<PAGE>
IDS
State
Tax-Exempt Funds
Tax-exempt
funds from the
following states:
California
Massachusetts
Michigan
Minnesota
New York
Ohio
1997 ANNUAL REPORT
(PROSPECTUS INCLUDED)
AMERICAN
EXPRESS
Financial
Advisors (Logo)
(icon of) a column enclosed in a shield.
Distributed by American Express Financial Advisors Inc.
<PAGE>
Twice the tax relief
Many people who want to reduce their tax burden favor municipal bonds because
the interest they pay is generally free from federal tax. If you want to
eliminate state tax, too, you can invest in municipal bonds in the state in
which you reside. This double tax-exemption makes this one of the best
tax-advantaged investments still available to individuals. What's more, the
money you invest is typically used by municipalities to fund projects such as
schools and highways. So, with this investment, the benefits reach well beyond
your pocketbook.
<PAGE>
Contents
1997 annual report
From the president 4
From the portfolio manager 5
Performance 6
California Tax-Exempt Fund 8
Ten largest holdings 8
Long-term performance 9
Massachusetts Tax-Exempt Fund 10
Ten largest holdings 10
Long-term performance 11
Michigan Tax-Exempt Fund 12
Ten largest holdings 12
Long-term performance 13
Minnesota Tax-Exempt Fund 14
Ten largest holdings 14
Long-term performance 15
New York Tax-Exempt Fund 16
Ten largest holdings 16
Long-term performance 17
Ohio Tax-Exempt Fund 18
Ten largest holdings 18
Long-term performance 19
All funds 20
Making the most of a Fund 20
Independent auditors' report 21
Financial statements 22
Notes to financial statements 29
Investments in securities 42
IDSmutual funds 74
Federal income tax information 78
1997 prospectus
The Funds in brief 3p
Sales charge and Fund expenses 4p
Performance 8p
Investment policies and risks 24p
How to purchase, exchange or redeem shares 31p
Special shareholder services 43p
Distributions and taxes 44p
How the Funds are organized 49p
About American Express Financial Corporation 53p
Appendices 54p
The purpose of this annual report is to tell investors how the Funds performed.
(icon of) one open book inside another.
The prospectus, which is bound into the middle of this annual report, describes
the Funds in detail.
(This annual report is not part of the prospectus.)
<PAGE>
To our shareholders
From the president
If you're an experienced investor, you know that the past few years have
been unusually strong ones in many financial markets. Perhaps just as
important, you also know that history shows that bull markets don't last
forever. Though they're often unpredictable, declines -- whether they're
brief or long-lasting, moderate or substantial -- are always a
possibility.
That fact reinforces the need for investors to periodically review their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes more important if there's a major
change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
President of the Fund
(This annual report is not part of the prospectus.)
<PAGE>
From the portfolio manager
Despite considerable volatility in the fixed-income market, municipal
bonds fared relatively well during the past fiscal year. Reflecting the
generally positive environment, all of the IDS State Tax-Exempt Funds
Class A shares generated a total return (including net asset value change
and dividends) in excess of 7% for the July 1996 through June 1997 period.
After a sluggish summer, bonds were energized last fall by ongoing reports
of stable, low inflation and moderate economic growth. Against that
backdrop, long-term interest rates began falling, driving up bond prices
in the process. The rally stalled out over the winter, however, then
turned into a retreat in the spring as reports of stronger-than-expected
economic growth reignited inflation fears and led to a rise in long-term
interest rates. But the period ended on an up note, as benign economic and
inflation data again enticed investors back into the market, allowing
rates to come back down.
Favorable supply/demand situation
The Funds' performance roughly tracked that of the broad bond market --
gaining ground last fall, slipping back in the spring and rebounding in
May and June. To the Funds' benefit, municipal bonds outperformed Treasury
bonds for the year as a whole, thanks chiefly to a favorable supply/demand
situation. A substantial number of municipal bonds were "called" by
issuers (taken out of the market because issuers paid off the principal
ahead of the bonds' maturity dates), while the number of new bonds coming
to market was comparatively modest. The result was consistent demand and
less supply - a positive for security prices.
The flip side of the call situation was that it slightly eroded the Funds'
dividends, which resulted from the fact that newly issued bonds didn't pay
as much interest as the older bonds that were called away. Still, measured
against comparable municipal bond funds, the Funds' dividends held up
better than most. Also tempering performance a bit was the modest amount
of investment capital flowing into the municipal bond market, especially
compared to the enormous inflows into the stock market. This condition has
persisted for more than three years, limiting the net-asset-value
appreciation the Funds might otherwise have enjoyed.
State updates
In general, ongoing economic growth nationwide benefited each of the
mutual funds. Beyond that, California, Massachusetts, Minnesota and Ohio
enjoyed a favorable supply/demand situation for municipal bonds. In
Michigan, an excess supply created by the seasonal issuance of school
bonds last fall dissipated over the ensuing months. In New York, the
potential for a huge new supply of bonds resulting from the possible
acquisition of Long Island Lighting by another state agency continued to
hang over the market, but had no material effect on performance.
Given that the economy continues to expand, I think it's increasingly
likely that we'll see somewhat higher inflation in the new fiscal year.
Ultimately, I expect that will lead to moderately higher long-term
interest rates, which may mean a more difficult environment for bonds,
including municipals. In light of that possibility, I have structured the
Funds more defensively, which includes a slightly higher amount of cash
reserves and a shorter duration -- a strategy that helps cushion the
Funds' net asset values when interest rates rise and, in general, lessens
their volatility. In addition, I am concentrating on maintaining the
Funds' dividends, which I expect to provide most of the Funds' returns in
the months ahead.
Paul B. Hylle
(picture of) Paul B. Hylle
Portfolio manager
(This annual report is not part of the prospectus.)
<PAGE>
To our shareholders
Performance
California
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.24
June 30, 1996 $ 5.15
Increase $ 0.09
Distributions July 1, 1996 - June 30, 1997
From income $ 0.29
From capital gains $ 0.01
Total distributions $ 0.30
Total return* +7.8%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.24
June 30, 1996 $ 5.15
Increase $ 0.09
Distributions July 1, 1996 - June 30, 1997
From income $ 0.25
From capital gains $ 0.01
Total distributions $ 0.26
Total return* +7.0%**
Massachusetts
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.42
June 30, 1996 $ 5.30
Increase $ 0.12
Distributions
July 1, 1996 - June 30, 1997
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +7.8%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.42
June 30, 1996 $ 5.30
Increase $ 0.12
Distributions July 1, 1996 - June 30, 1997
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +7.0%**
Michigan
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.44
June 30, 1996 $ 5.36
Increase $ 0.08
Distributions July 1, 1996 - June 30, 1997
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +7.1%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.44
June 30, 1996 $ 5.36
Increase $ 0.08
Distributions July 1, 1996 - June 30, 1997
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +6.3%**
* The prospectus discusses the effect of sales charges, if any, on the various
classes.
** The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.)
<PAGE>
Performance
Minnesota
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.30
June 30, 1996 $ 5.20
Increase $ 0.10
Distributions July 1, 1996 - June 30, 1997
From income $ 0.31
From capital gains $ --
Total distributions $ 0.31
Total return* +8.1%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.30
June 30, 1996 $ 5.20
Increase $ 0.10
Distributions July 1, 1996 - June 30, 1997
From income $ 0.27
From capital gains $ --
Total distributions $ 0.27
Total return* +7.2%**
New York
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.15
June 30, 1996 $ 5.06
Increase $ 0.09
Distributions July 1, 1996 - June 30, 1997
From income $ 0.28
From capital gains $ --
Total distributions $ 0.28
Total return* +7.6%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.15
June 30, 1996 $ 5.06
Increase $ 0.09
Distributions July 1, 1996 - June 30, 1997
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +6.8%**
Ohio
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.38
June 30, 1996 $ 5.28
Increase $ 0.10
Distributions July 1, 1996 - June 30, 1997
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +7.4%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1997 $ 5.38
June 30, 1996 $ 5.28
Increase $ 0.10
Distributions July 1, 1996 - June 30, 1997
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +6.6%**
* The prospectus discusses the effect of sales charges, if any, on the
various classes.
** The total return is a hypothetical investment in the Fund with all
distributions reinvested.
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's ten largest holdings
<TABLE>
<CAPTION>
IDS California Tax-Exempt Fund
Percent Value
(of Fund's net assets) as of June 30, 1997)
<S> <C> <C>
Anaheim Public Finance Authority Revenue Bonds
2nd Series Electric Utilities San Juan
5.75% 2022 4.61% $11,160,939
Sacramento Municipal Utility District Series R
6.00% 2015-2017 3.10 7,501,845
Long Beach Harbor Revenue Bonds Series 1989A A.M.T.
7.25% 2019 3.02 7,308,630
Los Angeles Department of Water & Power Electric Plant
Revenue Bonds Series 1990
7.125% 2030 2.90 7,036,185
Statewide Community Development Authority Revenue
Certificate of Participation St. Joseph Health System Group
6.50% 2015 2.46 5,961,560
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A
7.00% 2020 2.22 5,369,700
University of Southern California Educational Facilities Authority
Pre-Refunded Revenue Bonds Series 1989B
6.75% 2015 2.21 5,359,750
Statewide Community Development Authority Health Facilities
Revenue Bonds Unihealth America Series 1993A Inverse Floater
7.114% 2011 2.19 5,293,750
San Diego Regional Transportation Commission Sales Tax
Pre-Refunded Revenue Bonds Limited Tax Series 1989A
6.25% 2008 2.15 5,218,474
Rancho Mirage Joint Powers Finance Authority
Certificate of Participation Eisenhower Memorial Hospital
7.00% 2022 1.98 4,788,560
Note: The Fund's investment income from certain securities may be subject
to the Alternative Minimum Tax (A.M.T.).
</TABLE>
(icon of) pie chart
The ten holdings listed here make up 26.84% of the Fund's net assets
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
IDS California Tax-Exempt Fund
Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect taxes
payable on distributions. o Also see "Performance" in the Fund's current
prospectus. o Reinvestment of all income and capital gain distributions for
the Fund, with a value of $9,034.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS California Tax-Exempt Fund
$20,000
$19,670
Lehman Brothers California
Total Return Tax-Exempt Fund
Municipal Bond Index Class A
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
Since
1 year inception 5 years 10 years
Class A +2.38% --% +5.15% +6.99%
Class B +2.95% +3.94%* --% --%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing California Tax-Exempt Fund (Class A) to the
index, you should take into account the fact that the Fund's performance
reflects the maximum sales charge of 5%, while such charges are not
reflected in the performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS Massachusetts Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1997)
<S> <C> <C>
Boston City Hospital Refunding Revenue Bonds
Series B
5.75% 2023 3.96% $2,952,360
Health & Educational Facilities Authority
Revenue Bonds Suffolk University Series B
6.35% 2022 3.50 2,612,465
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System Series A
5.25% 2021 3.15 2,349,475
Health & Educational Facilities Authority
Revenue Bonds Boston College Series J
6.625% 2021 2.90 2,164,580
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison Series 1993
5.875% 2008 2.65 1,980,160
Health & Educational Facilities Authority
Revenue Bonds Charlton Memorial Hospital Series 1991B
7.25% 2013 2.55 1,905,978
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
9.00% 2015 2.26 1,684,290
North Attleborough Unlimited General Obligation Bonds Series 1997
5.25% 2017 2.20 1,644,649
Municipal Wholesale Electric Power Supply System
Refunding Revenue Bonds Series B
4.75% 2011 2.19 1,632,715
Bay Transportation Authority General Transportation System
Refunding Bonds Series 1992B
6.20% 2016 2.19 1,630,635
Note: The Fund's investment income from securities may be subject to the
Alternative Minimum Tax (A.M.T.).
</TABLE>
(icon of) pie chart
The ten holdings listed here make up 27.55% of the Fund's net assets
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
IDS Massachusetts Tax-Exempt Fund
Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $8,500.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS Massachusetts Tax-Exempt Fund
$20,000
$18,837
Lehman Brothers Massachusetts
Total Return Tax-Exempt Fund
Municipal Bond Index Class A
$10,000
$9,500
7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
1 year 5 years Since
inception
Class A +2.42% +5.37% +6.52%*
Class B +3.00% --% +4.05%**
*Inception date was July 2, 1987.
**Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing Massachusetts Tax-Exempt Fund (Class A) to the
index, you should take into account the fact that the Fund's performance
reflects the maximum sales charge of 5%, while such charges are not
reflected in the performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS Michigan Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1997)
<S> <C> <C>
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds
5.75% 2022 3.13% $2,513,850
State Building Authority Refunding Revenue Bonds Series 1991I
6.25% 2020 2.86 2,295,524
State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds
McLaren Obligated Group Series 1991A
7.50% 2021 2.47 1,984,605
Detroit Sewer Disposal Revenue Bonds
5.70% 2023 2.46 1,973,300
Grand Ledge Public Schools Unlimited Tax General Obligation
Refunding Bonds Counties of Eaton, Clinton & Ionia
Series 1995
5.375% 2024 2.40 1,926,980
Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi 2
Plants Series CC A.M.T.
7.50% 2019 2.37 1,905,960
State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds
Ford Motor Series 1991A
7.10% 2006 2.37 1,900,338
Battle Creek Water Supply System
Pre-Refunded Revenue Bonds Series 1990B
6.375% 2008-2010 2.14 1,715,637
Buena Vista School District Saginaw County
School Building & Site Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1991
7.20% 2016 2.09 1,674,300
Northville Public Schools Unlimited Tax General Obligation Bonds
Series 1991B
7.00% 2008 2.04 1,640,910
Note: The Fund's investment income from certain securities may be subject
to the Alternative Minimum Tax (A.M.T.).
</TABLE>
(icon of) pie chart
The ten holdings listed here make up 24.33% of the Fund's net assets
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
IDS Michigan Tax-Exempt Fund
Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $8,837.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS Michigan Tax-Exempt Fund
$20,000
$19,136
Lehman Brothers Michigan
Total Return Tax-Exempt Fund
Municipal Bond Index Class A
$10,000
$9,500
7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
1 year 5 years Since
inception
Class A +1.77% +5.39% +6.71%*
Class B +2.32% --% +3.85%**
*Inception date was July 2, 1987.
**Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing Michigan Tax-Exempt Fund (Class A) to the index,
you should take into account the fact that the Fund's performance reflects
the maximum sales charge of 5%, while such charges are not reflected in
the performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS Minnesota Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1997)
<S> <C> <C>
State University Board of Regents
General Obligation Bond Series 1996A
5.50% 2021 3.14% $12,516,500
Minneapolis & St. Paul Housing & Redevelopment Authority
Health Care System Revenue Bonds
Healthspan Series 1993
4.75% 2018 3.00 11,941,155
St. Paul & Minneapolis Housing &
Redevelopment Authority Health Care
Facility Revenue Bonds Group Health Plan Series 1992
6.75% 2013 2.85 11,387,355
Western Minnesota Municipal Power Agency Supply
Refunding Revenue Bonds Series A
5.50% 2015 2.81 11,199,712
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1991
6.70% 2011 2.18 8,699,600
State Public Facilities Authority
Water Pollution Control Revenue Bonds
Series 1989A
7.00% 2009 2.12 8,467,873
Anoka County General Obligation Capital
Improvement Revenue Bonds Series 1989B
7.00% 2007-10 2.07 8,240,652
Hennepin County Lease Revenue
Certificate of Participation Series 1991
6.80% 2017 1.97 7,839,280
St. Paul Housing & Redevelopment Authority Sales Tax
Revenue Bonds Civic Center
5.55% 2023 1.88 7,488,000
Edina Multi-family Housing Revenue Bonds
Walker Assisted Living Series 1991
9.00% 2031 1.84 7,343,468
Note: The Fund's investment income from certain securities may be subject
to the Alternative Minimum Tax (A.M.T.).
(This annual report is not part of the prospectus.)
</TABLE>
(icon of) pie chart
The ten holdings listed here make up 23.86% of the Fund's net assets
<PAGE>
The Fund's long-term performance
IDS Minnesota Tax-Exempt Fund
Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $9,115.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS Minnesota Tax-Exempt Fund
$20,000
$19,635
Lehman Brothers Minnesota
Total Return Tax-Exempt Fund
Municipal Bond Index Class A
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
Since
1 year inception 5 years 10 years
Class A +2.65% --% +5.20% +6.97%
Class B +3.23% +4.19%* --% --%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing Minnesota Tax-Exempt Fund (Class A) to the index,
you should take into account the fact that the Fund's performance reflects
the maximum sales charge of 5%, while such charges are not reflected in
the performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS New York Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1997)
<S> <C> <C>
State Energy Research & Development Authority
Electric Facility Revenue Bonds Consolidated Edison
Series 1990A A.M.T.
7.50% 2025 4.59% $5,286,900
State Urban Development Correction Facility
Pre-Refunded Revenue Bonds Series 1
7.50% 2020 4.28 4,928,175
United Nations Development Senior Lien
Refunding Revenue Bonds Series 1992A
6.00% 2026 3.93 4,528,350
State Local Government Assistance Pre-Refunded Bonds
Series 1991A
7.00% 2016 3.86 4,438,440
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series TT
7.50% 2015 3.71 4,276,440
State Dormitory Authority City University System
Pre-Refunded Revenue Bonds
8.125% 2017 3.01 3,468,374
State Environmental Facility State Water & Pollution Control
Revolving Fund Revenue Bonds New York City
Municipal Water Finance Authority Series 1990A
7.50% 2012 2.87 3,308,010
Triborough Bridge & Tunnel Authority
General Purpose Pre-Refunded Revenue Bonds Series S
7.00% 2021 2.87 3,299,580
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series 27
6.90% 2015 2.80 3,223,500
State Dormitory Authority City University System
Revenue Bonds Series 1993A
5.75% 2013 2.64 3,034,470
Note: The Fund's investment income from certain securities may be subject
to the Alternative Minimum Tax (A.M.T.).
(icon of) pie chart
The ten holdings listed here make up 34.56% of the Fund's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Fund's long-term performance
IDS New York Tax-Exempt Fund
Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $9,005.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS New York Tax-Exempt Fund
$20,000
$19,698
Lehman Brothers New York
Total Return Tax-Exempt Fund
Municipal Bond Index Class A
$10,000
$9,500
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
Since
1 year inception 5 years 10 years
Class A +2.22% --% +4.85% +7.01%
Class B +2.80% +3.37%* --% --%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing New York Tax-Exempt Fund (Class A) to the index,
you should take into account the fact that the Fund's performance reflects
the maximum sales charge of 5%, while such charges are not reflected in
the performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS Ohio Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1997)
<S> <C> <C>
Erie County Hospital Improvement Refunding Revenue Bonds
Firelands Community Hospital Series 1992
6.75% 2015 3.06% $2,147,260
Lakota Local School District Unlimited Tax Improvement
General Obligation Bonds
6.25% 2014 3.05 2,138,800
State Air Quality Development Authority
Refunding Revenue Bonds Series 1994 A.M.T.
6.375% 2029 3.00 2,104,620
State Valley School District School Improvement
Unlimited Tax General Obligation Bonds
Counties of Adams & Highland Series 1995
5.25% 2021 2.74 1,920,200
Lorain County Hospital Facilities Refunding Revenue Bonds
EMH Regional Medical Center Series 1995
5.375% 2021 2.74 1,919,920
State Municipal Electric Generation Agency Joint Venture #5
Revenue Bonds
5.375% 2024 2.73 1,914,000
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
7.50% 2010 2.66 1,870,050
Franklin County Convention Facilities Authority
Tax & Lease Revenue Anticipation
Pre-Refunded Bonds
7.00% 2019 2.36 1,654,905
State Housing Finance Agency Mortgage Revenue Bonds Aristrocrat South
Board & Care Series 1991A A.M.T.
7.30% 2031 2.24 1,568,895
Cuyahoga County Hospital Refunding Revenue Bonds
Cleveland Clinic Foundation Series 1992
5.50% 2011 2.16 1,518,930
Note: The Fund's investment income from certain securities may be subject
to the Alternative Minimum Tax (A.M.T.).
</TABLE>
(icon of) pie chart
The ten holdings listed here make up 26.74% of the Fund's net assets
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
IDS Ohio Tax-Exempt Fund
Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. o Reinvestment of all income and capital gain
distributions for the Fund, with a value of $8,564.
The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list
of municipal bonds used as a general measure of market performance.
How your $10,000 has grown in IDS Ohio Tax-Exempt Fund
$20,000
Lehman Brothers $18,702
Total Return Ohio
Municipal Bond Index Tax-Exempt Fund
$10,000 Class A
$9,500
7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97
Average annual total returns
(as of June 30, 1997)
1 year 5 years Since
inception
Class A +2.05% +5.03% +6.47%*
Class B +2.62% --% +3.61%**
*Inception date was July 2, 1987.
**Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared to a
widely cited performance index, the Lehman Brothers Total Return Municipal
Bond Index. In comparing Ohio Tax-Exempt Fund (Class A) to the index, you
should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in the
performance of the index.
Your investment and return values fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return figures reflect the impact of the applicable sales
charge up to a maximum of 5%. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future results.
(This annual report is not part of the prospectus.)
<PAGE>
Making the most of a Fund
Build your assets systematically
To keep your assets growing steadily, one of the best ways to invest in a
Fund is by dollar-cost averaging -- a time-tested strategy that can make
market fluctuations work for you. To dollar-cost average, simply invest a
fixed amount of money regularly. You'll automatically buy more shares when
a Fund's share price is low, fewer shares when it is high.
This does not ensure a profit or avoid a loss if the market declines. But,
if you can continue to invest regularly through changing market
conditions, it can be an effective way to accumulate shares to meet your
long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan. $100 $20 5.00 nnnnn
Feb. 100 18 5.56 nnnnnn
Mar. 100 17 5.88 nnnnnn
Apr. 100 15 6.67 nnnnnnn
May 100 16 6.25 nnnnnnn
June 100 18 5.56 nnnnnn
July 100 17 5.88 nnnnnn
Aug. 100 19 5.26 nnnnnn
Sept. 100 21 4.76 nnnnn
Oct. 100 20 5.00 nnnnn
By investing an equal number of dollars each month ...
you automatically buy more shares when the per share market price is low ...
(arrow pointing to the month of Apr.)
and fewer shares when the per share market price is high.
(arrow pointing to the month of Sept.)
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
Three ways to benefit from a mutual fund:
o your shares increase in value when a Fund's investments do well
o you receive capital gains when the gains on investments sold by a Fund
exceed losses
o you receive income when a Fund's interest dividends and short-term gains
exceed its expenses
All three make up your total return. And you potentially can increase your
investment if, like most investors, you reinvest your dividends and
capital gains distributions to buy additional shares of a Fund or another
fund.
(This annual report is not part of the prospectus.)
<PAGE>
Independent auditors' report
The board and shareholders
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments in securities, of IDS California
Tax-Exempt Fund (a fund within IDS California Tax-Exempt Trust) and IDS
Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS Minnesota
Tax-Exempt Fund, IDS New York Tax-Exempt Fund and IDS Ohio Tax-Exempt Fund
(funds within IDS Special Tax-Exempt Series Trust) as of June 30, 1997 and
the related statements 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 then ended and the financial highlights for each of the years in
the eight-year period ended June 30, 1997, the six months ended June 30,
1989 and each of the years in the two-year period ended December 31, 1988,
of IDS California Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund and IDS
New York Tax-Exempt Fund, and for each of the years in the ten-year period
ended June 30, 1997, of IDS Massachusetts Tax-Exempt Fund, IDS Michigan
Tax-Exempt Fund and IDS Ohio Tax-Exempt Fund. 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 California
Tax-Exempt Fund, IDS Massachusetts Tax-Exempt Fund, IDS Michigan
Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund, IDS New York Tax-Exempt
Fund and IDS Ohio Tax-Exempt Fund at June 30, 1997, and the results of its
operations 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 1, 1997
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
June 30, 1997
Assets
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
<S> <C> <C> <C>
Fund Fund Fund
Investments in securities, at value (Note 1)
(identified cost $219,017,594, $69,401,754
and $73,211,161) $238,094,586 $74,064,134 $79,000,976
Cash in bank on demand deposit -- 25,711 69,859
Accrued interest receivable 4,410,897 1,528,581 1,299,188
Receivable for investment securities sold 3,125 26,563 1,563
----- ------ -----
Total assets 242,508,608 75,644,989 80,371,586
----------- ---------- ----------
Liabilities
Disbursements in excess of cash on demand deposit 136,618 -- --
Dividends payable to shareholders 155,908 42,961 48,278
Payable for investment securities purchased 10,000 946,016 3,125
Accrued investment management services fee 9,365 2,886 3,101
Accrued distribution fee 621 500 224
Accrued service fee 3,487 1,075 1,155
Accrued transfer agency fee 724 350 312
Accrued administrative services fee 797 246 264
Other accrued expenses 30,286 29,035 34,123
------ ------ ------
Total liabilities 347,806 1,023,069 90,582
------- --------- ------
Net assets applicable to outstanding shares $242,160,802 $74,621,920 $80,281,004
============ =========== ===========
Represented by
Shares of beneficial interest -- $.01 par value,
unlimited number of shares authorized $ 462,097 $ 137,722 $ 147,472
Additional paid-in capital 229,581,668 71,058,314 75,771,618
Undistributed (excess of distributions over) net investment income 310,708 -- 479
Accumulated net realized gain (loss) (Notes 1 and 6) (7,220,611) (1,222,907) (1,413,071)
Unrealized appreciation (depreciation) on investments (Note 5) 19,026,940 4,648,791 5,774,506
- ---------- --------- ---------
Total-- representing net assets applicable to outstanding shares $242,160,802 $74,621,920 $80,281,004
============ =========== ===========
Net assets applicable to outstanding shares: Class A $232,102,600 $66,508,071 $76,650,521
Class B $ 10,058,202 $ 8,113,849 $ 3,630,483
Outstanding shares of beneficial interest: Class A shares 44,289,909 12,274,597 14,080,312
Class B shares 1,919,755 1,497,590 666,891
Net asset value per share: Class A $ 5.24 $ 5.42 $ 5.44
Class B $ 5.24 $ 5.42 $ 5.44
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
<PAGE>
Statements of assets and liabilities
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
June 30, 1997
Assets
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
Investments in securities, at value (Note 1)
(identified cost $370,020,219, $107,120,101
and $64,706,778) $393,801,571 $115,023,727 $69,191,185
Cash in bank on demand deposit 881,505 -- 35,232
Accrued interest receivable 8,265,587 2,485,221 984,208
Receivable for investment securities sold 121,250 4,688 1,579
------- ----- -----
Total assets 403,069,913 117,513,636 70,212,204
----------- ----------- ----------
Liabilities
Disbursements in excess of cash on demand deposit -- 296,793 --
Dividends payable to shareholders 234,973 68,805 42,982
Payable for investment securities purchased 4,118,453 1,954,416 2,829
Accrued investment management services fee 15,107 4,461 2,711
Accrued distribution fee 1,374 458 218
Accrued service fee 5,739 1,661 1,009
Accrued transfer agency fee 1,700 504 299
Accrued administrative services fee 1,251 380 231
Other accrued expenses 23,539 30,388 19,134
------ ------ ------
Total liabilities 4,402,136 2,357,866 69,413
--------- --------- ------
Net assets applicable to outstanding shares $398,667,777 $115,155,770 $70,142,791
============ ============ ===========
Represented by
Shares of beneficial interest -- $.01 par value,
unlimited number of shares authorized $ 752,692 $ 223,440 $ 130,499
Additional paid-in capital 383,697,800 110,305,222 67,213,157
Undistributed (excess of distributions over) net investment income 9,570 711 22,242
Accumulated net realized gain (loss) (Notes 1 and 6) (9,495,418) (3,177,889) (1,693,924)
Unrealized appreciation (depreciation) on investments (Note 5) 23,703,133 7,804,286 4,470,817
- ---------- --------- ---------
Total-- representing net assets applicable to outstanding shares $398,667,777 $115,155,770 $70,142,791
============ ============ ===========
Net assets applicable to outstanding shares: Class A $376,468,903 $107,604,673 $66,603,460
Class B $ 22,198,874 $ 7,551,097 $ 3,539,331
Outstanding shares of beneficial interest: Class A shares 71,077,793 20,878,902 12,391,446
Class B shares 4,191,393 1,465,084 658,475
Net asset value per share: Class A $ 5.30 $ 5.15 $ 5.38
Class B $ 5.30 $ 5.15 $ 5.38
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
<PAGE>
Statements of operations
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Year ended June 30, 1997
Investment income
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
Income:
Interest $15,487,124 $4,577,544 $5,042,077
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 1,136,825 349,582 382,131
Distribution fee-- Class B 61,667 50,354 23,438
Transfer agency fee 91,027 44,076 40,093
Incremental transfer agency fee-- Class B 325 276 143
Service fee
Class A 403,439 117,243 134,983
Class B 14,022 11,749 5,345
Administrative services fees and expenses 96,751 28,771 32,522
Compensation of board members 17,078 7,732 7,508
Compensation of officers -- -- 305
Custodian fees 29,978 9,368 5,224
Postage 15,268 9,062 7,989
Registration fees 26,086 27,606 22,702
Reports to shareholders 6,893 310 4,246
Audit fees 17,000 15,500 15,500
Other 6,860 3,140 5,877
----- ----- -----
Total expenses 1,923,219 674,769 688,006
Earnings credits on cash balances (Note 2) (40,056) (8,184) (3,149)
- ------- ------ ------
Total net expenses 1,883,163 666,585 684,857
--------- ------- -------
Investment income-- net 13,603,961 3,910,959 4,357,220
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 466,187 (8,568) (109,521)
Financial futures contracts 962,668 252,709 288,241
------- ------- -------
Net realized gain (loss) on investments 1,428,855 244,141 178,720
Net change in unrealized appreciation (depreciation) of investments 3,063,495 1,390,465 1,046,406
--------- --------- ---------
Net gain (loss) on investments 4,492,350 1,634,606 1,225,126
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations $18,096,311 $5,545,565 $5,582,346
=========== ========== ==========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
<PAGE>
Statements of operations
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Year ended June 30, 1997
Investment income
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
Income:
Interest $26,420,518 $7,513,877 $4,492,346
----------- ---------- ----------
Expenses (Note 2):
Investment management services fee 1,856,870 555,919 335,881
Distribution fee-- Class B 144,457 45,744 20,664
Transfer agency fee 216,722 64,976 38,230
Incremental transfer agency fee-- Class B 845 284 140
Service fee
Class A 665,929 194,228 118,535
Class B 33,682 10,494 4,821
Administrative services fees and expenses 153,661 47,312 28,586
Compensation of board members 7,785 3,288 7,871
Compensation of officers 1,395 6,322 315
Custodian fees 972 14,030 9,724
Postage 34,388 10,350 5,748
Registration fees 14,687 18,398 19,582
Reports to shareholders 6,739 5,589 2,181
Audit fees 18,000 17,000 15,500
Other 6,484 8,619 8,621
----- ----- -----
Total expenses 3,162,616 1,002,553 616,399
Earnings credits on cash balances (Note 2) (45,776) (18,709) (13,707)
- ------- ------- -------
Total net expenses 3,116,840 983,844 602,692
--------- ------- -------
Investment income-- net 23,303,678 6,530,033 3,889,654
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 191,203 184,680 204,013
Financial futures contracts 1,541,555 976,466 266,162
--------- ------- -------
Net realized gain (loss) on investments 1,732,758 1,161,146 470,175
Net change in unrealized appreciation (depreciation) of investments 6,062,416 939,832 744,941
--------- ------- -------
Net gain (loss) on investments 7,795,174 2,100,978 1,215,116
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations $31,098,852 $8,631,011 $5,104,770
=========== ========== ==========
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Year ended June 30,
Operations and distributions 1997 1996 1997 1996
California Massachusetts
Tax-Exempt Fund Tax-Exempt Fund
<S> <C> <C> <C> <C>
Investment income-- net $ 13,603,961 $ 13,093,048 $ 3,910,959 $ 3,831,143
Net realized gain (loss) on investments 1,428,855 553,259 244,141 95,554
Net change in unrealized appreciation
(depreciation) on investments 3,063,495 323,151 1,390,465 202,491
--------- ------- --------- -------
Net increase (decrease) in net assets resulting
from operations 18,096,311 13,969,458 5,545,565 4,129,188
---------- ---------- --------- ---------
Distributions to shareholders from:
Net investment income
Class A (12,900,026) (12,910,408) (3,608,592) (3,652,208)
Class B (394,958) (184,985) (308,683) (172,619)
Net realized gain
Class A (518,965) (1,353,180) -- --
Class B (17,699) (20,647) -- --
------- -------
Total distributions (13,831,648) (14,469,220) (3,917,275) (3,824,827)
----------- ----------- ---------- ----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 19,424,292 23,553,539 6,908,468 11,006,959
Class B shares 4,411,205 5,187,208 3,032,071 4,389,565
Reinvestment of distributions at net asset value
Class A shares 9,248,935 10,071,476 2,774,110 2,835,422
Class B shares 327,596 184,290 269,072 149,356
Payments for redemptions
Class A shares (34,815,979) (38,384,549) (12,428,315) (14,679,805)
Class B shares (Note 2) (1,214,600) (960,392) (889,801) (790,581)
---------- -------- -------- --------
Increase (decrease) in net assets from
share transactions (2,618,551) (348,428) (334,395) 2,910,916
---------- -------- -------- ---------
Total increase (decrease) in net assets 1,646,112 (848,190) 1,293,895 3,215,277
Net assets at beginning of year 240,514,690 241,362,880 73,328,025 70,112,748
----------- ----------- ---------- ----------
Net assets at end of year $242,160,802 $240,514,690 $74,621,920 $73,328,025
============ ============ =========== ===========
Undistributed (excess of distributions over)
net investment income $ 310,708 $ 1,254 $ -- $ 6,316
------------ ------------ ----------- -----------
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
<PAGE>
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Year ended June 30,
Operations and distributions 1997 1996 1997 1996
Michigan Minnesota
Tax-Exempt Fund Tax-Exempt Fund
Investment income-- net $ 4,357,220 $ 4,347,534 $ 23,303,678 $ 23,264,721
Net realized gain (loss) on investments 178,720 316,845 1,732,758 512,083
Net change in unrealized appreciation
(depreciation) on investments 1,046,406 274,473 6,062,416 20,022
--------- ------- --------- ------
Net increase (decrease) in net assets resulting
from operations 5,582,346 4,938,852 31,098,852 23,796,826
--------- --------- ---------- ----------
Distributions to shareholders from:
Net investment income
Class A (4,220,612) (4,267,967) (22,346,136) (22,792,680)
Class B (145,774) (83,171) (975,607) (470,510)
Net realized gain on securities
Class A (19,158) (1,011,054) -- (300,981)
Class B (747) (21,404) -- (6,713)
---- ------- ------- ------
Total distributions (4,386,291) (5,383,596) (23,321,743) (23,570,884)
---------- ---------- ----------- -----------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 4,657,190 7,791,545 37,612,445 43,579,588
Class B shares 1,464,265 1,729,504 7,437,173 12,784,665
Reinvestment of distributions at net asset value
Class A shares 3,050,415 3,972,959 17,393,622 18,480,882
Class B shares 108,932 85,004 781,646 401,374
Payments for redemptions
Class A shares (11,286,452) (9,793,095) (78,924,930) (72,296,842)
Class B shares (Note 2) (582,299) (166,982) (2,465,251) (1,011,844)
-------- -------- ---------- ----------
Increase (decrease) in net assets from
share transactions (2,587,949) 3,618,935 (18,165,295) 1,937,823
---------- --------- ----------- ---------
Total increase (decrease) in net assets (1,391,894) 3,174,191 (10,388,186) 2,163,765
Net assets at beginning of year 81,672,898 78,498,707 409,055,963 406,892,198
---------- ---------- ----------- -----------
Net assets at end of year $80,281,004 $81,672,898 $398,667,777 $409,055,963
=========== =========== ============ ============
Undistributed (excess of distributions over)
net investment income $ 479 $ (3,116) $ 9,570 $ 11,951
----------- ----------- ------------ ------------
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
<PAGE>
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Year ended June 30,
Operations and distributions 1997 1996 1997 1996
New York Ohio
Tax-Exempt Fund Tax-Exempt Fund
Investment income-- net $ 6,530,033 $ 6,762,893 $ 3,889,654 $ 4,040,372
Net realized gain (loss) on investments 1,161,146 (312,952) 470,175 (450,527)
Net change in unrealized appreciation
(depreciation) of investments 939,832 (271,393) 744,941 579,615
------- -------- ------- -------
Net increase (decrease) in net assets resulting
from operations 8,631,011 6,178,548 5,104,770 4,169,460
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income
Class A (6,237,111) (6,587,853) (3,739,886) (3,934,670)
Class B (294,055) (175,051) (129,674) (69,847)
Net realized gain
Class A -- -- (7,128) (133,992)
Class B -- -- (297) (3,014)
--------- --------- --------- ---------
Total distributions (6,531,166) (6,762,904) (3,876,985) (4,141,523)
--------- --------- --------- ---------
Share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 11,232,398 9,808,292 5,210,610 6,884,856
Class B shares 3,038,506 3,827,013 1,817,909 1,761,407
Reinvestment of distributions at net asset value
Class A shares 4,709,717 5,179,063 2,867,182 3,192,485
Class B shares 250,963 158,781 98,384 64,381
Payments for redemptions
Class A shares (25,606,182) (18,878,694) (14,289,613) (11,876,308)
Class B shares (Note 2) (800,957) (862,141) (607,746) (316,974)
-------- -------- -------- --------
Increase (decrease) in net assets from
share transactions (7,175,555) (767,686) (4,903,274) (290,153)
---------- -------- ---------- --------
Total increase (decrease) in net assets (5,075,710) (1,352,042) (3,675,489) (262,216)
Net assets at beginning of year 120,231,480 121,583,522 73,818,280 74,080,496
----------- ----------- ---------- ----------
Net assets at end of year $115,155,770 $120,231,480 $70,142,791 $73,818,280
============ ============ =========== ===========
Undistributed (excess of distributions over)
net investment income $ 711 $ (11) $ 22,242 $ 695
------------ ------------ ----------- -----------
See accompanying notes to financial statements.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
1
Summary of significant
accounting policies
IDS California Tax-Exempt Trust and IDS Special Tax-Exempt Series Trust
were organized as Massachusetts business trusts. IDS California Tax-Exempt
Trust includes only IDS California Tax-Exempt Fund. IDS Special Tax-Exempt
Series Trust is a "series fund" that is currently composed of individual
state tax-exempt funds and one insured national tax-exempt fund, including
IDS Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS
Minnesota Tax-Exempt Fund, IDS New York Tax-Exempt Fund, IDS Ohio
Tax-Exempt Fund and IDS Insured Tax-Exempt Fund. The Funds are
non-diversified, open-end management investment companies as defined in
the Investment Company Act of 1940 (as amended).
Each Fund's goal is to provide a high level of income generally exempt
from federal income tax as well as from the respective state and local
income tax. A portion of each Fund's assets may be invested in bonds whose
interest is subject to the alternative minimum tax computation. The Funds,
excluding IDS Insured Tax-Exempt Fund, concentrate their investments in a
single state and therefore may have more credit risk related to the
economic conditions of the respective state than Funds that have a broader
geographical diversification.
Each Fund offers Class A and Class B shares. Class A shares are sold with
a front-end sales charge. Class B shares may be subject to a contingent
deferred sales charge. Class B shares automatically convert to Class A
after eight years.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than
class-specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
The significant accounting policies followed by the Funds are summarized
as follows:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
(This annual report is not part of the prospectus.)
<PAGE>
Valuation of securities
All securities are valued at the close of each business day. Securities
for which market quotations are not readily available are valued at fair
value according to methods selected in good faith by the board.
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.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Funds may
buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Funds give up the opportunity for profit
if the market price of the security increases. The risk in writing a put
option is that the Funds 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 Funds pay a premium whether or not the option is
exercised. The Funds also have the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist. The Funds 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. Each
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 the premium received or paid.
(This annual report is not part of the prospectus.)
<PAGE>
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Funds may buy and sell financial 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 Funds may be 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 Funds 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 Funds recognize a realized
gain or loss when the contract is closed or expires.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Illiquid securities
At June 30, 1997, investments in securities for IDS Minnesota Tax-Exempt
Fund includes an issue that is illiquid. The Fund currently limits
investments in illiquid securities to 10% of the net assets, at market
value, at the time of purchase. The aggregate value of such securities at
June 30, 1997 was $1,767,174 representing 0.4% of IDS Minnesota Tax-Exempt
Fund's net assets. Pursuant to guidelines adopted by the board, certain
unregistered securities are determined to be illiquid and are not included
within the 10% limitation specified above.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income taxes
Since each Fund intends 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. Each Fund is treated as a separate
entity for federal income tax purposes.
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 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. The effect on
dividend distributions of certain book-to-tax differences is presented as
"excess distributions" in the statement of changes in net assets. Also,
due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Funds.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, accumulated net realized gain (loss) and
undistributed net investment income have been increased (decreased),
resulting in net reclassification adjustments to additional paid-in
capital by the following:
<TABLE>
California Massachusetts Michigan Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accumulated net realized gain (loss) (477) -- (12,756) (17,583) (1,855) (1,453)
Undistributed net investment income 477 -- 12,761 15,684 1,855 1,453
- --------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital increase (decrease) -- -- (5) 1,899 -- --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Dividends to shareholders
Dividends from net investment income, declared daily and paid monthly, are
reinvested in additional shares of each Fund at net asset value or payable
in cash. Capital gains, when available, are distributed along with the
last income dividend at the end 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.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
2
Expenses and
sales charges
Effective March 20, 1995, each Fund entered into an agreement with AEFC
for managing its portfolio, providing administrative services and serving
as transfer agent.
Under its Investment Management Services Agreement, AEFC determines which
securities will be purchased, held or sold. The management fee is a
percentage of each Fund's average daily net assets in reducing percentages
from 0.47% to 0.38% annually.
Under its Administrative Services Agreement, each Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's
average daily net assets in reducing percentages from 0.04% to 0.02%
annually. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, and any other expenses properly payable by
the Fund and approved by the board.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder
accounts and records. Each Fund pays AEFC an annual fee per shareholder
account for this service as follows:
oClass A $15.50
oClass B $16.50
Also effective March 20, 1995, each Fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services. Under a Plan and Agreement of Distribution,
each Fund pays a distribution fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, each Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of each Fund's average daily net
assets attributable to Class A and Class B shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing the Funds' shares for the year ended June 30, 1997, are as
follows:
Fund Class A Class B
IDS California $435,840 $11,470
IDS Massachusetts 209,807 7,304
IDS Michigan 128,154 3,875
IDS Minnesota 785,957 29,864
IDS New York 235,029 9,154
IDS Ohio 104,351 3,108
(This annual report is not part of the prospectus.)
<PAGE>
During the year ended June 30, 1997, the Funds' custodian and transfer
agency fees were reduced as a result of earnings credits from overnight
cash balances as follows:
Fund Reduction
IDS California $40,056
IDS Massachusetts 8,184
IDS Michigan 3,149
IDS Minnesota 45,776
IDS New York 18,709
IDS Ohio 13,707
3
Securities
transactions
For the year ended June 30, 1997, cost of purchases and proceeds from
sales (other than short-term obligations) aggregated for each Fund are as
follows:
Fund Purchases Proceeds
IDS California $33,886,695 $36,248,092
IDS Massachusetts 6,099,756 6,768,012
IDS Michigan 16,395,142 17,576,040
IDS Minnesota 54,229,350 71,939,676
IDS New York 14,151,185 17,523,775
IDS Ohio 6,450,116 12,788,350
Net realized gains and losses on investment sales are determined on an
identified cost basis.
4
<TABLE>
<CAPTION>
Capital share
transactions
Transactions in shares of each Fund for the periods indicated are as
follows:
California Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sold 3,727,951 847,908
Issued for reinvested distributions 1,775,984 62,918
Redeemed (6,684,505) (234,000)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,180,570) 676,826
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 4,511,208 995,477
Issued for reinvested distributions 1,925,937 35,294
Redeemed (7,378,222) (184,480)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (941,077) 846,291
- ----------------------------------------------------------------------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Massachusetts Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 1,287,516 564,106
Issued for reinvested distributions 517,304 50,175
Redeemed (2,316,120) (166,069)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (511,300) 448,212
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 2,049,431 819,429
Issued for reinvested distributions 529,225 27,882
Redeemed (2,742,630) (147,842)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (163,974) 699,469
- ----------------------------------------------------------------------------------------------------------------------------
Michigan Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 859,824 270,029
Issues for reinvested distributions 563,716 20,129
Redeemed (2,086,380) (107,455)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (662,840) 182,703
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 1,429,150 315,865
Issued for reinvested distributions 725,994 15,490
Redeemed (1,794,375) (30,500)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 360,769 300,855
- ----------------------------------------------------------------------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
Minnesota Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 7,159,020 1,414,781
Issued for reinvested distributions 3,311,994 148,821
Redeemed (15,031,003) (469,087)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (4,559,989) 1,094,515
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 8,270,935 2,429,988
Issued for reinvested distributions 3,510,209 76,278
Redeemed (13,742,113) (192,219)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,960,969) 2,314,047
- ----------------------------------------------------------------------------------------------------------------------------
New York Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 2,196,024 593,838
Issued for reinvested distributions 921,975 49,118
Redeemed (5,008,087) (156,652)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,890,088) 486,304
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 1,906,925 744,701
Issued for reinvested distributions 1,006,844 30,877
Redeemed (3,672,303) (166,438)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (758,534) 609,140
- ----------------------------------------------------------------------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Ohio Tax-Exempt Fund
Year ended June 30, 1997
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 974,586 339,467
Issued for reinvested distributions 537,160 18,433
Redeemed (2,679,134) (113,803)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,167,388) 244,097
- ----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- ----------------------------------------------------------------------------------------------------------------------------
Sold 1,279,987 327,095
Issued for reinvested distributions 596,171 12,022
Redeemed (2,225,461) (59,086)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (349,303) 280,031
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
Interest rate
futures contracts
Investments in securities at June 30, 1997, included securities that were
valued and pledged as collateral to cover initial margin deposits (see
Summary of significant accounting policies) as follows:
Open Open
Market purchase sales
Fund value contracts contracts
IDS California $3,265,125 32 10
IDS Massachusetts 1,772,123 9 5
IDS Michigan 2,119,206 10 5
IDS Minnesota 6,535,000 51 20
IDS New York 3,708,997 63 15
IDS Ohio 2,180,123 9 5
The market value of the open purchase contracts at June 30, 1997, was as
follows:
Net
Market unrealized
Fund value gain (loss)
IDS California $3,728,000 $ (55,000)
IDS Massachusetts 1,048,500 (15,468)
IDS Michigan 1,165,000 (17,188)
IDS Minnesota 5,941,500 (87,656)
IDS New York 7,339,500 (105,938)
IDS Ohio 1,048,500 (15,469)
(This annual report is not part of the prospectus.)
<PAGE>
The market value of the open sales contracts at June 30, 1997, was as
follows:
Net
Market unrealized
Fund value gain (loss)
IDS California $1,165,000 $4,948
IDS Massachusetts 582,500 1,879
IDS Michigan 582,500 1,879
IDS Minnesota 2,330,000 9,437
IDS New York 1,747,500 6,598
IDS Ohio 582,500 1,879
The Funds maintain, in a segregated account with its custodian, advanced
refunded bonds with at least a market value equal to the value of these
open long futures contracts. Advanced refunded bonds are highly liquid,
usually covered by government securities, which will be refunded at the
bond's first call date.
6
Capital loss
carryover
For federal income tax purposes, capital loss carryovers were as follows
at June 30, 1997:
Expiration
Fund Carryover date
IDS California $1,643,088 2006
IDS Massachusetts 268,549 1999-2005
IDS Michigan 147,263 2005
IDS Minnesota 972,605 2005
IDS New York 1,956,275 2003-2005
IDS Ohio 527,216 2005
It is unlikely the board will authorize a distribution of any net realized
capital gains for a Fund until the respective capital loss carryover has
been offset or expires.
7
Financial highlights
"Financial highlights" showing per share data and selected information are
presented on pages 8-19 of the prospectus.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
<TABLE>
<CAPTION>
IDS California Tax-Exempt Fund
June 30, 1997
(Percentages represent value of
investments compared to net assets)
Municipal bonds (97.7%)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
<S> <C> <C> <C> <C>
Aliso Viejo Orange County District Community Facilities
District #88-1 Special Tax Bonds Series 1992A 7.35% 2018 $3,000,000 $ 3,464,910
ABAG Finance Authority for Nonprofit Corporations
Certificate of Participation International School Project
Series 1996 7.375 2026 2,200,0000 2,116,092
Anaheim Public Finance Authority Revenue Bonds
2nd Series Electric Utilities San Juan (FGIC Insured) 5.75 2022 11,100,000 11,160,939
Brea Redevelopment Agency Tax Allocation Refunding Bonds
Redevelopment Project AB (MBIA Insured) 5.50 2017 1,800,000 1,771,956
Burbank Redevelopment Agency Tax Allocation Bonds
Golden State Series 1993A 6.00 2023 2,000,000 2,011,680
Chapman College Educational Facilities Authority
Revenue Bonds Series 1989B 7.50 2018 500,000 555,980
Clearlake Redevelopment Agency
Highlands Park Community Development
Tax Allocation Bonds Series 1993 6.40 2023 1,420,000 1,442,535
Eastern Municipal Water District Riverside County
Water & Sewer Revenue Certificates of Participation
Series 1991 6.00 2023 1,000,000 1,013,550
Eastern Municipal Water District Riverside County
Water & Sewer Pre-Refunded Revenue Certificate of
Participation Series 1991(FGIC Insured) 6.50 2020 3,000,000 3,296,760
El Camino Hospital District Hospital Pre-Refunded Revenue
Certificate of Participation Series A 8.50 2017 1,500,000 1,541,505
Encinitas Unified School District
Unlimited General Obligation Bonds
Series 1996 Zero Coupon (MBIA Insured) 5.85 2015-16 3,500,000(h) 1,258,880
Fontana Redevelopment Agency
Refunding Certificate of Participation
Police Facility Series 1993 5.625 2016 4,500,000 4,435,515
Fontana Unified School District
Unlimited General Obligation Bonds
Series C (FGIC Insured) 6.15 2020 3,470,000 3,651,655
Fontana Unified School District
Unlimited Tax General Obligation Bonds
Series C Zero Coupon (FGIC Insured) 6.28 2022 2,000,000(e) 1,703,760
Foothill/Eastern Transportation Corridor Agency Toll Road
Senior Lien Revenue Bonds Series 1995A 6.00 2034 1,775,000 1,780,094
Garden Grove Agency Community Development
Tax Allocation Refunding Bonds
Garden Grove Community 5.875 2023 3,000,000 2,969,970
Garden Grove Certificate of Participation
Bahia Village/Emerald Isle
(FSA Insured) 5.70 2023 2,660,000 2,666,677
Huntington Beach Certificate of Participation Revenue Bonds
Civic Center Refinancing (AMBAC Insured) 5.50 2016 1,715,000 1,685,090
Indian Wells Improvement Bonds
Assessment District #13 7.50 2008 350,000(g) 360,885
Irwindale Redevelopment Agency Sub Lien
Tax Allocation Bonds Series 1996 7.00 2019 1,700,000 1,805,094
Janesville Union School District
Lassen County General Obligation Bonds
Series 1996 Election Bank Qualified 6.45 2021 875,000 882,516
Lake Elsinore School Financing Authority
Revenue Bonds Series 1997 6.125 2019 1,235,000 1,238,335
Long Beach Harbor Revenue Bonds
Series 1989A A.M.T. 7.25 2019 7,000,000(g) 7,308,630
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation
Series 1989A 7.00 2020 5,000,000 5,369,700
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A 7.30 2009 1,000,000 1,079,990
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A 7.375 2018 2,900,000 3,136,379
Los Angeles County Transportation Commission
Sales Tax Refunding Revenue Bonds Series A 7.00 2019 4,150,000 4,425,809
Los Angeles County Transportation Commission
Sales Tax Pre-Refunded Revenue Bonds Series A 8.00 2016 2,000,000 2,040,220
Los Angeles County Transportation Commission
Sales Tax Pre-Refunded Revenue Bonds
Series 1988A 7.875 2008 500,000 529,465
Los Angeles County Transportation Commission
Sales Tax Refunding Revenue Bonds
Series 1989A 7.40 2015 2,000,000 2,152,900
Los Angeles Department of Water & Power
Electric Plant Revenue Bonds Series 1990 7.125 2030 6,500,000 7,036,185
Los Angeles Department of Water & Power
Waterworks Refunding Revenue Bonds
Second Issue (Secondary FGIC Insured) 4.50 2018 3,000,000 2,557,110
Los Angeles International Airport Revenue Bonds
Series D (FGIC Insured) A.M.T. 5.50 2015 1,000,000 995,430
Los Angeles Multi-family Housing Revenue Bonds
Park Parthenia Series 1986A
(GNMA Insured) A.M.T. 7.40 2022 1,000,000 1,031,770
Los Angeles Single Family Home Mortgage Revenue Bonds
Series 1991A (GNMA & FNMA Insured) A.M.T. 6.875 2025 810,000 846,806
Los Angeles State Building Authority
Lease Pre-Refunded Revenue Bonds
State Department of General Services Lease
Series 1988A 7.25 2006 1,500,000 1,563,645
Los Angeles State Building Authority
Lease Pre-Refunded Revenue Bonds
State Department of General Services Lease
Series 1988A 7.50 2011 1,500,000 1,566,090
Los Angeles State Harbor Revenue Bonds
Series 1996B (MBIA Insured) A.M.T. 5.375 2019-23 3,300,000 3,156,084
Los Angeles State Harbor Revenue Bonds
Escrowed to Maturity 7.60 2018 1,000,000 1,242,690
Los Angeles Wastewater System
Pre-Refunded Revenue Bonds Series 1987 8.125 2017 1,000,000 1,034,070
Los Angeles Wastewater System
Refunding Revenue Bonds Series D (FGIC Insured) 4.70 2017 1,000,000 882,630
Modesto Certificate of Participation Pre-Refunded Bonds
Community Center 8.10 2015 1,000,000 1,033,990
Mount Diablo Hospital District Hospital
Pre-Refunded Revenue Bonds
Series 1990A (AMBAC Insured) 7.00 2017 3,000,000 3,317,910
North City West Community School Facility
Authority Special Tax
Refunding Revenue Bonds Series 1995B (CGIC Insured) 5.75 2015 1,000,000 1,022,250
Northern California Public Power Authority Power
Pre-Refunded Revenue Bonds Hydroelectric
Series 1986B-3 8.00 2024 2,000,000 2,082,280
Northern California Public Power Authority Power
Pre-Refunded Revenue Bonds Hydroelectric #1
Series 1986B-1 8.00 2024 2,100,000 2,186,394
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS California Tax-Exempt Fund (Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Northern California Transmission Agency
California-Oregon Transmission
Pre-Refunded Revenue Bonds
Series 1990A (MBIA Insured) 7.00 2024 2,000,000 2,177,020
Northern California Transmission
Select Auction Variable Rate Security &
Residual Interest Revenue Bonds Inverse Floater
(MBIA Insured) 5.50 2024 4,500,000(f) 4,340,745
Novato Community Facility District #1 Vintage Oaks
Public Improvement Special Tax Refunding Bonds 7.25 2021 2,000,000 2,115,600
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A 6.15 2012 1,880,000 1,949,391
Port of Oakland Refunding Revenue Bonds
Series 1997G (MBIA Insured) A.M.T. 5.375 2025 3,080,000 2,931,544
Rancho Cucamonga Redevelopment Agency
1990 Tax Allocation Pre-Refunded Bonds
(MBIA Insured) 7.125 2019 3,540,000 3,831,094
Rancho Mirage Joint Powers Finance Authority
Certificate of Participation Eisenhower Memorial Hospital7.00 2022 4,250,000 4,788,560
Redding Redevelopment Agency Tax Allocation
Refunding Bonds Canby Hilltop Cypress
Series D (CGIC Insured) 5.00 2023 4,700,000 4,266,895
Richmond Elementary School District
Lassen County General Obligation Bonds
Series 1996 Election Bank Qualified 6.50 2021 649,000 662,311
Richmond Joint Powers Financing Authority Leases and
Gas Tax Refunding Revenue Bonds Series 1995A 5.25 2013 3,540,000 3,435,924
Sacramento Cogeneration Authority
Cogeneration Revenue Bonds
Procter & Gamble Series 1995 6.375 2010 1,000,000 1,058,740
Sacramento Municipal Utility District Series R 6.00 2015-17 7,500,000 7,501,845
Sacramento Municipal Utility District Pre-Refunded Series V 7.50 2018 2,775,000 2,887,471
Sacramento Municipal Utility District Pre-Refunded Series W 7.50 2018 1,980,000 2,060,249
Sacramento Municipal Utility District Pre-Refunded Series Y
(MBIA Insured) 6.75 2019 3,400,000 3,778,454
Sacramento Power Authority Cogeneration
Revenue Bonds Series 1995 6.00 2022 1,000,000 1,012,040
San Diego County Capital Asset Lease
Certificate of Participation
Series 1993 Inverse Floater (AMBAC Insured) 7.02 2007 3,200,000(f) 3,476,000
San Diego Regional Transportation Commission Sales Tax
Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25 2008 5,030,000 5,218,474
San Joaquin County Pre-Refunded Certificate of Participation
Human Services Facility Series 1989 (BIG Insured) 6.70 2009 3,500,000 3,733,205
San Joaquin County Certificate of Participation
Jail & Sheriffs Operation Center (MBIA Insured) 6.75 2015 2,000,000 2,158,780
San Jose Redevelopment Agency Merged Area
RedevelopmentTax Allocation Bonds
Series 1993 (MBIA Insured) 4.75 2024 3,055,000 2,660,569
San Jose Redevelopment Agency Merged Area
Tax Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured) 6.973 2014 3,000,000(f) 2,898,750
San Mateo County Transit District Limited Tax
Pre-Refunded Bonds Series 1990A (MBIA Insured) 6.50 2020 1,500,000 1,565,310
Santa Clara County Mountain View-
Los Altos Union High School District Unlimited Tax
General Obligation Bonds Series A 5.75 2015 1,200,000 1,211,820
Santa Cruz Certificate of Participation 8.375 2007 1,220,000 1,248,292
See Accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Southern California Home Financing Authority
Single Family Mortgage Revenue Bonds 1990B
(GNMA Insured) A.M.T. 7.75 2024 575,000 607,309
Southern California Public Power Authority Transmission
Special Bonds 6.00 2012 2,700,000 2,786,994
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds Series 1995B 6.25 2020 2,700,000 2,746,683
State Department Water Resources Water System
Pre-Refunded Revenue Bonds Central Valley
Series D 7.70 2024 2,400,000 2,474,376
State Department Water Resource Water System
Revenue Bonds Central Valley Series L 5.50 2023 3,000,000 2,914,440
State Education Facility Authority Revenue Bonds
Pomona College 6.00 2017 3,000,000 3,087,150
State Education Facility Authority
Revenue Bonds Series 1997B 6.30 2021 1,000,000 1,018,170
State Health Facility Finance Authority
Pre-Refunded Revenue Bonds
St. Joseph Health System Series 1989A 6.90 2014 3,500,000 3,753,225
State Housing Finance Agency Home Mortgage
Revenue Bonds Series 1986B 6.90 2016 1,770,000 1,806,515
State Pollution Control Finance Authority Pollution Control
Revenue Bonds Southern California Edison
Series 1988A A.M.T. 6.90 2006 2,000,000 2,123,080
State Public Works Board Lease Revenue Bonds
California Community Colleges Series 1994B 7.00 2019 2,000,000 2,333,840
State Public Works Board Lease Revenue Bonds
Department of Corrections
Substance Abuse Treatment Facility &
State Prison at Corcoran
Series 1996A (AMBAC Insured) 5.25 2021 1,870,000 1,789,740
State Public Works Board University of California Lease
Pre-Refunded Revenue Bonds Series 1990A 7.00 2015 2,250,000 2,477,228
State Rural Home Mortgage Financing Authority
Single Family Mortgage Revenue Bonds
Series 1997A-3 (GNMA & FNMA Insured) A.M.T. 6.25 2029 1,500,000 1,632,855
State University Refunding Revenue Bonds
Series C (AMBAC Insured) 5.00 2023 2,000,000 1,815,700
State Unlimited Tax General Obligation Bonds
(Secondary FGIC Insured) 4.75 2023 1,325,000(g) 1,156,420
Statewide Community Development Authority
Health Facilities Revenue Bonds
Unihealth America Series 1993A
Inverse Floater (AMBAC Insured) 7.11 2011 5,000,000(f) 5,293,750
Statewide Community Development Authority Revenue
Certificate of Participation
St. Joseph Health System Group 6.50 2015 5,500,000 5,961,560
Stockton Single Family Mortgage Revenue Bonds
Series 1990A (GNMA Insured) A.M.T. 7.50 2023 110,000 116,075
University of Southern California Educational
Facilities Authority Pre-Refunded Revenue Bonds
Series 1989B 6.75 2015 5,000,000 5,359,750
Upland Certificate of Participation Water System
Refunding Bonds (FGIC Insured) 6.60 2016 1,000,000 1,084,700
Vacaville Limited Obligation Improvement Bonds
Water Rights Assessment District 8.00 2007 750,000 773,138
Total municipal bonds
(Cost: $217,417,594) $236,494,586
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS California Tax-Exempt Fund (Percentages represent value of
investments compared to net assets)
Short-term securities (0.7%)
<S> <C> <C> <C>
Issuer (d,i) Effective Amount Value(a)
yield payable at
maturity
Municipal notes
Irvine Ranch Water District
Series 1985 V.R.
10-01-05 3.75% $ 400,000 $ 400,000
Tustin California Improvement Bonds
Series 1995-2 V.R.
09-02-13 3.75 1,200,000 1,200,000
Total short-term securities
(Cost $1,600,000) $ 1,600,000
Total investments in securities
(Cost: $219,017,594)(j) $238,094,586
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to investments in securities
<TABLE>
<CAPTION>
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Investments in bonds, by rating category as a percentage of total bonds, are as follows:
(Unaudited)
<S> <C> <C>
Rating 6-30-97 6-30-96
AAA 61% 59%
AA 19 19
A 9 13
BBB 8 7
BB and below 3 2
Non-rated -- --
Total 100% 100%
</TABLE>
(c) The following abbreviations are used in portfolio
descriptions to identify the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 1997, the value of
securities subject to alternative minimum tax
represented 8.6% of net assets.
V.R. -- Variable Rate
(e) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on June 30, 1997. Inverse floaters in the aggregate represent 6.6% of the
Fund's net assets as of June 30, 1997.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- ---------------------------------------------------
Municipal Bonds Index Sept. 1997 $3,200,000
- ---------------------------------------------------
Sale contracts
- ---------------------------------------------------
Municipal Bonds Index Sept. 1997 $1,000,000
- ---------------------------------------------------
(h) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(i) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on June 30,
1997.
(j) At June 30, 1997, the cost of securities for federal income tax purposes was
$218,758,032 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation ............................$19,426,756
Unrealized depreciation ................................(90,202)
- -----------------------------------------------------------------
Net unrealized appreciation........................ $19,336,554
- -----------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
IDS Massachusetts Tax-Exempt Fund
June 30, 1997
(Percentages represent value of
investments compared to net assets)
Municipal bonds (97.4%)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
<S> <C> <C> <C> <C>
Bay Transit Authority Series A (Secondary CGIC Insured) 5.50% 2021 $ 500,000 $ 484,525
Bay Transportation Authority General Transportation System
Refunding Bonds Series 1992B 6.20 2016 1,500,000 1,630,635
Boston City Hospital Refunding Revenue Bonds
Series B (FHA Insured) 5.75 2023 3,000,000(f) 2,952,360
Boston City Hospital Pre-Refunded Revenue Bonds
Series A (FHA Insured) 7.625 2021 1,000,000 1,113,070
Boston General Obligation Bonds
Series 1991A (MBIA Insured) 6.75 2011 500,000 551,680
Boston General Obligation Refunding Bonds
Series 1993A (AMBAC Insured) 5.65 2009 1,500,000(f) 1,548,435
Boston Industrial Development Financing Authority
Revenue Bonds Massachusetts College of Pharmacy
Series 1993A (Connie Lee Insured) 5.25 2026 1,000,000 916,330
Boston Water & Sewer Commission
General Pre-Refunded Revenue Bonds
Senior Series 1991A (FGIC Insured) 7.00 2018 1,000,000 1,119,370
Boston Water & Sewer Commission
General Subordinate Revenue Bonds Series A
(MBIA Insured) 6.00 2008 500,000 506,280
Commonwealth General Obligation Consolidated Loan
Pre-Refunded Bonds
Series 1990A (FGIC Insured) 7.25 2009 500,000 546,110
Fall River General Obligation Refunding Bonds
Series 1996 (MBIA Insured) 5.25 2010 1,000,000 990,710
Greater Lawrence Sanitary District North Andover
General Obligation Bonds 8.50 2005 455,000 476,653
Haverhill City Unlimited Tax General Obligation Bonds
Series 1997 (FGIC Insured) 5.00 2017 1,000,000 939,850
Health & Educational Facilities Authority Refunding
Revenue Bonds Beth Israel Hospital Series 1989E 7.00 2009-14 550,000 582,779
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series A (MBIA Insured) 7.50 2008 500,000 531,030
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series C 5.90 2011 1,000,000 968,920
Health & Educational Facilities Authority Pre-Refunded
Revenue Bonds Beverly Hospital Series D (MBIA Insured) 7.30 2019 400,000 431,184
Health & Educational Facilities Authority Revenue Bonds
Boston College Series J (FGIC Insured) 6.625 2021 2,000,000 2,164,580
Health & Educational Facilities Authority Revenue Bonds
Boston College Series K 5.25 2023 1,000,000 938,110
Health & Educational Facilities Authority Revenue Bonds
Brigham & Women's Hospital Series C 6.75 2021 500,000 526,685
Health & Educational Facilities Authority Revenue Bonds
Brigham & Women's Hospital Series 1991D 6.75 2024 1,000,000 1,075,790
Health & Educational Facilities Authority Revenue Bonds
Cape Cod Health System Series A (Connie Lee Insured) 5.25 2021 2,500,000 2,349,475
Health & Educational Facilities Authority Revenue Bonds
Charlton Memorial Hospital Series 1991B 7.25 2013 1,750,000 1,905,978
Health & Educational Facilities Authority Revenue Bonds
Holyoke Hospital Series B 6.50 2015 1,000,000 1,006,690
Health & Educational Facilities Authority Pre-Refunded
Revenue Bonds Lahey Clinic Medical Center
Series A (MBIA Insured) 7.625 2018 500,000 527,940
Health & Educational Facilities Authority Revenue Bonds
Melrose-Wakefield Hospital Series 1992B 6.375 2016 1,000,000 1,037,360
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Mount Auburn Hospital
Series A (MBIA Insured) 7.875 2018 205,000 216,935
Health & Educational Facilities Authority Revenue Bonds
New England Deaconess Hospital Series 1992D 6.625 2012 1,000,000 1,051,710
Health & Educational Facilities Authority Revenue Bonds
Newton Wellesley Hospital Series 1991D (MBIA Insured) 7.00 2015 1,000,000 1,111,280
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Northeastern University
Series 1989C (AMBAC Insured) 7.10 2006 1,000,000 1,075,120
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Northeastern University
Series E (MBIA Insured) 6.55 2022 1,000,000 1,088,590
Health & Educational Facilities Authority Revenue Bonds
North Adams Regional Hospital Series 1 6.625 2018 1,000,000 1,013,160
Health & Educational Facilities Authority Revenue Bonds
South Shore Hospital Series 1992D (MBIA Insured) 6.50 2022 1,000,000 1,076,220
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds
Stonehill College Series 1990D (AMBAC Insured) 7.70 2020 1,000,000 1,112,730
Health & Educational Facilities Authority Revenue Bonds
Suffolk University Series B (Connie Lee Insured) 6.35 2022 2,495,000 2,612,465
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds
Wentworth Institute of Technology
Series A (AMBAC Insured) 7.40 2010 750,000 823,642
Health & Educational Facilities Authority Revenue Bonds
Valley Regional Health System
Series C (Connie Lee Insured) 5.75 2018 1,000,000 997,580
Industrial Finance Agency Assumption College Revenue Bonds
Series 1996 (Connie Lee Insured) 6.00 2026 1,000,000 1,022,630
Industrial Finance Agency Hampshire College Revenue Bonds
Series 1997 5.80 2017 1,105,000 1,077,905
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds
Eastern Edison Series 1993 5.875 2008 2,000,000 1,980,160
Industrial Finance Agency Resource Recovery Revenue Bonds
Ogden Haverhill Series 1986A (AMBAC Insured) A.M.T. 7.375 2011 175,000 178,973
Industrial Finance Agency Resource Recovery Revenue Bonds
SEMASS Series 1991A 9.00 2015 1,500,000 1,684,290
Industrial Finance Agency Revenue Bonds
Museum of Science
Series 1989 (FSA Insured) 7.30 2009 1,000,000 1,086,830
Leominster General Obligation Bonds (MBIA Insured) 7.50 2009 1,000,000 1,100,760
Mansfield General Obligation Bonds (AMBAC Insured) 6.70 2011 1,000,000 1,090,230
Municipal Wholesale Electric Power Supply System
Pre-Refunded Revenue Bonds Series 1992B 6.75 2017 1,395,000 1,559,875
Municipal Wholesale Electric Power Supply System
Refunding Revenue Bonds Series B (MBIA Insured) 4.75 2011 1,750,000 1,632,715
Municipal Wholesale Electric Power
Supply System Revenue Bonds
Special Pars & Inflows (AMBAC Insured) 5.45 2018 1,600,000 1,536,256
Nantucket General Obligation Bonds 6.80 2011 1,000,000 1,089,940
New Bedford General Obligation Bonds
Series 1995 (AMBAC Insured) 5.50 2015 700,000 700,049
North Andover General Obligation Bonds (MBIA Insured) 7.35 2008 310,000 342,773
North Attleborough Unlimited General Obligation Bonds
Series 1997 (AMBAC Insured) 5.25 2017 1,675,000 1,644,649
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Massachusetts Tax-Exempt Fund (Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Port Authority Revenue Bonds
Series 1990A (FGIC Insured) A.M.T. 7.50 2020 1,000,000 1,087,910
Southeastern University Building Refunding Revenue Bonds
Series A (AMBAC Insured) 5.75 2016 1,250,000 1,267,700
Southern Berkshire Regional School District Unlimited Tax
General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.55 2010 1,000,000 1,106,500
State Education Loan Authority
Educational Loan Revenue Bonds
Issue E Series B (AMBAC Insured) A.M.T. 6.00 2012 975,000 1,006,453
State General Obligation Consolidated Loan Bonds
Series 1991A (FGIC Insured) 6.00 2011 1,095,000 1,158,609
State Housing Finance Agency Single Family Housing
Revenue Bonds Series 13 A.M.T. 7.95 2023 430,000 454,673
State Housing Finance Authority Residential
Development Bonds Series 1992A (FNMA Insured) 6.875 2011 1,000,000 1,068,490
State Housing Finance Authority
Single Family Mortgage Housing Revenue Bonds
Series 4 7.375 2014 430,000(f) 441,128
State Housing Finance Authority
Single Family Mortgage Housing Revenue Bonds
Series 7 A.M.T. 8.10 2020 245,000 252,784
State Water Resource Authority Revenue Bonds
Series A (Secondary MBIA Insured) 5.50 2022 1,100,000 1,066,538
University of Lowell Building Authority Facilities
Revenue Bonds 4th Series A 7.40 2007 125,000 128,951
University of Lowell Building Authority Facilities
Revenue Bonds 4th Series A 7.60 2012 50,000 51,613
University of Massachusetts Building Authority
Revenue Bonds Series A (FSA Insured) 7.50 2014 500,000 524,755
University of Massachusetts Building Authority
Revenue Bonds Series A Escrowed to Maturity 7.50 2011 115,000 131,505
Water Resource Authority General
Pre-Refunded Revenue Bonds Series 1990A 7.625 2014 500,000 551,985
Water Resource Authority General
Pre-Refunded Revenue Bonds Series 1991A 6.50 2019 1,000,000 1,101,240
Water Resource Authority General Revenue Bonds
Series 1993B (MBIA Insured) 5.00 2022 1,365,000 1,240,840
Water Resource Authority General Revenue Bonds
Series 1993C 5.25 2020 1,400,000 1,307,054
Worcester General Obligation Refunding Bonds
Series 1995G (MBIA Insured) 5.30 2015 1,000,000 985,410
Total municipal bonds
(Cost: $68,001,754) $72,664,134
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Short-term security (1.9%)
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
<S> <C> <C>
Municipal note
State General Obligation Series B V.R.
12-01-97 4.00% $1,400,000 $ 1,400,000
Total short-term security
(Cost: $1,400,000) $ 1,400,000
Total investments in securities
(Cost: $69,401,754)(g) $74,064,134
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Massachusetts Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 6-30-97 6-30-96
AAA 64% 66%
AA 9 9
A 16 16
BBB 9 7
BB and below 2 2
Non-rated -- --
- --------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of
securities subject to alternative tax represented 4.0% of net
assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on June 30,
1997.
(f) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- ---------------------------------------------------------
Municipal Bonds Index Sept. 1997 $900,000
- ---------------------------------------------------------
Sale contracts
- ---------------------------------------------------------
Municipal Bonds Index Sept. 1997 $500,000
- ---------------------------------------------------------
(g) At June 30, 1997, the cost of securities for federal income tax purposes was
$69,382,621 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation ...................$4,789,739
Unrealized depreciation .....................(108,226)
- ------------------------------------------------------
Net unrealized appreciation............... $4,681,513
- ------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
IDS Michigan Tax-Exempt Fund
June 30, 1997
<TABLE>
<CAPTION>
(Percentages represent value of
investments compared to net assets)
Municipal bonds (98.3%)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
<S> <C> <C> <C> <C>
Auburn Hills Limited Tax General Obligation
Street Improvement Bonds 6.00% 2004 $ 200,000(f) $ 205,906
Battle Creek Calhoun County
Downtown Development Authority Bonds Series 1994 7.65 2022 1,250,000 1,435,537
Battle Creek Water Supply System
Pre-Refunded Revenue Bonds Series 1990B 6.375 2008-10 1,640,000 1,715,637
Buena Vista School District Saginaw County
School Building & Site Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1991 7.20 2016 1,500,000(f) 1,674,300
Central Michigan University Revenue Bonds
Series 1997 (FGIC Insured) 5.50 2026 750,000 733,920
Chelsea General Obligation Pre-Refunded Bonds (MBIA Insured) 8.20 2006 145,000 150,904
Chippewa Valley School District Unlimited Tax
General Obligation Bonds (FGIC Insured) 5.00 2021 1,000,000 911,710
Comstock Park Public School Kent County Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1989 6.00 2016 400,000 419,688
Comstock Park Public School Kent County Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1989 6.875 2010 260,000 276,775
Detroit General Obligation Pre-Refunded Bonds
Distributable State Aid Series 1989 (AMBAC Insured) 7.20 2009 1,000,000 1,072,040
Detroit Sewer Disposal Pre-Refunded Revenue Bonds 8.00 2008 500,000 510,055
Detroit Sewer Disposal Revenue Bonds (FGIC Insured) 5.70 2023 2,000,000(f) 1,973,300
Detroit Unlimited Tax General Obligation Bonds
Pre-Refunded Series A 7.25 2009 1,000,000 1,070,580
Detroit Unlimited Tax General Obligation Bonds
Pre-Refunded Series 1988A 7.875 2008 700,000 734,566
Detroit Unlimited Tax General Obligation Bonds
Series A (FGIC Insured) 5.50 2016 1,000,000 990,680
Detroit Unlimited Tax General Obligation Bonds
Series 1995A 6.80 2015 1,000,000 1,140,610
Detroit Downtown Development Authority
Development Area Project #1 Junior Lien
Refunded Tax Increment Series 1996D 6.50 2025 1,000,000 1,033,340
Detroit Water Supply System Second Lien
Revenue Bonds Series 1995A (MBIA Insured) 5.50 2025 1,500,000 1,452,165
Detroit Water Supply System Pre-Refunded Revenue Bonds
Series 1988 (MBIA Insured) 7.875 2008 400,000 423,408
East Lansing School District School Building & Site
Unlimited Tax General Obligation
Pre-Refunded Bonds Series 1991 6.625 2014 1,000,000 1,094,230
Farmington Hills Hospital Finance Authority
Revenue Bonds Botsford General Hospital
Series 1992A (MBIA Insured) 6.50 2022 1,500,000 1,608,570
Ferris State University Board of Trustees
General Revenue & Refunding Bonds
Series 1995 (MBIA Insured) 5.25 2020 1,000,000 944,790
Forest Hills School District Unlimited Tax
General Obligation Pre-Refunded Bonds 7.375 2015 1,000,000 1,089,500
Frenchtown Resort Drainage District Monroe County Drain
Pre-Refunded Revenue Bonds Series 1987 7.50 2011-12 615,000 662,760
Garden City School District Authority
Pre-Refunded Revenue Bonds 7.80 2010 305,000 323,794
Genesee County General Obligation Bonds
Sewer Disposal System Series A (AMBAC Insured) 5.40 2015 1,400,000 1,391,502
Grand Ledge Public Schools Unlimited Tax General Obligation
Refunding Bonds Counties of Eaton, Clinton & Ionia
Series 1995 (MBIA Insured) 5.375 2024 2,000,000 1,926,980
Grand Rapids Community College Limited Tax
General Obligation Bonds Series 1996 (MBIA Insured) 5.375 2019 1,000,000 971,770
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
IDS Michigan Tax-Exempt Fund
June 30, 1997
(Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Grand Rapids Tax Increment Revenue Bonds
Series 1994 (MBIA Insured) 6.875 2024 380,000 423,784
Grand Rapids Water Supply System Improvement
Pre-Refunded Revenue Bonds Series 1988 7.875 2018 700,000 727,923
Grand Rapids Water Supply System Improvement
Pre-Refunded Revenue Bonds Series 1990 (FGIC Insured) 7.25 2020 1,250,000 1,360,025
Hillman Cmmunity Schools General Obligation Bonds
Series 1997 (FGIC Insured) 5.25 2023 1,000,000 951,110
Inkster School District Unlimited Tax General Obligation
Pre-Refunded Bonds (AMBAC Insured) 7.00 2018 450,000 488,187
Iosco County Water Supply System Limited Tax
General Obligation Bonds (AMBAC Insured) 5.50 2008-10 575,000 588,342
Kent County Hospital Pre-Refunded Revenue Bonds
Butterworth Hospital Series 1989A 7.25 2013 500,000 532,390
Kent County Refuse Disposal System Limited Tax
General Obligation Refunding Bonds Series 1987 8.40 2010 150,000 155,799
Lake Orion School District General Obligation Bonds
(AMBAC Insured) 5.50 2020 1,000,000 978,300
Lincoln Park School Distict Wayne County School Building & Site
Unlimited Tax General Obligation Bonds (FGIC Insured) 5.90 2026 1,000,000 1,021,590
Marquette Hospital Finance Authority Pre-Refunded Revenue Bonds
Marquette General Hospital Series 1989C 7.50 2007-19 825,000 885,802
Monroe County Pollution Control Revenue Bonds
Detroit Edison Fermi Plants
Series 1990I (FGIC Insured) A.M.T. 7.65 2020 1,000,000 1,095,640
Monroe County Pollution Control Revenue Bonds
Detroit Edison Fermi 2 Plants
Series CC (AMBAC Insured) A.M.T. 7.50 2019 1,750,000 1,905,960
Muskegon Hospital Finance Authority
Refunding Revenue Bonds
Hackley Hospital Series 1988A 8.00 2008 400,000 415,112
Northville Public Schools Unlimited Tax
General Obligation Bonds Series 1991B 7.00 2008 1,500,000 1,640,910
Ovid-Elsie School District Unlimited Tax
General Obligation Bonds (Secondary MBIA Insured) 5.60 2021 1,000,000 986,960
Redford General Obligation Bonds (MBIA Insured) 5.25 2016 1,450,000 1,396,292
Richmond Limited Obligation Refunding Revenue Bonds
K mart Series A 6.625 2007 530,000 543,526
Rochester Hill Unlimited Tax General Obligation Bonds
Series 1990A 6.00 2009-10 735,000 756,339
Rockford Public Schools Kent County Unlimited Tax
General Obligation Pre-Refunded Revenue Bonds 7.375 2019 1,000,000 1,087,540
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds (FGIC Insured) 5.75 2022 2,500,000 2,513,850
St. Louis Public Schools Unlimited Tax
General Obligation Refunding Revenue Bonds
Counties of Gratiot, Midland & Isabella
Series 1995 (FGIC Insured) 5.25 2024 755,000 714,464
Schoolcraft Community School District
County of Kalamazoo School Building
and Site Unlimited General Obligation Bonds
Series 1996 (FGIC Insured) 5.375 2026 1,000,000 967,910
South Lake District Unlimited Tax General Obligation
Pre-Refunded Bonds 6.80 2010 355,000 390,706
South Redford School District Unlimited General Obligation Bonds
Series 1996 (FGIC Insured) 5.50 2022 1,000,000 980,020
State Building Authority Refunding Revenue Bonds Series 1991I6.25 2020 2,200,000 2,295,524
State Hospital Finance Authority Revenue Bonds
St. Johns Hospital & Medical Center (AMBAC Insured) 5.25 2026 1,400,000 1,314,950
State Hospital Finance Authority Revenue Bonds
Central Michigan Community Hospital 6.25 2027 1,000,000 1,001,560
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
State Hospital Finance Authority
Hospital Pre-Refunded Revenue Bonds
Detroit Medical Center Series 1988A 8.125 2012 310,000 329,890
State Hospital Finance Authority
Hospital Pre-Refunded Revenue Bonds
McLaren Obligated Group Series 1991A 7.50 2021 1,750,000 1,984,605
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Detroit Medical Center Series A 6.25 2013 1,200,000 1,249,476
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Detroit Medical Center Series 1988A 8.125 2012 90,000 95,122
State Hospital Finance Authority
Hospital Pre-Refunded Revenue Bonds
Detroit Medical Center Series 1988B 8.00 2008 500,000 531,410
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995 6.70 2026 1,000,000 1,058,590
State Hospital Finance Authority
Pre-Refunded Revenue Bonds
Oakwood Hospital Group Series 1990A (FGIC Insured) 7.10 2018 1,000,000 1,095,100
State Hospital Finance Authority
Pre-Refunded Revenue Bonds
Henry Ford Hospital Series 1990A 7.00 2010 1,000,000 1,092,310
State Hospital Finance Authority Revenue Bonds
Presbyterian Villages of Michigan Obligated Group
Series 1995 6.50 2025 1,000,000 1,013,740
State Hospital Finance Authority Revenue Bonds
Presbyterian Villages of Michigan Obligated Group
Series 1997 6.375 2025 700,000 699,370
State Public Power Agency Belle River
Refunding Revenue Bonds Series A 5.25 2018 1,000,000 952,960
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Detroit Edison
Series 1990BB (MBIA Insured) 7.00 2008 1,000,000 1,168,100
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Detroit Edison Series 1992BB
(FGIC Insured) 6.50 2016 1,500,000 1,618,230
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Escrowed to Maturity Oxford Institute 7.875 2005 150,000 170,205
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Ford Motor Series 1991A 7.10 2006 1,650,000(f) 1,900,338
State Strategic Fund Limited Tax Obligation Revenue Bonds
Great Lakes Pulp & Fibre A.M.T. 10.25 2016 1,000,000(g) 479,020
State Trunk Line Bonds Series A (FGIC Insured) 5.75 2020 1,065,000 1,071,816
State University Revenue Bonds Series A 5.50 2022 560,000 540,753
Taylor Tax Increment Finance Authority Bonds
Series 1989A (MBIA Insured) 6.00 2007-09 1,205,000 1,232,488
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A (Asset Guaranty) 6.375 2018 1,500,000 1,597,425
Van Buren Township Tax Increment Revenue Bonds
Series 1994 8.40 2016 1,000,000 1,130,850
Waterford School District Unlimited Tax General
Obligation Bonds Series Q 6.25 2013 340,000 353,233
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in Securities
IDS Michigan Tax-Exempt Fund (Percentages represent value of
investments compared to net assets)
Municipal bonds (Continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Wayne County Airport Revenue Bonds
Detroit Metropolitan Airport
Series 1990A (AMBAC Insured) A.M.T. 7.00 2020 1,080,000 1,167,437
Wyandotte Electric Pre-Refunded Revenue Bonds
Series 1987 (AMBAC Insured) 7.875 2017 300,000 308,976
Total municipal bonds
(Cost: $73,111,161) $78,900,976
</TABLE>
<TABLE>
<CAPTION>
Short-term security (0.1%)
<S> <C> <C> <C>
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
Municipal note
State Strategic Fund Consumer Power Company
Series 1988A V.R.
04-15-18 4.05% $100,000 $ 100,000
Total short-term security
(Cost: $100,000) $ 100,000
Total investments in securities
(Cost: $73,211,161)(h) $79,000,976
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 6-30-97 6-30-96
- ----------------------------------------------------------------
AAA 74% 71%
AA 11 12
A 5 6
BBB 9 9
BB and below 1 2
Non-rated -- --
Total 100% 100%
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
FGIC -- Financial Guarantee Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of
securities subject to alternative minimum tax represented 5.8%
of net assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a weeks notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on June 30,
1997.
(f) Partially or fully pledged as initial deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- --------------------------------------------------------
Municipal Bond Index Sept. 97 $1,000,000
- --------------------------------------------------------
Sale contracts
- --------------------------------------------------------
Municipal Bond Index Sept. 97 $ 500,000
- --------------------------------------------------------
(g) Non income producing. Item identified is in default as to payment of
interest and/or principal.
(h) At June 30, 1997, the cost of securities for federal income tax purposes was
$73,160,033 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation ................$6,372,505
Unrealized depreciation ..................(531,562)
- ----------------------------------------------------
Net unrealized appreciation............ $5,840,943
- ----------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
IDS Minnesota Tax-Exempt Fund
June 30, 1997
<TABLE>
<CAPTION>
(Percentages represent value of
investments compared to net assets)
Municipal bonds (97.7%)
<S> <C> <C> <C> <C>
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Anoka County General Obligation Capital Improvement
Revenue Bonds Series 1989B 7.00 % 2007-10 $7,950,000 $8,240,652
Anoka County Resource Recovery Revenue Bonds
Northern States Power Series 1985 7.15 2008 3,750,000 3,995,550
Becker Pollution Control Revenue Bonds
Northern States Power Sherburne County
Generating Station Units 1 & 2 Series 1987A 7.25 2005 2,000,000 2,004,740
Becker Solid Waste Disposal Facility
Revenue Bonds Liberty Paper Series 1994B A.M.T. 9.00 2015 3,825,000 3,998,081
Bemidji Hospital Facilities 1st Mortgage Revenue Bonds
North Country Health Services Series 1991 7.00 2021 1,755,000 1,958,369
Bloomington Community Development
Refunding Revenue Bonds Note 24th Avenue Motel 8.50 2005 1,758,382(i) 1,767,174
Brooklyn Center Tax Credit Investor Refunding Revenue Bonds
Four Courts Apartment Project Series 1995B A.M.T. 7.58 2009 2,450,000 2,475,259
Burnsville Multi-family Housing
Refunding Revenue Bonds Summit Park Apartments
Series 1993 (FHA Insured) 6.00 2033 4,000,000 4,030,280
Cambridge Independent School District #911
Unlimited Tax General Obligation
School Building Bonds Series 1997A
(MBIA Insured) 5.25 2018 1,900,000 1,855,255
Columbia Heights Multi-family Housing Revenue Bonds
Crestview Lutheran Home Royce Place Series 1991 10.00 2032 555,000 594,183
Columbia Heights Multi-family Housing Revenue Bonds
Crestview Lutheran Home Royce Place
Series 1991 (FHA Insured) 7.75 2032 2,725,000 2,849,914
Duluth Economic Development Authority
Health Care Facility Pre-Refunded Revenue Bonds
Benedictine Health System
St. Mary's Medical Center Series 1990 8.375 2020 2,000,000 2,236,580
Duluth Hospital Facilities St. Lukes Hospital
Pre-Refunded Revenue Bonds Series 1988 9.00 2018 2,500,000 2,653,300
Duluth Housing and Redevelopment Authority 1st Mortgage
Revenue Bonds Lakeshore Lutheran Home 8.25 2009 125,000 125,234
Eden Prairie Housing Development Refunding Revenue Bonds
Eden Commons Series 1990 (FHA Insured) 8.25 2025 6,195,000 6,344,423
Edina Hospital System Revenue Bonds
Fairview Hospital & Health Care Services
Series 1989A 7.125 2019 2,500,000 2,688,575
Edina Multi-family Housing Revenue Bonds
Walker Assisted Living Series 1991 9.00 2031 6,700,000 7,343,468
Faribault Rice & Goodhue County
Independent School District #656
General Obligation School Building Bonds
Series 1995 (FSA Insured) 5.75 2015 6,900,000 7,013,643
Faribault Single Family Mortgage
Refunding Revenue Bonds Series 1991A 7.50 2011 1,655,000 1,739,637
Fergus Falls Health Care Facilities Revenue Bonds
LRHC Long-Term Care Facility Series 1995 6.50 2025 1,500,000 1,542,645
Hennepin County Lease Revenue
Certificate of Participation
Series 1991 6.80 2017 7,250,000 7,839,280
Hopkins Revenue Bonds Blake School 6.70 2024 3,120,000 3,457,802
Hubbard County Solid Waste Disposal Revenue Bonds
Potlatch Series 1989 A.M.T. 7.375 2013 5,610,000 5,962,869
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
International Falls Solid Waste Disposal
Revenue Bonds Boise Cascade
Series 1990 A.M.T. 7.75 2015 4,000,000 4,190,720
Little Canada Multi-family Housing Revenue Bonds
Provinces of Little Canada
Series 1996 A.M.T. 7.00 2027 3,885,000 3,899,646
Mahtomedi Multi-family Housing
Briarcliff Revenue Bonds A.M.T. 7.35 2036 2,280,000 2,326,079
Maplewood Care Institute Series 1994 7.75 2024 3,830,000 3,955,624
Maplewood Multi-family Housing
Revenue Bonds Maplewood (FHA Insured) A.M.T. 7.75 2021 2,045,000 2,053,630
Maplewood Multi-family Housing
Carefree Cottages of Maplewood III
Refunding Revenue Bonds Series 1995 A.M.T. 7.20 2032 2,900,000 2,904,756
Minneapolis & St. Paul Housing Board
Multi-family Mortgage Revenue Bonds
Collateral Mortgage Revenue Loan
Riverside Plaza Series 1988 (GNMA Insured) A.M.T. 8.25 2030 3,945,000 4,111,558
Minneapolis Community Development Agency
Limited Tax Supported Development
Revenue Common Bond Fund
Series 1996-01 6.00 2011 980,000 983,969
Minneapolis General Obligation Bonds
Sports Arena Series 1996 5.20 2024 4,940,000 4,698,088
Minneapolis Hospital Facility
Pre-Refunded Revenue Bonds
Lifespan Incorporated Series 1989A 7.00 2014 5,000,000 5,416,350
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System Revenue Bonds
Healthspan Series 1993 (AMBAC Insured) 4.75 2018 13,500,000 11,941,155
Minneapolis Nursing Home Revenue Bonds
Walker Cityview & Southview
Series 1992 8.50 2022 5,405,000 5,833,130
Minneapolis Special School District #1
Certificates of Participation
Series 1997A (MBIA Insured) 5.375 2017 2,400,000 2,386,944
Minnetonka Multi-family Housing
Refunding Revenue Bonds Cedar Hill West
(FHA Insured) 7.75 2026 5,485,000 5,664,908
Minnetonka Multi-family Housing Revenue Bonds
The Cedar Hills Series 1985 7.50 2017 500,000 515,660
New Brighton Tax Credit Investor Revenue Bonds
Polynesian Village Apartments Series 1995B A.M.T. 7.75 2009 2,355,000 2,402,053
Northern Municipal Power Agency Electric System
Refunding Revenue Bonds
Series 1989A 7.25 2016 5,475,000 5,786,418
Northern Municipal Power Agency Electric System
Pre-Refunded Revenue Bonds
Series 1989A (AMBAC Insured) 7.40 2018 1,000,000 1,067,040
Northern Municipal Power Agency Electric System
Pre-Refunded Revenue Bonds
Series 1989B (AMBAC Insured) 7.40 2018 1,800,000 1,910,070
North St. Paul General Obligation School Bonds 5.125 2025 6,310,000 5,958,722
Owatanna Public Utilities
Pre-Refunded Revenue Bonds Series 1991 6.75 2016 1,000,000 1,079,220
Plymouth Multi-family Housing Revenue Bonds
Harbor Lane Apartments Series 1993
(Asset Guaranty Insured) A.M.T. 5.90 2013 2,325,000 2,339,741
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Minnesota Tax-Exempt Fund
(Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Richfield Independent School District #280
Unlimited Tax General Obligation
School Building Bonds Series 1993C
Inverse Floater (FGIC Insured) 6.875 2010 3,300,000(f) 3,316,500
Richfield Independent School District #280
Unlimited Tax General Obligation
School Building Bonds Series 1993C Trust
Inverse Floater (FGIC Insured) 5.975 2012 2,510,000(f) 2,503,725
Richfield Multi-family Housing
Refunding Revenue Bonds
Village Shores Apartments Project
Series 1996 7.625 2031 2,990,000 3,036,704
Robbinsdale Hospital Pre-Refunded Revenue Bonds
North Memorial Medical Center
Series 1989 (AMBAC Insured) 7.375 2019 2,200,000 2,345,706
Robbinsdale Multi-family Housing Revenue Bonds
Series 1996A 7.35 2031 3,260,000 3,255,632
Rochester Health Care Facility Revenue Bonds
Mayo Foundation Series A 4.951 2019 5,000,000 4,506,200
Rochester Multi-family Housing Development
Revenue Bonds Civic Square
Series 1991 (FHA Insured) A.M.T. 7.45 2031 4,390,000 4,640,230
St. Cloud Hospital Facility Refunding Revenue Bonds
Series 1996B (AMBAC Insured) 5.00 2020 3,000,000 2,765,160
St. Cloud Hospital Facility Refunding Revenue Bonds
Series B (AMBAC Insured) 5.00 2012 2,900,000 2,793,309
St. Cloud Hospital Facility Revenue Bonds
St. Cloud Hospital Series 1990B
(AMBAC Insured) 7.00 2020 5,000,000(h) 5,562,250
St. Cloud Hospital Facility Refunding Revenue Bonds
Series C (AMBAC Insured) 5.30 2020 1,515,000 1,437,326
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group
Series 1993 (AMBAC Insured) 5.20 2023 5,000,000 4,669,500
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993B
Inverse Floater (AMBAC Insured) 5.475 2013 7,000,000(f) 6,317,500
St. Louis Park Health Care Facilities
Pre-Refunded Revenue Bonds
Park Nicollet Medical Center Series 1990A 9.25 2020 4,000,000 4,536,480
St. Louis Park Health Care Facilities
Pre-Refunded Revenue Bonds
Park Nicollet Medical Center Series 1991A 8.625 2021 2,000,000 2,272,800
St. Louis Park Multi-family Housing
Revenue Refunding Bonds
Park Blvd Towers Series 1996A 7.00 2031 3,970,000 4,026,255
St. Paul & Minneapolis Housing &
Redevelopment Authority Health Care
Facility Revenue Bonds Group Health Plan Series 1992 6.75 2013 10,500,000(h) 11,387,355
St. Paul Housing & Development Bonds
Highland Retirement (FHA Insured) 7.013 2026 5,210,000(j) 5,157,900
St. Paul Housing & Redevelopment Authority
Commercial Development
Refunding Revenue Bonds Beverly Enterprises
Series 1992 7.75 2002 2,355,000 2,392,091
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center Series 1993A 7.125 2017 1,880,000 1,946,947
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center Series 1993A 7.125 2006 950,000 975,774
St. Paul Housing & Redevelopment Authority
Health Care Facility
Multi-family Rental Housing Revenue Bonds
Lynblomsten 1993B 7.00 2024 1,890,000 1,878,358
St. Paul Housing & Redevelopment Authority
Sales Tax Revenue Bonds
Civic Center (Secondary MBIA Insured) 5.55 2023 7,500,000 7,488,000
St. Paul Housing & Redevelopment Authority
Single Family Mortgage
Refunding Revenue Bonds Middle Income Phase II
Mortgage Backed (FNMA Insured) 6.80 2028 3,460,000 3,689,363
St. Paul Port Authority Unlimited Tax
General Obligation Bonds 5.125 2024 4,770,000 4,476,597
Shoreview Senior Housing Revenue Bonds
Series 1996 7.25 2026 2,700,000 2,683,638
Southern Minnesota Municipal Power Agency
Power Supply System
Revenue Bonds Zero Coupon
Series 1994A (MBIA Insured) 6.67 2019 19,500,000(g) 5,762,835
Southern Minnesota Municipal Power Agency
Power Supply System
Revenue Bonds Zero Coupon (MBIA Insured) 6.08 2024 5,150,000(g) 1,132,279
Southern Minnesota Municipal Power Agency
Power Supply System
Revenue Bonds Zero Coupon
Series 1994A (MBIA Insured) 6.88 2022 12,000,000(g) 2,966,280
Southern Minnesota Municipal Power Agency
Pre-Refunded Bonds Series 1988A 8.125 2018 1,315,000 1,369,047
Southern Minnesota Municipal Power Agency
Pre-Refunded Bonds Series 1988B 8.125 2018 1,000,000 1,041,100
Southern Minnesota Municipal Power Agency
Pre-Refunded Revenue Bonds
Escrowed to Maturity Series A (Secondary MBIA Insured) 5.75 2018 1,970,000 1,990,007
Southern Minnesota Municipal Power Agency
Revenue Bonds (Secondary MBIA Insured) 4.75 2016 6,415,000 5,784,855
Southern Minnesota Municipal Power Agency
Un-Refunded Balance Power Revenue Bonds Series A 5.75 2018 1,895,000 1,885,961
Spring Park Health Care Facility
Revenue Bonds Twin Birch Health Care Center
Series 1991 8.25 2011 1,780,000 1,904,636
State Agricultural and Economic Development Board
Health Care System Fairview Hospital & Healthcare Service
Series 1997A (MBIA Insured) 5.75 2026 2,000,000 1,999,840
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1990 7.00 2009 6,250,000 6,657,312
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1991 6.70 2011 8,000,000 8,699,600
State Higher Education Facilities Authority
Augsburg College Mortgage Revenue Bonds
Series 4-F1 6.25 2023 1,750,000 1,808,258
State Higher Education Facilities Authority
MacAlester College Revenue Bonds Series 1997 4-J 5.55 2017 1,000,000 998,730
State Higher Education Facility Authority
Mortgage Pre-Refunded Revenue Bonds
St. Mary's College Series 2-M 8.375 2017 1,000,000 1,072,450
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Minnesota Tax-Exempt Fund
(Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
State Housing Facility Authority
Housing Finance Agency Housing Development
Single Family Mortgage Bonds Series B 7.25 2016 325,000 329,092
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1989A A.M.T. 8.00 2029 1,210,000 1,257,396
State Housing Finance Agency
Single Family Mortgage Revenue Bonds
Series 1997D A.M.T. 5.85 2019 3,000,000 3,004,980
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1990A A.M.T. 7.95 2022 3,165,000 3,344,171
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1991A A.M.T. 7.45 2022 3,575,000 3,764,582
State Housing Finance Agency
Single Family Mortgage Bonds Series 1992A 6.95 2016 2,930,000 3,092,556
State Housing Finance Agency
Single Family Mortgage Revenue Bonds
Series L A.M.T. 6.70 2020 1,045,000 1,092,453
State Public Facilities Authority
Water Pollution Control Revenue Bonds
Series 1989A 7.00 2009 7,850,000 8,467,873
State University Board of Regents
General Obligation Bonds Inverse Floater
Series 1993A Bonds 5.564 2003 5,000,000(f) 5,062,500
State University Board of Regents
General Obligation Pre-Refunded Bonds
Series 1989A 6.00 2011 4,625,000 4,977,379
State University Board of Regents
General Obligation Bonds Series 1996A 5.50 2021 12,500,000 12,516,500
State University Board State University System
Pre-Refunded Revenue Bonds
Series 1989A (MBIA Insured) 7.40 2019 2,250,000 2,391,187
Vadnais Heights Multi-family Housing
Cottages of Vadnais Heights
Refunding Revenue Bonds
Series 1995 A.M.T. 7.00 2031 3,190,000 3,189,745
Vadnais Heights Multi-family Housing
Cottages of Vadnais Heights
Tax Credit Revenue Bonds
Series 1997 A.M.T. 7.00 2009 1,080,000 1,073,887
Washington County General Obligation
Capital Improvement Bonds
Series 1989A 7.00 2009-10 4,425,000 4,586,778
Washington County Housing & Redevelopment Authority
Woodbury Multi-family Housing
Refunding Revenue Bonds Series 1996 6.95 2023 1,985,000 1,992,603
Western Minnesota Municipal Power Agency
Revenue Bonds
Escrowed to Maturity (AMBAC Insured) 6.75 2016 5,935,000 6,392,648
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds
Series A (Secondary MBIA Insured) 5.50 2015 11,250,000 11,199,712
White Bear Lake Industrial Development
Revenue Bonds
Taylor Series 1988A A.M.T. 8.75 2008 2,250,000 2,388,645
Total municipal bonds
(Cost: $365,620,219) $389,401,571
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (1.1%)
<S> <C> <C> <C>
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
Municipal note
Duluth Health Facilities
Revenue Bond V.R.
06-01-19 4.25% $ 100,000 $ 100,000
Minneapolis & St. Paul Housing &
Redevelopment Authority Health Care
Revenue Bond
Series B V.R.
08-15-25 4.30 4,300,000 4,300,000
Total short-term securities
(Cost: $4,400,000) $ 4,400,000
Total investments in securities
(Cost: $370,020,219)(k) $393,801,571
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
Investments in securities
IDS Minnestoa Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 6-30-97 6-30-96
- ---------------------------------------------------------
AAA 44% 48%
AA 22 18
A 13 15
BBB 9 7
BB and below 12 10
Non-rated -- 2
- ---------------------------------------------------------
Total 100% 100%
- ---------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue: AMBAC -- American Municipal Bond Association
Corporation FGIC -- Financial Guarantee Insurance Corporation FNMA -- Federal
National Mortgage Association FHA -- Federal Housing Authority FSA -- Financial
Security Assurance GNMA -- Government National Mortgage Association MBIA --
Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of June 30, 1997, the value of
securities subject to alternative minimum tax represented
15.2% of net assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on June 30,
1997.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on June 30, 1997. Inverse floaters in the aggregate represent 4.3% of the
Fund's net assets as of June 30, 1997.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(h) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements): Type of security
Notional amount Purchase contracts
- -------------------------------------------------
Municipal Bonds Index Sept. 1997 $5,100,000
- -------------------------------------------------
Sales contracts
- -------------------------------------------------
Municipal Bonds Index Sept. 1997 $2,000,000
- -------------------------------------------------
(i) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at June 30, 1997, is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Acquisition Purchase
Security date cost
- --------------------------------------------------------------------------------------
Bloomington Community Development
Refunding Revenue Note 24th Avenue Motel 03-31-88 $1,758,382
(j) Non-income producing. Item identified is in default as to payment of
interest and/or principal.
(k) At June 30, 1997, the cost of securities for federal income tax purposes was
$369,560,056 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
</TABLE>
Unrealized appreciation ...........................$24,335,871
Unrealized depreciation ...............................(94,356)
- ---------------------------------------------------------------
Net unrealized appreciation....................... $24,241,515
- --------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
IDS New York Tax-Exempt Fund (Percentages represent value of
June 30, 1997 investments compared to net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Municipal bonds (99.9%)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Albany County Airport Authority Revenue Bonds
Series 1997 (FSA Insured) A.M.T. 5.50 % 2019 $ 250,000 (g) $ 241,250
Broome County Certificates of Partication
Public Safety Facility Series 1994 (MBIA Insured) 5.25 2022 2,650,000 2,495,929
Buffalo Municipal Water Agency Authority Water System
Revenue Bonds Series 1995 (FGIC Insured) 5.00 2025 1,000,000 918,310
City of Buffalo School Serial Bonds
Series 1997B (AMBAC Insured) 5.375 2016 500,000 493,900
Erie County Unlimited Tax General Obligation Bonds
Series B (FGIC Insured) 5.50 2025 700,000 684,348
Erie County Water Authority Fourth Resolution Water
Refunding Revenue Bonds Zero Coupon
Series 1992 (AMBAC Insured) 7.30 2017 1,215,000(e) 281,880
Erie County Water Authority Water Works System
Revenue Bonds Escrowed to Maturity
Series 1990A (AMBAC Insured) 6.00 2008 1,765,000 1,887,403
Fallsburg Sullivan County Unlimited Tax General
Obligation Improvement Pre-Refunded Bonds
Series 1991 7.05 2011-14 1,300,000 1,450,501
Great Neck North Water Authority Water System
Pre-Refunded Revenue Bonds Series 1989A 6.00 2020 1,415,000 1,472,180
Metropolitan Transportation Authority Commuter Facilities
1987 Service Contract Refunding Bonds Series 5 6.50 2016 1,775,000 1,871,152
Monroe County Utility General Obligation
Pre-Refunded Bonds Water Improvement System 7.10 2008-09 1,000,000 1,061,500
Municipal Assistance New York City Series 59 7.75 2006 660,000 673,266
Municipal Assistance New York City Series 62 6.75 2006 2,200,000 2,244,176
Municipal Assistance Troy New York
General Revenue Bonds Series 1996A (MBIA Insured) 5.00 2022 1,250,000 1,155,263
New York & New Jersey Port Authority Special Obligation
Revenue Bonds KIAC Partners Project Series 4 A.M.T. 6.75 2019 1,500,000 1,592,805
New York City General Obligation Bonds Series 1995B 7.00 2016 1,500,000 1,632,900
New York City General Obligation Bonds Series J 5.875 2019 1,000,000 993,270
New York City Industrial Development Agency
Civil Facility Lease Revenue Bonds
Series 1997 (MBIA Insured) 5.25 2017-27 2,000,000 1,904,240
New York City Industrial Development Agency
Civil Facility Revenue Bonds Series 1993 5.375 2023 2,000,000 1,925,520
New York City Industrial Development Agency
Civil Facility Lease Revenue Bonds Series 1997 5.80 2016 1,000,000 989,930
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series B Inverse Floater (MBIA Insured) 6.34 2009 2,000,000(f) 1,935,000
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series B (MBIA Insured) 5.75 2026 500,000 503,375
New York City Unlimited Tax General Obligation Bonds
Series 1996G 5.75 2017 1,500,000 1,475,700
New York City Water Finance Authority
Water & Sewer System Pre-Refunded Revenue Bonds
Series A (FGIC Insured) 6.75 2014 1,185,000 1,259,904
New York City Water Finance Authority
Water & Sewer System Revenue Bonds
Series A (FGIC Insured) 6.75 2014 565,000 600,714
State Dormitory Authority City University System
Consolidated 3rd Resolution Revenue Bonds
Series 1994-2 (MBIA Insured) 6.25 2019 1,500,000 1,583,355
See accompanying notes to investments in securities.
(This annual report is ot part of the prospectus.)
<PAGE>
IDS New York Tax-Exempt Fund (Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
State Dormitory Authority City University System
Pre-Refunded Revenue Bonds 8.125 2017 3,400,000 3,468,374
State Dormitory Authority City University System
Revenue Bonds Series 1993A 5.75 2013 3,000,000 3,034,470
State Dormitory Authority College
Revenue Bonds Series 1996 (AMBAC Insured) 5.25 2016 1,140,000 1,101,445
State Dormitory Authority Revenue Bonds
NYACK Hospital Series 1996 6.25 2013 1,000,000 1,027,950
State Dormitory Authority State University Education Facility
Cooper Union Insured College Revenue Bonds
Series 1996 (AMBAC Insured) 5.375 2020 860,000 834,062
State Dormitory Authority State University Education Facility
Pre-Refunded Revenue Bonds Series 1990A 7.70 2012 1,750,000 1,943,165
State Dormitory Authority State University Education Facility
Refunding Revenue Bonds Series 1990B 7.50 2011 1,900,000 2,226,724
State Dormitory Authority State University Education Facility
Revenue Bonds (Secondary AMBAC Insured) 5.25 2015 1,000,000 993,060
State Dormitory Authority State University Education Facility
Revenue Bonds (Secondary AMBAC Insured) 5.50 2019 2,000,000 2,010,000
State Energy Research & Development Authority
Electric Facility Revenue Bonds
Consolidated Edison Series 1986A A.M.T. 7.50 2021 1,750,000 1,788,903
State Energy Research & Development Authority
Electric Facility Revenue Bonds
Consolidated Edison Series 1989A A.M.T. 7.75 2024 1,000,000 1,029,170
State Energy Research & Development Authority
Electric Facility Revenue Bonds Consolidated Edison
Series 1990A A.M.T. 7.50 2025 5,000,000(g) 5,286,900
State Energy Research & Development Authority
Gas Facilities Industrial Development
Revenue Bonds Series 1996 (MBIA Insured) 5.50 2021 2,000,000 1,961,240
State Energy Research & Development
Authority Pollution Control Refunding
Revenue Bonds Rochester Gas & Electric
(MBIA Insured) A.M.T. 6.50 2032 2,500,000 2,669,300
State Energy Research & Development Authority
Solid Waste Development Revenue Bonds
State Gas & Electric Company
Series A (MBIA Insured) A.M.T. 5.70 2028 3,000,000 2,948,190
State Environmental Facility State Water & Pollution Control
Revolving Fund Revenue Bonds New York City
Municipal Water Finance Authority Series 1990A 7.50 2012 3,000,000 3,308,010
State Local Government Assistance Bonds Series C 5.50 2022 1,500,000 1,443,015
State Local Government Assistance Pre-Refunded Bonds
Series 1991A 7.00 2016 4,000,000 4,438,440
State Medical Care Facility Finance Agency
Hospital & Nursing Home Mortgage Revenue Bonds
Montefiore Hospital
Series 1989A (FHA Insured) 7.25 2024 1,400,000 1,493,828
State Medical Care Facility Finance Agency Mental Health
Services Facility Improving Refunding Revenue Bonds
Series 1993F (Secondary FSA Insured) 5.375 2014 1,000,000 980,030
State Medical Care Facility Finance Agency Mental Health
Services Facility Improving Refunding Revenue Bonds
Series 1994A (Secondary FSA Insured) 5.25 2023 1,500,000 1,406,820
State Medical Care Facility Finance Agency Pre-Refunded Bonds
Presbyterian Hospital Series 1985B 8.00 2025 1,320,000(g) 1,352,987
State Medical Care Facility Finance Agency Revenue Bonds
Buffalo General Hospital Series 1988C (FHA Insured) 7.60 2008 1,500,000 1,589,775
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
State Medical Care Facility Finance Agency Revenue Bonds
Buffalo General Hospital Series 1988C (FHA Insured) 7.70 2022 1,950,000 2,068,735
State Medical Care Facility Finance Agency Secured Hospital
Revenue Bonds Series 1987A 7.10 2027 550,000 561,643
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series TT 7.50 2015 4,000,000 4,276,440
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series 27 6.90 2015 3,000,000 3,223,500
State Mortgage Agency Revenue Bonds
Series 9 A.M.T. 7.30 2017 970,000 990,758
State Thruway Authority Local Highway & Bridge Service
Contract Bonds Series 1991 6.00 2011 2,500,000 2,519,500
State Urban Development Correction Facility
Pre-Refunded Revenue Bonds Series 1 (FSA Insured) 7.50 2020 4,500,000 4,928,175
State Urban Development Correctional Capital Facilities
Refunding Revenue Bonds Series 1993A 5.25 2021 2,500,000 2,306,725
State Urban Development Correctional Capital Facilities
Revenue Bonds Series 5 (MBIA Insured) 5.50 2025 750,000 733,365
State Urban Development Revenue Bonds
Higher Education Applied Technology Grants
Series 1995 (MBIA Insured) 5.75 2015 1,000,000 1,021,610
Triborough Bridge & Tunnel Authority
General Purpose Pre-Refunded Revenue Bonds Series S 7.00 2021 3,000,000 3,299,580
Triborough Bridge & Tunnel Authority
Special Obligation Refunding Bonds
Series 1991B (FGIC Insured) 6.875 2015 2,000,000 2,162,180
United Nations Development Senior Lien
Refunding Revenue Bonds Series 1992A 6.00 2026 4,500,000 4,528,350
Utica Industrial Development Agency
Civic Facility Revenue Bonds
Series 1996A (MBIA Insured) 5.50 2016 750,000 739,537
Total municipal bonds
(Cost: $107,120,101) $115,023,727
Total investments in securities
(Cost: $107,120,101)(h) $115,023,727
</TABLE>
See accompanying notes to investments in securietis.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS New York Tax-Exempt Fund
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 6-30-97 6-30-96
- -------------------------------------------------------------------
AAA 58% 52%
AA 13 18
A 12 15
BBB 16 14
BB and below 1 1
Non-rated -- --
- -------------------------------------------------------------------
Total 100% 100%
- -------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviation is used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of
securities subject to alternative minimum tax represented
14.4% of net assets.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
yield on the date of acquisition.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on June 30, 1997. Inverse floaters in the aggregate represent 1.7% of the
Fund's net assets as of June 30, 1997.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- -------------------------------------------------------
Municipal Bonds Index Sept. 1997 $6,300,000
- -------------------------------------------------------
Sales contracts
- -------------------------------------------------------
Municipal Bonds Index Sept. 1997 $1,500,000
- -------------------------------------------------------
(h) At June 30, 1997, the cost of securities for federal income tax purposes was
$107,052,857 and the gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation ......................$8,082,388
Unrealized depreciation ........................(111,518)
- ---------------------------------------------------------
Net unrealized appreciation.................. $7,970,870
- ---------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
IDS Ohio Tax-Exempt Fund
June 30, 1997
<TABLE>
<CAPTION>
(Percentages represent value of
investments compared to net assets)
Municipal bonds (96.4%)
<S> <C> <C> <C> <C>
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Barberton Limited Tax Various Purpose General Obligation Bonds
Series 1989-1 7.35 % 2009 $ 700,000 $ 754,768
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association of Logan County
Series 1993 6.00 2013 1,000,000 984,160
Buckeye Valley Local School District School
Improvement Unlimited Tax
General Obligation Bonds Series 1995A (MBIA Insured) 5.25 2020 1,000,000 960,900
Butler County Hospital Facility Improvement
Refunding Revenue Bonds 7.50 2010 1,750,000 1,870,050
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds 6.25 2010 955,000 916,466
Celina Local School District
Unlimited General Obligation Bonds
Series 1996 (FGIC Insured) 5.25 2020 1,000,000 960,900
Clermont County Hospital Facility Revenue Bonds
Mercy Health System Province of Cincinnati
Series 1989A (AMBAC Insured) 7.50 2019 750,000 820,319
Cleveland Airport Systems Revenue Bonds
Series 1990A (MBIA Insured) A.M.T. 7.40 2020 500,000 537,475
Cleveland General Obligation Pre-Refunded Bonds 7.375 2003 125,000 128,489
Cleveland Public Power System 1st Mortgage
Pre-Refunded Revenue Bonds 8.375 2017 100,000(f) 102,377
Cleveland Waterworks Improvement 1st Mortgage
Refunding Revenue Bonds
Series F 1992B (AMBAC Insured) 6.25 2016 1,000,000(f) 1,062,520
Cleveland Waterworks Improvement 1st Mortgage
Revenue Bonds Series 1987E 6.00 2017 200,000 200,450
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992 7.875 2013 1,000,000 1,060,830
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds
Judson Retirement Community Series A 7.25 2018 1,000,000 1,015,740
Cuyahoga County Hospital Improvement Revenue Bonds
Cleveland Clinic Foundation 7.00 2013 500,000 504,970
Cuyahoga County Hospital Improvement
Pre-Refunded Revenue Bonds
Cleveland Clinic Foundation Series 1987A 7.875 2010 275,000 285,018
Cuyahoga County Hospital Improvement Revenue Bonds
Mount Sinai Medical Center Series 1991
(AMBAC Insured) 6.625 2021 600,000 662,736
Cuyahoga County Hospital Improvement Revenue Bonds
University Hospitals Health System
Series 1992 (AMBAC Insured) 6.50 2011 500,000 535,790
Cuyahoga County Hospital Refunding Revenue Bonds
Cleveland Clinic Foundation Series 1992 5.50 2011 1,500,000 1,518,930
Cuyahoga County Hospital Refunding Revenue Bonds
Mount Sinai Medical Center Series 1987A 8.125 2014 400,000 414,180
Cuyahoga County Hospital Revenue Bonds
Meridia Health Series 1991 7.00 2023 1,000,000 1,070,590
Cuyahoga County Limited Tax General Obligation Bonds 5.60 2013 500,000 517,675
Cuyahoga Hospital Revenue Bonds Metrohealth System
Series 1989 (MBIA Insured) 6.00 2019 1,000,000 1,024,250
Delaware County Sewer Improvement Limited Tax
General Obligation Bonds 5.25 2015 1,000,000 973,490
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Ohio Tax-Exempt Fund
(Percentages represent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Dover Limited Tax Improvement General Obligation Bonds
Municipal Sewer System 7.10 2009 1,000,000 1,065,230
Elyria Limited Tax Improvement General Obligation
Recreation Facility Bonds 7.10 2009 715,000 767,581
Erie County Hospital Improvement Refunding Revenue Bonds
Firelands Community Hospital Series 1992 6.75 2015 2,000,000(f) 2,147,260
Franklin County Convention Facilities Authority
Tax & Lease Revenue Anticipation
Pre-Refunded Bonds (MBIA Insured) 7.00 2019 1,500,000 1,654,905
Highland Heights Limited Tax Improvement
General Obligation Street Bonds 7.75 2008 400,000 425,344
Hilliard County School District Unlimited Tax
General Obligation Bonds Series A (FGIC Insured) 5.00 2020 1,000,000 935,810
Lake County Water System Limited Tax Improvement
General Obligation Pre-Refunded Bonds Series 1987-2 8.125 2010 700,000 726,117
Lakota Local School District Butler County School
Unlimited Tax Improvement Bonds 7.00 2012 500,000 532,935
Lakota Local School District Butler County School
Unlimited Tax Improvement Pre-Refunded Bonds 7.90 2011 200,000 210,686
Lakota Local School District Unlimited Tax Improvement
General Obligation Bonds (AMBAC Insured) 6.25 2014 2,000,000 2,138,800
Lima Limited Tax Improvement General Obligation
Sanitary Sewer System Pre-Refunded Bonds 8.25 2012 200,000 207,590
Lorain County Hospital Facilities Refunding Revenue Bonds
Elyria United Methodist Series C 6.875 2022 1,000,000 1,023,270
Lorain County Hospital Facilities Refunding Revenue Bonds
EMH Regional Medical Center
Series 1995 (AMBAC Insured) 5.375 2021 2,000,000 1,919,920
Lucas County Hospital Refunding Revenue Bonds
St. Vincent's Medical Center Series B (MBIA Insured) 5.25 2020 1,000,000 944,960
Marietta Sewer System Improvement Bonds (BIG Insured) 7.50 2007 200,000 206,472
Marion County Health Care Facilities Improvement
Refunding Revenue Bonds United Church Homes
Series 1993 6.375 2010 1,000,000 1,024,050
Marysville Sewer System 1st Mortgage Revenue Bonds
Series 1988 (BIG Insured) A.M.T. 7.85 2008 400,000 419,204
Marysville Water System Mortgage Revenue Bonds
Series 1991 (MBIA Insured) 7.05 2021 1,000,000 1,115,290
Medina County Hospital Revenue Bonds Medina County
Community Hospital Series 1987 (AMBAC Insured) 6.875 2016 100,000 103,255
Montgomery County Health Facilities Revenue Bonds
Friendship Village Dayton Series 1990A 9.25 2016 1,000,000 1,054,410
Montgomery County Hospital Facility
Refunding Revenue & Improvement Bonds
Ketter Medical Center
Series 1996 (MBIA Insured) 5.50 2026 1,000,000 970,410
Montgomery County Water Revenue Bonds
Greater Moraine - Beavercreek District (FGIC Insured) 6.25 2017 1,000,000 1,068,660
North Olmsted County General Obligation Bonds
(AMBAC Insured) 5.00 2016 1,500,000 1,426,575
North Olmsted County General Obligation Bonds
(AMBAC Insured) 5.00 2021 200,000 186,896
Parma Hospital Improvement Revenue Bonds
Parma Community General Hospital
Series 1989B (MBIA Insured) 7.125 2013 500,000 527,715
Pickerington Local School District Unlimited Tax
General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2013 1,000,000 1,103,270
Rural Loraine County Water Authority Water Resource
Improvement Pre-Refunded Revenue Bonds
Series 1991 (AMBAC Insured) 7.00 2011 1,000,000 1,108,470
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
Southwest Local School District Hamilton & Butler Counties
School Unlimited Tax Improvement Bonds
(AMBAC Insured) 7.65 2010 500,000 555,170
State Air Quality Development Authority
Refunding Revenue Bonds JMG Funding Limited Partnership
(AMBAC Insured) A.M.T. 6.375 2029 500,000 526,155
State Air Quality Development Authority
Refunding Revenue Bonds
Series 1994 (AMBAC Insured) A.M.T. 6.375 2029 2,000,000 2,104,620
State Air Quality Development Authority Revenue Bonds
Cleveland Electric Illuminating Series A 7.00 2009 340,000 340,105
State Air Quality Development Authority Revenue Bonds
Columbus & Southern Series A (FGIC Insured) 6.375 2020 1,000,000 1,082,310
State Building Authority Local Jail Grant Bonds
Series 1989A (MBIA Insured) 7.35 2009 500,000 548,725
State Building Authority State Facility Pre-Refunded Bonds
Columbus State Office Building Series 1985C 7.35 2005 1,000,000 1,095,860
State Higher Educational Facility Pre-Refunded Revenue Bonds
Oberlin College Series 1989 7.375 2014 500,000 542,505
State Housing Finance Agency Mortgage Revenue Bonds
Aristocrat South Board & Care
Series 1991A (FHA Insured) A.M.T. 7.30 2031 1,500,000 1,568,895
State Housing Finance Agency Single Family Mortgage
Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.80 2030 460,000 482,494
State Housing Finance Agency Single Family Mortgage
Revenue Bonds Series 1990C (GNMA Insured) A.M.T. 7.85 2021 760,000 807,804
State Municipal Electric Generation Agency Joint Venture #5
Revenue Bonds (AMBAC Insured) 5.375 2024 2,000,000 1,914,000
State Turnpike Revenue Bonds Series A 5.75 2024 1,000,000 1,003,290
State Turnpike Revenue Bonds Series A (MBIA Insured) 5.50 2026 1,000,000 985,750
State Valley School District School Improvement Unlimited Tax
General Obligation Bonds Counties of Adams & Highland
Series 1995 (MBIA Insured) 5.25 2021 2,000,000 1,920,200
State Water & Air Quality Development Authority
Cleveland Electric Illumination
Pollution Control Refunding Revenue Bonds
Series 1995 7.70 2025 1,000,000 1,093,670
State Water Development Authority Bonds Toledo Edison
Series 1994 A.M.T. 8.00 2023 1,000,000 1,090,790
State Water Development Authority Pollution Control
Revenue Bonds Phillip Morris 7.25 2008 150,000 155,921
State Water Development Authority Water Development
Pre-Refunded Bonds Pure Water Series 1988I 7.00 2014 500,000 514,325
State Water Development Authority Water Development
Refunding Revenue Bonds Pure Water (AMBAC Insured) 5.50 2018 750,000 737,003
State Water Development Solid Waste Disposal
Northstar BHP Steel LLC-Cargill Series 1995
Revenue Bonds A.M.T. 6.30 2020 500,000(f) 524,045
Summit County Industrial Development Revenue Bonds
Century Products 7.75 2005 100,000 102,775
Summit County Limited Tax General Obligation Pre-Refunded Bonds
Human Services Facility (AMBAC Insured) 8.00 2007 95,000 98,520
Sycamore Board of Education Community School District
Hamilton County School Improvement Bonds 6.50 2009 500,000 516,635
University of Cincinnati Certificates of Participation
Student Recreation Center (MBIA Insured) 5.125 2024 1,000,000 940,920
University of Cincinnati General Receipt
Pre-Refunded Bonds Series I-1 7.10 2010 750,000 804,675
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Investments in securities
IDS Ohio Tax-Exempt Fund (Percentages repersent value of
investments compared to net assets)
Municipal bonds (continued)
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b, c, d) rate year amount
University of Toledo General Receipt
Pre-Refunded Bonds Series 1990 (MBIA Insured) 7.125 2020 500,000 547,610
Warren County Various Purpose Limited Tax
General Obligation Bonds Series 1992 6.10 2012 500,000 543,410
Whitehall City School District Franklin County Unlimited Tax
Improvement General Obligation
Pre-Refunded Revenue Bonds 7.25 2013 500,000 544,845
Total municipal bonds
(Cost: $63,106,778) $67,591,185
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Short-term securities (2.3%)
Issuer (d, e) Effective Amount Value(a)
yield payable at
maturity
Municipal notes
State Air Quality Development Authority Revenue Bonds
Cincinnati Gas & Electric
Series 1985B V.R.
12-01-15 5.50% $ 500,000 $ 500,000
State Air Quality Development Authority Revenue Bonds
Cincinnati Gas & Electric
Series A V.R.
09-01-30 4.00 1,100,000 1,100,000
Total short-term securities
(Cost: $1,600,000) $ 1,600,000
Total investments in securities
(Cost: $64,706,778)(g) $69,191,185
</TABLE>
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.)
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds,
are as follows:
(Unaudited)
Rating 6-30-97 6-30-96
- ----------------------------------------------------------------
AAA 64% 68%
AA 9 10
A 9 9
BBB 10 7
BB and below 8 6
Non-rated -- --
- ----------------------------------------------------------------
Total 100% 100%
- ----------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of
securities subject to alternative minimum tax represented 11.5%
of net assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies to
reflect current market conditions; rate shown is the effective rate on June 30,
1997.
(f) Partially or fully pledged as initial deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- -----------------------------------------------------
Municipal Bonds Index Sept. 1997 $900,000
- -----------------------------------------------------
Sale contracts
- ------------------------------------------------------
Municipal Bonds Index Sept. 1997 $500,000
- ------------------------------------------------------
(g) At June 30, 1997, the cost of securities for federal income tax purposes was
$64,643,308 and the gross unrealized appreciation and depreciation based on that
cost was:
Unrealized appreciation .........................$4,568,086
Unrealized depreciation ............................(20,209)
- -------------------------------------------------------------
Net unrealized appreciation..................... $4,547,877
- -------------------------------------------------------------
(This annual report is not part of the prospectus.)
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale holding two worlds
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) office building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
(This annual report is not part of the prospectus.)
<PAGE>
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
(This annual report is not part of the prospectus.)
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with significant growth
potential due to superiority in technology, marketing or management. The Fund
frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily of high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio that seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
(This annual report is not part of the prospectus.)
<PAGE>
IDS mutual funds
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head enclosed
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes.
Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column enclosed
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with a tree enclosed
(This annual report is not part of the prospectus.)
<PAGE>
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS California Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
your year-end statement, last January. Dividends paid to you since the end
of last year will be reported to you on a tax statement sent next January.
IDS California Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02217
Aug. 26, 1996 0.02323
Sept. 25, 1996 0.02306
Oct. 28, 1996 0.02491
Nov. 26, 1996 0.02259
Dec. 26, 1996 0.02287
Jan. 29, 1997 0.02605
Feb. 26, 1997 0.02413
March 26, 1997 0.02190
April 28, 1997 0.02644
May 28, 1997 0.02447
June 26, 1997 0.02464
Total $0.28646
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00007
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00275
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00886
Total distributions $0.29814
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.01902
Aug. 26, 1996 0.01990
Sept. 25, 1996 0.01986
Oct. 28, 1996 0.02137
Nov. 26, 1996 0.01948
Dec. 26, 1996 0.01966
Jan. 29, 1997 0.02238
Feb. 26, 1997 0.02109
March 26, 1997 0.01893
April 28, 1997 0.02292
May 28, 1997 0.02123
June 26, 1997 0.02154
Total $0.24738
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00007
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00275
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00886
Total distributions $0.25906
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS California Tax-Exempt Fund
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on California municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax adviser about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
IDS Massachusetts Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
your year-end statement, last January. Dividends paid to you since the end
of last year will be reported to you on a tax statement sent next January.
IDS Massachusetts Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02137
Aug. 26, 1996 0.02179
Sept. 25, 1996 0.02474
Oct. 28, 1996 0.02615
Nov. 26, 1996 0.02332
Dec. 26, 1996 0.02333
Jan. 29, 1997 0.02653
Feb. 26, 1997 0.02426
March 26, 1997 0.02194
April 28, 1997 0.02624
May 28, 1997 0.02325
June 26, 1997 0.02283
Total distributions $0.28575
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Massachusetts Tax-Exempt Fund
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.01810
Aug. 26, 1996 0.01836
Sept. 25, 1996 0.02144
Oct. 28, 1996 0.02248
Nov. 26, 1996 0.02008
Dec. 26, 1996 0.01999
Jan. 29, 1997 0.02277
Feb. 26, 1997 0.02113
March 26, 1997 0.01884
April 28, 1997 0.02262
May 28, 1997 0.01992
June 26, 1997 0.01957
Total distributions $0.24530
(This annual report is not part of the prospectus.)
<PAGE>
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on Massachusetts municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax adviser about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Michigan Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
Form 1099-DIV, Dividends and Distributions, last January. Dividends paid
to you since the end of last year will be reported to ou on a tax
statement sent next January.
IDS Michigan Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02145
Aug. 26, 1996 0.02349
Sept. 25, 1996 0.02477
Oct. 28, 1996 0.02670
Nov. 26, 1996 0.02419
Dec. 26, 1996 0.02412
Jan. 29, 1997 0.02674
Feb. 26, 1997 0.02326
March 26, 1997 0.02251
April 28, 1997 0.02644
May 28, 1997 0.02341
June 26, 1997 0.02369
Total $0.29077
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00075
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00082
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00051
Total distributions $0.29285
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.01822
Aug. 26, 1996 0.02003
Sept. 25, 1996 0.02143
Oct. 28, 1996 0.02305
Nov. 26, 1996 0.02090
Dec. 26, 1996 0.02076
Jan. 29, 1997 0.02297
Feb. 26, 1997 0.02010
March 26, 1997 0.01937
April 28, 1997 0.02282
May 28, 1997 0.02006
June 26, 1997 0.02043
Total $0.25014
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00075
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00082
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00051
Total distributions $0.25222
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Michigan Tax-Exempt Fund
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on Michigan municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
IDS Minnesota Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
your year-end statement, last January. Dividends paid to you since the end
of last year will be reported to you on a tax statement sent next January.
IDS Minnesota Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02415
Aug. 26, 1996 0.02514
Sept. 25, 1996 0.02730
Oct. 28, 1996 0.02723
Nov. 26, 1996 0.02431
Dec. 26, 1996 0.02497
Jan. 29, 1997 0.02809
Feb. 26, 1997 0.02594
March 26, 1997 0.02349
April 28, 1997 0.02802
May 28, 1997 0.02462
June 26, 1997 0.02221
Total $0.30547
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00011
Total distributions $0.30558
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Minnesota Tax-Exempt Fund
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02094
Aug. 26, 1996 0.02179
Sept. 25, 1996 0.02407
Oct. 28, 1996 0.02365
Nov. 26, 1996 0.02116
Dec. 26, 1996 0.02169
Jan. 29, 1997 0.02438
Feb. 26, 1997 0.02287
March 26, 1997 0.02044
April 28, 1997 0.02447
May 28, 1997 0.02137
June 26, 1997 0.01903
Total $0.26586
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00011
Total distributions $0.26597
(This annual report is not part of the prospectus.)
<PAGE>
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on Minnesota municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax adviser about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS New York Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
your year-end statement, last January. Dividends paid to you since the end
of last year will be reported to you on a tax statement sent next January.
IDS New York Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02245
Aug. 26, 1996 0.02369
Sept. 25, 1996 0.02365
Oct. 28, 1996 0.02541
Nov. 26, 1996 0.02291
Dec. 26, 1996 0.02302
Jan. 29, 1997 0.02592
Feb. 26, 1997 0.02280
March 26, 1997 0.02235
April 28, 1997 0.02606
May 28, 1997 0.02289
June 26, 1997 0.02273
Total $0.28388
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00005
Total distributions $0.28393
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.01933
Aug. 26, 1996 0.02043
Sept. 25, 1996 0.02051
Oct. 28, 1996 0.02192
Nov. 26, 1996 0.01984
Dec. 26, 1996 0.01983
Jan. 29, 1997 0.02232
Feb. 26, 1997 0.01982
March 26, 1997 0.01941
April 28, 1997 0.02272
May 28, 1997 0.01972
June 26, 1997 0.01964
Total $0.24549
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00005
Total distributions $0.24554
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS New York Tax-Exempt Fund
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on New York municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax adviser about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
IDS Ohio Tax-Exempt Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its
fiscal year. Some of the dividends listed below were reported to you on
Form 1099-DIV, Dividends and Distributions, last January.Dividends paid to
you since the end of last year will be reported to you on a tax statement
sent next January.
IDS Ohio Tax-Exempt Fund
Fiscal year ended June 30, 1997
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.02319
Aug. 26, 1996 0.02406
Sept. 25, 1996 0.02415
Oct. 28, 1996 0.02592
Nov. 26, 1996 0.02327
Dec. 26, 1996 0.02393
Jan. 29, 1997 0.02675
Feb. 26, 1997 0.02458
March 26, 1997 0.02235
April 28, 1997 0.02496
May 28, 1997 0.02353
June 26, 1997 0.02361
Total $0.29030
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00031
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00025
Total distributions $0.29086
(This annual report is not part of the prospectus.)
<PAGE>
Federal income tax information
IDS Ohio Tax-Exempt Fund
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 26, 1996 $0.01994
Aug. 26, 1996 0.02063
Sept. 25, 1996 0.02084
Oct. 28, 1996 0.02226
Nov. 26, 1996 0.02010
Dec. 26, 1996 0.02059
Jan. 29, 1997 0.02297
Feb. 26, 1997 0.02147
March 26, 1997 0.01925
April 28, 1997 0.02134
May 28, 1997 0.02022
June 26, 1997 0.02040
Total $0.25001
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1996 $0.00031
Taxable dividend -- taxable as long-term capital gain.
Payable date Per share
Dec. 26, 1996 $0.00025
Total distributions $0.25057
(This annual report is not part of the prospectus.)
<PAGE>
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1997 was derived from interest on Ohio municipal securities.
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should
not be included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for
state and local tax purposes.
(This annual report is not part of the prospectus.)
<PAGE>
Quick telephone reference
- -----------------------------------------------------------------
American Express Financial Advisors 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
- -----------------------------------------------------------------
TTY Service
For the hearing impaired
800-846-4852
- -----------------------------------------------------------------
American Express Financial Advisors Easy Access Line
Automated account information (TouchToneR phones only), including current fund
prices and performance, account values and recent account transactions
800-862-7919
AMERICAN
EXPRESS
Financial
Advisors
IDS State Tax-Exempt Funds
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report annual report to shareholders
is in two columns.
2) Headings. 2) The headings in the annual report
and prospectus are placed in a
blue strip at the top of the page.
3) There are pictures, icons and 3) Each picture, icon and graph is
graphs throughout the annual described in parentheses.
report and prospectus.
4) Footnotes for charts and graphs 4) The footnotes for each chart or
are described at the left margin. graph are typed below the
description of the chart or graph.
