<PAGE>
PAGE 1
IDS Tax-Free Money Fund
1995 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 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.
1995 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 16
IDS mutual funds 23
Federal income tax information 26
1995 prospectus
The Fund in brief 3p
Goal 3p
Types of Fund investments and their risks 3p
Manager and distributor 3p
Portfolio manager 3p
Sales charge and Fund expenses 4p
Performance 5p
Financial highlights 5p
Yield 5p
Investment policies and risks 6p
Facts about investments and their risks 6p
Alternative investment option 8p
Valuing Fund shares 8p
How to purchase, exchange or redeem shares 9p
How to purchase shares 9p
How to exchange shares 12p
How to redeem shares 13p
Special shareholder services 18p
Services 18p
Quick telephone reference 18p
Distributions and taxes 19p
Dividend and capital gain distributions 19p
Reinvestments 19p
Taxes 20p
How to determine the correct TIN 22p
<PAGE>
PAGE 4
How the Fund is organized 23p
Shares 23p
Voting rights 23p
Shareholder meetings 24p
Board members and officers 24p
Investment manager and transfer agent 26p
Distributor 27p
About American Express Financial Corporation 28p
General information 28p
Appendix 29p
Tax-exempt vs. taxable income 29p
<PAGE>
PAGE 5
To our shareholders
(photo of) William R. Pearce
President of the Fund
(photo of) Terry Fettig
Portfolio manager
From the president
If you're an experienced investor, you know that 1995 was an
unusually strong year for the U.S. financial markets. Perhaps just
as important, you also know that history shows that bull markets
don't last forever. Though they're often unpredictable, declines -
- - whether they're brief or long-lasting, moderate or substantial --
are always a possibility.
That fact reinforces the need for investors to review periodically
their long-term goals and assess whether their investment program
remains on track to achieving them. Your quarterly investment
statements are one part of that monitoring process. The other is a
meeting with your American Express Financial advisor. That becomes
even more important if there's a major change in your financial
situation or in the financial markets.
(signature of) William R. Pearce
From the portfolio manager
IDS Tax-Free Money Fund's yield decreased during the fiscal year
(January through December, 1995), tracking a decline in short-term
interest rates that began in the spring of the year. The $1 net
asset value was unchanged, providing shareholders with continued
stability of principal in addition to a tax-free return.
For the seven-day period ended Dec. 29, 1995, the Fund generated an
annualized simple yield of 3.44% and an annualized compound yield
of 3.5%. These are equal to 4.78% simple and 4.86% compound
taxable yields for an investor in the 28-percent federal income-tax
bracket.
(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. Investors also should
note that under federal law, some notes issued on the tax-free
market are subject to the alternative minimum tax, or AMT. To
eliminate any federal income-tax liabilities for investors who may
be subject to AMT requirements, we refrain from purchasing these
issues.)
Research pays off
Probably the biggest news in the tax-free market during the past
year was generated by the Orange County, Calif. bankruptcy. While
the situation created turmoil in the broad market, because the Fund
owned none of those securities it experienced no direct effect.
That fact is reflective of our emphasis on the highest-quality <PAGE>
PAGE 6
issues, based on our extensive investment research of all issuers.
On an overall basis, credit quality improved during 1995, as
relatively slow but steady economic growth added to municipalities'
tax revenues.
An ongoing facet of this Fund is that yields on tax-free securities
are seasonally affected by supply and demand factors. Demand
typically picks up both at the outset and the middle of the year,
creating lower yields than otherwise might be expected. (When
investors' interest in municipal securities is high, municipalities
can afford to reduce the interest they must offer on bonds to
attract buyers.) This was true again in 1995.
As for the current fiscal year, we're looking for a continuation of
modest economic growth accompanied by a slight increase in the
inflation rate. Unless inflation rises markedly, we also expect
the Federal Reserve Board to maintain its recent policy of reducing
short-term interest rates. In such a scenario, rates on short-term
tax-free securities would almost surely follow suit. To counter
that potential trend, we have begun to emphasize investments with
longer maturities. Ultimately, we expect this strategy to provide
support for the Fund's yield in 1996.
(signature of) Terry Fettig
12-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1995 $1.00
Dec. 31, 1994 $1.00
Increase $ --
Distributions
Jan. 1, 1995 - Dec. 31, 1995
From income $0.03
From capital gains $ --
Total distributions $0.03
Total return +3.2%<PAGE>
PAGE 7
Making the most of your Fund
Average annual total return
(as of Dec. 31, 1995)
1 year 5 years 10 years
+3.24% +2.59% +3.61%
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 fluctuating value assets growing steadily, 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
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 Sept) 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 8
Three ways to benefit from a mutual Fund:
o your shares increase in value when the Fund's investments do
well
o you receive capital gains when the gains on investments sold
by the Fund exceed losses
o you receive income when the Fund's stock dividends, interest
and short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the Fund or another Fund.
<PAGE>
PAGE 9
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, 1995, 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, 1995, and the financial
highlights for each of the years in the ten-year period ended
December 31, 1995. 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, 1995, 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, 1995, 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 2, 1996<PAGE>
PAGE 10
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Tax-Free Money Fund, Inc.
Dec. 31, 1995
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $140,143,605) $140,143,605
Cash in bank on demand deposit 4,998,178
Accrued interest receivable 823,768
_____________________________________________________________________________________________________________
Total assets 145,965,551
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Dividends payable to shareholders 28,261
Accrued investment management services fee 2,405
Accrued transfer agency fee 1,739
Accrued administrative services fee 233
Other accrued expenses 51,197
_____________________________________________________________________________________________________________
Total liabilities 83,835
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $145,881,716
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 145,889,568 shares $ 1,458,896
Additional paid-in capital 144,429,481
Undistributed net investment income 58
Accumulated net realized loss (6,719)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $145,881,716
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 1.00
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
PAGE 11
Financial statements
Statement of operations
IDS Tax-Free Money Fund, Inc.
Year ended Dec. 31, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Interest $5,072,315
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 427,876
Distribution fee 11,409
Transfer agency fee 165,159
Administrative services fee 31,800
Compensation of board members 748
Compensation of officers 1,290
Custodian fees 15,321
Postage 19,991
Registration fees 58,659
Reports to shareholders 23,339
Audit fees 19,000
Administrative 2,910
_____________________________________________________________________________________________________________
Total expenses 777,502
Earnings credits on cash balances (Note 2) (12,359)
_____________________________________________________________________________________________________________
Total net expenses 765,143
_____________________________________________________________________________________________________________
Investment income -- net 4,307,172
_____________________________________________________________________________________________________________
Realized gain on investments -- net
_____________________________________________________________________________________________________________
Net realized gain on investments (Note 3) 6,404
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $4,313,576
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 12
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Tax-Free Money Fund, Inc.
Year ended Dec. 31,
_____________________________________________________________________________________________________________
Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 4,307,172 $ 2,487,369
Net realized gain on investments 6,404 8,363
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 4,313,576 2,495,732
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (4,309,066) (2,485,462)
_____________________________________________________________________________________________________________
Capital share transactions at constant $1 net asset value
_____________________________________________________________________________________________________________
Proceeds from sales of shares 249,009,513 246,600,213
Net asset value of shares
issued in reinvestment of distributions 4,186,232 2,400,582
Payments for redemptions of shares (239,954,987) (231,967,181)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 13,240,758 17,033,614
_____________________________________________________________________________________________________________
Total increase in net assets 13,245,268 17,043,884
Net assets at beginning of year 132,636,448 115,592,564
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$58 and $1,952) $145,881,716 $132,636,448
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 13
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.
The Fund invests primarily in short-term bonds and notes issued by
or on behalf of state or local governmental units.
Significant accounting policies followed by the Fund are summarized
below:
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
Valuation of securities
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.
<PAGE>
PAGE 14
___________________________________________________________________
2. Expenses
Under terms of a prior agreement that ended March 19, 1995, the
Fund paid AEFC a fee for managing its investments, recordkeeping
and other specified services. The fee was 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.
Also under the terms of a prior agreement, the Fund paid AEFC 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 was reduced by earnings on monies
pending shareholder redemptions.
Effective March 20, 1995, the Fund entered into agreements with
AEFC for managing its portfolio, providing administrative services
and serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage
of the Fund's average daily net assets in reducing percentages from
0.31% to 0.24% annually.
Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at a percentage of the
Fund's average daily net assets in reducing percentages from 0.03%
to 0.02% annually.
Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee
of $20 per shareholder account for this service.
AEFC will assume and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive applicable state
expense limitation.
During the year ended Dec. 31, 1995, the Fund's custodian and
transfer agency fees were reduced by $12,359 as a result of
earnings credits from overnight
cash balances.
The Fund has a retirement plan for its independent board members.
Upon retirement, board members receive monthly payments equal to
one-half of the retainer fee for as many months as they served as
board members 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 board members serve on the board. The
retirement plan expense amounted to $934 for the year ended Dec.
31, 1995.
<PAGE>
PAGE 15
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities aggregated
$337,601,711 and $327,978,050, respectively, for the year ended
Dec. 31, 1995.
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 16
<TABLE>
<CAPTION>
Investments in securities
IDS Tax-Free Money Fund, Inc. (Percentages represent value of
Dec. 31, 1995 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b)
____________________________________________________________________________________________________________________________
Issuer Principal Value(a)
amount
____________________________________________________________________________________________________________________________
<S> <C> <C>
Alaska (0.7%)
Valdez Marine Terminal Refunding Revenue Bonds Alaska Pipeline (Mobil)
5.00% 11-1-03 $1,000,000 (c,d) $ 1,000,000
____________________________________________________________________________________________________________________________
Arizona (5.1%)
Maricopa County Pollution Control Revenue Bonds Series 1994B
(Arizona Public Service Company)
5.95% 5-1-29 1,300,000 (c,d) 1,300,000
Maricopa County Pollution Control Revenue Bonds T.E.C.P.
Series E (Southern California Edison)
3.60% 1-10-96 1,600,000 1,600,000
3.85% 1-8-96 1,120,000 1,120,000
3.90% 1-11-96 1,000,000 1,000,000
Maricopa County Pollution Control Revenue Bonds T.E.C.P.
Series F (Southern California Edison)
3.60% 1-10-96 500,000 500,000
Salt River Agricultural Improvement & Power District T.E.C.P.
3.55% 1-11-96 1,000,000 1,000,000
3.85% 1-10-96 1,000,000 1,000,000
____________
Total 7,520,000
_____________________________________________________________________________________________________________________________
California (1.4%)
Los Angeles County T.R.A.N.
4.50% 7-1-96 2,000,000 2,006,774
_____________________________________________________________________________________________________________________________
Colorado (4.2%)
Moffat County Pollution Control Revenue Bonds Series 1994 (Pacificorp)
5.90% 5-1-13 4,200,000 (c,d) 4,200,000
State T.R.A.N.
4.50% 6-27-96 2,000,000 2,007,583
______________
Total 6,207,583
_____________________________________________________________________________________________________________________________
Connecticut (4.3%)
Development Authority Pollution Control Bonds Series 1993A
(Western Massachusetts Gas & Electric)
4.90% 9-1-28 2,200,000 (c,d) 2,200,000
Development Authority Pollution Control Bonds Series 1993A
(Connecticut Power & Light)
5.10% 9-1-28 4,000,000 (c,d) 4,000,000
____________
Total 6,200,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 17
_____________________________________________________________________________________________________________________________
Florida (3.0%)
Jacksonville Electric Authority Electric System T.E.C.P. Series D-1
3.45% 1-16-96 2,000,000 2,000,000
3.55% 1-9-96 1,300,000 1,300,000
4.25% 1-8-96 1,100,000 1,100,000
_____________
Total 4,400,000
_____________________________________________________________________________________________________________________________
Georgia (4.2%)
Burke County Development Authority Pollution Control Revenue Bonds
(Georgia Power & Light)
5.50% 7-1-24 1,600,000 (c,d) 1,600,000
6.00% 7-1-24 2,000,000 (c,d) 2,000,000
Burke County Pollution Control Revenue Bonds Series 1994
(Georgia Power & Light)
5.50% 7-1-14 500,000 (c,d) 500,000
Monroe County Development Authority Pollution Control Revenue Bonds
Series 1995 (Georgia Power & Light) (Scherer)
6.00% 7-1-25 2,000,000 (c,d) 2,000,000
______________
Total 6,100,000
_____________________________________________________________________________________________________________________________
Idaho (1.4%)
State T.A.N. Series 1994
4.50% 6-27-96 2,000,000 2,006,636
_______________________________________________________________________________________________________________________________
Illinois (5.1%)
Gulf Coast (Amoco)
5.90% 10-12-17 4,400,000 (c,d) 4,400,000
State R.A.N. 1995
4.50% 4-12-96 1,000,000 1,002,131
4.50% 5-10-96 1,000,000 1,002,457
4.50% 6-10-96 1,000,000 1,002,672
______________
Total 7,407,260
_____________________________________________________________________________________________________________________________
Indiana (5.1%)
Jasper County Pollution Control Refunding Revenue Bonds Series 1994B
(North Indiana Public Service)
5.90% 6-1-13 4,600,000 (c,d) 4,600,000
Mount Vernon Pollution Control Refunding Revenue Bonds T.E.C.P.
(General Electric)
3.55% 2-2-96 1,800,000 1,800,000
State Education Facility (University of Notre Dame)
4.80% 3-1-25 1,000,000 (c,d) 1,000,000
_____________
Total 7,400,000
_____________________________________________________________________________________________________________________________
Kentucky (0.9%)
Jefferson County Pollution Control Revenue Bonds T.E.C.P. Series 1993
3.70% 1-19-96 1,300,000 1,300,000
_____________________________________________________________________________________________________________________________
Louisiana (1.1%)
East Baton Rouge Parish Pollution Control Revenue Bonds (Exxon)
6.00% 3-1-22 1,600,000 (c,d) 1,600,000
____________________________________________________________________________________________________________________________
Maine (1.7%)
State General Obligation T.R.A.N.
4.50% 6-28-96 2,500,000 2,508,945
_____________________________________________________________________________________________________________________________
Maryland (2.3%)
Health & Educational Facilities Authority Revenue Bonds
Series A (Kaiser Permanente)
5.10% 7-1-15 2,000,000 (c,d) 2,000,000
Montgomery County C.P. B.A.N.
3.55% 1-8-96 1,300,000 1,300,000
______________
Total 3,300,000
_______________________________________________________________________________________________________________________________
<PAGE>
PAGE 18
Massachusetts (0.7%)
State Option Revenue Bonds Harvard University Series I
4.75% 2-1-16 1,000,000 (c,d) 1,000,000
______________________________________________________________________________________________________________________________
Michigan (2.8%)
Regents of the University Hospital Refunding Revenue Bonds Series 1992A
5.90% 12-1-19 4,100,000 (c,d) 4,100,000
______________________________________________________________________________________________________________________________
Minnesota (9.0%)
Becker T.E.C.P. Series 1993B (Northern States Power)
3.90% 1-3-96 3,000,000 3,000,000
3.90% 1-18-96 1,000,000 1,000,000
Bloomington Port Authority Special Tax Refunding Revenue Bonds Mall of America
(FSA Insured)
5.20% 2-1-09 1,900,000 (c,d,e) 1,900,000
Regents of the University T.E.C.P. Series I
3.80% 1-11-96 1,000,000 1,000,000
3.80% 1-18-96 1,000,000 1,000,000
Regents of the University T.E.C.P. Series 1985H
3.90% 1-5-96 2,300,000 2,300,000
Regents of the University T.E.C.P. Series 1991A
3.85% 1-9-96 1,000,000 1,000,000
Southern Minnesota Municipal Power T.E.C.P. Series B
3.80% 1-12-96 2,000,000 2,000,000
______________
Total 13,200,000
_____________________________________________________________________________________________________________________________
Mississippi (2.9%)
Jackson County Port Bonds Series 1993 (Chevron)
5.95% 6-1-23 4,200,000 (c,d) 4,200,000
_____________________________________________________________________________________________________________________________
New York (4.2%)
New York City Municipal Water Financial Authority Series 1994
(FGIC Insured)
5.90% 6-15-23 4,100,000 (c,d,e) 4,100,000
New York City R.A.N. Series A
4.50% 4-11-96 1,000,000 1,001,827
Triborough Bridge & Tunnel Authority Special Obligation Bonds Series 1994
(FGIC Insured)
4.90% 1-1-24 1,000,000 (c,d,e) 1,000,000
______________
Total 6,101,827
_____________________________________________________________________________________________________________________________
North Carolina (3.4%)
Medical Care Community Hospital Revenue Bonds Duke University Hospital
Series 1985B-C
4.95% 6-1-15 5,000,000 (c,d) 5,000,000
______________________________________________________________________________________________________________________________
Ohio (1.9%)
State Air Quality Development Authority Revenue Bonds
Series B (Cincinnati Gas & Electric)
5.95% 9-1-30 2,800,000 (c,d) 2,800,000
_______________________________________________________________________________________________________________________________
Pennsylvania (7.5%)
Delaware County Industrial Development Authority Airport Facility
Revenue Bonds Series 1985 (United Parcel Service)
5.90% 12-1-15 5,000,000 (c,d) 5,000,000
Montgomery County Industrial Development Authority Pollution Control
Refunding Revenue Bonds T.E.C.P. (PECO)
3.75% 1-9-96 1,000,000 1,000,000
State Higher Education Facility Authority Refunding Revenue Bonds
Series B (Carnegie Mellon)
6.00% 11-1-27 3,000,000 (c,d) 3,000,000
State T.R.A.N.
4.50% 6-28-96 2,000,000 2,007,049
_____________
Total 11,007,049
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 19
Texas (13.8%)
Houston T.R.A.N.
4.50% 6-27-96 1,000,000 1,003,983
Jefferson Port Arthur Navigation District
Pollution Control Revenue Bonds (Texaco)
6.00% 10-1-24 5,900,000 (c,d) 5,900,000
Lower Colorado River Authority T.E.C.P. Series B
3.50% 2-6-96 1,000,000 1,000,000
San Antonio Electric & Gas System T.E.C.P. Series A
3.45% 1-23-96 2,500,000 2,500,000
3.75% 1-4-96 2,000,000 2,000,000
State Municipal Power Agency T.E.C.P.
3.55% 1-4-96 1,500,000 (c,d) 1,500,000
3.85% 1-18-96 650,000 (c,d) 650,000
3.90% 1-5-96 2,600,000 (c,d) 2,600,000
State T.R.A.N.
4.75% 8-30-96 3,000,000 3,013,092
____________
Total 20,167,075
_____________________________________________________________________________________________________________________________
Vermont (1.4%)
State General Obligation C.P. R.A.N. Series F
3.70% 1-17-96 2,000,000 2,000,000
_____________________________________________________________________________________________________________________________
Virginia (3.8%)
Peninsula Port Authority Series 1987 (Shell Oil)
5.90% 12-1-05 5,500,000 (c,d) 5,500,000
_____________________________________________________________________________________________________________________________
Washington (0.6%)
Washington Public Power Supply System Electric Refunding Revenue Bonds
Project #3
5.10% 7-1-18 900,000 (c,d) 900,000
_____________________________________________________________________________________________________________________________
Wisconsin (2.1%)
State Operating Notes Series 1995
4.50% 6-17-96 3,000,000 3,010,456
_____________________________________________________________________________________________________________________________
Wyoming (1.5%)
Lincoln County Pollution Control Revenue Bonds Series 1984D (Exxon)
5.90% 11-1-14 1,200,000 (c,d) 1,200,000
Lincoln County Pollution Control Revenue Bonds Series 1985 (Exxon)
5.95% 8-1-15 1,000,000 (c,d) 1,000,000
_____________
Total 2,200,000
_____________________________________________________________________________________________________________________________
Total investments in securities (96.1%)
(Cost: $140,143,605)(f) $140,143,605
_____________________________________________________________________________________________________________________________
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:
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
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, 1995.
(d) The Fund is 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, 1995, also represents the cost of securities for federal income tax purposes.
</TABLE>
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PAGE 20
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 21
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
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
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
<PAGE>
PAGE 22
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 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
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 Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
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PAGE 23
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.
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 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
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PAGE 24
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.
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.
<PAGE>
PAGE 25
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, 1995
Exempt-interest dividends -- taxable status
explained below.
Payable date Per share
__________________________________
Jan. 25, 1995 $0.00210
Feb. 23, 1995 0.00256
March 27, 1995 0.00275
April 26, 1995 0.00286
May 25, 1995 0.00292
June 26, 1995 0.00286
July 26, 1995 0.00239
Aug. 25, 1995 0.00253
Sept. 25, 1995 0.00269
Oct. 26, 1995 0.00273
Nov. 27, 1995 0.00287
Dec. 27, 1995 0.00270
___________________________________
Total distributions $0.03196
___________________________________
Source of distributions
Distributions during the year ended Dec. 31, 1995,
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 26
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, 1995 are listed
below.
Alaska 0.742%
Arizona 4.658
California 1.964
Colorado 5.517
Connecticut 4.856
Florida 4.577
Georgia 4.291
Idaho 3.339
Illinois 4.092
Indiana 5.304
Kentucky 0.843
Louisiana 0.709
Maine 1.927
Maryland 0.232
Massachusetts 1.183
Michigan 4.972
Minnesota 12.620
Mississippi 4.368
New Jersey 0.166
New York 3.666
North Carolina 4.427
Ohio 0.067
Pennsylvania 4.677
Texas 10.446
Virginia 4.387
Washington 1.499
Washington DC 0.505
Wisconsin 1.941
Wyoming 2.025
<PAGE>
PAGE 27
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
AMERICAN
EXPRESS
FINANCIAL
ADVISORS
IDS Tax-Free Money Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 28
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 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 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.
