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Vermont Prospectus Supplement
March 31, 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 BB 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 "Foreign investments" subsection of the "Investment policies
and risks" section of the prospectus for IDS Managed Retirement
Fund is supplemented as follows:
"Foreign investments are subject to currency fluctuations, and
political and economic risks of the countries in which the
investments are made, including the possibility of seizure or
nationalization of companies, imposition of withholding taxes on
income, establishment of exchange controls or adoption of other
restrictions that might affect an investment adversely. The
limited liquidity and price fluctuations in emerging markets could
make investments in developing countries more volatile."
___________________________________________________________________
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."
