<PAGE>
PAGE 1
IDS
Tax-Free
Money Fund
1994 annual report
(prospectus enclosed)
(Icon of) shield with piggy bank enclosed
The goal of IDS Tax-Free Money Fund, Inc. is to provide as high a
level of current income exempt from federal income tax as is
consistent with liquidity and stability of principal. The fund
invests primarily in short-term bonds and notes issued by or on
behalf of state or local governmental units.
(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.)
Distributed by
American Express
Financial Advisors Inc.
<PAGE>
PAGE 2
(Icon of) shield with piggy bank enclosed
Stability
without taxes
Everyone needs to have a cash reserve to cover unexpected expenses.
But where to keep it? It's easy to find an investment that provides
stability and ready access to your money, but there's usually a
drawback: You have to pay taxes on the interest the money earns.
But there is an alternative - Tax-Free Money Fund. The interest it
pays is generally free from federal taxes. The result: a cash
reserve that can let you keep the tax-exempt income it earns.
<PAGE>
PAGE 3
Contents
(Icon of) One book inside of another, both opened together.
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.
1994 annual report
From the president 4
From the portfolio manager 4
Making the most of your fund 6
Independent auditors' report 8
Financial statements 9
Notes to financial statements 12
Investments in securities 14
IDS mutual funds 19
Federal income tax information 22
1994 prospectus
The fund in brief
Goal 3p
Types of fund investments 3p
Manager and distributor 3p
Portfolio manager 3p
Sales charge and fund expenses
Sales charge 4p
Annual fund operating expenses 4p
Performance
Financial highlights 5p
Yield 5p
Key terms 6p
Investment policies and risks
Facts about investments and their risks 7p
Alternative investment option 10p
Valuing assets 10p
How to buy, exchange or sell shares
How to buy shares 11p
How to exchange shares 14p
How to sell shares 15p
Special shareholder services
Services 20p
Quick telephone reference 20p
Distributions and taxes
Dividend and capital gain distributions 21p
Reinvestments 21p
Taxes 22p
How the fund is organized
Shares 25p
Voting rights 25p
Shareholder meetings 25p
Directors and officers 25p
Investment manager and transfer agent 27p
Distributor 28p
About American Express Financial Corporation
General information 29p
Appendix
Tax-exempt vs. taxable income 30p<PAGE>
PAGE 4
To our shareholders
(Photo of) William R. Pearce, President of the Fund
(Photo of) Terry Fettig, Portfolio Manager
From the president
All of the funds in the IDS MUTUAL FUND GROUP held shareholder
meetings on Nov. 9, 1994. The meetings, which were well-attended,
approved all of the proposals advanced by management. Among the
proposals was the election of directors and the selection of KPMG
Peat Marwick LLP as independent auditors for each of the funds in
the group. Also proposed was a change in investment policy that
will permit the funds to adopt a master/feeder structure if and
when the board of each fund determines that it is in the best
interest of the shareholders.
No other business was presented at the meeting, which was concluded
by a report to shareholders from the American Express Financial
Corporation Investment Department.
Thanks to all of you for your effort in reviewing the proxy
material and voting your proxies.
William R. Pearce
From the portfolio manager
The yield for IDS Tax-Free Money Fund moved higher throughout the
fiscal year, tracking the increases in short-term interest rates
that began back in February 1994. Net asset value was unchanged for
the year, providing shareholders with continued stability of
principal in addition to a tax-free return.
(Investors should keep in mind that an investment in the fund is
not insured or guaranteed by the U.S. government. Although the fund
seeks to maintain a stable $1 share price, there is no assurance
that it will be able to do so.)
For the seven-day period ended Dec. 30, 1994, the fund provided
shareholders with an annualized simple yield of 3.92% and an
annualized compound yield of 4%. These are equal to 5.44% simple
and 5.56% compound taxable yields for an investor in the 28-percent
federal income-tax bracket.
Continued emphasis placed on fund diversification
The fund has attempted during the past two years to diversify its
holdings among the securities in which the fund can invest -
variable-rate demand notes, commercial paper and longer-term notes.
Yet the overall philosophy of the fund remains unchanged. We still
focus on high-quality securities that are easy to sell on the open
market. This strategy is designed to meet the fund's main objective
of protecting investors' principal.
Investors also should note that under federal law, some notes
issued on the tax-free market are subject to the alternative
minimum tax (AMT). To eliminate any federal income-tax liabilities <PAGE>
PAGE 5
for investors who may be subject to AMT requirements, we will
continue to refrain from purchasing these issues.
Investing in short-term vehicles remains key strategy
Looking ahead, we expect the economy to remain strong throughout
the first half of 1995, with a slowing in the second half. The
continuing overall strength of the economy should improve the
credit quality for many of the issuers of tax-free securities.
We fully anticipate short-term rates to continue to rise as the
year moves ahead. Hence, we have made substantial investments in
vehicles with shorter maturities, providing us with greater
flexibility to take advantage of higher rates as they emerge. If
these rates do move upward, the fund's yield would also rise, and,
assuming inflation remains under control, shareholders could
benefit from a higher real (after-inflation) return.
Investors also should note that yields on tax-free securities are
seasonally affected by supply and demand factors. Demand typically
picks up both at the beginning of a new year and during the middle
of the year, creating lower yields than otherwise might be
expected. Overall, however, we expect rising interest rates to
provide improved yield for investors.
Terry Fettig
12-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1994 $1.00
Dec. 31, 1993 $1.00
Increase $ -
Distributions
Jan. 1, 1994 - Dec. 31, 1994
From income $0.02
From capital gains $ -
Total distributions $0.02
Total return +2.1%
<PAGE>
PAGE 6
Making the most of your fund
Average annual total return
(as of Dec. 31, 1994)
1 year 5 years 10 years
+2.09% +2.98% +3.78%
Although there is no guarantee, the fund will use its best efforts
to maintain a constant net asset value of $1 per share. Your
investment and return value may fluctuate so that your shares, when
redeemed, may be worth more or less than the original cost. This
was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
Build your assets systematically
To keep your assets growing steadily, one of the best ways to use
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
Feb 100 18 5.56
Mar 100 17 5.88
Apr 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(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.
<PAGE>
PAGE 7
Three ways to benefit from a mutual fund:
o your income increases when the fund's investments do well
o you receive short-term capital gains when the gains on
investments sold by the fund exceed losses
o you receive income when the fund's 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.
<PAGE>
PAGE 8
Independent auditors' report
___________________________________________________________________
The board of directors and shareholders
IDS Tax-Free Money Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Tax-Free Money Fund, Inc. as of December 31, 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 December 31, 1994, and the financial
highlights for each of the years in the ten-year period ended
December 31, 1994. 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. 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
Tax-Free Money Fund, Inc. at December 31, 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
December 31, 1994, and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 3, 1995
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PAGE 9
Financial statements
Statement of assets and liabilities
IDS Tax-Free Money Fund, Inc.
Dec. 31, 1994
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $130,513,540) $130,513,540
Cash in bank on demand deposit 1,407,495
Accrued interest receivable 864,519
_____________________________________________________________________________________________________________
Total assets 132,785,554
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Dividends payable to shareholders 29,937
Accrued investment management and services fee 34,506
Accrued distribution fee 4,251
Accrued transfer agency fee 13,814
Other accrued expenses 66,598
_____________________________________________________________________________________________________________
Total liabilities 149,106
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $132,636,448
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 132,646,785 shares $ 1,326,468
Additional paid-in capital 131,321,151
Undistributed net investment income 1,952
Accumulated net realized loss (13,123)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $132,636,448
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 1.00
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
PAGE 10
Statement of operations
IDS Tax-Free Money Fund, Inc.
Year ended Dec. 31, 1994
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Interest $3,291,207
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 400,146
Distribution fee 53,322
Transfer agency fee 193,102
Compensation of directors 2,754
Compensation of officers 1,497
Custodian fees 9,924
Postage 29,309
Registration fees 71,537
Reports to shareholders 13,054
Audit fees 18,000
Administrative 4,305
Other 6,888
_____________________________________________________________________________________________________________
Total expenses 803,838
_____________________________________________________________________________________________________________
Investment income -- net 2,487,369
_____________________________________________________________________________________________________________
Realized gain on investments -- net
_____________________________________________________________________________________________________________
Net realized gain on investments (Note 3) 8,363
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $2,495,732
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
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PAGE 11
Financial statements
Statements of changes in net assets
IDS Tax-Free Money Fund, Inc.
Year ended Dec. 31,
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Operations and distributions 1994 1993
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 2,487,369 $ 2,038,716
Net realized gain (loss) on investments 8,363 (16,772)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 2,495,732 2,021,944
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (2,485,462) (2,038,709)
_____________________________________________________________________________________________________________
Capital share transactions at constant $1 net asset value
_____________________________________________________________________________________________________________
Proceeds from sales of shares 246,600,213 210,478,473
Net asset value of shares
issued in reinvestment of distributions 2,400,582 1,959,174
Payments for redemptions of shares (231,967,181) (233,790,673)
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions 17,033,614 (21,353,026)
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets 17,043,884 (21,369,791)
Net assets at beginning of year 115,592,564 136,962,355
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$1,952 and $45) $132,636,448 $115,592,564
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 12
Notes to financial statements
IDS Tax-Free Money 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
Pursuant to Rule 2a-7 of the 1940 Act, all securities are valued
daily at amortized cost, which approximates market value, in order
to maintain a constant net asset value of $1 per share.
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.
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.
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
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
an annual asset charge in reducing percentages from 0.34% to 0.26%
annually.
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 $24 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.
The fund has a retirement plan for its independent directors. Upon
retirement, directors receive monthly payments equal to one-half of
<PAGE>
PAGE 13
the retainer fee for as many months as they served as directors up
to 120 months. There are no death benefits. The plan is not funded
but the fund recognizes the cost of payments during the time the
directors serve on the board. The retirement plan expense amounted
to $309 for the year ended Dec. 31, 1994.
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities aggregated
$310,331,235 and $294,285,444, respectively, for the year ended
Dec. 31, 1994. Realized gains and losses are determined on an
identified cost basis.
___________________________________________________________________
4. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on page 5 of the prospectus.
<PAGE>
PAGE 14
<TABLE>
<CAPTION>
Investments in securities
IDS Tax-Free Money Fund, Inc. (Percentages represent value of
Dec. 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b)
____________________________________________________________________________________________________________________________
Issuer Principal Value(a)
amount
____________________________________________________________________________________________________________________________
<S> <C> <C>
Alaska (0.8%)
Valdez Marine Terminal Refunding Revenue Bonds Alaska Pipeline (Mobil)
5.50% 11-1-03 $1,000,000 (c,d) $ 1,000,000
____________________________________________________________________________________________________________________________
Arizona (3.1%)
Maricopa County Pollution Control Revenue Bonds T.E.C.P.
Series E (Southern California Edison)
3.60% 1-11-95 1,120,000 1,120,000
3.90% 1-9-95 1,000,000 1,000,000
Salt River Agricultural Improvement & Power District T.E.C.P.
3.50% 1-31-95 1,000,000 1,000,000
3.85% 1-4-95 1,000,000 1,000,000
____________
Total 4,120,000
_____________________________________________________________________________________________________________________________
California (2.9%)
Los Angeles County T.R.A.N. Series 1994-95
4.50% 6-30-95 2,840,000 2,848,812
State Contra Costa Transportation Authority Series 1993A (FGIC Insured)
5.65% 3-1-09 1,000,000 (c,d,e) 1,000,000
____________
Total 3,848,812
_____________________________________________________________________________________________________________________________
Colorado (2.5%)
Moffat County Pollution Control Revenue Bonds Series 1994 (Pacificorp)
6.15% 5-1-13 1,300,000 (c,d) 1,300,000
State General Fund T.R.A.N. Series 1994
4.50% 6-27-95 2,000,000 2,006,580
_____________
Total 3,306,580
_____________________________________________________________________________________________________________________________
Connecticut (5.4%)
Development Authority Pollution Control Bonds Series 1993A (Connecticut
Power & Light)
5.40% 9-1-28 5,000,000 (c,d) 5,000,000
Development Authority Pollution Control Bonds Series 1993A (Western Massachusetts
Gas & Electric)
5.50% 9-1-28 2,200,000 (c,d) 2,200,000
____________
Total 7,200,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 15
_____________________________________________________________________________________________________________________________
Florida (5.7%)
Jacksonville Electric Authority Electric System T.E.C.P Series D-1
3.50% 2-8-95 2,000,000 2,000,000
State Municipal Power Agency Revenue Bonds T.E.C.P. Series A
3.50% 1-24-95 4,000,000 4,000,000
3.75% 1-6-95 1,500,000 1,500,000
____________
Total 7,500,000
_____________________________________________________________________________________________________________________________
Georgia (3.6%)
Burke County Pollution Control Revenue Bonds Series 1994 (Georgia Power & Light)
5.00% 7-1-14 4,800,000 (c,d) 4,800,000
_____________________________________________________________________________________________________________________________
Idaho (4.5%)
State T.A.N. Series 1994
4.50% 6-29-95 6,000,000 6,002,279
_____________________________________________________________________________________________________________________________
Indiana (5.7%)
Jasper County Pollution Control Refunding Revenue Bonds
Series 1994A (North Indiana Public Service)
6.15% 4-1-10 800,000 (c,d) 800,000
6.15% 6-1-10 400,000 (c,d) 400,000
Jasper County Pollution Control Refunding Revenue Bonds
Series 1994B (North Indiana Public Service)
6.15% 4-1-13 1,100,000 (c,d) 1,100,000
6.15% 6-1-13 2,400,000 (c,d) 2,400,000
Jasper County Pollution Control Refunding Revenue Bonds
Series 1994C (North Indiana Public Service)
6.15% 4-1-19 900,000 (c,d) 900,000
State Bond Bank Advancement Fund Program Series 1994A-2
3.03% 1-17-95 2,000,000 2,000,253
_____________
Total 7,600,253
_____________________________________________________________________________________________________________________________
Kentucky (0.8%)
Jefferson County Pollution Control Revenue Bonds T.E.C.P Series 1993
3.50% 1-30-95 1,000,000 1,000,000
_____________________________________________________________________________________________________________________________
Maine (2.3%)
State General Obligation T.A.N.
4.50% 6-30-95 3,000,000 3,011,471
_____________________________________________________________________________________________________________________________
Massachusetts (1.5%)
State Option Revenue Bonds Harvard University Series I
5.00% 2-1-16 2,000,000 (c,d) 2,000,000
______________________________________________________________________________________________________________________________
Michigan (4.8%)
Regents of the University Hospital Refunding Revenue Bonds Series 1992A
6.15% 12-1-19 6,400,000 (c,d) 6,400,000
______________________________________________________________________________________________________________________________
<PAGE>
PAGE 16
______________________________________________________________________________________________________________________________
Minnesota (7.5%)
Becker T.E.C.P. Series 1993B (Northern States Power)
3.60% 1-12-95 3,000,000 3,000,000
Bloomington Port Authority Special Tax Refunding Revenue Bonds Mall of America
(FSA Insured)
5.55% 2-1-09 3,000,000 (c,d,e) 3,000,000
Regents of the University T.E.C.P. Series 1985H
3.60% 1-10-95 2,000,000 2,000,000
Regents of the University T.E.C.P. Series I
3.60% 1-13-95 1,000,000 1,000,000
3.75% 1-5-95 1,000,000 1,000,000
____________
Total 10,000,000
_____________________________________________________________________________________________________________________________
Mississippi (5.8%)
Jackson County Port Bonds (Chevron)
5.20% 6-1-23 6,800,000 (c,d) 6,800,000
6.15% 12-1-16 900,000 (c,d) 900,000
_____________
Total 7,700,000
_____________________________________________________________________________________________________________________________
New York (5.5%)
New York City Municipal Water Financial Authority Series 1992C (FGIC Insured)
6.00% 6-15-22 3,000,000 (c,d,e) 3,000,000
New York City Municipal Water Financial Authority Series 1994C (FGIC Insured)
6.00% 6-15-23 3,300,000 (c,d,e) 3,300,000
Triborough Bridge & Tunnel Authority Special Obligation Bonds Series 1994
(FGIC Insured)
4.85% 1-1-24 1,000,000 (c,d,e) 1,000,000
____________
Total 7,300,000
_____________________________________________________________________________________________________________________________
North Carolina (4.5%)
Medical Care Community Hospital Revenue Bonds Duke University Hospital
Series 1985B
5.45% 6-1-15 3,000,000 (c,d) 3,000,000
Medical Care Community Hospital Revenue Bonds Duke University Hospital
Series 1985C
5.45% 6-1-15 2,000,000 (c,d) 2,000,000
Municipal Power Agency #1 Catawba T.E.C.P.
3.60% 1-17-95 1,000,000 1,000,000
____________
Total 6,000,000
_____________________________________________________________________________________________________________________________
Pennsylvania (4.1%)
Delaware County Industrial Development Authority Airport Facility
Revenue Bonds Series 1985 (United Parcel Service)
5.85% 12-1-05 5,500,000 (c,d) 5,500,000
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 17
_____________________________________________________________________________________________________________________________
Texas (14.0%)
Gulf Coast (Amoco)
6.15% 10-12-17 7,800,000 (c,d) 7,800,000
Harris County Industrial Development Pollution Control Revenue Bonds
Series 1984A (Exxon)
6.00% 3-1-24 1,200,000 (c,d) 1,200,000
Harris County Industrial Development Pollution Control Revenue Bonds
Series 1984B (Exxon)
6.00% 3-1-24 2,000,000 (c,d) 2,000,000
San Antonio Electric & Gas System T.E.C.P. Series A
3.40% 2-1-95 2,500,000 2,500,000
State Municipal Power Agency T.E.C.P.
3.60% 1-12-95 2,600,000 2,600,000
3.75% 1-5-95 500,000 500,000
State T.R.A.N.
5.00% 8-31-95 2,000,000 2,012,283
____________
Total 18,612,283
_____________________________________________________________________________________________________________________________
Virginia (5.7%)
Peninsula Port Authority Series 1987 (Shell Oil)
6.15% 12-1-05 7,500,000 (c,d) 7,500,000
_____________________________________________________________________________________________________________________________
Washington (2.2%)
Washington Public Power Supply System Electric Refunding Revenue Bonds
Project #3
5.60% 7-1-18 2,900,000 (c,d) 2,900,000
_____________________________________________________________________________________________________________________________
Wisconsin (2.3%)
State Operating Notes Series 1994
4.50% 6-15-95 3,000,000 3,011,862
_____________________________________________________________________________________________________________________________
Wyoming (3.2%)
Kemmerer Pollution Control Revenue Bonds Series 1984 (Exxon)
6.00% 11-1-14 3,400,000 (c,d) 3,400,000
Lincoln County Pollution Control Revenue Bonds Series 1984B (Exxon)
6.00 11-1-14 800,000 (c,d) 800,000
_____________
Total 4,200,000
_____________________________________________________________________________________________________________________________
Total investments in securities (98.4%)
(Cost: $130,513,540)(f) $130,513,540
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) The following abbreviations are used in portfolio descriptions:
T.A.N. -- Tax Anticipation Note
T.E.C.P. -- Tax-Exempt Commercial Paper
T.R.A.N. -- Tax & Revenue Anticipation Note
(c) Interest rate varies to reflect current market conditions; rate shown is the effective rate on Dec. 31, 1994.
(d) Holder entitled to receive principal amount from issuer or corporate guarantor, if indicated in parenthesis, after a day
or a week's notice. The maturity date disclosed represents the final maturity. However, for purposes of Rule 2a-7, maturity is
the later of the next put or interest rate reset date.
(e) The following abbreviations are used in the portfolio descriptions to identify the insurer of the issue:
FGIC -- Financial Guarantee Insurance Corporation
FSA -- Financial Security Assurance
(f) At Dec. 31, 1994, also represents the cost of securities for federal income tax purposes.
/TABLE
<PAGE>
PAGE 18
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposits (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income. Secondary
objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia
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
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PAGE 19
IDS Strategy, Income Fund
Invests primarily in corporate and government bonds to seek high
current income while conserving capital. Also may seek capital
appreciation when consistent with its primary goals.
(icon of) chess piece
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the
timely payment of principal and interest by the U.S. government,
its agencies and instrumentalities. Seeks a high level of current
income and safety of principal consistent with its type of
investments.
(icon of) federal building
IDS Strategy, Short-Term Income Fund
Invests primarily in short-term and intermediate-term bonds and
notes to seek a high level of current income.
(icon of) chess piece
Tax-exempt income investments
These funds provide tax-free income by investing in municipal
bonds. The income is generally free from federal income tax. Risk
varies by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed
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
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PAGE 20
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 eagle head
Growth and income investments
These funds focus on securities of medium to large, well-
established companies that offer long-term growth of capital and
reasonable income from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20% of
its assets in the U.S. market.
(icon of) three flags
IDS Strategy, Worldwide Growth Fund
Invests primarily in common stocks of companies throughout the
world that offer potential for superior growth. Holdings may range
from small- to large-capitalization stocks, including those of
companies involved in areas of rapid economic growth.
(icon of) chess piece
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income investments
and money market securities to seek a maximum total return through
a combination of growth of capital and current income.
(icon of) bird in a nest
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 apple trees
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PAGE 21
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 Stock Fund
Invests in common stock of companies representing many sectors of
the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Strategy, Equity Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) chess piece
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) electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high
current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Growth investments
Funds in this group seek capital growth, primarily from common
stocks. They are high risk mutual funds with a potential for high
reward.
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PAGE 22
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 Strategy, Aggressive Equity 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 Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy. These
companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth potential
due to superiority in technology, marketing or management. The
fund frequently changes its industry mix.
(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
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against
inflation.
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PAGE 23
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic
companies that explore for, mine and process or distribute gold and
other precious metals. This is the most aggressive and most
speculative IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including
charges and expenses, you can obtain a prospectus by contacting
your financial advisor or writing to American Express Shareholder
Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it
carefully before you invest or send money.
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PAGE 24
Federal income tax information
IDS Tax-Free Money 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 your year-end statement, in January.
IDS Tax-Free Money Fund, Inc.
Year ended Dec. 31, 1994
Exempt-interest dividends -- taxable status
explained below.
Payable date Per share
___________________________________________________
Jan. 26, 1994 $0.00130
Feb. 24, 1994 0.00120
March 25, 1994 0.00110
April 25, 1994 0.00130
May 25, 1994 0.00160
June 27, 1994 0.00170
July 26, 1994 0.00140
Aug. 26, 1994 0.00190
Sept. 26, 1994 0.00213
Oct. 26, 1994 0.00198
Nov. 28, 1994 0.00252
Dec. 28, 1994 0.00253
___________________________________________________
Total $0.02066
___________________________________________________
Source of distributions
Distributions during the year ended Dec. 31, 1994, were derived
exclusively from interest on tax-exempt securities.
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.<PAGE>
PAGE 25
IDS Tax-Free Money Fund, Inc.
Federal income tax information (continued)
___________________________________________________________________
Source of income by state
Percentages of income from municipal securities earned by the fund
from various states during the year ended Dec. 31, 1994 are listed
below.
Alaska 0.875%
Arizona 5.998
California 3.739
Colorado 1.206
Connecticut 5.795
Florida 4.809
Georgia 2.328
Idaho 3.590
Illinois 0.176
Indiana 3.658
Kentucky 0.884
Louisiana 0.337
Maine 1.671
Massachusetts 1.694
Michigan 4.673
Minnesota 11.459
Mississippi 3.564
Missouri 1.165
Nebraska 0.494
New Jersey 1.424
New York 4.155
North Carolina 6.098
Pennsylvania 5.376
Texas 12.749
Virginia 3.284
Washington 2.891
Wisconsin 3.179
Wyoming 2.729
<PAGE>
PAGE 26
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
Your IDS financial advisor:
IDS Tax-Free Money Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 27
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 and
prospectus are placed
in 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 and prospectus. 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.
