IDS State
Tax-Exempt
Funds
Tax-exempt funds from the following states:
California
Massachusetts
Michigan
Minnesota
New York
Ohio
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 reduce
state tax, too, you can invest in municipal bonds in the state you reside.
Investments in municipal bonds are 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.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 6
Financial statements 12
Notes to financial statements 19
Investments in securities 38
Board members and officers 67
IDS mutual funds 68
To our shareholders
William R. Pearce
President of the Funds
(picture of) William Pearce
From the president
If you're an experienced investor, you know that the past two years have been
unusually strong ones in many financial markets. Perhaps just as important, you
also know that history shows that bull markets don't last forever. Though
they're often unpredictable, declines - whether they're brief or long-lasting,
moderate or substantial - are always a possibility. That fact reinforces the
need for investors to periodically review their long-term goals and examine
whether their investment program remains on track to achieving them. Your
quarterly investment statements are one part of that monitoring process. The
other is a meeting with your American Express financial advisor. That becomes
even more important if there's a major change in your financial situation or in
the financial markets.
William R. Pearce
Paul B. Hylle
Portfolio manager
(picture of) Paul Hylle
From the portfolio manager
Volatility continued to pervade the bond market during the past six months,
reflecting investors' shifting outlooks regarding inflation. Fortunately,
however, the upturns overpowered the downturns, resulting in a productive period
for the IDS State Tax-Exempt Funds.
When the period began last summer, the bond market was still licking the wounds
it received during the first three months of 1996, when a rise in long-term
interest rates, largely induced by what later proved to be an unfounded fear of
higher inflation, drove bond prices sharply lower.
A fall rally
By fall, though, the investment environment had improved, thanks to reports of
moderate economic growth and stable inflation. On that news, long-term interest
rates started coming back down, driving bond prices higher in the process. The
rally lasted through November, before renewed inflation fears sent the market
into a mild retreat during the final weeks of 1996.
The Funds' municipal bond holdings, like all fixed-income investments, benefited
substantially from the rally. Keeping a negligible amount of cash reserves in
the portfolio also worked to the Funds' advantage during that time. Still,
negative net cash flow into the municipal bond market, a condition that has
persisted for the past three years, limited the capital appreciation the Funds
enjoyed.
The supply situation, on the other hand, remained mostly favorable as the number
of bonds "called away" by issuers (taken out of the market because issuers paid
off the principal ahead of the bonds' maturity dates) exceeded the number of new
bonds coming to market. In fact, there are fewer municipal bonds outstanding
today than three years ago. The flip side of the call situation, which has been
in effect for the past few years, is that it continued to erode the Funds'
dividend slightly. This results from the fact that newly issued bonds don't pay
as much interest as the older bonds being called away. Measured against
comparable municipal bond funds, however, the dividends provided by these Funds
have held up better than most. This has been achieved by means of a "barbell"
approach to credit quality, which is an emphasis on high-grade bonds
complemented by middle-grade issues.
State updates
In California, the passage of proposition 218, which limits communities'
financial flexibility regarding raising taxes, led to slight quality downgrades
of some municipal bonds. Bond performance was tempered a bit in Michigan, which
experienced an above-average supply of bonds, and New York, where the potential
for an over-supply generated by the sale of Long Island Lighting hung over the
market. On a general note, the passage of federal welfare reform in 1996 may
ultimately complicate states' financial situations, but the effect, if any, on
the overall municipal bond market won't be known for some time.
Looking toward the second half of the fiscal year, while some fluctuation in
bond prices is inevitable, I think conditions may allow for less-dramatic swings
in the months ahead. As always, the main bond-market catalyst will be the
outlook for inflation, which, given the probability of ongoing moderate economic
growth, should increase only modestly in 1997. If that forecast proves to be
reasonably accurate, long-term interest rates would seem unlikely to experience
a substantial, sustained rise. In any event, I will update you on the Funds'
progress after the fiscal year ends in June.
Paul B. Hylle
<PAGE>
California
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- -----------------------------
Dec. 31, 1996 $5.25
- -----------------------------
June 30, 1996 $5.15
- -----------------------------
Increase $0.10
- -----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- -----------------------------
From income $0.14
- -----------------------------
From capital gains $0.01
- -----------------------------
Total distributions $0.15
- -----------------------------
Total return* +4.9%**
- -----------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.25
- ----------------------------
June 30, 1996 $5.15
- ----------------------------
Increase $0.10
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.12
- ----------------------------
From capital gains $0.01
- ----------------------------
Total distributions $0.13
- ----------------------------
Total return* +4.5%**
- ----------------------------
*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.
<PAGE>
Massachusetts
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.41
- ----------------------------
June 30, 1996 $5.30
- ----------------------------
Increase $0.11
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.14
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.14
- ----------------------------
Total return* +4.8%**
- ------------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.41
- ----------------------------
June 30, 1996 $5.30
- ----------------------------
Increase $0.11
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.12
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.12
- ----------------------------
Total return* +4.4%**
- ----------------------------
*The prospectus discusses the
effect of sales charge, if
any, on the various classes.
**The total return is a hypothetical
investment in the Fund with all
distributions reinvested.
<PAGE>
Michigan
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.46
- ----------------------------
June 30, 1996 $5.36
- ----------------------------
Increase $0.10
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.14
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.14
- ----------------------------
Total return* +4.5%**
- ----------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.46
- ----------------------------
June 30, 1996 $5.36
- ----------------------------
Increase $0.10
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.12
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.12
- ----------------------------
Total return* +4.1%**
- ----------------------------
*The prospectus discusses the effect
of sales charges, if any, on the
the various classes.
**The total return is a hypothetical
investment in the Fund with all
distributions reinvested.
<PAGE>
Minnesota
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.29
- ----------------------------
June 30, 1996 $5.20
- ----------------------------
Increase $0.09
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.15
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.15
- ----------------------------
Total return* +4.8%**
- ----------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.29
- ----------------------------
June 30, 1996 $5.20
- ----------------------------
Increase $0.09
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.13
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.13
- ----------------------------
Total return* +4.4%**
- ----------------------------
*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.
<PAGE>
New York
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.15
- ----------------------------
June 30, 1996 $5.06
- ----------------------------
Increase $0.09
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.14
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.14
- ----------------------------
Total return* +4.5%**
- ----------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.15
- ----------------------------
June 30, 1996 $5.06
- ----------------------------
Increase $0.09
- ----------------------------
Distributions
July 1, 1996- Dec. 31, 1996
- ----------------------------
From income $0.12
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.12
- -----------------------------
Total return* +4.1%**
- -------------------------------
*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.
<PAGE>
Ohio
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.39
- ----------------------------
June 30, 1996 $5.28
- ----------------------------
Increase $0.11
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.14
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.14
- ----------------------------
Total return* +4.7%**
- ----------------------------
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
- ----------------------------
Dec. 31, 1996 $5.39
- ----------------------------
June 30, 1996 $5.28
- ----------------------------
Increase $0.11
- ----------------------------
Distributions
July 1, 1996 - Dec. 31, 1996
- ----------------------------
From income $0.12
- ----------------------------
From capital gains $ --
- ----------------------------
Total distributions $0.12
- ----------------------------
Total return* +4.4%**
- ----------------------------
*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.
<PAGE>
The Fund's ten largest holdings
IDS California Tax-Exempt Fund
(pie chart) The ten holdings listed here make up 26.80% of the Fund's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
Anaheim Public Finance Authority Revenue Bonds
2nd Series Electric Utilities San Juan
5.75% 2022 4.59% $11,156,721
Sacramento Municipal Utility District Series R
6.00% 2015-2017 3.09 7,501,020
Long Beach Harbor Revenue Bonds Series 1989A A.M.T.
7.25% 2019 3.04 7,390,390
Los Angeles Department of Water & Power Electric Plant
Revenue Bonds Series 1990
7.125% 2030 2.95 7,156,955
Statewide Community Development Authority Revenue
Certificate of Participation St. Joseph Health System Group
6.50% 2015 2.43 5,902,765
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A
7.00% 2020 2.24 5,435,900
University of Southern California Educational Facilities Authority
Pre-Refunded Revenue Bonds Series 1989B
6.75% 2015 2.22 5,397,650
Statewide Community Development Authority Health Facilities
Revenue Bonds Unihealth America Series 1993A Inverse Floater
7.519% 2011 2.18 5,300,000
San Diego Regional Transportation Commission Sales Tax
Pre-Refunded Revenue Bonds Limited Tax Series 1989A
6.25% 2008 2.17 5,274,156
Rancho Mirage Joint Powers Finance Authority Certificate of Participation
Eisenhower Memorial Hospital
7.00% 2022 1.89 4,601,135
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T.).
<PAGE>
The Fund's ten largest holdings
IDS Massachusetts Tax-Exempt Fund
The ten holdings listed here make up 26.98% of the Fund's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
Boston City Hospital Refunding Revenue Bonds
Series B
5.75% 2023 3.84% $2,901,450
Health & Educational Facilities Authority
Revenue Bonds Suffolk University Series B
6.35% 2022 3.48 2,627,035
Health & Educational Facilities Authority
Revenue Bonds Cape Cod Health System Series A
5.25% 2021 3.09 2,329,250
Health & Educational Facilities Authority
Revenue Bonds Boston College Series J
6.625% 2021 2.88 2,174,220
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison Series 1993
5.875% 2008 2.60 1,961,580
Health & Educational Facilities Authority
Revenue Bonds Charlton Memorial Series 1991B
7.25% 2013 2.51 1,892,223
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
9.00% 2015 2.21 1,671,120
Bay Transportation Authority General Transportation System
Refunding Bonds Series 1992B
6.20% 2016 2.16 1,627,020
Municipal Wholesale Electric Power Supply System
Refunding Revenue Bonds Series B
4.75% 2011 2.13 1,605,258
Municipal Wholesale Electric Power Supply System
Pre-Refunded Revenue Bonds Series 1992B
6.75% 2017 2.08 1,566,822
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T.).
<PAGE>
The Fund's ten largest holdings
IDS Michigan Tax-Exempt Fund
(pie chart) The ten holdings listed here make up 24.20% of the Fund's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds
5.75% 2022 3.07% $2,512,925
State Building Authority Refunding Revenue Bonds
Series 1991I
6.25% 2020 2.78 2,277,990
State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds
McLaren Obligated Group Series 1991A
7.50% 2021 2.44 2,000,233
Detroit Sewer Disposal Revenue Bonds
5.70% 2023 2.40 1,967,780
Monroe County Pollution Control Revenue Bonds
Detroit Edison Fermi 2 Plants Series CC A.M.T.
7.50% 2019 2.36 1,932,420
Grand Ledge Public Schools Unlimited Tax General Obligation
Refunding Bonds Counties of Eaton, Clinton & Ionia Series 1995
5.375% 2024 2.35 1,926,400
State Strategic Fund Limited Tax Obligation
Refunding Revenue Bonds Ford Motor Series 1991A
7.10% 2006 2.31 1,890,669
Willow Run Community Schools Unlimited General Obligation Refunding
Bonds Series 1996
5.00% 2016 2.29 1,872,680
Battle Creek Water Supply System
Pre-Refunded Revenue Bonds Series 1990B
6.375% 2008-2010 2.12 1,733,234
Mason Public Schools Unlimited Tax General Obligation Bonds
County of Ingham School Building & Site Bonds Series 1995
5.40% 2021 2.08 1,704,314
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T).
<PAGE>
The Fund's ten largest holdings
IDS Minnesota Tax-Exempt Fund
(pie chart) The ten holdings listed here make up 21.42% of the Fund's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
Minneapolis & St. Paul Housing & Redevelopment Authority
Health Care System Revenue Bonds
Healthspan Series 1993
4.75% 2018 2.93% $11,861,370
St. Paul & Minneapolis Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Group Health Plan Series 1992
6.75% 2013 2.81 11,395,755
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1991
6.70% 2011 2.16 8,742,640
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1990
7.00% 2009 2.11 8,543,862
Anoka County General Obligation Capital Improvement
Revenue Bonds Series 1989B
7.00% 2007-2010 2.05 8,329,374
State University Board of Regents
General Obligation Bonds Series 1996A
5.50% 2021 1.94 7,862,640
Hennepin County Lease Revenue
Certificate of Participation Series 1991
6.80% 2017 1.94 7,856,390
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds Series 1987A
7.00% 2013 1.84 7,446,000
St. Paul Housing & Redevelopment Authority Sales Tax
Revenue Bonds Civic Center
5.55% 2023 1.83 7,400,475
Edina Multi-family Housing Revenue Bonds
Walker Assisted Living Series 1991
9.00% 2031 1.81 7,352,044
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T.).
<PAGE>
The Fund's ten largest holdings
IDS New York Tax-Exempt Fund
(pie chart) The ten holdings listed here make up 34.31% of the Fund's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
State Energy Research & Development Authority
Electric Facility Revenue Bonds Consolidated Edison
Series 1990A A.M.T.
7.50% 2025 4.51% $5,343,050
State Urban Development Correction Facility
Pre-Refunded Revenue Bonds Series 1
7.50% 2020 4.21 4,991,265
United Nations Development Senior Lien
Refunding Revenue Bonds Series 1992A
6.00% 2026 3.83 4,535,730
State Local Government Assistance Pre-Refunded Bonds
Series 1991A
7.00% 2016 3.77 4,470,240
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series TT
7.50% 2015 3.60 4,266,760
Battery Park City Authority
Senior Refunding Revenue Bonds Series 1993A
5.25% 2017 3.13 3,712,800
State Dormitory Authority City University System
Pre-Refunded Revenue Bonds
8.125% 2017 2.99 3,545,112
Triborough Bridge & Tunnel Authority
General Purpose Pre-Refunded Revenue Bonds Series S
7.00% 2021 2.80 3,324,540
State Environmental Facility State Water & Pollution Control
Revolving Fund Revenue Bonds New York City
Municipal Water Finance Authority Series 1990A
7.50% 2012 2.79 3,305,430
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series 27
6.90% 2015 2.68 3,181,770
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T.).
<PAGE>
The Fund's ten largest holdings
IDS Ohio Tax-Exempt Fund
(pie chart)The ten holdings listed here make up 26.39% of the Funds's net assets
- --------------------------------------------------------------------------------
Percent Value
(of Fund's net assets) (as of Dec. 31, 1996)
- --------------------------------------------------------------------------------
Lakota Local School District Unlimited Tax Improvement
General Obligation Bonds
6.25% 2014 2.99% $2,134,980
State Air Quality Development Authority
Refunding Revenue Bonds Series 1994 A.M.T.
6.375% 2029 2.98 2,130,500
Erie County Hospital Improvement Refunding Revenue Bonds
Firelands Community Hospital Series 1992
6.75% 2015 2.96 2,113,920
Lorain County Hospital Facilities Refunding Revenue Bonds
EMH Regional Medical Center
Series 1995
5.375% 2021 2.71 1,939,860
State Municipal Electric Generation Agency Joint Venture #5
Revenue Bonds
5.375% 2024 2.68 1,918,640
State Valley School District School Improvement
Unlimited Tax General Obligation Bonds
Counties of Adams & Highland Series 1995
5.25% 2021 2.67 1,914,220
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
7.50% 2010 2.62 1,874,442
Franklin County Convention Facilities Authority
Tax & Lease Revenue Anticipation
Pre-Refunded Bonds
7.00% 2019 2.34 1,671,615
North Olmstead County
Limited General Obligation Bonds
Series 1996
5.00% 2016-2021 2.24 1,598,792
State Housing Finance Agency Mortgage Revenue Bonds
Aristrocrat South Board & Care Series 1991A
7.30% 2031 2.20 1,569,915
Note: Certain of the Fund's investment income may be subject to the Alternative
Minimum Tax (A.M.T.).
<PAGE>
Financial statements
<TABLE>
<CAPTION>
Statements of assets and liabilities
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Dec. 31, 1996 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------------
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investments in securities, at value (Note 1)
(identified cost $219,816,196, $69,382,326
and $74,581,261) $239,704,961 $73,969,570 $80,651,428
Cash in bank on demand deposit -- 15,919 24,186
Accrued interest receivable 4,517,101 1,578,749 1,332,185
- ----------------------------------------------------------------------------------------------------------
Total assets 244,222,062 75,564,238 82,007,799
- ----------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------
Disbursements in excess of cash on demand deposit 918,530 -- --
Dividends payable to shareholders 172,337 53,404 57,965
Payable for investment securities purchased 36,000 10,125 12,438
Accrued investment management services fee 3,137 970 1,053
Accrued distribution fee 166 140 63
Accrued service fee 1,168 361 392
Accrued transfer agency fee 210 100 95
Accrued administrative services fee 267 83 89
Other accrued expenses 102,666 42,804 40,968
- ----------------------------------------------------------------------------------------------------------
Total liabilities 1,234,481 107,987 113,063
- ----------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares $242,987,581 $75,456,251 $81,894,736
- ----------------------------------------------------------------------------------------------------------
Represented by
- ----------------------------------------------------------------------------------------------------------
Shares of beneficial interest -- $.01 par value,
unlimited number of shares authorized $462,907 $139,506 $ 150,038
Additional paid-in-capital 230,024,406 72,014,595 77,161,549
Excess of distributions over net investment income (123,793) -- (8,339)
Accumulated net realized loss (Notes 1 and 6) (7,298,860) (1,294,656) (1,489,147)
Unrealized appreciation (Note 5) 19,922,921 4,596,806 6,080,635
- ----------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable
to outstanding shares $242,987,581 $75,456,251 $81,894,736
- ----------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares:
Class A $234,902,194 $68,628,996 $78,817,975
Class B $8,085,387 $6,827,255 $ 3,076,761
Outstanding shares of beneficial interest:
Class A shares 44,750,011 12,688,245 14,440,084
Class B shares 1,540,659 1,262,330 563,686
Net asset value per share:
Class A $ 5.25 $ 5.41 $ 5.46
Class B $ 5.25 $ 5.41 $ 5.46
See accompanying notes to financial statements.
<PAGE>
Statements of assets and liabilities
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Dec. 31, 1996 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Assets
- ----------------------------------------------------------------------------------------------------------
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
Investments in securities, at value (N,ote 1)
(identified cost $381,356,749, $108,357,131
and $65,791,862) $405,409,640 $116,433,107 $70,584,764
Accrued interest receivable 8,400,999 2,399,515 1,027,431
Receivable for investment securities sold 270,000 -- --
- ----------------------------------------------------------------------------------------------------------
Total assets 414,080,639 118,832,622 71,612,195
- ----------------------------------------------------------------------------------------------------------
Liabilities
- ----------------------------------------------------------------------------------------------------------
Disbursements in excess of cash on demand deposit 509,675 76,059 40,844
Dividends payable to shareholders 315,565 87,972 51,985
Payable for investment securities purchased 7,913,237 70,875 10,125
Accrued investment management services fee 5,112 1,526 921
Accrued distribution fee 401 126 59
Accrued service fee 1,943 568 343
Accrued transfer agency fee 499 154 90
Accrued administrative services fee 423 130 78
Other accrued expenses 86,084 30,390 16,656
- ----------------------------------------------------------------------------------------------------------
Total liabilities 8,832,939 267,800 121,101
- ----------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares $405,247,700 $118,564,822 $71,491,094
- ----------------------------------------------------------------------------------------------------------
Represented by
- ----------------------------------------------------------------------------------------------------------
Shares of beneficial interest -- $.01 par value,
unlimited number of shares authorized $ 766,006 $ 230,406 $ 132,724
Additional paid-in-capital 390,678,374 113,863,975 68,396,159
Excess of distributions over net investment income (5,705) (1,147) (7,624)
Accumulated net realized loss (Notes 1 and 6) (10,298,053) (3,682,420) (1,832,629)
Unrealized appreciation (Note 5) 24,107,078 8,154,008 4,802,464
- ----------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable
to outstanding shares $405,247,700 $118,564,822 $71,491,094
- ----------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding shares:
Class A $385,690,744 $112,418,285 $68,636,389
Class B $ 19,556,956 $ 6,146,537 $ 2,854,705
Outstanding shares of beneficial interest:
Class A shares 72,903,687 21,846,198 12,742,435
Class B shares 3,696,873 1,194,397 529,971
Net asset value per share:
Class A $ 5.29 $ 5.15 $ 5.39
Class B $ 5.29 $ 5.15 $ 5.39
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of operations
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Six months ended Dec. 31, 1996 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Investment income
- ----------------------------------------------------------------------------------------------------------
California Massachusetts Michigan
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
Income:
Interest $7,565,108 $2,305,701 $2,564,345
- ----------------------------------------------------------------------------------------------------------
Expenses (Note 2)
Investment management services fee 576,991 176,929 194,011
Distribution fee -- Class B 27,921 22,609 10,784
Transfer agency fee 46,921 22,765 20,793
Incremental transfer agency fee -- Class B 156 131 67
Service fee
Class A 205,540 60,023 68,607
Class B 6,301 5,276 2,440
Administrative services fee 49,106 14,077 16,512
Compensation of board members 11,419 2,072 1,848
Compensation of officers -- -- 305
Custodian fees 17,879 2,778 828
Postage 57,735 8,982 3,176
Registration fees 7,544 27,415 24,567
Reports to shareholders 31,341 7,426 5,752
Audit fees 8,500 7,750 7,750
Administrative -- 5 426
Other -- 3,476 5,757
- ----------------------------------------------------------------------------------------------------------
Total expenses 1,047,354 361,714 363,623
Earnings credits on cash balances (Note 2) (21,895) (5,037) (1,875)
- ----------------------------------------------------------------------------------------------------------
Total net expenses 1,025,459 356,677 361,748
- ----------------------------------------------------------------------------------------------------------
Investment income -- net 6,539,649 1,949,024 2,202,597
- ----------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) -- net
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions (Note 3) 436,799 (41,280) (149,505)
Net realized gain on financial futures contracts 786,525 213,672 242,354
- ----------------------------------------------------------------------------------------------------------
Net realized gain on investments 1,223,324 172,392 92,849
Net change in unrealized appreciation or depreciation 3,959,476 1,338,480 1,352,535
- ----------------------------------------------------------------------------------------------------------
Net gain on investments 5,182,800 1,510,872 1,445,384
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $11,722,449 $3,459,896 $3,647,981
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
<PAGE>
Statements of operations
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
Six months ended Dec. 31, 1996 (Unaudited)
- ----------------------------------------------------------------------------------------------------------
Investment income
- ----------------------------------------------------------------------------------------------------------
Minnesota New York Ohio
Tax-Exempt Tax-Exempt Tax-Exempt
Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------
Income:
Interest $13,548,158 $3,836,950 $2,295,454
- ----------------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 949,008 285,162 172,973
Distribution fee -- Class B 67,255 20,753 9,075
Transfer agency fee 112,339 33,775 19,828
Incremental transfer agency fee -- Class B 403 134 67
Service fee
Class A 342,114 100,334 61,350
Class B 15,682 4,840 2,117
Administrative services fee 78,495 24,269 14,721
Compensation of board members 2,125 3,287 2,211
Compensation of officers 1,395 663 315
Custodian fees 45,213 8,498 5,095
Postage 18,057 4,720 2,392
Registration fees 7,375 13,518 12,967
Reports to shareholders 20,591 4,679 4,683
Audit fees 9,000 8,500 7,750
Administrative 1,091 583 1,513
Other 1,071 4,608 7,585
- ----------------------------------------------------------------------------------------------------------
Total expenses 1,671,214 518,323 324,642
Earnings credits on cash balances (Note 2) (67,538) (11,763) (7,240)
- ----------------------------------------------------------------------------------------------------------
Total net expenses 1,603,676 506,560 317,402
- ----------------------------------------------------------------------------------------------------------
Investment income -- net 11,944,482 3,330,390 1,978,052
- ----------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) -- net
- ----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions (Note 3) (369,698) 56,227 98,782
Net realized gain on financial futures contracts 1,282,238 598,533 227,125
- ----------------------------------------------------------------------------------------------------------
Net realized gain on investments 912,540 654,760 325,907
Net change in unrealized appreciation or depreciation 6,466,361 1,289,554 1,076,588
- ----------------------------------------------------------------------------------------------------------
Net gain on investments 7,378,901 1,944,314 1,402,495
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $19,323,383 $5,274,704 $3,380,547
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
- ------------------------------------------------------------------------------------------------------------
Operations and distributions Dec. 31, 1996 June 30, 1996 Dec. 31, 1996 June 30, 1996
- ------------------------------------------------------------------------------------------------------------
California Massachusetts
Tax-Exempt Fund Tax-Exempt Fund
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income -- net $6,539,649 $13,093,048 $1,949,024 $3,831,143
Net realized gain on investments 1,223,324 553,259 172,392 95,554
Net change in unrealized appreciation
or depreciation 3,959,476 323,151 1,338,480 202,491
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 11,722,449 13,969,458 3,459,896 4,129,188
- ------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (6,488,949) (12,910,408) (1,819,252) (3,652,208)
Class B (175,747) (184,985) (136,088) (172,619)
Net realized gain on securities
Class A (396,342) (1,353,180) -- --
Class B (13,517) (20,647) -- --
- ------------------------------------------------------------------------------------------------------------
Total distributions (7,074,555) (14,469,220) (1,955,340) (3,824,827)
- ------------------------------------------------------------------------------------------------------------
Share transactions (Note 4)
- ------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 9,113,768 23,553,539 3,724,627 11,006,959
Class B shares 2,025,504 5,187,208 1,553,832 4,389,565
Reinvestment of distributions at net asset value
Class A shares 4,731,300 10,071,476 1,382,047 2,835,422
Class B shares 155,076 184,290 116,639 149,356
Payments for redemptions
Class A shares (17,567,135) (38,384,549) (5,630,496) (14,679,805)
Class B shares (Note 2) (633,516) (960,392) (522,979) (790,581)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
share transactions (2,175,003) (348,428) 623,670 2,910,916
- ------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,472,891 (848,190) 2,128,226 3,215,277
Net assets at beginning of period 240,514,690 241,362,880 73,328,025 70,112,748
- ------------------------------------------------------------------------------------------------------------
Net assets at end of period
(including undistributed (excess of
distributions over) net investment income
of $(123,793) and $1,254 for IDS California, and
$0 and $6,316 for IDS Massachuesetts) $242,987,581 $240,514,690 $75,456,251 $73,328,025
- ------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
- ------------------------------------------------------------------------------------------------------------
Operations and distributions Dec. 31, 1996 June 30, 1996 Dec. 31, 1996 June 30, 1996
- ------------------------------------------------------------------------------------------------------------
Michigan Minnesota
Tax-Exempt Fund Tax-Exempt Fund
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------------------
Investment income -- net $ 2,202,597 $ 4,347,534 $11,944,482 $23,264,721
Net realized gain on investments 92,849 316,845 912,540 512,083
Net change in unrealized appreciation
or depreciation 1,352,535 274,473 6,466,361 20,022
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 3,647,981 4,938,852 19,323,383 23,796,826
- ------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (2,140,334) (4,267,967) (11,505,726) (22,792,680)
Class B (67,486) (83,171) (456,412) (470,510)
Net realized gain on securities
Class A (22,580) (1,011,054) -- (300,981)
Class B (286) (21,404) -- (6,713)
- -------------------------------------------------------------------------------------------------------------
Total distributions (2,230,686) (5,383,596) (11,962,138) (23,570,884)
- -------------------------------------------------------------------------------------------------------------
Share transactions (Note 4)
- -------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 2,707,689 7,791,545 17,769,266 43,579,588
Class B shares 612,282 1,729,504 3,820,123 12,784,665
Reinvestment of distributions at net asset value
Class A shares 1,550,441 3,972,959 8,889,287 18,480,882
Class B shares 50,401 85,004 358,912 401,374
Payments for redemptions
Class A shares (5,886,022) (9,793,095) (40,984,317) (72,296,842)
Class B shares (Note 2) (230,248) (166,982) (1,022,779) (1,011,844)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
share transactions (1,195,457) 3,618,935 (11,169,508) 1,937,823
- -------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 221,838 3,174,191 (3,808,263) 2,163,765
Net assets at beginning of period 81,672,898 78,498,707 409,055,963 406,892,198
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period
(including undistributed (excess of
distributions over) net investment income
of $(8,339) and $(3,116) for IDS Michigan, and
$(5,705) and $11,951 for IDS Minnesota) $81,894,736 $81,672,898 $405,247,700 $409,055,963
- -------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
- ------------------------------------------------------------------------------------------------------------
Operations and distributions Dec. 31, 1996 June 30, 1996 Dec. 31, 1996 June 30, 1996
- ------------------------------------------------------------------------------------------------------------
New York Ohio
Tax-Exempt Fund Tax-Exempt Fund
Six months ended Year ended Six months ended Year ended
(Unaudited) (Unaudited)
- ------------------------------------------------------------------------------------------------------------
Investment income -- net $3,330,390 $6,762,893 $1,978,052 $4,040,372
Net realized gain (loss) on investments 654,760 (312,952) 325,907 (450,527)
Net change in unrealized appreciation
or depreciation 1,289,554 (271,393) 1,076,588 579,615
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 5,274,704 6,178,548 3,380,547 4,169,460
- ------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (3,199,193) (6,587,853) (1,929,625) (3,934,670)
Class B (132,333) (175,051) (56,746) (69,847)
Net realized gain on securities
Class A -- -- (3,182) (133,992)
Class B -- -- (133) (3,014)
- -------------------------------------------------------------------------------------------------------------
Total distributions (3,331,526) (6,762,904) (1,989,686) (4,141,523)
- -------------------------------------------------------------------------------------------------------------
Share transactions (Note 4)
- -------------------------------------------------------------------------------------------------------------
Proceeds from sales
Class A shares (Note 2) 5,029,276 9,808,292 2,718,147 6,884,856
Class B shares 1,197,827 3,827,013 969,076 1,761,407
Reinvestment of distributions at net asset value
Class A shares 2,404,775 5,179,063 1,463,403 3,192,485
Class B shares 111,961 158,781 45,252 64,381
Payments for redemptions
Class A shares (12,150,324) (18,878,694) (8,519,690) (11,876,308)
Class B shares (Note 2) (203,351) (862,141) (394,235) (316,974)
- -------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
share transactions (3,609,836) (767,686) (3,718,047) (290,153)
- -------------------------------------------------------------------------------------------------------------
Total decrease in net assets (1,666,658) (1,352,042) (2,327,186) (262,216)
Net assets at beginning of period 120,231,480 121,583,522 73,818,280 74,080,496
- -------------------------------------------------------------------------------------------------------------
Net assets at end of period
(including undistributed (excess of
distributions over) net investment income
of $(1,147)and $(11) for IDS New York, and
$(7,624) and $695 for IDS Ohio) $118,564,822 $120,231,480 $71,491,094 $73,818,280
- -------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS California Tax-Exempt Trust
IDS Special Tax-Exempt Series Trust
(Unaudited as to Dec. 31, 1996)
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies
IDS California Tax-Exempt Trust and IDS Special Tax-Exempt Series Trust were
organized as Massachusetts business trusts. IDS California Tax-Exempt Trust
includes only IDS California Tax-Exempt Fund. IDS Special Tax-Exempt Series
Trust is a "series fund" that is currently composed of individual state
tax-exempt funds and one insured national tax-exempt fund, including IDS
Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS Minnesota
Tax-Exempt Fund, IDS New York Tax-Exempt Fund, IDS Ohio Tax-Exempt Fund and IDS
Insured Tax-Exempt Fund (the Funds). The Funds are non-diversified, open-end
management investment companies as defined in the Investment Company Act of 1940
(as amended).
Each Fund's goal is to provide a high level of income generally exempt from
federal income tax as well as from the respective state and local income tax. A
portion of each Fund's assets may be invested in bonds whose interest is subject
to the alternative minimum tax computation. The Funds, excluding IDS Insured
Tax-Exempt Fund, concentrate their investments in a single state and therefore
may have more credit risk related to the economic conditions of the respective
state than Funds that have a broader geographical diversification.
Each Fund offers Class A, Class B and Class Y shares. Class A shares are sold
with a front-end sales charge. Class B shares may be subject to a contingent
deferred sales charge. Class B shares automatically convert to Class A after
eight years.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of distribution
fee, transfer agency fee and service fee (class specific expenses) differs among
classes. Income, expenses (other than class-specific expenses) and realized and
unrealized gains or losses on investments are allocated to each class of shares
based upon its relative net assets.
The significant accounting policies followed by the Funds are summarized as
follows:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Determination of fair
value involves, among other things, reference to market indexes, matrixes and
data from independent brokers. Short-term securities maturing in more than 60
days from the valuation date are valued at the market price or approximate
market value based on current interest rates; those maturing in 60 days or less
are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Funds may buy or sell put
and call options and write covered call options on portfolio securities and may
write cash-secured put options. The risk in writing a call option is that the
Funds give up the opportunity for profit if the market price of the security
increases. The risk in writing a put option is that the Funds may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised. The Funds also have the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not exist.
The Funds also may write over-the-counter options where the completion of the
obligation is dependent upon the credit standing of the other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Each Fund
will realize a gain or loss upon expiration or closing of the option
transaction. When options on debt securities or futures are exercised, the Fund
will realize a gain or loss. When other options are exercised, the proceeds on
sales for a written call option, the purchase cost for a written put option or
the cost of a security for a purchased put or call option is adjusted by the
amount of the premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Funds may buy or 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 Funds may be required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Funds each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Funds recognize a realized gain or loss when the contract is
closed or expires.
Federal income taxes
Since each Fund intends to comply with all sections of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required. Each Fund is treated as a separate entity for federal income tax
purposes.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of losses
on certain futures contracts and losses deferred due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. The effect on dividend
distributions of certain book-to-tax differences is presented as "excess
distributions" in the statement of changes in net assets. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the Funds.
Dividends to shareholders
Dividends from net investment income, declared daily and paid monthly, are
reinvested in additional shares of each Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend at the end of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including amortization of premium and discount on a level
yield basis, is accrued daily.
- --------------------------------------------------------------------------------
2. Expenses and sales charges
Effective March 20, 1995, each Fund entered into an agreement with AEFC for
managing its portfolio, providing administrative services and serving as
transfer agent. Under its Investment Management Services Agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of each Fund's average daily net assets in reducing percentages
from 0.47% to 0.38% annually.
Under an Administrative Services Agreement, each Fund pays AEFC for
administration and accounting services at a percentage of each Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. Each Fund pays AEFC an annual fee per shareholder account for this
service as follows:
o Class A $15.50
o Class B $16.50
Each Fund entered into agreements with American Express Financial Advisors Inc.
for distribution and shareholder servicing-related services. Under a Plan and
Agreement of Distribution, each Fund pays a distribution fee at an annual rate
of 0.75% of the Fund's average daily net assets attributable to Class B shares
for distribution-related services.
Under a Shareholder Service Agreement, each Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of each Fund's average daily net assets
attributable to Class A and Class B shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing the Funds' shares for the period ended Dec. 31, 1996, are as
follows:
Fund Class A Class B
---------------------------------------------------------------
IDS California $195,690 $5,131
IDS Massachusetts 123,567 5,087
IDS Michigan 69,384 2,760
IDS Minnesota 391,935 14,229
IDS New York 138,040 1,535
IDS Ohio 57,478 2,675
During the period ended Dec. 31, 1996, the Funds' custodian and transfer agency
fees were reduced as a result of earnings credits from overnight cash balances
as follows:
Fund Reduction
-----------------------------------------
IDS California $21,895
IDS Massachusetts 5,037
IDS Michigan 1,875
IDS Minnesota 67,538
IDS New York 11,763
IDS Ohio 7,240
- --------------------------------------------------------------------------------
3. Securities transactions
For the period ended Dec. 31, 1996, cost of purchases and proceeds from sales
(other than short-term obligations) aggregated for each Fund are as follows:
Fund Purchases Proceeds
-----------------------------------------------------------------------
IDS California $18,092,522 $18,025,929
IDS Massachusetts 2,436,948 1,991,920
IDS Michigan 11,302,011 11,172,825
IDS Minnesota 28,723,798 30,136,693
IDS New York 2,752,218 5,459,325
IDS Ohio 5,507,081 9,355,000
Net realized gains and losses on investment sales are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
4. Capital share transactions
Transactions in shares of each Fund for the periods indicated are as follows:
California Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 1,743,707 390,126
Issued for reinvested distributions 907,128 29,733
Redeemed (3,371,303) (122,129)
- --------------------------------------------------------------------
Net increase (decrease) (720,468) 297,730
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 4,511,208 995,477
Issued for reinvested distributions 1,925,937 35,294
Redeemed (7,378,222) (184,480)
- --------------------------------------------------------------------
Net increase (decrease) (941,077) 846,291
- --------------------------------------------------------------------
Massachusetts Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 695,017 289,211
Issued for reinvested distributions 257,660 21,743
Redeemed (1,050,329) (98,002)
- --------------------------------------------------------------------
Net increase (decrease) (97,652) 212,952
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 2,049,431 819,429
Issued for reinvested distributions 529,225 27,882
Redeemed (2,742,630) (147,842)
- --------------------------------------------------------------------
Net increase (decrease) (163,974) 699,469
- --------------------------------------------------------------------
<PAGE>
Michigan Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 499,257 112,785
Issues for reinvested distributions 286,006 9,293
Redeemed (1,088,331) (42,580)
- --------------------------------------------------------------------
Net increase (decrease) (303,068) 79,498
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 1,429,150 315,865
Issued for reinvested distributions 725,994 15,490
Redeemed (1,794,375) (30,500)
- --------------------------------------------------------------------
Net increase 360,769 300,855
- --------------------------------------------------------------------
Minnesota Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 3,383,674 726,544
Issued for reinvested distributions 1,691,866 68,284
Redeemed (7,809,635) (194,833)
- --------------------------------------------------------------------
Net increase (decrease) (2,734,095) 599,995
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 8,270,935 2,429,988
Issued for reinvested distributions 3,510,209 76,278
Redeemed (13,742,113) (192,219)
- --------------------------------------------------------------------
Net increase (decrease) (1,960,969) 2,314,047
- --------------------------------------------------------------------
<PAGE>
New York Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 983,579 233,517
Issued for reinvested distributions 470,446 21,893
Redeemed (2,376,817) (39,793)
- --------------------------------------------------------------------
Net increase (decrease) (922,792) 215,617
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 1,906,925 744,701
Issued for reinvested distibutions 1,006,844 30,877
Redeemed (3,672,303) (166,438)
- --------------------------------------------------------------------
Net increase (decrease) (758,534) 609,140
- --------------------------------------------------------------------
Ohio Tax-Exempt Fund
Six months ended Dec. 31, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 508,212 180,956
Issued for reinvested distributions 273,865 8,467
Redeemed (1,598,476) (73,830)
- --------------------------------------------------------------------
Net increase (decrease) (816,399) 115,593
- --------------------------------------------------------------------
Year ended June 30, 1996
Class A Class B
- --------------------------------------------------------------------
Sold 1,279,987 327,095
Issued for reinvested distributions 596,171 12,022
Redeemed (2,225,461) (59,086)
- --------------------------------------------------------------------
Net increase (decrease) (349,303) 280,031
- --------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. Interest rate futures contracts
Investments in securities at Dec. 31, 1996, included securities that were
pledged as collateral to cover initial margin deposits (see summary of
significant accounting policies) as follows:
Open
purchase
Fund Value contracts
-----------------------------------------------------------------------
IDS California $3,293,850 32
IDS Massachusetts 1,753,293 9
IDS Michigan 562,715 10
IDS Minnesota 6,544,610 51
IDS New York 2,242,288 63
IDS Ohio 2,130,369 9
The market value of the open contracts at Dec. 31, 1996, was as follows:
Net
Market unrealized
Fund value gain
-----------------------------------------------------------------------
IDS California $3,714,000 34,156
IDS Massachusetts 1,044,562 9,562
IDS Michigan 1,160,625 10,468
IDS Minnesota 5,919,188 54,187
IDS New York 7,311,938 78,032
IDS Ohio 1,044,563 9,562
The Funds maintain, in a segregated account with its custodian, advanced
refunded bonds with at least a market value equal to the value of these open
long futures contracts. Advanced refunded bonds are highly liquid, usually
covered by government securities, which will be refunded at the bond's first
call date.
- --------------------------------------------------------------------------------
6. Capital loss carryover
For federal income tax purposes, capital loss carryovers were as follows at June
30, 1996:
Fund Carryover
------------------------------------------
IDS California $ 182,601
IDS Massachusetts 426,167
IDS Michigan 216,362
IDS Minnesota 2,911,065
IDS New York 2,695,894
IDS Ohio 843,358
These capital loss carryovers will expire in 1999 through 2005 if not offset by
subsequent capital gains. It is unlikely the board will authorize a distribution
of any net realized capital gains for a Fund until the respective capital loss
carryover has been offset or expires.
<PAGE>
<TABLE>
IDS California Tax-Exempt Trust
IDS California Tax-Exempt Fund
- --------------------------------------------------------------------------------
7. Financial Highlights
<CAPTION>
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***
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net asset value, $5.15 $5.16 $5.13 $5.41 $5.18 $4.94 $4.89 $4.97 $4.82 $4.66 $5.07
beginning of period
Income from investment operations:
Net investment .14 .28 .30 .31 .30 .31 .32 .32 .16 .32 .32
income
Net gains (losses) .11 .02 .03 (.28) .23 .24 .05 (.08) .15 .16 (.41)
(both realized
and unrealized)
Total from .25 .30 .33 .03 .53 .55 .37 .24 .31 .48 (.09)
investment
operations
Less distributions:
Dividends from net (.14) (.28) (.30) (.31) (.30) (.31) (.32) (.32) (.16) (.32) (.32)
investment income
Distributions from (.01) (.03) -- -- -- -- -- -- -- -- --
realized gains
Total distributions (.15) (.31) (.30) (.31) (.30) (.31) (.32) (.32) (.16) (.32) (.32)
Net asset value, $5.25 $5.15 $5.16 $5.13 $5.41 $5.18 $4.94 $4.89 $4.97 $4.82 $4.66
end of period
Ratios/supplemental data:
Class A
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net assets, end of $235 $234 $239 $255 $261 $222 $185 $142 $95 $63 $40
period (in millions)
Ratio of expenses to .83%++ .80% .65% .61% .63% .64% .60% .62% .64%++ .72% .78%
average daily net
assets##
Ratio of net income 5.33%++ 5.40% 5.89% 5.67% 5.78% 6.16% 6.51% 6.53% 6.67%++ 6.61% 6.74%
to
average daily net
assets
Portfolio turnover 8% 15% 48% 27% 5% 7% 23% 20% 6% 13% 16%
rate(excluding
short-term securities)
Total return# 4.9% 6.0% 6.5% 0.4% 10.8% 11.4% 7.7% 5.0% 6.5%+++ 10.5% (1.6%)
</TABLE>
* Six months ended June 30, 1989. The Fund's fiscal year end was
changed from Dec. 31 to June 30, effective 1989.
** Fiscal years ended Dec. 31, 1987 and Dec. 31, 1988.
*** For a share outstanding throughout the period. Rounded to the nearest cent.
+ Six months ended Dec. 31, 1996 (Unaudited).
++ Adjusted to an annual basis.
+++ For the fiscal period ended June 30, 1989, the annualized total return was
13.6%.
# Total return does not reflect payment of a sales charge.
## Effective fiscal year 1996, expense ratio is based on total expenses
of the Fund before reduction of earnings credits on cash balances.
<PAGE>
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*
Class B
1996*** 1996 1995**
Net asset value, $5.15 $5.16 $5.21
beginning of period
Income from investment operations:
Net investment income .12 .24 .09
Net gains (losses) .11 .02 (.05)
(both realized
and unrealized)
Total from investment .23 .26 .04
operations
Less distributions:
Dividends from net (.12) (.24) (.09)
investment income
Distributions from (.01) (.03) --
realized gains
Total distributions (.13) (.27) (.09)
Net asset value, $5.25 $5.15 $5.16
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end of $8 $6 $2
period (in millions)
Ratio of expenses to 1.56%+ 1.57% 1.51%+
average daily net
assets#
Ratio of net income to 4.59%+ 4.64% 4.87%+
average daily net
assets
Portfolio turnover 8% 15% 48%
rate
(excluding short-term
securities)
Total return++ 4.5% 5.2% 0.8%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total
expenses of the Fund before reduction of earnings credits on cash balances.
<PAGE>
<TABLE>
<CAPTION>
IDS Special Tax-Exempt Series Trust
IDS Massachusetts Tax-Exempt Fund
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*
Class
A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, $5.30 $5.27 $5.24 $5.49 $5.20 $4.96 $4.88 $5.01 $4.91 $5.00
beginning of period
Income from investment operations:
Net investment income .14 .28 .30 .30 .30 .31 .32 .32 .32 .31
Net gains (losses) .11 .03 .03 (.25) .29 .24 .08 (.12) .12 (.06)
(both realized
and unrealized)
Total from investment .25 .31 .33 .05 .59 .55 .40 .20 .44 .25
operations
Less distributions:
Dividends from net (.14) (.28) (.30) (.30) (.30) (.31) (.32) (.32) (.32) (.31)
investment income
Distributions from -- -- -- -- -- -- -- (.01) (.02) (.03)
realized gains
Total distributions (.14) (.28) (.30) (.30) (.30) (.31) (.32) (.33) (.34) (.34)
Net asset value, $5.41 $5.30 $5.27 $5.24 $5.49 $5.20 $4.96 $4.88 $5.01 $4.91
end of period
Ratios/supplemental data:
Class
A
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $69 $68 $68 $72 $64 $44 $27 $19 $13 $4
period (in millions)
Ratio of expenses to .90%# .86% .72% .69% .72% .72% .69% .70% .84% .93%***
average daily net
assets++
Ratio of net income to 5.22%# 5.26% 5.74% 5.40% 5.57% 6.05% 6.53% 6.59% 6.55% 6.40%***
average daily net assets
Portfolio turnover rate 3% 6% 16% 6% 0% 2% 16% 36% 25% 34%
(excluding short-term
securities)
Total return+ 4.8% 6.0% 6.5% 0.9% 11.5% 11.4% 8.5% 4.2% 9.2% 5.3%
</TABLE>
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Six months ended Dec. 31, 1996 (Unaudited).
*** During the period from July 2, 1987 to March 31, 1988,American Express
Financial Corporation voluntarily reimbursed the Fund for expenses in
excess of 0.75% of its average daily net assets, on an annual basis. Had
American Express Financial Corporation not done so, the ratio of net
investment income would have been 1.30% and 6.03%, respectively.
# Adjusted to an annual basis.
+ Total return does not reflect payment of a sales charge.
++ Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
<PAGE>
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*
Class B
1996*** 1996 1995**
Net asset value, $5.30 $5.27 $5.31
beginning of period
Income from investment operations:
Net investment income .12 .24 .09
Net gains (losses) .11 .03 (.04)
(both realized
and unrealized)
Total from investment .23 .27 .05
operations
Less distributions:
Dividends from net (.12) (.24) (.09)
investment income
Net asset value, $5.41 $5.30 $5.27
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end $7 $6 $2
of
period (in
millions)
Ratio of expenses to 1.65%+ 1.63% 1.59%+
average daily net
assets+++
Ratio of net income to 4.48%+ 4.51% 4.83%+
average daily net assets
Portfolio turnover rate 3% 6% 16%
(excluding short-term
securities)
Total return++ 4.4% 5.2% 0.9%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
+++ Effective fiscal year 1996, expense ratio is based on total expenses
of the Fund before reduction of earnings credit on cash balances.
<PAGE>
<TABLE>
<CAPTION>
IDS Special Tax-Exempt Series Trust
IDS Michigan Tax-Exempt Fund
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*
Class
A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, $5.36 $5.39 $5.35 $5.60 $5.31 $5.04 $4.96 $5.08 $4.85 $5.00
beginning of period
Income from investment operations:
Net investment income .14 .30 .30 .31 .31 .32 .32 .32 .32 .31
Net gains (losses) .10 .04 .05 (.25) .29 .27 .08 (.12) .23 (.11)
(both realized
and unrealized)
Total from investment .24 .34 .35 .06 .60 .59 .40 .20 .55 .20
operations
Less distributions:
Dividends from net (.14) (.30) (.31) (.31) (.31) (.32) (.32) (.32) (.32) (.31)
investment income
Distributions from -- (.07) -- -- -- -- -- -- -- (.04)
realized gains
Total distributions (.14) (.37) (.31) (.31) (.31) (.32) (.32) (.32) (.32) (.35)
Net asset value, $5.46 $5.36 $5.39 $5.35 $5.60 $5.31 $5.04 $4.96 $5.08 $4.85
end of period
Ratios/supplemental data:
Class
A
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $79 $79 $78 $77 $72 $55 $41 $29 $16 $8
period (in millions)
Ratio of expenses to .85%# .82% .70% .65% .68% .67% .67% .71% .81% .87%***
average daily net
assets+
Ratio of net income to 5.35# 5.37% 5.71% 5.43% 5.64% 6.18% 6.45% 6.47% 6.50% 6.56%***
average daily net
assets
Portfolio turnover 14% 29% 48% 16% 2% 0% 3% 5% 10% 14%
rate
(excluding short-term
securities)
Total return++ 4.5% 6.3% 6.6% 1.0% 11.6% 12.0% 8.3% 4.1% 11.7% 4.4%
</TABLE>
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Six months ended Dec. 31, 1996 (Unaudited).
*** During the period from July 2, 1987 to March 31, 1988, American Express
Financial Corporation voluntarily reimbursed the Fund for expenses in
excess of 0.75% of its average daily net assets, on an annual basis. Had
American Express Finanacial Corporation not done so, the ratio of expenses
and ratio of net investment income would have been 1.09% and 6.34%,
respectively.
# Adjusted to an annual basis.
+ Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
++ Total return does not reflect payment of a sales charge.
<PAGE>
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*
Class B
1996*** 1996 1995**
Net asset value, $5.36 $5.39 $5.43
beginning of period
Income from investment operations:
Net investment income .12 .25 .09
Net gains (losses) .10 .04 (.04)
(both realized
and unrealized)
Total from investment .22 .29 .05
operations
Less distributions:
Dividends from net (.12) (.25) (.09)
investment income
Distributions from -- (.07) --
realized gains
Total distributions (.12) (.32) (.09)
Net asset value, $5.46 $5.36 $5.39
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end of $3 $3 $1
period (in millions)
Ratio of expenses to 1.59%+ 1.59% 1.62%+
average daily net
assets++
Ratio of net income to 4.63%+ 4.63% 4.89%+
average daily net
assets
Portfolio turnover 14% 29% 48%
rate
(excluding short-term
securities)
Total return+++ 4.1% 5.6% 0.9%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Adjusted to an annual basis.
++ Effective fiscal year 1996, expense ratio is based on total expenses the
Fund before reduction of earnings credits on cash balances.
+++ Total return does not reflect payment of a sales charge.
<PAGE>
<TABLE>
<CAPTION>
IDS Special Tax-Exempt Series Trust
IDS Minnesota Tax-Exempt Fund
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***
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net asset value, $5.20 $5.19 $5.16 $5.44 $5.22 $5.01 $4.95 $5.05 $4.86 $4.76 $5.18
beginning of period
Income from investment operations:
Net investment income .15 .30 .31 .31 .31 .33 .33 .32 .16 .33 .33
Net gains (losses) .09 .01 .03 (.28) .22 .21 .06 (.10) .19 .10 (.42)
(both realized
and unrealized)
Total from investment .24 .31 .34 .03 .53 .54 .39 .22 .35 .43 (.09)
operations
Less distributions:
Dividends from net (.15) (.30) (.31) (.31) (.31) (.33) (.33) (.32) (.16) (.33) (.33)
investment income
Net asset value, $5.29 $5.20 $5.19 $5.16 $5.44 $5.22 $5.01 $4.95 $5.05 $4.86 $4.76
end of period
Ratios/supplemental data:
Class
A
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net assets, end of $386 $393 $403 $408 $402 $313 $233 $181 $121 $82 $50
period (in millions)
Ratio of expenses to .78%+++ 80% .67% .66% .67% .66% .63% .64% .65%++ .65% .78%
average daily net
assets##
Ratio of net income to 5.81%++ 5.66% 6.01% 5.73% 5.91% 6.43% 6.67% 6.62% 6.84%+++ 6.73% 6.83%
average daily net
assets
Portfolio turnover 7% 13% 28% 13% 2% 7% 10% 8% 0% 14% 40%
rate
(excluding short-term
securities)
Total return+++ 4.8% 5.9% 6.8% 0.4% 10.5% 11.0% 8.2% 4.8% 7.4%# 9.3% (1.4%)
</TABLE>
* Six months ended June 30, 1989. The Fund's fiscal year end was
changed from Dec. 31 to June 30, effective 1989.
** Fiscal years ended Dec. 31, 1987 and Dec. 31, 1988.
*** For a share outstanding throughout the period. Rounded to the nearest cent.
+ Six months ended Dec. 31, 1996 (Unaudited).
++ Adjusted to an annual basis.
+++ Total return does not reflect payment of a sales charge.
# For the fiscal period ended June 30, 1989, the annualized total return
was 15.5%.
## Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credit on cash balances.
<PAGE>
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*
Class B
1996*** 1996 1995**
Net asset value, $5.20 $5.19 $5.24
beginning of period
Income from investment operations:
Net investment income .13 .26 .09
Net gains (losses) .09 .01 (05)
(both realized
and unrealized)
Total from investment .22 .27 .04
operations
Less distributions:
Dividends from net (.13) (.26) (.09)
investment income
Net asset value, $5.29 $5.20 $5.19
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end of $20 $16 $4
period (in millions)
Ratio of expenses to 1.53%+ 1.57% 1.27%+
average daily net
assets #
Ratio of net income to 5.06%+ 4.94% 5.40%+
average daily net
assets
Portfolio turnover 7% 13% 28%
rate
(excluding short-term
securities)
Total return++ 4.4% 5.2% 0.8%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before redution of earnings credit on cash balances.
<PAGE>
<TABLE>
<CAPTION>
IDS Special Tax-Exempt Series Trust
IDS New York Tax-Exempt Fund
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***
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net asset value, $5.06 $5.09 $5.12 $5.41 $5.13 $4.86 $4.80 $4.87 $4.73 $4.58 $5.07
beginning of period
Income from investment operations:
Net investment income .14 .29 .30 .30 .30 .31 .31 .31 .16 .31 .31
Net gains (losses) .09 (.03) (.03) (.29) .28 .27 .06 (.07) .14 .15 (.49)
(both realized
and unrealized)
Total from investment .23 .26 .27 .01 .58 .58 .37 .24 .30 .46 (.18)
operations
Less distributions:
Dividends from net (.14) (.29) (.30) (.30) (.30) (.31) (.31) (.31) (.16) (.31) (.31)
investment income
Net asset value, $5.15 $5.06 $5.09 $5.12 $5.41 $5.13 $4.86 $4.80 $4.87 $4.73 $4.58
end of period
Ratios/supplemental data:
Class A
1996+ 1996 1995 1994 1993 1992 1991 1990 1989* 1988** 1987**
Net assets, end of $112 $115 $120 $120 $117 $95 $79 $68 $49 $34 $21
period (in millions)
Ratio of expenses to .82%++ .82% .70% .65% .67% .67% .65% .65% .66%++ .71% .88%
average daily net
assets##
Ratio of net income to 5.51%++ 5.51% 6.00% 5.61% 5.79% 6.26% 6.53% 6.57% 6.78%++ 6.61% 6.79%
average daily net
assets
Portfolio turnover 2% 9% 20% 10% 0% 8% 17% 8% 1% 6% 20%
rate
(excluding short-term
securities)
Total return+++ 4.5% 5.2% 5.5% 0.1% 11.6% 12.3% 8.2% 5.0% 6.5%# 10.3% (3.4%)
</TABLE>
* Six months ended June 30, 1989. The Fund's fiscal year was
changed from Dec. 31 to June 30, effective 1989.
** Fiscal years ended Dec. 31, 1987 and Dec. 31, 1988.
*** For a share outstanding throughout the period. Rounded to the nearest cent.
+ Six months ended Dec. 31, 1996 (Unaudited).
++ Adjusted to an annual basis.
+++ Total return does not reflect payment of a sales charge.
# For the fiscal period ended June 30, 1989, the annualized total
return was 13.6%.
## Effective fiscal year 1996, expense ratio is based on total expense of the
Fund before reduction of earnings credits on cash balances.
<PAGE>
IDS Special Tax-Exempt Series Trust
IDS New York Tax-Exempt Fund
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*
Class B
1996*** 1996 1995**
Net asset value, $5.06 $5.09 $5.17
beginning of period
Income from investment operations:
Net investment income .12 .25 .09
Net gains (losses) .09 (.03) (.08)
(both realized
and unrealized)
Total from investment .21 .22 .01
operations
Less distributions:
Dividends from net (.12) (.25) (.09)
investment income
Net asset value, $5.15 $5.06 $5.09
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end of $6 $5 $2
period (in millions)
Ratio of expenses to 1.57%++ 1.59% 1.59%++
average daily net
assets+++
Ratio of net income to 4.76%++ 4.79% 5.42%++
average daily net assets
Portfolio turnover rate 2% 9% 20%
(excluding short-term
securities)
Total return+ 4.1% 4.4% 0.2%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Total return does not reflect payment of a sales charge.
++ Adjusted to an annual basis.
+++ Effective fiscal year 1996, expense ratio is based on total expense of the
Fund before reduction of earnings credits on cash balances.
<PAGE>
<TABLE>
<CAPTION>
IDS Special Tax-Exempt Series Trust
IDS Ohio Tax-Exempt Fund
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*
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net asset value, $5.28 $5.28 $5.26 $5.58 $5.28 $5.01 $4.94 $5.04 $4.87 $5.00
beginning of period
Income from investment operations:
Net investment income .14 .29 .29 .30 .30 .31 .32 .31 .31 .32
Net gains (losses) .11 .01 .03 (.32) .31 .27 .07 (.09) .18 (.10)
(both realized
and unrealized)
Total from investment .25 .30 .32 (.02) .61 .58 .39 .22 .49 .22
operations
Less distributions:
Dividends from net (.14) (.29) (.30) (.30) (.30) (.31) (.32) (.31) (.31) (.32)
investment income
Distributions from -- (.01) -- -- (.01) -- -- (.01) (.01) (.03)
realized gains
Total distributions (.14) (.30) (.30) (.30) (.31) (.31) (.32) (.32) (.32) (.35)
Net asset value, $5.39 $5.28 $5.28 $5.26 $5.58 $5.28 $5.01 $4.94 $5.04 $4.87
end of period
Ratios/supplemental data:
Class A
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of $69 $72 $73 $72 $65 $47 $33 $25 $16 $8
period (in millions)
Ratio of expenses to .85%# .85% .71% .66% .67% .70% .68% .70% .82% .86%+
average daily net
assets##
Ratio of net income to 5.38%# 5.35% 5.65% 5.44% 5.65% 6.14% 6.41% 6.43% 6.40% 6.64%+
average daily net
assets
Portfolio turnover 8% 24% 45% 11% 0% 5% 2% 6% 10% 0%
rate(excluding
short-term securities)
Total return++ 4.7% 5.7% 6.2% (0.5%) 12.1% 11.9% 8.1% 4.6% 10.5% 4.7%
</TABLE>
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Six months ended Dec. 31, 1996 (Unaudited).
+ During the period from July 2, 1987 to March 31, 1988, American Express
Financial Corporation voluntarily reimbursed the Fund for expenses in excess
of 0.75% of its average daily net assets, on an annual basis. Had American
Express Financial Corporation not done so, the ratio of net investment
income would have been 1.09% and 6.41%, respectively.
++ Total return does not reflect payment of a sales charge.
# Adjusted to an annual basis.
## Effective fiscal year 1996, expense ratio is based on total expense of the
Fund before reduction of earnings credits on cash balances.
<PAGE>
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*
Class B
1996*** 1996 1995**
Net asset value, $5.28 $5.28 $5.34
beginning of period
Income from investment operations:
Net investment income .12 .24 .09
Net gains (losses) .11 .01 (.06)
(both realized
and unrealized)
Total from investment .23 .25 .03
operations
Less distributions:
Dividends from net (.12) (.24) (.09)
investment income
Distributions from -- (.01) --
realized gains
Total distributions (.12) (.25) (.09)
Net asset value, $5.39 $5.28 $5.28
end of period
Ratios/supplemental data:
Class B
1996*** 1996 1995**
Net assets, end of $3 $2 $1
period (in millions)
Ratio of expenses to 1.61%+ 1.59% 1.66%+
average daily net
assets#
Ratio of net income to 4.64%+ 4.63% 4.58%+
average daily net
assets
Portfolio turnover 8% 24% 45%
rate (excluding
short-term securities)
Total return++ 4.4% 5.0% 0.6%
* For a share outstanding throughout the period. Rounded to the nearest cent.
** Inception date was March 20, 1995.
*** Six months ended Dec. 31, 1996 (Unaudited).
+ Adjusted to an annual basis.
++ Total return does not reflect payment of a sales charge.
# Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS California Tax-Exempt Fund (Percentages represent value of
Dec. 31, 1996 (Unaudited) investments compared to net assets)
- -----------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (98.7%)
- -----------------------------------------------------------------------------------------------------------------------------------
Name of issuer and Coupon Maturity Principal Value(a)
title of issue (b,c,d) rate year amount
- -----------------------------------------------------------------------------------------------------------------------------------
Aliso Viejo Orange County District Community Facilities
<S> <C> <C> <C> <C>
District #88-1 Special Tax Bonds Series 1992A 7.35 % 2018 $ 3,000,000 $ 3,492,810
ABAG Finance Authority for Nonprofit Corporations
Certificate of Participation International School Project
Series 1996 7.375 2026 2,200,000 2,092,970
Anaheim Public Finance Authority Revenue Bonds
2nd Series Electric Utilities San Juan (FGIC Insured) 5.75 2022 11,100,000 11,156,721
Brea Redevelopment Agency Tax Allocation Refunding Bonds
Redevelopment Project AB (MBIA Insured) 5.50 2017 1,800,000 1,771,596
Burbank Redevelopment Agency Tax Allocation Bonds
Golden State Series 1993A 6.00 2023 2,000,000 2,016,360
Cathedral Public Finance Authority
Revenue Tax Allocation Bonds Series A (MBIA Insured) 5.50 2017 2,230,000 2,197,487
Chapman College Educational Facilities Authority
Revenue Bonds Series 1989B 7.50 2018 500,000 563,900
Chico Walker Senior Housing Insured Revenue Bonds
The Lodge Series 1993A 5.70 2023 1,500,000 1,473,570
Clearlake Redevelopment Agency
Highlands Park Community Development
Tax Allocation Bonds Series 1993 6.40 2023 1,420,000 1,433,064
Eastern Municipal Water District Riverside County
Water & Sewer Revenue Certificates of Participation
Series 1991 6.00 2023 1,000,000 1,012,860
Eastern Municipal Water District Riverside County
Water & Sewer Pre-Refunded Revenue Certificates of
Participation Series 1991(FGIC Insured) 6.50 2020 3,000,000 3,319,590
El Camino Hospital District Hospital Pre-Refunded Revenue
Certificate of Participation Series A 8.50 2017 1,500,000 1,579,125
Encinitas Unified School District
Unlimited General Obligation Bonds
Series 1996 Zero Coupon (MBIA Insured) 5.85 2015-16 3,500,000(h) 1,205,430
Fontana Redevelopment Agency
Refunding Certificate of Participation
Police Facility Series 1993 5.625 1997 4,500,000 4,378,455
Fontana Unified School District
Unlimited Tax General Obligation Bonds
CVT Series C Zero Coupon (FGIC Insured) 8.03 1997 3,470,000(e) 3,523,056
Foothill-De Anza Community College Santa Clara County
Refunding Certificate of Participation Series 1993
(Connie Lee Insured) 5.25 2021 1,675,000 1,569,375
Foothill/Eastern Transportation Corridor Agency Toll Road
Senior Lien Revenue Bonds Series 1995A 6.00 2034 1,775,000 1,776,313
Garden Grove Agency Community Development
Tax Allocation Refunding Bonds
Garden Grove Community 5.875 2023 3,000,000 2,922,750
Garden Grove Certificate of Participation
Bahia Village/Emerald Isle
(FSA Insured) 5.70 2023 2,660,000 2,652,632
Hayward Civic Center Project
Certificate of Participation Series 1996 (MBIA Insured) 5.50 2017 1,000,000 990,230
Huntington Beach Certificate of Participation Revenue Bonds
Civic Center Refinancing (AMBAC Insured) 5.50 2016 1,715,000 1,684,662
Indian Wells Improvement Bonds
Assessment District #13 7.50 2008 370,000(g) 381,377
Irwindale Redevelopment Agency Sub Lien
Tax Allocation Bonds Series 1996 7.00 2019 1,700,000 1,783,589
Janesville Union School District
Lassen County General Obligation Bonds
Series 1996 Election Bank Qualified 6.45 2021 875,000 874,939
Long Beach Harbor Revenue Bonds
Series 1989A A.M.T. 7.25 2019 7,000,000(g) 7,390,390
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation
Series 1989A 7.00 2020 5,000,000 5,435,900
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A 7.30 2009 1,000,000 1,094,570
Los Angeles Convention & Exhibition Center
Pre-Refunded Certificate of Participation Series 1989A 7.375 2018 2,900,000 3,179,618
Los Angeles County Certificate of Participation
Disney Parking 5.50 2021 1,625,000 1,532,895
Los Angeles County Metropolitan Transportation Authority
Sales Tax Revenue Bonds
2nd Series 1995A (AMBAC Insured) 5.50 2017 1,650,000 1,632,015
Los Angeles County Public Works Financing Authority
Lease Refunding Revenue Bonds
Series 1996B (MBIA Insured) 5.25 2014 1,000,000 964,240
Los Angeles County Transportation Commission
Sales Tax Refunding Revenue Bonds Series A 7.00 2019 4,150,000 4,458,843
Los Angeles County Transportation Commission
Sales Tax Pre-Refunded Revenue Bonds Series A 8.00 2016 2,000,000 2,084,980
Los Angeles County Transportation Commission
Sales Tax Pre-Refunded Revenue Bonds
Series 1988A 7.875 2008 500,000 538,850
Los Angeles County Transportation Commission
Sales Tax Refunding Revenue Bonds
Series 1989A 7.40 2015 2,000,000 2,173,480
Los Angeles Department of Water & Power
Electric Plant Revenue Bonds Series 1990 7.125 2030 6,500,000 7,156,955
Los Angeles Department of Water & Power
Waterworks Refunding Revenue Bonds
Second Issue (Secondary FGIC Insured) 4.50 2018 3,000,000 2,554,950
Los Angeles International Airport Revenue Bonds
Series D (FGIC Insured) A.M.T. 5.50 2015 1,000,000 989,670
Los Angeles Multi-family Housing Revenue Bonds
Park Parthenia Series 1986A
(GNMA Insured) A.M.T. 7.40 2022 1,000,000 1,030,630
Los Angeles Single Family Home Mortgage Revenue Bonds
Series 1991A (GNMA & FNMA Insured) A.M.T. 6.875 2025 810,000 838,480
Los Angeles State Building Authority
Lease Pre-Refunded Revenue Bonds
State Department of General Services Lease
Series 1988A 7.25 2006 1,500,000 1,591,320
Los Angeles State Building Authority
Lease Pre-Refunded Revenue Bonds
State Department of General Services Lease
Series 1988A 7.50 2011 1,500,000 1,595,565
Los Angeles State Harbor Revenue Bonds
Series 1996B A.M.T. 5.375 2023 1,300,000 1,230,242
Los Angeles State Harbor Revenue Bonds
Escrowed to Maturity 7.60 2018 1,000,000 1,233,870
Los Angeles Unified School District
Certificate of Participation
Series 1996A (FSA Insured) 5.50 2016 1,375,000 1,356,946
Los Angeles Wastewater System
Pre-Refunded Revenue Bonds Series 1987 8.125 2017 1,000,000 1,057,960
Los Angeles Wastewater System
Refunding Revenue Bonds Series D (FGIC Insured) 4.70 2017 1,000,000 881,110
Modesto Certificate of Participation Pre-Refunded Bonds
Community Center 8.10 2015 1,000,000 1,057,750
Mount Diablo Hospital District Hospital
Pre-Refunded Revenue Bonds
Series 1990A (AMBAC Insured) 7.00 2017 3,000,000 3,343,230
North City West Community School Facility
Authority Special Tax
Refunding Revenue Bonds Series 1995B (CGIC Insured) 5.75 2015 1,000,000 1,008,370
Northern California Public Power Authority Power
Pre-Refunded Revenue Bonds Hydroelectric
Series 1986B-3 8.00 2024 2,000,000 2,123,160
Northern California Public Power Authority Power
Pre-Refunded Revenue Bonds Hydroelectric #1
Series 1986B-1 8.00 2024 2,100,000 2,229,318
Northern California Transmission Agency
California-Oregon Transmission
Pre-Refunded Revenue Bonds
Series 1990A (MBIA Insured) 7.00 2024 2,000,000 2,201,100
Northern California Transmission
Select Auction Variable Rate Security &
Residual Interest Revenue Bonds Inverse Floater
(MBIA Insured) 5.50 2024 4,500,000(f) 4,321,575
Novato Community Facility District #1 Vintage Oaks
Public Improvement Special Tax Refunding Bonds 7.25 2021 2,000,000 2,092,540
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A 6.15 2012 1,895,000 1,952,513
Port of Oakland Revenue Bonds
Series 1989A (BIG Insured) A.M.T. 7.60 2016 500,000 515,655
Rancho Cucamonga Redevelopment Agency
1990 Tax Allocation Pre-Refunded Bonds
(MBIA Insured) 7.125 2019 3,540,000 3,879,309
Rancho Mirage Joint Powers Finance Authority
Certificate of Participation Eisenhower Memorial Hospital 7.00 2022 4,250,000 4,601,135
Redding Redevelopment Agency Tax Allocation
Refunding Bonds Canby Hilltop Cypress
Series D (CGIC Insured) 5.00 2023 4,700,000 4,245,463
Richmond Elementary School District
Lassen County General Obligation Bonds
Series 1996 Election Bank Qualified 6.50 2021 649,000 648,955
Richmond Joint Powers Financing Authority Leases and
Gas Tax Refunding Revenue Bonds Series 1995A 5.25 2013 3,540,000 3,332,131
Sacramento Cogeneration Authority
Cogeneration Revenue Bonds
Procter & Gamble Series 1995 6.375 2010 1,000,000 1,044,750
Sacramento Municipal Utility District Series R 6.00 2015-17 7,500,000 7,501,020
Sacramento Municipal Utility District Pre-Refunded Series V 7.50 2018 2,775,000 2,937,587
Sacramento Municipal Utility District Pre-Refunded Series W 7.50 2018 1,980,000 2,096,008
Sacramento Municipal Utility District Pre-Refunded Series Y
(MBIA Insured) 6.75 2019 3,400,000 3,805,858
Sacramento Power Authority Cogeneration
Revenue Bonds Series 1995 6.00 2022 1,000,000 1,002,470
San Diego County Capital Asset Lease
Certificate of Participation
Series 1993 Inverse Floater (AMBAC Insured) 7.27 2007 3,200,000(f) 3,448,000
San Diego Regional Transportation Commission Sales Tax
Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25 2008 5,030,000 5,274,156
San Joaquin County Pre-Refunded Certificate of Participation
Human Services Facility Series 1989 (BIG Insured) 6.70 2009 3,500,000 3,776,605
San Joaquin County Certificate of Participation
Jail & Sheriffs Operation Center (MBIA Insured) 6.75 2015 2,000,000 2,181,420
San Jose Redevelopment Agency Merged Area
RedevelopmentTax Allocation Bonds
Series 1993 (MBIA Insured) 4.75 2024 3,055,000 2,649,938
San Jose Redevelopment Agency Merged Area
Tax Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured) 6.627 2014 3,000,000(f) 2,838,750
San Mateo County Transit District Limited Tax
Pre-Refunded Bonds Series 1990A (MBIA Insured) 6.50 2020 1,500,000 1,590,825
Santa Clara County Mountain View-
Los Altos Union High School District Unlimited Tax
General Obligation Bonds Series A 5.75 2015 1,200,000 1,209,396
Santa Cruz Certificate of Participation 8.375 2007 1,220,000 1,270,398
Southern California Home Financing Authority
Single Family Mortgage Revenue Bonds 1990B
(GNMA Insured) A.M.T. 7.75 2024 575,000 608,488
Southern California Public Power Authority Transmission
Special Bonds 6.00 2012 2,700,000 2,765,367
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds Series 1995B 6.25 2020 2,700,000 2,722,815
State Department Water Resources Water System
Pre-Refunded Revenue Bonds Central Valley
Series D 7.70 2024 2,400,000 2,527,080
State Department Water Resource Water System
Revenue Bonds Central Valley Project Series L 5.50 2023 3,000,000 2,929,860
State Education Facility Authority Revenue Bonds
Pomona College 6.00 2017 3,000,000 3,064,170
State Health Facility Finance Authority Pre-Refunded
Revenue Bonds St. Joseph Health System Series 1989A 6.90 2014 3,500,000 3,792,985
State Housing Finance Agency Home Mortgage Revenue Bonds
Series 1986B 6.90 2016 1,990,000 2,032,526
State Pollution Control Finance Authority Pollution Control
Revenue Bonds Southern California Edison
Series 1988A A.M.T. 6.90 2006 2,000,000 2,133,580
State Public Works Board Lease Revenue Bonds
California Community Colleges Series 1994B 7.00 2019 2,000,000 2,336,340
State Public Works Board Lease Revenue Bonds
Department of Corrections
Substance Abuse Treatment Facility &
State Prison at Corcoran
Series 1996A (AMBAC Insured) 5.25 2021 1,870,000 1,786,542
State Public Works Board University of California Lease
Pre-Refunded Revenue Bonds Series 1990A 7.00 2015 2,250,000 2,503,755
State Unlimited Tax General Obligation Bonds
(Secondary FGIC Insured) 4.75 2023 1,325,000(g) 1,151,769
Statewide Community Development Authority
Certificate of Participation Sutter Health Group
(MBIA Insured) 5.50 2022 1,000,000 974,470
Statewide Community Development Authority
Health Facilities Revenue Bonds
Unihealth America Series 1993A
Inverse Floater (AMBAC Insured) 7.519 2011 5,000,000(f) 5,300,000
Statewide Community Development Authority Revenue
Certificate of Participation
St. Joseph Health System Group 6.50 2015 5,500,000 5,902,765
Stockton Single Family Mortgage Revenue Bonds
Series 1990A (GNMA Insured) A.M.T. 7.50 2023 110,000 115,710
University of Southern California Educational
Facilities Authority Pre-Refunded Revenue Bonds
Series 1989B 6.75 2015 5,000,000 5,397,650
Upland Certificate of Participation Water System
Refunding Bonds (FGIC Insured) 6.60 2016 1,000,000 1,091,210
Vacaville Limited Obligation Improvement Bonds
Water Rights Assessment District 8.00 2007 750,000 773,963
Watsonville Solid Waste Resource Recovery
Revenue Bonds Series 1996 (MBIA Insured) 5.50 2016 1,775,000 1,758,191
- -----------------------------------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $ 219,816,196) $ 239,704,961
- -----------------------------------------------------------------------------------------------------------------------------------
Total investments in securities
(Cost: $219,816,196)(i) $ 239,704,961
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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,
area as follows:
(Unaudited)
Rating 12-31-96 6-30-96
- --------------------------------------------------------------------------------
AAA 60% 59%
AA 19 19
A 11 13
BBB 7 7
BB and below 3 2
Non-rated -- --
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviation is used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of Dec. 31, 1996, the value of
securities subject to alternative minimum tax represented 6.1%
of net assets.
(e) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the
date of acquisition to interest reset date disclosed.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed
is the rate in effect on Dec. 31, 1996. Inverse floaters in the aggregate
represent 6.5% of the Fund's net assets as of Dec. 31, 1996.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
------------------------------------------------------------
Municipal Bonds Index March 1997 $3,200,000
------------------------------------------------------------
(h) For zero coupon bonds, the interest rate disclosed represents the
annualized effective yield on the date of acquisition.
(i) At Dec.31, 1996, the cost of securities for federal income tax purposes was
approximately $219,583,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $20,312,000
Unrealized depreciation (190,000)
----------------------------------------------------------------------
Net unrealized appreciation $ 20,122,000
----------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
IDS Massachusetts Tax-Exempt Fund (Percentages represent value of
Dec. 31, 1996 (Unaudited) investments compared to net assets)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (97.6%)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of issuer
<CAPTION>
and title of issue (b,c,d) Coupon Maturity Principal Value(a)
rate year amount
<S> <C> <C> <C> <C>
Bay Transit Authority Series A (Secondary CGIC Insured) 5.50 % 2021 $ 500,000 $ 484,375
Bay Transportation Authority General Transportation System
Refunding Bonds Series 1992B 6.20 2016 1,500,000 1,627,020
Boston City Hospital Refunding Revenue Bonds
Series B (FHA Insured) 5.75 2023 3,000,000 (f) 2,901,450
Boston City Hospital Pre-Refunded Revenue Bonds
Series A (FHA Insured) 7.625 2021 1,000,000 1,126,780
Boston General Obligation Bonds
Series 1991A (MBIA Insured) 6.75 2011 500,000 555,505
Boston General Obligation Refunding Bonds
Series 1993A (AMBAC Insured) 5.65 2009 1,500,000 (f) 1,543,020
Boston Industrial Development Financing Authority
Revenue Bonds Massachusetts College of Pharmacy
Series 1993A (Connie Lee Insured) 5.25 2026 1,000,000 923,710
Boston Water & Sewer Commission
General Pre-Refunded Revenue Bonds
Senior Series 1991A (FGIC Insured) 7.00 2018 1,000,000 1,127,750
Boston Water & Sewer Commission
General Subordinate Revenue Bonds Series A
(MBIA Insured) 6.00 2008 500,000 508,880
Commonwealth General Obligation Consolidated Loan
Pre-Refunded Bonds
Series 1990A (FGIC Insured) 7.25 2009 500,000 552,610
Fall River General Obligation Refunding Bonds
Series 1996 (MBIA Insured) 5.25 2010 1,000,000 981,090
Greater Lawrence Sanitary District North Andover
General Obligation Bonds 8.50 2005 510,000 533,664
Health & Educational Facilities Authority Refunding
Revenue Bonds Beth Israel Hospital Series 1989E 7.00 2009-14 550,000 585,445
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series A (MBIA Insured) 7.50 2008 500,000 539,110
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems Series C 5.90 2011 1,000,000 956,280
Health & Educational Facilities Authority Pre-Refunded
Revenue Bonds Beverly Hospital Series D (MBIA Insured) 7.30 2019 400,000 436,648
Health & Educational Facilities Authority Revenue Bonds
Boston College Series J (FGIC Insured) 6.625 2021 2,000,000 2,174,220
Health & Educational Facilities Authority Revenue Bonds
Boston College Series K 5.25 2023 1,000,000 936,300
Health & Educational Facilities Authority Revenue Bonds
Brigham & Women's Hospital Series C 6.75 2021 500,000 526,075
Health & Educational Facilities Authority Revenue Bonds
Brigham & Women's Hospital Series 1991D 6.75 2024 1,000,000 1,071,110
Health & Educational Facilities Authority Revenue Bonds
Cape Cod Health System Series A (Connie Lee Insured) 5.25 2021 2,500,000 2,329,250
See accompanying notes to investments in securities.
Health & Educational Facilities Authority Revenue Bonds
Charlton Memorial Hospital Series 1991B 7.25 2013 1,750,000 1,892,223
Health & Educational Facilities Authority Revenue Bonds
Cooley Dickinson Hospital Issue (AMBAC Insured) 5.50 2025 1,250,000 1,209,550
Health & Educational Facilities Authority Revenue Bonds
Holyoke Hospital Series B 6.50 2015 1,000,000 986,570
Health & Educational Facilities Authority Pre-Refunded
Revenue Bonds Lahey Clinic Medical Center
Series A (MBIA Insured) 7.625 2018 500,000 536,320
Health & Educational Facilities Authority Revenue Bonds
Lahey Clinic Medical Center Series B (MBIA Insured) 5.625 2015 1,000,000 985,880
Health & Educational Facilities Authority Revenue Bonds
Melrose-Wakefield Hospital Series 1992B 6.375 2016 1,000,000 1,027,850
Health & Educational Facilities Authority Revenue Bonds
Morton Hospital & Medical Center
Series B (Connie Lee Insured) 5.25 2014 1,000,000 958,050
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Mount Auburn Hospital
Series A (MBIA Insured) 7.875 2018 205,000 220,615
Health & Educational Facilities Authority Revenue Bonds
New England Deaconess Hospital Series 1992D 6.625 2012 1,000,000 1,051,770
Health & Educational Facilities Authority Revenue Bonds
Newton Wellesley Hospital Series 1991D (MBIA Insured) 7.00 2015 1,000,000 1,105,970
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Northeastern University
Series 1989C (AMBAC Insured) 7.10 2006 1,000,000 1,082,520
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds Northeastern University
Series E (MBIA Insured) 6.55 2022 1,000,000 1,096,330
Health & Educational Facilities Authority Revenue Bonds
North Adams Regional Hospital Series 1 6.625 2018 1,000,000 1,002,390
Health & Educational Facilities Authority Revenue Bonds
South Shore Hospital Series 1992D (MBIA Insured) 6.50 2022 1,000,000 1,075,580
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds
Stonehill College Series 1990D (AMBAC Insured) 7.70 2020 1,000,000 1,127,320
Health & Educational Facilities Authority Revenue Bonds
Suffolk University Series B (Connie Lee Insured) 6.35 2022 2,495,000 2,627,035
Health & Educational Facilities Authority
Pre-Refunded Revenue Bonds
Wentworth Institute of Technology
Series A (AMBAC Insured) 7.40 2010 750,000 833,663
Health & Educational Facilities Authority Revenue Bonds
Valley Regional Health System
Series C (Connie Lee Insured) 5.75 2018 1,000,000 998,780
Health & Educational Facilities Authority Revenue Bonds
Wentworth Institute of Technology
Series B (Connie Lee Insured) 5.50 2023 1,500,000 1,411,380
Industrial Finance Agency Assumption College Revenue Bonds
Series 1996 (Connie Lee Insured) 6.00 2026 1,000,000 1,024,210
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds
Eastern Edison Series 1993 5.875 2008 2,000,000 1,961,580
Industrial Finance Agency Resource Recovery Revenue Bonds
Ogden Haverhill Series 1986A (AMBAC Insured) A.M.T. 7.375 2011 175,000 179,011
Industrial Finance Agency Resource Recovery Revenue Bonds
SEMASS Series 1991A 9.00 2015 1,500,000 1,671,120
Industrial Finance Agency Revenue Bonds
Museum of Science
Series 1989 (FSA Insured) 7.30 2009 1,000,000 1,100,830
Leominster General Obligation Bonds (MBIA Insured) 7.50 2009 1,000,000 1,113,260
Mansfield General Obligation Bonds (AMBAC Insured) 6.70 2011 1,000,000 1,094,690
Municipal Wholesale Electric Power Supply System
Pre-Refunded Revenue Bonds Series 1992B 6.75 2017 1,395,000 1,566,822
Municipal Wholesale Electric Power Supply System
Refunding Revenue Bonds Series B (MBIA Insured) 4.75 2011 1,750,000 1,605,258
Municipal Wholesale Electric Power
Supply System Revenue Bonds
Special Pars & Inflows (AMBAC Insured) 5.45 2018 1,600,000 1,527,920
Nantucket General Obligation Bonds 6.80 2011 1,000,000 1,094,160
New Bedford General Obligation Bonds
Series 1995 (AMBAC Insured) 5.50 2015 700,000 690,263
North Andover General Obligation Bonds (MBIA Insured) 7.35 2008 310,000 346,003
Port Authority Revenue Bonds
Series 1990A (FGIC Insured) A.M.T. 7.50 2020 1,000,000 1,100,260
Southeastern University Building Refunding Revenue Bonds
Series A (AMBAC Insured) 5.75 2016 1,250,000 1,264,450
Southern Berkshire Regional School District Unlimited Tax
General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.55 2010 1,000,000 1,117,000
State Education Loan Authority
Educational Loan Revenue Bonds
Issue E Series B (AMBAC Insured) A.M.T. 6.00 2012 1,000,000 1,025,460
State General Obligation Consolidated Loan Bonds
Series 1991A (FGIC Insured) 6.00 2011 1,095,000 1,164,138
State Housing Finance Agency Single Family Housing
Revenue Bonds Series 13 A.M.T. 7.95 2023 475,000 508,022
State Housing Finance Authority Residential
Development Bonds Series 1992A (FNMA Insured) 6.875 2011 1,000,000 1,065,550
State Housing Finance Authority
Single Family Mortgage Housing Revenue Bonds Series 4 7.375 2014 430,000 (f) 441,038
State Housing Finance Authority
Single Family Mortgage Housing Revenue Bonds Series 7 A.M.T. 8.10 2020 245,000 255,109
State Water Resource Authority Revenue Bonds
Series A (Secondary MBIA Insured) 5.50 2022 1,100,000 1,060,532
University of Lowell Building Authority Facilities Revenue Bonds
4th Series A 7.40 2007 125,000 131,317
University of Lowell Building Authority Facilities Revenue Bonds
4th Series A 7.60 2012 50,000 52,608
University of Massachusetts Building Authority Revenue Bonds
Series A (FSA Insured) 7.50 2014 500,000 533,480
University of Massachusetts Building Authority Revenue Bonds
Series A Escrowed to Maturity 7.50 2011 120,000 135,936
Water Resource Authority General Pre-Refunded Revenue Bonds
Series 1990A 7.625 2014 500,000 559,155
Water Resource Authority General Pre-Refunded Revenue Bonds
Series 1991A 6.50 2019 1,000,000 1,108,040
Water Resource Authority General Revenue Bonds
Series 1993B (MBIA Insured) 5.00 2022 1,365,000 1,238,000
Water Resource Authority General Revenue Bonds
Series 1993C 5.25 2020 1,400,000 1,309,560
Worcester General Obligation Refunding Bonds
Series 1995G (MBIA Insured) 5.30 2015 1,000,000 974,700
- ------------------------------------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $69,082,326) $73,669,570
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Short-term security (0.4%)
- --------------------------------------------------------------------------------
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
- --------------------------------------------------------------------------------
Municipal note
State General Obligation Series B V.R.
12-01-97 4.80% $300,000 $300,000
- --------------------------------------------------------------------------------
Total short-term security
(Cost: $300,000) $300,000
- --------------------------------------------------------------------------------
Total investments in securities
(Cost: $69,382,326)(g) $73,969,570
- --------------------------------------------------------------------------------
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:
Rating 12-31-96 06-30-96
- --------------------------------------------------------------------------------
AAA 66% 66%
AA 9 9
A 15 16
BBB 8 7
BB and below 2 2
Non-rated -- --
Total 100% 100%
----------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
AMT -- Alternative Minimum Tax -- As of Dec. 31, 1996, the value of
securities subject to alternative tax represented 4.1% of net
assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
Dec. 31, 1996.
(f) Partially or fully pledged as initial deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
- --------------------------------------------------------------------------------
Municipal Bonds Index March 1997 $900,000
- --------------------------------------------------------------------------------
(g) At Dec. 31, 1996, the cost of securities for federal income tax purposes was
approximately $69,334,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $4,841,000
Unrealized depreciation (205,000)
- --------------------------------------------------------------------------------
Net unrealized appreciation $4,636,000
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
IDS Michigan Tax-Exempt Fund (Percentages represent value of
Dec. 31, 1996 (Unaudited) investments compared to net assets)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (98.2%)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Name of issuer and Coupon Maturity Principal Value(a)
title of issue (b,c,d) rate year amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albion Public School District Unlimited Tax General Obligation Bonds 5.125% 2021 $1,000,000 $ 923,380
Auburn Hills Limited Tax General Obligation
Street Improvement Bonds 6.00 2004 200,000 (f) 207,040
Battle Creek Calhoun County
Downtown Development Authority Bonds Series 1994 7.65 2022 1,250,000 1,418,112
Battle Creek Water Supply System
Pre-Refunded Revenue Bonds Series 1990B 6.375 2008-10 1,640,000 1,733,234
Buena Vista School District Saginaw County
School Building & Site Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1991 7.20 2016 1,500,000 (f) 1,688,145
Chelsea General Pre-Refunded Obligation Bonds (MBIA Insured) 8.20 2006 145,000 154,212
Comstock Park Public School Kent County Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1989 6.00 2016 400,000 422,896
Comstock Park Public School Kent County Unlimited Tax
General Obligation Pre-Refunded Bonds Series 1989 6.875 2010 260,000 279,885
Detroit General Obligation Pre-Refunded Bonds
Distributable State Aid Series 1989 (AMBAC Insured) 7.20 2009 1,000,000 1,085,730
Detroit Sewer Disposal Pre-Refunded Revenue Bonds 8.00 2008 500,000 520,705
Detroit Sewer Disposal Revenue Bonds
(FGIC Insured) 5.70 2023 2,000,000 (f) 1,967,780
Detroit Unlimited Tax General Obligation Bonds Pre-Refunded Series A 7.25 2009 1,000,000 1,082,730
Detroit Unlimited Tax General Obligation Bonds Pre-Refunded Series A 8.625 2007 100,000 103,200
Detroit Unlimited Tax General Obligation Bonds Pre-Refunded Series 1988A 7.875 2008 700,000 746,592
Detroit Unlimited Tax General Obligation Bonds Series A (FGIC Insured) 5.50 2016 1,000,000 979,000
Detroit Unlimited Tax General Obligation Bonds Series 1995A 6.80 2015 1,000,000 1,135,010
Detroit Downtown Development Authority Development Area
Project #1 Tax Increment Series 1996D
(Junior Lien) 6.50 2025 1,000,000 1,022,760
Detroit Water Supply System Revenue Second Lien
Bonds Series 1995A (MBIA Insured) 5.50 2025 1,500,000 1,472,475
Detroit Water Supply System Pre-Refunded Revenue Bonds
Series 1988 (MBIA Insured) 7.875 2008 400,000 430,592
East Lansing School District School Building & Site
Unlimited Tax General Obligation Pre-Refunded Bonds Series 1991 6.625 2014 1,000,000 1,100,270
Farmington Hills Hospital Finance Authority
Revenue Bonds Botsford General Hospital
Series 1992A (MBIA Insured) 6.50 2022 1,500,000 1,608,255
Ferris State University Board of Trustees
General Revenue & Refunding Bonds
Series 1995 (MBIA Insured) 5.25 2020 1,000,000 949,210
Forest Hills School District Unlimited Tax
General Obligation Pre-Refunded Bonds 7.375 2015 1,000,000 1,101,500
Frenchtown Resort Drainage District Monroe County Drain
Pre-Refunded Revenue Bonds Series 1987 7.50 2011-12 615,000 669,624
See accompanying notes to investments in securities.
<PAGE>
Garden City School District Authority
Pre-Refunded Revenue Bonds 7.80 2010 305,000 329,537
Genesee County General Obligation Bonds Sewer Disposal System
Series A (AMBAC Insured) 5.40 2015 1,400,000 1,372,826
Grand Ledge Public Schools Unlimited Tax General Obligation
Refunding Bonds Counties of Eaton, Clinton & Ionia
Series 1995 (MBIA Insured) 5.375 2024 2,000,000 1,926,400
Grand Rapids Community College Limited Tax General Obligation Bonds
Series 1996 (MBIA Insured) 5.375 2019 1,000,000 971,440
Grand Rapids Tax Increment Revenue Bonds
Series 1994 (MBIA Insured) 6.875 2024 380,000 425,927
Grand Rapids Water Supply System Improvement
Pre-Refunded Revenue Bonds Series 1988 7.875 2018 700,000 742,028
Grand Rapids Water Supply System Improvement
Pre-Refunded Revenue Bonds Series 1990 (FGIC Insured) 7.25 2020 1,250,000 1,375,875
Inkster School District Unlimited Tax General Obligation
Pre-Refunded Bonds (AMBAC Insured) 7.00 2018 450,000 493,034
Isoco County Water Supply System Limited Tax
General Obligation Bonds (AMBAC Insured) 5.50 2008-10 575,000 588,831
Kent County Hospital Pre-Refunded Revenue Bonds
Butterworth Hospital Series 1989A 7.25 2013 500,000 539,975
Kent County Refuse Disposal System Limited Tax
General Obligation Refunding Bonds Series 1987 8.40 2010 150,000 158,292
Lake Orion School District General Obligation Bonds
(AMBAC Insured) 5.50 2020 1,000,000 983,150
Lincoln Park School Distict Wayne County School Building & Site
Unlimited Tax General Obligation Bonds (FGIC Insured) 5.90 2026 1,000,000 1,025,680
Marquette Hospital Finance Authority Pre-Refunded Revenue Bonds
Marquette General Hospital Series 1989C 7.50 2007-19 825,000 898,565
Mason Public Schools Unlimited Tax General Obligation Bonds
County of Ingham School Building & Site Bonds
Series 1995 (FGIC Insured) 5.40 2021 1,760,000 1,704,314
Monroe County Pollution Control Revenue Bonds Detroit Edison
Fermi Plants Series 1990I (FGIC Insured) A.M.T. 7.65 2020 1,000,000 1,108,630
Monroe County Pollution Control Revenue Bonds Detroit Edison
Fermi 2 Plants Series CC (AMBAC Insured) A.M.T. 7.50 2019 1,750,000 1,932,420
Muskegon Hospital Finance Authority Refunding Revenue Bonds
Hackley Hospital Series 1988A 8.00 2008 400,000 420,188
Northville Public Schools Unlimited Tax
General Obligation Bonds Series 1991B 7.00 2008 1,500,000 1,666,365
Ovid-Elsie School District Unlimited Tax
General Obligation Bonds (Secondary MBIA Insured) 5.60 2021 1,000,000 986,840
Redford General Obligation Bonds (MBIA Insured) 5.25 2016 1,450,000 1,400,483
Richmond Limited Obligation Refunding Revenue Bonds
K mart Series A 6.625 2007 530,000 528,659
Rochester Hill Unlimited Tax General Obligation Bonds
Series 1990A 6.00 2009-10 735,000 757,667
Rockford Public Schools Kent County Unlimited Tax
General Obligation Pre-Refunded Revenue Bonds 7.375 2019 1,000,000 1,101,500
Romulus Township School District Unlimited Tax
General Obligation Refunding Bonds (FGIC Insured) 5.75 2022 2,500,000 2,512,925
St. Louis Public Schools Unlimited Tax
General Obligation Refunding Revenue Bonds
Counties of Gratiot, Midland & Isabella Series 1995 (FGIC Insured) 5.25 2024 755,000 717,167
Schoolcraft Community School District County of Kalamazoo School Building
and Site Unlimited General Obligation Bonds Series 1996 (FGIC Insured) 5.375 2026 1,000,000 964,900
South Lake District Unlimited Tax General Obligation Pre-Refunded Bonds 6.80 2010 355,000 392,516
South Redford School District Unlimited General Obligation Bonds
Series 1996 (FGIC Insured) 5.50 2022 1,000,000 982,480
State Building Authority Refunding Revenue Bonds Series 1991I 6.25 2020 2,200,000 2,277,990
State Hospital Finance Authority Revenue Bonds
<PAGE>
St. Johns Hospital & Medical Center (AMBAC Insured) 5.25 2026 1,400,000 1,331,610
State Hospital Finance Authority Revenue Bonds
Central Michigan Community Hospital 6.25 2027 1,000,000 984,040
State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds
Detroit Medical Center Series 1988A 8.125 2012 310,000 335,417
State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds
McLaren Obligated Group Series 1991A 7.50 2021 1,750,000 2,000,233
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Detroit Medical Center Series A 6.25 2013 1,200,000 1,234,500
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Detroit Medical Center Series 1988A 8.125 2012 90,000 96,261
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Detroit Medical Center Pre-Refunded Series 1988B 8.00 2008 500,000 540,040
State Hospital Finance Authority Hospital Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995 6.70 2026 1,000,000 1,011,010
State Hospital Finance Authority Pre-Refunded Revenue Bonds
Oakwood Hospital Group Series 1990A (FGIC Insured) 7.10 2018 1,000,000 1,105,600
State Hospital Finance Authority Pre-Refunded Revenue Bonds
Henry Ford Hospital Series 1990A 7.00 2010 1,000,000 1,102,380
State Hospital Finance Authority Revenue Bonds
Presbyterian Villages of Michigan Obligated Group
Series 1995 6.50 2025 1,000,000 1,006,400
State Public Power Agency Belle River
Refunding Revenue Bonds Series A 5.25 2018 1,000,000 937,170
State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds
Detroit Edison Series 1990BB (MBIA Insured) 7.00 2008 1,000,000 1,162,260
State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds
Detroit Edison Series 1992BB (FGIC Insured) 6.50 2016 1,500,000 1,613,865
State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds
Escrowed to Maturity Oxford Institute 7.875 2005 150,000 170,553
State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds
Ford Motor Series 1991A 7.10 2006 1,650,000 (f) 1,890,669
State Strategic Fund Limited Tax Obligation Revenue Bonds
Great Lakes Pulp & Fibre A.M.T. 10.25 2016 1,000,000 567,490
State Trunk Line Bonds Series A (FGIC Insured) 5.75 2020 1,065,000 1,071,294
State University Revenue Bonds Series A 5.50 2022 560,000 537,690
Taylor Tax Increment Finance Authority Bonds
Series 1989A (MBIA Insured) 6.00 2007-09 1,205,000 1,232,267
Troy City Downtown Development Authority County of Oakland
Development Bonds Series 1995A (Asset Guaranty) 6.375 2018 1,500,000 1,583,340
Van Buren Township Tax Increment Revenue Bonds
Series 1994 8.40 2016 1,000,000 1,126,920
Waterford School District Unlimited Tax General Obligation Bonds
Series Q 6.25 2013 340,000 352,777
Wayne County Airport Revenue Bonds Detroit Metropolitan Airport
Series 1990A (AMBAC Insured) A.M.T. 7.00 2020 1,080,000 1,180,580
Willow Run Community Schools Unlimited General Obligation Refunding Bonds
Series 1996 (AMBAC Insured) 5.00 2016 2,000,000 1,872,680
Wyandotte Electric Pre-Refunded Revenue Bonds
Series 1987 (AMBAC Insured) 7.875 2017 300,000 315,441
- ------------------------------------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $74,381,261) $80,451,428
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Short-term security (0.2%)
- --------------------------------------------------------------------------------
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
- --------------------------------------------------------------------------------
Municipal note
State Strategic Fund Consumer Power Company
Series 1988A V.R.
04-15-18 4.95% $200,000 $ 200,000
- --------------------------------------------------------------------------------
Total short-term security
(Cost: $200,000) $ 200,000
- --------------------------------------------------------------------------------
Total investments in securities
(Cost: $74,581,261)(g) $80,651,428
- --------------------------------------------------------------------------------
<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 12-31-96 06-30-96
----------------------------------------------------------------------------
AAA 73% 71%
AA 11 12
A 5 6
BBB 10 9
BB and below 1 2
Non-rated -- --
----------------------------------------------------------------------------
Total 100% 100%
----------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
FGIC -- Financial Guarantee Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviations are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax - As of Dec. 31, 1996, the value of
securities subject to alternative minimum tax represented
5.8% of net assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
marturity date disclosed reporsents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
Dec. 31, 1996.
(f) Partially or fully pledged as initial deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
Purchase contracts
--------------------------------------------------------------------------
Municipal Bonds Index March 1997 $1,000,000
--------------------------------------------------------------------------
(g) At Dec. 31, 1996, the cost of securities for federal income tax purposes was
approximately $74,538,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $6,548,000
Unrealized depreciation (435,000)
--------------------------------------------------------------------------
Net unrealized appreciation $6,113,000
--------------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
(Percentages represent value of
IDS Minnesota Tax-Exempt Fund investments compared to net assets)
Dec. 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (100.0%)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Name of issuer and Coupon Maturity Principal Value(a)
title of issue (b,c,d) rate year amount
- ------------------------------------------------------------------------------------------------------------------------------------
Anoka County General Obligation Capital Improvement
<S> <C> <C> <C> <C>
Revenue Bonds Series 1989B 7.00 % 2007-10 $7,950,000 $8,329,374
Anoka County Resource Recovery Revenue Bonds
Northern States Power Series 1985 7.15 2008 3,750,000 4,013,063
Becker Pollution Control Revenue Bonds
Northern States Power Sherburne County
Generating Station Units 1 & 2 Series 1987A 7.25 2005 2,000,000 2,004,500
Becker Solid Waste Disposal Facility
Revenue Bonds Liberty Paper Series 1994B A.M.T. 9.00 2015 3,825,000 4,029,791
Bemidji Hospital Facilities 1st Mortgage Revenue Bonds
North Country Health Services Series 1991 7.00 2021 1,755,000 1,967,776
Bloomington Community Development
Refunding Revenue Bonds Note 24th Avenue Motel 8.50 2005 1,776,938 1,794,708
Brooklyn Center Tax Credit Investor Refunding Revenue Bonds
Four Courts Apartment Project Series 1995B A.M.T. 7.58 2009 2,450,000 2,471,977
Burnsville Multi-family Housing
Refunding Revenue Bonds
FHA-Summit Park Apartments Series 1993 6.00 2033 4,000,000 4,015,840
Columbia Heights Multi-family Housing Revenue Bonds
Crestview Lutheran Home Royce Place Series 1991 10.00 2032 560,000 597,402
Columbia Heights Multi-family Housing Revenue Bonds
Crestview Lutheran Home Royce Place
Series 1991 (FHA Insured) 7.75 2032 2,730,000 2,859,893
Duluth Economic Development Authority
Health Care Facility Pre-Refunded Revenue Bonds
Benedictine Health System
St. Mary's Medical Center Series 1990 8.375 2020 2,000,000 2,266,840
Duluth Hospital Facilities St. Lukes Hospital
Pre-Refunded Revenue Bonds Series 1988 9.00 2018 2,500,000 2,712,575
Duluth Housing and Redevelopment Authority 1st Mortgage
Revenue Bonds Lakeshore Lutheran Home 8.25 2009 125,000 125,219
Eden Prairie Housing Development Refunding Revenue Bonds
Eden Commons Series 1990 (FHA Insured) 8.25 2025 6,230,000 6,377,215
Edina Hospital System Revenue Bonds
Fairview Hospital & Health Care Services
Series 1989A 7.125 2019 2,500,000 2,667,000
Edina Multi-family Housing Revenue Bonds
Walker Assisted Living Series 1991 9.00 2031 6,700,000 7,352,044
Faribault Rice & Goodhue County
Independent School District #656
General Obligation School Building Bonds
Series 1995 (CGIC Insured) 5.75 2015 6,900,000 7,016,127
Faribault Single Family Mortgage
Refunding Revenue Bonds Series 1991A 7.50 2011 1,985,000 2,080,359
See accompanying notes to investments in securities.
Farmington Independent School District #192
Unlimited General Obligation Bonds
Series 1994 (AMBAC Insured) 5.125 2015 1,000,000 956,230
Farmington Independent School District #192
Series A (FSA Insured) 5.30 2020 2,500,000 2,405,850
Fergus Falls Health Care Facilities Revenue Bonds
LRHC Long-Term Care Facility Series 1995 6.50 2025 1,500,000 1,528,650
Hennepin County Lease Revenue
Certificate of Participation
Series 1991 6.80 2017 7,250,000 7,856,390
Hopkins Revenue Bonds Blake School 6.70 2024 3,120,000 3,439,457
Hubbard County Solid Waste Disposal Revenue Bonds
Potlatch Series 1989 A.M.T. 7.375 2013 5,610,000 5,996,529
International Falls Solid Waste Disposal
Revenue Bonds Boise Cascade
Series 1990 A.M.T. 7.75 2015 4,000,000 4,194,760
Little Canada Multi-family Housing Revenue Bonds
Provinces of Little Canada
Series 1996 A.M.T. 7.00 2027 3,885,000 3,846,189
Mahtomedi Multi-family Housing
Briarcliff Revenue Bonds A.M.T. 7.35 2036 2,290,000 2,330,487
Maplewood Care Institute Series 1994 7.75 2024 3,830,000 3,924,907
Maplewood Multi-family Housing
Revenue Bonds Maplewood (FHA Insured) A.M.T. 7.75 2021 2,060,000 2,075,944
Maplewood Multi-family Housing
Carefree Cottages of Maplewood III
Refunding Revenue Bonds Series 1995 A.M.T. 7.20 2032 2,900,000 2,888,864
Minneapolis & St. Paul Housing Board
Multi-family Mortgage Revenue Bonds
GNMA Collateral Mortgage Revenue Loan
Riverside Plaza Series 1988 A.M.T. 8.25 2030 3,945,000 4,137,161
Minneapolis Community Development Agency
Limited Tax Supported Development
Revenue Common Bond Fund
Series 1996-01 6.00 2011 980,000 976,198
Minneapolis General Obligation Refunding Bonds
Sports Arena Series 1996 5.125 2020 4,000,000 3,822,520
Minneapolis General Obligation Bonds
Sports Arena Series 1996 5.20 2024 2,940,000 2,823,047
Minneapolis Hospital Facility
Pre-Refunded Revenue Bonds
Lifespan Incorporated Series 1987A 8.125 2017 3,630,000 3,742,530
Minneapolis Hospital Facility
Pre-Refunded Revenue Bonds
Lifespan Incorporated Series 1989A 7.00 2014 5,000,000 5,464,550
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System Revenue Bonds
Healthspan Series 1993 (AMBAC Insured) 4.75 2018 13,500,000 11,861,370
Minneapolis & St. Paul Housing &
Redevelopment Authority
Health Care System Revenue Bonds
Series 1995A (CGIC Insured) 5.50 2025 2,500,000 2,443,450
Minneapolis Nursing Home Revenue Bonds
Walker Cityview & Southview
Series 1992 8.50 2022 5,460,000 5,880,966
Minnetonka Multi-family Housing
Refunding Revenue Bonds Cedar Hill West
(FHA Insured) 7.75 2026 5,510,000 5,696,183
Minnetonka Multi-family Housing Revenue Bonds
The Cedar Hills Series 1985 Inverse Floater 7.50 2017 500,000 (f) 518,005
New Brighton Tax Credit Investor Revenue Bonds
Polynesian Village Apartments Series 1995B A.M.T. 7.75 2009 2,355,000 2,399,133
North Branch School District
Unlimited Tax General Obligation Bonds
Series 1995A (FGIC Insured) 5.625 2017 500,000 499,080
Northern Municipal Power Agency Electric System
Refunding Revenue Bonds
Series 1989A 7.25 2016 5,475,000 5,815,600
Northern Municipal Power Agency Electric System
Pre-Refunded Revenue Bonds
Series 1989A (AMBAC Insured) 7.40 2018 1,000,000 1,082,780
Northern Municipal Power Agency Electric System
Pre-Refunded Revenue Bonds
Series 1989B (AMBAC Insured) 7.40 2018 1,800,000 1,929,564
North St. Paul General Obligation School Bonds 5.125 2025 3,500,000 3,327,590
Owatanna Public Utilities
Pre-Refunded Revenue Bonds Series 1991 6.75 2016 1,000,000 1,085,720
Plymouth Multi-family Housing Revenue Bonds
Harbor Lane Apartments Series 1993
(Asset Guaranty Insured) A.M.T. 5.90 2013 2,325,000 2,335,742
Richfield Independent School District #280
Unlimited Tax General Obligation
School Building Bonds Series 1993C
Inverse Floater (FGIC Insured) 6.58 2010 3,300,000 (f) 3,312,375
Richfield Independent School District #280
Unlimited Tax General Obligation
School Building Bonds Series 1993C Trust
Inverse Floater (FGIC Insured) 6.675 2012 2,510,000 (f) 2,525,688
Richfield Multi-family Housing
Refunding Revenue Bonds
Village Shores Apartments Project
Series 1996 7.625 2031 3,000,000 3,037,680
Robbinsdale Hospital Pre-Refunded Revenue Bonds
North Memorial Medical Center
Series 1989 (AMBAC Insured) 7.375 2019 2,200,000 2,379,300
Robbinsdale Multi-family Housing Revenue Bonds
Series 1996A A.M.T. 7.35 2031 3,260,000 3,239,429
Rochester Health Care Facility Revenue Bonds
Mayo Foundation Series A 4.95 2019 5,000,000 4,465,750
Rochester Multi-family Housing Development
Revenue Bonds Civic Square
Series 1991 (FHA Insured) A.M.T. 7.45 2031 4,400,000 4,656,564
Roseville Health Care Facility
Refunding Revenue Bonds
Presbyterian Homes of Minnesota Series 1987 7.50 2007 2,250,000 2,304,562
Rush City Independent School District #139
Unlimited Tax School Building
Refunding Bonds School Credit Enhancement Program 5.25 2018 2,595,000 2,543,022
St. Cloud Hospital Facility
Refunding Revenue Bonds Series 1996B (AMBAC Insured) 5.00 2020 3,000,000 2,792,280
St. Cloud Hospital Facility
Refunding Revenue Bonds Series B (AMBAC Insured) 5.00 2012 2,900,000 2,770,457
St. Cloud Hospital Facility Revenue Bonds
St. Cloud Hospital Series 1990B
(AMBAC Insured) 7.00 2020 5,000,000 (h) 5,590,300
St. Cloud Hospital Facility Refunding Revenue Bonds
Series C (AMBAC Insured) 5.30 2020 1,515,000 1,432,766
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group
Series 1993 (AMBAC Insured) 5.20 2023 5,000,000 4,666,750
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group Series 1993B
Inverse Floater (AMBAC Insured) 6.175 2013 7,000,000 (f) 6,247,500
St. Louis Park Health Care Facilities
Pre-Refunded Revenue Bonds
Park Nicollet Medical Center Series 1990A 9.25 2020 4,000,000 4,614,440
St. Louis Park Health Care Facilities
Pre-Refunded Revenue Bonds
Park Nicollet Medical Center Series 1991A 8.625 2021 2,000,000 2,298,700
St. Louis Park Multi-family Housing
Revenue Refunding Bonds
Park Blvd Towers Series 1996A 7.00 2031 3,985,000 4,027,679
St. Louis Park Multi-family Rental Housing
Revenue Bonds Mortgage Loan
Community Housing & Services
Series 1985 (FHA Insured) 7.375 2028 2,250,000 2,329,672
St. Paul & Minneapolis Housing &
Redevelopment Authority Health Care
Facility Revenue Bonds Group Health Plan Series 1992 6.75 2013 10,500,000 (h) 11,395,755
St. Paul Housing & Development Bonds
Highland Retirement (FHA Insured) 7.50 2026 5,210,000 (e) 4,871,350
St. Paul Housing & Redevelopment Authority
Hospital Facility Revenue Bonds
St. Paul Ramsey Medical Center (AMBAC Insured) 5.55 2023 4,000,000 3,902,360
St. Paul Housing & Redevelopment Authority
Commercial Development
Refunding Revenue Bonds Beverly Enterprises
Series 1992 7.75 2002 2,355,000 2,412,745
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center Series 1993A 7.125 2017 1,880,000 1,931,869
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center Series 1993A 9.60 2006 950,000 967,936
St. Paul Housing & Redevelopment Authority
Health Care Facility
Multi-family Rental Housing Revenue Bonds
Lynblomsten 1993B 7.00 2024 1,890,000 1,866,942
St. Paul Housing & Redevelopment Authority
Sales Tax Revenue Bonds
Civic Center (Secondary MBIA Insured) 5.55 2023 7,500,000 7,400,475
St. Paul Housing & Redevelopment Authority
Single Family Mortgage
Refunding Revenue Bonds Middle Income Phase II
FNMA Mortgage Backed 6.80 2028 3,460,000 3,689,467
St. Paul Port Authority Unlimited Tax
General Obligation Bonds 5.125 2024 2,770,000 2,590,892
Shoreview Senior Housing Revenue Bonds
Series 1996 7.25 2026 2,700,000 2,667,519
Southern Minnesota Municipal Power Agency
Power Supply System
Revenue Bonds Zero Coupon
Series 1994A (MBIA Insured) 6.67 2019 19,500,000 (g) 5,626,725
Southern Minnesota Municipal Power Agency
Power Supply System
Revenue Bonds Zero Coupon
Series 1994A (MBIA Insured) 6.88 2022 12,000,000 (g) 2,915,760
Southern Minnesota Municipal Power Agency
Pre-Refunded Bonds Series 1988A 8.125 2018 1,315,000 1,397,056
Southern Minnesota Municipal Power Agency
Pre-Refunded Bonds Series 1988B 8.125 2018 1,000,000 1,062,400
Southern Minnesota Municipal Power Agency
Pre-Refunded Revenue Bonds
Escrowed to Maturity Series A (Secondary MBIA Insured) 5.75 2018 1,970,000 1,967,143
Southern Minnesota Municipal Power Agency
Revenue Bonds (Secondary MBIA Insured) 4.75 2016 6,415,000 5,740,783
Southern Minnesota Municipal Power Agency
Un-Refunded Balance Power Revenue Bonds Series A 5.75 2018 1,895,000 1,861,023
Spring Park Health Care Facility
Revenue Bonds Twin Birch Health Care Center
Series 1991 8.25 2011 1,780,000 1,904,547
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1990 7.00 2009 7,850,000 8,543,862
State General Obligation Various Purpose
Pre-Refunded Bonds Series 1991 6.70 2011 8,000,000 8,742,640
State Higher Education Facilities Authority
Augsburg College Mortgage Revenue Bonds
Series 4-F1 6.25 2023 1,750,000 1,786,873
State Higher Education Facility Authority
Mortgage Pre-Refunded Revenue Bonds
St. Mary's College Series 2-M 8.375 2017 1,000,000 1,090,430
State Housing Facility Authority
Housing Finance Agency Housing Development
Single Family Mortgage Bonds Series B 7.25 2016 325,000 332,319
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1989A A.M.T. 8.00 2029 1,210,000 1,257,444
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1990A A.M.T. 7.95 2022 3,210,000 3,391,526
State Housing Finance Agency
Single Family Mortgage Bonds
Series 1991A A.M.T. 7.45 2022 3,575,000 3,748,745
State Housing Finance Agency
Single Family Mortgage Bonds Series 1992A 6.95 2016 2,930,000 3,088,923
State Housing Finance Agency
Single Family Mortgage Revenue Bonds
Series L A.M.T. 6.70 2020 1,060,000 1,096,877
State Public Facilities Authority
Water Pollution Control Revenue Bonds
Series 1989A 7.00 2009 6,250,000 6,739,625
State University Board of Regents
General Obligation Inverse Floater Bonds
Series 1993A Bonds 5.82 2003 5,000,000 (f) 4,981,250
State University Board of Regents
General Obligation Pre-Refunded Bonds
Series 1989A 6.00 2011 4,625,000 4,924,237
State University Board of Regents
General Obligation Bonds Series 1996A 5.50 2021 8,000,000 7,862,640
State University Board State University System
Pre-Refunded Revenue Bonds
Series 1989A (MBIA Insured) 7.40 2019 2,250,000 2,421,968
Vadnais Heights Multi-family Housing
Cottages of Vadnais Heights
Refunding Revenue Bonds
Series 1995 A.M.T. 7.00 2031 3,200,000 3,179,072
Washington County General Obligation
Capital Improvement Bonds
Series 1989A 7.00 2009-10 4,425,000 4,663,153
Washington County Housing & Redevelopment Authority
Multi-family Housing Revenue Bonds
Orleans Homes Series 1987-2 A.M.T. 9.00 2017 2,000,000 2,039,560
Washington County Housing & Redevelopment Authority
Woodbury Multi-family Housing
Refunding Revenue Bonds Series 1996 6.95 2023 2,000,000 1,999,840
Western Minnesota Municipal Power Agency
Revenue Bonds
Escrowed to Maturity (AMBAC Insured) 6.75 2016 5,935,000 6,465,767
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds
Series 1987A 5.50 2015 6,250,000 6,200,687
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds
Series 1987A 6.875 2007 2,500,000 2,550,000
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds
Series 1987A 7.00 2013 7,300,000 7,446,000
Western Minnesota Municipal Power Agency
Supply Refunding Revenue Bonds
Series A (Secondary MBIA Insured) 5.50 2015 5,000,000 4,893,850
White Bear Lake Independent School District #624
Unlimited Tax General Obligation School Building Bonds
Series 1996A 5.75 2017 2,140,000 2,165,530
White Bear Lake Industrial Development
Revenue Bonds
Taylor Series 1988A A.M.T. 8.75 2008 2,250,000 2,422,012
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment in securities
(Cost: $381,356,749) (i) $405,409,640
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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 12-31-96 06-30-96
----------------------------------------------------------------------------
AAA 45% 48%
AA 19 18
A 15 15
BBB 8 7
BB and below 12 10
Non-rated 1 2
----------------------------------------------------------------------------
Total 100% 100%
----------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
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 portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of Dec. 31, 1996, the value of
securities subject to alternative minimum tax represented
15.2% of net assets
(e) Presently non-income producing. Item identified is in default as to payment
of interest and/or principal.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed
is the rate in effect on Dec. 31, 1996. Inverse floaters in the aggregate
represent 4.3% of the Fund's net assets as of Dec. 31, 1996.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition. (h) Partially pledged as initial
deposit on the following open interest rate futures contracts (see Note 5 to
the financial statements):
Type of security Notional amount
Purchase contracts
----------------------------------------------------------------------------
Municipal Bonds Index March 1997 $5,100,000
----------------------------------------------------------------------------
(i) At Dec. 31, 1996, the cost of securities for federal income tax purposes was
approximately $380,447,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $25,535,000
Unrealized depreciation (572,000)
----------------------------------------------------------------------------
Net unrealized appreciation $24,963,000
----------------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
IDS New York Tax-Exempt Fund (Percentages represent value of
Dec. 31, 1996 (Unaudited) investments compared to net assets)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (97.6%)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Name of issuer Coupon Maturity Principal Value(a)
and title of issue (b,c,d) rate year amount
- ------------------------------------------------------------------------------------------------------------------------------------
Battery Park City Authority
<S> <C> <C> <C> <C>
Senior Refunding Revenue Bonds Series 1993A 5.25 % 2017 $4,000,000 $3,712,800
Broome County Certificates of Partication
Public Safety Facility Series 1994 (MBIA Insured) 5.25 2022 2,650,000 2,494,524
Buffalo Municipal Water Agency Authority Water System
Revenue Bonds Series 1995 (FGIC Insured) 5.00 2025 1,000,000 912,410
Erie County Unlimited Tax General Obligation Bonds
Series B (FGIC Insured) 5.50 2025 700,000 687,148
Erie County Water Authority Fourth Resolution Water
Refunding Revenue Bonds Zero Coupon
Series 1992 (AMBAC Insured) 7.30 2017 1,215,000 (e) 271,929
Erie County Water Authority Water Works System
Revenue Bonds Escrowed to Maturity
Series 1990A (AMBAC Insured) 6.00 2008 1,765,000 1,878,507
Fallsburg Sullivan County Unlimited Tax General
Obligation Improvement Pre-Refunded Bonds
Series 1991 7.05 2011-14 1,300,000 1,455,324
Great Neck North Water Authority Water System
Pre-Refunded Revenue Bonds Series 1989A 6.00 2020 1,415,000 1,482,439
Metropolitan Transportation Authority Commuter Facilities
1987 Service Contract Refunding Bonds Series 5 6.50 2016 1,775,000 1,844,402
Monroe County Utility General Obligation
Pre-Refunded Bonds Water Improvement System 7.10 2008-09 1,000,000 1,076,220
Municipal Assistance New York City Series 59 7.75 2006 660,000 685,172
Municipal Assistance New York City Series 62 6.75 2006 2,200,000 2,270,466
Municipal Assistance Troy New York
General Revenue Bonds Series 1996A (MBIA Insured) 5.00 2022 1,250,000 1,155,962
New York & New Jersey Port Authority Special Obligation
Revenue Bonds KIAC Partners Project Series 4 A.M.T. 6.75 2019 1,500,000 1,534,245
New York City General Obligation Bonds Series 1995B 7.00 2016 1,500,000 1,614,390
New York City General Obligation Bonds Series J 5.875 2019 1,000,000 969,260
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series B Inverse Floater (MBIA Insured) 6.57 2009 2,000,000 (f) 1,922,500
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series B (MBIA Insured) 5.75 2026 500,000 503,105
New York City Unlimited Tax General Obligation Bonds
Series 1996G 5.75 2017 1,500,000 1,437,915
New York City Water Finance Authority
Water & Sewer System Pre-Refunded Revenue Bonds
Series A (FGIC Insured) 6.75 2014 1,185,000 1,273,567
New York City Water Finance Authority
Water & Sewer System Revenue Bonds
Series A (FGIC Insured) 6.75 2014 565,000 607,228
New York City Water Finance Authority
Water & Sewer System Revenue Pre-Refunded Bonds
Series 1988A 7.00 2018 1,000,000 1,030,550
State Dormitory Authority City University System
Consolidated 3rd Resolution Revenue Bonds
Series 1994-2 (MBIA Insured) 6.25 2019 1,500,000 1,580,610
State Dormitory Authority City University System
Pre-Refunded Revenue Bonds 8.125 2017 3,400,000 (h) 3,545,112
State Dormitory Authority City University System
Revenue Bonds Series 1993A 5.75 2013 3,000,000 2,993,670
State Dormitory Authority Revenue Bonds
The Devereux Foundation Series 1995 (MBIA Insured) 5.00 2015 1,000,000 939,100
State Dormitory Authority Revenue Bonds
NYACK Hospital Series 1996 6.25 2013 1,000,000 1,018,060
State Dormitory Authority State University Education Facility
Cooper Union Insured College Revenue Bonds
Series 1996 (AMBAC Insured) 5.375 2020 860,000 832,704
State Dormitory Authority State University Education Facility
Pre-Refunded Revenue Bonds Series 1990A 7.70 2012 1,750,000 1,967,472
State Dormitory Authority State University Education Facility
Refunding Revenue Bonds Series 1990B 7.50 2011 1,900,000 2,228,187
State Dormitory Authority State University Education Facility
Revenue Bonds (Secondary AMBAC Insured) 5.25 2015 1,000,000 980,310
State Dormitory Authority State University Education Facility
Revenue Bonds (Secondary AMBAC Insured) 5.50 2019 2,000,000 2,012,700
State Energy Research & Development Authority
Electric Facility Revenue Bonds
Consolidated Edison Series 1986A A.M.T. 7.50 2021 1,750,000 1,788,693
State Energy Research & Development Authority
Electric Facility Revenue Bonds
Consolidated Edison Series 1989A A.M.T. 7.75 2024 1,000,000 1,043,780
State Energy Research & Development Authority
Electric Facility Revenue Bonds Consolidated Edison
Series 1990A A.M.T. 7.50 2025 5,000,000 (h) 5,343,050
State Energy Research & Development
Authority Gas Facility
Revenue Bonds Brooklyn Union Gas Series I 7.125 2020 2,000,000 2,043,080
State Energy Research & Development Authority Gas Facility
Revenue Bonds Brooklyn Union Gas Series II 7.00 2020 1,500,000 1,532,220
State Energy Research & Development
Authority Pollution Control Refunding
Revenue Bonds Rochester Gas & Electric
(MBIA Insured) A.M.T. 6.50 2032 2,500,000 2,668,950
State Energy Research & Development Authority
Solid Waste Development Revenue Bonds
State Gas & Electric Company
Series A (MBIA Insured) A.M.T. 5.70 2028 3,000,000 2,918,220
State Environmental Facility State Water & Pollution Control
Revolving Fund Revenue Bonds New York City
Municipal Water Finance Authority Series 1990A 7.50 2012 3,000,000 3,305,430
State Local Government Assistance Bonds Series C 5.50 2022 1,500,000 1,438,665
State Local Government Assistance Pre-Refunded Bonds
Series 1991A 7.00 2016 4,000,000 4,470,240
State Medical Care Facility Finance Agency
Hospital & Nursing Home Mortgage Revenue Bonds
Montefiore Hospital
Series 1989A (FHA Insured) 7.25 2024 1,400,000 1,514,030
State Medical Care Facility Finance Agency Mental Health
Services Facility Improving Refunding Revenue Bonds
Series 1993F (Secondary FSA Insured) 5.375 2014 1,000,000 970,010
State Medical Care Facility Finance Agency Mental Health
Services Facility Improving Refunding Revenue Bonds
Series 1994A (Secondary FSA Insured) 5.25 2023 1,500,000 1,408,005
State Medical Care Facility Finance Agency Pre-Refunded Bonds
Presbyterian Hospital Series 1985B 8.00 2025 1,320,000 1,382,172
State Medical Care Facility Finance Agency Revenue Bonds
Buffalo General Hospital Series 1988C (FHA Insured) 7.60 2008 1,500,000 1,615,245
State Medical Care Facility Finance Agency Revenue Bonds
Buffalo General Hospital Series 1988C (FHA Insured) 7.70 2022 1,950,000 2,102,861
State Medical Care Facility Finance Agency Secured Hospital
Revenue Bonds Series 1987A 7.10 2027 550,000 561,858
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series TT 7.50 2015 4,000,000 4,266,760
State Mortgage Agency Homeowner Mortgage Revenue Bonds
Series 27 6.90 2015 3,000,000 3,181,770
State Mortgage Agency Revenue Bonds
Series 9 A.M.T. 7.30 2017 970,000 990,719
State Thruway Authority Local Highway & Bridge Service
Contract Bonds Series 1991 6.00 2011 2,500,000 2,507,025
State Urban Development Correction Facility
Pre-Refunded Revenue Bonds Series 1 (FSA Insured) 7.50 2020 4,500,000 4,991,265
State Urban Development Correctional Capital Facilities
Refunding Revenue Bonds Series 1993A 5.25 2021 2,500,000 2,242,675
State Urban Development Correctional Capital Facilities
Revenue Bonds Series 5 (MBIA Insured) 5.50 2025 750,000 736,343
State Urban Development Revenue Bonds
Higher Education Applied Technology Grants
Series 1995 (MBIA Insured) 5.75 2015 1,000,000 1,011,480
Triborough Bridge & Tunnel Authority
General Purpose Pre-Refunded Revenue Bonds Series S 7.00 2021 3,000,000 3,324,540
Triborough Bridge & Tunnel Authority
Special Obligation Refunding Bonds
Series 1991B (FGIC Insured) 6.875 2015 2,000,000 2,187,860
United Nations Development Senior Lien
Refunding Revenue Bonds Series 1992A 6.00 2026 4,500,000 4,535,730
Utica Industrial Development Agency
Civic Facility Revenue Bonds
Series 1996A (MBIA Insured) 5.50 2016 750,000 732,443
- ------------------------------------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $107,657,131) $115,733,107
____________________________________________________________________________________________________________________________________
</TABLE>
Short-term securities
(0.6%)
- --------------------------------------------------------------------------------
Issuer (d,g) Effective Amount Value (a)
yield payable at
maturity
- --------------------------------------------------------------------------------
Municipal notes
New York City Municipal Water Authority
Water & Sewer System Revenue Bonds
06-15-22 5.00% 200,000 $ 200,000
New York City Municipal Water Authority
Water & Sewer System Revenue Bonds Series A
06-15-25 4.70 500,000 500,000
- --------------------------------------------------------------------------------
Total short-term securities
(Cost: $700,000) $ 700,000
- --------------------------------------------------------------------------------
Total investments in securities
(Cost: $108,357,131)(i) $116,433,107
- --------------------------------------------------------------------------------
<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 12-31-96 06-30-96
----------------------------------------------------------------------------
AAA 51% 52%
AA 17 18
A 16 15
BBB 15 14
BB and below 1 1
Non-rated -- --
----------------------------------------------------------------------------
Total 100% 100%
----------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviation are used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of Dec. 31, 1996, the value of
securities subject to alternative minimum tax represented
13.7% of net assets.
V.R. -- Variable Rate
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
yield on the date of acquisition.
(f) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a
decline (increase) in market short-term rates. Interest rate disclosed is
the rate in effect on Dec. 31, 1996. Inverse floaters in the aggregate
represent 1.6% of the Fund's net assets as of Dec. 31, 1996.
(g) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis, after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
Dec. 31, 1996.
(h) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
--------------------------------------------------------------------------
Purchase contracts
Municipal Bonds Index March 1997 $6,300,000
--------------------------------------------------------------------------
(i) At Dec. 31, 1996, the cost of securities for federal income tax purposes was
approximately $108,291,000 and the approximate gross unrealized appreciation
and depreciation based on that cost was:
Unrealized appreciation $8,425,000
Unrealized depreciation (283,000)
___________________________________________________________________________
Net unrealized appreciation $8,142,000
---------------------------------------------------------------------------
<PAGE>
<TABLE>
Investments in securities
IDS Ohio Tax-Exempt Fund
Dec. 31, 1996 (Unaudited) (Percentages represent value of
investments compared to net assets)
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal bonds (98.3%)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Name of issuer and Coupon Maturity Principal Value(a)
title of issue (b,c,d) rate year amount
- ------------------------------------------------------------------------------------------------------------------------------------
Barberton Limited Tax Various Purpose General Obligation Bonds
<S> <C> <C> <C> <C>
Series 1989-1 7.35% 2009 $ 700,000 $ 762,195
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association of Logan County
Series 1993 6.00 2013 1,000,000 970,710
Buckeye Valley Local School District School
Improvement Unlimited Tax
General Obligation Bonds Series 1995A (MBIA Insured) 5.25 2020 1,000,000 957,940
Butler County Hospital Facility Improvement
Refunding Revenue Bonds 7.50 2010 1,750,000 1,874,442
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds 6.25 2010 955,000 913,935
Clermont County Hospital Facility Revenue Bonds
Mercy Health System Province of Cincinnati
Series 1989A (AMBAC Insured) 7.50 2019 750,000 830,396
Cleveland Airport Systems Revenue Bonds
Series 1990A (MBIA Insured) A.M.T. 7.40 2020 500,000 545,920
Cleveland General Obligation Pre-Refunded Bonds 7.375 2003 125,000 130,785
Cleveland Public Power System 1st Mortgage
Pre-Refunded Revenue Bonds 8.375 2017 100,000 104,735
Cleveland Waterworks Improvement 1st Mortgage
Refunding Revenue Bonds
Series F 1992B (AMBAC Insured) 6.25 2016 1,000,000 (f) 1,058,550
Cleveland Waterworks Improvement 1st Mortgage
Revenue Bonds Series 1987E 6.00 2017 200,000 199,978
Cleveland Waterworks Improvement 1st Mortgage
Pre-Refunded Revenue Bonds Series 1987E 7.875 2016 650,000 663,000
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992 7.875 2013 1,000,000 1,071,900
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds
Judson Retirement Community Series 1996A 7.25 2018 1,000,000 1,005,880
Cuyahoga County Hospital Improvement Revenue Bonds
Cleveland Clinic Foundation 7.00 2013 500,000 508,330
Cuyahoga County Hospital Improvement
Pre-Refunded Revenue Bonds
Cleveland Clinic Foundation Series 1987A 7.875 2010 275,000 290,845
Cuyahoga County Hospital Improvement Revenue Bonds
Mount Sinai Medical Center Series 1991 (AMBAC Insured) 6.625 2021 600,000 666,660
Cuyahoga County Hospital Improvement Revenue Bonds
University Hospitals Health System
Series 1992 (AMBAC Insured) 6.50 2011 500,000 540,360
Cuyahoga County Hospital Refunding Revenue Bonds
Cleveland Clinic Foundation Series 1992 5.50 2011 1,500,000 1,514,205
Cuyahoga County Hospital Refunding Revenue Bonds
Mount Sinai Medical Center Series 1987A 8.125 2014 400,000 423,196
Cuyahoga County Hospital Revenue Bonds
Meridia Health Series 1991 7.00 2023 1,000,000 1,079,800
See accompanying notes to investments in securities.
<PAGE>
Cuyahoga County Limited Tax General Obligation Bonds 5.60 2013 500,000 513,375
Cuyahoga Hospital Revenue Bonds Metrohealth System
Series 1989 (MBIA Insured) 6.00 2019 1,000,000 1,012,380
Delaware County Sewer Improvement Limited Tax
General Obligation Bonds 5.25 2015 1,000,000 970,780
Dover Limited Tax Improvement General Obligation Bonds
Municipal Sewer System 7.10 2009 1,000,000 1,082,690
Elyria Limited Tax Improvement General Obligation
Recreation Facility Bonds 7.10 2009 715,000 774,123
Erie County Hospital Improvement Refunding Revenue Bonds
Firelands Community Hospital Series 1992 6.75 2015 2,000,000 (f) 2,113,920
Franklin County Convention Facilities Authority
Tax & Lease Revenue Anticipation
Pre-Refunded Bonds (MBIA Insured) 7.00 2019 1,500,000 1,671,615
Highland Heights Limited Tax Improvement
General Obligation Street Bonds 7.75 2008 400,000 431,016
Hilliard County School District Unlimited Tax
General Obligation Bonds Series A (FGIC Insured) 5.00 2020 1,000,000 931,360
Kettering School District Improvement
General Obligation Bonds (FGIC Insured) 5.25 2022 1,000,000 956,330
Lake County Water System Limited Tax Improvement
General Obligation Pre-Refunded Bonds Series 1987-2 8.125 2010 700,000 741,650
Lakota Local School District Butler County School
Unlimited Tax Improvement Bonds 7.00 2012 500,000 539,170
Lakota Local School District Butler County School
Unlimited Tax Improvement Pre-Refunded Bonds 7.90 2011 200,000 214,550
Lakota Local School District Unlimited Tax Improvement
General Obligation Bonds (AMBAC Insured) 6.25 2014 2,000,000 2,134,980
Lima Limited Tax Improvement General Obligation
Sanitary Sewer System Pre-Refunded Bonds 8.25 2012 200,000 212,176
Lorain County Hospital Facilities Refunding Revenue Bonds
Elyria United Methodist Series C 6.875 2022 1,000,000 1,005,100
Lorain County Hospital Facilities Refunding Revenue Bonds
EMH Regional Medical Center Series 1995 (AMBAC Insured) 5.375 2021 2,000,000 1,939,860
Lucas County Hospital Refunding Revenue Bonds
St. Vincent's Medical Center Series B (MBIA Insured) 5.25 2020 1,000,000 941,910
Marietta Sewer System Improvement Bonds (BIG Insured) 7.50 2007 200,000 209,570
Marion County Health Care Facilities Improvement
Refunding Revenue Bonds United Church Homes
Series 1993 6.375 2010 1,000,000 1,016,280
Marysville Sewer System 1st Mortgage Revenue Bonds
Series 1988 (BIG Insured) A.M.T. 7.85 2008 400,000 425,884
Marysville Water System Mortgage Revenue Bonds
Series 1991 (MBIA Insured) 7.05 2021 1,000,000 1,124,040
Medina County Hospital Revenue Bonds Medina County
Community Hospital Series 1987 (AMBAC Insured) 6.875 2016 100,000 104,292
Miami County Hospital Facility Refunding Revenue Bonds
Upper Valley Medical Center Series 1987A 8.375 2013 75,000 (f) 77,452
Montgomery County Health Facilities Revenue Bonds
Friendship Village Dayton Series 1990A 9.25 2016 1,000,000 1,051,100
Montgomery County Hospital Facility
Refunding Revenue & Improvement Bonds
Ketter Medical Center
Series 1996 (MBIA Insured) 5.50 2026 1,000,000 974,370
Montgomery County Water Revenue Bonds
Greater Moraine - Beavercreek District (FGIC Insured) 6.25 2017 1,000,000 1,064,390
North Olmsted County Limited General Obligation Bonds
Series 1996 (AMBAC Insured) 5.00 2016-21 1,700,000 1,598,792
Parma Hospital Improvement Revenue Bonds
<PAGE>
Parma Community General Hospital
Series 1989B (MBIA Insured) 7.125 2013 500,000 533,975
Pickerington Local School District Unlimited Tax
General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2013 1,000,000 1,114,410
Rural Loraine County Water Authority Water
Resource Improvement Pre-Refunded Revenue Bonds
Series 1991 (AMBAC Insured) 7.00 2011 1,000,000 1,116,580
Southwest Licking Local School District School Facilities
Unlimited Tax General Obligation Bonds (FGIC Insured) 5.75 2022 500,000 505,180
Southwest Local School District
Hamilton & Butler Counties School
Unlimited Tax Improvement Bonds (AMBAC Insured) 7.65 2010 500,000 560,300
State Air Quality Development Authority
Refunding Revenue Bonds
JMG Funding Limited Partnership
(AMBAC Insured) A.M.T. 6.375 2029 500,000 532,625
State Air Quality Development Authority Refunding Revenue Bonds
Series 1994 (AMBAC Insured) A.M.T. 6.375 2029 2,000,000 2,130,500
State Air Quality Development Authority Revenue Bonds
Cleveland Electric Illuminating Series A 7.00 2009 340,000 340,085
State Air Quality Development Authority Revenue Bonds
Columbus & Southern Series A (FGIC Insured) 6.375 2020 1,000,000 1,071,250
State Building Authority Local Jail Grant Bonds
Series 1989A (MBIA Insured) 7.35 2009 500,000 555,185
State Building Authority State Correctional Facility
Revenue Bonds Series B 7.125 2009 75,000 76,601
State Building Authority State Facility Pre-Refunded Bonds
Columbus State Office Building Series 1985C 7.35 2005 1,000,000 1,109,620
State Higher Educational Facility Pre-Refunded Revenue Bonds
Oberlin College Series 1989 7.375 2014 500,000 549,425
State Housing Finance Agency Mortgage Revenue Bonds
Aristocrat South Board & Care
Series 1991A (FHA Insured) A.M.T. 7.30 2031 1,500,000 1,569,915
State Housing Finance Agency Single Family Mortgage
Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.80 2030 495,000 520,299
State Housing Finance Agency Single Family Mortgage
Revenue Bonds Series 1990C (GNMA Insured) A.M.T. 7.85 2021 800,000 847,552
State Municipal Electric Generation Agency Joint Venture #5
Revenue Bonds (AMBAC Insured) 5.375 2024 2,000,000 1,918,640
State Turnpike Revenue Bonds Series A 5.75 2024 1,000,000 997,200
State Turnpike Revenue Bonds Series A (MBIA Insured) 5.50 2026 1,000,000 982,830
State Valley School District School Improvement Unlimited Tax
General Obligation Bonds Counties of Adams & Highland
Series 1995 (MBIA Insured) 5.25 2021 2,000,000 1,914,220
State Water & Air Quality Development Authority
Cleveland Electric Illumination
Pollution Control Refunding Revenue Bonds
Series 1995 7.70 2025 1,000,000 1,082,920
State Water Development Authority Bonds Toledo Edison
Series 1994 A.M.T. 8.00 2023 1,000,000 1,090,770
State Water Development Authority Pollution Control
Revenue Bonds Phillip Morris 7.25 2008 150,000 157,390
State Water Development Authority Water Development
Pre-Refunded Bonds Pure Water Series 1987I 7.75 2006-14 200,000 207,414
State Water Development Authority Water Development
Pre-Refunded Bonds Pure Water Series 1988I 7.00 2014 500,000 521,935
State Water Development Authority Water Development
Refunding Revenue Bonds Pure Water (AMBAC Insured) 5.50 2018 750,000 734,078
State Water Development Solid Waste Disposal
<PAGE>
Northstar BHP Steel LLC-Cargill Series 1995
Revenue Bonds A.M.T. 6.30 2020 500,000 (f) 523,480
Summit County Industrial Development Revenue Bonds
Century Products 7.75 2005 100,000 103,702
Summit County Limited Tax General Obligation
Pre-Refunded Bonds
Human Services Facility (AMBAC Insured) 8.00 2007 95,000 100,576
Sycamore Board of Education Community School District
Hamilton County School Improvement Bonds 6.50 2009 500,000 519,135
University of Cincinnati Certificates of Participation
Student Recreation Center Series 1996 (MBIA Insured) 5.125 2024 1,000,000 943,130
University General Receipts Refunding Revenue Bonds
Student Recreation Center (FGIC Insured) 5.00 2013 1,000,000 949,570
University of Cincinnati General Receipt
Pre-Refunded Bonds Series I-1 7.10 2010 750,000 814,650
University of Toledo General Receipt
Pre-Refunded Bonds Series 1990 (MBIA Insured) 7.125 2020 500,000 553,570
Warren County Various Purpose Limited Tax
General Obligation Bonds Series 1992 6.10 2012 500,000 538,700
Whitehall City School District Franklin County Unlimited Tax
Improvement General Obligation Pre-Refunded
School Building Construction 7.25 2013 500,000 550,435
- ------------------------------------------------------------------------------------------------------------------------------------
Total municipal bonds
(Cost: $65,491,862) $70,284,764
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Short-term security (0.4%)
- --------------------------------------------------------------------------------
Issuer (d,e) Effective Amount Value(a)
yield payable at
maturity
- --------------------------------------------------------------------------------
Municipal note
State Air Quality Development Authority Revenue Bonds
Cincinnati Gas & Electric
Series A.V.R.
12-01-15 4.70% $300,000 $ 300,000
- --------------------------------------------------------------------------------
Total short-term security
(Cost: $300,000) $ 300,000
- --------------------------------------------------------------------------------
Total investments in securities
(Cost: $65,791,862)(g) $70,584,764
- --------------------------------------------------------------------------------
<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:
Rating 12-31-96 06-30-96
- --------------------------------------------------------------------------------
AAA 65% 68%
AA 9 10
A 9 9
BBB 9 7
BB and below 8 6
Non-rated -- --
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) The following abbreviation is used in portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of Dec. 31, 1996, the value of
securities subject to alternative minimum tax represented 11.4%
of net assets.
V.R. -- Variable Rate
(e) The Fund is entitled to receive principal amount from issuer or corporate
guarantor, if indicated in parenthesis after a day or a week's notice. The
maturity date disclosed represents the final maturity. Interest rate varies
to reflect current market conditions; rate shown is the effective rate on
Dec. 31, 1996.
(f) Partially or fully pledged as initial deposit on the following open interest
rate futures contracts (see Note 5 to the financial statements):
Type of security Notional amount
---------------------------------------------------------------------------
Purchase contracts
Municipal Bonds Index March 1997 $900,000
---------------------------------------------------------------------------
(g) At Dec. 31, 1996, the cost of securities for federal income tax purposes was
approximately $65,729,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $4,897,000
Unrealized depreciation (41,000)
----------------------------------------------------------------------------
Net unrealized appreciation $ 4,856,000
----------------------------------------------------------------------------
<PAGE>
Board members and officers
Board members and officers of the Fund
- -----------------------------------------------------------------
President and interested board member
William R. Pearce
President and director, Board Services Corporation (provides administrative
services to boards including the boards of the IDS and IDS Life funds and Master
Trust Portfolios).
- -----------------------------------------------------------------
Independent board members
H. Brewster Atwater Jr.
Former chairman and chief executive officer, General Mills, Inc.
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.
Melvin R. Laird
Senior counsellor for national and international affairs, The Readers's Digest
Association, Inc.
Alan K Simpson
Former United States senator for Wyoming
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
- -----------------------------------------------------------------
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
- -----------------------------------------------------------------
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.
Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the Fund.
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Other officer
Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services Corporation.
Vice president, general counsel and secretary for the Fund.
Refer to the SAI for the board members' and officers' biographies.
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.
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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.
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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.
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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.
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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.
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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.
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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 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.
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IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
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IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
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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.
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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.
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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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Growth and 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.
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 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.
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IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
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IDS Equity Value 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 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.
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IDS Mutual
Invests in a Portfolio which seeks to 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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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 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.
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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.
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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.
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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.
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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.
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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.
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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.)
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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.
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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.
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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.
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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.
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Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
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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(R) 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 State Tax-Exempt Funds
IDS Tower 10
Minneapolis, MN 55440-0010
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