IDS
State
Tax-Exempt Funds
(icon of) shield with U.S. enclosed
Tax-exempt
funds from the
following states:
California
Massachusetts
Michigan
Minnesota
New York
Ohio
1998 ANNUAL REPORT
(PROSPECTUS INCLUDED)
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) shield with U.S. enclosed
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
1998 annual report
From the chairman 4
From the portfolio manager 5
Performance 6
California Tax-Exempt Fund 8
The Fund's ten largest holdings 8
The Fund's long-term performance 9
Massachusetts Tax-Exempt Fund 10
The Fund's ten largest holdings 10
The Fund's long-term performance 11
Michigan Tax-Exempt Fund 12
The Fund's ten largest holdings 12
The Fund's long-term performance 13
Minnesota Tax-Exempt Fund 14
The Fund's ten largest holdings 14
The Fund's long-term performance 15
New York Tax-Exempt Fund 16
The Fund's ten largest holdings 16
The Fund's long-term performance 17
Ohio Tax-Exempt Fund 18
The Fund's ten largest holdings 18
The Fund's 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
IDS mutual funds 86
Federal income tax information 90
1998 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 of 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
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong in many financial markets. Perhaps just as
important, 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. We saw
evidence of that last October, when financial turmoil in Southeast Asia
sparked a sharp decline in worldwide financial markets, including the U.S.
The potential for such volatility reinforces the need for investors to
review periodically 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.
(signature of) W.R. Pearce
William R. Pearce
(This annual report is not part of the prospectus.)
<PAGE>
(picture of) Paul B. Hylle
Paul B. Hylle
Portfolio Manager
From the portfolio manager
An excellent environment for bonds led to a highly productive fiscal year
for the IDS State Tax-Exempt Funds. For investors in the Funds' Class A
shares, the total returns (which include net asset value change and
dividends) ranged from 7.7% to 8.2% for the July 1997 through June 1998
period.
Despite a continuation of solid economic growth, which many observers
thought would put upward pressure on consumer prices, inflation remained
remarkably tame throughout the 12 months. Bolstering the low-inflation
outlook was the financial turmoil in Asian markets, which reinforced the
case for falling prices of imported goods as well as somewhat slower
economic growth in the U.S. In addition, the Asian situation spawned a
"flight to quality" by foreign investors, who, seeking a safe haven for
their investments, moved money into U.S. bonds, lending further support to
the market.
Rates down, bonds up
As a result, long-term interest rates, aside from a couple of brief,
moderate run-ups, declined substantially. In fact, at one point yields on
municipal bonds reached a 25-year low. Bond prices, which move in the
opposite direction of interest rates, rose accordingly, boosting the
Funds' net asset values. On the other hand, the rate decline ultimately
depressed the Funds' dividend payments slightly. Compared to most
municipal bond funds, however, the dividend level held up quite well.
Looking at the technical factors in the market, the supply of new issues
was substantial. Fortunately, demand from both institutional and
individual buyers was equally strong. Overall, I concentrated purchases in
higher-quality issues, given the fact that lower-quality bonds offered
only minimally higher yields. I kept a low level of cash reserves (5% or
less) in all the Funds, a strategy that enhanced overall performance.
State updates
Consistent with the generally strong national economy, all of the states
represented by the Funds enjoyed good fiscal health. Reflecting that fact,
the unemployment level continued to decline in California, while remaining
below the national average in Minnesota, Michigan and Massachusetts.
Indicative of their robust economies, New York, Ohio and Minnesota also
enjoyed budget surpluses. Those and other positive factors resulted in a
trend toward upgrading of bond quality by rating agencies, which provided
support for municipal bond prices.
As for the current fiscal year, at this point (mid-July) inflation remains
well under control while the national economy continues to grow at a solid
rate. Should the economy stay strong, which I expect, upward pressure on
inflation is likely to increase, perhaps prompting the Federal Reserve
Board to push up short-term interest rates. In light of that possibility,
I plan to continue my emphasis on maintaining the Funds' dividends and
conserving shareholders' capital.
(signature of) Paul B. Hylle
Paul B. Hylle
(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, 1998 $ 5.35
June 30, 1997 $ 5.24
Increase $ 0.11
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +7.7%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.35
June 30, 1997 $ 5.24
Increase $ 0.11
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +6.9%**
Massachusetts
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.56
June 30, 1997 $ 5.42
Increase $ 0.14
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +8.1%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.56
June 30, 1997 $ 5.42
Increase $ 0.14
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.24
From capital gains $ --
Total distributions $ 0.24
Total return* +7.3%**
Michigan
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.57
June 30, 1997 $ 5.44
Increase $ 0.13
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.29
From capital gains $ --
Total distributions $ 0.29
Total return* +7.7%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.57
June 30, 1997 $ 5.44
Increase $ 0.13
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +6.9%**
* 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, 1998 $ 5.41
June 30, 1997 $ 5.30
Increase $ 0.11
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.30
From capital gains $ --
Total distributions $ 0.30
Total return* +8.0%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.41
June 30, 1997 $ 5.30
Increase $ 0.11
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.26
From capital gains $ --
Total distributions $ 0.26
Total return* +7.2%**
New York
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.29
June 30, 1997 $ 5.15
Increase $ 0.14
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.27
From capital gains $ --
Total distributions $ 0.27
Total return* +8.2%**
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.29
June 30, 1997 $ 5.15
Increase $ 0.14
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.23
From capital gains $ --
Total distributions $ 0.23
Total return* +7.4%**
Ohio
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
June 30, 1998 $ 5.50
June 30, 1997 $ 5.38
Increase $ 0.12
Distributions
July 1, 1997 - June 30, 1998
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, 1998 $ 5.50
June 30, 1997 $ 5.38
Increase $ 0.12
Distributions
July 1, 1997 - June 30, 1998
From income $ 0.25
From capital gains $ --
Total distributions $ 0.25
Total return* +7.0%**
* 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>
<TABLE>
<CAPTION>
The Fund's ten largest holdings
IDS California Tax-Exempt Fund
Percent Value
(of Fund's net assets) (as of June 30, 1998)
<S> <C> <C>
Anaheim Public Finance Authority Revenue Bonds
Electric Utilities San Juan Series 2
5.75% 2022 4.56% $11,603,496
Corona Community Facilities District #90-1
Special Tax Refunding Bonds Series 1998A
4.70% 2020 2.93 7,447,459
Los Angeles Water & Power
Electric Plant Revenue Bonds Series 1990
7.125% 2030 2.75 6,981,845
Statewide Community Development Authority
Revenue Certificate of Participation
St. Joseph Health System Group
6.50% 2015 2.45 6,235,075
Statewide Community Development Authority
Health Facilities Unihealth America Certificate of Participation
Series 1993 Inverse Floater
7.16% 2011 2.31 5,881,250
University of Southern California Educational
Facilities Authority Pre-refunded Revenue Bonds
Series 1989B
6.75% 2015 2.07 5,259,850
Los Angeles Convention & Exhibition Center
Pre-refunded Certificate of Participation
Series 1989A
7.00% 2020 2.07 5,255,750
San Diego Regional Transportation Commission
Sales Tax Pre-refunded Revenue Bonds
Limited Tax Series 1989A
6.25% 2008 2.02 5,128,890
Rancho Mirage Joint Powers Finance Authority
Certificate of Participation
Eisenhower Memorial Hospital
7.00% 2022 1.86 4,739,940
Northern California Transmission Select Auction
Variable Rate Security & Residual Interest Revenue Bonds
Inverse Floater
5.50% 2024 1.82 4,638,195
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 24.84% of the Fund's net assets
</TABLE>
(This annual report is not part of the prospectus.)
<PAGE>
The Fund's long-term performance
IDS California Tax-Exempt Fund
How your $10,000 has grown in IDS California Tax-Exempt Fund
$20,000
$19,635
California
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $8,856.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.34% --% +4.57% +6.98%
Class B +2.94% +5.17% --% --%
*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 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, 1998)
Boston City Hospital Refunding Revenue Bonds
Series B
<S> <C> <C>
5.75% 2023 3.87% $3,081,600
Health & Educational Facilities Authority
Revenue Bonds Suffolk University Series B
6.35% 2022 3.38 2,698,392
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System Series A
5.25% 2021 3.14 2,501,350
Health & Educational Facilities Authority
Revenue Bonds Boston College Series J
6.625% 2021 2.72 2,167,240
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison Series 1993
5.875% 2008 2.61 2,079,660
Health & Educational Facilities Authority
Revenue Bonds Charlton Memorial Hospital Series 1991B
7.25% 2013 2.43 1,938,405
Municipal Wholesale Electric Power Supply System
Refunding Revenue Bonds Series B
4.75% 2011 2.16 1,723,312
Bay Transportation Authority General Transportation
System Refunding Bonds Series 1992B
6.20% 2016 2.16 1,719,015
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
9.00% 2015 2.11 1,680,405
Municipal Wholesale Electric Power Supply System
Revenue Bonds Special Parts & Inflows
5.45% 2018 2.05 1,635,808
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further details about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 26.63% of the Fund's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Fund's long-term performance
IDS Massachusetts Tax-Exempt Fund
How your $10,000 has grown in IDS Massachusetts Tax-Exempt Fund
$20,000
$19,319
Massachusetts
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $8,542.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.72% --% +4.74% +6.81%
Class B +3.32% +5.39% --% --%
*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 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, 1998)
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds
<S> <C> <C>
5.75% 2022 3.19% $2,614,600
State Building Authority Refunding Revenue Bonds
Series 1991I
6.25% 2020 2.86 2,350,414
Detroit Sewer Disposal Revenue Bonds
5.70% 2023 2.54 2,083,780
Grand Ledge Public Schools Unlimited Tax General
Obligation Refunding Bonds Eaton,
Clinton & Ionia Counties 1995
5.375% 2024 2.48 2,034,320
State Hospital Finance Authority Hospital Pre-refunded
Revenue Bonds McLaren Obligated Group Series 1991A
7.50% 2021 2.39 1,960,560
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Ford Motor Series 1991A
7.10% 2006 2.35 1,929,757
Monroe County Pollution Control Revenue Bonds
Detroit Edison Fermi 2 Plants Series CC A.M.T.
7.50% 2019 2.28 1,875,353
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A Asset Guaranty
6.375% 2018 2.02 1,661,760
Buena Vista School District Saginaw County
School Building & Site Unlimited Tax
General Obligation Pre-refunded Bonds Series 1991
7.20% 2016 2.02 1,654,065
Farmington Hills Hospital Finance Authority
Revenue Bonds Botsford General Hospital
Series 1992A
6.50% 2022 2.01 1,647,000
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 24.14% of the Fund's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Fund's long-term performance
IDS Michigan Tax-Exempt Fund
How your $10,000 has grown in IDS Michigan Tax-Exempt Fund
$20,000
$19,749
Michigan
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $8,851.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.28% --% +4.64% +7.04%
Class B +2.86% +5.11% --% --%
*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 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, 1998)
State University Board of Regents
General Obligation Bonds Series 1996A
<S> <C> <C>
5.50% 2021 3.18% $13,242,625
Minneapolis & St. Paul Housing & Redevelopment
Authority Health Care System Revenue Bonds
Healthspan Series 1993A
4.75% 2018 3.07 12,773,835
St. Paul & Minneapolis Housing & Redevelopment
Authority Health Care Facility Revenue Bonds
Group Health Plan Series 1992
6.75% 2013 2.76 11,494,035
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds Series 1987A
5.50% 2015 2.71 11,254,438
Southern Minnesota Municipal Power Agency
Revenue Bonds
4.75% 2016 2.12 8,796,567
State General Obligation Various Purpose
Pre-refunded Bonds Series 1991
6.70% 2011 2.07 8,623,280
State Public Facilities Authority Water Pollution
Control Pre-refunded Revenue Bonds Series 1989A
7.00% 2009 2.00 8,333,795
Hennepin County Lease Revenue Certificates of
Participation Series 1991
6.80% 2017 1.89 7,878,792
St. Paul Housing & Redevelopment Authority
Sales Tax Revenue Bonds Civic Center
Escrowed to Maturity
5.55% 2023 1.88 7,816,500
Edina Multi-family Housing Revenue Bonds
Walker Assisted Living Series 1991
9.00% 2031 1.77 7,366,948
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 23.45% of the Fund's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Fund's long-term performance
IDS Minnesota Tax-Exempt Fund
How your $10,000 has grown in IDS Minnesota Tax-Exempt Fund
$20,000
$19,707
Minnesota
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $9,000.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.56% --% +4.71% +7.02%
Class B +3.17% +5.44% --% --%
*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 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, 1998)
State Energy Research & Development Authority
Electric Facilities Revenue Bonds Consolidated
Edison Series 1990A A.M.T.
<S> <C> <C>
7.50% 2025 4.51% $5,202,300
United Nations Development Senior Lien
Pre-refunded Revenue Bonds Series 1992A
6.00% 2026 4.30 4,958,820
State Urban Development Correctional Facilities
Pre-refunded Revenue Bonds 1st Series 1990
7.50% 2020 4.19 4,826,025
State Local Government Assistance Pre-refunded
Bonds Series 1991A
7.00% 2016 3.80 4,384,560
State Mortgage Agency Homeowner Mortgage
Revenue Bonds Series 1991TT
7.50% 2015 3.72 4,289,320
Triborough Bridge & Tunnel Authority General
Purpose Pre-refunded Revenue Bonds Series 1990S
7.00% 2021 2.83 3,255,330
State Environmental Facility State Water & Pollution
Control Revolving Fund Revenue Bonds New York
City Municipal Water Finance Authority Series 1990A
7.50% 2012 2.82 3,246,000
State Dormitory Authority City University System
Revenue Bonds Series 1993A
5.75% 2013 2.81 3,238,800
State Mortgage Agency Homeowner Mortgage
Revenue Bonds 27th Series 1992
6.90% 2015 2.80 3,229,530
State Energy Research & Development Authority Solid Waste Development
Revenue Bonds State Gas & Electric Company Series 1993A A.M.T.
5.70% 2028 2.70 3,111,780
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 34.48% 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
How your $10,000 has grown in IDS New York Tax-Exempt Fund
$20,000
$19,704
New York
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $8,831.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.75% -- % +4.19% +7.02%
Class B +3.35% +4.92% -- % -- %
*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 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, 1998)
Lakota Local School District Unlimited Tax
Improvement General Obligation Bonds
<S> <C> <C>
6.25% 2014 3.10% $2,248,120
State Air Quality Development Authority
Refunding Revenue Bonds Series 1994 A.M.T.
6.375% 2029 3.01 2,183,200
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital Series 1992
6.75% 2015 3.00 2,175,840
State Municipal Electric Generation Agency Joint Venture 5
Revenue Bonds
5.375% 2024 2.79 2,024,860
Lorain County Hospital Facilities Refunding
Revenue Bonds EMH Regional Medical Center
Series 1995
5.375% 2021 2.79 2,024,000
State Valley School District School Improvement
Unlimited Tax General Obligation Bonds
Adams & Highland Counties Series 1995
5.25% 2021 2.76 2,002,860
Butler County Hospital Facility Improvement
Refunding Revenue Bonds Fort Hamilton-Hughes
Memorial Center Series 1991
7.50% 2010 2.62 1,898,698
Franklin County Convention Facilities Authority
Tax & Lease Revenue Anticipation
Pre-refunded Bonds
7.00% 2019 2.25 1,633,005
State Housing Finance Agency Mortgage Revenue Bonds Aristrocrat South
Board & Care Series 1991A A.M.T.
7.30% 2031 2.19 1,585,470
Cuyahoga County Hospital Refunding Revenue Bonds
Cleveland Clinic Foundation Series 1992
5.50% 2011 2.16 1,562,835
Note: Certain of the Fund's investment income may be subject to the
Alternative Minimum Tax (A.M.T.).
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 26.67% of the Fund's net assets
(This annual report is not part of the prospectus.)
</TABLE>
<PAGE>
The Fund's long-term performance
IDS Ohio Tax-Exempt Fund
How your $10,000 has grown in IDS Ohio Tax-Exempt Fund
$20,000
$19,274
Ohio
Tax-Exempt Fund
Class A
Lehman Brothers
Municipal Bond Index
$10,000
$9,500
'88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98
Assumes: oHolding period from 7/1/88 to 6/30/98. oReturns do not reflect
taxes payable on distributions. o Also see "Performance" in the Fund's
current prospectus. oReinvestment of all income and capital gain
distributions for the Fund, with a value of $8,548.
The Lehman Brothers Municipal Bond Index is an unmanaged list of municipal
bonds used as a general measure of market performance.
Average annual total returns
(as of June 30, 1998)
Since
1 year inception* 5 years 10 years
Class A +2.40% --% +4.22% +6.78
Class B +2.98% +4.98% --% --%
*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 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 XXXXX
Feb. 100 18 5.56 XXXXXx
Mar. 100 17 5.88 XXXXXx
Apr. 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug. 100 19 5.26 XXXXXx
Sept. 100 21 4.76 XXXXx
Oct. 100 20 5.00 XXXXX
By investing an equal number of dollars each month ...
(arrow pointing to Apr.) you automatically buy more shares when the
per share market price is low ...
(arrow pointing to Sept.) and fewer shares when the per share market
price is high.
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>
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 of globes
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) 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 investment manager, than
the 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 Stock 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
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 that generally pay
dividends 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 in 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>
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) two 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
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
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
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
(This annual report is not part of the prospectus.)
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 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, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02363
Aug. 27, 1997 0.02708
Sept. 25, 1997 0.02419
Oct. 28, 1997 0.02681
Nov. 25, 1997 0.02200
Dec. 26, 1997 0.02314
Jan. 28, 1998 0.02468
Feb. 26, 1998 0.02396
March 26, 1998 0.02106
April 28, 1998 0.02550
May 27, 1998 0.02150
June 25, 1998 0.02228
Total $0.28583
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00022
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00006
Total distributions $0.28611
(This annual report is not part of the prospectus.)
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02046
Aug. 27, 1997 0.02346
Sept. 25, 1997 0.02106
Oct. 28, 1997 0.02319
Nov. 25, 1997 0.01893
Dec. 26, 1997 0.01975
Jan. 28, 1998 0.02101
Feb. 26, 1998 0.02073
March 26, 1998 0.01799
April 28, 1998 0.02187
May 27, 1998 0.01831
June 25, 1998 0.01910
Total $0.24586
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00022
Taxable dividend -- short-term capital gain taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00006
Total distributions $0.24614
(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, 1998 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 advisor 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 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, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02230
Aug. 27, 1997 0.02536
Sept. 25, 1997 0.02310
Oct. 28, 1997 0.02563
Nov. 25, 1997 0.02148
Dec. 26, 1997 0.02466
Jan. 28, 1998 0.02528
Feb. 26, 1998 0.02461
March 26, 1998 0.02176
April 28, 1998 0.02623
May 27, 1998 0.02232
June 25, 1998 0.02261
Total distributions $0.28534
(This annual report is not part of the prospectus.)
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.01902
Aug. 27, 1997 0.02160
Sept. 25, 1997 0.01982
Oct. 28, 1997 0.02190
Nov. 25, 1997 0.01831
Dec. 26, 1997 0.02113
Jan. 28, 1998 0.02148
Feb. 26, 1998 0.02126
March 26, 1998 0.01856
April 28, 1998 0.02245
May 27, 1998 0.01901
June 25, 1998 0.01933
Total distributions $0.24387
(This annual report is not part of the prospectus.)
Source of distributions
100% of exempt-interest distributions during the fiscal year ended June
30, 1998 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 advisor 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
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 Michigan Tax-Exempt Fund
Fiscal year ended June 30, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02271
Aug. 27, 1997 0.02555
Sept. 25, 1997 0.02313
Oct. 28, 1997 0.02585
Nov. 25, 1997 0.02244
Dec. 26, 1997 0.02431
Jan. 28, 1998 0.02549
Feb. 26, 1998 0.02482
March 26, 1998 0.02150
April 28, 1998 0.02595
May 27, 1998 0.02218
June 25, 1998 0.02275
Total $0.28668
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00001
Total distributions $0.28669
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.01945
Aug. 27, 1997 0.02178
Sept. 25, 1997 0.01984
Oct. 28, 1997 0.02213
Nov. 25, 1997 0.01925
Dec. 26, 1997 0.02077
Jan. 28, 1998 0.02171
Feb. 26, 1998 0.02147
March 26, 1998 0.01830
April 28, 1998 0.02223
May 27, 1998 0.01888
June 25, 1998 0.01946
Total $0.24527
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00001
Total distributions $0.24528
(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, 1998 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, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02343
Aug. 27, 1997 0.02682
Sept. 25, 1997 0.02434
Oct. 28, 1997 0.02698
Nov. 25, 1997 0.02317
Dec. 26, 1997 0.02536
Jan. 28, 1998 0.02700
Feb. 26, 1998 0.02617
March 26, 1998 0.02307
April 28, 1998 0.02750
May 27, 1998 0.02333
June 25, 1998 0.02382
Total $0.30099
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00027
Total distributions $0.30126
(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 25, 1997 $0.02023
Aug. 27, 1997 0.02316
Sept. 25, 1997 0.02113
Oct. 28, 1997 0.02333
Nov. 25, 1997 0.02007
Dec. 26, 1997 0.02191
Jan. 28, 1998 0.02330
Feb. 26, 1998 0.02292
March 26, 1998 0.01995
April 28, 1998 0.02383
May 27, 1998 0.02011
June 25, 1998 0.02058
Total $0.26052
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00027
Total distributions $0.26079
(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, 1998 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 advisor 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, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02146
Aug. 27, 1997 0.02401
Sept. 25, 1997 0.02232
Oct. 28, 1997 0.02461
Nov. 25, 1997 0.02178
Dec. 26, 1997 0.02324
Jan. 28, 1998 0.02442
Feb. 26, 1998 0.02355
March 26, 1998 0.02075
April 28, 1998 0.02506
May 27, 1998 0.02126
June 25, 1998 0.02206
Total $0.27452
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00003
Total distributions $0.27455
(This annual report is not part of the prospectus.)
<PAGE>
Class B
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.01835
Aug. 27, 1997 0.02044
Sept. 25, 1997 0.01918
Oct. 28, 1997 0.02103
Nov. 25, 1997 0.01874
Dec. 26, 1997 0.01985
Jan. 28, 1998 0.02082
Feb. 26, 1998 0.02037
March 26, 1998 0.01769
April 28, 1998 0.02145
May 27, 1998 0.01811
June 25, 1998 0.01888
Total $0.23491
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00003
Total distributions $0.23494
(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, 1998 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 advisor 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
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 Ohio Tax-Exempt Fund
Fiscal year ended June 30, 1998
Class A
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
July 25, 1997 $0.02358
Aug. 27, 1997 0.02621
Sept. 25, 1997 0.02318
Oct. 28, 1997 0.02552
Nov. 25, 1997 0.02095
Dec. 26, 1997 0.02372
Jan. 28, 1998 0.02669
Feb. 26, 1998 0.02473
March 26, 1998 0.02129
April 28, 1998 0.02609
May 27, 1998 0.02202
June 25, 1998 0.02293
Total $0.28691
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00028
Total distributions $0.28719
(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 25, 1997 $0.02034
Aug. 27, 1997 0.02249
Sept. 25, 1997 0.01993
Oct. 28, 1997 0.02181
Nov. 25, 1997 0.01779
Dec. 26, 1997 0.02021
Jan. 28, 1998 0.02293
Feb. 26, 1998 0.02141
March 26, 1998 0.01811
April 28, 1998 0.02236
May 27, 1998 0.01875
June 25, 1998 0.01964
Total $0.24577
Taxable dividend -- income distribution taxable as dividend income.
Payable date Per share
Dec. 26, 1997 $0.00028
Total distributions $0.24605
(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, 1998 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 Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current prices
and performance, account values
and recent account transactions
*You may experience delays when call volumes are high.
<PAGE>
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.
