<PAGE> PAGE 1
000 B000000 05/31/97
000 C000000 0000764802
000 D000000 N
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000 F000000 Y
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001 A000000 IDS FEDERAL INCOME FUND, INC.
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002 A000000 IDS TOWER 10
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004 000000 N
005 000000 N
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007 C030100 N
007 C010200 2
007 C020200 IDS FEDERAL INCOME FUND CLASS B
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011 A00AA01 AMERICAN EXPRESS FINANCIAL ADVISORS INC.
011 B00AA01 8-16791
011 C01AA01 MINNEAPOLIS
011 C02AA01 MN
011 C03AA01 55440
011 C04AA01 0010
012 A00AA01 AMERICAN EXPRESS FINANCIAL CORPORATION
012 B00AA01 84-456
012 C01AA01 MINNEAPOLIS
012 C02AA01 MN
012 C03AA01 55440
012 C04AA01 0010
<PAGE> PAGE 2
013 A00AA01 KPMG PEAT MARWICK LLP
013 B01AA01 MINNEAPOLIS
013 B02AA01 MN
013 B03AA01 55402
013 B04AA01 3900
015 A00AA01 AMERICAN EXPRESS TRUST COMPANY
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SIGNATURE LESLIE L. OGG
TITLE VICE PRESIDENT
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</TABLE>
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Independent Auditors' Report on Internal Accounting
Control
The Board of Directors and Shareholders
IDS Federal Income Fund, Inc.:
In planning and performing our audits of the financial
statements of IDS Federal Income Fund, Inc. for the year ended
May 31, 1997, we considered their internal control
structure, including procedures for safeguarding securities,
in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form
N-SAR, not to provide assurance on the internal control
structure.
The management of IDS Federal Income Fund, Inc. is responsible
for establishing and maintaining a system of internal
accounting control. In fulfilling this responsibility,
estimates and judgments by management are required to
assess the expected benefits and related costs of internal
control structure policies and procedures. Two of the
objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance
that assets are safeguarded against loss from unauthorized
use or disposition and that transactions are executed in
accordance with management's authorization and recorded
properly to permit the preparation of financial statements in
conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be
detected. Also, projection of any evaluation of the structure
to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would
not necessarily disclose all matters in the internal control
structure that might be material weaknesses under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which
the design or operation of the specific internal control
structure elements does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would
be material in relation to the financial statements being
audited may occur and not be detected within a timely
period by employees in the normal course of performing
their assigned functions. However, we noted no matter
involving the internal control structure, including
procedures for safeguarding securities, that we consider to
be a material weakness as defined above as of May 31,
1997.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
July 3, 1997
