PAGE
IDS Insured
Tax-Exempt
Fund
1994 semiannual report
(icon of) shield with eagle head
The goals of IDS
Insured Tax-Exempt
Fund, a part of IDS
Special Tax-Exempt
Series Trust, are to
provide a high level
of income generally
exempt from federal
income tax and
preservation of
shareholders' capital.
The fund invests
primarily in securities
that are insured as
to their scheduled
payment of principal
and interest for at
least as long as the
securities are held
in the fund.
Distributed by
American Express
Financial Advisors Inc.
<PAGE>
PAGE
(icon of) shield with eagle head
No-default
insurance
Any investment involves risks. For a municipal bond investor, there's the
risk that the bond issuer could default on its payments. But there are
bonds that are insured against default, and these are the ones that
Insured Tax-Exempt Fund invests in. While this doesn't mean that
shareholders are insulated from fluctuations in bond market values, it
does ensure that all principal and interest due to investors will be paid.
Along the way, shareholders enjoy regular income that is generally free
from federal income tax.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 18
Directors and officers 28
IDS mutual funds 29
<PAGE>
PAGE
To our shareholders
(Photo of) William R. Pearce
William R. Pearce
President of the fund
(Photo of) Paul B. Hylle
Paul B. Hylle
Portfolio manager
From the president
All of the funds in the IDS MUTUAL FUND GROUP held shareholder meetings
on Nov. 9, 1994. The meetings, which were well-attended, approved all
of the proposals advanced by management. Among the proposals were:
The election of trustees and the selection of KPMG Peat Marwick LLP as
independent auditors for each of the funds in the group.
A new investment management agreement that will become effective for each
fund when it begins offering multiple classes of shares, now planned to
occur in March, 1995.
A change in investment policy that will permit the funds to adopt a
master/feeder structure if and when the board of each fund determines
that it is in the best interest of the shareholders.
And, finally, changes to the funds' "fundamental investment policies" that,
among other things, allow the board to modify them should it deem
appropriate.
No other business was presented at the meeting, which was concluded
by a report to shareholders from the American Express Financial
Corporation Investment Department.
Thanks to all of you for your effort in reviewing the proxy material
and voting your proxies.
William R. Pearce
<PAGE>
PAGE
From the portfolio manager
One of the most difficult bond market environments in the past six decades
continued to plague bond investors throughout most of the second half of
the year. Municipal bonds were particularly hard hit in this environment,
which resulted in a decline in the fund's net asset value. The fund's
dividend, however, was largely unaffected.
The decline in the overall market began in earnest in February 1994,
when the Federal Reserve began raising short-term interest rates to slow
down economic growth. That policy continued the rest of the year. In fact,
by the end of November, the Fed had raised rates six times. Although we
were not surprised by these moves, we did not expect professional bond
investors to react as negatively as they did. They sold bonds in great
numbers, driving down prices in the process and fueling a sustained
increase in long-term interest rates. These developments were
particularly damaging to our holdings of longer-term bonds because
the longer the maturity, the more a bond's price is affected by
interest rate changes.
Although the insured market had been hit hard in the early fall, we
did not change our strategy because of the large supply of insured
bonds in the market and our belief that most of the market decline
was behind us. The market did begin to improve in mid-November and
ended the year with a reasonably firm tone.
Quality remains fundamental criteria for fund holdings
IDS Insured Tax-Exempt Fund invests in only the highest-quality
municipal bonds and presents virtually no credit risk because all of its
holdings are insured for timely payment of principal and interest.
However, it is important to remember that the fund is still subject to
interest-rate risk, which has affected bond funds to such a great degree
throughout the year.
Furthermore, fund shares are not insured against price decline, plus
certain income earned from the fund may be subject to state or local tax,
or the alternative minimum tax.
At year-end, the fund is positioned to benefit from declining long-term
interest rates and has performed well since long-term rates peaked in
mid-November. We hold only a small amount of cash and keep the portfolio
virtually fully invested in bonds in order to maximize tax-exempt income.
One of the key trades we focused on last year was to buy issues in
<PAGE>
PAGE
high-tax states. Assuming the market stabilizes and the demand for
municipal bonds exceeds supply, the bonds from high-tax states should
be strong performers.
Mixed year is forecast for bond market
Although we don't expect a repeat of 1994, we do think the bond market
environment will be a challenging one, particularly in the first half
of this year. An improvement is expected in the second half, primarily
because we think the Fed's actions to slow economic growth will take
hold. Furthermore, we expect an ongoing favorable supply/demand situation
for municipal bonds to be a plus for the market and, ultimately, the fund.
Given these factors, we believe 1995 will be characterized as a
"trading market" with periods of both price strength and weakness.
If the market continues to strengthen in early 1995, we will begin to
shorten the maturities of bonds held in the fund to guard against price
erosion. We continue to search for bonds that have high credit ratings
and attractive yields. Overall, despite the events of the past six months,
the benefit of investing in tax-free securities is still in effect for
taxpayers, particularly those in higher brackets.
Paul B. Hylle
6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1994 $ 5.16
June 30, 1994 $ 5.35
Decrease $(0.19)
Distributions
July 1, 1994 - Dec. 31, 1994
From income $ 0.15
From capital gains $ --
Total distributions $ 0.15
Total return* (0.7)%
* If you purchased shares in the fund during this period, your return
also would have been affected by the sales charge, as described in the
prospectus.<PAGE>
PAGE
<TABLE>
<CAPTION>
IDS Insured Tax-Exempt Fund
Your fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 20.51% of the fund's net assets
____________________________________________________________________________________
Percent Value
(of fund's net assets) (as of Dec. 31, 1994)
____________________________________________________________________________________
<S> <C> <C>
Brazos River Texas Authority Collateralized Pollution Control
Refunding Revenue Bonds Texas Utility Electric
Series 1992C
6.70% 2022 3.00% $14,637,943
Snohomish County Washington Public Utility District #1
General System Revenue Bonds Series 1993
6.00% 2013 2.45 11,944,152
Pittsburgh Pennsylvania Water & Sewer Authority
Water & Sewer System Pre-Refunded Revenue Bonds
Series 1991A
6.50% 2014 2.16 10,569,200
Montgomery County Pennsylvania Industrial Development
Authority Pollution Control Refunding Revenue Bonds
Philadelphia Electric Series 1991B
6.70% 2021 2.05 9,999,200
Washington Public Power Supply System Nuclear Project #1
Refunding Revenue Bonds Series 1992A
6.25% 2017 2.02 9,885,225
Colorado River Texas Municipal Water District Water System
Pre-Refunded Revenue Bonds Series A
6.625% 2021 1.90 9,272,020
Harris County Texas Toll Road Senior Lien
Pre-Refunded Revenue Bonds Series A
6.50% 2017 1.77 8,644,023
District of Columbia Metropolitan Washington Airports
Authority Airport System Revenue Bonds AMT Series 1992A
5.75% 2020 1.75 8,569,300
District of Columbia Metropolitan Washington Airports
Authority Airport System Revenue Bonds Series 1992A
6.625% 2019 1.71 8,367,764
Washoe County Nevada Gas & Water Facilities
Refunding Revenue Bonds Sierra Pacific Power Series 1993B
5.90% 2023 1.70 8,298,602
/TABLE
<PAGE>
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Financial statements
Statement of assets and liabilities
IDS Insured Tax-Exempt Fund
Dec. 31, 1994
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $487,964,157) $480,727,173
Accrued interest receivable 10,445,265
Receivable for investment securities sold 35,657
_____________________________________________________________________________________________________________
Total assets 491,208,095
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 57,144
Dividends payable to shareholders 153,278
Payable for investment securities purchased 1,895,973
Accrued investment management and services fee 207,740
Accrued distribution fee 8,520
Accrued transfer agency fee 21,524
Other accrued expenses 267,069
_____________________________________________________________________________________________________________
Total liabilities 2,611,248
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares $488,596,847
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Shares of beneficial interest - $.01 par value, unlimited number of shares authorized;
outstanding 94,640,685 shares $ 946,407
Additional paid-in capital 496,863,151
Accumulated net realized loss (Notes 1 and 4) (2,552,375)
Unrealized depreciation (Note 5) (6,660,336)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding shares $488,596,847
_____________________________________________________________________________________________________________
Net asset value per share $ 5.16
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statement of operations
IDS Insured Tax-Exempt Fund
Six months ended Dec. 31, 1994
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $16,290,512
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 1,330,810
Distribution fee 53,592
Transfer agency fee 136,585
Compensation of trustees 2,744
Compensation of officers 4,355
Custodian fees 11,767
Postage 68,590
Registration fees 8,119
Reports to shareholders 43,502
Audit fees 7,750
Administrative 11,181
Other 28,975
_____________________________________________________________________________________________________________
Total expenses 1,707,970
_____________________________________________________________________________________________________________
Investment income -- net 14,582,542
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security transactions (Note 3) (124,447)
Net realized gain on closed interest rate futures contracts 337,554
_____________________________________________________________________________________________________________
Net gain on investments 213,107
Net change in unrealized appreciation or depreciation (19,009,925)
_____________________________________________________________________________________________________________
Net loss on investments (18,796,818)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations $(4,214,276)
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Insured Tax-Exempt Fund
_____________________________________________________________________________________________________________
Operations and distributions Dec. 31, 1994 June 30, 1994
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $ 14,582,542 $ 27,960,399
Net realized gain (loss) on investments 213,107 (631,384)
Net change in unrealized appreciation or depreciation (19,009,925) (28,613,958)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations (4,214,276) (1,284,943)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (14,587,555) (27,955,386)
Net realized gain -- (129,500)
_____________________________________________________________________________________________________________
Total distributions (14,587,555) (28,084,886)
_____________________________________________________________________________________________________________
Share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
8,764,802 and 27,036,137 shares (Note 2) 45,543,498 153,720,129
Net asset value of 2,003,931 and 3,605,846 shares
issued in reinvestment of distributions 10,463,214 20,296,120
Payments for redemptions of
14,291,174 and 14,841,541 shares (74,047,558) (83,052,989)
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from share transactions
representing net reduction of
3,522,441 and addition of 15,800,442 shares (18,040,846) 90,963,260
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets (36,842,677) 61,593,431
Net assets at beginning of period 525,439,524 463,846,093
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$0 and $5,013) $488,596,847 $525,439,524
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE
Notes to financial statements
IDS Insured Tax-Exempt Fund
(Unaudited as to Dec. 31, 1994)
______________________________________________________________________________
1. Summary of significant accounting policies
IDS Special Tax-Exempt Series Trust was organized as a Massachusetts business
trust April 7, 1986. IDS Special Tax-Exempt Series Trust is a "series fund"
that is currently composed of six individual funds, including IDS Insured Tax-
Exempt Fund. The fund is registered under the Investment Company Act of 1940
(as amended) as a diversified, open-end management investment company.
Significant accounting policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each business day. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board of trustees.
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.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the fund may buy and sell
put and call options and write covered call options on portfolio securities
and may write cash- secured put options. The risk in writing a call option is
that the fund gives up the opportunity of profit if the market price of the
security increases. The risk in writing a put option is that the fund may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the fund pays a premium
whether or not the option is exercised. The fund also has the additional risk
of not being able to enter into a closing transaction if a liquid secondary
market does not exist. The fund also may write over-the-counter options where
the completion of the obligation is dependent upon the credit standing of the
other party.
<PAGE>
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or closing of the option
transaction. When options on debt securities or futures are exercised, the
fund will realize a gain or loss. When other options are exercised, the
proceeds on sales for a written call option, the purchase cost for a written
put option or the cost of a security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
fund may buy and sell interest rate futures contracts. Risks of entering into
futures contracts and related options include the possibility that there may
be an illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The fund recognizes a realized gain or loss when the contract is
closed or expires.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the fund on a
forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to
market fluctuations, and they may effect the fund's net assets the same as
owned securities. The fund designates cash or liquid high-grade debt
securities at least equal to the amount of its commitment. As of Dec. 31,
1994, the fund had entered into oustanding when-issued or forward commitments
of $1,879,100.<PAGE>
PAGE
Federal taxes
Since the fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and losses
deferred due to "wash sale" transactions. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also,
due to the timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized gains
(losses) were recorded by the fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last
income dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased
or sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily. <PAGE>
PAGE
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, the fund pays American
Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee is a percentage of the
fund's average daily net assets consisting of a group asset charge in reducing
percentages from 0.46% to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual
asset charge of 0.13% of average daily net assets.
The fund also pays American Express Financial Corporation a distribution fee
at an annual rate of $6 per shareholder account and a transfer agency fee at
an annual rate of $15.50 per shareholder account. The transfer agency fee is
reduced by earnings on monies pending shareholder redemptions.
American Express Financial Corporation will assume and pay any expenses
(except taxes and brokerage commissions) that exceed the most restrictive
applicable state expense limitation.
Sales charges by American Express Financial Advisors Inc. for distributing
fund shares were $851,022 for the six months ended Dec. 31, 1994.
The fund has a retirement plan for its independent trustees. Upon retirement,
trustees receive monthly payments equal to one-half of the retainer fee for as
many months as they served as trustees up to 120 months. There are no death
benefits. The plan is not funded but the fund recognizes the cost of payments
during the time the trustees serve on the board. The retirement plan expense
amounted to $3,330 for the six months ended Dec. 31, 1994.<PAGE>
PAGE
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $89,230,920 and $106,228,040, respectively, for the
six months ended Dec. 31, 1994. Realized gains and losses are determined on an
identified cost basis.
______________________________________________________________________________
4. Capital loss carryover
For federal income tax purposes, the fund has a capital loss carryover of
approximately $1,935,000 at Dec. 31, 1994, that will expire in 1996 through
2003 if not offset by subsequent capital gains.
______________________________________________________________________________
5. Interest rate futures contracts
At Dec. 31, 1994, investments in securities included securities valued at
$1,080,289 that were pledged as collateral to cover initial margin deposits on
500 open purchase contracts and 500 open sales contracts. The market value of
the open contracts at Dec. 31, 1994, was $92,031,250 with a net unrealized
gain of $576,648.
<PAGE>
<TABLE>
<CAPTION>
6. Financial highlights
The table below shows certain important financial information
for evaluating the fund's results.
Fiscal period ended June 30,
Per share income and capital changes*
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $5.35 $5.63 $5.33 $5.04 $4.96 $5.00
beginning of period
Income from investment operations:
Net investment income .15 .30 .30 .31 .32 .31
Net gains (losses) (.19) (.28) .30 .29 .08 (.04)
(both realized
and unrealized)
Total from investment (.04) .02 .60 .60 .40 .27
operations
Less distributions:
Dividends from net (.15) (.30) (.30) (.31) (.32) (.31)
investment income
Net asset value, $5.16 $5.35 $5.63 $5.33 $5.04 $4.96
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $489 $525 $464 $308 $195 $133
(in millions)
Ratio of expenses to .67%*** .65% .65% .67% .67% .69%
average daily net assets
Ratio of net income to 5.74%*** 5.32% 5.53% 6.06% 6.36% 6.44%
average daily net assets
Portfolio turnover rate 18% 37% 5% 11% 8% 24%
(excluding short-term
securities)
Total return+ (0.7%)++ 0.3% 11.7% 12.3% 8.1% 5.6%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Dec. 31, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++For the fiscal period ended Dec. 31, 1994, the annualized total return is (1.4%).
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Investments in securities
IDS Insured Tax-Exempt Fund (Percentages represent value of
Dec. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Municipal bonds (97.7%)
_____________________________________________________________________________________________________________________________
Name of issuer and title of issue (b,c,d) Coupon Maturity Principal Value(a)
rate amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Alabama (0.7%)
Mobile General Obligation Capital Improvement Warrants Convention Center
Pre-Refunded Bonds Series 1990 (AMBAC Insured) 7.125% 2020 $ 3,000,000 $ 3,255,720
_____________________________________________________________________________________________________________________________
Arizona (0.7%)
Chandler Water & Sewer Refunding Revenue Bonds Series 1991 (FGIC Insured) 7.00 2012 1,250,000 1,300,363
Health Facilities Authority Hospital System Refunding Revenue Bonds
Phoenix Baptist Hospital Series 1992 (MBIA Insured) 6.25 2011 2,150,000 2,104,054
____________
Total 3,404,417
_____________________________________________________________________________________________________________________________
California (7.8%)
Alameda County Certificate of Participation Refunding Bonds
Santa Rita Jail (MBIA Insured) 5.00 2015 3,250,000 2,571,335
Eastern Municipal Water District Riverside County Water & Sewer
Pre-Refunded Revenue Certificates of Participation Series 1991
(FGIC Insured) 6.50 2020 5,460,000 5,752,001
Fresno Health Facility Revenue Bonds Holy Cross-St. Agnes
(Secondary MBIA Insured) 6.625 2021 2,000,000 1,961,960
Los Angeles County Metropolitan Transportation Authority Sales Tax
Refunding Revenue Bonds Series A (FGIC Insured) 5.00 2021 1,500,000 1,161,330
Northern California Transmission Revenue Linked Select Auction Variable Rate
Securities & Residual Interest Bonds (MBIA Insured) 5.358 2024 2,500,000 (g) 2,080,875
Orange County Redevelopment Agency Tax Allocation
Refunding Revenue Bonds Southwest Redevelopment Series A (AMBAC Insured) 5.70 2023 3,000,000 2,522,730
Pittsburg Public Financing Authority Wastewater Refunding Revenue Bonds
Series A (FGIC Insured) 5.125 2015 2,895,000 2,358,267
Pittsburg Redevelopment Agency Los Medanos Development Tax Allocation
Refunding Bonds Series A (AMBAC Insured) 5.25 2015 2,225,000 1,841,432
Pittsburg Redevelopment Agency Los Medanos Development Tax Allocation
Refunding Bonds Series 1993A (AMBAC Insured) 5.00 2017 2,800,000 2,211,524
Rancho Cucamonga Redevelopment Agency Rancho Redevelopment Tax Allocation
Refunding Bonds Series 1994 (MBIA Insured) 5.00 2015 3,485,000 2,783,853
San Jose Redevelopment Agency Merged Area Redevelopment
Tax Allocation Bonds Series 1993 (MBIA Insured) 5.25 2016 1,250,000 1,027,400
San Marcos Public Facility Authority Tax Allocation
Refunding Revenue Bonds Series A (CGIC Insured) 5.50 2023 3,000,000 2,485,050
San Mateo County Joint Power Financing Authority Lease Revenue Bonds
San Mateo County Health Center Series 1994A (FSA Insured) 5.75 2022 1,500,000 1,298,415
Southern Public Power Authority Transmission Refunding Revenue Bonds
Series 1994B (MBIA Insured) 5.00 2022 1,500,000 1,161,480
Statewide Community Development Authority Revenue
Certificate of Participation Sutter Health Obligated Group (MBIA Insured) 5.50 2023 2,750,000 2,274,745
See accompanying notes to investments in securities.<PAGE>
PAGE
Stockton Certificate of Participation Refunding Bonds Wastewater System
(AMBAC Insured) 5.50 2015 2,250,000 1,927,598
Stockton Health Facility Revenue Bonds St. Joseph Medical Center
Series A (MBIA Insured) 5.50 2023 3,000,000 2,487,690
____________
Total 37,907,685
_____________________________________________________________________________________________________________________________
Colorado (1.2%)
Douglas County School District General Obligation Improvement Bonds
Series 1994A (MBIA Insured) 6.50 2016 1,500,000 1,498,170
Metro Wastewater Reclamation District Sewer Refunding Bonds
Series 1993B (AMBAC Insured) 4.75 2012 1,750,000 1,410,045
State Board of Trustees of Colleges in Colorado Auxiliary
Facility System Enterprise Revenue Bonds Western State College
Series 1994C (MBIA Insured) 5.625 2015 2,000,000 1,795,400
State Health Facility Authority Hospital Refunding Revenue Bonds
Boulder Community Hospital Series 1994B (MBIA Insured) 5.875 2023 1,250,000 1,120,512
____________
Total 5,824,127
_____________________________________________________________________________________________________________________________
Delaware (1.6%)
Economic Development Pollution Control Refunding Revenue Bonds
Delaware Power & Light Series 1992B (AMBAC Insured) 6.75 2019 6,500,000 6,534,775
Health Facilities Authority Refunding Revenue Bonds
Medical Center of Delaware Series 1989 (MBIA Insured) 7.00 2015 1,000,000 1,015,390
____________
Total 7,550,165
_____________________________________________________________________________________________________________________________
District of Columbia (3.8%)
Howard University Revenue Bonds Series A (MBIA Insured) 8.00 2017 1,500,000 1,575,915
Metropolitan Washington Airports Authority Airport System
Revenue Bonds Series 1992A (MBIA Insured) 6.625 2019 8,670,000 8,367,764
Metropolitan Washington Airports Authority Airport System
Revenue Bonds AMT Series 1994A (MBIA Insured) 5.75 2020 10,000,000 8,569,300
____________
Total 18,512,979
_____________________________________________________________________________________________________________________________
Florida (3.1%)
Dade County Aviation Revenue Bonds AMT Series B (MBIA Insured) 6.60 2022 4,775,000 4,750,218
Department of Transportation Turnpike Revenue Bonds Series 1991A
(AMBAC Insured) 6.25 2020 1,250,000 1,203,800
Fort Myers Utility System Refunding Revenue Bonds Series 1989A
(BIG Insured) 6.00 2019 2,000,000 1,863,580
Gulf Breeze Local Government Loan Program Boca Raton Series 1985E
(FGIC Insured) 7.75 2015 2,000,000 2,148,540
Lee County Transportation Facilities Pre-Refunded Revenue Bonds
Series 1987 (AMBAC Insured) 8.25 2017 1,500,000 1,572,525
Osceola County Transportation Pre-Refunded Revenue Bonds
Series 1988A (FGIC Insured) 7.70 2013 1,215,000 1,312,260
Palm Beach County Solid Waste Authority Revenue Bonds Series 1984
(BIG Insured) 8.375 2010 500,000 540,615
Tampa Allegany Health System Revenue Bonds St. Joseph's Hospital
Series 1994 (MBIA Insured) 6.50 2023 2,000,000 1,971,640
____________
Total 15,363,178
_____________________________________________________________________________________________________________________________<PAGE>
PAGE
Georgia (1.9%)
Atlanta Metropolitan Rapid Transit Authority Sales Tax
Pre-Refunded Revenue Bonds Series L (AMBAC Insured) 7.20 2020 3,000,000 3,234,150
Chatham County Hospital Authority Revenue Bonds Memorial Medical Center
Series 1990A (MBIA Insured) 7.00 2021 4,500,000 4,579,740
Municipal Electrical Authority Power Revenue Bonds Series M (BIG Insured) 8.10 2012 1,080,000 1,149,228
Municipal Electrical Authority Special Obligation Refunding Bonds
2nd Crossover Series (AMBAC Insured) 7.80 2020 500,000 524,315
____________
Total 9,487,433
_____________________________________________________________________________________________________________________________
Illinois (3.0%)
Chicago O'Hare International Airport General Revenue Bonds Series 1990A
(AMBAC Insured) 7.50 2016 2,000,000 2,061,260
Chicago O'Hare International Airport Terminal Revenue Bonds (MBIA Insured) 7.625 2010 3,000,000 3,156,420
Chicago Public Building Commission Pre-Refunded Revenue Bonds
(MBIA Insured) 7.70 2008 1,000,000 1,057,350
Chicago Public Building Commission Pre-Refunded Revenue Bonds
Series 1989A (FGIC Insured) 7.75 2006 1,000,000 1,094,770
Chicago Public Building Commission Pre-Refunded Revenue Bonds
Series 1990A (MBIA Insured) 7.125 2015 5,000,000 5,283,450
Cook County Unlimited Tax General Obligation Bonds (FGIC Insured) 5.50 2022 2,535,000 2,130,769
____________
Total 14,784,019
_____________________________________________________________________________________________________________________________
Indiana (2.7%)
Educational Facilities Authority Pre-Refunded Bonds Valpraiso University
(BIG Insured) 7.80 2008 500,000 544,980
Marion County Hospital Authority Refunding Revenue Bonds Methodist Hospital
Series 1989 (MBIA Insured) 6.50 2013 4,000,000 3,906,680
Municipal Power Agency Power Supply System Electric Refunding Revenue Bonds
Series A (MBIA Insured) 5.50 2023 4,250,000 3,521,210
State Health Facility Finance Authority Hospital Refunding Revenue Bonds
Columbus Regional Hospital Series 1993 (CGIC Insured) 7.00 2015 5,000,000 5,177,200
____________
Total 13,150,070
_____________________________________________________________________________________________________________________________
Kentucky (0.1%)
Jefferson County Multi-family Housing Revenue Bonds AMT Brownsboro Gardens
Series 1986A (FHA Insured) 8.00 2026 395,000 392,227
Louisville & Jefferson County Airport Authority System Revenue Bonds AMT
(MBIA Insured) 8.50 2017 300,000 322,056
____________
Total 714,283
_____________________________________________________________________________________________________________________________
Louisiana (1.7%)
Energy & Power Authority Power Refunding Revenue Bonds Rodemacher Unit #2
Series 1991 (FGIC Insured) 6.75 2008 7,000,000 7,129,640
New Orleans Audubon Park Commission Aquarium Pre-Refunded Bonds
Series 1988 (MBIA Insured) 7.90 2008 500,000 540,250
New Orleans International Airport Pre-Refunded Revenue Bonds Series A
(FGIC Insured) 8.875 2017 565,000 620,398
____________
Total 8,290,288
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
Maine (0.4%)
State Turnpike Authority Turnpike Revenue Bonds (MBIA Insured) 6.00 2018 2,290,000 2,106,617
_____________________________________________________________________________________________________________________________
Maryland (1.6%)
Baltimore Refunding Revenue Bonds Wastewater Series 1994A
(FGIC Insured) 5.00 2022 1,000,000 782,510
Health & Higher Educational Facilities Authority Refunding Revenue
Bonds Greater Baltimore Medical Center (FGIC Insured) 5.00 2019 2,650,000 2,090,081
Health & Higher Educational Facilities Authority Revenue Bonds
Frederick Memorial Hospital Series 1993 (FGIC Insured) 5.00 2028 4,750,000 3,616,460
Health & Higher Educational Facilities Authority Revenue Bonds
Peninsula Regional Medical Center (MBIA Insured) 5.00 2023 2,000,000 1,549,280
____________
Total 8,038,331
_____________________________________________________________________________________________________________________________
Massachusetts (2.9%)
Bay Transportation Authority Refunding Bonds Series B
(Secondary MBIA Insured) 5.50 2021 1,770,000 1,513,173
Boston Water & Sewer Commission Revenue Bonds General Subordinate Series A
(BIG Insured) 6.00 2008 2,500,000 2,431,150
Health & Educational Authority Revenue Bonds Valley Regional Health System
Series C (Connie Lee Insured) 5.75 2018 1,500,000 1,296,090
Health & Educational Facilities Authority Pre-Refunded Revenue Bonds
Lahey Clinic Medical Center (MBIA Insured) 7.625 2018 2,200,000 2,380,466
Health & Educational Facilities Authority Pre-Refunded Revenue Bonds
Northeastern University Series 1989C (AMBAC Insured) 7.10 2006 1,000,000 1,061,990
Industrial Finance Agency Revenue Bonds Brandeis University (MBIA Insured) 6.80 2019 1,700,000 1,709,758
Quincy Refunding Revenue Bonds Quincy Hospital Series 1993 (FSA Insured) 5.25 2016 2,235,000 1,848,077
State Water Resource Authority Revenue Bonds Series A (MBIA Insured) 5.50 2022 2,000,000 1,693,460
____________
Total 13,934,164
_____________________________________________________________________________________________________________________________
Michigan (1.4%)
Chippewa Valley School District Macomb County Qualified School Building
Loan Fund Unlimited Tax General Obligation Refunding Bonds
(FGIC Insured) 5.00 2021 2,145,000 1,687,665
Detroit Water Supply System Refunding Revenue Bonds Series 1993
(FGIC Insured) 5.00 2023 1,050,000 810,159
River Rouge School District (FSA Insured) 5.625 2022 2,400,000 2,051,712
Sandusky County School District Refunding Bonds (AMBAC Insured) 5.25 2021 1,000,000 815,310
State Hospital Finance Authority Refunding Bonds Oakwood Hospital Group
Series A (FGIC Insured) 5.625 2018 1,000,000 862,200
Wayne County Charter Airport Revenue Bonds AMT
Detroit Metropolitan Wayne County Airport (FGIC Insured) 8.00 2014 675,000 709,715
____________
Total 6,936,761
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
Minnesota (1.4%)
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993A (AMBAC Insured) 5.20 2023 3,000,000 2,402,220
Western Municipal Power Agency Transmission Pre-Refunded Revenue
Bonds Series 1991 (AMBAC Insured) 6.75 2016 4,500,000 4,560,930
____________
Total 6,963,150
_____________________________________________________________________________________________________________________________
Missouri (1.2%)
Kansas City School District Insured Leasehold Revenue Bonds
Capital Improvement (FGIC Insured) 5.00 2014 6,430,000 5,267,906
St. Louis Municipal Finance Leasehold Improvement Revenue Bonds
St. Louis Civil Courts Building Series 1994 (FGIC Insured) 5.75 2013 750,000 684,495
____________
Total 5,952,401
_____________________________________________________________________________________________________________________________
Montana (1.8%)
Forsyth Rosebud County Pollution Refunding Revenue Bonds AMT
Puget Sound Power & Light (AMBAC Insured) 7.25 2021 4,000,000 4,104,760
State Board of Investments Payroll Tax Bonds Worker's Compensation Program
Series 1991 (MBIA Insured) 6.875 2020 4,750,000 (h) 4,784,200
____________
Total 8,888,960
_____________________________________________________________________________________________________________________________
Nebraska (0.9%)
Public Power District Revenue Bonds Power Supply System (MBIA Insured) 5.75 2020 5,000,000 4,433,000
_____________________________________________________________________________________________________________________________
Nevada (2.6%)
Clark County Passenger Facility Charge Revenue Bonds AMT
Las Vegas McCarren Airport Series B 6.25 2022 5,000,000 4,590,350
Washoe County Gas & Water Facilities Refunding Revenue Bonds
Sierra Pacific Power Series 1993B (MBIA Insured) 5.90 2023 9,400,000 8,298,602
____________
Total 12,888,952
_____________________________________________________________________________________________________________________________
New Hampshire (1.5%)
Industrial Development Authority Pollution Control Revenue Bonds AMT
Light & Power Series 1989 (AMBAC Insured) 7.375 2019 5,000,000 5,139,450
State Higher Educational & University System of New Hampshire
(MBIA Insured) 5.75 2024 2,500,000 2,156,375
____________
Total 7,295,825
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
New Jersey (1.4%)
Health Care Facility Finance Authority Revenue Bonds
Jersey Shore Medical Center (AMBAC Insured) 5.875 2024 2,600,000 2,325,622
Health Care Facility Finance Authority Revenue Bonds
Newark Bethleham Israel Medical Center Series 1994 (FSA Insured) 6.00 2024 5,000,000 4,570,200
_____________
Total 6,895,822
_____________________________________________________________________________________________________________________________
New Mexico (1.4%)
Farmington Pollution Control Refunding Revenue Bonds
Southern California Edison Series A (MBIA Insured) 5.875 2023 5,750,000 5,130,437
Los Alamos Utility System Revenue Bonds Series 1994A
(FSA Insured) 6.00 2015 1,755,000 1,635,713
____________
Total 6,766,150
_____________________________________________________________________________________________________________________________
New York (4.4%)
Broome Certificate of Participation Public Safety Facility
Series 1994 (MBIA Insured) 5.25 2022 2,250,000 1,815,053
Dormitory Authority City University System Consolidated 3rd Resolution
Revenue Bonds 1994 Series 2 (MBIA Insured) 6.25 2019 2,500,000 2,368,325
Metropolitan Transport Authority Transit Facility Revenue Bonds
Series 1994O (MBIA Insured) 6.00 2024 5,500,000 5,027,220
Metropolitan Transportation Authority Commuter Facility Service
Contract Bonds Series L (AMBAC Insured) 7.50 2017 1,300,000 1,356,264
New York City General Obligation Pre-Refunded Bonds Series A
(FGIC Insured) 8.125 2007 1,145,000 1,247,832
New York City Municipal Water Facility Water & Sewer System Revenue Bonds
Series A (AMBAC Insured) 5.50 2020 5,000,000 4,234,000
State Energy Resource & Development Authority Pollution Control
Refunding Revenue Bonds AMT Rochester Gas & Electric (MBIA Insured) 6.50 2032 4,000,000 3,816,840
State Urban Development Correctional Facilities Pre-Refunded Revenue Bonds
Series 1 (FSA Insured) 7.50 2020 1,500,000 1,647,390
____________
Total 21,512,924
_____________________________________________________________________________________________________________________________
North Carolina (2.6%)
Charlotte Pre-Refunded Certificates of Participation Convention Facility
Series 1991 (AMBAC Insured) 6.75 2021 3,150,000 3,375,603
Charlotte Convention Facility Refunding Certificate of Participation
Series 1993C (AMBAC Insured) 5.25 2020 4,850,000 3,964,778
Metropolitan Sewerage District of Buncombe County Refunding Revenue Bonds
Series 1993A (FGIC Insured) 5.50 2022 400,000 343,164
Municipal Power Agency #1 Catawba Electric Refunding Revenue Bonds
Series 1993 (MBIA Insured) 5.75 2020 5,500,000 4,858,150
____________
Total 12,541,695
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
Ohio (2.0%)
Clermont County Sewer System Refunding Bonds (AMBAC Insured) 5.20 2021 4,000,000 3,260,360
Cleveland Airport System Revenue Bonds AMT Series A (FGIC Insured) 6.00 2024 1,650,000 1,501,153
Cleveland City School District Unlimited Tax General Obligation Bonds
Series A (FGIC Insured) 5.875 2011 2,325,000 2,190,661
Lucas County Hospital Refunding Revenue Bonds St. Vincent Medical Center
Series 1993C (MBIA Insured) 5.25 2022 1,725,000 1,404,616
Municipal Electric Generation Agency Joint Venture 5
Revenue Bonds (AMBAC Insured) 5.375 2024 1,480,000 1,221,992
____________
Total 9,578,782
_____________________________________________________________________________________________________________________________
Oklahoma (0.9%)
Moore Public Works Authority Refunding Revenue Bonds Series 1989
(AMBAC Insured) 7.60 2006 2,700,000 2,931,795
Tulsa International Airport General Revenue Bonds Consolidated Fixed Rate
Series 1989 (MBIA Insured) 7.50 2008 1,500,000 1,572,615
____________
Total 4,504,410
_____________________________________________________________________________________________________________________________
Pennsylvania (6.1%)
Allegheny County Airport Revenue Bonds Pittsburgh International
Series D (FGIC Insured) 7.75 2019 2,300,000 2,401,982
Intergovernmental Coop Authority Special Tax Revenue Bonds (MBIA Insured) 5.75 2015 1,000,000 885,870
Montgomery County Industrial Development Authority Pollution Control
Refunding Revenue Bonds Philadelphia Electric Series 1991B
(MBIA Insured) 6.70 2021 10,000,000 9,999,200
Pittsburgh Water & Sewer Authority Water & Sewer System
Pre-Refunded Revenue Bonds Series 1991A (FGIC Insured) 6.50 2014 10,000,000 10,569,200
Robinson Township Municipal Authority Water & Sewer Revenue Bonds
(FGIC Insured) 6.00 2019 2,200,000 2,017,004
State Higher Educational Facilities Authority Temple University
Revenue Bonds Series 1991-1 (MBIA Insured) 5.75 2031 3,100,000 2,670,681
Turnpike Commission Pre-Refunded Revenue Bonds Series 1989K (MBIA Insured) 7.50 2012 1,000,000 1,096,760
____________
Total 29,640,697
_____________________________________________________________________________________________________________________________
South Carolina (0.2%)
Piedmont Municipal Power Agency Electric Refunding Revenue Bonds
(FGIC Insured) 6.25 2021 1,000,000 946,100
_____________________________________________________________________________________________________________________________
Tennessee (1.4%)
Johnson County Health & Educational Facility Board Hospital
Refunding Revenue Bonds Johnson County Medical Center Series 1994
(MBIA Insured) 5.00 2013 500,000 408,785
Knox County Health Education & Housing Facility Board Hospital Refunding
Revenue Bonds Fort Sanders Alliance Obligation Group Series 1993
(MBIA Insured) 5.75 2014 7,000,000 6,270,460
____________
Total 6,679,245
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
Texas (19.9%)
Austin Combine Utility System Pre-Refunded Revenue Bonds (AMBAC Insured) 5.75 2016 2,000,000 1,783,320
Austin Combine Utility System Revenue Bonds (MBIA Insured) 5.25 2018 2,300,000 1,892,348
Austin Combine Utility System Revenue Bonds Series 1987 (BIG Insured) 8.625 2012-17 1,250,000 1,459,740
Austin Combined Utilities System Refunding Revenue Bonds Series 1994
(FGIC Insured) 5.75 2024 8,500,000 7,428,745
Bexar County Health Facility Development Hospital Revenue Bonds San Antonio
Baptist Memorial Hospital System Series 1994 (MBIA Insured) 6.75 2019 5,000,000 4,963,800
Brazos River Authority Collateralized Pollution Control
Refunding Revenue Bonds Texas Utility Electric Series 1992
(AMBAC Insured) 6.75 2022 5,750,000 5,671,570
Brazos River Authority Collateralized Pollution Control
Refunding Revenue Bonds Texas Utility Electric Series 1992B
(FGIC Insured) 6.625 2022 6,000,000 5,826,240
Brazos River Authority Collateralized Pollution Control
Refunding Revenue Bonds Texas Utility Electric Series 1992C
(FGIC Insured) 6.70 2022 14,935,000 14,637,943
Colorado River Municipal Water District Water System
Pre-Refunded Revenue Bonds Series A (AMBAC Insured) 6.625 2021 8,900,000 9,272,020
Harris County Health Facilities Development Hospital Revenue Bonds
State Children's Hospital Series 1989A (MBIA Insured) 7.00 2019 1,500,000 1,515,780
Harris County Public Facilities Corporation Detention Facility Mortgage
Pre-Refunded Revenue Bonds (MBIA Insured) 7.80 2011 1,000,000 1,095,350
Harris County Toll Road Senior Lien Pre-Refunded Revenue Bonds
Series A (AMBAC Insured) 6.50 2017 8,170,000 8,644,023
League City General Obligation Refunding & Improvement Bonds Series 1990
(FGIC Insured) 6.25 2013 2,500,000 2,410,725
Lower Colorado River Authority Priority Pre-Refunded Revenue Bonds
Series 1990 (BIG Insured) 7.75 2010 600,000 625,784
Matagorda County Navigation District #1 Collateralized Pollution Control
Revenue Bonds Central Power & Light Series 1984A (AMBAC Insured) 7.50 2014 2,500,000 2,638,225
Matagorda County Navigation District #1 Pollution Control
Refunding Revenue Bonds Houston Light & Power Series E (FGIC Insured) 7.20 2018 2,150,000 2,197,838
Matagorda County Navigation District #1 Pollution Control Revenue Bonds
AMT Central Power & Light Series 1990 (AMBAC Insured) 7.50 2020 2,000,000 2,059,840
Municipal Power Agency Refunding Revenue Bonds Series 1991A
(AMBAC Insured) 6.75 2012 5,250,000 5,317,935
North Central State Health Facilities Pre-Refunded Bonds
Children's Medical Center (BIG Insured) 7.875 2018 2,000,000 2,149,800
San Antonio Water Refunding Revenue Bonds (MBIA Insured) 5.50 2018 5,000,000 4,306,400
Tarrant County Health Facility Development Hospital Revenue Bonds
Adventist Health System/Sunbelt Series 1993
(CGIC Insured) 5.00 2013 1,250,000 1,012,675
Turnpike Authority Dallas North Tollway Pre-Refunded Revenue Bonds
Series 1990 (AMBAC Insured) 6.00 2020 5,000,000 5,088,600
Turnpike Authority Dallas North Tollway Revenue Bonds Addison Airport
Toll Tunnel Series 1994 (FGIC Insured) 6.60 2023 2,000,000 (e) 1,984,840
University of Houston System Consolidated Pre-Refunded Revenue Bonds
Series 1990A (MBIA Insured) 7.40 2006 3,160,000 3,401,234
____________
Total 97,384,775
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
Utah (0.6%)
Intermountain Power Agency Special Obligation Bonds 2nd Crossover Series
(FGIC Insured) 7.25 2017 875,000 891,415
Intermountain Power Authority Power Supply Pre-Refunded Revenue Bonds
Series 1987C (AMBAC Insured) 8.375 2012 900,000 (h) 979,569
Salt Lake City-County Airport Pre-Refunded Revenue Bonds AMT Series 1989
(FGIC Insured) 7.875 2018 1,000,000 1,083,300
____________
Total 2,954,284
_____________________________________________________________________________________________________________________________
Virginia (2.4%)
Industrial Development Authority Chesapeake Public Facility Lease
Revenue Bonds Chesapeake Jail Series 1994 (MBIA Insured) 5.625 2014 855,000 761,010
Loudoun County Sanitation Authority Waste & Sewer
Refunding Revenue Bonds (MBIA Insured) 5.25 2030 1,435,000 1,134,655
Norfolk Water Revenue Bonds (AMBAC Insured) 5.375 2023 3,905,000 3,213,659
Richmond Metropolitan Authority Expressway Refunding Bonds
Series A (FGIC Insured) 5.75 2022 3,890,000 3,450,236
Roanoke Industrial Development Authority Refunding Revenue Bonds
Memorial Hospital Series A (MBIA Insured) 5.00 2024 4,250,000 3,268,293
____________
Total 11,827,853
_____________________________________________________________________________________________________________________________
Washington (6.7%)
Public Power Supply System Nuclear Project #1 Pre-Refunded Revenue Bonds
Series A (MBIA Insured) 7.50 2015 1,805,000 1,967,919
Public Power Supply System Nuclear Project #1 Refunding Revenue Bonds
Series A (MBIA Insured) 7.50 2015 1,195,000 1,247,257
Public Power Supply System Nuclear Project #1 Refunding Revenue Bonds
Series 1992A (MBIA Insured) 6.25 2017 10,500,000 9,885,225
Public Power Supply System Pre-Refunded Revenue Bonds Nuclear Project #3
Series 1989A (BIG Insured) 7.25 2016 1,000,000 1,081,260
Public Power Supply System Refunding Revenue Bonds Nuclear Project #3
Series 1989A (BIG Insured) 6.00 2018 3,000,000 2,723,610
Snohomish County Public Utility District #1 General System Revenue Bonds
Series 1993 (FGIC Insured) 6.00 2013 12,920,000 11,944,152
Spokane Regional Solid Waste Management System Revenue Bonds AMT
Series 1989 (AMBAC Insured) 7.75 2011 300,000 317,451
Spokane Regional Solid Waste Management System Revenue Bonds AMT
Series 1989 (AMBAC Insured) 7.875 2007 1,250,000 1,341,363
State Health Care Facilities Authority Refunding Revenue Bonds
Dominican Health Service Spokane Series 1993 (Connie Lee Insured) 5.75 2020 2,800,000 2,383,500
____________
Total 32,891,737
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE
West Virginia (2.7%)
Board of Regents Registration Fee Pre-Refunded Revenue Bonds Series 1989B
(MBIA Insured) 7.40 2009 2,000,000 2,167,440
School Building Authority Capital Improvement Pre-Refunded Revenue Bonds
(MBIA Insured) 7.25 2015 3,415,000 3,718,764
School Building Authority Capital Improvement Revenue Bonds Series 1990B
(MBIA Insured) 6.75 2017 5,000,000 5,000,000
State Parkway Economic Development & Tourism Authority Parkway
Pre-Refunded Revenue Bonds Series 1989 (FGIC Insured) 7.125 2019 2,000,000 2,150,220
____________
Total 13,036,424
_____________________________________________________________________________________________________________________________
Wyoming (1.0%)
State Municipal Power Agency Power Supply System Refunding Revenue Bonds
Series 1993A (MBIA Insured) 6.125 2016 5,000,000 4,683,750
_____________________________________________________________________________________________________________________________
Total municipal bonds
(Cost: $484,764,157) $477,527,173
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (0.7%)
_____________________________________________________________________________________________________________________________
Issuer (f,g) Effective Amount Value(a)
yield payable at
maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Municipal notes
Jackson County Mississippi Pollution Control Revenue Bonds
Chevron V.R.D.B. Series 1993
06-01-23 5.20% $1,200,000 $ 1,200,000
New York City Municipal Water Finance Authority V.R.D.B Series 1994C
06-15-23 6.00 2,000,000 2,000,000
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $3,200,000) $ 3,200,000
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $487,964,157)(i) $480,727,173
_____________________________________________________________________________________________________________________________
<PAGE>
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 12-31-94 06-30-94
___________________________________________________________________________________________________________
AAA 100% 100%
AA - -
A - -
BBB - -
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
CGIC -- Capital Guaranty Insurance Company
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 the portfolio descriptions:
AMT -- Alternative Mininum Tax
(e) At Dec. 31, 1994, the cost of securities purchased on a when-issued basis was $1,879,100.
(f) The following abbreviation is used in the portfolio descriptions:
V.R.D.B. -- Variable Rate Demand Bond
(g) Interest rate varies to reflect current market conditions; rate shown is the effective rate
on Dec. 31, 1994.
(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 March 1995 $50,000,000
Sales contracts
U.S. Treasury Bonds March 1995 50,000,000
(i) At Dec. 31, 1994, the cost of securities for federal income tax purposes was approximately $487,915,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $13,534,000
Unrealized depreciation (20,722,000)
______________________________________________________________________________________________________
Net unrealized depreciation $(7,188,000)
______________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation.
<PAGE>
PAGE
William H. Dudley
Exective vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Fianacial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and general
counsel and treasurer of the publicly offered funds.<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. 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
Income investments
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 Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in 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) cornucopia<PAGE>
PAGE
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 Strategy, Income Fund
Invests primarily in corporate and government bonds to seek high
current income while conserving capital. Also may seek capital
appreciation when consistent with its primary goals.
(icon of) chess piece
IDS Selective Fund
Invests in 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 primarily in 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) federal building
IDS Strategy, Short-Term Income Fund
Invests primarily in short-term and intermediate-term bonds and notes
to seek a high level of current income.
(icon of) chess piece
Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies
by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in 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<PAGE>
PAGE
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 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 eagle head
Growth and income investments
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. Moderate risk.
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 Strategy, Worldwide Growth Fund
Invests primarily in common stocks of companies throughout the world
that offer potential for superior growth. Holdings may range from
small- to large- capitalization stocks, including those of companies
involved in areas of rapid economic growth.
(icon of) chess piece
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
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IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
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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.
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IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
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IDS Strategy, Equity Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
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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.
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IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
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IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
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Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
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.
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IDS Strategy, Aggressive Equity 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.
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IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
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IDS Global Growth Fund
Invests in 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.
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IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
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IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
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Specialty growth investment
This fund aggressively seeks capital growth as a hedge against inflation.
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. This is the most aggressive and most speculative
IDS mutual fund.
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For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
planner or writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before
you invest or send money.
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Quick telephone reference
American Express 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
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including current
fund prices and performance, account values and recent account
transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Insured Tax-Exempt Fund
IDS Tower 10
Minneapolis, MN 55440-0010
