<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ (File No. 2-96512)
Post-Effective Amendment No. 17 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 (File No. 811-4260) X
IDS FEDERAL INCOME FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
_____immediately upon filing pursuant to paragraph (b)
X on Aug. 29, 1994 pursuant to paragraph (b) of rule 485
_____60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24-f of the Investment Company Act of 1940. Registrant's Rule
24f-2 Notice for its most recent fiscal year ended June 30, 1993,
will be filed on or about Aug. 29, 1994.
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PAGE 2
Cross reference sheet showing location in the prospectus and the
statement of additional information called for by the items
enumerated in Part A and Part B of Form N-1A.
Negative answers omitted from Part A or Part B are so indicated.
<TABLE><CAPTION>
PART A PART B
Page Number
Page Number in Statement of
Item No. in Prospectus Item No. Additional Information
<C> <C> <C> <C>
1 3 10 26
2 5-6 11 27
3(a) 7 12 NA
(b) 7-10
(c) 7 13(a) 28-30;51-60
(d) 7 (b) 28-30
(c) 29-30
4(a) 5;10-13;22-25 (d) 33
(b) 10-13
(c) 10-13 14(a) 22-23**;46-49
(b) 46-49
5(a) 22-23 (c) 49
(b) 22;25
(b)(i) 25 15(a) NA
(b)(ii) 23-24 (b) NA
(b)(iii) 23-24 (c) 49
(c) 5
(d) 5 16(a)(i) 22;25**
(e) 23-24 (a)(ii) 43-44;45-46
(f) 24-25 (a)(iii) 44
(g) 23-24 (b) 43;45-46
(c) NA
5A(a) * (d) None
(b) * (e) NA
(f) 45-46
6(a) 22 (g) NA
(b) NA (h) 49
(c) NA (i) 45;49
(d) NA
(e) 3 17(a) 30-33
(f) 19-20 (b) 33
(g) 20-21 (c) 30-33
(d) 32
7(a) 24-25 (e) 33
(b) 9-10
(c) 17-18 18(a) 22**;46-49
(d) 14 (b) NA
(e) NA
(f) 24-25 19(a) 37-40
(b) 35-40
8(a) 15-17 (c) NA
(b) NA
(c) 14 20 43
(d) 16
21(a) 45
9 None (b) 45
(c) NA
22(a) NA
(b) 33-35
23 49
<FN>
*Designates page number is located in annual report.
**Designates page number in prospectus.
/TABLE
<PAGE>
PAGE 3
IDS Federal Income Fund
Prospectus
Aug. 29, 1994
The goals of IDS Federal Income Fund, Inc. are to provide
shareholders with a high level of current income and safety of
principal consistent with investment in U.S. government and
government agency securities.
This prospectus contains facts that can help you decide if the fund
is the right investment for you. Read it before you invest and
keep it for future reference.
Additional facts about the fund are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated Aug. 29, 1994, is incorporated here by
reference. For a free copy contact IDS Shareholder Service.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
IDS Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
<PAGE>
PAGE 4
Table of contents
The fund in brief
Goal
Types of fund investments
Manager and distributor
Portfolio manager
Sales charge and fund expenses
Sales charge
Operating expenses
Performance
Financial highlights
Total returns
Yield
Key terms
Investment policies and risks
Facts about investments and their risks
Valuing assets
How to buy, exchange or sell shares
How to buy shares
How to exchange shares
How to sell shares
Reductions of the sales charge
Waivers of the sales charge
Special shareholder services
Services
Quick telephone reference
Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How the fund is organized
Shares
Voting rights
Shareholder meetings
Directors and officers
Investment manager and transfer agent
Distributor
About IDS
General information
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PAGE 5
The fund in brief
Goals
IDS Federal Income Fund seeks to provide shareholders with a high
level of current income and safety of principal consistent with
investment in U.S. government and government agency securities.
Because any investment involves risk, achieving this goal cannot be
guaranteed. Only shareholders can change the goal.
Types of fund investments
The fund is a diversified mutual fund that invests at least 65% of
its total assets in securities issued or guaranteed as to principal
and interest by the U.S. government and its agencies. Most
investments are in pools of mortgage loans. The fund also may
invest in non-governmental debt securities, derivative instruments
and money market instruments. Some of the fund's investments may
be considered speculative and involve additional investment risks.
Manager and distributor
The fund is managed by IDS Financial Corporation (IDS), a provider
of financial services since 1894. IDS currently manages more than
$36 billion in assets for the IDS MUTUAL FUND GROUP. Shares of the
fund are sold through IDS Financial Services Inc., a wholly owned
subsidiary of IDS.
Portfolio manager
Jim Snyder joined IDS in 1989 as an investment analyst. He was
appointed portfolio manager of this fund in 1993 after having
served as associate portfolio manager of this fund from 1992 to
1993. He also is portfolio manager of IDS Strategy, Short-Term
Income Fund and IDS Life Series Fund, Government Securities
Portfolio. Prior to joining IDS, he had been a Quantitative
Investment Analyst at Harris Trust.
Sales charge and fund expenses
Sales charge
When you buy shares, you pay a maximum sales charge of 5% of the
public offering price. This charge can be reduced, depending on
your total investments in IDS funds. See "Reductions of the sales
charge."
Shareholder transaction expenses
Maximum sales charge on purchases
(as a percent of offering price).................5%
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PAGE 6
Operating expenses
The fund pays certain expenses out of its assets; the expenses are
reflected in the fund's daily share price and dividends, and are
not charged directly to shareholder accounts. The following chart
gives a projection of these expenses -- based on historical
expenses.
Annual fund operating expenses
(% of average daily net assets):
Management fee 0.53%
12b-1 fee 0.05%
Other expenses 0.18%
Total 0.76%
Example: Suppose for each year for the next 10 years, fund
expenses are as above and annual return is 5%. If you sold your
shares at the end of the following years, for each $1,000 invested,
you would pay total expenses of:
1 year 3 years 5 years 10 years
$57 $73 $90 $140
This example does not represent actual expenses, past or future.
Actual expenses may be higher or lower than those shown. Because
the fund pays annual distribution fees, shareholders who stay in
the fund for more than 20 years may indirectly pay an equivalent
of more than a 7.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.
Fund expenses include fees paid to IDS for:
o managing its portfolio, providing investment research and
administrative services
o distribution (known as 12b-1 fees, after the federal rule that
authorizes them)
o transfer agent services, including handling shareholder
accounts and records.
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PAGE 7
Performance
Financial highlights
<TABLE>
<CAPTION>
Performance
Financial highlights
Fiscal period ended June 30,
Per share income and capital changes*
1994 1993 1992 1991 1990 1989 1988 1987 1986**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value $5.30 $5.19 $5.10 $5.00 $5.02 $5.02 $5.01 $5.07 $5.00
beginning of period
Income from investment operations:
Net investment income .29 .32 .36 .42 .42 .40 .41 .40 .41
Net gains (losses) on (.31) .13 .09 .09 (.02) -- .01 (.03) .10
securities (both realized
and unrealized)
Total from investment (.02) .45 .45 .51 .40 .40 .42 .37 .51
operations
Less distributions:
Dividends from net (.29) (.32) (.36) (.41) (.42) (.40) (.41) (.40) (.41)
investment income
Distributions from (.14) (.02) -- -- -- -- -- (.03) (.03)
realized gains
Total distributions (.43) (.34) (.36) (.41) (.42) (.40) (.41) (.43) (.44)
Net asset value, $4.85 $5.30 $5.19 $5.10 $5.00 $5.02 $5.02 $5.01 $5.07
end of period
Ratios/supplemental data
1994 1993 1992 1991 1990 1989 1988 1987 1986**
Net assets, end of period $1,025 $1,025 $834 $397 $234 $183 $183 $181 $202
(in millions)
Ratio of expenses to .76% .77% .79% .80% .82% .79% .80% .86% .73%
average daily net assets
Ratio of net income to 5.64% 6.03% 6.93% 8.20% 8.53% 8.15% 8.24% 7.81% 9.09%***
average daily net assets
Portfolio turnover rate 304% 227% 104% 52% 104% 81% 143% 36% 108%
(excluding short-term
securities)
Total return+ (0.5%) 9.0% 9.0% 10.8% 8.3% 8.4% 8.8% 7.4% 10.5%++
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Commencement of operations. Period from Aug. 19, 1985 to June 30, 1986.
***Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++For the fiscal period ended June 30, 1986, the annualized total return is 12.2%.
The information in this table has been audited by KPMG Peat Marwick, independent
auditors. The independent auditors' report and additional information about the
performance of the fund is contained in the fund's annual report which, if not
included with this prospectus, may be obtained without charge.
</TABLE>
The information in this table has been audited by KPMG Peat
Marwick, independent auditors. The independent auditors' report
and additional information about the performance of the fund are
contained in the fund's annual report which, if not included with
this prospectus, may be obtained without charge.
<PAGE>
PAGE 8
Total returns
Average annual total returns as of June 30, 1994
Purchase 1 year 5 years Since
made ago ago inception*
IDS Federal Income Fund -5.5% +6.1% +7.5%
Lehman Aggregate
Bond Index -1.3% +8.5% +9.7%
Lehman Treasury Bond
Index -1.3% +8.3% +9.2%
* Aug. 19, 1985
Cumulative total returns as of June 30, 1994
Purchase 1 year 5 years Since
made ago ago inception*
IDS Federal Income Fund -5.5% +34.6% + 88.3%
Lehman Aggregate
Bond Index -1.3% +50.2% +127.3%
Lehman Treasury Bond
Index -1.3% +49.1% +119.1%
*Aug. 19, 1985
These examples show total returns from hypothetical investments in
the fund. These returns are compared to those of popular indexes
for the same periods.
For purposes of calculation, information about the fund assumes a
sales charge of 5%, makes no adjustments for taxes an investor may
have paid on the reinvested income and capital gains, and covers a
period of widely fluctuating securities prices. Returns shown
should not be considered a representation of the fund's future
performance.
The fund invests primarily in debt securities that may be different
from those in the indexes. The indexes reflect reinvestment of all
distributions and changes in market prices, but exclude brokerage
commissions or other fees.
Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed securities
and mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in the fund.
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PAGE 9
Lehman Treasury Bond Index is made up of a representative list of
government bonds which include all publicly issued obligations of
the U.S. Treasury. The index is frequently used as a general
measure of bond market performance. However, the securities used
to create the index may not be representative of the debt
securities held in the fund.
Yield
The fund's annualized yield for the 30-day period ended June 30,
1994, was 5.37%.
The fund calculates this 30-day annualized yield by dividing:
o net investment income per share deemed earned during a 30-day
period by
o the public offering price per share on the last day of the
period, and
o converting the result to a yearly equivalent figure.
The fund's yield varies from day to day, mainly because share
values and offering prices (which are calculated daily) vary in
response to changes in interest rates. Net investment income
normally changes much less in the short run. Thus, when interest
rates rise and share values fall, yield tends to rise. When
interest rates fall, yield tends to follow.
Past yields should not be considered an indicator of future yields.
Key terms
Net asset value (NAV) - Value of a single fund share. It is the
total market value of all of a fund's investments and other assets,
less any liabilities, divided by the number of shares outstanding.
The NAV is the price you receive when you sell your shares. It
usually changes from day to day, and is calculated at the close of
business, normally 3 p.m. Central time, each business day (any day
the New York Stock Exchange is open). NAV generally declines as
interest rates increase and rises as interest rates decline.
Public offering price - Price at which you buy shares. It is the
NAV plus the sales charge. NAVs and public offering prices of IDS
funds are listed each day in major newspapers and financial
publications.
Investment income - Dividends and interest earned on securities
held by the fund.
Capital gains or losses - Increase or decrease in value of the
securities the fund holds. Gains or losses are realized when
securities that have increased or decreased in value are sold. A
fund also may have unrealized gains or losses when securities
increase or decrease in value but are not sold.
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Distributions - Payments to shareholders of two types: investment
income (dividends) and realized net long-term capital gains
(capital gains distributions).
Total return - Sum of all of your returns for a given period,
assuming you reinvest all distributions. Calculated by taking the
total value of shares you own at the end of the period (including
shares acquired by reinvestment), less the price of shares you
purchased at the beginning of the period.
Average annual total return - The annually compounded rate of
return over a given time period (usually two or more years) --
total return for the period converted to an equivalent annual
figure.
Yield - Net investment income earned per share for a specified time
period, divided by the offering price at the end of the period.
Investment policies and risks
The fund invests primarily in securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies and
instrumentalities. Under normal market conditions, at least 65% of
the fund's total assets will be invested in such securities.
Although the fund may invest in any U.S. government securities, it
is anticipated that most of the portfolio will consist of U.S.
government securities representing part ownership of pools of
mortgage loans.
The various types of investments the portfolio manager uses to
achieve investment performance are described in more detail in the
next section and in the SAI.
Facts about investments and their risks
Government securities: U.S. Treasury bonds, notes and bills, and
securities including mortgage pass through certificates of the
Government National Mortgage Association (GNMA), are guaranteed by
the United States. Other U.S. government securities are issued or
guaranteed by federal agencies or government-sponsored enterprises
but are not direct obligations of the United States. These include
securities supported by the right of the issuer to borrow from the
Treasury, such as obligations of Federal Home Loan Mortgage
Corporation (FHLMC) and Federal National Mortgage Association
(FNMA) bonds. Because the U.S. government is not obligated to
provide financial support to its instrumentalities, the fund will
invest only in securities issued by those instrumentalities where
the investment manager is satisfied the credit risk is minimal.
Mortgage-backed securities: A mortgage pass through certificate
that represents an interest in a pool, or group, of mortgage loans
assembled by GNMA, FNMA, or FHLMC or non-governmental entities. In
pass-through certificates, both principal and interest payments,
including prepayments, are passed through to the holder of the
certificate. Prepayments on underlying mortgages result in
<PAGE>
PAGE 11
a loss of anticipated interest, and the actual yield (or total
return) to the fund, which is influenced by both stated interest
rates and market conditions, may be different than the quoted yield
on the certificates. The fund may also invest in non-governmental
mortgage-related securities and debt securities, such as bonds,
debentures and collateralized mortgage obligations secured by
mortgages on commercial real estate or residential rental
properties, provided such securities are rated A or better by
Moody's Investors Service, Inc. or Standard & Poor's Corporation
or, if not rated, are of equivalent investment quality as
determined by the fund's investment manager. Some U.S. government
securities may be purchased on a "when-issued" basis, which means
that it may take as long as 45 days after the purchase before the
securities are delivered to the fund.
The fund may invest in stripped mortgage-backed securities.
Generally, there are two classes of stripped mortgage-backed
securities: Interest Only (IO) and Principal Only (PO). IOs
entitle the holder to receive distributions consisting of all or a
portion of the interest on the underlying pool of mortgage loans or
mortgage-backed securities. POs entitle the holder to receive
distributions consisting of all or a portion of the principal of
the underlying pool of mortgage loans or mortgage-backed
securities. The cash flows and yields on IOs and POs are extremely
sensitive to the rate of principal payments (including prepayments)
on the underlying mortgage loans or mortgage-backed securities. A
rapid rate of principal payments may adversely affect the yield to
maturity of IOs. A slow rate of principal payments may adversely
affect the yield to maturity of POs. If prepayments of principal
are greater than anticipated, an investor may incur substantial
losses. If prepayment of principal are slower than anticipated,
the yield on a PO will be affected more severely than would be the
case with a traditional mortgage-backed security.
The fund may purchase mortgage-backed security (MBS) put spread
options and write covered MBS call spread options. MBS spread
options are based upon the changes in the price spread between a
specified mortgage-backed security and a like-duration Treasury
security. MBS spread options are traded in the OTC market and are
of short duration, typically one to two months. The fund would buy
or sell covered MBS call spread options in situations where
mortgage-backed securities are expected to under perform like-
duration Treasury securities.
Debt securities: The price of an investment-grade bond fluctuates
as interest rates change or if its credit rating is upgraded or
downgraded. Securities that are subsequently downgraded in quality
may continue to be held by the fund and will be sold only if the
fund's portfolio manager believes it is advantageous to do so.
Derivative instruments: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no <PAGE>
PAGE 12
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies,
or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties, and inability to close such instruments. The fund will
use derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The fund will designate cash or appropriate liquid
assets to cover its portfolio obligations. No more than 5% of the
fund's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. For further information, see
the options and futures appendix in the SAI.
Securities and derivative instruments that are illiquid: Illiquid
means the security or derivative instrument cannot be sold quickly
in the normal course of business. Some investments cannot be
resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
of directors and consider relevant factors such as the nature of
the security and the number of likely buyers when determining
whether a security is illiquid. No more than 10% of the fund's net
assets will be held in securities and derivative instruments that
are illiquid.
Money market instruments: Short-term debt securities rated in the
top two grades are used to meet daily cash needs and at various
times to hold assets until better investment opportunities arise.
Generally less than 25% of the fund's net assets are in these money
market instruments. However, for temporary defensive purposes
these investments could exceed that amount for a limited period of
time.
The investment policies described above may be changed by the board
of directors.
Lending portfolio securities: The fund may lend its securities to
earn income so long as borrowers provide collateral equal to the
market value of the loans. The risks are that borrowers will not
provide collateral when required or return securities when due.
Unless shareholders approve otherwise, loans may not exceed 30% of
the fund's net assets.
The various types of investments the portfolio manager uses to
achieve investment performance are described in more detail in the
next section and in the SAI.
<PAGE>
PAGE 13
Valuing assets
o Securities (except bonds) and assets with available market
values are valued on that basis.
o Securities maturing in 60 days or less are valued at amortized
cost.
o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board of directors.
How to buy, exchange or sell shares
How to buy shares
If you're investing in this fund for the first time, you'll need to
set up an account. Your financial planner will help you fill out
and submit an application. Once your account is set up, you can
choose among several convenient ways to invest.
Important: When opening an account, you must provide IDS with your
correct Taxpayer Identification Number (Social Security or Employer
Identification number). See "Distributions and taxes."
When you buy shares for a new or existing account, the price you
pay per share is determined at the close of business on the day
your investment is received and accepted at the Minneapolis
headquarters.
Purchase policies:
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day and to receive that day's
share price. Otherwise your purchase will be processed the
next business day and you will pay the next day's share price.
o The minimums allowed for investment may change from time to
time.
o Wire orders can be accepted only on days when your bank, IDS,
the fund and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and the fund accepts the purchase.
o IDS and the fund are not responsible for any delays that occur
in wiring funds, including delays in processing by the bank.
o You must pay any fee the bank charges for wiring.
o The fund reserves the right to reject any application for any
reason.
<PAGE>
PAGE 14
<TABLE><CAPTION>
Three ways to invest
<C> <C> <C>
1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Additional
to: investments: $ 100
IDS Financial Services Inc. Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none
Your financial planner will help
you with this process.
2
By scheduled Contact your financial planner Minimum amounts
investment plan to set up one of the following Initial investment: $100
scheduled plans: Additional
investments: $100/mo
o automatic payroll deduction Account balances: none
(on active plans of
o bank authorization monthly payments)
o direct deposit of
Social Security check
o other plan approved by the fund
3
By wire If you have an established account, If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the fund, less
Routing No. 091000019 any costs the fund or IDS
Minneapolis, MN incurs, will be returned
Attn: Domestic Wire Dept. promptly.
Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).
<FN>
*If your account balance falls below $300, IDS will ask you in writing to bring it up to $300 or establish a scheduled
investment plan. If you don't do so within 30 days, your shares can be redeemed and the proceeds mailed to you.
</TABLE>
How to exchange shares
You can exchange your shares of the fund at no charge for shares of
any other publicly offered fund in the IDS MUTUAL FUND GROUP
available in your state. For complete information, including fees
and expenses, read the prospectus carefully before exchanging into
a new fund.
If your exchange request arrives at the Minneapolis headquarters
before the close of business, your shares will be redeemed at the
net asset value set for that day. The proceeds will be used to
purchase new fund shares the same day. Otherwise, your exchange
will take place the next business day at that day's net asset
value.
For tax purposes, an exchange represents a sale and purchase and
may result in a gain or loss. However, you cannot create a tax
loss (or reduce a taxable gain) by exchanging from the fund within
91 days of your purchase. For further explanation, see the SAI.
<PAGE>
PAGE 15
How to sell shares
You can sell (redeem) your shares at any time. IDS Shareholder
Service will mail payment within seven days after receiving your
request.
When you sell shares, the amount you receive may be more or less
than the amount you invested. Your shares will be redeemed at net
asset value at the close of business on the day your request is
accepted at the Minneapolis headquarters. If your request arrives
after the close of business, the price per share will be the net
asset value at the close of business on the next business day.
A redemption is a taxable transaction. If the fund's net asset
value when you sell shares is more or less than the cost of your
shares, you will have a gain or loss, which can affect your tax
liability. Redeeming shares held in an IRA or qualified retirement
account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax adviser.
<TABLE><CAPTION>
Two ways to request an exchange or sale of shares
1
<C> <C>
By letter Include in your letter:
o the name of the fund(s)
o your account number(s) (for exchanges, both funds must
Regular mail: be registered in the same ownership)
IDS Shareholder Service o your Taxpayer Identification Number (TIN)
Attn: Redemptions o the dollar amount or number of shares you want to
P.O. Box 534 exchange or sell
Minneapolis, MN o signature of all registered account owners
55440-0534 o for redemptions, indicate how you want your sales proceeds delivered to you
o any paper certificates of shares you hold
Express mail:
IDS Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402
2
By phone
IDS Telephone Transaction o The fund and IDS will honor any telephone exchange
Service: or redemption request believed to be authentic and will
800-437-3133 or use reasonable procedures to confirm that they are. This
612-671-3800 includes asking identifying questions and tape recording calls. So long as reasonable
procedures are followed, neither the fund nor IDS will be liable for any loss resulting
from fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges
NOT apply by writing IDS Shareholder Service. Each registered owner must sign the request.
o IDS answers phone requests promptly, but you may experience delays when call volume is
high. If you are unable to get through, use mail procedure as an alternative.
o Phone privileges may be modified or discontinued at any time.
Minimum amount
Redemption: $100
Maximum amount
Redemption: $50,000
</TABLE>
Exchange policies:
o You may make up to three exchanges within any 30-day period,
with each limited to $300,000. These limits do not apply to
scheduled exchange programs and certain employee benefit plans or
other arrangements through which one shareholder represents the
interests of several. Exceptions may be allowed with pre-approval
of the fund.
<PAGE>
PAGE 16
o If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for
another exchange.
o If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured party.
o IDS and the fund reserve the right to reject any exchange, limit
the amount, or modify or discontinue the exchange privilege, to
prevent abuse or adverse effects on the fund and its shareholders.
For example, if exchanges are too numerous or too large, they may
disrupt the fund's investment strategies or increase its costs.
Redemption policies:
o A "change of mind" option allows you to change your mind after
requesting a redemption and to use all or part of the proceeds to
buy new shares in the same account at the net asset value, rather
than the offering price on the date of a new purchase. To do so,
send a written request within 30 days of the date your redemption
request was received. Include your account number and mention this
option. This privilege may be limited or withdrawn at any time,
and it may have tax consequences.
o A telephone redemption request will not be allowed within 30
days of a phoned-in address change.
Important: If you request a redemption of shares you recently
purchased by a check or money order that is not guaranteed, the
fund will wait for your check to clear. Please expect a minimum of
10 days from the date of purchase before IDS mails a check to you.
(A check may be mailed earlier if your bank provides evidence
satisfactory to the fund and IDS that your check has cleared.)
<PAGE>
PAGE 17
<TABLE><CAPTION>
Three ways to receive payment when you sell shares
<C> <C>
1
By regular or express mail o Mailed to the address on record.
o Payable to names listed on the account.
NOTE: The express mail delivery charges
you pay will vary depending on the
courier you select.
2
By wire o Minimum wire redemption: $1,000.
o Request that money be wired to your bank.
o Bank account must be in the same
ownership as the IDS account.
NOTE: Pre-authorization required. For
instructions, contact your financial
planner or IDS Shareholder Service.
3
By scheduled payout plan o Minimum payment: $50.
o Contact your financial planner or IDS
Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
o Buying new shares while under a payout
plan may be disavantageous because of
sales charges.
</TABLE>
Reductions of the sales charge
You pay a 5% sales charge on the first $50,000 of your total
investment and less on investments after the first $50,000:
Total investment Sales charge as a
percent of:*
Public Net
offering amount
price invested
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $150,000 4.0 4.17
Next $250,000 3.0 3.09
Next $500,000 2.0 2.04
Next $2,000,000 1.0 1.01
More than $3,000,000 0.5 0.50
* To calculate the actual sales charge on an investment greater
than $50,000, amounts for each applicable increment must be
totaled. See the SAI.
Your sales charge may be reduced, depending on the totals of:
o the amount you are investing in this fund now,
o the amount of your existing investment in this fund, if any, and
o the amount you and your immediate family (spouse or unmarried
children under 21) are investing or have in other funds in the IDS
MUTUAL FUND GROUP that carry a sales charge.
<PAGE>
PAGE 18
Other policies that affect your sales charge:
o IDS Cash Management Fund and IDS Tax-Free Money Fund do not
carry sales charges. However, you may count investments in these
funds if you acquired shares in them by exchanging shares from IDS
funds that carry sales charges.
o IRA purchases or other employee benefit plan purchases made
through a payroll deduction plan or through a plan sponsored by an
employer, association of employers, employee organization or other
similar entity, may be added together to reduce sales charges for
all shares purchased through that plan.
For more details, see the SAI.
Waivers of the sales charge
Sales charges do not apply to:
o Current or retired trustees, directors, officers or employees of
the fund or IDS or its subsidiaries, their spouses and unmarried
children under 21.
o Current or retired IDS planners, their spouses and unmarried
children under 21.
o Qualified employee benefit plans* if the plan:
- has at least $1 million invested in funds of the IDS MUTUAL
FUND GROUP; or
- has 500 or more participants; or
- uses a daily transfer recordkeeping service offering
participants daily access to IDS funds.
(Participants in certain qualified plans for which the initial
sales charge is waived may be subject to a deferred sales charge of
up to 4% on certain redemptions. For more information, see the
SAI.)
o Trust companies or similar institutions, and charitable
organizations that meet the definition in Section 501(c)(3) of the
Internal Revenue Code.* These must have at least $1 million
invested in funds of the IDS MUTUAL FUND GROUP.
o Purchases made within 30 days after certain redemptions. A
waiver applies up to the amount redeemed from:
- an IDS product in a qualified plan subject to a deferred sales
charge; or
- a qualified plan where IDS Trust acts as trustee and/or
recordkeeper; or
- IDS Strategy Fund.
Send the fund a written request along with your payment, indicating
the amount of the redemption and the date on which it occurred.
o Purchases made with dividend or capital gain distributions from
another fund in the IDS MUTUAL FUND GROUP that has a sales charge.
*Eligibility must be determined in advance by IDS. To do so,
contact your financial planner. <PAGE>
PAGE 19
Special shareholder services
Services
To help you track and evaluate the performance of your investments,
IDS provides these services:
Quarterly statements listing all of your holdings and transactions
during the previous three months.
Yearly tax statements featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information - which simplifies tax calculations.
A personalized mutual fund progress report detailing returns on
your initial investment and cash-flow activity in your account. It
calculates a total return to reflect your individual history in
owning fund shares. This report is available from your financial
planner.
Quick telephone reference
IDS Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
IDS Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
IDS Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
Distributions and taxes
The fund distributes to shareholders investment income and capital
gains. It does so to qualify as a regulated investment company and
to avoid paying corporate income and excise taxes. Dividend and
capital gains distributions will have tax consequences you should
know about.
Dividend and capital gain distributions
The fund distributes its net investment income (dividends and
interest earned on securities held by the fund, less operating
expenses) to shareholders of record monthly. Short-term capital
gains distributed are included in net investment income. Net <PAGE>
PAGE 20
realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they're
distributed, net capital gains are included in the value of each
share. After they're distributed, the value of each share drops by
the per-share amount of the distribution. (If your distributions
are reinvested, the total value of your holdings will not change.)
Reinvestments
Dividends and capital gain distributions are automatically
reinvested in additional shares of the fund, unless:
o you request the fund in writing or by phone to pay
distributions to you in cash, or
o you direct the fund to invest your distributions in any
publicly available IDS fund for which you've previously opened
an account.
You pay no sales charge on shares purchased through reinvestment
from this fund into any IDS fund. The reinvestment price is the
net asset value at close of business on the day the distribution is
paid. (Your quarterly statement from IDS will confirm the amount
invested and the number of shares purchased.)
If you choose cash distributions, you will receive only those
declared after your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at the
then-current net asset value and make future distributions in the
form of additional shares.
Taxes
Distributions are subject to federal income tax. In certain
states, fund distributions, to the extent they consist of interest
from securities of the U.S. government and certain of its agencies
or instrumentalities, may be exempt from state and local taxes.
Interest from obligations which are merely guaranteed by the U.S.
government or one of its agencies, such as GNMA certificates, is
not entitled to this exemption. Distributions are taxable in the
year the fund pays them regardless of whether you take them in cash
or reinvest them.
Each January, IDS sends you a statement showing the kinds and total
amount of all distributions you received during the previous year.
You must report all distributions on your tax returns, even if they
are reinvested in additional shares.
"Buying a dividend" creates a tax liability. This means buying
shares shortly before a net investment income or a capital gain
distribution. You pay the full pre-distribution price for the
shares, then receive a portion of your investment back as a
distribution, which is taxable.
Redemptions and exchanges subject you to a tax on any capital gain.
If you sell shares for more than their cost, the difference is a <PAGE>
PAGE 21
capital gain. Your gain may be either short term (for shares held
for one year or less) or long term (for shares held for more than
one year).
Your Taxpayer Identification Number (TIN) is important. As with
any financial account you open, you must list your current and
correct Taxpayer Identification Number (TIN) -- either your Social
Security or Employer Identification number. The TIN must be
certified under penalties of perjury on your application when you
open an account at IDS.
If you don't provide the TIN to IDS, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
taxable distributions and proceeds from certain sales and
exchanges. You also could be subject to further penalties, such
as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information
You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:
Individual or joint account The individual or first person
listed on the account
Custodian account of a minor The minor
(Uniform Gift/Transfer to Minors
Act)
A living trust The grantor-trustee (the person
who puts the money into the
trust)
An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial planner or
local IDS office for federal Form W-9, "Request for Taxpayer
Identification Number and Certification."<PAGE>
PAGE 22
Important: This information is a brief and selective summary of
certain federal tax rules that apply to this fund. Tax matters are
highly individual and complex, and you should consult a qualified
tax adviser about your personal situation.
How the fund is organized
The fund is a diversified, open-end management investment company,
as defined in the Investment Company Act of 1940. It was
incorporated on March 12, 1985 in Minnesota. The fund headquarters
are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-
3268.
Shares
The fund is owned by its shareholders. All shares issued by the
fund are of the same class -- capital stock. Par value is 1 cent
per share. Both full and fractional shares can be issued.
The fund no longer issues stock certificates.
Voting rights
As a shareholder, you have voting rights over the fund's management
and fundamental policies. You are entitled to one vote for each
share you own.
Shareholder meetings
The fund does not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors.
Directors and officers
Shareholders elect a board of directors who oversee the operations
of the fund and choose its officers. Its officers are responsible
for day-to-day business decisions based on policies set by the
board. The board has named an executive committee that has
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP, except for Mr. Dudley, who is a director of all
publicly offered funds.
Directors and officers of the fund
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
<PAGE>
PAGE 23
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
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 and chief executive officer, Minnesota Mining and
Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
Interested director who is a partner in a law firm that has
represented an IDS subsidiary
Anne P. Jones
Partner, law firm of Sutherland, Asbill & Brennan.
Interested directors who are officers and/or employees of IDS
William H. Dudley
Executive vice president, IDS.
David R. Hubers
President and chief executive officer, IDS.
John R. Thomas
Senior vice president, IDS.
Other officer
Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.
Refer to the SAI for the directors' and officers' biographies.
Investment manager and transfer agent
The fund pays IDS for managing its portfolio, providing
administrative services and serving as transfer agent (handling
shareholder accounts).
Under its Investment Management and Services Agreement, IDS
determines which securities will be purchased, held or sold
(subject to the direction and control of the fund's board of
directors). For this services the fund pays IDS a two-part fee.
<PAGE>
PAGE 24
The first part is based on the combined average daily net assets of
all funds in the IDS MUTUAL FUND GROUP, as follows:
Net assets of
IDS MUTUAL Annual
FUND GROUP* fee
First $5 billion 0.46%
Each additional Decreasing
$5 billion percentages
More than $50 billion 0.32%
*Includes all funds except the money market funds.
The second part is equal to 0.13% of the fund's average daily net
assets during the fiscal year.
For the fiscal year ended June 30, 1994, the fund paid IDS a total
investment management fee of 0.53% of its average daily net assets.
Under the Agreement, the fund also pays taxes, brokerage
commissions and nonadvisory expenses.
In addition, under a separate Transfer Agency Agreement, IDS
maintains shareholder accounts and records. The fund pays IDS an
annual fee of $15.50 per shareholder account for this service.
Distributor
The fund sells shares through IDS Financial Services Inc., a wholly
owned subsidiary of IDS, under a Distribution Agreement. Financial
planners representing IDS Financial Services Inc. provide
information to investors about individual investment programs, the
fund and its operations, new account applications, exchange and
redemption requests. The cost of these services is paid partially
by the fund's sales charge.
Portions of sales charges may be paid to securities dealers who
have sold the fund's shares, or to banks and other financial
institutions. The proceeds paid to others range from 0.8% to 4% of
the fund's offering price depending on the monthly sales volume.
To help defray costs not covered by sales charges, including costs
for marketing, sales administration, training, overhead, direct
marketing programs, advertising and related functions, the fund
pays IDS a 12b-1 fee. This fee is paid under a Plan and
Supplemental Agreement of Distribution that follows the terms of
Rule 12b-1 of the Investment Company Act of 1940 (and a Securities
and Exchange Commission order). Under this Agreement, the fund
pays IDS $6 per shareholder account per year. The total 12b-1 fee
paid by the fund for the fiscal year ended June 30, 1994 was 0.05%
of its average daily net assets. This fee will not cover all of
the costs incurred by IDS.
Total management and distribution fees and expenses paid by the
fund in the fiscal year ended June 30, 1994 were 0.76% of its
average daily net assets.
<PAGE>
PAGE 25
Total fees and expenses (excluding taxes and brokerage commissions)
cannot exceed the most restrictive applicable state expense
limitation.
About IDS
General information
The IDS family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.
Besides managing investments for all publicly offered funds in the
IDS MUTUAL FUND GROUP, IDS also manages investments for itself and
its subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on June 30, 1994 were more
than $100 billion.
IDS Financial Services Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more
than 7,800 planners.
Other IDS subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.
IDS is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is
a wholly owned subsidiary of American Express Company, a financial
services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285. The fund may pay brokerage
commissions to broker-dealer affiliates of American Express and
IDS.
<PAGE>
PAGE 26
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS FEDERAL INCOME FUND
August 29, 1994
This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the fund's prospectus and the
financial statements contained in the fund's Annual Report which
may be obtained from your IDS personal financial planner or by
writing to IDS Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.
This SAI is dated Aug. 29, 1994, and it is to be used with the
fund's prospectus dated Aug. 29, 1994, and the fund's Annual Report
for the fiscal year ended June 30, 1994.
<PAGE>
PAGE 27
TABLE OF CONTENTS
Goal and Investment Policies.........................See Prospectus
Additional Investment Policies................................p. 3
Portfolio Transactions........................................p. 5
Brokerage Commissions Paid to Brokers Affiliated with IDS.....p. 8
Performance Information.......................................p. 8
Valuing Fund Shares...........................................p.10
Investing in the Fund.........................................p.12
Redeeming Shares..............................................p.15
Pay-out Plans.................................................p.16
Exchanges.....................................................p.17
Capital Loss Carryover........................................p.18
Taxes.........................................................p.18
Agreements....................................................p.18
Directors and Officers........................................p.21
Custodian.....................................................p.24
Independent Auditors..........................................p.24
Financial Statements..............................See Annual Report
Prospectus....................................................p.25
Appendix A: Description of Commercial Paper Ratings
and Additional Information on Investment
Policies.........................................p.26
Appendix B: Mortgage-Backed Securities.......................p.27
Appendix C: Options and Interest Rate Futures Contracts......p.30
Appendix D: Dollar-Cost Averaging............................p.36
<PAGE>
PAGE 28
ADDITIONAL INVESTMENT POLICIES
These are investment policies in addition to those presented in the
prospectus. Unless holders of a majority of the outstanding shares
agree to make the change the fund will not:
'Invest more than 5% of its total assets, at market value, in
securities of any one company, government or political subdivision
thereof, except the limitation will not apply to investments in
securities issued by the U.S. government, its agencies or
instrumentalities, and except that up to 25% of the fund's total
assets may be invested without regard to this 5% limitation.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'Invest more than 5% of its total assets, at cost, in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.
'Invest in securities of investment companies except by purchases
in the open market where the dealer's or sponsor's profit is the
regular commission.
'Buy or sell real estate, commodities or commodity contracts,
except the fund may enter into interest rate futures contracts and
make margin deposits on such contracts.
'Buy on margin or sell short, except it may enter into interest
rate futures contracts.
'Invest in a company to control or manage it.
'Pledge or mortgage its assets beyond 15% of the cost of total
assets. If the fund were ever to do so, valuation of the pledged
or mortgaged assets would be based on market values. For purposes
of this restriction, collateral arrangements for margin deposits on
interest rate futures contracts are not deemed to be a pledge of
assets.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The fund has not borrowed in the past and has
no present intention to borrow.
'Make cash loans. The fund, however, does make investments in debt
securities where the sellers agree to repurchase the securities at
cost plus an agreed-upon interest rate within a specified period of
time.
<PAGE>
PAGE 29
'Act as an underwriter (see securities for others). However, under
the securities laws, the fund may be deemed to be an underwriter
when it purchases restricted securities directly from the issuer
and later resells them.
'Make a loan of any part of its assets to IDS Financial Corporation
(IDS), to the directors and officers of IDS or to its own directors
and officers.
'Buy any property or security (other than securities issued by the
fund) from any director or officer of IDS or the fund, nor will the
fund sell any property or security to them.
'Purchase securities of an issuer if the directors and officers of
the fund and of IDS hold more than a certain percentage of the
issuer's outstanding securities. The holdings of all directors and
officers of the fund and of IDS who own more than 0.5% of an
issuer's securities are added together and if in total they own
more than 5%, the fund will not purchase securities of that issuer.
'Issue senior securities, except that this restriction shall not be
deemed to prohibit the fund from borrowing money from banks,
lending its securities, or entering into repurchase agreements or
options or futures contracts.
'Invest more than 5% of its net assets in warrants. Under one
state's law, no more than 2% of the fund's net assets may be
invested in warrants not listed on an Exchange.
'Invest in exploration or development programs, such as oil, gas or
mineral programs.
'Lend portfolio securities in excess of 30% of its net assets, at
market value. This policy may not be changed without shareholder
approval. The current policy of the fund's board of directors is
to make these loans, either long- or short-term, to broker-dealers.
In making such loans the fund gets the market price in cash, U.S.
government securities, letters of credit or such other collateral
as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities
goes up, the fund will get additional collateral on a daily basis.
The risks are that the borrower may not provide additional
collateral when required or return the securities when due. During
the existence of the loan, the fund receives cash payments
equivalent to all interest or other distributions paid on the
loaned securities. A loan will not be made unless the investment
manager believes the opportunity for additional income outweighs
the risks.
Unless changed by the board of directors, the fund will not:
'Invest in a company if the fund's investments would result in the
total holdings of all the funds in the IDS MUTUAL FUND GROUP being
in excess of 15% of that company's issued shares.
<PAGE>
PAGE 30
'Invest more than 10% of the fund's net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have a readily available market,
repurchase agreements with maturities greater than seven days, non-
negotiable fixed-time deposits and over-the-counter options.
In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers,
the investment manager, under guidelines established by the board
of directors, will consider any relevant factors including the
frequency of trades, the number of dealers willing to purchase or
sell the security and the nature of marketplace trades.
In determining the liquidity of commercial paper issued in
transactions not involving a public offering under Section 4(2) of
the Securities Act of 1933, the investment manager, under
guidelines established by the board of directors, will evaluate
relevant factors such as the issuer and the size and nature of its
commercial paper programs, the willingness and ability of the
issuer or dealer to repurchase the paper, and the nature of the
clearance and settlement procedures for the paper.
The fund may maintain a portion of its assets in cash and cash-
equivalent investments. The cash-equivalent investments the fund
may use are negotiable certificates of deposit, non-negotiable
fixed-time deposits, bankers' acceptances and letters of credit of
banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published
annual financial statements) in excess of $100 million (or the
equivalent in the instance of a foreign branch of a U.S. bank) at
the date of investment. The fund also may purchase short-term
commercial paper rated P-2 or better by Moody's or A-2 or better by
S&P or the equivalent and may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934
and with commercial banks. A risk of a repurchase agreement is
that if the seller seeks the protection of the bankruptcy laws, the
fund's ability to liquidate the security involved could be
impaired.
For a description of corporate bond and commercial paper ratings
and additional information on investment policies, see Appendix A.
Additional information on GNMA certificates is included in Appendix
B. For a discussion on options and interest rate futures
contracts, see Appendix C.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, IDS is
authorized to determine, consistent with the fund's investment goal
and policies, which securities will be purchased, held or sold. In
determining where the buy and sell orders are to be placed, IDS has
been directed to use its best efforts to obtain the best available
price and most favorable execution except where otherwise
authorized by the board of directors.<PAGE>
PAGE 31
Normally, the fund's securities are traded on a principal rather
than an agency basis. In other words, IDS will trade directly with
the issuer or with a dealer who buys or sells for its own account,
rather than acting on behalf of another client. IDS does not pay
the dealer commissions. Instead, the dealer's profit, if any, is
the difference, or spread, between the dealer's purchase and sale
price for the security.
Each investment decision made for the fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by IDS or any IDS subsidiary. When
the fund buys or sells the same security as another fund or
account, IDS carries out the purchase or sale in a way the fund
agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the
fund, the fund hopes to gain an overall advantage in execution.
On occasion, it may be desirable to compensate a broker for
research services or for brokerage services by paying a commission
that might not otherwise be charged or a commission in excess of
the amount another broker might charge. The board of directors has
adopted a policy authorizing IDS to do so to the extent authorized
by law, if IDS determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light
of that transaction or IDS' overall responsibilities to the funds
in the IDS MUTUAL FUND GROUP.
Research provided by brokers supplements IDS' own research
activities. Such services include economic data on, and analysis
of, U.S. and foreign economies; information on specific industries;
information about specific companies, including earnings estimates;
purchase recommendations for stocks and bonds; portfolio strategy
services; political, economic, business and industry trend
assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. IDS has obtained, and in the
future may obtain, computer hardware from brokers, including but
not limited to personal computers that will be used exclusively for
investment decision-making purposes, which include the research,
portfolio management and trading functions and other services to
the extent permitted under an interpretation by the Securities and
Exchange Commission.
When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, IDS
must follow procedures authorized by the board of directors. To
date, three procedures have been authorized. One procedure permits
IDS to direct an order to buy or sell a security traded on a
national securities exchange to a specific broker for research
services it has provided. The second procedure permits IDS, in
order to obtain research, to direct an order on an agency basis to
<PAGE>
PAGE 32
buy or sell a security traded in the over-the-counter market to a
firm that does not make a market in that security. The commission
paid generally includes compensation for research services. The
third procedure permits IDS, in order to obtain research and
brokerage services, to cause the fund to pay a commission in excess
of the amount another broker might have charged. IDS has advised
the fund it is necessary to do business with a number of brokerage
firms on a continuing basis to obtain such services as the handling
of large orders, the willingness of a broker to risk its own money
by taking a position in a security, and the specialized handling of
a particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but IDS
believes it may obtain better overall execution. IDS has assured
the fund that under all three procedures the amount of commission
paid will be reasonable and competitive in relation to the value of
the brokerage services performed or research provided.
All other transactions shall be placed on the basis of obtaining
the best available price and the most favorable execution. In so
doing, if in the professional opinion of the person responsible for
selecting the broker or dealer, several firms can execute the
transaction on the same basis, consideration will be given by such
person to those firms offering research services. Such services
may be used by IDS in providing advice to all the funds in the IDS
MUTUAL FUND GROUP and other accounts advised by IDS, even though it
is not possible to relate the benefits to any particular fund or
account.
Each investment decision made for the fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by IDS or any of its subsidiaries.
When the fund buys or sells the same security as another fund or
account, IDS carries out the purchase or sale in a way the fund
agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the
fund, the fund hopes to gain an overall advantage in execution.
IDS has assured the fund it will continue to seek ways to reduce
brokerage costs.
On a periodic basis, IDS makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions.
The review evaluates execution, operational efficiency and research
services.
The fund paid total brokerage commissions of $119,413 for the
fiscal year ended June 30, 1994, $187,642 for fiscal year 1993, and
$10,752 for fiscal year 1992. Substantially all firms through whom
transactions were executed provide research services.
<PAGE>
PAGE 33
No transactions were directed to brokers because of research
services they provided to the fund.
The fund acquired no securities of its regular brokers or dealers
or of the parents of those brokers or dealers that derived more
than 15% of gross revenue from securities-related activities during
the fiscal year ended June 30, 1994.
The portfolio turnover rate was 227% in the fiscal year ended June
30, 1993, and 304% in fiscal year 1994.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH IDS
Affiliates of American Express Company (American Express) (of which
IDS is a wholly owned subsidiary) may engage in brokerage and other
securities transactions on behalf of the fund according to
procedures adopted by the fund's board of directors and to the
extent consistent with applicable provisions of the federal
securities laws. IDS will use an American Express affiliate only
if (i) IDS determines that the fund will receive prices and
executions at least as favorable as those offered by qualified
independent brokers performing similar brokerage and other services
for the fund and (ii) the affiliate charges the fund commission
rates consistent with those the affiliate charges comparable
unaffiliated customers in similar transactions and if such use is
consistent with terms of the Investment Management and Services
Agreement.
No brokerage commissions were paid to brokers affiliated with IDS
for the three most recent fiscal years.
PERFORMANCE INFORMATION
The fund may quote various performance figures to illustrate past
performance. Average annual total return and current yield
quotations used by the fund are based on standardized methods of
computing performance as required by the SEC. An explanation of
these and any other methods used by the fund to compute performance
follows below.
Average annual total return
The fund may calculate average annual total return for certain
periods by finding the average annual compounded rates of return
over the period that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)<PAGE>
PAGE 34
Aggregate total return
The fund may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in
the fund over a specified period of time according to the following
formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Annualized yield
The fund may calculate an annualized yield by dividing the net
investment income per share deemed earned during a period by the
net asset value per share on the last day of the period and
annualizing the results.
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
The fund's annualized yield was 5.37% for the 30-day period ended
June 30, 1994.
The fund's yield, calculated as described above according to the
formula prescribed by the SEC, is a hypothetical return based on
market value yield to maturity for the fund's securities. It is
not necessarily indicative of the amount which was or may be paid
to the fund's shareholders. Actual amounts paid to fund
shareholders are reflected in the distribution yield.
<PAGE>
PAGE 35
Distribution yield
Distribution yield is calculated according to the following
formula:
D divided by POP F equals DY
30 30
where: D = sum of dividends for 30-day period
POP = sum of public offering price for 30-day period
F = annualizing factor
DY = distribution yield
The fund's distribution yield was 5.10% for the 30-day period ended
June 30, 1994.
In its sales material and other communications, the fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.
VALUING FUND SHARES
The value of an individual share is determined by using the net
asset value before shareholder transactions for the day. On July
1, 1994, the first business day following the end of the fiscal
year, the computation looked like this:
<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<C> <C> <C> <C> <C>
$1,025,411,792 divided by 211,575,822 equals $4.85
</TABLE>
In determining net assets before shareholder transactions, the
fund's portfolio securities are valued as follows as of the close
of business of the New York Stock Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.
<PAGE>
PAGE 36
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S.
dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times
and the close of the New York Stock Exchange that will not be
reflected in the computation of the fund's net asset value. If
events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
fund's board of directors.
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.
'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board of directors. The board of
directors is responsible for selecting methods it believes provide
fair value. When possible, bonds are valued by a pricing service
independent from the fund. If a valuation of a bond is not
available from a pricing service, the bond will be valued by a
dealer knowledgeable about the bond if such a dealer is available.
The New York Stock Exchange, IDS and the fund will be closed on the
following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
<PAGE>
PAGE 37
INVESTING IN THE FUND
Sales Charge
Shares of the fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge. The public offering price for an investment of
less than $50,000, made July 1, 1994, was determined by dividing
the net asset value of one share, $4.85, by 0.95 (1.00-0.05 for a
maximum 5% sales charge) for a public offering price of $5.10. The
sales charge is paid to IDS Financial Services Inc. by the person
buying the shares.
Calculation of the Sales Charge
Sales charges are determined as follows:
<TABLE><CAPTION>
Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested
<C> <C> <C> <C>
First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 150,000 4.0 4.17
Next 250,000 3.0 3.09
Next 500,000 2.0 2.04
Next 2,000,000 1.0 1.01
More than 3,000,000 0.5 0.50
</TABLE>
Sales charges on an investment greater than $50,000 are calculated
for each increment separately and then totaled. The resulting
total sales charge, expressed as a percentage of the public
offering price and of the net amount invested, will vary depending
on the proportion of the investment at different sales charge
levels.
For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.
The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<PAGE>
PAGE 38
<TABLE><CAPTION>
On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:
<C> <C> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.75 5.26-4.99
More than 100,000 to 250,000 4.75-4.30 4.99-4.49
More than 250,000 to 500,000 4.30-3.65 4.49-3.79
More than 500,000 to 1,000,000 3.65-2.83 3.79-2.91
More than 1,000,000 to 3,000,000 2.83-1.61 2.91-1.63
More than 3,000,000 1.61-0.50 1.63-0.50
</TABLE>
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:
Deferred Sales Charge
Number of Participants
Total Plan Assets 1-99 100 or more
Less than $1 million 4% 0%
$1 million or more 0% 0%
_________________________________________________________
Reducing the Sales Charge
Sales charges are based on the total amount of your investments in
the fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.
The total amount invested includes any shares held in the fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.
<PAGE>
PAGE 39
Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the fund or IDS or its subsidiaries and
deceased planners.
The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Growth Fund and $5,000 in this fund. If you
invest $40,000 more in this fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.
Finally, Individual Retirement Account (IRA) purchases, or other
employee benefit plan purchases made through a payroll deduction
plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be
added together to reduce sales charges for shares purchased through
that plan.
Systematic Investment Programs
After you make your initial investment of $2,000 or more, you can
arrange to make additional payments of $100 or more on a regular
basis. These minimums do not apply to all systematic investment
programs. You decide how often to make payments - monthly,
quarterly or semiannually. You are not obligated to make any
payments. You can omit payments or discontinue the investment
program altogether. The fund also can change the program or end it
at any time. If there is no obligation, why do it? Putting money
aside is an important part of financial planning. With a
systematic investment program, you have a goal to work for.
How does this work? When you send in your payment, your money is
invested at the public offering price. Your regular investment
amount will purchase more shares when the net asset value per share
decreases, and fewer shares when the net asset value per share
increases. Each purchase is a separate transaction. After each
purchase your new shares will be added to your account. Shares
bought through these programs are exactly the same as any other
fund shares. They can be bought and sold at any time. A
systematic investment program is not an option or an absolute right
to buy shares.
The systematic investment program itself cannot ensure a profit,
nor can it protect against a loss in a declining market. If you
decide to discontinue the program and redeem your shares when their
net asset value is less than what you paid for them, you will incur
a loss.
For a discussion on dollar-cost averaging, see Appendix D.
<PAGE>
PAGE 40
Automatic Directed Dividends
Dividends, including capital gain distributions, paid by another
fund in the IDS MUTUAL FUND GROUP subject to a sales charge, may be
used to automatically purchase shares of this fund without paying a
sales charge. Dividends may be directed to existing accounts only.
Dividends declared by a fund are exchanged to this fund the
following day. Dividends can be exchanged into one fund but cannot
be split to make purchases in two or more funds. Automatic
directed dividends are available between accounts of any ownership
except:
'Between a non-custodial account and an IRA, or 401(k) plan account
or other qualified retirement account of which IDS Trust Company
acts as custodian;
'Between two IDS Trust Company custodial accounts with different
owners (for example, you may not exchange dividends from your IRA
to the IRA of your spouse);
'Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange dividends from your
IRA to your 401(k) plan account, although you may exchange
dividends from one IRA to another IRA).
Moreover, dividends may be directed from accounts established under
the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to
Minors Act (UTMA) only into other UGMA or UTMA accounts with
identical ownership.
Each fund has a different investment goal described in its
prospectus along with other information, including fees and expense
ratios. Before exchanging dividends into another fund, you should
read its prospectus. You will receive a confirmation that the
automatic directed dividend service has been set up for your
account.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.
During an emergency, the board of directors can suspend the
computation of net asset value, stop accepting payments for
purchase of shares or suspend the duty of the fund to redeem shares
for more than seven days. Such emergency situations would occur
if:
'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or
'Disposal of the fund's securities is not reasonably practicable or
it is not reasonably practicable for the fund to determine the fair
value of its net assets, or
<PAGE>
PAGE 41
'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.
Should the fund stop selling shares, the directors may make a
deduction from the value of the assets held by the fund to cover
the cost of future liquidations of the assets so as to distribute
fairly these costs among all shareholders.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments at no extra cost. While the plans differ
on how the pay-out is figured, they all are based on the redemption
of your investment. Net investment income dividends and any
capital gain distributions will automatically be reinvested, unless
you elect to receive them in cash. If you are redeeming a tax-
qualified plan account for which IDS Trust Company acts as
custodian, you can elect to receive your dividends and other
distributions in cash when permitted by law. If you redeem an IRA
or a qualified retirement account, certain restrictions, federal
tax penalties and special federal income tax reporting requirements
may apply. You should consult your tax adviser about this complex
area of the tax law.
IDS normally will not accept applications for a systematic
investment in any fund in the IDS MUTUAL FUND GROUP subject to a
sales charge while a pay-out plan for any of those funds is in
effect. Occasional investments, however, may be accepted.
To start any of these plans, please submit an authorization form
supplied by IDS Shareholder Service. For a copy, write or call IDS
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534, 612-
671-3733. Your authorization must be received in the Minneapolis
headquarters at least five days before the date you want your
payments to begin. The initial payment must be at least $50.
Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you
change or cancel it.
The following pay-out plans are designed to take care of the needs
of most shareholders in a way IDS can handle efficiently and at a
reasonable cost. If you need a more irregular schedule of
payments, it may be necessary for you to make a series of
individual redemptions, in which case you will have to send in a
separate redemption request for each pay-out. The fund reserves
the right to change or stop any pay-out plan and to stop making
such plans available.
Plan #1: Pay-out for a fixed period of time
If you choose this plan, a varying number of shares will be
redeemed at net asset value at regular intervals during the time
period you choose. This plan is designed to end in complete re-
demption of all shares in your account by the end of the fixed
period.
<PAGE>
PAGE 42
Plan #2: Redemption of a fixed number of shares
If you choose this plan, a fixed number of shares will be redeemed
at net asset value for each payment and that amount will be sent to
you. The length of time these payments continue is based on the
number of shares in your account.
Plan #3: Redemption of a fixed dollar amount
If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until your account is closed.
Plan #4: Redemption of a percentage of net asset value
Payments are made based on a fixed percentage of the net asset
value of the shares in the account computed on the day of each
payment. Percentages range from 0.25% to 0.75%. For example, if
you are on this plan and arrange to take 0.5% each month, you will
get $50 if the value of your account is $10,000 on the payment
date.
EXCHANGES
If you buy shares in the fund and then exchange into another fund,
it is considered a sale and subsequent purchase of shares. Under
the tax laws, if this exchange is done within 91 days, any sales
charge waived on a subsequent purchase of shares applies to the new
shares acquired in the exchange. Therefore, you cannot create a
tax loss or reduce a tax gain attributable to the sales charge when
exchanging shares within 91 days.
Retirement Accounts
If you have a nonqualified investment in the fund and you wish to
move part or all of those shares to an IRA or qualified retirement
account in this fund, you can do so without paying a sales charge.
However, this type of exchange is considered a sale of shares and
may result in a gain or loss for tax purposes. In addition, this
type of exchange may result in an excess contribution under IRA or
qualified plan regulations if the amount exchanged plus the amount
of the initial sales charge applied to the amount exchanged exceeds
annual contribution limitations. For example: If you were to
exchange $2,000 in shares from a nonqualified account to an IRA
without considering the 5% ($100) initial sales charge applicable
to that $2,000, you may be deemed to have exceeded current IRA
annual contribution limitations. You should consult your tax
adviser for further details about this complex subject.
<PAGE>
PAGE 43
CAPITAL LOSS CARRYOVER
For federal income tax purposes, the fund had a capital loss
carryover of $32,363,757 at June 30, 1994, that will expire in
2002.
It is unlikely that the board of directors will authorize a
distribution of any net realized capital gains until the available
capital loss carryover has been offset or has expired except as
required by Internal Revenue Service rules.
TAXES
Net investment income dividends received should be treated as
dividend income for federal income tax purposes. Corporate
shareholders are generally entitled to a deduction equal to 70% of
that portion of the fund's dividend that is attributable to
dividends the fund received from domestic (U.S.) securities. For
the fiscal year ended June 30, 1994, none of the fund's net
investment income dividends qualified for the corporate deduction.
Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the fund are paid to shareholders as part of their
ordinary income dividend and are taxable.
Under federal tax law, by the end of a calendar year the fund must
declare and pay dividends representing 98% of ordinary income for
that calendar year and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Oct. 31 of that calendar
year. The fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
amount actually distributed. The fund intends to comply with
federal tax law and avoid any excise tax.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax adviser as to the
application of federal, state and local income tax laws to fund
distributions.
AGREEMENTS
Investment Management and Services Agreement
The fund has an Investment Management and Services Agreement with
IDS. For its services, IDS is paid a fee composed of an asset
charge in two parts. The first part, the group asset charge, is
based on the combined daily net assets of all funds in the IDS
MUTUAL FUND GROUP, except the money market funds, including any new
fund that may be organized in the future. The daily rate of the
group asset charge is based upon the following schedule:
<PAGE>
PAGE 44
Group Asset Charge
Group assets Annual rate at Effective
(billions) each asset level annual rate
First $5 0.460% 0.460%
Next $5 0.440 0.450
Next $5 0.420 0.440
Next $5 0.400 0.430
Next $5 0.390 0.422
Next $5 0.380 0.415
Next $5 0.360 0.407
Next $5 0.350 0.400
Next $5 0.340 0.393
Next $5 0.330 0.387
Over $50 0.320
The aggregate net assets of all non-money market funds in the IDS
MUTUAL FUND GROUP were $43,022,106,256 on June 30, 1994, and the
daily rate applied to the fund's assets was equal to approximately
0.40% on an annual basis.
The second part of the asset charge is calculated at an annual rate
of (0.21/0.13/0.14) percent and is based on the unique
characteristics of the fund, including the fund's use of services
provided by IDS in the areas of investment research, portfolio
management, investment services and fund accounting. The total fee
is calculated for each calendar day on the basis of net assets as
of the close of business two business days prior to the day for
which the calculation is made.
The management fee is paid monthly. The total amount paid was
$3,347,481 for the fiscal year ended June 30, 1992, $5,135,288 for
fiscal year 1993, and $5,369,312 for fiscal year 1994. Under the
current Agreement, the fund also pays taxes, brokerage commissions
and nonadvisory expenses, that include custodian fees; audit and
certain legal fees; fidelity bond premiums; registration fees for
shares; fund office expenses; consultants' fees; compensation of
directors, officers and employees; corporate filing fees;
Investment Company Institute dues; organizational expenses;
expenses incurred in connection with lending portfolio securities
of the fund; and expenses properly payable by the fund, approved by
the board of directors. The fund paid nonadvisory expenses of
$473,348 for the fiscal year ended June 30, 1992, $728,659 for
fiscal year 1993, and $687,292 for fiscal year 1994.
<PAGE>
PAGE 45
Transfer Agency Agreement
The fund has a Transfer Agency Agreement with IDS. This agreement
governs IDS' responsibility for administering and/or performing
transfer agent functions, for acting as service agent in connection
with dividend and distribution functions and for performing
shareholder account administration agent functions in connection
with the issuance, exchange and redemption or repurchase of the
fund's shares. Under the agreement, IDS will earn a fee from the
fund determined by multiplying the number of shareholder accounts
at the end of the day by a rate of $15.50 per year and dividing by
the number of days in the year. The fees paid to IDS may be
changed from time to time upon agreement of the parties without
shareholder approval. The fund paid fees of $1,172,477 for the
fiscal year ended June 30, 1994.
Distribution Agreement
Under a Distribution Agreement, sales charges deducted for
distributing fund shares are paid to IDS Financial Services Inc.
daily. These charges amounted to $21,025,838 for the fiscal year
ended June 30, 1992. After paying commissions to personal
financial planners, and other expenses, the amount retained was
$7,270,827. The amounts were $22,570,176 and $7,958,181 for fiscal
year 1993, and $23,989,780 and $8,314,808 for fiscal year 1994.
Additional information about commissions and compensation for the
fiscal year ended June 30, 1994, is contained in the following
table:
<TABLE><CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions* Compensation
<S> <C> <C> <C> <C>
IDS None None None $458,958**
IDS Financial
Services Inc. $23,989,780 None None None
</TABLE>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with IDS."
**Distribution fees paid pursuant to the Plan and Supplemental
Agreement of Distribution.
Plan and Supplemental Agreement of Distribution
To help IDS defray the cost of distribution and servicing, not
covered by the sales charges received under the Distribution
Agreement, the fund and IDS entered into a Plan and Supplemental
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the fund shares except compensation to the
sales force. A substantial portion of the costs are not
specifically identified to any one fund in the IDS MUTUAL FUND
<PAGE>
PAGE 46
GROUP. Under the Plan, IDS is paid a fee determined by multiplying
the number of shareholder accounts at the end of each day by a rate
of $6 per year and dividing by the number of days in the year.
The Plan must be approved annually by the directors, including a
majority of the disinterested directors, if it is to continue for
more than a year. At least quarterly, the directors must review
written reports concerning the amounts expended under the Plan and
the purposes for which such expenditures were made. The Plan and
any agreement related to it may be terminated at any time by vote
of a majority of directors who are not interested persons of the
fund and have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan, or
by vote of a majority of the outstanding voting securities of the
fund or by IDS. The Plan (or any agreement related to it) shall
terminate in the event of its assignment, as that term is defined
in the Investment Company Act of 1940, as amended. The Plan may
not be amended to increase the amount to be spent for distribution
without shareholder approval, and all material amendments to the
Plan must be approved by a majority of the directors, including a
majority of the directors who are not interested persons of the
fund and who do not have a financial interest in the operation of
the Plan or any agreement related to it. The selection and
nomination of such disinterested directors is the responsibility of
such disinterested directors. No interested person of the fund,
and no director who is not an interested person, has any direct or
indirect financial interest in the operation of the Plan or any
related agreement.
Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the fund's average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the
fund exceed this limitation for the fund's fiscal year in progress,
IDS will assume all expenses in excess of the limitation. IDS then
may bill the fund for such expenses in subsequent months up to the
end of that fiscal year, but not after that date. No interest
charges are assessed by IDS for expenses it assumes.
DIRECTORS AND OFFICERS
The following is a list of the fund's directors who, except for Mr.
Dudley, also are directors of all other funds in the IDS MUTUAL
FUND GROUP. Mr. Dudley is a director of all publicly offered
funds. All shares have cumulative voting rights when voting on the
election of directors.
<PAGE>
PAGE 47
Lynne V. Cheney'
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockhead Corporation, and the Interpublic Group of Companies, Inc.
William H. Dudley+**
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of IDS.
Robert F. Froehlke+
901 S. Marquette Ave.
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectual
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
David R. Hubers**
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of IDS.
Previously, senior vice president, finance and chief financial
officer of IDS.
Anne P. Jones***
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, D.C.
Partner, law firm of Sutherland, Asbill & Brennan. Director,
Motorola, Inc. and C-Cor Electronics, Inc.
Donald M. Kendall'
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
<PAGE>
PAGE 48
Melvin R. Laird
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
Lewis W. Lehr'
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
William R. Pearce+*
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
Edson W. Spencer+'
840 TCF Tower
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
John R. Thomas**
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of IDS.
Wheelock Whitney+
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
<PAGE>
PAGE 49
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of
the fund.
**Interested person by reason of being an officer, director,
employee and/or shareholder of IDS or American Express.
***Interested person by reason of being a partner in a law firm
that has represented IDS or its subsidiaries.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
Besides Mr. Pearce, who is president, the fund's other officer is:
Leslie L. Ogg
901 S. Marquette Ave.
Minneapolis, MN
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.
On June 30, 1994, the fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended June 30, 1994, no director or officer earned more than
$60,000 from this fund. All directors and officers as a group
earned $42,120, including $15,312 of retirement plan expense, from
this fund.
CUSTODIAN
The fund's securities and cash are held by IDS Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-
2307, through a custodian agreement. The custodian is permitted to
deposit some or all of its securities in central depository systems
as allowed by federal law.
INDEPENDENT AUDITORS
The fund's financial statements contained in its Annual Report to
shareholders, for the fiscal year ended June 30, 1994, were audited
by independent auditors, KPMG Peat Marwick, 4200 Norwest Center, 90
S. Seventh St., Minneapolis, MN 55402-3900. The independent
auditors also provide other accounting and tax-related services as
requested by the fund.
FINANCIAL STATEMENTS
The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1994 Annual Report to
IDS Federal Income Fund, shareholders, pursuant to Section 30(d) of
the Investment Company Act of 1940, as amended, are hereby
incorporated in this SAI by reference. No other portion of the
Annual Report however, is incorporated by reference.
<PAGE>
PAGE 50
PROSPECTUS
The prospectus dated August 29, 1994, is hereby incorporated in
this SAI by reference.
<PAGE>
PAGE 51
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS AND ADDITIONAL INFORMATION
ON INVESTMENT POLICIES
Commercial paper rated Prime-1 (P-1) by Moody's or A-1 by S&P
indicates that the degree of safety regarding timely repayment is
either overwhelming or very strong.
Commercial paper rated P-2 or A-2 indicates that capacity for
timely payment on issues with this designation is strong.
When-Issued Securities
The fund may purchase some securities in advance of when they are
issued. Price and rate of interest are set on the date the
commitments are given but no payment is made or interest earned
until the date the securities are issued, usually within two
months, but other terms may be negotiated. The commitment requires
the fund to buy the security when it is issued so the commitment is
valued daily the same way as owning a security would be valued.
The fund designates cash or liquid high-grade debt securities to at
least equal the amount of its commitment. The fund may sell the
commitment just like it can sell a security. Frequently, the fund
has the opportunity to sell the commitment back to the institution.
Inverse Floaters
The Fund may invest in securities called "inverse floaters".
Inverse floaters are created by underwriters using the interest
payments on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. What is left over, less a servicing fee, is
paid to holders of the inverse floaters. As interest rates go
down, the holders of the inverse floaters receive more income and
an increase in the price for the inverse floaters. As interest
rates go up, the holders of the inverse floaters receive less
income and a decrease in the price for the inverse floaters.
<PAGE>
PAGE 52
APPENDIX B
MORTGAGE-BACKED SECURITIES
GNMA CERTIFICATES
The Government National Mortgage Association (GNMA) is a wholly
owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. GNMA certificates are
mortgage-backed securities of the modified pass-through type, which
means that both interest and principal payments (including
prepayments) are passed through monthly to the holder of the
certificate. Each certificate evidences an interest in a specific
pool of mortgage loans insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by
the Veterans Administration. The National Housing Act provides
that the full faith and credit of the United States is pledged to
the timely payment of principal and interest by GNMA of amounts due
on these certificates. GNMA is empowered to borrow without
limitation from the U.S. Treasury, if necessary, to make such
payments.
Underlying Mortgages of the Pool. Pools consist of whole mortgage
loans or participations in loans. The majority of these loans are
made to purchasers of 1-4 family homes. The terms and
characteristics of the mortgage instruments generally are uniform
within a pool but may vary among pools. For example, in addition
to fixed-rate fixed-term mortgages, the fund may purchase pools of
variable rate mortgages, growing equity mortgages, graduated
payment mortgages and other types.
All servicers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Servicers
also establish credit standards and underwriting criteria for
individual mortgages included in the pools. In addition, many
mortgages included in pools are insured through private mortgage
insurance companies.
Average Life of GNMA Certificates. The average life of GNMA
certificates varies with the maturities of the underlying mortgage
instruments which have maximum maturities of 30 years. The average
life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of
prepayments or refinancing of such mortgages. Such prepayments are
passed through to the registered holder with the regular monthly
payments of principal and interest.
As prepayment rates vary widely, it is not possible to accurately
predict the average life of a particular pool. It is customary in
the mortgage industry in quoting yields on a pool of 30-year
mortgages to compute the yield as if the pool were a single loan
that is amortized according to a 30-year schedule and that is
prepaid in full at the end of the 12th year. For this reason, it
is standard practice to treat GNMA certificates as 30-year
mortgage-backed securities which prepay fully in the 12th year.<PAGE>
PAGE 53
Calculation of Yields. Yields on pass-through securities are
typically quoted based on the maturity of the underlying
instruments and the associated average life assumption.
Actual pre-payment experience may cause the yield to differ from
the assumed average life yield. When mortgage rates drop, pre-
payments will increase, thus reducing the yield. Reinvestment of
pre-payments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of the fund. The
compounding effect from reinvestments of monthly payments received
by the fund will increase the yield to shareholders compared to
bonds that pay interest semi-annually. The yield also may be
affected if the certificate was issued at a premium or discount,
rather than at par. This also applies after issuance to
certificates trading in the secondary market at a premium or
discount.
"When-Issued" GNMA Certificates. Some U.S. government securities
may be purchased on a "when-issued" basis, which means that it may
take as long as 45 days after the purchase before the securities
are delivered to the fund. Payment and interest terms, however,
are fixed at the time the purchaser enters into the commitment.
However, the yield on a comparable GNMA certificate when the
transaction is consummated may vary from the yield on the GNMA
certificate at the time that the when-issued transaction was made.
The fund does not pay for the securities or start earning interest
on them until the contractual settlement date. When-issued
securities are subject to market fluctuations and they may affect
the fund's gross assets the same as owned securities.
Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA
certificates outstanding has grown rapidly. The size of the market
and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA certificates a
highly liquid instrument. Prices of GNMA certificates are readily
available from securities dealers and depend on, among other
things, the level of market interest rates, the certificate's
coupon rate and the prepayment experience of the pool of mortgages
underlying each certificate.
The fund may invest in stripped mortgage-backed securities.
Generally, there are two classes of stripped mortgage-backed
securities: Interest Only (IO) and Principal Only (PO). IOs
entitle the holder to receive distributions consisting of all or a
portion of the interest on the underlying pool of mortgage loans or
mortgage-backed securities. POs entitle the holder to receive
distributions consisting of all or a portion of the principal of
the underlying pool of mortgage loans or mortgage-backed
securities. The cash flows and yields on IOs and POs are extremely
sensitive to the rate of principal payments (including prepayments)
on the underlying mortgage loans or mortgage-backed securities. A
rapid rate of principal payments may adversely affect the yield to
maturity of IOs. A slow rate of principal payments may adversely
<PAGE>
PAGE 54
affect the yield to maturity of POs. If prepayments of principal
are greater than anticipated, an investor may incur substantial
losses. If prepayments of principal are slower than anticipated,
the yield on a PO will be affected more severely than would be the
case with a traditional mortgage-backed security.
The fund may purchase mortgage-backed security (MBS) put spread
options and write covered MBS call spread options. MBS spread
options are based upon the changes in the price spread between a
specified mortgage-backed security and a like-duration Treasury
security. MBS spread options are traded in the OTC market and are
of short duration, typically one to two months. The fund would buy
or sell covered MBS call spread options in situations where
mortgage-backed securities are expected to under perform like-
duration Treasury securities.
<PAGE>
PAGE 55
APPENDIX C
OPTIONS AND INTEREST RATE FUTURES CONTRACTS
The fund may buy or write options traded on any U.S. exchange or in
the over-the-counter market. The fund may enter into interest rate
futures contracts traded on any U.S. exchange. The fund also may
buy or write put and call options on these futures. Options in the
over-the-counter market will be purchased only when the investment
manager believes a liquid secondary market exists for the options
and only from dealers and institutions the investment manager
believes present a minimal credit risk. Some options are
exercisable only on a specific date. In that case, or if a liquid
secondary market does not exist, the Fund could be required to buy
or sell securities at disadvantageous prices, thereby incurring
losses. The fund will not purchase options or write covered put
options if the value of the underlying assets exceeds 10 percent of
the value of its net assets. There is no limit on the use of
derivatives.
OPTIONS. An option is a contract. A person who buys a call option
for a security has the right to buy the security at a set price for
the length of the contract. A person who sells a call option is
called a writer. The writer of a call option agrees to sell the
security at the set price when the buyer wants to exercise the
option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person
who writes a put option agrees to buy the security at the set price
if the purchaser wants to exercise the option, no matter what the
market price of the security is at that time. An option is covered
if the writer owns the security (in the case of a call) or sets
aside the cash (in the case of a put) that would be required upon
exercise.
The price paid by the buyer for an option is called a premium. In
addition the buyer generally pays a broker a commission. The
writer receives a premium, less a commission, at the time the
option is written. The cash received is retained by the writer
whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
market price rises above the exercise price. A writer of a put
option may have to pay an above-market price for the security if
its market price decreases below the exercise price.
Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options and futures contracts may benefit the
fund and its shareholders by improving the fund's liquidity and by
helping to stabilize the value of its net assets.
Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. They also may be used for investment. Options
<PAGE>
PAGE 56
are used as a trading technique to take advantage of any disparity
between the price of the underlying security in the securities
market and its price on the options market. It is anticipated the
trading technique will be utilized only to effect a transaction
when the price of the security plus the option price will be as
good or better than the price at which the security could be bought
or sold directly. When the option is purchased, the fund pays a
premium and a commission. It then pays a second commission on the
purchase or sale of the underlying security when the option is
exercised. For record keeping and tax purposes, the price obtained
on the purchase of the underlying security will be the combination
of the exercise price, the premium and both commissions. When
using options as a trading technique, commissions on the option
will be set as if only the underlying securities were traded.
Put and call options also may be held by the fund for investment
purposes. Options permit the fund to experience the change in the
value of a security with a relatively small initial cash
investment. The risk the fund assumes when it buys an option is
the loss of the premium. To be beneficial to the fund, the price
of the underlying security must change within the time set by the
option contract. Furthermore, the change must be sufficient to
cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the
exercise of the option and subsequent sale (in the case of a call)
or purchase (in the case of a put) of the underlying security.
Even then the price change in the underlying security does not
ensure a profit since prices in the option market may not reflect
such a change.
Writing covered options. The fund will write covered options when
it feels it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the fund's
goal.
'All options written by the fund will be covered. For covered call
options if a decision is made to sell the security, the fund will
attempt to terminate the option contract through a closing purchase
transaction.
'The fund will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by the fund, it will conform to the requirements of those states.
For example, California limits the writing of options to 50% of the
assets of a fund. Some regulations also affect the Custodian.
When a covered call option is written, the Custodian segregates the
underlying securities and issues a receipt. There are certain
rules regarding banks issuing such receipts that may restrict the
amount of covered call options written. Furthermore, the fund is
limited to pledging not more than 15% of the cost of its total
assets.
<PAGE>
PAGE 57
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the fund is
taxed as a regulated investment company under the Internal Revenue
Code, any gains on options and other securities held less than
three months must be limited to less than 30% of its annual gross
income.
If a covered call option is exercised, the security is sold by the
fund. The fund will recognize a capital gain or loss based upon
the difference between the proceeds and the security's basis.
Options on many securities are listed on options exchanges. If the
fund writes listed options, it will follow the rules of the options
exchange. Options are valued at the close of the New York Stock
Exchange. An option listed on a national exchange, CBOE or NASDAQ
will be valued at the last quoted sales price or, if such a price
is not readily available, at the mean of the last bid and asked
prices.
Options on Government National Mortgage Association (GNMA)
certificates and certain other securities are not actively traded
on any exchange, but may be entered into directly with a dealer.
When the fund writes such an option, the Custodian will segregate
assets as appropriate to cover the option. However, since the
remaining principal balance of GNMA certificates declines each
month as a result of mortgage payments, the fund may find that the
GNMA certificates it holds as "cover" no longer have a sufficient
remaining principal balance for this purpose. A GNMA certificate
held by the fund also may cease to represent cover for the option
if the GNMA coupon rate at which new pools are originated under the
FHA/VA loan ceiling in effect at any given time is reduced. If
either event should occur, the fund will either enter into a
closing purchase transaction or replace certificates with
certificates that represent cover. When the fund closes its
position or replaces certificates, it may realize an unanticipated
loss and incur transaction costs.
FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. They have been established by boards of trade which have
been designated contracts markets by the Commodity Futures Trading
Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and
the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures
contracts based on such debt securities as long-term U.S. Treasury
bonds, Treasury notes, GNMA modified pass-through mortgage-backed
securities, three-month U.S. Treasury bills and bank certificates
of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the
futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale
is effected by the fund entering into a futures contract purchase
<PAGE>
PAGE 58
for the same aggregate amount of the specific type of financial
instrument and same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the fund immediately
is paid the difference and realizes a gain. If the offsetting
purchase price exceeds the sale price, the fund pays the difference
and realizes a loss. Similarly, closing out a futures contract
purchase is effected by the fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
fund realizes a gain, and if the offsetting sale price is less than
the purchase price, the fund realizes a loss. At the time a
futures contract is made, a good-faith deposit called initial
margin is set up within a segregated account at the fund's
custodian bank. The initial margin deposit is approximately 1.5%
of a contract's face value. Daily thereafter, the futures contract
is valued and the payment of variation margin is required so that
each day the fund would pay out cash in an amount equal to any
decline in the contract's value or receive cash equal to any
increase. At the time a futures contract is closed out, a nominal
commission is paid, which is generally lower than the commission on
a comparable transaction in the cash markets.
The purpose of a futures contract, in the case of a portfolio
holding long-term debt securities, is to gain the benefit of
changes in interest rates without actually buying or selling long-
term debt securities. For example, if the fund owned long-term
bonds and interest rates were expected to increase, it might enter
into futures contracts to sell securities which would have much the
same effect as selling some of the long-term bonds it owned.
Futures contracts are based on types of debt securities referred to
above, which have historically reacted to an increase or decline in
interest rates in a fashion similar to the debt securities the fund
owns. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the
fund's futures contracts would increase at approximately the same
rate, thereby keeping the net asset value of the fund from
declining as much as it otherwise would have. If, on the other
hand, the fund held cash reserves and interest rates were expected
to decline, the fund might enter into interest rate futures
contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the fund's
earnings. Even if short-term rates were not higher, the fund would
still benefit from the income earned by holding these short-term
investments. At the same time, by entering into futures contracts
for the purchase of securities, the fund could take advantage of
the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities
when interest rates are expected to increase or by buying bonds
with long maturities and selling bonds with short maturities when
interest rates are expected to decline. But by using futures
contracts as an investment tool, given the greater liquidity in the
<PAGE>
PAGE 59
futures market than in the cash market, it might be possible to
accomplish the same result more easily and more quickly.
Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest
rates. If the investment manager's prediction is incorrect, the
fund would have been better off had it not entered into futures
contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell futures contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are no daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily
and that change is reflected in the net asset value of the fund.
RISKS. There are risks in engaging in each of the management tools
described above. The risk the fund assumes when it buys an option
is the loss of the premium paid for the option. Purchasing options
also limits the use of monies that might otherwise be available for
long-term investments.
The risk involved in writing options on futures contracts the fund
owns, or on securities held in its portfolio, is that there could
be an increase in the market value of such contracts or securities.
If that occurred, the option would be exercised and the asset sold
at a lower price than the cash market price. To some extent, the
risk of not realizing a gain could be reduced by entering into a
closing transaction. The fund could enter into a closing
transaction by purchasing an option with the same terms as the one
it had previously sold. The cost to close the option and terminate
the fund's obligation, however, might be more or less than the
premium received when it originally wrote the option. Furthermore,
the fund might not be able to close the option because of
insufficient activity in the options market.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the fund's portfolio securities.
The correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the
difference between a contract or security price and their cost of
borrowed funds. Such distortions are generally minor and would
diminish as the contract approached maturity.
<PAGE>
PAGE 60
Another risk is that the fund's investment manager could be
incorrect in anticipating as to the direction or extent of various
interest rate movements or the time span within which the movements
take place. For example, if the fund sold futures contracts for
the sale of securities in anticipation of an increase in interest
rates, and interest rates declined instead, the fund would lose
money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, the
fund intends to identify futures contracts as mixed straddles and
not mark them to market, that is, not treat them as having been
sold at the end of the year at market value. Such an election may
result in the fund being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
Federal income tax treatment of gains or losses from transactions
in options on futures contracts and indexes is currently unclear,
although the fund's tax advisers currently believe marking to
market is not required. Depending on developments, and although no
assurance is given, the fund may seek Internal Revenue Service
(IRS) rulings clarifying questions concerning such treatment.
Certain provisions of the Internal Revenue Code may also limit the
fund's ability to engage in futures contracts and related options
transactions. For example, at the close of each quarter of the
fund's taxable year, at least 50% of the value of its assets must
consist of cash, government securities and other securities,
subject to certain diversification requirements. Less than 30% of
its gross income must be derived from sales of securities held less
than three months.
The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50-percent-of-assets test and that its
issuer is the issuer of the underlying security, not the writer of
the option, for purposes of the diversification requirements. In
order to avoid realizing a gain within the three-month period, the
fund may be required to defer closing out a contract beyond the
time when it might otherwise be advantageous to do so. The fund
also may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale
holding period rules with respect to such underlying securities.
Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the fund's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.
<PAGE>
PAGE 61
APPENDIX D
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.
While this does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many
shareholders who can continue investing through changing market
conditions to accumulate shares in a fund to meet long term goals.
Dollar-cost averaging
Regular Market Price Shares
Investment of a Share Acquired
$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 62
Independent auditors' report
The board of directors and shareholders
IDS Federal Income Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Federal Income Fund, Inc. as of June 30, 1994, and the
related statement of operations for the year then ended and the
statements of changes in net assets for each of the years in the
two-year period ended June 30, 1994, and the financial highlights
for each of the years in the eight-year period ended June 30, 1994,
and for the period from August 19, 1985 (commencement of
operations), to June 30, 1986. These financial statements and the
financial highlights are the responsibility of Fund management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and
sold but not received or delivered, we request confirmations from
brokers, and where replies are not received, we carry out other
appropriate auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS
Federal Income Fund, Inc. at June 30, 1994, and the results of its
operations for the year then ended and the changes in its net
assets for each of the years in the two-year period ended June 30,
1994, and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 5, 1994
<PAGE>
PAGE 63
<TABLE>
Financial statements
Statement of assets and liabilities
IDS Federal Income Fund, Inc.
June 30, 1994
_____________________________________________________________________________________________________________
<CAPTION>
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $1,079,138,683) $1,048,406,463
Accrued interest receivable 8,731,656
Receivable for investment securities sold 59,499,085
_____________________________________________________________________________________________________________
Total assets 1,116,637,204
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 1,494,635
Dividends payable to shareholders 74,923
Payable for investment securities purchased 88,743,799
Accrued investment management and services fee 442,762
Accrued distribution fee 38,414
Accrued transfer agency fee 98,726
Other accrued expenses 246,670
Open option contracts written, at value
(premium received $234,539)(Note 5) 175,469
_____________________________________________________________________________________________________________
Total liabilities 91,315,398
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,025,321,806
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 211,575,822 shares $ 2,115,758
Additional paid-in capital 1,084,020,018
Undistributed net investment income (439,420)
Accumulated net realized loss (Notes 1 and 6) (32,269,181)
Unrealized depreciation (Note 4) (28,105,369)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,025,321,806
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 4.85
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
PAGE 64
Financial statements
Statement of operations
IDS Federal Income Fund, Inc.
Year ended June 30, 1994
_____________________________________________________________________________________________________________
<CAPTION>
Investment income
_____________________________________________________________________________________________________________
<S> <C>
Income:
Interest $61,504,534
Fee income (Note 1) 3,569,081
_____________________________________________________________________________________________________________
Total income 65,073,615
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 5,369,312
Distribution fee 458,958
Transfer agency fee 1,172,477
Compensation of directors 33,418
Compensation of officers 8,702
Custodian fees 100,341
Postage 265,731
Registration fees 145,630
Reports to shareholders 53,088
Audit fees 31,500
Administrative 14,048
Other 34,834
_____________________________________________________________________________________________________________
Total expenses 7,688,039
_____________________________________________________________________________________________________________
Investment income -- net 57,385,576
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security transactions (34,576,043)
Net realized gain on closed interest rate futures contracts 8,449,197
Net realized gain on closed or expired option contracts written (Note 5) 1,374,791
_____________________________________________________________________________________________________________
Net realized loss on investments (24,752,055)
Net change in unrealized appreciation or depreciation (38,009,969)
_____________________________________________________________________________________________________________
Net loss on investments (62,762,024)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations $(5,376,448)
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
PAGE 65
Financial statements
Statements of changes in net assets
IDS Federal Income Fund, Inc.
Year ended June 30,
_____________________________________________________________________________________________________________
<CAPTION>
Operations and distributions 1994 1993
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 57,385,576 $ 57,435,345
Net realized gain (loss) on investments (24,752,055) 25,836,238
Net change in unrealized appreciation or depreciation (38,009,969) (1,059,269)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations (5,376,448) 82,212,314
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (57,139,239) (57,971,568)
Net realized gains on investments (28,095,757) (2,941,850)
_____________________________________________________________________________________________________________
Total distributions (85,234,996) (60,913,418)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
132,557,506 and 123,595,985 shares (Note 2) 671,874,642 647,636,194
Net asset value of 14,452,759 and 9,485,733 shares
issued in reinvestment of distributions 73,532,781 49,651,783
Payments for redemptions of
128,743,048 and 100,549,963 shares (654,662,328) (527,278,272)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions
representing net addition of
18,267,217 and 32,531,755 shares 90,745,095 170,009,705
_____________________________________________________________________________________________________________
Total increase in net assets 133,651 191,308,601
Net assets at beginning of year 1,025,188,155 833,879,554
_____________________________________________________________________________________________________________
Net assets at end of year
$1,025,321,806 $1,025,188,155
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 66
IDS Federal Income Fund, Inc.
Notes to Financial Statements
___________________________________________________________________
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 traded on national securities exchanges or included in
national market systems are valued at the last quoted sales price;
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 fund
also may purchase mortgage-backed security (MBS) put spread options
and write covered MBS call spread options. MBS spread options are
based upon the changes in the price spread between a specified
mortgage-backed security and a like-duration Treasury security. 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.
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 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.
<PAGE>
PAGE 67
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
___________________________________________________________________
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
June 30, 1994, the fund had entered into outstanding when-issued or
forward commitments of $88,743,799.
During the year ended June 30, 1994, 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 year ended June 30, 1994, such
fees earned by the fund amounted to $3,569,081.
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.
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 <PAGE>
PAGE 68
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
___________________________________________________________________
fiscal year in which amounts are distributed may differ from the
year that the income or realized gains (losses) were recorded by
the fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income and accumulated net realized loss have been decreased by
$685,757.
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.
___________________________________________________________________
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% to 0.32%
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% 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 $23,989,780 for the year ended June 30, 1994. The fund
also pays custodian fees to IDS Trust Company, 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 $15,312 for the year ended June 30, 1994.<PAGE>
PAGE 69
IDS Federal Income Fund, Inc.
Notes to Financial Statements (continued)
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $3,111,248,091 and
$3,022,243,850, respectively, for the year ended June 30, 1994.
Realized gains and losses are determined on an identified cost
basis.
Income from securities lending amounted to $19,062 for the year
ended June 30, 1994.
___________________________________________________________________
4. Interest rate futures contracts
At June 30, 1994, investments in securities included securities
valued at $7,220,000 that were pledged as collateral to cover
initial margin deposit on 1,050 purchase contracts. The market
value of the open contracts at June 30, 1994, was $154,659,063 with
a net unrealized gain of $2,567,781.
___________________________________________________________________
5. Options contracts written
The number of contracts and premium amounts associated with options
contracts written is as follows:
<TABLE>
<CAPTION>
Year ended June 30, 1994
___________________________________________________________________
Puts Calls MBS Calls
___________________________________________________________________
Contracts Premium Contracts Premium National Premium
___________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance June 30, 1993 -- $ -- -- $ -- -- $ --
Opened 200 89,226 2,135 1,728,104 31,000,000 145,313
Closed -- -- (250) (275,595) -- --
Exercised -- -- (103) (100,873) -- --
Expired -- -- (1,782) (1,351,636) -- --
___________________________________________________________________________________________
Balance June 30, 1994 200 $89,226 -- $ -- 31,000,000 $145,313
___________________________________________________________________________________________
</TABLE>
___________________________________________________________________
6. Capital loss carryover
For federal income tax purposes, the fund had a capital loss
carryover of $32,363,757 at June 30, 1994, that if not offset by
subsequent capital gains, will expire in 2002.
___________________________________________________________________
7. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on page 5 of the prospectus.
<PAGE>
PAGE 70
<TABLE>
<CAPTION>
Investments in securities
IDS Federal Income Fund, Inc. (Percentages represent value of
June 30, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (98.1%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (37.8%)
U.S. Treasury 3.875% 1995 $ 55,000,000 $ 54,439,000
4.125 1995 54,000,000 53,375,754
4.25 1995 92,000,000 90,755,231
6.00 1996 130,000,000 129,589,187
7.25 1996 57,850,000 59,021,457
______________
Total 387,180,629
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (60.3%)
Federal Home Loan Mortgage Corporation (16.4%)
5.624 2022 332,108 341,449
6.421 2020 310,600 317,057
8.00 2008-23 61,101,372 60,973,235
9.50 2024 33,525,098 35,348,025
Collateralized Mtge Obligation 5.75 2015 14,000,000 12,984,720
6.50 2019-24 40,900,000 36,643,629
6.85 2020 4,604,000 4,202,761
7.00 2008 3,600,000 3,296,250
7.50 2020 12,527,000 12,594,020
Collateralized Mtge Obligation
Inverse Floater 6.404 2000 1,925,102 (b) 1,483,532
Interest Only 10.00 2020 896,176 (e) 171,748
______________
Total 168,356,426
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 71
Investments in securities
IDS Federal Income Fund, Inc. (Percentages represent value of
June 30, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
<CAPTION>
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Mortgage-backed securities (cont'd)
Federal National Mortgage Association (43.8%)
6.50 % 2008-24 $139,028,562 (c,h) $ 126,717,010
7.40 2004 19,860,000 (d) 19,612,344
8.00 2006-08 53,363,263 53,913,572
8.00 2020 58,000,000 (d) 57,075,625
8.50 2007-23 68,325,351 69,322,758
8.50 2024 10,700,000 (d) 10,827,062
Collateralized Mtge Obligation 6.25 2005 9,228,000 8,137,942
6.50 2020 20,967,901 20,341,590
Collateralized Mtge Obligation
Inverse Floater 5.28 2023 313,459 (b) 153,595
6.098 1999 4,235,417 (b) 3,263,918
6.792 2023 5,860,510 (b) 3,102,407
8.978 2008 6,737,200 (b) 4,615,790
9.844 2022 6,000,000 (b) 5,635,320
12.111 2020 4,250,000 (b) 4,080,000
Collateralized Mtge Obligation
Principal Only 12.568 2021 1,564,410 (f) 1,148,934
Collateralized Mtge Obligation
Trust Series Z 6.00 2024 8,628,139 (g) 5,452,552
Interest Only 7.00 2023 49,554,143 (e) 52,938,127
7.50 2007 2,313,087 (e) 1,764,537
9.50 2018-22 2,566,626 (e) 1,057,141
______________
Total 449,160,224
_____________________________________________________________________________________________________________________________
Government National Mortgage Association (0.1%)
11.00 2019 770,033 835,727
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 72
Investments in securities
<CAPTION>
IDS Federal Income Fund, Inc. (Percentages represent value of
June 30, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Mortgage-backed securities (cont'd)
Other mortgage-backed securities (--%)
Daiwa Securities
Collateralized Mtge Obligation
Inverse Floater 17.00% 2009 $ 506,610 (b) $ 510,592
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,036,775,818) $1,006,043,598
_____________________________________________________________________________________________________________________________
<CAPTION>
Short-term securities (4.1%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (3.6%)
Federal Home Loan
Bank Disc Notes
07-19-94 4.21% $ 900,000 $ 898,115
Federal Home Loan
Mtge Corp Disc Notes
07-01-94 4.19 2,300,000 2,300,000
07-01-94 4.20 3,500,000 3,500,000
Federal Natl Mtge
Assn Disc Notes
07-25-94 4.25 12,500,000 12,464,750
Student Loan Mtge
Assn Disc Notes
07-01-94 4.17 17,700,000 17,700,000
______________
Total 36,862,865
_____________________________________________________________________________________________________________________________
Commercial paper (0.5%)
Wal-mart Stores
07-01-94 4.10 5,500,000 5,500,000
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $42,362,865) $ 42,362,865
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,079,138,683)(i) $1,048,406,463
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.<PAGE>
PAGE 73
Investments in securities
IDS Federal Income Fund, Inc.
June 30, 1994
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) 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 June 30, 1994.
(c) Partially pledged as initial deposit on the following open interest rate futures purchase contracts (see Note 4 to the
financial statements):
Type of security Par Value
______________________________________________________________
U.S. Treasury Sept. 94 10 year notes $1,502,000,000
______________________________________________________________
(d) At June 30, 1994, the cost of securities purchased on a when-issued basis was $88,743,799.
(e) Principal amounts and interest rates disclosed for interest-only securities represent amortized cost and coupon rates,
respectively.
(f) Principal Only - interest rate disclosed for this security represents the current yield based upon estimated future
cash flows.
(g) This security is a collateralized mortgage obligation whose payment of principal has been deferred until payment of
previous series within the trust has been paid off.
(h) At June 30, 1994, securities valued at $7,220,000 were held to cover open call options written.
(i) At June 30, 1994, the cost of securities for federal income tax purposes was $1,079,044,108 and the aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 6,568,643
Unrealized depreciation (37,206,288)
____________________________________________________________
Net unrealized depreciation $(30,637,645)
____________________________________________________________
</TABLE>
<PAGE>
PAGE 74
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
List of financial statements filed as part of this Post-Effective
Amendment to this Registration Statement.
Independent Auditors' Report dated August 5, 1994
Statement of Assets and Liabilities, June 30, 1994
Statement of Operations, Year ended June 30, 1994
Statement of Changes in Net Assets for Ten months ended June
30, 1993 and Year ended June 30, 1994
Notes to Financial Statements
Investments in Securities, June 30, 1994
Notes to Investments in Securities
(b) EXHIBITS:
1. Articles of Incorporation, as amended October 17, 1988, filed
as Exhibit 1 to Post-Effective Amendment No. 7 to Registration
Statement No. 2-96512, is incorporated herein by reference.
2. By-laws, as amended Jan. 12, 1989, filed as Exhibit 2 to Post-
Effective Amendment No. 7 to Registration Statement No. 2-96512, is
incorporated herein by reference.
3. Not Applicable.
4. Form of Stock Certificate for common stock, filed as Exhibit
No. 4 to Registration Statement No. 2-96512, is incorporated herein
by reference.
5. Copy of Investment Management and Services Agreement between
Registrant and IDS Financial Corporation dated Nov. 14, 1992, filed
as Exhibit 5 to Registrant's Post-Effective Amendment No. 12 to
Registration Statement No. 2-96512, is incorporated herein by
reference.
6. Distribution Agreement, dated January 1, 1987, filed as
Exhibit No. 6 to Post-Effective Amendment No. 4 to Registration
Statement No. 2-96512, is incorporated herein by reference.
7. All employees are eligible to participate in a profit sharing
plan. Entry into the plan is Jan. 1 or July 1. The Registrant
contributes each year an amount up to 15 percent of their annual
salaries, the maximum deductible amount permitted under Section
404(a) of the Internal Revenue Code.
8. Custodian Agreement, filed as Exhibit No. 8 to Registration
Statement No. 2-96512, is incorporated herein by reference.
9.(a) Copy of Transfer Agency Agreement between Registrant and IDS
Financial Corporation, dated Nov. 14, 1991 filed to Registrant's
Post-Effective Amendment No. 12 to Registration Statement No. 2-
96512, is incorporated herein by reference.
<PAGE>
PAGE 75
(b) Copy of License Agreement dated Jan. 25, 1988, between IDS
and Registrant filed as Exhibit 9(b) to Post-Effective Amendment
No. 7 to Registration Statement No. 2-96512, is incorporated herein
by reference.
10. Opinion and Consent of Counsel, filed as Exhibit No. 10 to
Pre-Effective Amendment No. 2 to Registration Statement No.
2-96512, is incorporated herein by reference.
11. Auditors consent electronically filed herewith.
12. None.
13. Copy of letter of IDS Financial Services Inc. as sole
shareholder, filed as Exhibit No. 13 to Pre-Effective Amendment No.
2 to Registration Statement No. 2-96512, is incorporated herein by
reference.
14. Forms of Keogh, IRA and other retirement plans, filed as
Exhibits 14(a) through 14(g) to IDS Government Securities Money
Fund, Inc., Post-Effective Amendment No. 1 to Registration
Statement No. 2-75165 on August 26, 1982, are incorporated herein
by reference.
15. Copy of Plan and Supplemental Agreement of Distribution, dated
January 1, 1987, filed as Exhibit No. 15 to Post-Effective
Amendment No. 4 to Registration Statement No. 2-96512, is
incorporated herein by reference.
16. Copy of schedule for computation of each performance
quotation, filed concurrently on Form SE as Exhibit 16(b) to
Registrant's Post-Effective Amendment No. 13 to Registration
Statement No. 2-96512 is incorporated herein by reference.
17.(a) Directors' power of attorney, dated Oct. 14, 1993, to sign
amendments to this Registration Statement, filed as Exhibit No.
17(a) to Post-Effective Amendment No. 16 to Registration Statement
No. 2-9652, is incorporated herein by reference.
(b) Officers' power of attorney, dated June 1, 1993, to sign
amendments to this Registration Statement filed as Exhibit 17(b) on
June 24, 1993 to Registrant's Post-Effective Amendment No. 14 to
Registration Statement No. 2-96512 is incorporated herein by
reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders as of
Title of Class June 17, 1994
Common Stock 63,794
$.01 par value<PAGE>
PAGE 76
<PAGE>
PAGE 1
Item 27. Indemnification
The Articles of Incorporation of the registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
PAGE 2
<TABLE><CAPTION>
Item 28a. Business and Other Connections of Investment Adviser (IDS Financial Corporation)
Directors and officers of IDS Financial Corporation who are directors and/or officers of one
or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Field Administration
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Field
Administration
Douglas A. Alger, Vice President--Total Compensation
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President and Controller--Mutual Funds Operations
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Mutual Funds
Operations
Peter J. Anderson, Director and Senior Vice President--Investments
IDS Advisory Group Inc. IDS Tower 10 Director and Chairman
Minneapolis, MN 55440 of the Board
IDS Capital Holdings Inc. Director and President
IDS Financial Services Inc. Senior Vice President-
Investments
IDS Fund Management Limited Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President--Sales and Marketing, IDS Institutional Retirement Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, IDS
Institutional Retirement
Services
Alvan D. Arthur, Region Vice President--Pacific Northwest Region
American Express Service Corporation IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Region Vice President-
Pacific Northwest Region
<PAGE>
PAGE 3
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Kent L. Ashton, Vice President--Financial Education Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Education Services
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Senior
Portfolio Manager
Robert C. Basten, Vice President--Tax and Business Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
Timothy V. Bechtold, Vice President--Insurance Product Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Insurance
Minneapolis, MN 55440 Product Development
IDS Life Insurance Company Vice President-Insurance
Product Development
John D. Begley, Region Vice President--Mid-Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Mid-Central Region
IDS Insurance Agency of Alabama Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Nevada Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Ohio Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Mid-Central
Region
Carl E. Beihl, Vice President--Strategic Technology Planning
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
<PAGE>
PAGE 4
Item 28a. Business and Other Connections of Investment Adviser (IDS Financial
Corporation)(cont'd)
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Financial Planning
Systems
Brent L. Bisson, Region Vice President--Northwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Northwest Region
IDS Insurance Agency of Alabama Inc. Vice President-
Northwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Northwest Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Northwest Region
IDS Insurance Agency of Nevada, Inc. Vice President-
Northwest Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Northwest Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Northwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Northwest Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Northwest Region
John C. Boeder, Vice President--Mature Market Group
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel
American Express Minnesota Foundation IDS Tower 10 Director
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director and President
IDS Financial Services Inc. Senior Vice President-
Corporate Affairs and
Special Counsel
Harold E. Burke, Vice President and Assistant General Counsel
American Express Service Corporation IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Vice President and
Assistant General Counsel
<PAGE>
PAGE 5
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Daniel J. Candura, Vice President--Marketing Support
IDS Financial Services Inc. IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--IDS Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
IDS Financial Services Inc. Vice President-IDS
Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Minnesota Foundation IDS Tower 10 Director
American Express Service Corporation Minneapolis, MN 55440 Vice President
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
IDS Financial Services Inc. IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
<PAGE>
PAGE 6
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Roger C. Corea, Region Vice President--Northeast Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Northeast Region
IDS Insurance Agency of Alabama Inc. Vice President -
Northeast Region
IDS Insurance Agency of Arkansas Inc. Vice President -
Northeast Region
IDS Insurance Agency of Massachusetts Inc. Vice President -
Northeast Region
IDS Insurance Agency of Nevada Inc. Vice President -
Northeast Region
IDS Insurance Agency of New Mexico Inc. Vice President -
Northeast Region
IDS Insurance Agency of North Carolina Inc. Vice President -
Northeast Region
IDS Insurance Agency of Ohio, Inc. Vice President -
Northeast Region
IDS Insurance Agency of Wyoming Inc. Vice President -
Northeast Region
IDS Life Insurance Co. of New York Box 5144 Director
Albany, NY 12205
Kevin F. Crowe, Region Vice President--Atlantic Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President -
Atlantic Region
Alan R. Dakay, Vice President--Institutional Insurance Marketing
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Partners Life Insurance Co. Director and President
IDS Financial Services Inc. Vice President -
Institutional Insurance
Marketing
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
William F. Darland, Region Vice President--South Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
South Central Region
IDS Insurance Agency of Alabama Inc. Vice President-
South Central Region
IDS Insurance Agency of Arkansas Inc. Vice President -
South Central Region
<PAGE>
PAGE 7
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of Massachusetts Inc. Vice President-
South Central Region
IDS Insurance Agency of Nevada Inc. Vice President-
South Central Region
IDS Insurance Agency of New Mexico Inc. Vice President-
South Central Region
IDS Insurance Agency of North Carolina Inc. Vice President-
South Central Region
IDS Insurance Agency of Ohio Inc. Vice President-
South Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-
South Central Region
William H. Dudley, Director and Executive Vice President--Investment Operations
IDS Advisory Group Inc. IDS Tower 10 Director
Minneapolis, MN 55440
IDS Capital Holdings Inc. Director
IDS Financial Services Inc. Director and Executive
Vice President-
Investment Operations
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director and Senior Vice President--Information Systems
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information Systems
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
IDS Financial Services Inc. IDS Tower 10 Senior Vice President and
General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
<PAGE>
PAGE 8
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Retail Services
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
IDS Advisory Group Inc. IDS Tower 10 Executive Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Mutual Fund Equity
Investments
IDS International Inc. Vice President and
Portfolio Manager
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Financial Services Inc. Senior Vice President and
Chief Financial Officer
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
IDS Trust Company Director
Investors Syndicate Development Corp. Vice President
Douglas L. Forsberg, Vice President--Securities Services
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Securities Services
<PAGE>
PAGE 9
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Carl W. Gans, Region Vice President--North Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
North Central Region
Robert G. Gilbert, Vice President--Real Estate
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Co. Vice President and
Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Vice President and
Treasurer
IDS Cable II Corporation Vice President and
Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Financial Services Inc. Vice President and
Corporate Treasurer
<PAGE>
PAGE 10
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Vice President and
Treasurer
IDS Partnership Services Corporation Vice President and
Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Vice President and
Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
<PAGE>
PAGE 11
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
David A. Hammer, Vice President and Marketing Controller
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Robert L. Harden, Region Vice President--Mid-Atlantic Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Mid Atlantic Region
IDS Insurance Agency of Alabama Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Nevada Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Ohio Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Mid Atlantic Region
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Financial Services Inc. Vice President-Insurance
Investments
IDS Life Insurance Company Vice President-Investments
Investors Syndicate Development Corp. Vice President-Investments
Mark S. Hays, Vice President--Senior Portfolio Manager, IDS International
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager, IDS
International
IDS Fund Management Limited Director
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 12
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Brian M. Heath, Region Vice President--Southwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Southwest Region
IDS Insurance Agency of Alabama Inc. Vice President-
Southwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southwest Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Southwest Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southwest Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southwest Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Southwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southwest Region
IDS Insurance Agency of Texas Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Vice President-
Southwest Region
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Vice President-Senior
Portfolio Manager
James G. Hirsh, Vice President and Assistant General Counsel
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Paul C. Hopkins, Vice President--Senior Portfolio Manager-IDS International
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager-IDS
International
IDS International, Inc. Senior Vice President
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Service Corporation Vice President
IDS Financial Services Inc. Vice President-
Government and
Customer Relations
IDS Securities Corporation Vice President and Chief
Compliance Officer
<PAGE>
PAGE 13
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
David R. Hubers, Director, President and Chief Executive Officer
American Express Service Corporation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Financial Services Inc. Chairman, Chief Executive
Officer and President
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
Douglas R. Jordal, Vice President--Taxes
IDS Aircraft Services Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Taxes
Craig A. Junkins, Vice President--IDS 1994 Implementation Planning and Financial Planning
Development
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-IDS 1994
Implementation Planning
and Financial Planning
Development
James E. Kaarre, Vice President--Marketing Information
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
G. Michael Kennedy, Vice President--Investment Services and Investment Research
IDS Financial Services Inc. IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Minnesota Foundation IDS Tower 10 Director
Minneapolis, MN 55440
American Express Service Corporation Vice President
IDS Financial Services Inc. Senior Vice President-
Human Resources
<PAGE>
PAGE 14
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Financial Services Inc. Senior Vice President-
Risk Management Products
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A&B Member of Board of
Managers, Chairman of the
Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Harold D. Knutson, Vice President--System Services
IDS Financial Services Inc. IDS Tower 10 Vice President--
Minneapolis, MN 55440 System Services
Paul F. Kolkman, Vice President--Actuarial Finance
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
David S. Kreager, Vice President--Field Management Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Development
Christopher R. Kudrna, Vice President--Systems and Technology Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Systems and
Minneapolis, MN 55440 Technology Development
<PAGE>
PAGE 15
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Director and Senior Vice
President-Field
Management and Business
Systems
Mitre Kutanovski, Region Vice President--Midwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Midwest Region
Edward Labenski, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Senior Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Senior Portfolio
Manager
Peter L. Lamaison, Vice President--IDS International Division
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 IDS International
Division
IDS Fund Management Limited Director and Chairman of
the Board
IDS International, Inc. Director, President and
Chief Executive Officer
Kurt A. Larson, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Ryan R. Larson, Vice President--IPG Product Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
<PAGE>
PAGE 16
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Peter A. Lefferts, Director, Senior Vice President and Chief Marketing Officer
IDS Financial Services Inc. IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Chief Marketing Officer
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
IDS Trust Company Director and Chairman of
the Board
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Director and Executive
Vice President-Private
Client Group
Mary J. Malevich, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 17
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
IDS Cable Corporation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Cable II Corporation Director and President
IDS Financial Services Inc. Vice President-
Variable Assets
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Variable Annuity Funds A&B Director
IDS Life Series Fund, Inc. Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
IDS Certificate Company Director and Chairman of
the Board
IDS Financial Services Inc. Executive Vice President-
Marketing and Products
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Minnesota Foundation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Corporate Communications
Barry J. Murphy, Director and Senior Vice President--Client Service
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
Robert J. Neis, Vice President--Information Systems Operations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
<PAGE>
PAGE 18
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Vernon F. Palen, Region Vice President--Rocky Mountain Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Rocky Mountain Region
IDS Insurance Agency of Alabama Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Nevada Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Ohio Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Rocky Mountain Region
James R. Palmer, Vice President--Insurance Operations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Judith A. Pennington, Vice President--Field Technology
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Technology
George M. Perry, Vice President--Corporate Strategy and Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
IDS Financial Services Inc. IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
<PAGE>
PAGE 19
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Ronald W. Powell, Vice President and Assistant General Counsel
IDS Cable Corporation IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
James M. Punch, Vice President--TransAction Services
IDS Financial Services Inc. Vice President-Trans
Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
IDS Advisory Group Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President--
Taxable Mutual Fund
Investments
Roger B. Rogos, Region Vice President--Great Lakes Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Great Lakes Region
IDS Insurance Agency of Alabama Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Nevada Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Ohio Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Great Lakes Region
<PAGE>
PAGE 20
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
ReBecca K. Roloff, Vice President--1994 Program Director
IDS Financial Services Inc. IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
IDS Advisory Group Inc. IDS Tower 10 President and Chief
Minneapolis, MN 55440 Executive Officer
IDS Financial Services Inc. Vice President-Advisory
Institutional Marketing
Robert A. Rudell, Vice President--IDS Institutional Retirement Services
IDS Financial Services Inc. IDS Tower 10 Vice President-IDS
Minneapolis, MN 55440 Institutional Retirement
Services
IDS Sales Support Inc. Director and President
IDS Trust Company Director
John P. Ryan, Vice President and General Auditor
IDS Financial Services Inc. IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
<PAGE>
PAGE 21
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
R. Reed Saunders, Director and Senior Vice President--Corporate Strategy and Development
American Express Service Corporation IDS Tower 10 Director and Vice
Minneapolis, MN 55440 President
IDS Financial Services Inc. Director and Senior
Vice President-Corporate
Strategy and Development
IDS Property Casualty Insurance Co. Director
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
IDS Certificate Company Director and President
IDS Financial Services Inc. Vice President-
Assured Assets
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Financial Services Inc. Vice President-Senior
Portfolio Manager
Insurance Investments
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
<PAGE>
PAGE 22
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Julian W. Sloter, Region Vice President--Southeast Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Southeast Region
IDS Insurance Agency of Alabama Inc. Vice President-
Southeast Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southeast Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Southeast Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southeast Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southeast Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Southeast Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southeast Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Southeast Region
Ben C. Smith, Vice President--Workplace Marketing
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
James B. Solberg, Vice President--Advanced Financial Planning
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Advanced Financial
Planning
Bridget Sperl, Vice President--Human Resources Management Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 23
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Lois A. Stilwell, Vice President--Planner Training and Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Planner Training and
Development
William A. Stoltzmann, Vice President and Assistant General Counsel
American Partners Life Insurance Co. IDS Tower 10 Director, Vice President,
Minneapolis, MN 55440 General Counsel and
Secretary
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund, Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity Funds A&B General Counsel and
Assistant Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
IDS Financial Services Inc. IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
Neil G. Taylor, Vice President--Field Business Systems
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Business Systems
<PAGE>
PAGE 24
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
IDS Bond Fund, Inc. IDS Tower 10 Director
Minneapolis, MN 55440
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Plus Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Financial Services Inc. Senior Vice President-
Information and
Technology
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Financial Services Inc. Vice President and
Corporate Controller
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Executive Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Senior Portfolio Manager
IDS Fund Management Limited Director
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 25
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Norman Weaver, Jr., Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
Pacific Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Pacific Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Pacific Region
IDS Insurance Agency of Nevada Inc. Vice President-
Pacific Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Pacific Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Pacific Region
IDS Insurance Agency of Ohio Inc. Vice President-
Pacific Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Pacific Region
Michael L. Weiner, Vice President--Corporate Tax Operations
IDS Capital Holdings Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Corporate
Tax Operations
IDS Futures III Corporation Vice President, Treasurer
and Secretary
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
William N. Westhoff, Director and Senior Vice President--Fixed Income Management
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Fixed Income Management
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 26
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Edwin M. Wistrand, Vice President and Assistant General Counsel
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 27
Item 29. Principal Underwriters.
(a) IDS Financial Services Inc. acts as principal underwriter
for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Plus Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Field Administration
Minneapolis, MN 55440
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Jerome R. Amundson Vice President and None
IDS Tower 10 Controller-Mutual Funds
Minneapolis, MN 55440 Operations
Peter J. Anderson Senior Vice President- None
IDS Tower 10 Investments
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 IDS Institutional Retirement
Services
Alvan D. Arthur Region Vice President- None
IDS Tower 10 Pacific Northwest Region
Minneapolis, MN 55440
Kent L. Ashton Vice President- None
IDS Tower 10 Financial Education
Minneapolis, MN 55440 Services
<PAGE>
PAGE 28
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
John D. Begley Region Vice President- None
Olentangy Valley Center Mid-Central Region
Suite 300
7870 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Region Vice President- None
Seafirst Financial Northwest Region
Center, Suite 1730
601 W. Riverside Ave.
Spokane, WA 99201
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President-IDS None
IDS Tower 10 Securities Services
Minneapolis, MN 55440
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29. (continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James E. Choat Senior Vice President- None
Suite 124 Field Management
6210 Campbell Rd.
Dallas, TX 75248
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Region Vice President- None
345 Woodcliff Drive Northeast Region
Fairport, NY 14450
Kevin F. Crowe Region Vice President- None
IDS Tower 10 Atlantic Region
Minneapolis, MN 55440
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
William F. Darland Region Vice President- None
Suite 108C South Central Region
301 Sovereign Court
Manchester, MO 63011
William H. Dudley Director and Executive Director/
IDS Tower 10 Vice President- Trustee
Minneapolis MN 55440 Investment Operations
Roger S. Edgar Senior Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
<PAGE>
PAGE 30
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Douglas L. Forsberg Vice President- None
IDS Tower 10 Securities Services
Minneapolis, MN 55440
Carl W. Gans Region Vice President- None
IDS Tower 10 North Central Region
Minneapolis, MN 55440
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Robert L. Harden Region Vice President- None
Suite 403 Mid-Atlantic Region
8500 Leesburg Pike
Vienna, VA 22180
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Mark S. Hays Vice President-Senior None
IDS Tower 10 Portfolio Manager, IDS
Minneapolis, MN 55440 International
Brian M. Heath Region Vice President- None
IDS Tower 10 Southwest Region
Minneapolis, MN 55440
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
<PAGE>
PAGE 31
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Paul C. Hopkins Vice President- None
IDS Tower 10 Senior Portfolio Manager,
Minneapolis, MN 55440 IDS International
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief None
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Douglas R. Jordal Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Craig A. Junkins Vice President - IDS 1994 None
IDS Tower 10 Implementation Planning
Minneapolis, MN 55440 and Financial Planning
Development
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
Harold D. Knutson Vice President- None
IDS Tower 10 System Services
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Vice President-Field None
IDS Tower 10 Management Development
Minneapolis, MN 55440
<PAGE>
PAGE 32
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Christopher R. Kudrna Vice President- None
IDS Tower 10 Systems and Technology
Minneapolis, MN 55440 Development
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Region Vice President- None
IDS Tower 10 Midwest Region
Minneapolis, MN 55440
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Peter L. Lamaison Vice President- None
One Broadgate IDS International
London, England Division
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Peter A. Lefferts Senior Vice President and None
IDS Tower 10 Chief Marketing Officer
Minneapolis, MN 55440
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
<PAGE>
PAGE 33
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
Vernon F. Palen Region Vice President- None
Suite D-222 Rocky Mountain Region
7100 E. Lincoln Drive
Scottsdale, AZ 85253
James R. Palmer Vice President- None
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
Judith A. Pennington Vice President- None
IDS Tower 10 Field Technology
Minneapolis, MN 55440
George M. Perry Vice President- None
IDS Tower 10 Corporate Strategy
Minneapolis, MN 55440 and Development
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 TransAction Services
Minneapolis, MN 55440
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
<PAGE>
PAGE 34
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Roger B. Rogos Region Vice President- None
Suite 15, Parkside Place Great Lakes Region
945 Boardman-Canfield Rd
Youngstown, Ohio 44512
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Robert A. Rudell Vice President- None
IDS Tower 10 IDS Institutional
Minneapolis, MN 55440 Retirement Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven A. Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Braintree, MA 02184
R. Reed Saunders Director and Senior None
IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Strategy and Development
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Region Vice President- None
9040 Roswell Rd. Southeast Region
River Ridge-Suite 600
Atlanta, GA 30350
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
<PAGE>
PAGE 35
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Vice President- None
IDS Tower 10 Advanced Financial
Minneapolis, MN 55440 Planning
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Lois A. Stilwell Vice President- None
IDS Tower 10 Planner Training and
Minneapolis, MN 55440 Development
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Vice President- None
IDS Tower 10 Field Business Systems
Minneapolis, MN 55440
John R. Thomas Senior Vice President- Director/
IDS Tower 10 Information and Trustee
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
Suite 215 Field Management
1501 Westcliff Drive
Newport Beach, CA 92660
<PAGE>
PAGE 36
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
William N. Westhoff Senior Vice President- None
IDS Tower 10 Fixed Income Management
Minneapolis, MN 55440
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
Suite 815 Field Management
8585 Broadway
Merrillville, IN 46410
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
IDS Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
PAGE 77
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Federal Income
Fund, Inc., certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Minneapolis and the State of Minnesota on the 25th day of August,
1994.
IDS FEDERAL INCOME FUND, INC.
By /s/ William R. Pearce**
William R. Pearce, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on the 25th day
of August, 1994.
Signature Capacity
/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director
/s/ Leslie L. Ogg** Treasurer, Principal
Leslie L. Ogg Financial Officer and
Principal Accounting
Officer
___________________________ Director
Lynne V. Cheney
/s/ William H. Dudley* Director
William H. Dudley
/s/ Robert F. Froehlke* Director
Robert F. Froehlke
/s/ David R. Hubers* Director
David R. Hubers
/s/ Anne P. Jones* Director
Anne P. Jones
/s/ Donald M. Kendall* Director
Donald M. Kendall
/s/ Melvin R. Laird* Director
Melvin R. Laird
/s/ Lewis W. Lehr* Director
Lewis W. Lehr<PAGE>
PAGE 78
/s/ Edson W. Spencer* Director
Edson W. Spencer
/s/ John R. Thomas* Director
John R. Thomas
/s/ Wheelock Whitney* Director
Wheelock Whitney
*Signed pursuant to Directors' Power of Attorney dated October 14,
1993, filed electronically as Exhibit 17(a) to Registrant's Post-
Effective Amendment No. 16 to Registration Statement No. 2-96512
by:
________________________
Leslie L. Ogg
**Signed pursuant to Officers' power of attorney dated June 1,
1993, filed electronically as Exhibit 17(b) to Registrant's Post-
Effective Amendment No. 14 to Registration Statement No. 2-96512
by:
________________________
Leslie L. Ogg
<PAGE>
PAGE 79
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 17
TO REGISTRATION STATEMENT NO. 2-96512
This Post-Effective Amendment comprises the following papers and
documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
<PAGE>
PAGE 1
EXHIBIT INDEX
B(11) Independent Auditors' Consent
<PAGE>
PAGE 1
INDEPENDENT AUDITORS' CONSENT
___________________________________________________________________
The Board of Directors and Shareholders
IDS Federal Income Fund, Inc.:
We consent to the use of our report incorporated herein by
reference and to the references to our Firm under the headings
"Financial Highlights" in Part A and "INDEPENDENT AUDITORS" in Part
B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 25, 1994
