenue Bonds 16th Series 7.00 2018 14,000,000 13,482,280
Philadelphia Water & Sewer Revenue Bonds 16th Series 7.50 2010 13,200,000 13,415,952
Philadelphia Water & Wastewater Revenue Bonds Series 1993 (CGIC Insured) 5.50 2015 11,000,000 9,060,590
Pittsburgh Public Parking Authority Parking System Revenue Bonds
Series 1985 9.50 2007 4,200,000 4,477,956
State Department of General Services Certificate of Participation
Series 1994A (AMBAC Insured) 5.00 2015 25,000,000 19,140,250
State Economic Development Finance Authority Resource Recovery
Revenue Bonds Colver Series 1994D 7.15 2018 20,000,000 18,416,600
Wilkins Industrial Development Authority Revenue Bonds
Retirement Community Longwood at Oakmont Series 1991A 10.00 2021 8,495,000 9,512,786
______________
Total 294,077,002
_____________________________________________________________________________________________________________________________
Puerto Rico (0.7%)
Electric Power Agency Revenue Bonds Series N 6.00 2010 40,000,000 36,343,200
Electric Power Agency Revenue Bonds Series O 6.00 2010 5,305,000 4,820,017
______________
Total 41,163,217
_____________________________________________________________________________________________________________________________
Rhode Island (0.1%)
<PAGE>
Public Building Authority Revenue Bonds Series 1994A (AMBAC Insured) 5.25 2007 3,485,000 3,026,653
_____________________________________________________________________________________________________________________________
South Carolina (2.1%)
Cherokee County Spring City Knitting Cluett Peabody 7.40 2009 5,200,000 5,592,704
Greenville County Industrial Development Revenue Bonds
Merscot-Greenville Waste Water Treatment Series 1986A 8.00 2008 8,530,000 8,897,899
Piedmont Municipal Power Agency Electric Refunding Revenue Bonds
Series 1985 7.00 2025 17,430,000 17,831,936
Piedmont Municipal Power Agency Electric Refunding Revenue Bonds
Series 1986B 5.75 2024 7,550,000 6,069,370
Piedmont Municipal Power Agency Electric Revenue Bonds Series 1984 7.00 2013 8,385,000 8,408,813
Piedmont Municipal Power Agency Electric Revenue Bonds Series 1985 7.50 2016 5,830,000 5,849,006
Public Service Authority Electric System Expansion Revenue Bonds
Santee Cooper Series 1985A 9.50 2022 23,920,000 25,317,167
Public Service Authority Electric System Expansion Revenue Bonds
Santee Cooper Series 1986D 6.375 2022 2,250,000 2,004,120
Public Service Authority Electric System Expansion Revenue Bonds
Santee Cooper Series 1991D 6.625 2031 14,975,000 15,747,560
Public Service Authority Electric System Expansion Revenue Bonds
Santee Cooper Series A 9.20 2021 3,000,000 3,170,370
Public Service Authority Electric System Revenue Bonds
Santee Cooper Series 1991B 6.00 2031 8,755,000 7,308,236
Public Service Authority Electric System Revenue Bonds
Santee Cooper Series 1993A Inverse Floater (MBIA Insured) 6.59 2013 17,700,000 (d) 11,881,125
______________
Total 118,078,306
_____________________________________________________________________________________________________________________________
South Dakota (0.3%)
Heartland Consumers Power District Electric System
Refunding Revenue Bonds Series 1986 6.00 2010 10,205,000 9,737,203
State Lease Revenue Trust Certificates Series 1993
(CGIC Insured) 6.70 2017 7,260,000 6,925,677
______________
Total 16,662,880
_____________________________________________________________________________________________________________________________
Tennessee (0.5%)
Chattanooga Municipal Improvement & Sewer Facility Unlimited Tax Bonds 6.50 2007 2,000,000 2,011,520
Nashville & Davidson County Health & Education Facility 1st Mortgage
Revenue Bonds Blakeford at Green Hills CCRC 9.25 2024 12,230,000 11,706,311
Jackson Industrial Development Board Solid Waste Disposal Revenue Bonds
Owens-Corning Fiberglas Series 1993 6.25 2004 5,350,000 4,997,810
Knox County Health Education & Housing Facility Hospital Revenue Bonds
Baptist Health System East Tennessee Series 1989 8.60 2016 10,000,000 10,213,600
______________
Total 28,929,241
_____________________________________________________________________________________________________________________________
Texas (10.0%)
Alliance Airport Authority Special Facility Revenue Bonds
American Airlines Series 1990 7.50 2029 37,400,000 34,200,430
Arlington Limited Tax General Obligation Bonds 6.50 2004 1,500,000 1,530,975
Austin Combined Utility Systems Refunding Revenue Bonds Series 1985 8.00 2014 6,500,000 6,704,620
Austin Combined Utility Systems Refunding Revenue Bonds Series 1985 10.75 2010-15 12,000,000 14,719,560
Austin Combined Utility Systems Refunding Revenue Bonds Series 1986 5.00 2013 20,000,000 15,503,600
Austin General Obligation Public Improvement Bonds Series 1986 6.75 2006 2,000,000 2,059,500
Austin General Obligation Public Improvement Bonds Series 1986 7.00 2007 5,450,000 5,633,829
Austin Utility Subordinate Lien Refunding Revenue Bonds Series 1985 7.00 2015 9,000,000 9,199,080
Board of Regents of the University System General Refunding Revenue Bonds
Series 1986 6.50 2007 17,500,000 17,908,191
Brazos River Authority Collateralized Pollution Control Revenue Bonds
Texas Utility Electric Series 1986 8.25 2016 7,765,000 7,968,521
<PAGE>
Brazos River Authority Collateralized Pollution Control Revenue Bonds
Texas Utility Electric Series 1989A 8.25 2019 14,000,000 14,791,840
Brazos River Authority Collateralized Pollution Control Revenue Bonds
Texas Utility Electric Series 1990A 8.125 2020 13,205,000 13,720,523
Brazos River Authority Collateralized Pollution Control Revenue Bonds
Texas Utility Electric Series 1991A 7.875 2021 24,450,000 25,062,472
Brazos River Authority Collateralized Refunding Revenue Bonds
Houston Lighting & Power Series 1989A 7.625 2019 26,300,000 27,082,951
Brazos River Authority Pollution Control Revenue Bonds
Houston Lighting & Power Series 1985A 9.875 2015 11,500,000 12,109,040
Brazos River Authority Pollution Control Revenue Bonds Texas Utilities 9.25 2018 13,000,000 14,253,850
Brownsville Utility System Priority Revenue Bonds Series 1990
(AMBAC Isured) 6.50 2017 10,015,000 9,469,383
Brownsville Utility System Revenue Bonds Series 1984 11.625 2014 2,860,000 2,954,866
Clay Road Municipal Utility District Unlimited Tax
Refunding Revenue Bonds Series 1991 7.625 2011 2,000,000 2,012,080
Colony Municipal Utility District #1 Denton County Series 1980 9.25 2007 1,000,000 1,222,060
Dallas & Fort Worth International Airport Regional Airport
Joint Revenue Bonds Series 1985 9.125 2015 14,500,000 15,442,935
Dallas & Fort Worth International Airport Special Facility Revenue Bonds
American Airlines Series 1990 7.50 2025 26,200,000 24,010,990
Dallas & Fort Worth International Airport Special Facility Revenue Bonds
Delta Air Lines Series 1991 7.125 2026 13,500,000 11,743,380
Denison Hospital Authority Hospital Revenue Bonds
Texoma Medical Center Series 1994 7.10 2024 3,950,000 3,580,991
El Paso Water & Sewer Revenue Bonds 7.00 2003-05 7,100,000 7,286,091
Garland Utility System Revenue Bonds Series 1986 6.80 2003 3,335,000 3,414,807
Harris County Health Facilities Development Hospital
Refunding Revenue Bonds Memorial Hospital Series 1985 6.00 2004 6,460,000 6,046,754
Harris County Health Facilities Hospital Revenue Bonds Memorial Hospital
Series 1992 7.125 2015 16,000,000 15,671,200
Harris County Industrial Development Marine Terminal Refunding Revenue Bonds
GATX Terminal Series 1992 6.95 2022 15,000,000 13,997,250
Lower Colorado River Authority Priority Revenue Bonds 7.00 2013 17,000,000 17,392,020
Lower Colorado River Authority Priority Revenue Bonds 9.00 2009 10,000,000 10,620,800
Lower Colorado River Authority Priority Revenue Bonds Series 1985 8.00 2014 2,500,000 2,611,650
Mansfield Tarrant Johnson & Ellis Counties Waterworks & Sewer System
Revenue Bonds Series 1985 10.25 2003 1,000,000 1,035,890
Mansfield Tarrant Johnson & Ellis Counties Waterworks & Sewer System
Revenue Bonds Series 1985 10.375 2007 1,815,000 1,881,610
Matagorda County Navigation District #1 Collateral Pollution Control
Revenue Bonds Central Power & Light Series 1986A (AMBAC Insured) 7.50 2020 6,500,000 6,563,765
Matagorda County Navigation District #1 Collateral Pollution Control
Revenue Bonds Houston Power & Light Series 1986A 7.875 2016 8,000,000 8,234,000
Matagorda County Navigation District #1 Collateral Pollution Control
Revenue Bonds Houston Power & Light Series 1989A 7.875 2019 10,060,000 10,338,461
Matagorda County Navigation District #1 Pollution Control Revenue Bonds
Central Power & Light Series 1986 7.875 2016 18,000,000 18,403,200
Matagorda County Navigation District #1 Pollution Control Revenue Bonds
Houston Lighting & Power Series 1985A 10.00 2015 5,000,000 5,276,850
Midland County Hospital District Revenue Bonds Series 1992 7.50 2016 3,025,000 2,980,563
Mills Road Municipal Utility District Harris County Unlimited Tax
Refunding Bonds Series 1993 6.50 2014 2,690,000 2,432,540
Municipal Power Agency Refunding Revenue Bonds (MBIA Insured) 5.25 2009 8,000,000 6,776,080
Municipal Power Agency Revenue Bonds Series 1985 7.00 2014 10,000,000 10,201,400
Municipal Power Agency Revenue Bonds Series 1985 9.50 2013 19,500,000 20,567,235
Municipal Power Agency Revenue Bonds Series 1986 6.50 2014 4,000,000 4,095,040
Municipal Power Agency Revenue Bonds 5.50 2013 7,410,000 6,183,719
Municipal Power Agency Revenue Bonds (BIG Insured) 6.25 2010 13,940,000 14,551,408
North Austin Municipal Utility District #1 Austin Contract Revenue Bonds
<PAGE>
Series 1985 9.90 2006-07 2,800,000 3,083,752
North Austin Municipal Utility District #1 Austin Contract Revenue Bonds
Series 1985 10.00 2008-09 2,625,000 2,895,323
North Central Texas Health Facility Development Hospital Revenue Bonds
University Medical Center 8.20 2019 4,245,000 4,466,419
North Central Texas Health Facility Development Hospital Revenue Bonds
University Medical Center Series 1987 7.75 2017 7,500,000 7,229,625
Plano Collin & Denton County General Obligation Bonds Limited Tax
Series 1986 6.00 2006 1,600,000 1,556,496
Sabine River Authority Collateralized Pollution Control Revenue Bonds
Texas Utilities Electric Series 1990A 8.125 2020 30,500,000 31,622,095
San Antonio Electric & Gas System Refunding Revenue Bonds Series 1989B 5.00 2016 11,000,000 8,409,170
San Antonio Electric & Gas System Revenue Bonds Series 1987 5.00 2014 8,680,000 6,766,754
West Side Calhoun County Navigation District Solid Waste Disposal
Revenue Bonds Union Carbide Chemical & Plastics Series 1991 8.20 2021 17,550,000 18,218,480
Wichita County Wichita Falls Hospital Board Revenue Bonds
Wichita Falls Hospital 10.75 2014 4,750,000 4,899,815
_____________
Total 578,595,929
_____________________________________________________________________________________________________________________________
Utah (1.9%)
Association Municipal Power System Hunter Series A (AMBAC Insured) 5.50 2012 4,000,000 3,383,880
Carbon County Solid Waste Disposal Refunding Revenue Bonds
Sunnyside Cogeneration Associates Series 1991 9.25 2018 25,350,000 25,913,531
Housing Finance Agency Single Family Mortgage Senior Bonds Series 1991C
(FGIC Insured) 7.30 2011 1,530,000 1,509,605
Housing Finance Agency Single Family Mortgage Senior Bonds Series 1991C
(FGIC Insured) 7.35 2016 1,215,000 1,198,087
Hurricane Health Facilities Development Revenue Bonds
Mission Health Services Series 1990 10.50 2020 7,835,000 8,637,461
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series F (AMBAC Insured) 5.00 2013 5,000,000 3,968,800
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series 1985A 10.375 2016 7,000,000 (g) 7,393,330
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series 1985B 7.00 2019-20 12,400,000 12,593,812
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series 1985B (AMBAC Insured) 9.50 2015 3,600,000 3,775,212
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series 1993B Inverse Floater 7.06 2011 7,600,000 (d) 5,225,000
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series G 8.00 2020 4,740,000 4,843,190
Intermountain Power Agency Power Supply Refunding Revenue Bonds
Series J (MBIA Insured) 6.50 2014 6,620,000 6,704,537
Intermountain Power Agency Power Supply Revenue Bonds Series 1987A
(MBIA Insured) 5.00 2012 8,000,000 6,374,720
Intermountain Power Agency Power Supply Revenue Bonds Series 1989A 6.00 2023 3,500,000 3,019,905
Intermountain Power Agency Power Supply Revenue Bonds Series 1989B 6.00 2023 10,165,000 8,770,667
Salt Lake City & County General Obligation Public Building Bonds 6.875 2010-11 5,700,000 5,911,812
West Valley City Salt Lake County K mart Industrial Development
Revenue Bonds 10.50 2005 1,450,000 1,565,449
______________
Total 110,788,998
_____________________________________________________________________________________________________________________________
Virginia (0.4%)
Hopewell City Industrial Development Authority Pollution Control
Refunding Revenue Bonds Stone Container Series 1992 8.25 2010 3,170,000 3,094,237
Housing Development Authority Commonmwealth Mortgage Bonds Series 1992A 7.15 2033 15,000,000 14,569,800
Southeastern Public Service Authority Senior Revenue Bonds
Regional Solid Waste System Series A 10.50 2015 5,300,000 5,587,896
<PAGE>
_____________
Total 23,251,933
_____________________________________________________________________________________________________________________________
Washington (3.0%)
Health Care Facilities Authority Revenue Bonds
Seattle Highline Community Hospital Series 1993 (Connie Lee Insured) 5.50 2014 7,500,000 6,133,575
Longview Industrial Development Corporation Solid Waste Revenue Bonds
Weyerhauser Series 1991 7.45 2013 20,000,000 20,215,600
Public Power Supply System Nuclear Project #1 Refunding Revenue Bonds
Series A 6.50 2015 21,000,000 19,306,140
Public Power Supply System Nuclear Project #1 Refunding Revenue Bonds
Bonneville Power Administration Series 1993A Inverse Floater
(FSA Insured) 7.47 2011 25,000,000 (d) 18,500,000
Public Power Supply System Nuclear Project #1 Revenue Bonds Series 1989 6.00 2017 28,070,000 24,224,410
Public Power Supply System Nuclear Project #1 Revenue Bonds Series 1990A 6.00 2017 38,875,000 33,549,125
Public Power Supply System Nuclear Project #2 Revenue Bonds Series 1994A 5.375 2011 10,000,000 8,173,300
Public Power Supply System Nuclear Project #3 Revenue Bonds Series 1989B 5.50 2017-18 27,550,000 22,219,155
Seattle Municipal Light & Power Refunding Revenue Bonds Series 1986 5.875 2010 6,000,000 6,088,380
Snohomish County Public Utility District #1 Generation System
Revenue Bonds Series 1986A 5.00 2020 17,750,000 13,495,147
______________
Total 171,904,832
_____________________________________________________________________________________________________________________________
West Virginia (1.8%)
Board of Regents State System Tuition Fee Revenue Bonds University 7.75 2011 8,000,000 8,448,080
Clarksburg Waterworks Improvement & Refunding Revenue Bonds
Series 1985 10.875 2020 4,500,000 4,642,875
Kanawha County Pollution Control Revenue Bonds Union Carbide Series 1984 7.35 2004 3,000,000 3,097,920
Marion County Solid Waste Disposal Facility Revenue Bonds
American Power Paper Recycling Series 1993 7.75 2011 20,000,000 18,782,800
Marion County Solid Waste Disposal Facility Revenue Bonds
American Power Paper Recycling Series 1994 8.25 2011 10,000,000 9,612,800
Marion County Solid Waste Disposal Facility Revenue Bonds
American Power Paper Recycling Series 1995 9.00 2011 5,000,000 (h) 4,868,900
Mason County Pollution Control Refunding Revenue Bonds
Appalachian Power Series 1992J 6.60 2022 25,000,000 22,678,500
Pea Ridge Public Service District Sewer Refunding Revenue Bonds
Series 1990 9.25 2020 2,655,000 2,652,026
Putnam County Pollution Control Revenue Bonds Appalachian Power Series C 6.60 2019 10,600,000 9,656,070
School Building Authority Capital Improvement Revenue Bonds Series 1991A 6.00 2021 20,785,000 18,088,978
South Charleston Pollution Control Refunding Revenue Bonds Union Carbide
Series 1985 7.625 2005 3,000,000 3,028,920
______________
Total 105,557,869
_____________________________________________________________________________________________________________________________
Wisconsin (0.7%)
Health & Education Facilities Authority Revenue Bonds St. Clare Hospital 7.00 2022 10,000,000 9,048,800
Health Facilities Authority Refunding Revenue Bonds Villa Clement
Series 1986 8.75 2012 4,500,000 4,600,305
Madison Industrial Development Refunding Revenue Bonds
Madison Gas & Electric Series 1992B 6.70 2027 19,300,000 18,343,492
Superior Water Supply Facility Revenue Bonds
Superior Water Light & Power Series 1986 7.875 2021 6,500,000 6,633,575
______________
Total 38,626,172
_____________________________________________________________________________________________________________________________
Wyoming (0.2%)
Green River & Rock Springs Sweetwater County Joint Powers
Water Board Revenue Bonds Series 1988A 8.50 2007 2,500,000 2,659,075
Natrona County Hospital Revenue Bonds Wyoming Medical Center 8.125 2010 6,500,000 6,643,065
<PAGE>
State Farm Loan Board Capital Facilities Revenue Bonds Series 1994 6.10 2024 5,000,000 4,336,750
______________
Total 13,638,890
_____________________________________________________________________________________________________________________________
Total municipal bonds
(Cost: $5,678,230,344) $5,602,084,409
_____________________________________________________________________________________________________________________________
<CAPTION>
Short-term securities (0.9%)
_____________________________________________________________________________________________________________________________
Issuer (j) Annualized Amount Value(a)
yield on date payable at
of purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Municipal Notes
California School Cash Resource Program Authority Pool Bonds
Series A
07-05-95 4.50% $ 7,000,000 $ 7,013,160
Los Angeles County T.R.A.N.
06-30-95 4.50 5,500,000 5,511,660
Los Angeles Unified School District California T.R.A.N.
07-10-95 4.50 5,000,000 4,996,050
New York City Municipal Water Finance Authority V.R.D.B.
Series 1994C (FGIC Insured)
06-15-23 3.40 5,500,000 (i) 5,500,000
Regents of the University of Michigan Hospital Refunding Revenue Bonds
V.R.D.B. Series 1992A
12-01-19 3.50 700,000 (i) 700,000
Regents of the University of Minnesota Commercial Paper Certificates
Series 1991A
01-03-95 3.40 2,000,000 2,000,000
Sacremento County California T.R.A.N.
09-29-95 4.25 10,000,000 9,957,400
Santa Clara County California T.R.A.N.
07-07-95 4.25 15,000,000 14,962,200
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $50,887,022) $ 50,640,470
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $5,729,117,366)(k) $5,652,724,879
_____________________________________________________________________________________________________________________________
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:
<CAPTION>
(Unaudited)
___________________________________________
Rating 11-30-94 11-30-93
_______________________________________________________________________
<S> <C> <C>
AAA 28% 22%
AA 7 13
A 23 27
BBB and below 41 26
Non-rated 1 12
_______________________________________________________________________
<PAGE>
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) Inverse floaters represent securities, which 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 Nov. 30, 1994. Inverse floaters in the aggregate
represent 4.3% of the fund's net assets as of Nov. 30, 1994.
(e) Presently non-income producing. For long-term debt securities items
identified are in default as to payment of interest and/or principal.
(f) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 4 to the financial statements):
<CAPTION>
Type of security Notional amount
Purchase contracts
<S> <C>
________________________________________________________________
U.S. Treasury Bonds March 1995 $13,500,000
________________________________________________________________
Sales contracts
________________________________________________________________
Municipal Bonds March 1995 $13,500,000
________________________________________________________________
(h) At Nov. 30, 1994, the cost of securities purchased on a when-issued basis
was $11,950,440.
(i) Interest rate varies to reflect current market conditions; rate shown is
the effective rate on Nov. 30, 1994.
(j) The following abbreviations are used in portfolio descriptions:
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R.D.B. -- Variable Rate Demand Bond
(k) At Nov. 30, 1994, the cost of securities for federal income tax purposes was
$5,725,506,601 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
<CAPTION>
<S> <C>
Unrealized appreciation $ 199,835,742
Unrealized depreciation (272,617,464)
___________________________________________________________________________
Net unrealized depreciation $ (72,781,722)
___________________________________________________________________________
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<C> <C> <S>
(a) FINANCIAL STATEMENTS:
List of financial statements filed as part of this Post-Effective Amendment to the
Registration Statement:
- Independent Auditors' Report dated January 6, 1995
- Statement of Assets and Liabilities, November 30, 1994
- Statement of Operations, Year ended November 30, 1994
- Statement of Changes in Net Assets, for the two-year period ended November 30,
1993 and November 30, 1994
- Notes to Financial Statements
- Investments in Securities, November 30, 1994
- Notes to Investments in Securities
(b) EXHIBITS:
1. Copy of Articles of Incorporation, filed as Exhibit 1 to Registrant's
Post-Effective Amendment No. 19 to Registration Statement No. 2-63552, is
incorporated herein by reference.
2. Copy of By-laws, as amended Jan. 12, 1989, filed as Exhibit 2 to Registrant's
Post-Effective Amendment No. 20 to Registration Statement No. 2-63552, is
incorporated herein by reference.
3. Not applicable.
4. Form of Stock certificate, filed as Exhibit 4 to Registrant's Registration
Statement No. 2-62552, on February 9, 1979, is incorporated herein by reference.
5. Form of Investment Management Services Agreement between Registrant and American
Express Financial Corporation, dated March 20, 1995, is filed electronically
herewith.
6. Form of Distribution Agreement between Registrant and American Express Financial
Advisors Inc., dated March 20, 1995, is filed electronically herewith.
7. All employees are eligible to participate in a profit sharing plan. Entry into
the plan is Jan. 1 or July 1. The Registrant contributes each year an amount up
to 15 percent of their annual salaries, the maximum deductible amount permitted
under Section 404(a) of the Internal Revenue Code.
8. Form of Custodian Agreement between Registrant and American Express Trust
Company, dated March 20, 1995, is filed electronically herewith.
9. (a) Copy of Plan and Agreement of Merger, filed electronically as Exhibit No. 9
to Registrant's Post- Effective Amendment No. 13 to Registration Statement No. 2-
63552, is incorporated herein by reference.
(b) Form of Transfer Agency Agreement between Registrant and American Express
Financial Corporation, dated March 20, 1995, is filed electronically herewith.
(c) Copy of License Agreement between Registrant and IDS Financial Corporation
dated January 25, 1988, filed as Exhibit 9(c) to Registrant's Post-Effective
Amendment No. 21 to Registration Statement No. 2-63552, is incorporated herein by
reference.
(d) Form of Shareholder Service Agreement between Registrant and American Express
Financial Advisors Inc., dated March 20, 1995, is filed electronically herewith.
(e) Form of Administrative Services Agreement between Registrant and American
Express Financial Corporation, dated March 20, 1995, is filed electronically
herewith.
10. Not Applicable.
11. Independent Auditors' Consent is filed electronically herewith.
12. None.
13. Not Applicable.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
14. Forms of Keogh, IRA and other retirement plans, filed as Exhibits 14(a) through
14(n) to IDS Growth Fund, Inc., Post- Effective Amendment No. 19 to Registration
Statement No. 2- 54516 are incorporated herein by reference.
15. Form of Plan and Agreement of Distribution between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, is filed electronically
herewith.
16. (a) Not Applicable.
(b) Schedule for computation of each performace quotation provided in the
Registration Statement in response to Item 22, filed electronically as Exhibit
16(b) to Registrant's Post-Effective Amendment No. 25 to Registration Statement
No. 2-63552 is incorporated herein by reference.
17. Financial Data Schedule is filed electronically herewith.
18. (a) Directors' Power of Attorney dated November 10, 1994, filed electronically as
Exhibit 18(a) to Registrant's Post-Effective Amendment No. 29, is incorporated
herein by reference.
(b) Officers' Power of Attorney dated June 1, 1993, to sign amendments to this
Registration Statement filed electronically as Exhibit 17(a) to Registrant's
Post-Effective Amendment No. 26 to Registration Statement No. 2-63552 is
incorporated herein by reference.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
NUMBER OF RECORD
AS OF
TITLE OF CLASS JANUARY 23, 1995
-------------- ----------------
<S> <C>
Common Stock 189,587
</TABLE>
II-2
<PAGE>
Item 27. Indemnification
The Articles of Incorporation of the registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
<PAGE>
PAGE 1
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Service Quality
and Reengineering
American Express Service Corporation Vice President
Douglas A. Alger, Vice President--Total Compensation
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President and Controller--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Investment
Accounting
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS Fund Management Limited Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services
Kent L. Ashton, Vice President--Financial Education Services
American Express Financial Advisors IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Education Services
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Insurance Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Insurance
Minneapolis, MN 55440 Product Development
IDS Life Insurance Company Vice President-Insurance
Product Development
Carl E. Beihl, Vice President--Strategic Technology Planning
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Financial Planning
Systems
American Express Service Corporation Vice President
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director and Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Harold E. Burke, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-IDS
Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Alan R. Dakay, Vice President--Institutional Insurance Marketing
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President -
Institutional Insurance
Marketing
American Partners Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
William H. Dudley, Director and Executive Vice President--Investment Operations
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director and Senior Vice President--Information Systems
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information Systems
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Vice President and
Portfolio Manager
<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Tax & Business Director
Services Inc.
American Express Trust Company Director
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
Investors Syndicate Development Corp. Vice President
Robert G. Gilbert, Vice President--Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
<PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Vice President and
Treasurer
IDS Cable II Corporation Vice President and
Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Vice President and
Treasurer
IDS Partnership Services Corporation Vice President and
Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Vice President and
Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Vice President-Investments
<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Services
American Express Trust Company IDS Tower 10 Vice President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and President
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas R. Jordal, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
Craig A. Junkins, Vice President--IDS 1994 Implementation Planning and Financial Planning
Development
American Express Financial Advisors IDS Tower 10 Vice President-IDS 1994
Minneapolis, MN 55440 Implementation Planning
and Financial Planning
Development
American Express Service Corporation Vice President
James E. Kaarre, Vice President--Marketing Information
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A&B Member of Board of
Managers, Chairman of the
Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Harold D. Knutson, Vice President--System Services
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 System Services
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
American Express Service Corporation Vice President
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edward Labenski, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Peter A. Lefferts, Director, Senior Vice President and Chief Marketing Officer
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Chief Marketing Officer
American Express Trust Company Director and Chairman of
the Board
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
American Express Service Corporation Vice President
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International, Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
IDS Certificate Company Director and Chairman of
the Board
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Communications
American Express Minnesota Foundation Director and President
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert J. Neis, Vice President--Information Systems Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
James R. Palmer, Vice President--Insurance Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
Judith A. Pennington, Vice President--Field Technology
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Technology
George M. Perry, Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James M. Punch, Vice President--TransAction Services
American Express Financial Advisors IDS Tower 10 Vice President-Trans
Minneapolis, MN 55440 Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
ReBecca K. Roloff, Vice President--1994 Program Director
American Express Financial Advisors IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
Robert A. Rudell, Vice President--American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director
IDS Sales Support Inc. Director and President
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
<PAGE>
PAGE 18
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 19
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund, Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity Funds A&B General Counsel and
Assistant Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
<PAGE>
PAGE 20
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Select Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Vice President and
Corporate Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Chairman
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 21
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Norman Weaver, Jr., Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
Pacific Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Pacific Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Pacific Region
IDS Insurance Agency of Nevada Inc. Vice President-
Pacific Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Pacific Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Pacific Region
IDS Insurance Agency of Ohio Inc. Vice President-
Pacific Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Pacific Region
Michael L. Weiner, Vice President--Corporate Tax Operations
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
<PAGE>
PAGE 22
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 23
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Jerome R. Amundson Vice President and None
IDS Tower 10 Controller-Investment
Minneapolis, MN 55440 Accounting
Peter J. Anderson Senior Vice President- None
IDS Tower 10 Investments
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 American Express
Institutional Services
Alvan D. Arthur Group Vice President- None
IDS Tower 10 Central California/
Minneapolis, MN 55440 Western Nevada
Kent L. Ashton Vice President- None
IDS Tower 10 Financial Education
Minneapolis, MN 55440 Services
<PAGE>
PAGE 24
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
John D. Begley Group Vice Presdient- None
Olentangy Valley Center Ohio/Indiana
Suite 300
7870 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Jack A. Benjamin Group Vice President- None
Greater Pennsylvania
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Group Vice President- None
Seafirst Financial Los Angeles Metro
Center, Suite 1730
601 W. Riverside Ave.
Spokane, WA 99201
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Bruce J. Bordelon Group Vice President- None
Gulf States
Charles R. Branch Group Vice President- None
Northwest
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel<PAGE>
PAGE 25
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
Suite 124 Field Management
6210 Campbell Rd.
Dallas, TX 75248
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
345 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Connecticut
John M. Crawford Group Vice President- None
Arkansas/Springfield/Memphis
Kevin F. Crowe Group Vice President- None
IDS Tower 10 Carolinas/Eastern Georgia
Minneapolis, MN 55440
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
Regenia David Vice President- None
Systems Services
Scott M. Digiammarino Group Vice President- None
Washington/Baltimore
Bradford L. Drew Group Vice President- None
Eastern Florida
<PAGE>
PAGE 26
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
William H. Dudley Director and Executive Director/
IDS Tower 10 Vice President- Trustee
Minneapolis MN 55440 Investment Operations
Roger S. Edgar Senior Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
Nebraska/Iowa/Dakotas
Louise P. Evenson Group Vice President- None
San Francisco Bay Area
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
Douglas L. Forsberg Group Vice President- None
IDS Tower 10 Portland/Eugene
Minneapolis, MN 55440
William P. Fritz Group Vice President- None
Northern Missouri
Carl W. Gans Group Vice President- None
IDS Tower 10 Twin City Metro
Minneapolis, MN 55440
Bruce M. Gaurino Group Vice President- None
Hawaii
<PAGE>
PAGE 27
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Hawaii
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Northern New England
John R. Hantz Group Vice President- None
Detroit Metro
Robert L. Harden Group Vice President- None
Suite 403 Boston Metro
8500 Leesburg Pike
Vienna, VA 22180
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
IDS Tower 10 North Texas
Minneapolis, MN 55440
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
<PAGE>
PAGE 28
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
Eastern Tennessee
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief None
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Douglas R. Jordal Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Craig A. Junkins Vice President - IDS 1994 None
IDS Tower 10 Implementation Planning
Minneapolis, MN 55440 and Financial Planning
Development
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
Linda B. Keene Vice President- None
Market Development
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Harold D. Knutson Vice President- None
IDS Tower 10 System Services
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
IDS Tower 10 Greater Michigan
Minneapolis, MN 55440
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
IDS Tower 10 Chicago Metro
Minneapolis, MN 55440
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
MInneapolis, MN 55440 Manager
Peter A. Lefferts Senior Vice President and None
IDS Tower 10 Chief Marketing Officer
Minneapolis, MN 55440<PAGE>
PAGE 30
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Pittsburgh Metro
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Kansas/Oklahoma
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations<PAGE>
PAGE 31
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald E. Newton Group Vice President- None
Rhode Island/Central
Massachusetts
Thomas V. Nicolosi Group Vice President- None
New York Metro Area
Vernon F. Palen Region Vice President- None
Suite D-222 Rocky Mountain Region
7100 E. Lincoln Drive
Scottsdale, AZ 85253
James R. Palmer Vice President- None
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
Judith A. Pennington Vice President- None
IDS Tower 10 Field Technology
Minneapolis, MN 55440
George M. Perry Vice President- None
IDS Tower 10 Corporate Strategy
Minneapolis, MN 55440 and Development
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
Philadelphia Metro
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 TransAction Services
Minneapolis, MN 55440
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
R. Daniel Richardson Group Vice President- None
Southern Texas
<PAGE>
PAGE 32
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Roger B. Rogos Group Vice President- None
Suite 15, Parkside Pl. Western Florida
945 Boardman-Canfield Rd
Youngstown, Ohio 44512
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Wisconsin/Upper Michigan
Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven A. Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Braintree, MA 02184
Russell L. Scalfano Group Vice President- None
Illinois/Indiana/Kentucky
William G. Scholz Group Vice President- None
Arizona/Las Vegas
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development<PAGE>
PAGE 33
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Julian W. Sloter Group Vice Presidnet- None
9040 Roswell Rd. Orlando/Jacksonville
River Ridge-Suite 600
Atlanta, GA 30350
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
IDS Tower 10 Eastern Iowa Area
Minneapolis, MN 55440
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Paul J. Stanislaw Group Vice President- None
Southern California
Lois A. Stilwell Group Vice President- None
IDS Tower 10 Outstate Minnesota Area/
Minneapolis, MN 55440 North Dakota/Western Wisconsin
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
IDS Tower 10 Seattle/Tacoma
Minneapolis, MN 55440
John R. Thomas Senior Vice President- Director/
IDS Tower 10 Information and Trustee
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440<PAGE>
PAGE 34
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Peter S. Velardi Group Vice President- None
Atlanta/Birmingham
Charles F. Wachendorfer Group Vice President- None
Denver/Salt Lake City/
Albuquerque
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
Suite 215 Field Management
1501 Westcliff Drive
Newport Beach, CA 92660
Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer
Thomas L. White Group Vice President- None
Cleveland Metro
Eric S. Williams Group Vice President- None
Virginia
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
Suite 815 Field Management
8585 Broadway
Merrillville, IN 46410
<PAGE>
PAGE 35
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
IDS Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS High Yield Tax-Exempt Fund
Inc., certifies that it meets the requirements for the effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis and the State of Minnesota on the 27th
day of February, 1995.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By /s/ WILLIAM R. PEARCE**
------------------------------------
William R. Pearce,
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacities indicated on the 27th day of February, 1995.
SIGNATURE CAPACITY
- ----------------------------------- -------------------------
/s/ WILLIAM R. PEARCE** President and Principal
- ----------------------------------- Executive Officer and
William R. Pearce Director
Treasurer, Principal
/s/ LESLIE L. OGG** Financial Officer, and
- ----------------------------------- Principal Accounting
Leslie L. Ogg Officer
/s/ LYNNE V. CHENEY*
- ----------------------------------- Director
Lynne V. Cheney
/s/ WILLIAM H. DUDLEY*
- ----------------------------------- Director
William H. Dudley
/s/ ROBERT F. FROEHLKE*
- ----------------------------------- Director
Robert F. Froehlke
/s/ DAVID R. HUBERS*
- ----------------------------------- Director
David R. Hubers
/s/ HEINZ F. HUTTER*
- ----------------------------------- Director
Heinz F. Hutter
II-3
<PAGE>
SIGNATURE CAPACITY
- ----------------------------------- -------------------------
/s/ ANNE P. JONES*
- ----------------------------------- Director
Anne P. Jones
/s/ DONALD M. KENDALL*
- ----------------------------------- Director
Donald M. Kendall
/s/ MELVIN R. LAIRD*
- ----------------------------------- Director
Melvin R. Laird
/s/ LEWIS W. LEHR*
- ----------------------------------- Director
Lewis W. Lehr
/s/ EDSON W. SPENCER*
- ----------------------------------- Director
Edson W. Spencer
/s/ JOHN R. THOMAS*
- ----------------------------------- Director
John R. Thomas
/s/ WHEELOCK WHITNEY*
- ----------------------------------- Director
Wheelock Whitney
/s/ C. ANGUS WURTELE*
- ----------------------------------- Director
C. Angus Wurtele
*Signed pursuant to Directors' Power of Attorney dated
November 10, 1994, filed electronically as Exhibit 18(a) to
Registrant's Post-Effective Amendment No. 29, by:
/s/LESLIE L. OGG
- -----------------------------------
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated June 1,
1993, filed as Exhibit 18(b) to Post-Effective Amendment No.
26 to Registration Statement No. 2-63552 by:
/s/LESLIE L. OGG
- -----------------------------------
Leslie L. Ogg
II-4
<PAGE>
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 31
TO REGISTRATION STATEMENT NO. 2-63552
This Post-Effective Amendment comprises the following papers and documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other information.
Exhibits.
The signatures.
<PAGE>
IDS High Yield Tax-Exempt Fund, Inc.
Registration Number 2-63552/811-2901
EXHIBIT INDEX
<TABLE>
<C> <S>
Exhibit 5: Form of Investment Management Services Agreement between
Registrant and American Express Financial Corporation,
dated March 20, 1995.
Exhibit 6: Form of Distribution Agreement between Registrant and
American Express Financial Advisors Inc., dated March 20,
1995.
Exhibit 8: Form of Custodian Agreement between Registrant and American
Express Trust Company, dated March 20, 1995.
Exhibit 9b: Form of Transfer Agency Agreement between Registrant and
American Express Financial Corporation, dated March 20,
1995.
Exhibit 9d: Form of Shareholder Service Agreement between Registrant and
American Express Financial Advisors Inc., dated March 20,
1995.
Exhibit 9e: Form of Administrative Services Agreement between Registrant
and American Express Financial Corporation, dated March 20,
1995.
Exhibit 11: Independent Auditors' Consent.
Exhibit 15: Form of Plan and Agreement of Distribution between
Registrant and American Express Financial Advisors Inc.,
dated March 20, 1995.
Exhibit 17: Financial Data Schedule.
</TABLE>
<PAGE>
FORM OF
INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS High Yield
Tax-Exempt Fund, Inc. (the "Fund"), a Minnesota corporation, and American
Express Financial Corporation, a Delaware corporation.
PART ONE: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Fund hereby retains American Express Financial Corporation, and
American Express Financial Corporation hereby agrees, for the period of
this Agreement and under the terms and conditions hereinafter set forth, to
furnish the Fund continuously with suggested investment planning; to determine,
consistent with the Fund's investment objectives and policies, which securities
in American Express Financial Corporation's discretion shall be purchased, held
or sold and to execute or cause the execution of purchase or sell orders; to
prepare and make available to the Fund all necessary research and statistical
data in connection therewith; to furnish all services of whatever nature
required in connection with the management of the Fund as provided under this
Agreement; and to pay such expenses as may be provided for in Part Three;
subject always to the direction and control of the Board of Directors (the
"Board"), the Executive Committee and the authorized officers of the Fund.
American Express Financial Corporation agrees to maintain an adequate
organization of competent persons to provide the services and to perform the
functions herein mentioned. American Express Financial Corporation agrees to
meet with any persons at such times as the Board deems appropriate for the
purpose of reviewing American Express Financial Corporation's performance under
this Agreement.
(2) American Express Financial Corporation agrees that the investment
planning and investment decisions will be in accordance with general investment
policies of the Fund as disclosed to American Express Financial Corporation
from time to time by the Fund and as set forth in its prospectuses and
registration statements filed with the United States Securities and Exchange
Commission (the "SEC").
(3) American Express Financial Corporation agrees that it will maintain
all required records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for the Fund.
(4) The Fund agrees that it will furnish to American Express Financial
Corporation any information that the latter may reasonably request with respect
to the services performed or to be performed by American Express Financial
Corporation under this Agreement.
(5) American Express Financial Corporation is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities for the Fund and is directed to use its best efforts to obtain the
best available price and most favorable execution, except as prescribed herein.
Subject to prior authorization by the Fund's Board of appropriate policies and
procedures, and subject to termination at any time by the Board, American
Express Financial Corporation may also be authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, to the extent authorized by law, if American Express Financial
Corporation determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or American Express Financial Corporation's overall responsibilities
with respect to the Fund and other funds for which it acts as investment
adviser.
(6) It is understood and agreed that in furnishing the Fund with the
services as herein provided, neither American Express Financial Corporation, nor
any officer, director or agent thereof shall be held liable to the Fund or its
creditors or shareholders for errors of judgment or for anything except willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that American Express Financial
Corporation may rely upon information furnished to it reasonably believed to be
accurate and reliable.
PART TWO: COMPENSATION TO INVESTMENT MANAGER
(1) The Fund agrees to pay to American Express Financial Corporation, and
American Express Financial Corporation covenants and agrees to accept from the
Fund in full payment for the services furnished, a fee for each calendar day of
each year equal to the total of 1/365th (1/366th in each leap
<PAGE>
year) of the amount computed as shown below. The computation shall be made for
each day on the basis of net assets as of the close of business of the full
business day two (2) business days prior to the day for which the computation is
being made. In the case of the suspension of the computation of net asset value,
the asset charge for each day during such suspension shall be computed as of the
close of business on the last full business day on which the net assets were
computed. Net assets as of the close of a full business day shall include all
transactions in shares of the Fund recorded on the books of the Fund for that
day.
The asset charge shall be based on the net assets of the Fund as set forth
in the following table.
ASSET CHARGE
<TABLE>
<CAPTION>
ASSETS ANNUAL RATE AT
(BILLIONS) EACH ASSET LEVEL
---------- ----------------
<S> <C>
First $1 0.490%
Next $1 0.465
Next $1 0.440
Next $3 0.415
Next $3 0.390
Over $9 0.360
</TABLE>
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, the fee accrued shall be prorated on the basis of
the number of days that this Agreement is in effect during the month with
respect to which such payment is made.
(3) The fee provided for hereunder shall be paid in cash by the Fund to
American Express Financial Corporation within five business days after the last
day of each month.
PART THREE: ALLOCATION OF EXPENSES
(1) The Fund agrees to pay:
(a) Fees payable to American Express Financial Corporation for its
services under the terms of this Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection with the purchase
and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified public accountants for
services the Fund requests.
(f) Premium on the bond required by Rule 17g-1 under the Investment
Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the Fund, its
directors and officers, (ii) it employs in conjunction with a claim asserted by
the Board against American Express Financial Corporation, except that American
Express Financial Corporation shall reimburse the Fund for such fees and
expenses if it is ultimately determined by a court of competent jurisdiction, or
American Express Financial Corporation agrees, that it is liable in whole or in
part to the Fund, and (iii) it employs to assert a claim against a third party.
(h) Fees paid for the qualification and registration for public sale of
the securities of the Fund under the laws of the United States and of the
several states in which such securities shall be offered for sale.
(i) Fees of consultants employed by the Fund.
<PAGE>
(j) Directors, officers and employees expenses which shall include fees,
salaries, memberships, dues, travel, seminars, pension, profit sharing, and
all other benefits paid to or provided for directors, officers and employees,
directors and officers liability insurance, errors and omissions liability
insurance, worker's compensation insurance and other expenses applicable to the
directors, officers and employees, except the Fund will not pay any fees or
expenses of any person who is an officer or employee of American Express
Financial Corporation or its affiliates.
(k) Filing fees and charges incurred by the Fund in connection with
filing any amendment to its articles of incorporation, or incurred in filing
any other document with the State of Minnesota or its political subdivisions.
(l) Organizational expenses of the Fund.
(m) Expenses incurred in connection with lending portfolio securities of
the Fund.
(n) Expenses properly payable by the Fund, approved by the Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this Agreement.
Further, American Express Financial Corporation agrees that if, at the end of
any month, the expenses of the Fund under this Agreement and any other agreement
between the Fund and American Express Financial Corporation, but excluding those
expenses set forth in (1)(b) and (1)(c) of this Part Three, exceed the most
restrictive applicable state expenses limitation, the Fund shall not pay those
expenses set forth in (1)(a) and (d) through (n) of this Part Three to the
extent necessary to keep the Fund's expenses from exceeding the limitation, it
being understood that American Express Financial Corporation will assume
all unpaid expenses and bill the Fund for them in subsequent months but in no
event can the accumulation of unpaid expenses or billing be carried past the end
of the Fund's fiscal year.
PART FOUR: MISCELLANEOUS
(1) American Express Financial Corporation shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Fund.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Fund recognizes that American Express Financial Corporation now
renders and may continue to render investment advice and other services to other
investment companies and persons which may or may not have investment policies
and investments similar to those of the Fund and that American Express Financial
Corporation manages its own investments and/or those of its subsidiaries.
American Express Financial Corporation shall be free to render such investment
advice and other services and the Fund hereby consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto shall
be invalidated or in any way affected by the fact that directors, officers,
agents and/or shareholders of the Fund are or may be interested in American
Express Financial Corporation or any successor or assignee thereof, as
directors, officers, stockholders or otherwise; that directors, officers,
stockholders or agents of American Express Financial Corporation are or may be
interested in the Fund as directors, officers, shareholders, or otherwise; or
that American Express Financial Corporation or any successor or assignee, is or
may be interested in the Fund as shareholder or otherwise, provided, however,
that neither American Express Financial Corporation, nor any officer, director
or employee thereof or of the Fund, shall sell to or buy from the Fund any
property or security other than shares issued by the Fund, except in accordance
with applicable regulations or orders of the SEC.
(5) Any notice under this Agreement shall be given in writing, addressed,
and delivered, or mailed postpaid, to the party to this Agreement entitled to
receive such, at such party's principal place of business in Minneapolis,
Minnesota, or to such other address as either party may designate in writing
mailed to the other.
(6) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will deal for
or on behalf of the Fund with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors or employees of American Express Financial
Corporation from having a financial interest in the Fund or in American Express
Financial Corporation.
<PAGE>
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of whose
partners, officers, directors or employees is an officer, director or
employee of American Express Financial Corporation, provided such transactions
are handled in the capacity of broker only and provided commissions charged do
not exceed customary brokerage charges for such services.
(c) Transactions with the Fund by a broker-dealer affiliate of American
Express Financial Corporation as may be allowed by rule or order of the SEC, and
if made pursuant to procedures adopted by the Fund's Board.
(7) American Express Financial Corporation agrees that, except as herein
otherwise expressly provided or as may be permitted consistent with the use of a
broker-dealer affiliate of American Express Financial Corporation under
applicable provisions of the federal securities laws, neither it nor any of its
officers, directors or employees shall at any time during the period of this
Agreement, make, accept or receive, directly or indirectly, any fees, profits or
emoluments of any character in connection with the purchase or sale of
securities (except shares issued by the Fund) or other assets by or for the
Fund.
PART FIVE: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until March 19, 1997, or
until a new agreement is approved by a vote of the majority of the outstanding
shares of the Fund and by vote of the Fund's Board, including the vote required
by (b) of this paragraph, and if no new agreement is so approved, this Agreement
shall continue from year to year thereafter unless and until terminated by
either party as hereinafter provided, except that such continuance shall be
specifically approved at least annually (a) by the Board of the Fund or by a
vote of the majority of the outstanding shares of the Fund and (b) by the vote
of a majority of the directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. As used in this paragraph, the term
"interested person" shall have the same meaning as set forth in the Investment
Company Act of 1940, as amended (the "1940 Act").
(2) This Agreement may be terminated by either the Fund or American
Express Financial Corporation at any time by giving the other party 60 days'
written notice of such intention to terminate, provided that any termination
shall be made without the payment of any penalty, and provided further that
termination may be effected either by the Board of the Fund or by a vote of the
majority of the outstanding voting shares of the Fund. The vote of the majority
of the outstanding voting shares of the Fund for the purpose of this Part Five
shall be the vote at a shareholders' regular meeting, or a special meeting duly
called for the purpose, of 67% or more of the Fund's shares present at such
meeting if the holders of more than 50% of the outstanding voting shares are
present or represented by proxy, or more than 50% of the outstanding voting
shares of the Fund, whichever is less.
(3) This Agreement shall terminate in the event of its assignment, the
term "assignment" for this purpose having the same meaning as set forth in the
1940 Act.
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement
as of the day and year first above written.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By:
--------------------------------
Leslie L. Ogg,
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
--------------------------------
<PAGE>
DISTRIBUTION AGREEMENT
Agreement made as of the 20th day of March, 1995, by and between
IDS High Yield Tax-Exempt Fund, Inc. (the "Fund"), a Minnesota
corporation, for and on behalf of each class of the Fund and
American Express Financial Advisors Inc., a Delaware corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Fund covenants and agrees that, during the term of this
agreement and any renewal or extension, American Express Financial
Advisors shall have the exclusive right to act as principal
underwriter for the Fund and to offer for sale and to distribute
either directly or through any affiliate any and all shares of each
class of capital stock issued or to be issued by the Fund.
(2) American Express Financial Advisors hereby covenants and
agrees to act as the principal underwriter of each class of capital
shares issued and to be issued by the Fund during the period of
this agreement and agrees during such period to offer for sale such
shares as long as such shares remain available for sale, unless
American Express Financial Advisors is unable or unwilling to make
such offer for sale or sales or solicitations therefor legally
because of any federal, state, provincial or governmental law, rule
or agency or for any financial reason.
(3) With respect to the offering for sale and sale of shares of
each class to be issued by the Fund, it is mutually understood and
agreed that such shares are to be sold on the following terms:
(a) All sales shall be made by means of an application, and
every application shall be subject to acceptance or rejection by
the Fund at its principal place of business. Shares are to be sold
for cash, payable at the time the application and payment for such
shares are received at the principal place of business of the Fund.
(b) No shares shall be sold at less than the asset value
(computed in the manner provided by the currently effective
prospectus or Statement of Additional Information and the
Investment Company Act of 1940, and rules thereunder). The number
of shares or fractional shares to be acquired by each applicant
shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the
capital stock of the appropriate class as of the close of business
on the day when the application, together with payment, is received
by the Fund at its principal place of business. The computation as
to the number of shares and fractional shares shall be carried to
three decimal points of one share with the computation being
carried to the nearest 1/lOOOth of a share. If the day of receipt
of the application and payment is not a full business day, then the
asset value of the share for use in such computation shall be
determined as of the close of business on the next succeeding full
business day. In the event of a period of emergency, the
computation of the asset value for the purpose of determining the
number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the first
full business day following the termination of the period of
<PAGE>
emergency. A period of emergency shall have the definition given
thereto in the Investment Company Act of 1940, and rules
thereunder.
(4) The Fund agrees to make prompt and reasonable effort to do
any and all things necessary, in the opinion of American Express
Financial Advisors, to have and to keep the Fund and the shares
properly registered or qualified in all appropriate jurisdictions
and, as to shares, in such amounts as American Express Financial
Advisors may from time to time designate in order that the Fund's
shares may be offered or sold in such jurisdictions.
(5) The Fund agrees that it will furnish American Express
Financial Advisors with information with respect to the affairs and
accounts of the Fund, and in such form, as American Express
Financial Advisors may from time to time reasonably require and
further agrees that American Express Financial Advisors, at all
reasonable times, shall be permitted to inspect the books and
records of the Fund.
(6) American Express Financial Advisors or its agents may prepare
or cause to be prepared from time to time circulars, sales
literature, broadcast material, publicity data and other
advertising material to be used in the sales of shares issued by
the Fund, including material which may be deemed to be a prospectus
under rules promulgated by the Securities and Exchange Commission
(each separate promotional piece is referred to as an "Item of
Soliciting Material"). At its option, American Express Financial
Advisors may submit any Item of Soliciting Material to the Fund for
its prior approval. Unless a particular Item of Soliciting
Material is approved in writing by the Fund prior to its use,
American Express Financial Advisors agrees to indemnify the Fund
and its directors and officers against any and all claims, demands,
liabilities and expenses which the Fund or such persons may incur
arising out of or based upon the use of any Item of Soliciting
Material. The term "expenses" includes amounts paid in
satisfaction of judgments or in settlements. The foregoing right
of indemnification shall be in addition to any other rights to
which the Fund or any director or officer may be entitled as a
matter of law. Notwithstanding the foregoing, such indemnification
shall not be deemed to abrogate or diminish in any way any right or
claim American Express Financial Advisors may have against the Fund
or its officers or directors in connection with the Fund's
registration statement, prospectus, Statement of Additional
Information or other information furnished by or caused to be
furnished by the Fund.
(7) American Express Financial Advisors agrees to submit to the
Fund each application for shares immediately after the receipt of
such application and payment therefor by American Express Financial
Advisors at its principal place or business.
(8) American Express Financial Advisors agrees to cause to be
delivered to each person submitting an application a prospectus or
circular to be furnished by the Fund in the form required by the
applicable federal laws or by the acts or statutes of any
applicable state, province or country.
<PAGE>
(9) The Fund shall have the right to extend to shareholders of
each class the right to use the proceeds of any cash dividend paid
by the Fund to that shareholder to purchase shares of the same
class at the net asset value at the close of business upon the day
of purchase, to the extent set forth in the currently effective
prospectus or Statement of Additional Information.
(10) Shares of each class issued by the Fund may be offered and
sold at their asset value to the shareholders of the same class of
other funds in the IDS MUTUAL FUND GROUP who wish to exchange their
investments in shares of the other funds in the IDS MUTUAL FUND
GROUP to investments in shares of the Fund, to the extent set forth
in the currently effective prospectus or Statement of Additional
Information, such asset value to be computed as of the close of
business on the day of sale of such shares of the Fund.
(11) American Express Financial Advisors and the Fund agree to use
their best efforts to conform with all applicable state and federal
laws and regulations relating to any rights or obligations under
the term of this agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties,
American Express Financial Advisors covenants and agrees that
during the period of this agreement it will pay or cause or be paid
all expenses incurred by American Express Financial Advisors, or
any of its affiliates, in the offering for sale or sale of each
class of the Fund's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that American Express Financial
Advisors shall be paid:
(i) for a class of shares imposing a front-end sales charge,
by the purchasers of Fund shares in an amount equal to the
difference between the total amount received upon each sale of
shares issued by the Fund and the asset value of such shares at the
time of such sale; and
(ii) for a class of shares imposing a deferred sales charge,
by owners of Fund shares at the time the sales charge is imposed in
an amount equal to any deferred sales charge, as described in the
Fund's prospectus.
Such sums as are received by the Fund shall be received as Agent
for American Express Financial Advisors and shall be remitted to
American Express Financial Advisors daily as soon as practicable
after receipt.
(2) The asset value of any share of each class of the Fund shall
be determined in the manner provided by the classes currently
effective prospectus and Statement of Additional Information and
the Investment Company Act of 1940, and rules thereunder.
<PAGE>
Part Four: MISCELLANEOUS
(1) American Express Financial Advisors shall be deemed to be an
independent contractor and, except as expressly provided or
authorized in this agreement, shall have no authority to act for or
represent the Fund.
(2) American Express Financial Advisors shall be free to render
to others services similar to those rendered under this agreement.
(3) Neither this agreement nor any transaction had pursuant
hereto shall be invalidated or in any way affected by the fact that
directors, officers, agents and/or shareholders of the Fund are or
may be interested in American Express Financial Advisors as
directors, officers, shareholders or otherwise; that directors,
officers, shareholders or agents of American Express Financial
Advisors are or may be interested in the Fund as directors,
officers, shareholders or otherwise; or that American Express
Financial Advisors is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither American
Express Financial Advisors nor any officer or director of American
Express Financial Advisors or any officers or directors of the Fund
shall sell to or buy from the Fund any property or security other
than a security issued by the Fund, except in accordance with a
rule, regulation or order of the federal Securities and Exchange
Commission.
(4) For the purposes of this agreement, a "business day" shall
have the same meaning as is given to the term in the By-laws of the
Fund.
(5) Any notice under this agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the parties to this
agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party
may designate in writing mailed to the other.
(6) American Express Financial Advisors agrees that no officer,
director or employee of American Express Financial Advisors will
deal for or on behalf of the Fund with himself as principal or
agent, or with any corporation or partnership in which he may have
a financial interest, except that this shall not prohibit:
(a) Officers, directors and employees of American Express
Financial Advisors from having a financial interest in the Fund or
in American Express Financial Advisors.
(b) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or dealer,
one or more of whose partners, officers, directors or employees is
an officer, director or employee of American Express Financial
Advisors, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed
customary brokerage charges for such services.
<PAGE>
(c) Transactions with the Fund by a broker-dealer affiliate
of American Express Financial Advisors if allowed by rule or order
of the Securities and Exchange Commission and if made pursuant to
procedures adopted by the Fund's Board of Directors.
(7) American Express Financial Advisors agrees that, except as
otherwise provided in this agreement, or as may be permitted
consistent with the use of a broker-dealer affiliate of American
Express Financial Advisors under applicable provisions of the
federal securities laws, neither it nor any of its officers,
directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the
purchase or sale of securities (except securities issued by the
Fund) or other assets by or for the Fund.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and
until terminated by American Express Financial Advisors or the
Fund, except that such continuance shall be specifically approved
at least annually by a vote of a majority of the Board of Directors
who are not parties to this agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval, and by a majority of the Board of
Directors or by vote of a majority of the outstanding voting
securities of the Fund. As used in this paragraph, the term
"interested person" shall have the meaning as set forth in the
Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by American Express
Financial Advisors or the Fund at any time by giving the other
party sixty (60) days written notice of such intention to
terminate.
(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By _____________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By ____________________________________
Vice President
<PAGE>
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated March 20, 1995, between IDS High
Yield Tax-Exempt Fund, Inc., a Minnesota Corporation (the
"Corporation") and American Express Trust Company, a corporation
organized under the laws of the State of Minnesota with its
principal place of business at Minneapolis, Minnesota (the
"Custodian").
WHEREAS, the Corporation desires that its securities and cash be
hereafter held and administered by Custodian pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Corporation and the Custodian agree as follows:
SECTION 1. DEFINITIONS
The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks,
including any stocks of this Corporation, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Custodian Agreement, the word "securities"
also shall include other instruments in which the Corporation may
invest including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name of the Corporation by any two individuals designated in
the current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
SECTION 2. NAMES, TITLES AND SIGNATURES OF AUTHORIZED PERSONS
The Corporation will certify to the Custodian the names and
signatures of its present officers and other designated persons
authorized on behalf of the Corporation to direct the Custodian by
custodian order as herein before defined. The Corporation agrees
that whenever any change occurs in this list it will file with the
Custodian a copy of a resolution certified by the Secretary or an
<PAGE>
Assistant Secretary of the Corporation as having been duly adopted
by the Board of Directors or the Executive Committee of the Board
of Directors of the Corporation designating those persons currently
authorized on behalf of the Corporation to direct the Custodian by
custodian order, as herein before defined, and upon such filing (to
be accompanied by the filing of specimen signatures of the
designated persons) the persons so designated in said resolution
shall constitute the current certified list. The Custodian is
authorized to rely and act upon the names and signatures of the
individuals as they appear in the most recent certified list from
the Corporation which has been delivered to the Custodian as herein
above provided.
SECTION 3. USE OF SUBCUSTODIANS
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be
deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of United
States banks; through foreign banks, banking institutions or trust
companies; through foreign subsidiaries of United States banks or
bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the
"Foreign Subcustodian" or indirectly through an agent, established
under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940
and the rules promulgated by the Securities and Exchange Commission
thereunder, any order issued by the Securities and Exchange
Commission, or any "no-action" letter received from the staff of
the Securities and Exchange Commission. To the extent the existing
provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter,
they shall apply to all such foreign custodianships. To the extent
such provisions are inconsistent with or additional requirements
are established by such Section, rules, order or no-action letter,
the requirements of such Section, rules, order or no-action letter
will prevail and the parties will adhere to such requirements;
provided, however, in the absence of notification from the
Corporation of any changes or additions to such requirements, the
Custodian shall have no duty or responsibility to inquire as to any
such changes or additions.
SECTION 4. RECEIPT AND DISBURSEMENT OF MONEY
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Corporation or cause its agent to open
and maintain such account or accounts subject only to checks,
drafts or directives by the Custodian pursuant to the terms of this
Agreement. The Custodian or its agent shall hold in such account
or accounts, subject to the provisions hereof, all cash received by
<PAGE>
it from or for the account of the Corporation. The Custodian or
its agent shall make payments of cash to or for the account of the
Corporation from such cash only:
(a) for the purchase of securities for the portfolio of the
Corporation upon the receipt of such securities by the
Custodian or its agent unless otherwise instructed on
behalf of the Corporation;
(b) for the purchase or redemption of shares of capital
stock of the Corporation;
(c) for the payment of interest, dividends, taxes,
management fees, or operating expenses (including,
without limitation thereto, fees for legal, accounting
and auditing services);
(d) for payment of distribution fees, commissions, or
redemption fees, if any;
(e) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed
to by the Corporation held by or to be delivered to the
Custodian;
(f) for payments in connection with the return of
securities loaned by the Corporation upon receipt of
such securities or the reduction of collateral upon
receipt of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the Board of Directors or of the Executive Committee
of the Board of Directors of the Corporation signed by an officer
of the Corporation and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is made. Notwithstanding the above,
for the purposes permitted under items (a) or (f) of paragraph (1)
of this section, the Custodian may rely upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the
Corporation to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Corporation and drawn on or to the order of the
Corporation and to deposit same to the account of the Corporation
pursuant to this Agreement.
<PAGE>
SECTION 5. RECEIPT OF SECURITIES
Except as permitted by the second paragraph of this section, the
Custodian or its agent shall hold in a separate account or
accounts, and physically segregated at all times from those of any
other persons, firms or corporations, pursuant to the provisions
hereof, all securities received by it for the account of the
Corporation. The Custodian shall record and maintain a record of
all certificate numbers. Securities so received shall be held in
the name of the Corporation, in the name of an exclusive nominee
duly appointed by the Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the Securities
and Exchange Commission may adopt, the Custodian may deposit all or
any part of the securities owned by the Corporation in a securities
depository which includes any system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant
to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Corporation
pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise
dispose of any such securities, except pursuant to the directive of
the Corporation and only for the account of the Corporation as set
forth in Section 6 of this Agreement.
SECTION 6. TRANSFER EXCHANGE, DELIVERY, ETC. OF SECURITIES
The Custodian shall have sole power to release or deliver any
securities of the Corporation held by it pursuant to this
Agreement. The Custodian agrees to transfer, exchange or deliver
securities held by it or its agent hereunder only:
(a) for sales of such securities for the account of the
Corporation, upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would include
delivery against interim receipts or other proper delivery
receipts;
(d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any
plan of
(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
<PAGE>
(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their terms
into other securities;
(h) upon exercise of subscription, purchase or other similar
rights represented by such securities; for loans of such
securities by the Corporation upon receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, its
agent, or to a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Corporation requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under Section 6 (whenever a facsimile is utilized, the
Corporation will also deliver an original signed custodian order)
and, in respect to item (i), a copy of a resolution of the Board of
Directors or of the Executive Committee of the Board of Directors
of the Corporation signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary, specifying
the securities, setting forth the purpose for which such payment,
transfer, exchange or delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom such transfer, exchange or delivery of such
securities shall be made.
SECTION 7. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until the Custodian receives a contrary custodian order
from the Corporation, the Custodian shall or shall cause its agent
to:
(a) present for payment all coupons and other income items held
by the Custodian or its agent for the account of the
Corporation which call for payment upon presentation and hold
all cash received by it upon such payment for the account of
the Corporation;
(b) present for payment all securities held by it or its agent
which mature or when called, redeemed, retired or otherwise
become payable;
(c) ascertain all stock dividends, rights and similar securities
to be issued with respect to any securities held by the
Custodian or its agent hereunder, and to collect and hold for
the account of the Corporation all such securities; and
(d) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities held by the
Custodian or its agent, and to collect and hold such interest
and cash dividends for the account of the Corporation.
<PAGE>
SECTION 8. VOTING AND OTHER ACTION
Neither the Custodian nor any nominee of the Custodian shall vote
any of the securities held hereunder by or for the account of the
Corporation. The Custodian shall promptly deliver to the
Corporation all notices, proxies and proxy soliciting materials
with relation to such securities, such proxies to be executed by
the registered holder of such securities (if registered otherwise
than in the name of the Corporation), but without indicating the
manner in which such proxies are to be voted.
Custodian shall transmit promptly to the Corporation all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Corporation. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Corporation
all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
SECTION 9. TRANSFER TAXES
The Corporation shall pay or reimburse the Custodian for any
transfer taxes payable upon transfers of securities made hereunder,
including transfers resulting from the termination of this
Agreement. The Custodian shall execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
SECTION 10. CUSTODIAN'S REPORTS
The Custodian shall furnish the Corporation as of the close of
business each day a statement showing all transactions and entries
for the account of the Corporation. The books and records of the
Custodian pertaining to its actions as Custodian under this
Agreement and securities held hereunder by the Custodian shall be
open to inspection and audit by officers of the Corporation,
internal auditors employed by the Corporation's investment adviser,
and independent auditors employed by the Corporation. The
Custodian shall furnish the Corporation in such form as may
reasonably be requested by the Corporation a report, including a
list of the securities held by it in custody for the account of the
Corporation, identification of any subcustodian, and identification
of such securities held by such subcustodian, as of the close of
business of the last business day of each month, which shall be
certified by a duly authorized officer of the Custodian. It is
further understood that additional reports may from time to time be
requested by the Corporation. Should any report ever be filed with
any governmental authority pertaining to lost or stolen securities,
the Custodian will concurrently provide the Corporation with a copy
of that report.
<PAGE>
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Corporation may reasonably
request from time to time.
SECTION 11. CONCERNING CUSTODIAN
For its services hereunder the Custodian shall be paid such
compensation at such times as may from time to time be agreed on in
writing by the parties hereto in a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board of Directors or of
the Executive Committee of the Board of Directors of the
Corporation, and may rely on the genuineness of any such document
which it may in good faith believe to have been validly executed.
The Corporation agrees to indemnify and hold harmless Custodian and
its nominee from all taxes, charges, expenses, assessments, claims
and liabilities (including counsel fees) incurred or assessed
against it or its nominee in connection with the performance of
this Agreement, except such as may arise from the Custodian's or
its nominee's own negligent action, negligent failure to act or
willful misconduct. Custodian is authorized to charge any account
of the Corporation for such items. In the event of any advance of
cash for any purpose made by Custodian resulting from orders or
instructions of the Corporation, or in the event that Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or
its nominee's own negligent action, negligent failure to act or
willful misconduct, any property at any time held for the account
of the Corporation shall be security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Corporation resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of an agent, unless such loss
or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or
from its failure to enforce effectively such rights as it may have
against any agent.
SECTION 12. TERMINATION AND AMENDMENT OF AGREEMENT
The Corporation and the Custodian mutually may agree from time to
time in writing to amend, to add to, or to delete from any
provision of this Agreement.
<PAGE>
The Custodian may terminate this Agreement by giving the
Corporation ninety days' written notice of such termination by
registered mail addressed to the Corporation at its principal place
of business.
The Corporation may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the Board of Directors authorizing such termination and certified
by the Secretary of the Corporation, by registered mail to the
Custodian.
Upon such termination of this Agreement, assets of the Corporation
held by the Custodian shall be delivered by the Custodian to a
successor custodian, if one has been appointed by the Corporation,
upon receipt by the Custodian of a copy of the resolution of the
Board of Directors of the Corporation certified by the Secretary,
showing appointment of the successor custodian, and provided that
such successor custodian is a bank or trust company, organized
under the laws of the United States or of any State of the United
States, having not less than two million dollars aggregate capital,
surplus and undivided profits. Upon the termination of this
Agreement as a part of the transfer of assets, either to a
successor custodian or otherwise, the Custodian will deliver
securities held by it hereunder, when so authorized and directed by
resolution of the Board of Directors of the Corporation, to a duly
appointed agent of the successor custodian or to the appropriate
transfer agents for transfer of registration and delivery as
directed. Delivery of assets on termination of this Agreement
shall be effected in a reasonable, expeditious and orderly manner;
and in order to accomplish an orderly transition from the Custodian
to the successor custodian, the Custodian shall continue to act as
such under this Agreement as to assets in its possession or
control. Termination as to each security shall become effective
upon delivery to the successor custodian, its agent, or to a
transfer agent for a specific security for the account of the
successor custodian, and such delivery shall constitute effective
delivery by the Custodian to the successor under this Agreement.
In addition to the means of termination herein before authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Corporation and after
written notice of such action to the Custodian.
SECTION 13. GENERAL
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and assigns.
<PAGE>
This Agreement shall be governed by the laws of the State of
Minnesota.
This Agreement supersedes all prior agreements between the parties.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By:
----------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS TRUST COMPANY
By:
----------------------------------
Vice President
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of March 20, 1995, between IDS High Yield
Tax-Exempt Fund, Inc. (the "Fund"), a Minnesota corporation, and
American Express Financial Corporation (the "Transfer Agent"), a
Delaware corporation.
In consideration of the mutual promises set forth below, the Fund
and the Transfer Agent agree as follows:
1. Appointment of the Transfer Agent. The Fund hereby appoints the
Transfer Agent, as transfer agent for its shares and as shareholder
servicing agent for the Fund, and the Transfer Agent accepts such
appointment and agrees to perform the duties set forth below.
2. Compensation. The Fund will compensate the Transfer Agent for
the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the
Transfer Agent for which the Transfer Agent shall be entitled to
bill the Fund separately.
The Transfer Agent will bill the Fund monthly. The fee provided
for hereunder shall be paid in cash by the Fund to American Express
Financial Corporation within five (5) business days after the last
day of each month.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in Schedule B. Reimbursement by the Fund
for expenses incurred by the Transfer Agent in any month shall be
made as soon as practicable after the receipt of an itemized bill
from the Transfer Agent.
Any compensation jointly agreed to hereunder may be adjusted from
time to time by attaching to this Agreement a revised Schedule A,
dated and signed by an officer of each party.
3. Documents. The Fund will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to
be appropriate or necessary for the proper performance of its
duties.
4. Representations of the Fund and the Transfer Agent.
(a) The Fund represents to the Transfer Agent that all outstanding
shares are validly issued, fully paid and non-assessable by the
Fund. When shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its prospectus,
such shares shall be validly issued, fully paid and non-assessable
by the Fund.
(b) The Transfer Agent represents that it is registered under
Section 17A(c) of the Securities Exchange Act of 1934. The
Transfer Agent agrees to maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under
this agreement and to comply with all applicable laws.
<PAGE>
5. Duties of the Transfer Agent. The Transfer Agent shall be
responsible, separately and through its subsidiaries or affiliates,
for the following functions:
(a) Sale of Fund Shares.
(1) On receipt of an application and payment, wired instructions
and payment, or payment identified as being for the account of a
shareholder, the Transfer Agent will deposit the payment, prepare
and present the necessary report to the Custodian and record the
purchase of shares in a timely fashion in accordance with the terms
of the prospectus. All shares shall be held in book entry form and
no certificate shall be issued unless the Fund is permitted to do
so by the prospectus and the purchaser so requests.
(2) On receipt of notice that payment was dishonored, the Transfer
Agent shall stop redemptions of all shares owned by the purchaser
related to that payment, place a stop payment on any checks that
have been issued to redeem shares of the purchaser and take such
other action as it deems appropriate.
(b) Redemption of Fund Shares. On receipt of instructions to redeem
shares in accordance with the terms of the Fund's prospectus, the
Transfer Agent will record the redemption of shares of the Fund,
prepare and present the necessary report to the Custodian and pay
the proceeds of the redemption to the shareholder, an authorized
agent or legal representative upon the receipt of the monies from
the Custodian.
(c) Transfer or Other Change Pertaining to Fund Shares. On receipt
of instructions or forms acceptable to the Transfer Agent to
transfer the shares to the name of a new owner, change the name or
address of the present owner or take other legal action, the
Transfer Agent will take such action as is requested.
(d) Exchange of Fund Shares. On receipt of instructions to exchange
the shares of the Fund for the shares of another fund in the IDS
MUTUAL FUND GROUP or other American Express Financial Corporation
product in accordance with the terms of the prospectus, the
Transfer Agent will process the exchange in the same manner as a
redemption and sale of shares.
(e) Right to Seek Assurance. The Transfer Agent may refuse to
transfer, exchange or redeem shares of the Fund or take any action
requested by a shareholder until it is satisfied that the requested
transaction or action is legally authorized or until it is
satisfied there is no basis for any claims adverse to the
transaction or action. It may rely on the provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers
or the Uniform Commercial Code. The Fund shall indemnify the
Transfer Agent for any act done or omitted to be done in reliance
on such laws or for refusing to transfer, exchange or redeem shares
or taking any requested action if it acts on a good faith belief
that the transaction or action is illegal or unauthorized.
(f) Shareholder Records, Reports and Services.
<PAGE>
(1) The Transfer Agent shall maintain all shareholder accounts,
which shall contain all required tax, legally imposed and
regulatory information; shall provide shareholders, and file with
federal and state agencies, all required tax and other reports
pertaining to shareholder accounts; shall prepare shareholder
mailing lists; shall cause to be printed and mailed all required
prospectuses, annual reports, semiannual reports, statements of
additional information (upon request), proxies and other mailings
to shareholders; and shall cause proxies to be tabulated.
(2) The Transfer Agent shall respond to all valid inquiries related
to its duties under this Agreement.
(3) The Transfer Agent shall create and maintain all records in
accordance with all applicable laws, rules and regulations,
including, but not limited to, the records required by Section
31(a) of the Investment Company Act of 1940.
(g) Dividends and Distributions. The Transfer Agent shall prepare
and present the necessary report to the Custodian and shall cause
to be prepared and transmitted the payment of income dividends and
capital gains distributions or cause to be recorded the investment
of such dividends and distributions in additional shares of the
Fund or as directed by instructions or forms acceptable to the
Transfer Agent.
(h) Confirmations and Statements. The Transfer Agent shall confirm
each transaction either at the time of the transaction or through
periodic reports as may be legally permitted.
(i) Lost or Stolen Checks. The Transfer Agent will replace lost or
stolen checks issued to shareholders upon receipt of proper
notification and will maintain any stop payment orders against the
lost or stolen checks as it is economically desirable to do.
(j) Reports to Fund. The Transfer Agent will provide reports
pertaining to the services provided under this Agreement as the
Fund may request to ascertain the quality and level of services
being provided or as required by law.
(k) Other Duties. The Transfer Agent may perform other duties for
additional compensation if agreed to in writing by the parties to
this Agreement.
6. Ownership and Confidentiality of Records. The Transfer Agent
agrees that all records prepared or maintained by it relating to
the services to be performed by it under the terms of this
Agreement are the property of the Fund and may be inspected by the
Fund or any person retained by the Fund at reasonable times. The
Fund and Transfer Agent agree to protect the confidentiality of
those records.
7. Action by Board and Opinion of Fund's Counsel. The Transfer
Agent may rely on resolutions of the Board of Directors or the
Executive Committee of the Board of Directors and on opinion of
counsel for the Fund.
<PAGE>
8. Duty of Care. It is understood and agreed that, in furnishing
the Fund with the services as herein provided, neither the Transfer
Agent, nor any officer, director or agent thereof shall be held
liable for any loss arising out of or in connection with their
actions under this Agreement so long as they act in good faith and
with due diligence, and are not negligent or guilty of any willful
misconduct. It is further understood and agreed that the Transfer
Agent may rely upon information furnished to it reasonably believed
to be accurate and reliable. In the event the Transfer Agent is
unable to perform its obligations under the terms of this Agreement
because of an act of God, strike or equipment or transmission
failure reasonably beyond its control, the Transfer Agent shall not
be liable for any damages resulting from such failure.
9. Term and Termination. This Agreement shall become effective on
the date first set forth above (the "Effective Date") and shall
continue in effect from year to year thereafter as the parties may
mutually agree; provided that either party may terminate this
Agreement by giving the other party notice in writing specifying
the date of such termination, which shall be not less than 60 days
after the date of receipt of such notice. In the event such notice
is given by the Fund, it shall be accompanied by a vote of the
Board of Directors, certified by the Secretary, electing to
terminate this Agreement and designating a successor transfer agent
or transfer agents. Upon such termination and at the expense of
the Fund, the Transfer Agent will deliver to such successor a
certified list of shareholders of the Fund (with name, address and
taxpayer identification or Social Security number), a historical
record of the account of each shareholder and the status thereof,
and all other relevant books, records, correspondence, and other
data established or maintained by the Transfer Agent under this
Agreement in the form reasonably acceptable to the Fund, and will
cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from the Transfer Agent's
personnel in the establishment of books, records and other data by
such successor or successors.
10. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
11. Subcontracting. The Fund agrees that the Transfer Agent may
subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution
in the quality or level of the services and that the Transfer Agent
remains fully responsible for the services. Except for
out-of-pocket expenses identified in Schedule B, the Transfer Agent
shall bear the cost of subcontracting such services, unless
otherwise agreed by the parties.
12. Miscellaneous.
(a) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party.
<PAGE>
(b) This Agreement shall be governed by the laws of the State of
Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers as of the day and year
written above.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By:
----------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
----------------------------------
Vice President
<PAGE>
SCHEDULE A
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
TRANSFER AGENT FEE
Effective the 20th day of March, 1995, the Annual Per Account
Fee accrued daily and payable monthly is revised as follows:
CLASS FEE
----- ---
A $ 15.50
B 16.50
Y 15.50
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for the
following out-of-pocket expenses:
- - typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs
- - printing, paper, envelopes and postage for dividend notices,
dividend checks, records of account, purchase confirmations,
exchange confirmations and exchange prospectuses, redemption
confirmations, redemption checks, confirmations on changes of
address and any other communication required to be sent to
shareholders
- - typesetting, printing, paper, envelopes and postage for
prospectuses, annual and semiannual reports, statements of
additional information, supplements for prospectuses and statements
of additional information and other required mailings to
shareholders
- - stop orders
- - outgoing wire charges
- - other expenses incurred at the request or with the consent of the
Fund
<PAGE>
SHAREHOLDER SERVICE AGREEMENT
This agreement is between IDS High Yield Tax-Exempt Fund, Inc. (the
"Fund") and American Express Financial Advisors Inc., the principal
underwriter of the Fund, for services to be provided to
shareholders by personal financial advisors and other servicing
agents. It is effective on the first day the Fund offers multiple
classes of shares.
American Express Financial Advisors represents that shareholders
consider their financial advisor or servicing agent a significant
factor in their satisfaction with their investment and, to help
retain financial advisors or servicing agents, it is necessary for
the Fund to pay annual servicing fees to financial advisors and
other servicing agents.
American Express Financial Advisors represents that fees paid to
financial advisors will be used by financial advisors to help
shareholders thoughtfully consider their investment goals and
objectively monitor how well the goals are being achieved. As
principal underwriter, American Express Financial Advisors will use
its best efforts to assure that other distributors provide
comparable services to shareholders for the servicing fees
received.
American Express Financial Advisors agrees to monitor the services
provided by financial advisors and servicing agents, to measure the
level and quality of services provided, to provide training and
support to financial advisors and servicing agents and to devise
methods for rewarding financial advisors and servicing agents who
achieve an exemplary level and quality of services.
The Fund agrees to pay American Express financial advisors and
other servicing agents 0.15 percent of the net asset value for each
shareholder account assigned to a financial advisor or servicing
agent that holds either Class A or Class B shares. In addition,
the Fund agrees to pay American Express Financial Advisors' costs
to monitor, measure, train and support services provided by
financial advisors or servicing agents up to 0.025 percent of the
net asset value for each shareholder account assigned to a
financial advisor or servicing agent that holds either Class A or
Class B shares. The Fund agrees to pay American Express Financial
Advisors in cash within five (5) business days after the last day
of each month.
American Express Financial Advisors agrees to provide the Fund,
prior to the beginning of the calendar year, a budget covering its
expected costs to monitor, measure, train and support services and
a quarterly report of its actual expenditures. American Express
Financial Advisors agrees to meet with representatives of the Fund
at their request to provide information as may be reasonably
necessary to evaluate its performance under the terms of this
agreement.
American Express Financial Advisors agrees that if, at the end of
any month, the expenses of the Fund, including fees under this
agreement and any other agreement between the Fund and American
<PAGE>
Express Financial Advisors or American Express Financial
Corporation, but excluding taxes, brokerage commissions and charges
in connection with the purchase and sale of assets exceed the most
restrictive applicable state expense limitation for the Fund's
current fiscal year, the Fund shall not pay fees and expenses under
this agreement to the extent necessary to keep the Fund's expenses
from exceeding the limitation, it being understood that American
Express Financial Advisors will assume all unpaid expenses and bill
the Fund for them in subsequent months but in no event can the
accumulation of unpaid expenses or billing be carried past the end
of the Fund's fiscal year.
This agreement shall continue in effect for a period of more than
one year so long as it is reapproved at least annually at a meeting
called for the purpose of voting on the agreement by a vote, in
person, of the members of the Board who are not interested persons
of the Fund and have no financial interest in the operation of the
agreement, and of all the members of the Board.
This agreement may be terminated at any time without payment of any
penalty by a vote of a majority of the members of the Board who are
not interested persons of the Fund and have no financial interest
in the operation of the agreement or by American Express Financial
Advisors. The agreement will terminate automatically in the event
of its assignment as that term is defined in the Investment Company
Act of 1940. This agreement may be amended at any time provided
the amendment is approved in the same manner the agreement was
initially approved and the amendment is agreed to by American
Express Financial Advisors.
Approved this 20th day of March, 1995.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
__________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
__________________________________
Vice President
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS High
Yield Tax-Exempt Fund, Inc. (the "Fund"), a Minnesota corporation,
and American Express Financial Corporation, a Delaware corporation.
PART ONE: SERVICES
(1) The Fund hereby retains American Express Financial Corporation,
and American Express Financial Corporation hereby agrees, for the
period of this Agreement and under the terms and conditions
hereinafter set forth, to furnish the Fund continuously with all
administrative, accounting, clerical, statistical, correspondence,
corporate and all other services of whatever nature required in
connection with the administration of the Fund as provided under
this Agreement; and to pay such expenses as may be provided for in
Part Three hereof; subject always to the direction and control of
the Board of Directors, the Executive Committee and the authorized
officers of the Fund. American Express Financial Corporation
agrees to maintain an adequate organization of competent persons to
provide the services and to perform the functions herein mentioned.
American Express Financial Corporation agrees to meet with any
persons at such times as the Board of Directors deems appropriate
for the purpose of reviewing American Express Financial
Corporation's performance under this Agreement.
(2) The Fund agrees that it will furnish to American Express
Financial Corporation any information that the latter may
reasonably request with respect to the services performed or to be
performed by American Express Financial Corporation under this
Agreement.
(3) It is understood and agreed that in furnishing the Fund with
the services as herein provided, neither American Express Financial
Corporation, nor any officer, director or agent thereof shall be
held liable to the Fund or its creditors or shareholders for errors
of judgment or for anything except willful misfeasance, bad faith,
or gross negligence in the performance of its duties, or reckless
disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that American
Express Financial Corporation may rely upon information furnished
to it reasonably believed to be accurate and reliable.
PART TWO: COMPENSATION FOR SERVICES
(1) The Fund agrees to pay to American Express Financial
Corporation, and American Express Financial Corporation covenants
and agrees to accept from the Fund in full payment for the services
furnished, based on the net assets of the Fund as set forth in the
following table:
<PAGE>
Assets Annual Rate At
(Billions) Each Asset Level
---------- ----------------
First $1 0.040%
Next 1 0.035
Next 1 0.030
Next 3 0.025
Next 3 0.020
Over 9 0.020
The administrative fee for each calendar day of each year shall be
equal to 1/365th (1/366th in each leap year) of the total amount
computed. The computation shall be made for each such day on the
basis of net assets as of the close of business of the full
business day two (2) business days prior to the day for which the
computation is being made. In the case of the suspension of the
computation of net asset value, the administrative fee for each day
during such suspension shall be computed as of the close of
business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full
business day shall include all transactions in shares of the Fund
recorded on the books of the Fund for that day.
(2) The administrative fee shall be paid on a monthly basis and, in
the event of the termination of this Agreement, the administrative
fee accrued shall be prorated on the basis of the number of days
that this Agreement is in effect during the month with respect to
which such payment is made.
(3) The administrative fee provided for hereunder shall be paid in
cash by the Fund to American Express Financial Corporation within
five (5) business days after the last day of each month.
PART THREE: ALLOCATION OF EXPENSES
(1) The Fund agrees to pay:
(a) Administrative fees payable to American Express Financial
Corporation for its services under the terms of this Agreement.
(b) Taxes.
(c) Fees and charges of its independent certified public
accountants for services the Fund requests.
(d) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the
Fund, its directors and officers, (ii) it employs in conjunction
with a claim asserted by the Board of Directors against American
Express Financial Corporation, except that American Express
Financial Corporation shall reimburse the Fund for such fees and
expenses if it is ultimately determined by a court of competent
jurisdiction, or American Express Financial Corporation agrees,
that it is liable in whole or in part to the Fund, and (iii) it
employs to assert a claim against a third party.
<PAGE>
(e) Fees paid for the qualification and registration for public
sale of the securities of the Fund under the laws of the United
States and of the several states in which such securities shall be
offered for sale.
(f) Office expenses which shall include a charge for occupancy,
insurance on the premises, furniture and equipment, telephone,
telegraph, electronic information services, books, periodicals,
published services, and office supplies used by the Fund, equal to
the cost of such incurred by American Express Financial
Corporation.
(g) Fees of consultants employed by the Fund.
(h) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension,
profit sharing, and all other benefits paid to or provided for
directors, officers and employees, directors and officers liability
insurance, errors and omissions liability insurance, worker's
compensation insurance and other expenses applicable to the
directors, officers and employees, except the Fund will not pay any
fees or expenses of any person who is an officer or employee of
American Express Financial Corporation or its affiliates.
(i) Filing fees and charges incurred by the Fund in connection with
filing any amendment to its articles of incorporation, or incurred
in filing any other document with the State of Minnesota or its
political subdivisions.
(j) Organizational expenses of the Fund.
(k) One-half of the Investment Company Institute membership dues
charged jointly to the IDS MUTUAL FUND GROUP and American Express
Financial Corporation.
(l) Expenses properly payable by the Fund, approved by the Board of
Directors.
(2) American Express Financial Corporation agrees to pay all
expenses associated with the services it provides under the terms
of this Agreement. Further, American Express Financial Corporation
agrees that if, at the end of any month, the expenses of the Fund
under this Agreement and any other agreement between the Fund and
American Express Financial Corporation, but excluding those
expenses set forth in (1)(b) of this Part Three, exceed the most
restrictive applicable state expenses limitation, the Fund shall
not pay those expenses set forth in (1)(a) and (c) through (m) of
this Part Three to the extent necessary to keep the Fund's expenses
from exceeding the limitation, it being understood that American
Express Financial Corporation will assume all unpaid expenses and
bill the Fund for them in subsequent months but in no event can the
accumulation of unpaid expenses or billing be carried past the end
of the Fund's fiscal year.
<PAGE>
PART FOUR: MISCELLANEOUS
(1) American Express Financial Corporation shall be deemed to be an
independent contractor and, except as expressly provided or
authorized in this Agreement, shall have no authority to act for or
represent the Fund.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Fund recognizes that American Express Financial Corporation
now renders and may continue to render investment advice and other
services to other investment companies and persons which may or may
not have investment policies and investments similar to those of
the Fund and that American Express Financial Corporation manages
its own investments and/or those of its subsidiaries. American
Express Financial Corporation shall be free to render such
investment advice and other services and the Fund hereby consents
thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto
shall be invalidated or in anyway affected by the fact that
directors, officers, agents and/or shareholders of the Fund are or
may be interested in American Express Financial Corporation or any
successor or assignee thereof, as directors, officers, stockholders
or otherwise; that directors, officers, stockholders or agents of
American Express Financial Corporation are or may be interested in
the Fund as directors, officers, shareholders, or otherwise; or
that American Express Financial Corporation or any successor or
assignee, is or may be interested in the Fund as shareholder or
otherwise, provided, however, that neither American Express
Financial Corporation, nor any officer, director or employee
thereof or of the Fund, shall sell to or buy from the Fund any
property or security other than shares issued by the Fund, except
in accordance with applicable regulations or orders of the United
States Securities and Exchange Commission.
(5) Any notice under this Agreement shall be given in writing,
addressed, and delivered, or mailed postpaid, to the party to this
Agreement entitled to receive such, at such party's principal place
of business in Minneapolis, Minnesota, or to such other address as
either party may designate in writing mailed to the other.
(6) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will
deal for or on behalf of the Fund with himself as principal or
agent, or with any corporation or partnership in which he may have
a financial interest, except that this shall not prohibit officers,
directors or employees of American Express Financial Corporation
from having a financial interest in the Fund or in American Express
Financial Corporation.
(7) The Fund agrees that American Express Financial Corporation may
subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution
in the quality or level of the services and that American Express
Financial Corporation remains fully responsible for the services.
<PAGE>
(8) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party. This Agreement
shall be governed by the laws of the State of Minnesota.
PART FIVE: RENEWAL AND TERMINATION
(1) This Agreement shall become effective on the date first set
forth above (the "Effective Date") and shall continue in effect
from year to year thereafter as the parties may mutually agree;
provided that either party may terminate this Agreement by giving
the other party notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice.
(2) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
By:
----------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
----------------------------------
Vice President
<PAGE>
INDEPENDENT AUDITORS' CONSENT
______________________________________________________________________________
The Board of Directors and Shareholders
IDS High Yield Tax-Exempt Fund, Inc.:
We consent to the use of our report incorporated herein by reference and to the
references to our Firm under the headings "Financial Highlights" in Part A and
"INDEPENDENT AUDITORS" in Part B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 27, 1995
<PAGE>
PLAN AND AGREEMENT OF DISTRIBUTION
This plan and agreement is between IDS High Yield Tax-Exempt Fund,
Inc. (the "Fund") and American Express Financial Advisors Inc., the
principal underwriter of the Fund, for distribution services to the
Fund. It is effective on the first day the Fund offers multiple
classes of shares.
The plan and agreement has been approved by members of the Board of
Directors (the "Board") of the Fund who are not interested persons
of the Fund and have no direct or indirect financial interest in
the operation of the plan or any related agreement, and all of the
members of the Board, in person, at a meeting called for the
purpose of voting on the plan and agreement.
The plan and agreement provides that:
1. The Fund will reimburse American Express Financial Advisors
for all sales and promotional expenses attributable to the sale of
Class B shares, including sales commissions, business and employee
expenses charged to distribution of Class B shares, and corporate
overhead appropriately allocated to the sale of Class B shares.
2. The amount of the reimbursement shall be equal on an annual
basis to 0.75% of the average daily net assets of the Fund
attributable to Class B shares. The amount so determined shall be
paid to American Express Financial Advisors in cash within five (5)
business days after the last day of each month. American Express
Financial Advisors agrees that if, at the end of any month, the
expenses of the Fund, including fees under this agreement and any
other agreement between the Fund and American Express Financial
Advisors or American Express Financial Corporation, but excluding
taxes, brokerage commissions and charges in connection with the
purchase and sale of assets exceed the most restrictive applicable
state expense limitation for the Fund's current fiscal year, the
Fund shall not pay fees and expenses under this agreement to the
extent necessary to keep the Fund's expenses from exceeding the
limitation, it being understood that American Express Financial
Advisors will assume all unpaid expenses and bill the Fund for them
in subsequent months, but in no event can the accumulation of
unpaid expenses or billing be carried past the end of the Fund's
fiscal year.
3. For each purchase of Class B shares, after eight years the
Class B shares will be converted to Class A shares and those assets
will no longer be included in determining the reimbursement amount.
4. The Fund understands that if a shareholder redeems Class B
shares before they are converted to Class A shares, American
Express Financial Advisors will impose a sales charge directly on
the redemption proceeds to cover those expenses it has previously
incurred on the sale of those shares.
5. American Express Financial Advisors agrees to provide at
least quarterly an analysis of distribution expenses and to meet
with representatives of the Fund as reasonably requested to provide
additional information.
6. The plan and agreement shall continue in effect for a period
of more than one year provided it is reapproved at least annually
<PAGE>
in the same manner in which it was initially approved.
7. The plan and agreement may not be amended to increase
materially the amount that may be paid by the Fund without the
approval of a least a majority of the outstanding shares of Class
B. Any other amendment must be approved in the manner in which the
plan and agreement was initially approved.
8. This agreement may be terminated at any time without payment
of any penalty by a vote of a majority of the members of the Board
who are not interested persons of the Fund and have no financial
interest in the operation of the plan and agreement, or by vote of
a majority of the outstanding Class B shares, or by American
Express Financial Advisors. The plan and agreement will terminate
automatically in the event of its assignment as that term is
defined in the Investment Company Act of 1940.
Approved this 20th day of March, 1995.
IDS HIGH YIELD TAX-EXEMPT FUND, INC.
__________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
__________________________________
Vice President
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] NOV-30-1994
[PERIOD-END] NOV-30-1994
[INVESTMENTS-AT-COST] 5729117366
[INVESTMENTS-AT-VALUE] 5652724879
[RECEIVABLES] 142606049
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 5795330928
[PAYABLE-FOR-SECURITIES] 11950440
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14327223
[TOTAL-LIABILITIES] 26277663
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 5944023594
[SHARES-COMMON-STOCK] 1380760792
[SHARES-COMMON-PRIOR] 1414963728
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (98750811)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (76219518)
[NET-ASSETS] 5769053265
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 454192920
[OTHER-INCOME] 0
[EXPENSES-NET] 37894684
[NET-INVESTMENT-INCOME] 416298236
[REALIZED-GAINS-CURRENT] (76837611)
[APPREC-INCREASE-CURRENT] (714013228)
[NET-CHANGE-FROM-OPS] (374552603)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (416298458)
[DISTRIBUTIONS-OF-GAINS] (30681908)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 222781222
[NUMBER-OF-SHARES-REDEEMED] (327007352)
[SHARES-REINVESTED] 70023194
[NET-CHANGE-IN-ASSETS] (963905633)
[ACCUMULATED-NII-PRIOR] 408915669
[ACCUMULATED-GAINS-PRIOR] 30340901
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 32334785
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 37894684
[AVERAGE-NET-ASSETS] 6404584258
[PER-SHARE-NAV-BEGIN] 4.76
[PER-SHARE-NII] .30
[PER-SHARE-GAIN-APPREC] (.56)
[PER-SHARE-DIVIDEND] (.30)
[PER-SHARE-DISTRIBUTIONS] (.02)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 4.18
[EXPENSE-RATIO] .59
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
