<PAGE>
1997 ANNUAL REPORT
IDS
High Yield
Tax-Exempt
Fund
(prospectus enclosed)
(icon of) shield with basket of apples enclosed
The goal of IDS High Yield Tax-Exempt Fund, Inc. is to provide high yield
generally exempt from federal income taxes.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment policies, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) shield with basket of apples enclosed
More yield,
less taxes
Most of the time, making money means paying taxes. But investors still can enjoy
income that generally is free from federal taxes by taking advantage of
tax-exempt bonds. High Yield Tax-Exempt Fund strives to provide the maximum
amount of tax-free income by focusing on municipal bonds that pay above-average
interest. However, certain income may be subject to state or local or the
alternative minimum tax. To reduce the investment risk, the Fund holds a large,
widely diversified portfolio of bonds providing protection to shareholders
seeking to avoid the impact of default by an individual bond. The result may be
a superior after-tax return for investors in higher tax brackets.
<PAGE>
(icon of) one open book inside of another
The purpose of this annual report is to tell investors how the Fund performed.
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
Contents
1997 annual report
From the chairman 4
From the portfolio manager 4
The Portfolio's ten largest holdings 6
Making the most of the Fund 7
The Fund's long-term performance 8
Independent auditors' report (Fund) 9
Financial statements (Fund) 10
Notes to financial statements (Fund) 13
Independent auditors' report (Portfolio) 20
Financial statements (Portfolio) 21
Notes to financial statements (Portfolio) 24
Investments in securities 31
IDS mutual funds 58
Federal income tax information 62
1998 prospectus
The Fund in brief 3p
Goal 3p
Investment policies and risks 3p
Structure of the Fund 4p
Manager and distributor 4p
Portfolio manager 5p
Alternative purchase arrangements 5p
Sales charge and Fund expenses 6p
Performance 8p
Financial highlights 8p
Total returns 10p
Yield 12p
Investment policies and risks 13p
Facts about investments and their risks 13p
Valuing Fund shares 18p
How to purchase, exchange or redeem shares 19p
Alternative purchase arrangements 19p
How to purchase shares 22p
How to exchange shares 25p
How to redeem shares 25p
Reductions and waivers of the sales charge 30p
Special shareholder services 35p
Services 35p
Quick telephone reference 35p
Distributions and taxes 36p
Dividend and capital gain distributions 36p
Reinvestments 37p
Taxes 37p
How to determine the correct TIN 39p
How the Fund and Portfolio are organized 40p
Shares 40p
Voting rights 40p
Shareholder meetings 40p
Special considerations regarding
master/feeder structure 41p
Board members and officers 43p
Investment manager 45p
Administrator and transfer agent 45p
Distributor 46p
About American Express Financial Corporation 47p
General information 47p
Appendices 48p
Description of bond ratings 48p
Tax-exempt vs. taxable income 50p
Descriptions of derivative instruments 52p
(This annual report is not part of the prospectus.)
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or
long-lasting, moderate or substantial -- are always a possibility. We saw
evidence of that in late Oct., when declines in certain Asian markets
spawned a sharp drop in several financial markets worldwide, including the
U.S.
That fact reinforces the need for investors to review periodically their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
IDS High Yield Tax-Exempt Fund enjoyed a productive fiscal year as it took
advantage of a rebound by the bond market this past summer and fall. For
the December 1996 through November 1997 period, the Fund's Class A shares
produced a total return, which includes net asset value change and
dividends, of 7.9%. Consistent with the Fund's investment objective,
dividend payments to shareholders made up the greatest portion of the
return.
For the first several months of the fiscal year, the bond market
encountered a difficult environment. Although the inflation data had yet
to prove threatening, better-than-expected economic growth caused many
investors to conclude that an inflation run-up was imminent. The result
was that long-term interest rates, without prompting by the Federal
Reserve, crept higher over the winter. Bond prices, which move in the
opposite direction of interest rates, declined in the process, penalizing
the Fund's net asset value.
Recovery begins
By spring, though, inflation fears had waned and, with additional support
provided by the agreement between Congress and the President to balance
the federal budget, interest rates began to head back down. Aside from a
few, temporary interruptions, the trend continued through the end of the
fiscal year, boosting bond prices along the way. Higher-yielding municipal
bonds -- the core of this Fund's portfolio -- performed especially well
during that time, as investors were drawn to the relatively attractive
interest rates offered by such securities. Also working in the Fund's
favor was a well-balanced supply/demand situation -- that is, the supply
of municipal bonds was not excessive compared with investors' demand.
Over the 12 months, I kept the Fund essentially fully invested; about 95%
of the assets were kept in bonds, with the small remainder in cash
reserves. The Fund's duration - a function of the average maturity of the
bonds in the portfolio that determines how sensitive the Fund's net asset
value is to interest-rate changes -- stayed close to neutral. The result
was that the Fund's value fluctuated largely in sync with that of the bond
market as rates rose and fell.
The portfolio mix was little changed during the 12 months. I maintained
the biggest portion of assets in investment-grade (high-quality) municipal
bonds, complemented by a moderate amount in below-investment-grade issues,
which pay comparatively higher interest. I gradually increased the level
in the latter group to 22% by period-end, a strategy that helped shore up
the Fund's dividend in the face of falling rates.
The new fiscal year has just begun as I prepare this report. Although
inflation may edge up in the months ahead, I doubt it will become a
serious problem. If that's the case, I expect interest rates to stay in a
comfortable range, allowing the Fund to continue to provide a healthy,
tax-free return.
Kurt Larson
(picture of) Kurt Larson
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $4.64
Nov. 30, 1996 $4.56
Increase $0.08
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $0.27
From capital gains $ --
Total distributions $0.27
Total return* +7.9%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $4.64
Nov. 30, 1996 $4.56
Increase $0.08
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $0.23
From capital gains $ --
Total distributions $0.23
Total return* +7.1%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1997 $4.64
Nov. 30, 1996 $4.56
Increase $0.08
Distributions
Dec. 1, 1996 - Nov. 30, 1997
From income $0.27
From capital gains $ --
Total distributions $0.27
Total return* +8.0%**
* The prospectus discusses the effect of sales charges, if any, on the various
classes.
** The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.)
<PAGE>
The Portfolio's ten largest holdings
Percent Value
(of Portfolio's net assets) (as of Nov. 30, 1997)
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds Series A
6.25% 2021 .98% $58,573,590
Eastern North Carolina Municipal Power Agency
Power System Refunding Revenue Bonds Series 1991A
5.75% 2019 .92 55,155,100
New Hampshire Industrial Development Authority
Pollution Control Revenue Bonds
State Public Service Series 1991B
7.50% 2021 .90 54,084,993
Northern California Power Agency Geothermal #3
Revenue Bonds
5.00% 2009 .83 49,417,102
Utah Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C
5.70% 2017 .80 47,579,640
Puerto Rico Electric Power Agency Revenue Bonds
Series N-O
6.00% 2010 .77 46,154,016
Monroe County Michigan Pollution Control
Revenue Bonds Detroit Edison A.M.T.
7.75% 2019 .73 43,639,855
Texas Alliance Airport Authority Special Facility
Revenue Bonds American Airlines Series 1990 A.M.T.
7.50% 2029 .68 40,724,860
Dormitory Authority New York City University System Consolidated
2nd General Resource Revenue Bonds Series 1990C
6.00% 2016 .67 40,257,457
Washington Public Power Supply System
Nuclear Project 1 Revenue Bonds Series 1990A
6.00% 2017 .66 39,683,989
Note: Certain of the Portfolio's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
(icon of) pie chart
The ten holdings listed here make up 7.94% of the Portfolio's net assets
(This annual report is not part of the prospectus.)
<PAGE>
Making the most of the Fund
Build your assets systematically
One of the best ways to invest in the Fund is by dollar-cost averaging --
a time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly.
You'll automatically buy more shares when the Fund's share price is low,
fewer shares when it is high.
This does not ensure a profit or avoid a loss if the market declines. But,
if you can continue to invest regularly through changing market
conditions, it can be an effective way to accumulate shares to meet your
long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00 XXXXX
Feb 100 18 5.56 XXXXXx
March 100 17 5.88 XXXXXx
April 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more shares when the
per share market price is low...
(arrow in table pointing to September) and fewer shares when the per share
market price is high.
You have paid an average price of only $17.91 per share over the 10 months,
while the average market price actually was $18.10.
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
Three ways to benefit from a mutual fund:
o your shares increase in value when the Fund's
investments do well
o you receive capital gains when the gains on investments sold by the Fun
exceed losses
o you receive income when the Fund's stock dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. And you potentially can increase your
investment if, like most investors, you reinvest your dividends and
capital gain distributions to buy additional shares of the Fund or another
fund.
How your $10,000 has grown in IDS High Yield Tax-Exempt Fund
X
Lehman Brothers Municipal
Bond Index
$20,000 X
$20,664 High Yield
Tax-Exempt Fund Class A
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total return
(as of Nov. 30, 1997)
1 year Since 5 years 10 years
inception
Class A +2.47% --% +5.47% +7.52%
Class B* +3.08% +5.83% --% --%
Class Y* +7.96% +8.10% --% --%
*Inception date was March 20, 1995.
Assumes: o Holding period from 12/1/87 to 11/30/97. o Returns do not reflect
taxes payable on distributions. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $10,360. Also see "Performance" in
the Fund's current prospectus.
Lehman Brothers Municipal Bond Index is made up of a representative list of
general obligation, revenue, insured and prefunded bonds. The index is
frequently used as a general measure of tax-exempt bond market performance.
However, the securities used to create the index may not be representative of
the bonds held in High Yield Tax-Exempt Fund.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Municipal Bond Index.
In comparing High Yield Tax-Exempt Fund (Class A) to the index, you should
take into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in the
performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. Average annual
total return figures reflect the impact of the applicable sales charge up
to a maximum of 5%.This was a period of widely fluctuating security
prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
The Financial statements contained in Post-Effective Amendment #35 to
Registration Statement No. 2-63552 filed on or about January 27, 1998, are
incorporated herein by reference.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
(This annual report is not part of the prospectus.)
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
(This annual report is not part of the prospectus.)
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
(This annual report is not part of the prospectus.)
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS High Yield Tax-Exempt Fund, Inc.
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. The dividends listed below were reported to you on Form
1099-DIV, Dividends and Distributions.
IDS High Yield Tax-Exempt Fund, Inc.
Fiscal year ended Nov. 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.02177
Jan. 29, 1997 0.02453
Feb. 26, 1997 0.02239
March 26, 1997 0.02012
April 28, 1997 0.02519
May 28, 1997 0.02147
June 26, 1997 0.02095
July 25, 1997 0.02131
Aug. 27, 1997 0.02343
Sept. 25, 1997 0.02105
Oct. 28, 1997 0.02329
Nov. 25, 1997 0.02034
Total $0.26584
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00007
Total distributions $0.26591
(This annual report is not part of the prospectus.)
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.01896
Jan. 29, 1997 0.02136
Feb. 26, 1997 0.01976
March 26, 1997 0.01751
April 28, 1997 0.02214
May 28, 1997 0.01868
June 26, 1997 0.01823
July 25, 1997 0.01856
Aug. 27, 1997 0.02028
Sept. 25, 1997 0.01829
Oct. 28, 1997 0.02014
Nov. 25, 1997 0.01766
Total $0.23157
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00007
Total distributions $0.23164
(This annual report is not part of the prospectus.)
Class Y
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.02242
Jan. 29, 1997 0.02526
Feb. 26, 1997 0.02299
March 26, 1997 0.02072
April 28, 1997 0.02590
May 28, 1997 0.02187
June 26, 1997 0.02124
July 25, 1997 0.02157
Aug. 27, 1997 0.02373
Sept. 25, 1997 0.02132
Oct. 28, 1997 0.02364
Nov. 25, 1997 0.02061
Total $0.27127
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00007
Total distributions $0.27134
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
Source of income by state
Percentages of income from municipal securities earned by the Fund from
various states during the year ended Nov. 30, 1997 are listed below.
Alabama 0.715%
Alaska 0.337
Arizona 0.935
Arkansas 0.067
California 7.728
Colorado 6.849
Florida 4.217
Georgia 2.305
Hawaii 0.359
Illinois 8.665
Indiana 2.351
Iowa 0.812
Kentucky 1.380
Louisiana 3.516
Maine 0.185
Maryland 0.632
Massachusetts 2.589
Michigan 3.762
Minnesota 3.883
Mississippi 0.923
Missouri 0.695
Montana 0.008
Nebraska 0.023
Nevada 0.689
New Hampshire 2.688
New Jersey 0.242
New Mexico 2.057
New York 8.664
North Carolina 3.729
North Dakota 0.435
Ohio 3.096
Oklahoma 1.396
Oregon 0.682
Pennsylvania 4.403
Puerto Rico 0.745
South Carolina 0.913
South Dakota 0.519
Tennessee 0.512
Texas 7.677
Utah 1.932
Virginia 0.619
Washington 3.386
Washington, DC 0.598
West Virginia 1.118
Wisconsin 0.655
Wyoming 0.309
(This annual report is not part of the prospectus.)
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Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS High Yield Tax-Exempt Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
