Prospectus Supplement - Oct. 26, 1999*


AXP Federal Income Fund (July 30, 1999) S-6042 P (7/99)
(Formerly  known as IDS Federal Income Fund)



The first  paragraph of the  Investment  Strategy  section is revised as follows
(changes are underlined):


The Fund's  assets  primarily  are  invested in debt  obligations.  Under normal
market  conditions,  at least 65% of the Fund's  total  assets are  invested  in
securities  issued  or  guaranteed  as to  principal  and  interest  by the U.S.
government,  its agencies or instrumentalities.  Although the Fund may invest in
any  U.S.  government  securities,   it  is  anticipated  that  U.S.  government
securities   representing   part   ownership   in   pools  of   mortgage   loans
(mortgage-backed  securities)  will  comprise a large  percentage of the Fun d's
investments.  The  Fund  will  utilize  forward  sale  commitments  for  hedging
purposes.   Additionally,   the  Fund  will  aggressively   utilize   derivative
instruments and when-issued securities to produce incremental earnings, to hedge
existing positions and to increase flexibility. The Fund's potential losses from
the use of these instruments could extend beyond its initial investment.























S-6042- 11 A (10/99)
*Valid until next prospectus update

Destroy  July 28, 2000