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<PAGE> PAGE 2
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SIGNATURE LESLIE L. OGG
TITLE VICE PRESIDENT
<TABLE> <S> <C>
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<NUMBER> 1
<NAME> AXP FEDERAL INCOME FUND INC. CLASS A
<S> <C>
<PERIOD-TYPE> Year
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<PERIOD-END> MAY-31-1999
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<ARTICLE> 6
<SERIES>
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<NAME> AXP FEDERAL INCOME FUND CLASS B
<S> <C>
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<DISTRIBUTIONS-OF-INCOME> 58371770
<DISTRIBUTIONS-OF-GAINS> 16864445
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<NAME> AXP FEDERAL INCOME FUND CLASS Y
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<SHARES-COMMON-PRIOR> 23441515
<ACCUMULATED-NII-CURRENT> 260747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 14909868
<ACCUM-APPREC-OR-DEPREC> (65750798)
<NET-ASSETS> 191383962
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 185740782
<OTHER-INCOME> 0
<EXPENSES-NET> 35391638
<NET-INVESTMENT-INCOME> 150349144
<REALIZED-GAINS-CURRENT> 77501051
<APPREC-INCREASE-CURRENT> (129440332)
<NET-CHANGE-FROM-OPS> 98409863
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<DISTRIBUTIONS-OF-GAINS> 1996962
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<CAPTION>
SHAREHOLDER RESPONSE SUMMARY REPORT
IDS FUNDS
IDS Federal Income Fund, Inc.
June 16, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
1. Election of Board members.
H. Brewster Atwater, Jr.
<S> <C> <C> <C>
Affirmative 351,281,365.926 52.188% 98.498%
Withhold 5,356,847.895 0.796% 1.502%
TOTAL 356,638,213.821 52.984% 100.000%
Arne H. Carlson
Affirmative 350,645,592.309 52.094% 98.320%
Withhold 5,992,621.512 0.890% 1.680%
TOTAL 356,638,213.821 52.984% 100.000%
Lynne V. Cheney
Affirmative 351,263,848.791 52.186% 98.493%
Withhold 5,374,365.030 0.798% 1.507%
TOTAL 356,638,213.821 52.984% 100.000%
William H. Dudley
Affirmative 351,330,034.538 52.195% 98.512%
Withhold 5,308,179.283 0.789% 1.488%
TOTAL 356,638,213.821 52.984% 100.000%
David R. Hubers
Affirmative 351,374,563.847 52.202% 98.524%
Withhold 5,263,649.974 0.782% 1.476%
TOTAL 356,638,213.821 52.984% 100.000%
Heinz F. Hutter
Affirmative 351,237,411.662 52.182% 98.486%
Withhold 5,400,802.159 0.802% 1.514%
TOTAL 356,638,213.821 52.984% 100.000%
Anne P. Jones
Affirmative 351,329,395.335 52.195% 98.511%
Withhold 5,308,818.486 0.789% 1.489%
TOTAL 356,638,213.821 52.984% 100.000%
William R. Pearce
Affirmative 351,137,033.938 52.167% 98.457%
Withhold 5,501,179.883 0.817% 1.543%
TOTAL 356,638,213.821 52.984% 100.000%
Alan K. Simpson
Affirmative 351,139,990.109 52.167% 98.458%
Withhold 5,498,223.712 0.817% 1.542%
TOTAL 356,638,213.821 52.984% 100.000%
John R. Thomas
Affirmative 351,399,571.367 52.206% 98.531%
Withhold 5,238,642.454 0.778% 1.469%
TOTAL 356,638,213.821 52.984% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT
IDS FUNDS
IDS Federal Income Fund, Inc.
June 16, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
C. Angus Wurtele
Affirmative 351,313,356.004 52.193% 98.507%
Withhold 5,324,857.817 0.791% 1.493%
TOTAL 356,638,213.821 52.984% 100.000%
2. Ratify the selection of independent auditors
Affirmative 346,226,364.328 51.437% 97.081%
Against 3,633,167.586 0.540% 1.018%
Abstain 6,778,681.907 1.007% 1.901%
TOTAL 356,638,213.821 52.984% 100.000%
3. Change the Fund name from "IDS" to "AXP"
Affirmative 330,039,085.502 49.032% 92.542%
Against 18,904,014.096 2.809% 5.300%
Abstain 7,695,114.223 1.143% 2.158%
TOTAL 356,638,213.821 52.984% 100.000%
6. Changes to investment policies
6.1 Prohibited conflict of interest
Affirmative 322,324,251.991 47.886% 93.149%
Against 12,747,120.776 1.894% 3.684%
Abstain 10,958,753.054 1.628% 3.167%
TOTAL 346,030,125.821 51.408% 100.000%
Not Voting 10,608,088.000
6.2 Senior Securities
Affirmative 322,267,065.706 47.878% 93.133%
Against 12,604,133.950 1.872% 3.642%
Abstain 11,158,926.165 1.658% 3.225%
TOTAL 346,030,125.821 51.408% 100.000%
Not Voting 10,608,088.000
6.3 Transactions with affiliates
Affirmative 322,363,972.868 47.892% 93.161%
Against 12,633,134.307 1.877% 3.651%
Abstain 11,033,018.646 1.639% 3.188%
TOTAL 346,030,125.821 51.408% 100.000%
Not Voting 10,608,088.000
FUND TOTALS Shares
Record Total 673,105,418.586
Voted Shares 356,638,213.821
Percent Voted 52.984%
SHAREHOLDER RESPONSE SUMMARY REPORT
IDS FUNDS
IDS Federal Income Fund, Inc. Class B
June 16, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
4. Approve a new shareholder service and distribution plan.
Affirmative 133,117,762.783 45.540% 90.133%
Against 9,941,670.349 3.401% 6.731%
Abstain 4,631,536.184 1.585% 3.136%
TOTAL 147,690,969.316 50.526% 100.000%
Not Voting 586.000
FUND TOTALS Shares
Record Total 292,308,205.054
Voted Shares 147,691,555.316
Percent Voted 50.526%
SHAREHOLDER RESPONSE SUMMARY REPORT
IDS FUNDS
IDS Federal Income Fund, Inc. Class A & B
June 16, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
4. Approve a new shareholder service and distribution plan.
Affirmative 291,793,080.675 45.880% 89.938%
Against 22,390,952.517 3.521% 6.902%
Abstain 10,252,267.832 1.612% 3.160%
TOTAL 324,436,301.024 51.013% 100.000%
Not Voting 10,608,088.000
FUND TOTALS Shares
Record Total 635,987,842.222
Voted Shares 335,044,389.024
Percent Voted 52.681%
</TABLE>
Independent Auditors' Report on Internal Accounting Control
The Board of Directors and Shareholders
AXP Federal Income Fund, Inc.:
In planning and performing our audit of the financial statements of AXP
Federal Income Fund, Inc. for the year ended May 31, 1999, we considered its
internal control, including control activities 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.
The management of AXP Federal Income Fund, Inc. is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess
the expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective of
preparing financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting principles.
Those controls include the safeguarding of assets against unauthorized
acquisition, use or disposition.
Because of inherent limitations in internal control, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of internal control 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 would not necessarily disclose all matters in the
internal control 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 one or more of
the internal control components 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 matters involving the
internal control and its operation, including controls for safeguarding
securities, thatwe consider to be a material weakness as defined above.
This report is intended solely for the information and use of management,
the Board of Directors of AXP Federal Income Fund, Inc., and the Securities
and Exchange Commission and is not intended to be and should not be used by
anyone other than these specified parties.
KPMG LLP
Minneapolis, Minnesota
July 2, 1999
