1997 SEMIANNUAL REPORT
IDS
Tax-Free
Money
Fund
(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.
Distributed by American Express Financial Advisors Inc.
<PAGE>
(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.
Contents
From the president 3
From the portfolio manager 3
Financial statements 5
Notes to financial statements 8
Investments in securities 11
Board members and officers 19
IDS mutual funds 20
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To our shareholders
From the president
If you're an experienced investor, you know that the past two years have
been unusually strong ones in many 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 periodically review 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 Pearce
William R. Pearce
President of the Fund
From the portfolio manager
IDS Tax-Free Money Fund's yield rose slightly during the first half of the
fiscal year (January through June 1997), following an overall increase in
short-term interest rates. The Fund's $1 net asset value was unchanged
during the six months, providing shareholders with continued stability of
principal in addition to a tax-free return.
For the seven-day period ended June 29, 1997, the Fund provided an
annualized simple yield of 3.79% and an annualized compound yield of
3.86%. These are equal to 5.26% simple and 5.36% compound yields for an
investor in the 28% federal income-tax bracket.
(Investors should keep in mind that an investment in the Fund is neither
insured nor 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 keep in mind that, under federal law,
some notes issued in the tax-free securities market are subject to the
alternative minimum tax, or AMT. To eliminate any federal income-tax
liabilities for investors who may be subject to the AMT requirement, the
Fund does not invest in such issues.)
Rates rise without
increase in inflation
Although evidence of increasing inflation was nowhere to be found,
interest rates began creeping up over the past winter, as investors
concluded that greater-than-expected economic growth would soon push
prices higher. Evidently, the Federal Reserve Board agreed with that
reasoning, because in March it raised short-term interest rates for the
first time since 1994. The rest of the period passed without additional
rate hikes.
As usual, changes to the portfolio were largely confined to a shift in its
average maturity -- from about 45 days last winter to about 30 days at the
close of the period. This maturity is a result of both seasonal supply and
demand factors in the short-term, tax-free market, as well as my belief
that short-term interest rates would increase. A surge in the supply of
new issues occurs in early July every year, as outstanding issues mature.
This promotes a fairly short average maturity near the end of June and a
longer maturity in July, when new issues are purchased.
At this writing (mid-July), I think the economy will prove strong enough
to prompt additional increases in short-term interest rates by the Federal
Reserve this year. If so, the rates on the securities that this Fund
invests in probably will rise as well, modesty enhancing the Fund's yield
in the months ahead.
Terry Fettig
(picture of) Terry Fettig
Terry Fettig
Portfolio manager
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To our shareholders
6-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 1.00
Dec. 31, 1996 $ 1.00
Increase $ --
Distributions
Jan. 1, 1997 - June 30, 1997
From income $ 0.02
From capital gains $ --
Total distributions $ 0.02
Total return* +1.5%
*The total return is a hypothetical investment
in the Fund with all distributions reinvested.
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Tax-Free Money Fund, Inc.
June 30, 1997
Assets
(Unaudited)
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $159,877,459) $159,877,459
Cash in bank on demand deposit 2,528,841
Accrued interest receivable 750,433
-------
Total assets 163,156,733
-----------
Liabilities
Dividends payable to shareholders 68,540
Payable for investment securities purchased 5,532,885
Accrued investment management services fee 1,300
Accrued transfer agency fee 200
Accrued administrative services fee 390
Other accrued expenses 26,399
------
Total liabilities 5,629,714
---------
Net assets applicable to outstanding capital stock $157,527,019
============
Represented by
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 157,532,937 shares $ 1,575,329
Additional paid-in capital 155,956,420
Undistributed net investment income 1,989
Accumulated net realized gain (loss) (6,719)
------
Total-- representing net assets applicable to outstanding capital stock $157,527,019
============
Net asset value per share of outstanding capital stock $ 1.00
============
See accompanying notes to financial statements.
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<CAPTION>
Financial statements
Statement of operations
IDS Tax-Free Money Fund, Inc.
Six months ended June 30, 1997
Investment income
(Unaudited)
Income:
<S> <C>
Interest $2,841,492
----------
Expenses (Note 2):
Investment management services fee 246,383
Transfer agency fee 79,432
Administrative services fees and expenses 23,844
Compensation of board members 5,660
Custodian fees 11,471
Postage 12,044
Registration fees 49,291
Reports to shareholders 10,751
Audit fees 9,750
Other 2,771
-----
Total expenses 451,397
Earnings credits on cash balances (Note 2) (28,718)
-------
Total net expenses 422,679
-------
Investment income-- net 2,418,813
---------
Net increase in net assets resulting from operations $2,418,813
==========
See accompanying notes to financial statements.
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<CAPTION>
Statements of changes in net assets
IDS Tax-Free Money Fund, Inc.
Operations and distributions June 30, 1997 Dec. 31, 1996
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income-- net $ 2,418,813 $ 4,543,218
------------ ------------
Distributions to shareholders from:
Net investment income (2,419,734) (4,540,366)
---------- ----------
Capital share transactions at constant $1 net asset value
Proceeds from sales of shares 164,776,917 326,625,378
Net asset value of shares
issued in reinvestment of distributions 2,348,009 4,396,455
Payments for redemptions of shares (166,985,341) (319,518,046)
------------ ------------
Increase (decrease) in net assets from capital
share transactions 139,585 11,503,787
------- ----------
Total increase (decrease) in net assets 138,664 11,506,639
Net assets at beginning of period 157,388,355 145,881,716
----------- -----------
Net assets at end of period $157,527,019 $157,388,355
============ ============
Undistributed net investment income $ 1,989 $ 2,910
------------ ------------
See accompanying notes to financial statements.
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Notes to financial statements
IDS Tax-Free Money Fund, Inc.
(Unaudited as to June 30, 1997)
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.
2
Expenses
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio, providing
administrative services and serving as transfer agent. 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 its Administrative Services Agreement, the Fund pays AEFC a fee 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. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, and any other expenses properly payable by
the Fund and approved by the board.
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.
During the six months ended June 30, 1997, the Fund's custodian and
transfer agency fees were reduced by $28,718 as a result of earnings
credits from overnight cash balances.
3
Securities
transactions
Cost of purchases and proceeds from sales of securities aggregated
$215,525,619 and $211,365,000, respectively, for the six months ended June
30, 1997. Realized gains and losses are determined on an identified cost
basis.
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<CAPTION>
4. Financial highlights
The table below shows certain important financial information for evaluating the
Fund's results .
Fiscal period ended Dec. 31,
Per share income and capital changesa
1997b 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
beginning of period
Income from investment operations:
Net investment income .02 .03 .03 .02 .02 .02 .04 .05 .05 .04
Less distributions:
Dividends from net (.02) (.03) (.03) (.02) (.02) (.02) (.04) (.05) (.05) (.04)
investment income
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
end of period
Ratios/supplemental data
1997b 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period $158 $157 $146 $133 $116 $137 $144 $153 $117 $131
(in millions)
Ratio of expenses to .57%c .55% .58% .68% .68% .63% .70% .71% .67% .65%
average daily net assetsd
Ratio of net income to 3.04%c 2.94% 3.19% 2.11% 1.63% 2.25% 3.78% 5.24% 5.47% 4.54%
average daily net assets
Total return 1.5% 2.9% 3.2% 2.1% 1.6% 2.2% 3.8% 5.2% 5.6% 4.6%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended June 30, 1997 (Unaudited).
c Adjusted to an annual basis.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
</TABLE>
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<TABLE>
<CAPTION>
Investments in securities
IDS Tax-Free Money Fund, Inc. (Percentages represent
June 30, 1997 (Unaudited) value of investments
compared to net assets)
Name of issuer and title of issue (b)
Issuer Principal Value(a)
amount
Alabama (1.0%)
Columbia County Industrial Development
Pollution Control Revenue Bonds Series C (Alabama Power)
<S> <C> <C>
4.05% 10-1-22 $1,500,000(c,d) $ 1,500,000
Alaska (0.6%)
Valdez Marine Terminal Refunding Revenue Bonds Alaska Pipeline (Mobil)
4.15% 11-1-03 1,000,000(c,d) 1,000,000
Arizona (11.1%)
Maricopa County (Arizona Public Service Company) (Bank of America)
4.05% 5-1-29 4,900,000(c,d) 4,900,000
Maricopa County Pollution Control Revenue Bonds
(Arizona Public Service Company) (Morgan Guaranty)
4.00% 5-1-29 2,000,000(c,d) 2,000,000
Maricopa County Pollution Control Revenue Bonds C.P. Series E
(Southern California Edison)
3.50% 8-1-97 1,600,000 1,600,000
3.55% 8-11-97 1,120,000 1,120,000
3.70% 7-3-97 1,000,000 1,000,000
Maricopa County Pollution Control Revenue Bonds Series 1994B
(Arizona Public Service Company)
4.15% 5-1-29 2,000,000(c,d) 2,000,000
Salt River Agricultural Improvement & Power District C.P.
3.75% 7-8-97 1,000,000 1,000,000
3.75% 8-6-97 2,900,000 2,900,000
3.95% 7-9-97 1,000,000 1,000,000
Total 17,520,000
California (0.6%)
San Francisco City & County T.R.A.N.
4.50% 10-8-97 1,000,000(d) 1,002,091
Colorado (1.5%)
Moffat County Pollution Control Revenue Bonds Series 1994 (Pacificorp)
4.05% 5-1-13 2,400,000(c,d) 2,400,000
Florida (2.8%)
Jacksonville Electric Authority Electrical System C.P. Series D-1
3.65% 9-8-97 1,800,000 1,800,000
3.75% 8-5-97 1,500,000 1,500,000
State Municipal Power Agency C.P.
3.80% 8-20-97 1,155,000 1,155,000
Total 4,455,000
Georgia (8.3%)
Burke County Development Authority Pollution Control Revenue Bonds
(Georgia Power) Vogtle
4.05% 9-1-26 2,800,000(c,d) 2,800,000
Burke County Development Authority Pollution Control Revenue Bonds
(Georgia Power) Vogtle 4th
5.45% 7-1-24 900,000(c,d) 900,000
Burke County Development Authority Pollution Control Revenue Bonds
(Georgia Power) Vogtle 5th
4.00% 7-1-24 1,600,000(c,d) 1,600,000
Burke County Pollution Control Revenue Bonds (Georgia Power)
Series 1994
4.10% 7-1-24 2,700,000(c,d) 2,700,000
De Kalb County T.A.N.
4.00% 12-31-97 1,000,000 1,001,913
Putnam County Development Authority Pollution Control Revenue Bonds
(Georgia Power)
5.45% 4-1-32 4,100,000(c,d) 4,100,000
Total 13,101,913
Hawaii (0.6%)
State Department Budget & Finance Special Purpose Mortgage Revenue Bonds
(Kaiser Permanente)
4.10% 3-1-15 1,000,000(c,d) 1,000,000
Idaho (1.0%)
State T.A.N. Series 1997
4.625% 6-30-98 1,500,000(d) 1,510,725
Illinois (1.9%)
Chicago Park District Corporate T.A.N. Series 1996
4.70% 9-30-97 2,000,000 2,003,846
Development Finance Authority Pollution Control Revenue Bonds
Series 1994 (Amoco Oil)
4.00% 11-1-12 1,000,000(c,d) 1,000,000
Total 3,003,846
Indiana (3.6%)
Bond Bank Advanced Funding Notes Series 1997A-2
4.25% 1-21-98 1,000,000 1,002,970
Hammond Pollution Control Revenue Bonds (Amoco Oil)
4.00% 2-1-22 700,000(c,d) 700,000
Mount Vernon Pollution Control & Solid Waste Disposal
Refunding Revenue Bonds C.P. (General Electric)
3.65% 7-17-97 1,800,000 1,800,000
3.75% 9-2-97 1,190,000 1,190,000
State Education Facility (University of Notre Dame)
4.10% 3-1-25 1,000,000(c,d) 1,000,000
Total 5,692,970
Iowa (1.3%)
School Cash Anticipation Warrant Certificates 1996-B
4.25% 1-30-98 1,000,000 1,003,373
State School Cash Anticipation Warrant Certificates Series A
4.50% 6-26-98 1,000,000(d) 1,006,648
Total 2,010,021
Kentucky (2.7%)
Jefferson County Pollution Control Revenue Notes C.P. V.R.D.N.
Series 1993 (Louisville Gas & Electric)
3.70% 9-11-97 1,300,000 1,300,000
4.00% 7-30-97 3,000,000 3,000,000
Total 4,300,000
Maryland (2.6%)
Health & Educational Facilities Authority Revenue Bonds
Series A (Kaiser Permanente)
4.10% 7-1-15 2,000,000(c,d) 2,000,000
Montgomery County C.P. B.A.N.
3.60% 8-7-97 2,000,000 2,000,000
Total 4,000,000
Michigan (7.1%)
Regents of the University Hospital Refunding Revenue Bonds Series 1992A
4.05% 12-1-19 3,000,000(c,d) 3,000,000
Regents of the University Hospital Refunding Revenue Bonds Series 1995A
4.05% 12-1-27 2,200,000(c,d) 2,200,000
School District of Detroit Wayne County State School Aid Notes
4.50% 5-1-98 2,000,000 2,009,680
State General Obligation Notes
4.50% 9-30-97 2,000,000 2,005,096
University Refunding Revenue Bonds Hospital Series A
4.05% 12-1-19 2,000,000(c,d) 2,000,000
Total 11,214,776
Minnesota (5.7%)
Becker C.P. Series 1993B (Northern States Power)
3.55% 7-9-97 1,000,000 1,000,000
3.70% 8-4-97 3,000,000 3,000,000
Becker Pollution Control Revenue Bonds C.P. Series A
3.90% 7-10-97 2,000,000 2,000,000
Rochester Health Care Facility Revenue Bonds Series A (Mayo Clinic)
3.70% 7-15-97 1,000,000 1,000,000
Southern Minnesota Municipal Power C.P. Series B
3.50% 8-8-97 2,000,000 2,000,000
Total 9,000,000
Mississippi (1.7%)
Jackson County Pollution Control Refunding Revenue Bonds (Chevron)
4.00% 12-1-16 2,700,000(c,d) 2,700,000
Missouri (4.9%)
State Health and Education Facilities Authority
Series 1996B (Washington University)
4.10% 9-1-30 4,100,000(c,d) 4,100,000
Washington University Health & Education Facilities Authority Series A
4.10% 9-1-30 3,600,000(c,d) 3,600,000
Total 7,700,000
New Mexico (2.2%)
Farmington Pollution Control Refunding Revenue Bonds
Series B (Arizona Public Service)
4.05% 9-1-24 3,400,000(c,d) 3,400,000
New York (4.2%)
New York City Municipal Water & Sewer System Revenue Bonds
4.15% 6-15-22 2,000,000(c,d) 2,000,000
4.15% 6-15-23 3,400,000(c,d) 3,400,000
New York City Municipal Water Financial Authority Series 1994C
4.15% 6-15-23 1,150,000(c,d) 1,150,000
Total 6,550,000
North Carolina (2.6%)
Medical Care Community Hospital Revenue Bonds Duke University Hospital
Series 1985B-C
4.08% 6-1-15 4,000,000(c,d) 4,000,000
Ohio (6.3%)
State Air Quality Development Authority Revenue Bonds
Series 1995B (Cincinnati Gas & Electric)
5.50% 12-1-15 4,000,000(c,d) 4,000,000
State Air Quality Development Authority Revenue Bonds
Series A (Cincinnati Gas & Electric)
4.00% 9-1-30 6,000,000(c,d) 6,000,000
Total 10,000,000
Pennsylvania (5.7%)
Commonwealth General Obligation B.A.N. Series 1997A
3.45% 8-12-97 1,000,000 1,000,000
State Higher Education Facilities Authority Refunding Revenue Bonds
Series B (Carnegie Mellon)
4.15% 11-1-27 5,000,000(c,d) 5,000,000
State Higher Education Facilities Authority Revenue Bonds
Series C
4.00% 1-1-26 3,000,000(c,d) 3,000,000
Total 9,000,000
Texas (13.2%)
Houston T.R.A.N. Series 1997
4.50% 6-30-98 2,000,000(d) 2,012,480
Jefferson Port Arthur Navigation District
Pollution Control Revenue Bonds (Texaco)
4.15% 10-1-24 8,100,000(c,d) 8,100,000
San Antonio Electric & Gas System C.P. Series A
3.70% 8-5-97 1,500,000 1,500,000
3.80% 8-4-97 1,000,000 1,000,000
3.80% 8-5-97 2,000,000 2,000,000
State Municipal Power Authority C.P.
3.70% 7-14-97 1,500,000 1,500,000
3.90% 7-10-97 1,600,000 1,600,000
State T.R.A.N. Series 1996
4.75% 8-29-97 3,000,000 3,003,637
Total 20,716,117
Virginia (4.8%)
Peninsula Port Authority Series 1987 (Shell Oil)
4.05% 12-1-05 7,600,000(c,d) 7,600,000
Washington (1.2%)
State General Obligation C.P. R.A.N. Series 1996B
4.10% 6-15-20 1,000,000(c,d) 1,000,000
Washington Public Power Supply System Electric Refunding Revenue Bonds
Project #3
4.10% 7-1-18 900,000(c,d) 900,000
Total 1,900,000
Wyoming (2.3%)
Lincoln County Pollution Control Revenue Bonds Series 1985 (Exxon)
4.00% 8-1-15 1,500,000(c,d) 1,500,000
Sublette County Series 1984 (Exxon)
4.00% 11-1-14 2,100,000(c,d) 2,100,000
Total 3,600,000
Total investments in securities (101.5%)
(Cost: $159,877,459)(e) $159,877,459
See accompanying notes to investments in securities.
</TABLE>
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IDS Tax-Free Money Fund, Inc.
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.R.A.N. -- Tax & Revenue Anticipation Note
V.R.D.N. -- Variable Rate Demand Note
(c) Interest rate varies to reflect current market conditions; rate shown is the
effective rate on June 30, 1997.
(d) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parentheses, 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) At June 30, 1997, also represents the cost of securities for federal income
tax purposes.
<PAGE>
Board members and officers of the Fund
President and interested
board member
William R. Pearce
Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
Independent
board members
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills, Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public Policy
Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer,
Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Interested board
members who are
officers and/or
employees of AEFC
William H. Dudley
Senior advisor to the chief executive officer, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
Officers who also
are officers and/or
employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the
Fund.
Other officer
Leslie L. Ogg
President, treasurer and corporate secretary of Board Services
Corporation. Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
<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 globe
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.
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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.
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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.
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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.
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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.
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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.
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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.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
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Growth and 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.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
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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.
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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.
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IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
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IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
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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.
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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.
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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.
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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 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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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.
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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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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
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AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Tax-Free Money Fund
IDS Tower 10
Minneapolis, MN 55440-0010
