PAGE
1993 SEMIANNUAL REPORT
IDS Federal Income Fund, Inc.
(Picture of the nations capitol)
Invests primarily in U.S. government
and government agency securities to
seek a high level of current income
and safety of principal
IDS
An American Express company
American
Express
Distributed by IDS Financial Services Inc.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Message from the President
_______________________________________________________________________
(Photo of William R. Pearce)
Dear Shareholder,
A lackluster market for mortgage-backed securities limited IDS Federal
Income Fund's gain during the first half of the fiscal year. Jim Snyder,
the Fund's portfolio manager, reviews the past six months and provides
an outlook in his comments on the following page.
IDS Federal Income Fund seeks to provide investors with a high level of
current income and the safety of principal that is offered by U.S.
government and federal agency securities. Although they are not insured,
most of the securities in the Fund are guaranteed as to payment of
interest and principal by the U.S. government or one of its agencies.
As a result, although there is some market risk with the Fund, credit
risk is minimal. The portfolio manager makes maintaining a relatively
stable net asset value for the Fund a top priority. However, investors
should be aware that moderate price fluctuations do occur.
For your convenience, IDS provides several alternatives for your dividend
distributions. Most shareholders reinvest their dividends in additional
shares of the Fund. But you also may direct them to other publicly offered
IDS funds available in your state in which you have an investment, except
IDS Planned Investment Account. If you need to receive cash dividends,
consider having them sent directly to your bank. It keeps the check from
being delayed or lost, and it gets to the bank quicker. Your IDS personal
financial planner can tell you more about these dividend services.
Your IDS planner also can help you make sure your investment and
protection strategies continue to meet the objectives in your financial
plan. As your objectives and time horizons change, talk to your planner
about the broad range of IDS products and services designed to help you
meet a variety of investment and protection needs.
Sincerely,
William R. Pearce
President
IDS Federal Income Fund, Inc.
Feb. 9, 1994
On the cover: The nation's capitol. IDS Federal Income Fund primarily
invests in high-quality securities issued by the federal government and
its agencies.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
From Your Portfolio Manager: A Perspective
_______________________________________________________________________
(Photo of Jim Snyder)
Jim Snyder became portfolio manager of IDS Federal Income Fund in December
1993 and also manages IDS Strategy Short-Term Income Fund. He has been
with IDS since July 1992.
A combination of rising interest rates and disappointing mortgage security
performance dampened IDS Federal Income Fund performance during the past
six months. Despite the difficult environment, the Fund did provide
shareholders with a positive return for the period.
The Fund's annualized standard yield for the 31-day period ended Dec. 31,
1993, was 5.57 percent, based on the maximum public offering price on that
day. The Fund's net asset value per share was $5.06 on Dec. 31, 1993,
compared with $5.30 at the beginning of the fiscal year. Offsetting that
decline were distributions that totaled 30 cents per share for the six-
month period, including 14 cents from capital gains and 16 cents from
net investment income. (If you purchased shares during this period, your
return would have been affected by the sales charge, as described in the
prospectus.)
After several months of very modest growth, the economy began showing
signs of gaining meaningful momentum last summer. As is normally the case,
a stronger economy fuels fears of higher inflation, which usually results
in higher interest rates.
That scenario played out briefly during the past period, with interest
rates, which had been on a largely downward path for some three years,
moving slightly higher from mid-October through November. Because higher
rates drive down bond prices, the values of the bonds in the Fund's
portfolio fell, causing a modest decline in the Fund's net asset value.
Although we manage the fund to limit fluctuations in net asset value,
interest rate moves, either up or down, do have some effect on the Fund.
The other important influence on performance during the six months was the
ongoing surge of home mortgage refinancings. Because the majority of the
portfolio is invested in mortgage-backed securities issued by agencies of
the U.S. government, the level of home refinancings has a direct effect on
the Fund. The high level of refinancings in the past period resulted in a
higher level of mortgage prepayments, which can translate into a lower
dividend for the Fund. Given this relationship, we have invested most of
the Fund in mortgage securities that we believe are less sensitive to
prepayments, which should provide shareholders with a higher and more
stable dividend.
The most significant changes to the portfolio included an increase in
longer-maturity mortgage securities and a decrease in the amount of
intermediate Treasury securities. In additions, we increased the Fund's
long-term holdings in adjustable-rate mortgages (to about 23 percent).
This investment strategy should help us maintain an attractive dividend
and reduce the sensitivity of the Fund's net asset value to rising
short-term interest rates if the Federal Reserve decides to pursue a
tighter monetary policy.
PAGE
IDS Federal Income Fund, Inc.
From Your Portfolio Manager: A Perspective (continued)
_______________________________________________________________________
Our outlook calls for rising short-term interest rates but relatively
stable longer-term rates. The Fund is currently well-positioned for this
type of interest-rate environment. We're also anticipating stronger
performance from our mortgage-backed holdings, which tend to benefit from
a more stable interest rate climate.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Statement of Assets and Liabilities Dec. 31, 1993
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $1,332,386,119) $1,324,768,706
Receivable for investments securities sold 123,438
Accrued interest receivable 8,076,444
U.S. government securities held as collateral (Note 4) 36,759,646
_____________________________________________________________________________________________________________
Total assets 1,369,728,234
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 7,353,290
Dividends payable to shareholders 589,472
Payable for investment securities purchased 286,989,094
Payable upon return of securities loaned (Note 4) 60,992,896
Accrued investment management and services fee 453,361
Accrued distribution fee 38,798
Accrued transfer agency fee 96,218
Other accrued expenses 269,418
_____________________________________________________________________________________________________________
Total liabilities 356,782,547
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,012,945,687
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 200,046,822 shares $ 2,000,468
Additional paid-in capital 1,027,852,885
Undistributed net investment income 211,315
Accumulated net realized loss on investments (Note 1) (9,573,443)
Unrealized depreciation of investments (7,545,538)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,012,945,687
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 5.06
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Statement of Operations Six months ended Dec. 31, 1993
Investment income
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Income:
Interest $32,162,663
Other (Note 1) 3,224,546
_____________________________________________________________________________________________________________
Total income 35,387,209
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 2,732,797
Distribution fee 230,442
Transfer agency fee 586,946
Compensation of directors 12,468
Compensation of officers 7,371
Custodian fees 71,367
Postage 156,056
Registration fees 162,204
Reports to shareholders 20,831
Audit fees 15,000
Administrative 13,522
Other 16,889
_____________________________________________________________________________________________________________
Total expenses 4,025,893
_____________________________________________________________________________________________________________
Investment income -- net 31,361,316
_____________________________________________________________________________________________________________
Realized and unrealized loss on investments -- net
_____________________________________________________________________________________________________________
Net realized loss on security transactions (Note 3) (221,375)
Net realized loss on closed interest rate futures contracts (1,149,185)
_____________________________________________________________________________________________________________
Net realized loss on investments (1,370,560)
Net change in unrealized appreciation or depreciation of investments (17,450,138)
_____________________________________________________________________________________________________________
Net loss on investments (18,820,698)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $12,540,618
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________
Statements of Changes in Net Assets Six months ended Year ended
Dec. 31, 1993 June 30, 1993
Operations and distribution
______________________________________________________________________________________________________________
<S> <C> <C>
(Unaudited)
Investment income -- net $ 31,361,316 $ 57,435,345
Net realized gain (loss) on investments (1,370,560) 25,836,238
Net change in unrealized appreciation or depreciation of investments (17,450,138) (1,059,269)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 12,540,618 82,212,314
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (31,150,001) (57,971,568)
Net realized gain on investments (28,095,757) (2,941,850)
_____________________________________________________________________________________________________________
Total distributions (59,245,758) (60,913,418)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of 54,941,686 and 123,595,985 shares (Note 2) 289,268,605 647,636,194
Net asset value of 9,951,206 and 9,485,733 shares issued in reinvestment
of distributions 51,270,112 49,651,783
Payments for redemptions of 58,154,675 and 100,549,963 shares (306,076,045) (527,278,272)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions representing
net addition of 6,738,217 and 32,531,755 shares 34,462,672 170,009,705
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets (12,242,468) 191,308,601
_____________________________________________________________________________________________________________
Net assets at beginning of period 1,025,188,155 833,879,554
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of $211,315
and $0) $1,012,945,687 $1,025,188,155
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
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IDS Federal Income Fund, Inc.
Notes to Financial Statements (Unaudited as to Dec. 31, 1993)
____________________________________________________________________________
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
All securities are valued at the close of each
business day. Securities for which market quotations
are not readily available are valued at fair value
according to methods selected in good faith by the
Board of Directors. Determination of fair value
involves, among other things, reference to market
indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days
from the valuation date are valued at the market
price or approximate market value based on current
interest rates; those maturing in 60 days or less are
valued at amortized cost.
Options Transactions
In order to produce incremental earnings, protect
gains, and facilitate buying and selling of
securities for investment purposes, the Fund may buy
and sell put and call options and write covered call
options on portfolio securities and may write
cash-secured put options on U.S. government
securities. The risk in writing a call option is
that the Fund gives up the opportunity of profit if
the market price of the security increases. The risk
in writing a put option is that the Fund may incur a
loss if the market price of the security decreases
and the option is exercised. The risk in buying an
option is that the Fund pays a premium whether or not
the option is exercised. The Fund also has the
additional risk of not being able to enter into a
closing transaction if a liquid secondary market does
not exist. The Fund also may write over-the-counter
options where the completion of the obligation is
dependent upon the credit standing of the other
party.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
1. Summary of Significant Accounting Policies (continued)
Option contracts are valued daily at the closing
prices on their primary exchanges and unrealized
appreciation or depreciation is recorded. The Fund
will realize a gain or loss upon expiration, exercise
or closing of the option transaction. When options
on debt securities or futures are exercised, the Fund
will realize a gain or loss. When other options are
exercised, the proceeds on sales for a written call
option, the purchase cost for a written put option or
the cost of a security for a purchased put or call
option is adjusted by the amount of premium received
or paid.
Futures Transactions
In order to gain exposure to or protect itself
from changes in the market, the Fund may buy and sell
interest rate futures contracts. Risks of entering
into futures contracts and related options include
the possibility that there may be an illiquid market
and that a change in the value of the contract or
option may not correlate with changes in the value of
the underlying securities.
Upon entering into a futures contract, the Fund is
required to deposit either cash or securities in an
amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments
(variation margin) are made or received by the Fund
each day. The variation margin payments are equal to
the daily changes in the contract value and are
recorded as unrealized gains and losses. The Fund
recognizes a realized gain or loss when the contract
is closed or expires.
Securities Purchased on a When-Issued Basis
Delivery and payment for securities that have been
purchased by the Fund on a forward-commitment or
when-issued basis can take place one month or more
after the transaction date. During this period, such
securities are subject to market fluctuations, and
they may affect the Fund's gross assets the same as
owned securities. As of Dec. 31, 1993, the Fund had
entered into outstanding when-issued or forward
commitments of $286,989,094.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
1. Summary of Significant Accounting Policies (continued)
During the six months ended Dec. 31, 1993, the Fund
entered into transactions to sell purchase
commitments to third parties at the current market
values and concurrently acquired other purchase
commitments for similar securities at later dates.
As an inducement for a fund to "roll over" its
purchase commitments, the Fund receives negotiated
fees. For the six months ended Dec. 31, 1993, such
fees earned by the Fund amounted to $3,224,546.
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.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
1. Summary of Significant Accounting Policies (continued)
Net investment income (loss) and net realized gains
(losses) may differ for financial statement and tax
purposes primarily because of the deferral of losses
on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred
due to "wash sale" transactions. The character of
distributions made during the year from net
investment income or net realized gains may differ
from their ultimate characterization for federal
income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which
amounts are distributed may differ from the year
that the income or realized gains (losses) were
recorded by the Fund.
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. Capital gains, when available, are distributed
along with the last income dividend of the calendar
year.
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
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
2. Expenses and Sales Charges
Under terms of an agreement dated Nov. 14, 1991, the
Fund pays IDS Financial Corporation (IDS) a fee for
managing its investments, record-keeping and other
specified services. The fee is a percentage of the
Fund's average daily net assets consisting of a group
asset charge in reducing percentages from 0.46
percent to 0.32 percent annually on the combined net
assets of all non-money market funds in the IDS
MUTUAL FUND GROUP and an individual annual asset
charge of 0.13 percent of average daily net assets.
The Fund also pays IDS a distribution fee at an
annual rate of $6 per shareholder account and a
transfer agency fee at an annual rate of $15.50 per
shareholder account. The transfer agency fee is
reduced by earnings on monies pending shareholder
redemptions.
IDS will assume and pay any expenses (except taxes
and brokerage commissions) that exceed the most
restrictive applicable state expense limitation.
Sales charges by IDS Financial Services Inc. for
distributing Fund shares were $10,541,280 for the six
months ended Dec. 31, 1993. The Fund also pays
custodian fees to IDS Bank & Trust, an affiliate of
IDS.
The Fund has a retirement plan for its independent
directors. Upon retirement directors receive monthly
payments equal to one-half of 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
$7,649 for the six months ended Dec. 31, 1993.
____________________________________________________________________________
3. Securities Transactions
Cost of purchases and proceeds from sales of
securities (other than short-term obligations)
aggregated $1,726,954,315 and $1,699,877,386,
respectively, for the six months ended Dec. 31, 1993.
Realized gains and losses are determined on an
identified cost basis.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
4. Lending of Portfolio Securities
At Dec. 31, 1993, securities valued at $59,672,654
were on loan to brokers. For collateral, the Fund
received $24,233,250 in cash and U.S. government
securities valued at $36,759,646. Income from
securities lending amounted to $13,933 for the six
months ended Dec. 31, 1993. The risks to the Fund of
securities lending are that the borrower may not
provide additional collateral when required or return
the securities when due.
____________________________________________________________________________
5. Interest Rate Futures Contracts
At Dec. 31, 1993, investments in securities included
securities valued at $5,628,000 that were pledged as
collateral to cover initial margin deposit on 1,050
purchase contracts. The market value of the open
contracts at Dec. 31, 1993, was $118,750,000 with a
net unrealized gain of $71,875.
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
____________________________________________________________________________
6. Financial Highlights
The table below shows certain important financial
information for evaluating the Fund's results.
<TABLE>
<CAPTION>
Six months
ended Fiscal year ended June 30,
________________________________________
Dec. 31, 1993 1993 1992 1991 1990 1989
____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Per Share Income and Capital Changes* (Unaudited)
(for a share outstanding throughout
the period)
Net asset value, beginning of period $5.30 $5.19 $5.10 $5.00 $5.02 $5.02
____________________________________________________________________________________________________
Income from investment operations:
Net investment income .16 .32 .36 .42 .42 .40
Net gains (losses) on securities (both
realized and unrealized) (.10) .13 .09 .09 (.02) --
____________________________________________________________________________________________________
Total from investment operations .06 .45 .45 .51 .40 .40
____________________________________________________________________________________________________
Less distributions:
Dividends from net investment income (.16) (.32) (.36) (.41) (.42) (.40)
Distributions from realized gains (.14) (.02) -- -- -- --
____________________________________________________________________________________________________
Total distributions (.30) (.34) (.36) (.41) (.42) (.40)
____________________________________________________________________________________________________
Net asset value, end of period $5.06 $5.30 $5.19 $5.10 $5.00 $5.02
____________________________________________________________________________________________________
Ratios/Supplemental Data
Net assets, end of period (in millions) $1,013 $1,025 $834 $397 $234 $183
Ratio of expenses to average
daily net assets .78%** .77% .79% .80% .82% .79%
Ratio of net income to average
daily net assets 6.08%** 6.03% 6.93% 8.20% 8.53% 8.15%
Portfolio turnover rate (excluding
short-term securities) 170% 227% 104% 52% 104% 81%
____________________________________________________________________________________________________
Total Return*** 1.2%+ 9.0% 9.0% 10.8% 8.3% 8.4%
____________________________________________________________________________________________________
* Rounded to the nearest cent.
** Adjusted to an annual basis.
*** Total return does not reflect payment of a sales charge.
+ For the fiscal period ended Dec. 31, 1993, the annualized total return is 2.5 percent.
/TABLE
<PAGE>
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IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities, Dec. 31, 1993 (Unaudited)
_____________________________________________________________________________________________________________________________
Bonds (98.8%)
(Percentages represent value of investments compared to net assets)
_____________________________________________________________________________________________________________________________
Principal
Issuer and Coupon Rate Amount Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
U.S. Government Obligations (13.3%)
U.S. Treasury
4 1/4% 1995 $ 23,700,000 (c) $ 23,729,149
4 3/4% 1998 36,500,000 (c) 35,943,740
8 1/4% 1998 65,100,000 (e) 73,276,560
Zero Coupon 2011
(8.80% annualized yield on
date of purchase) 4,000,000 (b) 1,758,880
______________
134,708,329
_____________________________________________________________________________________________________________________________
Mortgage-Backed Securities (85.5%)
Federal Home Loan Mortgage Corporation (9.6%)
0.594% 2023 Principal Only
Collateralized Mtge
Obligation 297,845 (i) 241,441
5 3/4% Collateralized Mtge
Obligation 2015 14,000,000 13,860,000
6.85% Collateralized Mtge
Obligation 2020 4,604,000 4,598,659
7 1/2% Collateralized Mtge
Obligation 2020 12,527,000 12,884,270
7.975% Inverse Floater
Collateralized Mtge
Obligation 2000 2,299,725 (d) 2,231,451
8% 2023 46,926,000 49,037,670
8 1/2% 2023 Interest Only
Certificates 2,262,412 (h) 1,235,864
8.784% Inverse Floater
Collateralized Mtge
Obligation 2023 11,600,000 (d) 8,192,500
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities (continued)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Principal
Issuer and Coupon Rate Amount Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Mortgage-Backed Securities (cont'd)
Federal Home Loan Mortgage Corporation (cont'd)
10% 2020 Interest Only
Certificates $ 959,524 (h) $ 157,644
18.354% Inverse Floater
Collateralized Mtge
Obligation 1999 4,264,818 (d) 4,707,292
______________
97,146,791
_____________________________________________________________________________________________________________________________
Federal National Mortgage Association (45.6%)
3.97% 2023 Principal Only
Collateralized Mtge
Obligation 49,679,796 (i) 39,247,039
6% 2023 25,747 24,789
6 1/2% 2023 265,971,500 (f) 263,976,714
6 1/2% GNMA Collateralized Mtge
Obligation Trust G92-24E 2020 24,000,000 24,427,440
7% Collateralized Mtge
Obligation 2022 14,737,495 14,877,961
7% 2023 Interest Only
Certificates 39,465,352 (h) 33,594,905
7 1/2% 2007-08 31,445,962 32,654,666
7 1/2% 2007 Interest Only
Certificates 2,680,745 (h) 1,778,123
8.354% Inverse Floater
Collateralized Mtge
Obligation 2023 1,544,230 (d) 1,519,136
8 1/2% Inverse Floater
Collateralized Mtge
Obligation 1999 4,779,000 (d) 4,684,913
9 1/2% 2017-22 Interest Only
Certificates 3,913,224 (h) 1,092,444
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities (continued)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Principal
Issuer and Coupon Rate Amount Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Mortgage-Backed Securities (cont'd)
Federal National Mortgage Association (cont'd)
10 1/2% 2021 Interest Only
Certificates $ 1,348,579 (h) $ 982,961
11.062% Inverse Floater
Collateralized Mtge
Obligation 2022 6,000,000 (d) 6,334,380
11.423% Inverse Floater
Collateralized Mtge
Obligation 2023 6,347,951 (d) 6,411,430
11.619% Inverse Floater
Collateralized Mtge
Obligation 2008 6,737,200 (d) 6,770,886
12.413% Inverse Floater
Collateralized Mtge
Obligation 2021 4,419,000 (d) 5,003,137
12.466% 2021 Principal Only
Collateralized Mtge
Obligation 2,163,239 (i) 1,838,169
15.324% Inverse Floater
Collateralized Mtge
Obligation 2020 4,250,000 (d) 4,505,000
19.088% Inverse Floater
Collateralized Mtge
Obligation 1999 1,345,242 (d) 1,370,465
20.431% Collateralized Mtge
Obligation 2006 9,825,000 10,842,968
______________
461,937,526
_____________________________________________________________________________________________________________________________
Government National Mortgage Association
Mortgage-Backed Pass-Thru Certificates (30.2%)
4 1/2% 2023 106,643,656 (g) 106,541,426
5% 2023-24 101,567,044 (f,g) 103,533,882
5 1/2% 2022 28,667,489 (g) 29,521,207
7% 2022-23 63,589,393 64,662,464
11% 2019 1,077,710 1,201,984
______________
305,460,963
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities (continued)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Principal
Issuer and Coupon Rate Amount Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Mortgage-Backed Securities (cont'd)
Other Mortgage-Backed Securities (0.1%)
Daiwa Securities
18% Inverse Floater Collateralized
Mtge Obligation Trust 14 Cl A2 2009 $ 972,993 (d) $ 1,020,427
Oppenheimer
19.11% Inverse Floater
Collateralized Mtge Obligation
Trust 53H 2018 38,858 (d) 39,125
______________
1,059,552
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,007,596,522) $1,000,313,161
_____________________________________________________________________________________________________________________________
Options Purchased (0.1%)
_____________________________________________________________________________________________________________________________
Number Exercise Expiration
Issuer of Contracts Price Date Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Put
June Treasury Bond 400 $114 June 1994 $ 1,137,500
_____________________________________________________________________________________________________________________________
Total options purchased
(Cost: $1,471,552) $ 1,137,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities (continued)
_____________________________________________________________________________________________________________________________
Short-term Securities (31.9%)
_____________________________________________________________________________________________________________________________
Annualized Amount
Yield on Payable
Date of at
Issuer Purchase Maturity Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. Government Agencies
Federal Farm Credit
Bank Disc Notes
01-10-94 3.20% $16,105,000 $ 16,092,197
01-13-94 3.18 13,300,000 13,285,946
01-21-94 3.14 7,850,000 7,836,350
Federal Home Loan
Bank Disc Notes
01-06-94 3.18 50,200,000 50,177,898
01-07-94 3.14 25,100,000 25,086,906
01-10-94 3.19 600,000 599,523
01-12-94 3.14 46,000,000 45,956,006
01-18-94 3.13 38,400,000 38,343,424
01-19-94 3.13 43,500,000 43,432,140
01-25-94 3.14 4,100,000 4,091,445
01-31-94 3.13 3,600,000 3,590,640
Federal Home Loan
Mtge Corp Disc Notes
01-05-94 3.15 22,300,000 22,292,220
01-13-94 3.14 9,485,000 9,475,104
01-24-94 3.13 8,600,000 8,582,857
Federal Natl Mtge
Assoc Disc Notes
01-04-94 3.12 22,500,000 22,494,169
01-19-94 3.13 12,000,000 11,981,220
______________
323,318,045
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $323,318,045) $ 323,318,045
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,332,386,119)(j) $1,324,768,706
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
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IDS Federal Income Fund, Inc.
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Investments in Securities (continued)
_____________________________________________________________________________________________________________________________
Notes to Investments in Securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) For a zero coupon bond, the interest rate disclosed represents the
effective yield on the date of acquisition.
(c) Security is partially or fully on loan. See Note 4 to the financial
statements.
(d) Inverse floaters represent securities which pay interest at a rate
that increases (decreases) with a decline (increase) in the LIBOR
(London InterBank Offering Rate) Index. Interest rate disclosed is
the rate in effect on Dec. 31, 1993.
(e) Partially pledged as initial deposit on the following open interest
rate futures purchase contracts (see Note 5 to the financial statements):
<S> <C>
Type of Security Par Value
___________________________________________________________
U.S. Treasury Bonds, March 94 $25,000,000
U.S. Treasury Notes, March 94 80,000,000
___________________________________________________________
(f) At Dec. 31, 1993, the cost of securities purchased on a when-issued
basis was $286,989,094.
(g) Adjustable rate mortgage; interest rate varies to reflect current
market conditions; rate shown is the effective rate on Dec. 31, 1993.
(h) Principal amounts and interest rates disclosed for interest-only
securities represent amortized cost and coupon rates, respectively.
(i) Principal Only - interest rate disclosed for this security represents
the current yield based upon estimated future cash flows.
(j) At Dec. 31, 1993, the cost of securities for federal income tax
purposes was approximately $1,332,386,000 and the approximate
aggregate gross unrealized appreciation and depreciation based on
that cost was:
<S> <C>
Unrealized appreciation $ 10,252,000
Unrealized depreciation (17,869,000)
____________________________________________________________
Net unrealized depreciation $ (7,617,000)
____________________________________________________________
/TABLE
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IDS Federal Income Fund, Inc.
Directors and Officers
_____________________________________________________________________________
Directors of the Fund
William H. Dudley
executive vice president, IDS Financial Corporation
Robert F. Froehlke
previously president and chief executive officer of all funds in the
IDS MUTUAL FUND GROUP
David R. Hubers
president and chief executive officer, IDS Financial Corporation
Anne P. Jones
partner, Washington, D.C. law firm of Sutherland, Asbill & Brennan
Donald M. Kendall
former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
senior counsellor for national and international affairs, The Reader's
Digest Association, Inc.
Lewis W. Lehr
former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company
William R. Pearce
president and chief executive officer of all funds in the
IDS MUTUAL FUND GROUP
Aulana L. Peters
partner, law firm of Gibson, Dunn & Crutcher
Edson W. Spencer
president, Spencer Associates Inc.
John R. Thomas
senior vice president, IDS Financial Corporation
Wheelock Whitney
chairman, Whitney Management Company
_____________________________________________________________________________
Officers of the Fund
William R. Pearce
president and chief executive officer
Leslie L. Ogg
vice president, general counsel and treasurer
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IDS Federal Income Fund, Inc.
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IDS Federal Income Fund, Inc.
IDS MUTUAL FUND GROUP
_________________________________________________________________________
Specialty growth funds
Funds in this group aggressively seek capital growth, primarily from
international specialty common stocks. They are high risk mutual funds
with a potential for high reward.
IDS Precious Metals Fund, Inc.
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.
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.
IDS International Fund, Inc.
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The Fund may invest up to 20 percent of
its assets in the U.S. market.
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.
_____________________________________________________________________________
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 Discovery Fund, Inc.
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds
larger growth-oriented stocks.
IDS Growth Fund, Inc.
Invests primarily in companies that have above-average potential for
long-term growth as a result of new management, marketing opportunities
or technological superiority.
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.
IDS New Dimensions Fund, Inc.
Invests primarily in companies with significant growth potential due to
superiority in technology, marketing or management. The Fund frequently
changes its industry mix.
IDS Progressive Fund, Inc.
Invests primarily in undervalued common stocks. The Fund holds stocks for
the long-term with the goal of capital growth.
PAGE
IDS Federal Income Fund, Inc.
IDS MUTUAL FUND GROUP (Continued)
_________________________________________________________________________
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. Moderate risk.
IDS Managed Retirement Fund, Inc.
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.
IDS Equity Plus Fund, Inc.
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of capital and income.
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by IDS research analysts as the best from
each industry represented on the index. Offers potential for long-term
growth as well as dividend income.
IDS Stock Fund, Inc.
Invests in common stocks of companies representing many major sectors of
the economy. Seeks current income and growth of capital.
IDS Strategy, Equity Fund
Invests primarily in undervalued common stocks that offer potential for
growth of capital and income.
IDS Utilities Income Fund, Inc.
Invests primarily in the stocks of public utility companies to provide
high current income and growth of income and capital with reduced
volatility.
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to provide high current
income and, secondarily to benefit from the growth potential offered by
stock investments.
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.
<PAGE>
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IDS Federal Income Fund, Inc.
IDS MUTUAL FUND GROUP (Continued)
_________________________________________________________________________
Tax-exempt income funds
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, Inc.
Invests primarily in medium- and lower-quality municipal bonds and notes.
Lower quality securities generally involve greater risk of principal
and income.
IDS State Tax-Exempt Funds
(California, Massachusetts, Michigan, Minnesota, New York, Ohio)
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.)
IDS Tax-Exempt Bond Fund, Inc.
Invests mainly in bonds and notes of state or local government units,
with at least 75 percent in the four highest-rated, lowest-risk bond
categories.
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.
_________________________________________________________________________
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 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.
IDS Extra Income Fund, Inc.
Invests mainly in long-term, high-yielding corporate fixed income
securities in the lower-rated, higher-risk bond categories to provide
high current income. Secondary objective is capital growth.
IDS Bond Fund, Inc.
Invests mainly in corporate bonds, at least 50 percent in the
higher-rated, lower-risk bond categories, or the equivalent, and in
government bonds.
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.
<PAGE>
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IDS Federal Income Fund, Inc.
IDS MUTUAL FUND GROUP (Continued)
_____________________________________________________________________________
Income funds (continued)
IDS Selective Fund, Inc.
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.
IDS Federal Income Fund, Inc.
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.
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.
_____________________________________________________________________________
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. 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.
IDS Planned Investment Account
Invests in money market securities to provide maximum current income
consistent with liquidity and stability of principal, while serving as a
base for systematic exchanges into IDS fixed income and equity funds.
IDS Tax-Free Money Fund, Inc.
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
_________________________________________________________________________
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your IDS personal
financial planner or writing to IDS Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or send
money. This semiannual report is approved for use only if preceded or
accompanied by a prospectus for the Fund.
<PAGE>
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1993 SEMIANNUAL REPORT
IDS Federal Income Fund, Inc.
IDS MUTUAL FUND GROUP
IDS Tower 10
Minneapolis, Minnesota 55440-0010
