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Vermont Prospectus Supplement
March 20, 1995*
<TABLE><CAPTION>
Prospectus
Form #
Publicly Offered Funds:
<S> <C>
IDS Diversified Equity Income Fund
(Nov. 29, 1994**) S-6475 H
IDS Federal Income Fund (Aug. 29, 1994**) S-6042 H
IDS High Yield Tax-Exempt Fund (March 20, 1995) S-6430 H
IDS Managed Retirement Fund (March 20, 1995) S-6141 H
IDS Mutual (Nov. 29, 1994**) S-6326 J
IDS Selective Fund (March 20, 1995) S-6376 H
IDS Tax-Exempt Bond Fund (March 20, 1995) S-6310 H
IDS Utilities Income Fund (Aug. 29, 1994**) S-6341 H
</TABLE>
*Valid until January 29, 1996.
**As revised March 20, 1995.
The following information modifies that found in the above-
referenced prospectuses:
The "Investment policies and risks" section of the prospectuses for
IDS Diversified Equity Income Fund, IDS High Yield Tax-Exempt Fund,
IDS Mutual, IDS Selective Fund, IDS Tax-Exempt Bond Fund and IDS
Utilities Income Fund is supplemented as follows:
"The price of bonds generally declines as interest rates increase,
and rises as interest rates decline."
___________________________________________________________________
The "Investment policies and risks" section of the prospectuses for
IDS Federal Income Fund is supplemented as follows:
"The fund's average maturity/duration of its portfolio is 3.30
years as of March 8, 1995."
___________________________________________________________________
The "Investment policies and risks" section of the prospectuses for
IDS High Yield Tax-Exempt Fund is supplemented as follows:
"The fund's average maturity/duration of its portfolio is 5.18
years as of March 8, 1995."
___________________________________________________________________
The "Investment policies and risks" section of the prospectuses for
IDS Selective Fund is supplemented as follows:
"The fund's average maturity/duration of its portfolio is 6.14
years as of March 8, 1995."
___________________________________________________________________
The "Investment policies and risks" section of the prospectus for
IDS High Yield Tax-Exempt Fund is supplemented as follows:
"Medium-quality bonds and notes, those rated A and BBB, are
considered to have adequate protection of principal and interest, <PAGE>
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but may have some speculative characteristics over the longer
term. Lower-quality securities, those rated BBB or lower, may
react more to the ability of a company to pay interest and
principal when due than to changes in interest rates.
Lower-quality securities have greater price fluctuations, are more
likely to experience a default, and sometimes are referred to as
"junk bonds." Reduced market liquidity for these bonds may
occasionally make it more difficult to value them. In valuing
bonds the fund relies both on independent rating agencies and the
investment manager's credit analysis. Securities that are
subsequently downgraded in quality may continue to be held and will
be sold only when the fund's investment manager believes it is
advantageous to do so."
___________________________________________________________________
The "Common stocks" paragraph of the "Facts about investments and
their risks" section of the prospectus for IDS Managed Retirement
Fund is supplemented as follows:
"Stocks of companies experiencing significant growth and operating
in areas of financial or technological change may be subject to
more abrupt or erratic price movements than the stock market as a
whole. While most of the fund's investments are in established
companies having adequate financial reserves, some investments
involve substantial risk and may be considered speculative."
___________________________________________________________________
The "Investment policies and risks" section of the prospectus for
IDS Selective Fund is supplemented as follows:
"A zero-coupon security is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at face
value on the maturity date."
___________________________________________________________________
The "Investment policies and risks" section of the prospectus for
IDS Tax-Exempt Bond Fund is supplemented as follows:
The types of municipal obligations in which the fund may invest
include general obligation bonds, as well as revenue bonds, such as
electric, housing, airport and toll, pollution control, water and
sewer, and hospital bonds."
___________________________________________________________________
The "Investment policies and risks" section of the prospectus for
IDS Tax-Exempt Bond Fund is supplemented as follows:
"Securities rated BBB may have speculative characteristics."
___________________________________________________________________
The "Investment policies and risks" section of the prospectus for
IDS Utilities Income Fund is supplemented as follows:
"Utility stocks are sensitive to interest rate changes. As
interest rates rise, the price of utility stocks generally <PAGE>
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decreases, and as interest rates fall, the price of utility stocks
generally increases."
