-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LR8jgmbFzQpLvyRezebk3sgw9zNO5OfjvNhvCEep0Wnl4TdUsdY+qfGT+8xzkAr7 9Cn1S8Je7RsYwluMXLV1Gg== 0000820027-96-000489.txt : 19960906 0000820027-96-000489.hdr.sgml : 19960906 ACCESSION NUMBER: 0000820027-96-000489 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960905 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS CALIFORNIA TAX EXEMPT TRUST CENTRAL INDEX KEY: 0000792717 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04646 FILM NUMBER: 96625787 BUSINESS ADDRESS: STREET 1: IDS TOWER 10 STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 MAIL ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 N-30D 1 IDS STATE TAX-EXEMPT FUNDS PAGE 1 IDS State Tax-Exempt Funds 1996 annual report (prospectus enclosed) (Icon of) Column enclosed in shield Tax-exempt funds from the following states: California Massachusetts Michigan Minnesota New York Ohio Distributed by American Express Financial Advisors Managed by IDS Life Insurance Company PAGE 2 (Icon of) Column enclosed in shield Twice the tax relief Many people who want to reduce their tax burden favor municipal bonds because the interest they pay is generally free from federal tax. If you want to eliminate state tax, too, you can invest in municipal bonds in the state you reside. This double tax-exemption makes this one of the best tax-advantaged investments still available to individuals. What's more, the money you invest is typically used by municipalities to fund projects such as schools and highways. So, with this investment, the benefits reach well beyond your pocketbook. PAGE 3 Contents (Icon of) One open book inside of another. The purpose of this annual report is to tell investors how the Fund performed. The prospectus, which is bound into the middle of this annual report, describes the Fund in detail. 1996 annual report From the president 4 From the portfolio manager 5 Performance 6 California Tax-Exempt Fund 8 Ten largest holdings 8 Long-term performance 9 Massachusetts Tax-Exempt Fund 10 Ten largest holdings 10 Long-term performance 11 Michigan Tax-Exempt Fund 12 Ten largest holdings 12 Long-term performance 13 Minnesota Tax-Exempt Fund 14 Ten largest holdings 14 Long-term performance 15 New York Tax-Exempt Fund 16 Ten largest holdings 16 Long-term performance 17 Ohio Tax-Exempt Fund 18 Ten largest holdings 18 Long-term performance 19 All funds 20 Making the most of your fund 20 Independent auditors' report 23 Financial statements 24 Notes to financial statements 31 Investments in securities 40 IDS mutual funds 72 Federal income tax information 75 1996 prospectus The Funds in brief 3p Sales charge and Fund expenses 4p Performance 8p Investment policies and risks 24p How to buy, exchange or redeem shares 31p Special shareholder services 43p Distributions and taxes 44p How the funds are organized 49p About American Express Financial Corporation 53p Appendices 54p PAGE 4 To our shareholders From the president (Photo of) William R. Pearce President of the Fund If you're an experienced investor, you know that 1995 and the opening months of 1996 were an unusually strong period for the U.S. 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 and annual 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 PAGE 5 From the portfolio manager Reflecting an up-and-down bond market, IDS State Tax-Exempt Funds soared in value during the first half of the fiscal year, then were forced to give back some of their gains in the second half. All of the Funds, however, generated positive total returns (net asset value change plus income from investment operations) for the fiscal year (July 1995 through June 1996 period). Unlike 1994, when rising interest rates pummeled the bond market, 1995 could hardly have offered a better investment environment, as the favorable forces of moderate economic growth and low inflation remained in place. For the second half of the year (the first six months of the Funds' fiscal period), those factors were complemented by the possibility of an agreement to eventually balance the federal budget and willingness on the part of the Federal Reserve Board to reduce short-term interest rates. Rates down, bond prices up In that positive light, the interest income provided by bonds became more attractive to investors. As they poured money into the market, their buying drove long-term interest rates increasingly lower. Because falling rates boost the value of previously issued bonds, their prices rose, which in turn drove up the net asset value of mutual funds such as these. Our Funds were particularly well-positioned to benefit from the rate decline because of an emphasis on municipal bonds with longer- than-average maturities. (This strategy makes a portfolio more sensitive to interest-rate swings. Therefore, when rates came down, the Funds enjoyed enhanced performance.) As has been true for some time, I emphasized investments in essential services bonds, which typically provide more price stability than general obligation bonds, which are more sensitive to fluctuations in the economy. The positive environment quickly turned negative in 1996, however, as the budget negotiations broke down and the economy began showing signs of renewed vigor. Professional bond traders took those developments as precursors of high inflation -- bonds' eternal nemesis -- and started a rash of selling in February and March that drove up long-term interest rates to their highest levels in nearly a year. Bond prices, which move in the opposite direction of rates, slid substantially, taking the net asset value of funds such as these with them. To provide some cushion to net asset values during the downturn, I shortened the average maturity of the bonds in the portfolios -- a strategy that makes a portfolio less sensitive to interest-rate moves. Among other portfolio modifications, after rates rose I added some higher-yielding, lower-quality bonds and some non-rated bonds to enhance the Funds' dividend payments. This is consistent with my recent "barbell" approach to credit quality, which is an emphasis on very high-quality bonds complemented by some lower-quality issues. I believe this should allow the Funds to generate healthy dividends with only a minimal sacrifice in overall quality. PAGE 6 State updates Looking at individual states, there was no major news. In California, municipal bonds recovered well from problems created by financial difficulties in Orange and Los Angeles counties. (IDS California Tax-Exempt Fund was largely unaffected by those events.) Bond performance in New York and Michigan, on the other hand, was tempered a bit in 1995 by concerns about the possibility of an over-supply of bonds. Minnesota, Ohio and Massachusetts, however, benefited from favorable supply/demand situations. Paul B. Hylle PAGE 7 To our shareholders Performance California Class A 12 month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.15 June 30, 1995 $ 5.16 Decrease $(0.01) Distributions July 1, 1995-June 30, 1996 From income $ 0.28 From capital gains $ 0.03 Total distributions $ 0.31 Total return* +6.0%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.15 June 30, 1995 $ 5.16 Decrease $(0.01) Distributions July 1, 1995-June 30, 1996 From income $ 0.24 From capital gains $ 0.03 Total distributions $ 0.27 Total return* +5.2%** Class Y 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.15 June 30, 1995 $ 5.15 Increase $ -- Distributions July 1, 1995-June 30, 1996 From income $ 0.29 From capital gains $ 0.03 Total distributions $ 0.32 Total return* +6.1%** PAGE 8 Massachusetts Class A 12 month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.30 June 30, 1995 $ 5.27 Increase $ 0.03 Distributions July 1, 1995-June 30, 1996 From income $ 0.28 From capital gains $ -- Total distributions $ 0.28 Total return* +6.0%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.30 June 30, 1995 $ 5.27 Increase $ 0.03 Distributions July 1, 1995-June 30, 1996 From income $ 0.24 From capital gains $ -- Total distributions $ 0.24 Total return* +5.2%** Class Y 12-month period (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.32 June 30, 1995 $ 5.28 Increase $ 0.04 Distributions July 1, 1995-June 30, 1996 From income $ 0.29 From capital gains $ -- Total distributions $ 0.29 Total return* +6.1%** PAGE 9 Michigan Class A 12 month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.36 June 30, 1995 $ 5.39 Decrease $(0.03) Distributions July 1, 1995-June 30, 1996 From income $ 0.30 From capital gains $ 0.07 Total distributions $ 0.37 Total return* +6.3%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.36 June 30, 1995 $ 5.39 Decrease $(0.03) Distributions July 1, 1995-June 30, 1996 From income $ 0.25 From capital gains $ .07 Total distributions $ 0.32 Total return* +5.6%** Class Y 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.38 June 30, 1995 $ 5.41 Decrease $(0.03) Distributions July 1, 1995-June 30, 1996 From income $ 0.30 From capital gains $ 0.07 Total distributions $ 0.37 Total return* +6.4%** *The prospectus discusses the effect of the sales charges, if any, on the various classes. **The total return is a hypothetical investment in the Fund with all distributions reinvested. PAGE 10 Minnesota Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.20 June 30, 1995 $ 5.19 Increase $ 0.01 Distributions July 1, 1995-June 30, 1996 From income $ 0.30 From capital gains $ -- Total distributions $ 0.30 Total return* +5.9%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.20 June 30, 1995 $ 5.19 Increase $ 0.01 Distributions July 1, 1995-June 30, 1996 From income $ 0.26 From capital gains $ -- Total distributions $ 0.26 Total return* +5.2%** Class Y 12-month period (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.21 June 30, 1995 $ 5.20 Increase $ 0.01 Distributions July 1, 1995-June 30, 1996 From income $ 0.31 From capital gains $ -- Total distributions $ 0.31 Total return* +6.1%** PAGE 11 New York Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.06 June 30, 1995 $ 5.09 Decrease $(0.03) Distributions July 1, 1995-June 30, 1996 From income $ 0.29 From capital gains $ -- Total distributions $ 0.29 Total return* +5.2%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.06 June 30, 1995 $ 5.09 Decrease $(0.03) Distributions July 1, 1995-June 30, 1996 From income $ 0.25 From capital gains $ -- Total distributions $ 0.25 Total return* +4.4%** Class Y 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.07 June 30, 1995 $ 5.11 Decrease $(0.04) Distributions July 1, 1995-June 30, 1996 From income $ 0.30 From capital gains $ -- Total distributions $ 0.30 Total return* +5.4%** PAGE 12 Ohio Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.28 June 30, 1995 $ 5.28 Increase $ -- Distributions July 1, 1995-June 30, 1996 From income $ 0.29 From capital gains $ 0.01 Total distributions $ 0.30 Total return* +5.7%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.28 June 30, 1995 $ 5.28 Increase $ -- Distributions July 1, 1995-June 30, 1996 From income $ 0.24 From capital gains $ 0.01 Total distributions $ 0.25 Total return* +5.0%** Class Y 12-month performance (All figures per share) Net asset value (NAV) June 30, 1996 $ 5.29 June 30, 1995 $ 5.28 Increase $ 0.01 Distributions July 1, 1995-June 30, 1996 From income $ 0.30 From capital gains $ 0.01 Total distributions $ 0.31 Total return* +5.9%** *The prospectus discusses the effects of sales charge, if any, on the various classes. **The total return is a hypothetical investment in the fund with all distributions reinvested. PAGE 13
The Fund's ten largest holdings IDS California Tax-Exempt Fund (pie chart) The ten holdings listed here make up 26.59% of the Fund's net assets _____________________________________________________________________________________ Percent Value (of Fund's net assets) (as of June 30, 1996) _____________________________________________________________________________________ Anaheim Public Finance Authority Revenue Bonds 2nd Series Electric Utilities San Juan 5.75% 2022 4.52% $10,877,889 Sacramento Municipal Utility District Series R 6.00% 2015-2017 3.09 7,427,775 Long Beach Harbor Revenue Bonds Series 1989A A.M.T. 7.25% 2019 3.08 7,421,960 Los Angeles Department of Water & Power Electric Plant Revenue Bonds Series 1990 7.125% 2030 2.97 7,136,935 Statewide Community Development Authority Revenue Certificate of Participation St. Joseph Health System Group 6.50% 2015 2.37 5,692,115 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.00% 2020 2.26 5,446,000 University of Southern California Educational Facilities Authority Pre-Refunded Revenue Bonds Series 1989B 6.75% 2015 2.21 5,321,350 San Diego Regional Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25% 2008 2.19 5,271,490 Statewide Community Development Authority Health Facilities Revenue Bonds Unihealth America Series 1993A Inverse Floater 7.32% 2011 2.01 4,825,000 Rancho Mirage Joint Powers Finance Authority Certificate of Participation Eisenhower Memorial Hospital 7.00% 2022 1.89 4,535,430 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T.).
PAGE 14 The Fund's long-term performance IDS California Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short- term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS California Tax-Exempt Fund $17,971 Lehman Total Return California $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 9/1/86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total returns (as of June 30, 1996) Since 1 year 5 years inception Class A* +0.70% +5.86% +6.15% Class B** +0.19% --% +1.52% Class Y** +6.11% --% +5.06% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. Assumes: Holding period from 9/1/86 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the Fund's current prospectus. Reinvestment of all income and capital gains distributions for the fund, with a value of $8,217. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing California Tax-Exempt Fund to this index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 15 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 16
The Fund's ten largest holdings IDS Massachusetts Tax-Exempt Fund (pie chart) The ten holdings here make up 27.14% of the Fund's net assets. _____________________________________________________________________________________ Percent Value (of Fund's net assets)(as of June 30, 1996) _____________________________________________________________________________________ Boston City Hospital Refunding Revenue Bonds Series B 5.75% 2023 3.94% $2,885,250 Health & Educational Facilities Authority Revenue Bonds Suffolk University Series B 6.35% 2022 3.46 2,538,787 Health & Educational Facilities Authority Revenue Bonds Cape Cod Health System Series A 5.25% 2021 3.10 2,269,100 Health & Educational Facilities Authority Revenue Bonds Boston College Series J 6.625% 2021 2.87 2,103,300 Industrial Finance Agency Pollution Control Refunding Revenue Bonds Eastern Edison Series 1993 5.875% 2008 2.63 1,928,180 Health & Educational Facilities Authority Revenue Bonds Charlton Memorial Series 1991B 7.25% 2013 2.52 1,851,133 Industrial Finance Agency Resource Recovery Revenue Bonds SEMASS Series 1991A 9.00% 2015 2.25 1,653,300 Bay Transportation Authority General Transportation System Refunding Bonds Series 1992B 6.20% 2016 2.15 1,575,135 Municipal Wholesale Electric Power Supply System Pre-Refunding Revenue Bonds Series 1992 6.75% 2017 2.12 1,554,951 Municipal Wholesale Electric Power Supply System Refunding Revenue Bonds Series B 4.75% 2011 2.10 1,541,855 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T.).
PAGE 17 The Fund's long-term performance IDS Massachusetts Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS Massachusetts Tax-Exempt Fund $17,521 Lehman Total Return Massachusetts $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 8/1/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of June 30, 1996) Since 1 year 5 years inception Class A* +0.67% +6.06% +6.38% Class B** +0.19% --% +1.62% Class Y** +6.08% --% +5.38% *Inception date was July 2, 1987. **Inception date was March 20, 1995. Assumes: Holding period from 8/1/87 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the fund's current prospectus. Reinvestment of all income and capital gains distributions for the Fund, with a value of $7,359. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing Massachusetts Tax-Exempt Fund to this index, you should take into account the fact that the fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 18 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 19
The Fund's ten largest holdings IDS Michigan Tax-Exempt Fund (pie chart) The ten holdings listed here make up 24.65% of the Fund's net assets ______________________________________________________________________________________________ Percent Value (of Fund's net assets) (as of June 30, 1996) ______________________________________________________________________________________________ Romulus Township School District Unlimited Tax General Obligation Refunding Bonds 5.75% 2022 3.02% $2,466,675 State Building Authority Refunding Revenue Bonds Series 1991I 6.25% 2020 2.71 2,216,302 Johannesburg-Lewiston Area Schools Building & Site General Obligation Bonds Unlimited Tax 5.00% 2016 2.67 2,180,938 Eaton County Water System Limited Tax General Obligation Bonds 5.00% 2013 2.46 2,007,808 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds McLaren Obligated Group Series 1991A 7.50% 2021 2.44 1,993,687 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi 2 Plants Series CC A.M.T. 7.50% 2019 2.36 1,924,545 Detroit Sewer Disposal Revenue Bonds 5.70% 2023 2.31 1,887,180 Grand Ledge Public Schools Unlimited Tax General Obligation Refunding Bonds Counties of Eaton, Clinton & Ionia Series 1995 5.375% 2024 2.28 1,859,700 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Ford Motor Series 1991A 7.10% 2006 2.27 1,857,075 Battle Creek Water Supply System Pre-Refunded Revenue Bonds Series 1990B 6.375% 2008-2010 2.13 1,740,171 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T).
PAGE 20 The Fund's long-term performance IDS Michigan Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS Michigan Tax-Exempt Fund $18,046 Lehman Total Return Michigan $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 8/1/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of June 30, 1996) Since 1 year 5 years inception Class A* +1.04% +6.33% +6.66% Class B** +0.57% --% +1.78% Class Y** +6.45% --% +5.56% *Inception date was July 2, 1987. **Inception date was March 20, 1995. Assumes: Holding period from 8/1/87 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the Fund's current prospectus. Reinvestment of all income and capital gains distributions for the Fund, with a value of $7,706. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing Michigan Tax-Exempt Fund to this index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 21 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. The Fund's ten largest holdings PAGE 22
IDS Minnesota Tax-Exempt Fund (pie chart) The ten holdings listed here make up 20.75% of the Fund's net assets ____________________________________________________________________________________ Percent Value (of Fund's net assets) (as of June 30, 1996) ____________________________________________________________________________________ Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Healthspan Series 1993 4.75% 2018 2.80% $11,450,295 St. Paul & Minneapolis Housing & Redevelopment Authority Health Care Facility Revenue Bonds Group Health Plan Series 1992 6.75% 2013 2.76 11,273,115 State General Obligation Various Purpose Pre-Refunded Bonds Series 1991 6.70% 2011 2.12 8,690,240 State General Obligation Various Purpose Pre-Refunded Bonds Series 1990 7.00% 2009 2.08 8,511,519 Anoka County General Obligation Capital Improvement Revenue Bonds Series 1989B 7.00% 2007-2010 2.05 8,371,032 Hennepin County Lease Revenue Certificate of Participation Series 1991 6.80% 2017 1.91 7,819,488 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series 1987A 7.00% 2013 1.84 7,537,177 Edina Multi-family Housing Revenue Bonds Walker Assisted Living Series 1991 9.00% 2031 1.79 7,311,978 St. Paul Housing & Redevelopment Authority Sales Tax Revenue Bonds Civic Center 5.55% 2023 1.72 7,036,125 Faribault Rice & Goodhue County Independent School District #656 General Obligation School Building Bonds Series 1995 5.75% 2015 1.68 6,875,988 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T.).
PAGE 23 The Fund's long-term performance IDS Minnesota Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS Minnesota Tax-Exempt Fund $18,008 Lehman Total Return Minnesota $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 9/1/86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of June 30, 1996) Since 1 year 5 years inception Class A* +0.63% +5.77% +6.36% Class B** +0.20% --% +1.66% Class Y** +6.14% --% +5.36% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. Assumes: Holding period from 9/1/86 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the Fund's current prospectus. Reinvestment of all income and capital gains distributions for the Fund, with a value of $8,339. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing Minnesota Tax-Exempt Fund to this index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 24 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 25
The Fund's ten largest holdings IDS New York Tax-Exempt Fund (pie chart) The ten holdings listed here make up 33.65% of the Fund's net assets ______________________________________________________________________________________ Percent Value (of Fund's net assets)(as of June 30, 1996) ______________________________________________________________________________________ State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1990A A.M.T. 7.50% 2025 4.47% $5,370,800 State Urban Development Correction Facility Pre-Refunded Revenue Bonds Series 1 7.50% 2020 4.16 4,999,725 State Local Government Assistance Pre-Refunded Bonds Series 1991A 7.00% 2016 3.71 4,464,680 United Nations Development Senior Lien Refunding Revenue Bonds Series 1992A 6.00% 2026 3.69 4,432,275 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series TT 7.50% 2015 3.53 4,238,440 State Dormitory Authority City University System Pre-Refunded Revenue Bonds 8.125% 2017 3.01 3,615,798 Battery Park City Authority Senior Refunding Revenue Bonds Series 1993A 5.25% 2017 2.96 3,557,600 Triborough Bridge & Tunnel Authority General Purpose Pre-Refunded Revenue Bonds Series S 7.00% 2021 2.76 3,322,920 State Environmental Facility State Water & Pollution Control Revolving Fund Revenue Bonds New York City Municipal Water Finance Authority Series 1990A 7.50% 2012 2.74 3,300,210 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series 27 6.90% 2015 2.62 3,155,670 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T.).
PAGE 26 The Fund's long-term performance IDS New York Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS New York Tax-Exempt Fund $17,622 Lehman Total Return New York $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 9/1/86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of June 30, 1996) Since 1 year 5 years inception Class A* +0.03% +5.76% +5.94% Class B** +0.55% --% +0.48% Class Y** +5.35% --% +4.33% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. Assumes: Holding period from 9/1/86 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the Fund's current prospectus. Reinvestment of all income and capital gains distributions for the Fund, with a value of $8,035. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing New York Tax-Exempt Fund to this index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 27 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 28
The Fund's ten largest holdings IDS Ohio Tax-Exempt Fund (pie chart) The ten holdings listed here make up 25.80% of the Funds's net assets ___________________________________________________________________________________________ Percent Value (of Fund's net assets)(as of June 30, 1996) ___________________________________________________________________________________________ Erie County Hospital Improvement Refunding Revenue Bonds Firelands Community Hospital Series 1992 6.75% 2015 2.83% $2,088,380 Lakota Local School District Unlimited Tax Improvement General Obligation Bonds 6.25% 2014 2.81 2,073,340 State Air Quality Development Authority Refunding Revenue Bonds Series 1994 A.M.T. 6.375% 2029 2.79 2,059,700 Dayton Intl Airport Refunding Revenue Bonds 5.25% 2015 2.55 1,879,360 Lorain County Hospital Facilities Refunding Revenue Bonds EMH Regional Medical Center Series 1995 5.375% 2021 2.53 1,872,600 State Municipal Electric Generation Agency Joint Venture #5 Revenue Bonds 5.375% 2024 2.53 1,867,880 State Valley School District School Improvement Unlimited Tax General Obligation Bonds Counties of Adams & Highland Series 1995 5.25% 2021 2.51 1,854,580 Butler County Hospital Facility Improvement Refunding Revenue Bonds 7.50% 2010 2.51 1,854,125 Lucas County Hospital Refunding Revenue Bonds St. Vincent's Medical Center Series B 5.25% 2020 2.49 1,836,080 Franklin County Convention Facilities Authority Tax & Lease Revenue Anticipation Pre-Refunded Bonds 7.00% 2019 2.25 1,660,110 Note: Certain of the Fund's investment income may be subject to the Alternative Minimum Tax (A.M.T.).
PAGE 29 The Fund's long-term performance IDS Ohio Tax-Exempt Fund Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of the Fund or another fund. How your $10,000 has grown in IDS Ohio Tax-Exempt Fund $17,637 Lehman Total Return Ohio $10,000 Muni Index Tax-Exempt Fund $ 9,500 Class A 8/1/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 Average annual total return (as of June 30, 1996) Since 1 year 5 years inception Class A* +0.47% +5.89% +6.37% Class B** +0.04% --% +1.27% Class Y** +5.86% --% +4.73% *Inception date was July 2, 1987. **Inception date was March 20, 1995. Assumes: Holding period from 9/1/86 to 6/30/96. Returns do not reflect taxes payable on distributions. Also see "Performance" in the Fund's current prospectus. Reinvestment of all income and capital gains distributions for the Fund, with a value of $7,432. The Lehman Total Return Muni Index is an unmanaged list of municipal bonds used as a general measure of market performance. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Total Return Muni Index. In comparing Ohio Tax-Exempt Fund to this index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. If you were actually to buy either individual bonds or bond mutual funds, any sales charge that you pay would reduce your total return as well. PAGE 30 Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 31 Making the most of the Fund California Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since inception Class A* +0.70% +5.86% +6.15% Class B** +0.19% --% +1.52% Class Y** +6.11% --% +5.06% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. Massachusetts Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since inception Class A* +0.67% +6.06% +6.38% Class B** +0.19% --% +1.62% Class Y** +6.08% --% +5.38% *Inception date was July 2, 1987. **Inception date was March 20, 1995. Michigan Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since inception Class A* +1.04% +6.33% +6.66% Class B** +0.57% --% +1.78% Class Y** +6.45% --% +5.56% *Inception date was July 2, 1987. **Inception date was March 20, 1995. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Figures include the effect of the maximum sales charge as discussed in the prospectus. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 32 Minnesota Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since Inception Class A* +0.63% +5.77% +6.36% Class B** +0.20% --% +1.66% Class Y** +6.14% --% +5.36% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. New York Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since inception Class A* +0.03% +5.76% +5.94% Class B** +0.55% --% +0.48% Class Y** +5.35% --% +4.33% *Inception date was Aug. 18, 1986. **Inception date was March 20, 1995. Ohio Tax-Exempt Fund - average annual total return (June 30, 1996) 1 year 5 years Since inception Class A* +0.47% +5.89% +6.37% Class B** +0.04% --% +1.27% Class Y** +5.86% --% +4.73% *Inception date was July 2, 1987. **Inception date was March 20, 1995. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. Figures include the effect of the maximum sales charge as discussed in the prospectus. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 33 Making the most of the Fund Build your assets systematically To keep your assets growing steadily, one of the best ways to use the Fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when the Fund's share price is low, fewer shares when it is high. This does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Month Amount Per-share Number of shares purchased invested market price Jan. $100 $20 5.00 Feb. 100 18 5.56 Mar. 100 17 5.88 Apr. 100 15 6.67 May 100 16 6.25 June 100 18 5.56 July 100 17 5.88 Aug. 100 19 5.26 Sept. 100 21 4.76 Oct. 100 20 5.00 (footnotes to table) By investing an equal number of dollars each month... (arrow in table pointing to April) you automatically buy more shares when the per share market price is low... (arrow in table pointing to September) and fewer shares when the per share market price is high. You have paid an average price of only $17.91 per share over the 10 months, while the average market price actually was $18.10. PAGE 34 __________________________________________________________________ Independent auditors' report The board and shareholders IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust: We have audited the accompanying statements of assets and liabilities, including the schedules of investments in securities, of IDS California Tax-Exempt Fund (a fund within IDS California Tax-Exempt Trust), and IDS Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund, IDS New York Tax-Exempt Fund and IDS Ohio Tax-Exempt Fund (funds within IDS Special Tax-Exempt Series Trust) as of June 30, 1996, the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, the financial highlights for each of the years in the seven-year period ended June 30, 1996, the six months ended June 30, 1989, each of the years in the two-year period ended December 31, 1988, and the period from August 18, 1986 (commencement of operations), to December 31, 1986, of IDS California Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund and IDS New York Tax-Exempt Fund; and the financial highlights for each of the years in the nine-year period ended June 30, 1996, of IDS Massachusetts Tax- Exempt Fund, IDS Michigan Tax-Exempt Fund and IDS Ohio Tax-Exempt Fund. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody are confirmed to us by the custodian. As to securities purchased and sold but not received or delivered, we request confirmations from brokers, and where replies are not received, we carry out other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PAGE 35 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS California Tax-Exempt Fund, IDS Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund, IDS New York Tax-Exempt Fund and IDS Ohio Tax-Exempt Fund at June 30, 1996, and the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period ended, and the financial highlights for the periods stated in the first paragraph above, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota August 2, 1996 PAGE 36
Financial statements Statements of assets and liabilities IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust June 30, 1996 _____________________________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________________________ California Massachusetts Michigan Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund _____________________________________________________________________________________________________________________________ Investments in securities, at value (Note 1) (identified cost $219,312,804, $68,878,578 and $75,801,580) $234,980,999 $72,057,717 $80,439,025 Cash in bank on demand deposit 1,013,026 736,750 -- Accrued interest receivable 4,515,580 1,525,236 1,320,519 Receivable for investment securities sold 107,531 25,313 28,687 _____________________________________________________________________________________________________________________________ Total assets 240,617,136 74,345,016 81,788,231 _____________________________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit -- -- 59,689 Dividends payable to shareholders 51,808 20,083 18,090 Payable for investment securities purchased -- 965,203 -- Accrued investment management services fee 3,068 936 1,042 Accrued distribution fee 130 113 53 Accrued service fee 1,143 348 388 Accrued transfer agency fee 258 127 115 Accrued administrative services fee 261 80 89 Other accrued expenses 45,778 30,101 35,867 _____________________________________________________________________________________________________________________________ Total liabilities 102,446 1,016,991 115,333 _____________________________________________________________________________________________________________________________ Net assets applicable to outstanding shares $240,514,690 $73,328,025 $81,672,898 _____________________________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________________________ Shares of beneficial interest -- $.01 par value, unlimited number of shares authorized $ 467,134 $ 138,353 $ 152,273 Additional paid-in-capital 232,195,182 71,392,078 78,354,771 Undistributed net investment income 1,254 6,316 (3,116) Accumulated net realized loss (Notes 1 and 6) (8,112,325) (1,467,048) (1,559,130) Unrealized appreciation (Note 5) 15,963,445 3,258,326 4,728,100 _____________________________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding shares $240,514,690 $73,328,025 $81,672,898 _____________________________________________________________________________________________________________________________ Net assets applicable to outstanding shares: Class A $234,115,579 $67,765,538 $79,074,832 Class B $ 6,398,039 $ 5,561,413 $ 2,596,990 Class Y $ 1,072 $ 1,074 $ 1,076 Outstanding shares of beneficial interest: Class A shares 45,470,271 12,785,695 14,742,952 Class B shares 1,242,929 1,049,378 484,188 Class Y shares 208 202 200 Net asset value per share: Class A $ 5.15 $ 5.30 $ 5.36 Class B $ 5.15 $ 5.30 $ 5.36 Class Y $ 5.15 $ 5.32 $ 5.38 See accompanying notes to financial statements. PAGE 37 Financial statements Statements of assets and liabilities IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust June 30, 1996 _____________________________________________________________________________________________________________________________ Assets _____________________________________________________________________________________________________________________________ Minnesota New York Ohio Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund ____________________________________________________________________________________________________________________________ Investments in securities, at value (Note 1) (identified cost $383,139,342, $111,208,011 and $69,340,999) $400,295,278 $117,902,996 $72,981,281 Cash in bank on demand deposit 379,599 20,240 -- Accrued interest receivable 8,351,576 2,332,411 1,012,178 Receivable for investment securities sold 242,719 54,000 27,000 _____________________________________________________________________________________________________________________________ Total assets 409,269,172 120,309,647 74,020,459 _____________________________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit -- -- 153,982 Dividends payable to shareholders 126,049 35,710 21,942 Accrued investment management services fee 5,111 1,534 944 Accrued distribution fee 324 101 45 Accrued service fee 1,943 571 351 Accrued transfer agency fee 625 188 110 Accrued administrative services fee 422 130 80 Other accrued expenses 78,735 39,933 24,725 _____________________________________________________________________________________________________________________________ Total liabilities 213,209 78,167 202,179 _____________________________________________________________________________________________________________________________ Net assets applicable to outstanding shares $409,055,963 $120,231,480 $73,818,280 _____________________________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________________________ Shares of beneficial interest -- $.01 par value, unlimited number of shares authorized $ 787,347 $ 237,478 $ 139,732 Additional paid-in-capital 401,826,541 117,466,739 72,107,198 Undistributed net investment income 11,951 (11) 695 Accumulated net realized loss (Notes 1 and 6) (11,210,593) (4,337,180) (2,155,221) Unrealized appreciation (Note 5) 17,640,717 6,864,454 3,725,876 _____________________________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding shares $409,055,963 $120,231,480 $73,818,280 _____________________________________________________________________________________________________________________________ Net assets applicable to outstanding shares: Class A $392,966,276 $115,274,794 $71,628,090 Class B $ 16,088,609 $ 4,955,626 $ 2,189,121 Class Y $ 1,078 $ 1,060 $ 1,069 Outstanding shares of beneficial interest: Class A shares 75,637,575 22,768,781 13,558,632 Class B shares 3,096,878 978,780 414,378 Class Y shares 207 209 202 Net asset value per share: Class A $ 5.20 $ 5.06 $ 5.28 Class B $ 5.20 $ 5.06 $ 5.28 Class Y $ 5.21 $ 5.07 $ 5.29 See accompanying notes to financial statements. /TABLE PAGE 38
Financial statements Statements of operations IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, 1996 _____________________________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________________________ California Massachusetts Michigan Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund _____________________________________________________________________________________________________________________________ Income: Interest $14,969,221 $4,486,909 $5,028,983 _____________________________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 1,138,491 344,729 381,069 Distribution fee -- Class B 29,809 28,726 13,434 Transfer agency fee 96,983 46,478 42,691 Incremental transfer agency fee -- Class B 196 169 80 Service fee Class A 414,609 121,350 137,607 Class B 6,894 6,663 3,115 Administrative services fee 97,114 30,015 32,431 Compensation of board members 6,376 6,411 5,788 Compensation of officers 2,465 930 561 Custodian fees 100,438 5,630 23,266 Postage 16,475 5,355 3,597 Registration fees 27,954 24,903 33,241 Reports to shareholders 17,235 17,338 7,523 Audit fees 16,500 15,250 16,315 Administrative 1,896 2,583 987 Other 3,222 7,004 2,979 _____________________________________________________________________________________________________________________________ Total expenses 1,976,657 663,534 704,684 Earnings credits on cash balances (Note 2) (100,484) (7,768) (23,235) _____________________________________________________________________________________________________________________________ Total net expenses 1,876,173 655,766 681,449 _____________________________________________________________________________________________________________________________ Investment income -- net 13,093,048 3,831,143 4,347,534 _____________________________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________________________ Net realized gain on security transactions (Note 3) 997,822 102,823 318,118 Net realized loss on closed interest rate futures contracts (537,999) (22,179) (17,177) Net realized gain on exercised option contracts written (Note 7) 93,436 14,910 15,904 _____________________________________________________________________________________________________________________________ Net realized gain on investments 553,259 95,554 316,845 Net change in unrealized appreciation or depreciation 323,151 202,491 274,473 _____________________________________________________________________________________________________________________________ Net gain on investments 876,410 298,045 591,318 _____________________________________________________________________________________________________________________________ Net increase in net assets resulting from operations $13,969,458 $4,129,188 $ 4,938,852 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 39 Financial statements Statements of operations IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, 1996 _____________________________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________________________ Minnesota New York Ohio Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund _____________________________________________________________________________________________________________________________ Income: Interest $26,512,346 $7,798,801 $4,675,409 _____________________________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 1,895,243 578,413 355,739 Distribution fee -- Class B 71,223 27,377 11,346 Transfer agency fee 234,593 71,670 41,628 Incremental transfer agency fee -- Class B 509 198 97 Service fee Class A 698,714 207,892 128,837 Class B 16,613 6,387 2,647 Administrative services fee 156,621 49,226 30,276 Compensation of board members 8,036 7,000 6,949 Compensation of officers 5,121 1,170 672 Custodian fees 138,999 5,219 19,411 Postage 32,635 13,794 6,134 Registration fees 30,583 32,707 25,367 Reports to shareholders 35,566 14,838 7,395 Audit fees 17,500 16,500 16,129 Administrative 1,555 1,171 412 Other 15,694 6,139 1,401 _____________________________________________________________________________________________________________________________ Total expenses 3,359,205 1,039,701 654,440 Earnings credits on cash balances (Note 2) (111,580) (3,793) (19,403) _____________________________________________________________________________________________________________________________ Total net expenses 3,247,625 1,035,908 635,037 _____________________________________________________________________________________________________________________________ Investment income -- net 23,264,721 6,762,893 4,040,372 _____________________________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________________________ Net realized gain (loss) on security transactions (Note 3) 609,392 153,907 (440,823) Net realized loss on closed interest rate futures contracts (185,775) (537,433) (25,608) Net realized gain on exercised or expired option contracts written (Note 7) 88,466 70,574 15,904 ______________________________________________________________________________________________________________________________ Net realized gain (loss) on investments 512,083 (312,952) (450,527) Net change in unrealized appreciation or depreciation 20,022 (271,393) 579,615 _____________________________________________________________________________________________________________________________ Net gain (loss) on investments 532,105 (584,345) 129,088 _____________________________________________________________________________________________________________________________ Net increase in net assets resulting from operations $23,796,826 $6,178,548 $4,169,460 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE 40
Financial statements Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, _____________________________________________________________________________________________________________________________ Operations and distributions _____________________________________________________________________________________________________________________________ 1996 1995 1996 1995 California Massachusetts Tax-Exempt Fund Tax-Exempt Fund _____________________________________________________________________________________________________________________________ Investment income -- net $13,093,048 $ 14,306,975 $3,831,143 $ 3,941,356 Net realized gain (loss) on investments 553,259 (4,035,813) 95,554 (1,258,540) Net change in unrealized appreciation or depreciation 323,151 4,486,171 202,491 1,474,819 _____________________________________________________________________________________________________________________________ Net increase in net assets resulting from operations 13,969,458 14,757,333 4,129,188 4,157,635 _____________________________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (12,910,349) (14,290,556) (3,652,150) (3,926,867) Class B (184,985) (16,509) (172,619) (14,479) Class Y (59) (11) (58) (10) Net realized gain on securities Class A (1,353,174) -- -- -- Class B (20,647) -- -- -- Class Y (6) -- -- -- _____________________________________________________________________________________________________________________________ Total distributions (14,469,220) (14,307,076) (3,824,827) (3,941,356) _____________________________________________________________________________________________________________________________ Share transactions (Note 4) _____________________________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 23,553,539 22,693,617 11,006,959 10,352,839 Class B shares 5,187,208 2,091,151 4,389,565 1,991,573 Class Y shares -- 1,020 -- 1,021 Reinvestment of distributions at net asset value Class A shares 10,071,411 9,854,175 2,835,364 3,023,192 Class B shares 184,290 13,558 149,356 12,005 Class Y shares 65 11 58 10 Payments for redemptions Class A shares (38,384,549) (48,910,065) (14,679,805) (17,395,360) Class B shares (Note 2) (960,392) (27,600) (790,581) (137,393) _____________________________________________________________________________________________________________________________ Increase (decrease) in net assets from share transactions (348,428) (14,284,133) 2,910,916 (2,152,113) _____________________________________________________________________________________________________________________________ Total increase (decrease) in net assets (848,190) (13,833,876) 3,215,277 (1,935,834) Net assets at beginning of year 241,362,880 255,196,756 70,112,748 72,048,582 _____________________________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $1,254 and $2,661 for IDS California, and $6,316 and $0 for IDS Massachusetts) $240,514,690 $241,362,880 $73,328,025 $70,112,748 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 41 Financial statements Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, _____________________________________________________________________________________________________________________________ Operations and distributions ______________________________________________________________________________________________________________________________ 1996 1995 1996 1995 Michigan Minnesota Tax-Exempt Fund Tax-Exempt Fund ______________________________________________________________________________________________________________________________ Investment income -- net $4,347,534 $ 4,389,687 $ 23,264,721 $ 23,929,961 Net realized gain (loss) on investments 316,845 (518,081) 512,083 (9,227,466) Net change in unrealized appreciation or depreciation 274,473 1,141,073 20,022 10,495,908 _____________________________________________________________________________________________________________________________ Net increase in net assets resulting from operations 4,938,852 5,012,679 23,796,826 25,198,403 _____________________________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (4,267,908) (4,384,843) (22,792,618) (23,900,319) Class B (83,171) (4,833) (470,510) (29,555) Class Y (59) (11) (62) (11) Net realized gain Class A (1,011,041) (36,289) (300,980) -- Class B (21,404) -- (6,713) -- Class Y (13) -- (1) -- _____________________________________________________________________________________________________________________________ Total distributions (5,383,596) (4,425,976) (23,570,884) (23,929,885) _____________________________________________________________________________________________________________________________ Share transactions (Note 4) _____________________________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 7,791,545 12,053,759 43,579,588 57,985,486 Class B shares 1,729,504 997,872 12,784,665 4,124,509 Class Y shares -- 1,020 -- 1,020 Reinvestment of distributions at net asset value Class A shares 3,972,887 3,277,481 18,480,819 18,880,977 Class B shares 85,004 4,262 401,374 24,745 Class Y shares 72 11 63 11 Payment for redemptions Class A shares (9,793,095) (15,101,862) (72,296,842) (83,747,345) Class B shares (Note 2) (166,982) (3,353) (1,011,844) (36,354) _____________________________________________________________________________________________________________________________ Increase (decrease) in net assets from share transactions 3,618,935 1,229,190 1,937,823 (2,766,951) ______________________________________________________________________________________________________________________________ Total increase (decrease) in net assets 3,174,191 1,815,893 2,163,765 (1,498,433) Net assets at beginning of year 78,498,707 76,682,814 406,892,198 408,390,631 _____________________________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $(3,116) and $2,198 for IDS Michigan, and $11,951 and $10,692 for IDS Minnesota) $81,672,898 $78,498,707 $409,055,963 $406,892,198 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements. PAGE 42 Financial statements Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, _____________________________________________________________________________________________________________________________ Operations and distributions _____________________________________________________________________________________________________________________________ 1996 1995 1996 1995 New York Ohio Tax-Exempt Fund Tax-Exempt Fund _____________________________________________________________________________________________________________________________ Investment income -- net $ 6,762,893 $ 7,058,619 $4,040,372 $ 4,061,670 Net realized loss on investments (312,952) (2,824,160) (450,527) (1,262,593) Net change in unrealized appreciation or depreciation (271,393) 1,994,739 579,615 1,448,594 _____________________________________________________________________________________________________________________________ Net increase in net assets resulting from operations 6,178,548 6,229,198 4,169,460 4,247,671 _____________________________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (6,587,794) (7,042,080) (3,934,612) (4,092,348) Class B (175,051) (16,527) (69,847) (5,227) Class Y (59) (12) (58) (11) Net realized gain Class A -- -- (133,990) -- Class B -- -- (3,014) -- Class Y -- -- (2) -- _____________________________________________________________________________________________________________________________ Total distributions (6,762,904) (7,058,619) (4,141,523) (4,097,586) _____________________________________________________________________________________________________________________________ Share transactions (Note 4) _____________________________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 9,808,292 16,050,177 6,884,856 12,347,956 Class B shares 3,827,013 1,923,002 1,761,407 715,678 Class Y shares -- 1,020 -- 1,020 Reinvestment of distributions at net asset value Class A shares 5,179,004 5,362,620 3,192,425 3,162,750 Class B shares 158,781 12,791 64,381 3,706 Class Y shares 59 12 60 11 Payments for redemptions Class A shares (18,878,694) (21,072,998) (11,876,308) (14,135,624) Class B shares (Note 2) (862,141) (22,313) (316,974) (21) _____________________________________________________________________________________________________________________________ Increase (decrease) in net assets from share transactions (767,686) 2,254,311 (290,153) 2,095,476 _____________________________________________________________________________________________________________________________ Total increase (decrease) in net assets (1,352,042) 1,424,890 (262,216) 2,245,561 Net assets at beginning of year 121,583,522 120,158,632 74,080,496 71,834,935 _____________________________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $(11) and $0 for IDS New York, and $695 and $(35,368) for IDS Ohio) $120,231,480 $121,583,522 $73,818,280 $74,080,496 _____________________________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE 43 Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust ___________________________________________________________________ 1. Summary of significant accounting policies IDS California Tax-Exempt Trust and IDS Special Tax-Exempt Series Trust were organized as Massachusetts business trusts. IDS California Tax-Exempt Trust includes only IDS California Tax-Exempt Fund. IDS Special Tax-Exempt Series Trust is a "series fund" that is currently composed of individual state tax-exempt funds and one insured national tax-exempt fund, including IDS Massachusetts Tax-Exempt Fund, IDS Michigan Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund, IDS New York Tax-Exempt Fund, IDS Ohio Tax-Exempt Fund and IDS Insured Tax-Exempt Fund (the Funds). 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, which each Fund began offering on March 20, 1995, may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. Class Y shares, which each Fund also began offering on March 20, 1995, have no sales charge and are offered only to qualifying institutional investors. 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. Significant accounting policies followed by the Funds are summarized below: 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. PAGE 44 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, each Fund may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that each Fund gives up the opportunity of profit if the market price of the security increases. The risk in writing a put option is that each Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that each Fund pays a premium whether or not the option is exercised. Each Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Each Fund also may write over-the-counter options where the completion of the obligation is dependent upon the credit standing of the other party. Futures transactions In order to gain exposure to or protect itself from changes in the market, each Fund may buy and sell interest rate futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Securities purchased on a when-issued basis Delivery and payment of securities that have been purchased by IDS Massachusetts Tax-Exempt Fund on a forward-commitment or when issued basis can take place one month or more after the transaction date. During this period, such securities are subject to market fluctuations, and they may affect the Fund's net assets the same as owned securities. The Fund designates cash or liquid high-grade debt securities at least equal to the amount of its commitment. As of June 30, 1996, IDS Massachusetts Tax-Exempt Fund had entered into outstanding when-issued or forward commitments of $965,203. PAGE 45 Federal taxes Since each Fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, accumulated net realize gain (loss) and undistributed net investment income have been increased (decreased), resulting in net reclassification adjustments to additional paid-in-capital by the following:
California Michigan Minnesota Ohio Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Fund ___________________________________________________________________________ Accumulated net $(938) $1,710 $ 2,171 $(208) realized gain (loss) Undistributed net 938 1,710 (272) 208 investment income (loss) ___________________________________________________________________________ Additional paid-in-capital $ -- $ -- $(1,899) $ --
Dividends to shareholders Dividends from net investment income, declared daily and paid monthly, are reinvested in additional shares of each Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend at the end of the calendar year. Other Security transactions are accounted for on the date securities are purchased or sold. Interest income, including level-yield amortization of premium and discount, is accrued daily. At June 30, 1996, American Express Financial Corporation (AEFC) owned 208 Class Y shares for IDS California, 202 for IDS Massachusetts, 200 for IDS Michigan, 207 for IDS Minnesota, 209 for IDS New York and 202 for IDS Ohio Tax-Exempt Funds. PAGE 46 ___________________________________________________________________ 2. Expenses and sales charges Effective March 20, 1995, when each Fund began offering multiple classes of shares, each Fund entered into agreements with AEFC for managing its portfolio, providing administrative services and serving as transfer agent as follows: 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 o Class Y $15.50 Also effective March 20, 1995, each Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing-related services. Under a Plan and Agreement of Distribution, each Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, each Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of each Fund's average daily net assets attributable to Class A and Class B shares. American Express Financial Corporation will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges received by American Express Financial Advisors Inc. for distributing the Funds' shares for the year ended June 30, 1996, are as follows: Class A Class B IDS California $ 722,870 $12,031 IDS Massachusetts 313,479 2,723 IDS Michigan 209,670 1,577 IDS Minnesota 1,109,339 10,709 IDS New York 265,967 5,682 IDS Ohio 177,634 1,335 During the year ended June 30, 1996, the Funds' custodian and transfer agency fees were reduced by $100,484 for IDS California, $7,768 for IDS Massachusetts, $23,235 for IDS Michigan, $111,580 for IDS Minnesota, $3,793 for IDS New York and $19,403 for IDS Ohio Tax-Exempt Funds as a result of earnings credits from overnight cash balances. PAGE 47 Prior to April 30, 1996, each Fund had a retirement plan for its independent board members. The plan was terminated April 30, 1996. The retirement plan expense amounted to $557 for IDS California, $1,166 for IDS Massachusetts, $1,167 for IDS Michigan, $3,037 for IDS Minnesota, $1,156 for IDS New York and $506 for IDS Ohio Tax-Exempt Funds for the year. The total liability for the plan is $13,293 for IDS California, $5,584 for IDS Massachusetts, $6,584 for IDS Michigan, $11,280 for IDS Minnesota, $6,224 for IDS New York and $5,584 for IDS Ohio Tax-Exempt Funds and will be paid out at some future date. ___________________________________________________________________ 3. Securities transactions For the year ended June 30, 1996, cost of purchases and proceeds from sales (other than short-term obligations) aggregated $35,078,861 and $37,682,799 for IDS California, $8,060,747 and $3,947,688 for IDS Massachusetts, $25,233,011 and $23,299,257 for IDS Michigan, $55,992,006 and $54,660,000 for IDS Minnesota, $10,765,522 and $12,297,596 for IDS New York and $17,896,136 and $18,049,881 for IDS Ohio Tax-Exempt Funds. Realized gains and losses are determined on an identified cost basis. ___________________________________________________________________ 4. Share transactions Transactions in shares of each Fund for the periods indicated are as follows: California Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y _______________________________________________________________ Sold 4,511,208 995,477 -- Issued for reinvested 1,925,925 35,294 12 distributions Redeemed (7,378,222) (184,480) -- _______________________________________________________________ Net increase (decrease) (941,089) 846,291 12 _______________________________________________________________ PAGE 48 Year ended June 30, 1995 Class A Class B* Class Y* _______________________________________________________________ Sold 4,428,851 399,282 194 Issued for reinvested 1,929,797 2,588 2 distributions Redeemed (9,662,241) (5,232) -- _______________________________________________________________ Net increase (decrease) (3,303,593) 396,638 196 _______________________________________________________________ *Inception date was March 20, 1995. Massachusetts Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y _______________________________________________________________ Sold 2,049,431 819,429 -- Issued for reinvested 529,215 27,882 10 distributions Redeemed (2,742,630) (147,842) -- _______________________________________________________________ Net increase (decrease) (163,984) 699,469 10 _______________________________________________________________ Year ended June 30, 1995 Class A Class B* Class Y* _______________________________________________________________ Sold 1,986,963 373,441 190 Issued for reinvested 581,883 2,245 2 distributions Redeemed (3,369,135) (25,777) -- _______________________________________________________________ Net increase (decrease) (800,289) 349,909 192 _______________________________________________________________ *Inception date was March 20, 1995. Michigan Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y ________________________________________________________________ Sold 1,429,150 315,865 -- Issued for reinvested 725,981 15,490 13 distributions Redeemed (1,794,375) (30,500) -- ________________________________________________________________ Net increase 360,756 300,855 13 ________________________________________________________________ PAGE 49 Year ended June 30, 1995 Class A Class B* Class Y* ________________________________________________________________ Sold 2,295,997 183,169 185 Issued for reinvested 615,732 779 2 distributions Redeemed (2,849,810) (615) -- ________________________________________________________________ Net increase 61,919 183,333 187 ________________________________________________________________ *Inception date was March 20, 1995. Minnesota Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y _________________________________________________________________ Sold 8,270,935 2,429,988 -- Issued for reinvested 3,510,197 76,278 12 distributions Redeemed (13,742,113) (192,219) -- _________________________________________________________________ Net increase (decrease) (1,960,981) 2,314,047 12 _________________________________________________________________ Year ended June 30, 1995 Class A Class B* Class Y* _________________________________________________________________ Sold 11,298,321 785,048 193 Issued for reinvested 3,679,693 4,700 2 distributions Redeemed (16,502,683) (6,917) -- _________________________________________________________________ Net increase (decrease) (1,524,669) 782,831 195 _________________________________________________________________ *Inception date was March 20, 1995. PAGE 50 New York Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y _________________________________________________________________ Sold 1,906,925 744,701 -- Issued for reinvested 1,006,832 30,877 12 distributions Redeemed (3,672,303) (166,438) -- _________________________________________________________________ Net increase (decrease) (758,546) 609,140 12 _________________________________________________________________ Year ended June 30, 1995 Class A Class B* Class Y* _________________________________________________________________ Sold 3,164,808 371,486 195 Issued for reinvested 1,057,342 2,472 2 distributions Redeemed (4,176,540) (4,318) -- __________________________________________________________________ Net increase 45,610 369,640 197 __________________________________________________________________ *Inception date was March 20, 1995. Ohio Tax-Exempt Fund Year ended June 30, 1996 Class A Class B Class Y ________________________________________________________________ Sold 1,279,987 327,095 -- Issued for reinvested 596,160 12,022 11 distributions Redeemed (2,225,461) (59,086) -- ________________________________________________________________ Net increase (decrease) (349,314) 280,031 11 ________________________________________________________________ Year ended June 30, 1995 Class A Class B* Class Y* ________________________________________________________________ Sold 2,368,379 133,660 189 Issued for reinvested 604,956 691 2 distributions Redeemed (2,726,424) (4) -- ________________________________________________________________ Net increase 246,911 134,347 191 ________________________________________________________________ *Inception date was March 20, 1995. PAGE 51 ___________________________________________________________________ 5. Interest rate futures contracts Upon entering into a futures contract, each Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by each Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. Each Fund recognizes a realized gain or loss when the contract is closed or expires. Investments in securities at June 30, 1996, included securities valued at $5,923,940 for IDS California, $2,158,350 for IDS Massachusetts, $2,106,765 for IDS Michigan, $5,368,150 for IDS Minnesota, $5,303,990 for IDS New York and $1,584,485 for IDS Ohio Tax-Exempt Funds that were pledged as collateral to cover initial margin deposits on 111, 30, 34, 181, 64 and 32 open purchase contracts, respectively. The market value of the open contracts at June 30, 1996, was $12,470,156 for IDS California, $3,370,312 for IDS Massachusetts, $3,819,688 for IDS Michigan, $20,334,219 for IDS Minnesota, $7,190,000 for IDS New York and $3,595,000 for IDS Ohio Tax-Exempt Funds with a net unrealized gain of $295,250 for IDS California, $79,187 for IDS Massachusetts, $90,655 for IDS Michigan, $484,781 for IDS Minnesota, $169,469 for IDS New York and $85,594 for IDS Ohio Tax-Exempt Funds. 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 $182,601 for California, $426,167 for IDS Massachusetts, $216,362 for IDS Michigan, $2,911,065 for IDS Minnesota $2,695,894 for IDS New York and $843,358 for IDS Ohio tax-exempt funds at June 30, 1996. 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. ___________________________________________________________________ 7. Option contracts written 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. PAGE 52
The number of contracts and premium amounts associated with option contracts written is as follows: Year ended June 30, 1996 California Tax-Exempt Fund Massachusetts Tax Exempt Fund ___________________________________________________________________________ Calls Calls ___________________________________________________________________________ Contracts Premiums Contracts Premiums ___________________________________________________________________________ June 30, 1995 -- $ -- -- $ -- Opened 94 93,436 15 14,910 Exercised (94) (93,436) (15) (14,910) ___________________________________________________________________________ June 30, 1996 __ $ __ __ $ __ ___________________________________________________________________________ Year ended June 30, 1996 Michigan Tax-Exempt Fund Minnesota Tax-Exempt Fund ___________________________________________________________________________ Calls Calls ___________________________________________________________________________ Contracts Premiums Contracts Premiums ___________________________________________________________________________ June 30, 1995 -- $ -- -- $ -- Opened 16 15,904 89 88,466 Exercised/Expired (16) (15,904) (89) (88,466) ____________________________________________________________________________ June 30, 1996 -- $ -- -- $ -- ____________________________________________________________________________ Year ended June 30, 1996 New York Tax-Exempt Fund Ohio Tax-Exempt Fund ___________________________________________________________________________ Calls Calls ___________________________________________________________________________ Contracts Premiums Contracts Premiums ___________________________________________________________________________ June 30, 1995 -- $ -- -- $ -- Opened 71 70,574 16 15,904 Exercised 71 (70,574) (16) (15,904) ____________________________________________________________________________ June 30, 1996 -- $ -- -- $ -- ____________________________________________________________________________
PAGE 53 ___________________________________________________________________ 8. Financial highlights "Financial highlights" showing per share data and selected information are presented on pages 8-19 of the prospectus. PAGE 54
Investments in securities IDS California Tax-Exempt Fund (Percentages represent value of June 30, 1996 investments compared to net assets) ____________________________________________________________________________________________________________________________ Municipal bonds (97.7%) ____________________________________________________________________________________________________________________________ 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 District #88-1 Special Tax Bonds Series 1992A 7.35 % 2018 $ 3,000,000 $ 3,455,400 Anaheim Public Finance Authority Revenue Bonds 2nd Series Electric Utilities San Juan (FGIC Insured) 5.75 2022 11,100,000 10,877,889 Brea Redevelopment Agency Tax Allocation Refunding Bonds Redevelopment Project AB (MBIA Insured) 5.50 2017 1,800,000 1,722,024 Burbank Redevelopment Agency Tax Allocation Bonds Golden State Series 1993A 6.00 2023 2,000,000 1,942,320 Calaveras County Water District Certificate of Participation Refunding Revenue Bonds Water & Sewer System Improvement (AMBAC Insured) 5.25 2012 2,815,000 2,680,950 Chapman College Educational Facilities Authority Revenue Bonds Series 1989B 7.50 2018 500,000 538,135 Chico Walker Senior Housing Insured Revenue Bonds The Lodge Series 1993A 5.70 2023 1,500,000 1,403,550 Clearlake Redevelopment Agency Highlands Park Community Development Tax Allocation Bonds Series 1993 6.40 2023 1,420,000 1,370,215 Eastern Municipal Water District Riverside County Water & Sewer Revenue Certificates of Participation Series 1991 6.00 2023 1,000,000 994,700 Eastern Municipal Water District Riverside County Water & Sewer Pre-Refunded Revenue Certificates of Participation Series 1991 (FGIC Insured) 6.50 2020 3,000,000 3,295,920 El Camino Hospital District Hospital Pre-Refunded Revenue Certificate of Participation Series A 8.50 2017 1,500,000 1,610,445 Fontana Redevelopment Agency Refunding Certificate of Participation Police Facility Series 1993 5.625 2016 4,500,000 4,197,375 Fontana Unified School District Unlimited Tax General Obligation Bonds Zero Coupon CVT Series C (FGIC Insured) 6.40 1997 3,470,000 (e) 3,300,317 Foothill-De Anza Community College Santa Clara County Refunding Certificate of Participation Series 1993 (Connie Lee Insured) 5.25 2021 1,675,000 1,500,766 Foothill/Eastern Transportation Corridor Agency Toll Road Senior Lien Revenue Bonds Series 1995A 6.00 2034 1,775,000 1,686,534 Garden Grove Agency Community Development Tax Allocation Refunding Bonds Garden Grove Community 5.875 2023 3,000,000 2,779,590 Garden Grove Certificate of Participation Bahia Village/Emerald Isle (FSA Insured) 5.70 2023 2,660,000 2,550,222 Huntington Beach Certificate of Participation Revenue Bonds Civic Center Refinancing (AMBAC Insured) 5.50 2016 1,715,000 1,623,213 See accompanying notes to investments in securities. Indian Wells Improvement Bonds Assessment District #13 7.50 2008 370,000 381,152 Irwindale Redevelopment Agency Sub Lien Tax Allocation Bonds Series 1996 7.00 2019 1,700,000 1,738,726 Long Beach Harbor Revenue Bonds Series 1989A A.M.T. 7.25 2019 7,000,000 (g) 7,421,960 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.00 2020 5,000,000 5,446,000 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.30 2009 1,000,000 1,097,890 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.375 2018 2,900,000 3,190,174 Los Angeles County Certificate of Participation Disney Parking 5.50 2021 1,625,000 1,458,031 Los Angeles County Metropolitan Transportation Authority Sales Tax Revenue Bonds (AMBAC Insured) 5.00 2025 1,265,000 1,104,598 PAGE 55 Los Angeles County Transportation Commission Sales Tax Refunding Revenue Bonds Series A 7.00 2019 4,150,000 4,442,243 Los Angeles County Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Series A 8.00 2016 2,000,000 2,125,100 Los Angeles County Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Series 1988A 7.875 2008 500,000 545,150 Los Angeles County Transportation Commission Sales Tax Refunding Revenue Bonds Series 1989A 7.40 2015 2,000,000 2,192,320 Los Angeles Department of Water & Power Electric Plant Revenue Bonds Series 1990 7.125 2030 6,500,000 7,136,935 Los Angeles Department of Water & Power Waterworks Refunding Revenue Bonds Second Issue (Secondary FGIC Insured) 4.50 2018 3,000,000 2,455,560 Los Angeles International Airport Revenue Bonds Series D (FGIC Insured) A.M.T. 5.50 2015 1,000,000 943,890 Los Angeles Multi-family Housing Revenue Bonds Park Parthenia Series 1986A (GNMA Insured) A.M.T. 7.40 2022 1,000,000 1,032,310 Los Angeles Single Family Home Mortgage Revenue Bonds Series 1991A (GNMA & FNMA Insured) A.M.T. 6.875 2025 810,000 831,927 Los Angeles State Building Authority Lease Pre-Refunded Revenue Bonds State Department of General Services Lease Series 1988A 7.25 2006 1,500,000 1,606,860 Los Angeles State Building Authority Lease Pre-Refunded Revenue Bonds State Department of General Services Lease Series 1988A 7.50 2011 1,500,000 1,612,875 Los Angeles State Harbor Revenue Bonds Escrowed to Maturity 7.60 2018 1,000,000 1,187,930 Los Angeles Wastewater System Pre-Refunded Revenue Bonds Series 1987 8.125 2017 1,000,000 1,075,590 Los Angeles Wastewater System Refunding Revenue Bonds Series D (FGIC Insured) 4.70 2017 1,000,000 851,030 Modesto Certificate of Participation Pre-Refunded Bonds Community Center 8.10 2015 1,000,000 1,075,270 Modesto Irrigation Certificate of Participation 7.25 2015 2,000,000 2,058,240 Mount Diablo Hospital District Hospital Pre-Refunded Revenue Bonds Series 1990A (AMBAC Insured) 7.00 2017 3,000,000 3,338,070 North City West Community School Facility Authority Special Tax Refunding Revenue Bonds Series 1995B (CGIC Insured) 5.75 2015 1,000,000 994,170 Northern California Public Power Authority Power Pre-Refunded Revenue Bonds Hydroelectric Series 1986B-3 8.00 2024 2,000,000 2,148,500 Northern California Public Power Authority Power Pre-Refunded Revenue Bonds Hydroelectric #1 Series 1986B-1 8.00 2024 2,100,000 2,255,925 Northern California Transmission Agency California-Oregon Transmission Pre-Refunded Revenue Bonds Series 1990A (MBIA Insured) 7.00 2024 2,000,000 2,194,520 Northern California Transmission Select Auction Variable Rate Security & Residual Interest Revenue Bonds Inverse Floater (MBIA Insured) 5.50 2024 4,500,000 (f) 4,162,725 Northridge Water District Revenue Certificate of Participation (AMBAC Insured) 5.25 2014 1,500,000 1,403,415 Novato Community Facility District #1 Vintage Oaks Public Improvement Special Tax Refunding Bonds 7.25 2021 2,000,000 2,068,760 Pleasanton Joint Powers Financing Authority Reassessment Revenue Bonds Series 1993A 6.15 2012 1,940,000 1,939,787 Port of Oakland Revenue Bonds Series 1989A (BIG Insured) A.M.T. 7.60 2016 500,000 521,655 Rancho Cucamonga Redevelopment Agency 1990 Tax Allocation Pre-Refunded Bonds (MBIA Insured) 7.125 2019 3,540,000 3,887,628 Rancho Mirage Joint Powers Finance Authority Certificate of Participation Eisenhower Memorial Hospital 7.00 2022 4,250,000 4,535,430 Redding Redevelopment Agency Tax Allocation Refunding Bonds Canby Hilltop Cypress Series D (CGIC Insured) 5.00 2023 4,700,000 4,101,690 Richmond Joint Powers Financing Authority Leases and Gas Tax Refunding Revenue Bonds Series 1995A 5.25 2013 3,540,000 3,214,957 Sacramento Cogeneration Authority Cogeneration Revenue Bonds Procter & Gamble Series 1995 6.375 2010 1,000,000 1,011,580 Sacramento Municipal Utility District Series R 6.00 2015-17 7,500,000 7,427,775 Sacramento Municipal Utility District Pre-Refunded Series V 7.50 2018 2,775,000 2,967,474 Sacramento Municipal Utility District Pre-Refunded Series W 7.50 2018 1,980,000 2,117,333 Sacramento Municipal Utility District Pre-Refunded Series Y (MBIA Insured) 6.75 2019 3,400,000 3,781,684 PAGE 56 Sacramento Power Authority Cogeneration Revenue Bonds Series 1995 6.00 2022 1,000,000 954,500 San Bernardino County Medical Center Financing Project Certificate of Participation Series 1996 (MBIA Insured) 5.00 2028 2,500,000 2,180,750 San Diego County Capital Asset Lease Certificate of Participation Series 1993 Inverse Floater (AMBAC Insured) 7.27 2007 3,200,000 (f) 3,228,000 San Diego Industrial Development Revenue Bonds San Diego Gas & Electric Series A 7.625 2021 1,000,000 1,021,170 San Diego Regional Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25 2008 5,030,000 5,271,490 San Joaquin County Pre-Refunded Certificate of Participation Human Services Facility Series 1989 (BIG Insured) 6.70 2009 3,500,000 3,784,025 San Joaquin County Certificate of Participation Jail & Sheriffs Operation Center (MBIA Insured) 6.75 2015 2,000,000 2,179,880 San Jose Redevelopment Agency Merged Area Redevelopment Tax Allocation Bonds Series 1993 (MBIA Insured) 4.75 2024 1,435,000 1,206,390 San Jose Redevelopment Agency Merged Area Tax Allocation Bonds Series 1993 Inverse Floater (MBIA Insured) 7.08 2014 3,000,000 (f) 2,617,500 San Mateo County Transit District Limited Tax Pre-Refunded Bonds Series 1990A (MBIA Insured) 6.50 2020 1,500,000 1,592,235 Santa Clara County Mountain View- Los Altos Union High School District Unlimited Tax General Obligation Bonds Series A 5.75 2015 1,200,000 1,182,168 Santa Cruz Certificate of Participation 8.375 2007 1,220,000 1,287,320 Southern California Home Financing Authority Single Family Mortgage Revenue Bonds 1990B (GNMA Insured) A.M.T. 7.75 2024 575,000 607,907 Southern California Public Power Authority Transmission Special Bonds 6.00 2012 2,700,000 2,694,492 South Tahoe Joint Powers Financing Authority Refunding Revenue Bonds Series 1995B 6.25 2020 2,700,000 2,624,238 State Department Water Resources Water System Pre-Refunded Revenue Bonds Central Valley Series D 7.70 2024 2,400,000 2,565,096 State Department Water Resource Water System Revenue Bonds Central Valley Project Series L 5.50 2023 3,000,000 2,803,080 State Education Facility Authority Revenue Bonds Pomona College 6.00 2017 3,000,000 2,992,710 State Health Facility Finance Authority Pre-Refunded Revenue Bonds St. Joseph Health System Series 1989A 6.90 2014 3,500,000 (g) 3,803,380 State Health Facility Finance Authority Revenue Bonds Sisters Providence 5.50 2016 1,045,000 1,003,012 State Housing Finance Agency Home Mortgage Revenue Bonds Series 1986B 6.90 2016 1,990,000 2,032,487 State Pollution Control Finance Authority Pollution Control Revenue Bonds Southern California Edison Series 1988A A.M.T. 6.90 2006 2,000,000 2,151,340 State Public Works Board Lease Revenue Bonds California Community Colleges Series 1994B 7.00 2019 2,000,000 2,192,140 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 1,722,588 State Public Works Board University of California Lease Pre-Refunded Revenue Bonds Series 1990A 7.00 2015 2,250,000 2,492,752 State University Revenue Bonds San Jose State University Student Union Series B 7.60 2007 150,000 156,477 State Unlimited Tax General Obligation Bonds (Secondary FGIC Insured) 4.75 2023 2,945,000 2,454,304 Statewide Community Development Authority Certificate of Participation Sutter Health Group (MBIA Insured) 5.50 2022 1,000,000 952,070 Statewide Community Development Authority Health Facilities Revenue Bonds Unihealth America Series 1993A Inverse Floater (AMBAC Insured) 7.32 2011 5,000,000 (f) 4,825,000 Statewide Community Development Authority Health Facilities Revenue Bonds Certificate of Participation San Gabriel Valley Medical Center Series 1996A 5.50 2014 1,000,000 941,870 Statewide Community Development Authority Revenue Certificate of Participation St. Joseph Health System Group 6.50 2015 5,500,000 5,692,115 Stockton Single Family Mortgage Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.50 2023 110,000 113,728 University of Southern California Educational Facilities Authority Pre-Refunded Revenue Bonds Series 1989B 6.75 2015 5,000,000 5,321,350 Upland Certificate of Participation Water System Refunding Bonds (FGIC Insured) 6.60 2016 1,000,000 1,065,230 PAGE 57 Vacaville Limited Obligation Improvement Bonds Water Rights Assessment District 8.00 2007 765,000 789,021 Vista Community Development Tax Allocation Revenue Bonds (MBIA Insured) 5.25 2015 2,000,000 1,864,780 _____________________________________________________________________________________________________________________________ Total municipal bonds (Cost: $219,312,804) $234,980,999 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $219,312,804)(h) $234,980,999 _____________________________________________________________________________________________________________________________
PAGE 58 ___________________________________________________________________ Notes to investments in securities ___________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Investments in bonds, by rating category as a percentage of total bonds, are as follows:
(Unaudited) Rating 6-30-96 6-30-95 _____________________________________________________________________________ AAA 59% 61% AA 19 16 A 13 19 BBB 7 3 BB and below 2 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 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 June 30, 1996, the value of securities subject to alternative minimum tax represented 5.8% of net assets. (e) For these zero coupon bonds, which become coupon paying at a future date, the interest rate disclosed Represents the annualized effective yield from the date of acquisition to interest reset date disclosed. (f) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or in a multiple of, a decline (increase) in market short-term rates. Interest rate disclosed is the rate in effect on June 30, 1996. Inverse floaters in the aggregate represent 4.5% of the Fund's net assets as of June 30, 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 Sept. 1996 $11,100,000 ____________________________________________________________ PAGE 59 (h) At June 30, 1996, the cost of securities for federal income tax purposes was $219,142,112 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $17,111,872 Unrealized depreciation (1,272,985) ________________________________________________________________ Net unrealized appreciation $15,838,887 ________________________________________________________________ PAGE 60
Investments in securities IDS Massachusetts Tax-Exempt Fund (Percentages represent value of June 30, 1996 investments compared to net assets) _____________________________________________________________________________________________________________________________ Municipal bonds (98.0%) _____________________________________________________________________________________________________________________________ Name of issuer and Coupon Maturity Principal Value(a) title of issue (b,c,d) rate year amount _____________________________________________________________________________________________________________________________ Bay Transit Authority Series A (Secondary CGIC Insured) 5.50 % 2021 $ 500,000 $ 477,880 Bay Transportation Authority General Transportation System Refunding Bonds Series 1992B 6.20 2016 1,500,000 1,575,135 Boston City Hospital Refunding Revenue Bonds Series B (FHA Insured) 5.75 2023 3,000,000 2,885,250 Boston City Hospital Pre-Refunded Revenue Bonds Series A (FHA Insured) 7.625 2021 1,000,000 1,133,940 Boston General Obligation Bonds Series 1991A (MBIA Insured) 6.75 2011 500,000 552,720 Boston General Obligation Refunding Bonds Series 1993A (AMBAC Insured) 5.65 2009 1,500,000 (e) 1,515,150 Boston Industrial Development Financing Authority Revenue Bonds Massachusetts College of Pharmacy Series 1993A (Connie Lee Insured) 5.25 2026 1,000,000 874,500 Boston Water & Sewer Commission General Pre-Refunded Revenue Bonds Senior Series 1991A (FGIC Insured) 7.00 2018 1,000,000 1,122,050 Boston Water & Sewer Commission General Subordinate Revenue Bonds Series A (MBIA Insured) 6.00 2008 500,000 506,475 Boston Water & Sewer Commission Senior Revenue Bonds Series A 7.875 2013 365,000 376,972 Boston Water & Sewer Commission Senior Pre-Refunded Revenue Bonds Series A 7.875 2013 210,000 217,052 Commonwealth General Obligation Consolidated Loan Pre-Refunded Bonds Series 1990A (FGIC Insured) 7.25 2009 500,000 552,750 Greater Lawrence Sanitary District North Andover General Obligation Bonds 8.50 2005 510,000 534,618 Health & Educational Facilities Authority Refunding Revenue Bonds Beth Israel Hospital Series 1989E 7.00 2009-14 550,000 582,559 Health & Educational Facilities Authority Revenue Bonds Berkshire Health Systems Series A (MBIA Insured) 7.50 2008 500,000 544,255 Health & Educational Facilities Authority Revenue Bonds Berkshire Health Systems Series C 5.90 2011 1,000,000 930,930 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Beverly Hospital Series D (MBIA Insured) 7.30 2019 400,000 438,776 Health & Educational Facilities Authority Revenue Bonds Boston College Series J (FGIC Insured) 6.625 2021 2,000,000 2,103,300 Health & Educational Facilities Authority Revenue Bonds Boston College Series K 5.25 2023 1,000,000 897,950 Health & Educational Facilities Authority Revenue Bonds Brigham & Women's Hospital Series C 6.75 2021 500,000 523,520 Health & Educational Facilities Authority Revenue Bonds Brigham & Women's Hospital Series 1991D 6.75 2024 1,000,000 1,038,340 See accompanying notes to investments in securities. Health & Educational Facilities Authority Revenue Bonds Cape Cod Health System Series A (Connie Lee Insured) 5.25 2021 2,500,000 2,269,100 Health & Educational Facilities Authority Revenue Bonds Charlton Memorial Hospital Series 1991B 7.25 2013 1,750,000 1,851,133 Health & Educational Facilities Authority Revenue Bonds Cooley Dickinson Hospital Issue (AMBAC Insured) 5.50 2025 1,250,000 1,178,863 Health & Educational Facilities Authority Revenue Bonds Holyoke Hospital Series B 6.50 2015 500,000 472,935 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Lahey Clinic Medical Center Series A (MBIA Insured) 7.625 2018 500,000 542,560 Health & Educational Facilities Authority Revenue Bonds Lahey Clinic Medical Center Series B (MBIA Insured) 5.625 2015 1,500,000 1,448,250 Health & Educational Facilities Authority Revenue Bonds Melrose-Wakefield Hospital Series 1992B 6.375 2016 1,000,000 1,003,410 Health & Educational Facilities Authority Revenue Bonds Morton Hospital & Medical Center Series B (Connie Lee Insured) 5.25 2014 1,000,000 922,240 PAGE 61 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Mount Auburn Hospital Series A (MBIA Insured) 7.875 2018 205,000 223,427 Health & Educational Facilities Authority Revenue Bonds New England Deaconess Hospital Series 1992D 6.625 2012 1,000,000 1,034,440 Health & Educational Facilities Authority Revenue Bonds Newton Wellesley Hospital Series 1991D (MBIA Insured) 7.00 2015 1,000,000 1,080,130 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Northeastern University Series 1989C (AMBAC Insured) 7.10 2006 1,000,000 1,083,120 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Northeastern University Series E (MBIA Insured) 6.55 2022 1,000,000 1,060,660 Health & Educational Facilities Authority Revenue Bonds North Adams Regional Hospital Series 1 6.625 2018 1,000,000 (f) 973,500 Health & Educational Facilities Authority Revenue Bonds South Shore Hospital Series 1992D (MBIA Insured) 6.50 2022 1,000,000 1,043,680 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Stonehill College Series 1990D (AMBAC Insured) 7.70 2020 1,000,000 1,126,840 Health & Educational Facilities Authority Revenue Bonds Suffolk University Series B (Connie Lee Insured) 6.35 2022 2,495,000 2,538,787 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Wentworth Institute of Technology Series A (AMBAC Insured) 7.40 2010 750,000 833,962 Health & Educational Facilities Authority Revenue Bonds Valley Regional Health System Series C (Connie Lee Insured) 5.75 2018 1,000,000 969,670 Health & Educational Facilities Authority Revenue Bonds Wentworth Institute of Technology Series B (Connie Lee Insured) 5.50 2023 1,500,000 1,380,420 Industrial Finance Agency Pollution Control Refunding Revenue Bonds Eastern Edison Series 1993 5.875 2008 2,000,000 1,928,180 Industrial Finance Agency Resource Recovery Revenue Bonds Ogden Haverhill Series 1986A (AMBAC Insured) A.M.T. 7.375 2011 175,000 180,719 Industrial Finance Agency Resource Recovery Revenue Bonds SEMASS Series 1991A 9.00 2015 1,500,000 (e) 1,653,300 Industrial Finance Agency Revenue Bonds Museum of Science Series 1989 (FSA Insured) 7.30 2009 1,000,000 1,103,460 Leominster General Obligation Bonds (MBIA Insured) 7.50 2009 1,000,000 1,115,070 Mansfield General Obligation Bonds (AMBAC Insured) 6.70 2011 1,000,000 1,072,960 Municipal Wholesale Electric Power Supply System Pre-Refunded Revenue Bonds Series 1992B 6.75 2017 1,395,000 1,554,951 Municipal Wholesale Electric Power Supply System Refunding Revenue Bonds Series B (MBIA Insured) 4.75 2011 1,750,000 1,541,855 Municipal Wholesale Electric Power Supply System Revenue Bonds Special Pars & Inflows (AMBAC Insured) 5.45 2018 1,600,000 1,476,784 Nantucket General Obligation Bonds 6.80 2011 1,000,000 1,085,420 New Bedford General Obligation Bonds Series 1995 (AMBAC Insured) 5.50 2015 700,000 669,480 North Andover General Obligation Bonds (MBIA Insured) 7.35 2008 310,000 345,647 Port Authority Revenue Bonds Series 1990A (FGIC Insured) A.M.T. 7.50 2020 1,000,000 1,089,040 Quincy Refunding Revenue Bonds Quincy Hospital Series 1993 (FSA Insured) 5.25 2016 1,000,000 925,150 Southeastern University Building Refunding Revenue Bonds Series A (AMBAC Insured) 5.75 2016 1,250,000 1,244,038 Southern Berkshire Regional School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.55 2010 1,000,000 1,117,840 State Education Loan Authority, Educational Loan Revenue Bonds Issue E Series B (AMBAC Insured) A.M.T. 6.00 2012 1,000,000 1,003,720 State General Obligation Consolidated Loan Bonds Series 1991A (FGIC Insured) 6.00 2011 1,095,000 1,112,629 State Housing Finance Agency Single Family Housing Revenue Bonds Series 13 A.M.T. 7.95 2023 485,000 510,564 State Housing Finance Authority Residential Development Bonds Series 1992A (FNMA Insured) 6.875 2011 1,000,000 1,053,580 State Housing Finance Authority Single Family Mortgage Housing Revenue Bonds Series 4 7.375 2014 430,000 443,442 State Housing Finance Authority Single Family Mortgage Housing Revenue Bonds Series 7 A.M.T. 8.10 2020 245,000 255,535 State Water Resource Authority Revenue Bonds Series A (Secondary MBIA Insured) 5.50 2022 1,100,000 1,034,836 University of Lowell Building Authority Facilities Revenue Bonds 4th Series A 7.40 2007 125,000 133,088 University of Lowell Building Authority Facilities Revenue Bonds 4th Series A 7.60 2012 50,000 53,364 University of Massachusetts Building Authority Revenue Bonds Series A (FSA Insured) 7.50 2014 500,000 539,065 University of Massachusetts Building Authority Revenue Bonds Series A Escrowed to Maturity 7.50 2011 120,000 132,026 Water Resource Authority General Pre-Refunded Revenue Bonds Series 1990A 7.625 2014 500,000 559,850 PAGE 62 Water Resource Authority General Pre-Refunded Revenue Bonds Series 1991A 6.50 2019 1,000,000 1,099,800 Water Resource Authority General Revenue Bonds Series 1993B (MBIA Insured) 5.00 2022 1,365,000 1,196,941 Water Resource Authority General Revenue Bonds Series 1993C 5.25 2020 1,400,000 1,261,274 Worcester General Obligation Refunding Bonds Series 1995G (MBIA Insured) 5.30 2015 1,000,000 942,860 _____________________________________________________________________________________________________________________________ Total municipal bonds (Cost: $68,678,578) $71,857,717 _____________________________________________________________________________________________________________________________
Short-term security (0.3%) _____________________________________________________________________________________________________________________________ Issuer (d,g) Effective Amount Value(a) yield payable at maturity _____________________________________________________________________________________________________________________________ Municipal note State General Obligation V.R.D.B. Series E 12-01-97 3.60% $ 200,000 $ 200,000 _____________________________________________________________________________________________________________________________ Total short-term security (Cost: $200,000) 200,000 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $68,878,578)(h) $72,057,717 _____________________________________________________________________________________________________________________________
PAGE 63 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 06-30-96 06-30-95 _______________________________________________________________________________________________________ AAA 66% 65% AA 9 11 A 16 17 BBB 7 5 BB and below 2 2 Non-rated -- -- _______________________________________________________________________________________________________ Total 100% 100% _______________________________________________________________________________________________________
(c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation CGIC -- Capital Guaranty Insurance Company FGIC -- Financial Guarantee Insurance Corporation FHA -- Federal Housing Authority FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax - As of June 30, 1996, the value of securities subject to alternative minimum tax represented 4.1% of net assets. V.R.D.B. -- Variable Rate Demand Bond (e) Partially pledged as initial deposit on the following open interest rate futures contracts (see Note 5 to the financial statements): Type of security Notinal amount Purchase contracts ________________________________________________________ Municipal Bonds September 1996 $3,000,000 ________________________________________________________ (f) At June 30, 1996, the cost of securities purchased on a when-issued basis was $965,203. (g) Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1996. (h) At June 30, 1996, the cost of securities for federal income tax purposes was $68,879,596 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $3,831,024 Unrealized depreciation (652,903) ________________________________________________________ Net unrealized appreciation $3,178,121 ________________________________________________________ PAGE 64
Investments in securities IDS Michigan Tax-Exempt Fund (Percentages represent value of June 30, 1996 investments compared to net assets) _____________________________________________________________________________________________________________________________ Municipal bonds (96.8%) _____________________________________________________________________________________________________________________________ Name of issuer and Coupon Maturity Principal Value(a) title of issue (b,c,d) rate year amount _____________________________________________________________________________________________________________________________ Auburn Hills Limited Tax General Obligation Street Improvement Bonds 6.00 % 2004 $ 200,000 $ 206,898 Battle Creek Calhoun County Downtown Development Authority Bonds Series 1994 7.65 2022 1,250,000 1,374,913 Battle Creek Water Supply System Pre-Refunded Revenue Bonds Series 1990B 6.375 2008-10 1,640,000 1,740,171 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) 1,673,460 Chelsea General Obligation Bonds (MBIA Insured) 8.20 2006 145,000 156,880 Chippewa Valley School Macomb County Qualified School Building Loan Fund Unlimited Tax General Obligation Bonds (FGIC Insured) 5.00 2021 1,000,000 885,730 Comstock Park Public School Kent County Unlimited Tax General Obligation Pre-Refunded Bonds Series 1989 6.00 2016 400,000 422,200 Comstock Park Public School Kent County Unlimited Tax General Obligation Pre-Refunded Bonds Series 1989 6.875 2010 260,000 280,426 Detroit General Obligation Pre-Refunded Bonds Distributable State Aid Series 1989 (AMBAC Insured) 7.20 2009 1,000,000 1,089,650 Detroit Sewer Disposal Pre-Refunded Revenue Bonds 8.00 2008 500,000 530,140 Detroit Sewer Disposal Revenue Bonds (FGIC Insured) 5.70 2023 2,000,000 1,887,180 Detroit Unlimited Tax General Obligation Bonds Series A 7.25 2009 1,000,000 1,086,550 Detroit Unlimited Tax General Obligation Bonds Series A 8.625 2007 100,000 105,507 Detroit Unlimited Tax General Obligation Bonds Series 1988A 7.875 2008 700,000 754,740 Detroit Unlimited Tax General Obligation Bonds Series 1995A 6.80 2015 1,000,000 1,055,520 Detroit Downtown Development Authority Development Area Number 1 Project Tax Increment Series 1996D (Junior Lien) 6.50 2025 1,000,000 999,990 Detroit Water Supply System Revenue Second Lien Bonds Series 1995A (MBIA Insured) 5.50 2025 1,500,000 1,413,165 Detroit Water Supply System Pre-Refunded Revenue Bonds Series 1988 (MBIA Insured) 7.875 2008 400,000 435,468 Detroit Water Supply System Refunding Revenue Bonds Series 1993 (FGIC Insured) 5.00 2023 1,000,000 875,520 Dexter Community Schools Building Site & Refunding Unlimited Tax General Obligation Bonds 5.00 2017 1,500,000 1,335,870 East Lansing School District School Building & Site Unlimited Tax General Obligation Bonds Series 1991 6.625 2014 1,000,000 1,093,370 Eaton County Water System Limited Tax General Obligation Bonds (MBIA Insured) 5.00 2013 2,200,000 2,007,808 Farmington Hills Hospital Finance Authority Revenue Bonds Botsford General Hospital Series 1992A (MBIA Insured) 6.50 2022 1,500,000 (f) 1,548,945 Ferris State University Board of Trustees General Revenue & Refunding Bonds Series 1995 (MBIA Insured) 5.25 2020 1,000,000 917,820 Forest Hills School District Unlimited Tax General Obligation Pre-Refunded Bonds 7.375 2015 1,000,000 1,099,080 Frenchtown Resort Drainage District Monroe County Drain Pre-Refunded Revenue Bonds Series 1987 7.50 2011-12 615,000 672,410 See accompanying notes to investments in securities. PAGE 65 Garden City School District Authority Pre-Refunded Revenue Bonds 7.80 2010 305,000 332,404 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 1,859,700 Grand Rapids Tax Increment Revenue Bonds Series 1994 (MBIA Insured) 6.875 2024 380,000 413,254 Grand Rapids Water Supply System Improvement Pre-Refunded Revenue Bonds Series 1988 7.875 2018 700,000 753,074 Grand Rapids Water Supply System Improvement Pre-Refunded Revenue Bonds Series 1990 (FGIC Insured) 7.25 2020 1,250,000 1,374,938 Hemlock Public School District Unlimited Tax General Obligation Refunding Revenue Bonds Counties of Saginaw & Midland Series 1996 (MBIA Insured) 5.25 2021 1,000,000 916,950 Inkster School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2018 450,000 491,436 Isoco County Water Supply System Limited Tax General Obligation Bonds (AMBAC Insured) 5.50 2008-10 575,000 572,368 Johannesburg-Lewiston Area Schools Building & Site Unlimited Tax General Obligation Bonds (AMBAC Insured) 5.00 2016 2,415,000 2,180,938 Kent County Hospital Pre-Refunded Revenue Bonds Butterworth Hospital Series 1989A 7.25 2013 500,000 542,665 Kent County Refuse Disposal System Limited Tax General Obligation Refunding Bonds Series 1987 8.40 2010 150,000 160,337 Lake Orion School District General Obligation Bonds (AMBAC Insured) 5.50 2020 1,000,000 953,980 Lincoln Park School Distict Wayne County School Building & Site Unlimited Tax General Obligation Bonds (FGIC Insured) 5.90 2026 1,000,000 1,002,440 Marquette Hospital Finance Authority Refunding Revenue Bonds Marquette General Hospital Series 1989C 7.50 2007-19 825,000 903,721 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 1,648,046 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi Plants Series 1990I (FGIC Insured) A.M.T. 7.65 2020 1,000,000 1,100,580 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi 2 Plants Series CC (AMBAC Insured) A.M.T. 7.50 2019 1,750,000 1,924,545 Muskegon Hospital Finance Authority Refunding Revenue Bonds Hackley Hospital Series 1988A 8.00 2008 400,000 423,924 Northville Public Schools Unlimited Tax General Obligation Bonds Series 1991B 7.00 2008 1,500,000 1,662,030 Ovid-Elsie School District Unlimited Tax General Obligation Bonds (Secondary MBIA Insured) 5.60 2021 1,000,000 966,110 Redford General Obligation Bonds (MBIA Insured) 5.25 2016 1,450,000 1,351,951 Richmond Limited Obligation Refunding Revenue Bonds K mart Series A 6.625 2007 530,000 492,508 Rochester Hill Unlimited Tax General Obligation Bonds Series 1990A 6.00 2009-10 735,000 752,188 Rockford Public Schools Kent County Unlimited Tax General Obligation Pre-Refunded Revenue Bonds 7.375 2019 1,000,000 1,099,080 Romulus Township School District Unlimited Tax General Obligation Refunding Bonds (FGIC Insured) 5.75 2022 2,500,000 2,466,675 St. Louis Public Schools Unlimited Tax General Obligation Refunding Revenue Bonds Counties of Gratiot, Midland & Isabella Series 1995 5.25 2024 755,000 689,194 Sandusky County School District General Obligation Refunding Bonds (AMBAC Insured) 5.25 2021 500,000 459,085 South Lake District Unlimited Tax General Obligation Bonds 6.80 2010 355,000 389,392 State Building Authority Refunding Revenue Bonds Series 1991I 6.25 2020 2,200,000 2,216,302 State Hospital Finance Authority Revenue Bonds Central Michigan Community Hospital 6.25 2027 1,000,000 940,770 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds Detroit Medical Center Series 1988A 8.125 2012 310,000 339,233 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds McLaren Obligated Group Series 1991A 7.50 2021 1,750,000 1,993,687 State Hospital Finance Authority Hospital Refunding Revenue Bonds Detroit Medical Center Series A 6.25 2013 1,200,000 1,213,188 State Hospital Finance Authority Hospital Refunding Revenue Bonds Detroit Medical Center Series 1988A 8.125 2012 90,000 97,039 State Hospital Finance Authority Hospital Refunding Revenue Bonds Detroit Medical Center Series 1988B 8.00 2008 500,000 545,890 State Hospital Finance Authority Hospital Refunding Revenue Bonds Sinai Hospital of Greater Detroit Series 1995 6.70 2026 1,000,000 972,470 State Hospital Finance Authority Pre-Refunded Revenue Bonds Oakwood Hospital Group Series 1990A (FGIC Insured) 7.10 2018 1,000,000 1,102,970 State Hospital Finance Authority Revenue Bonds Henry Ford Hospital Series 1990A 7.00 2010 1,000,000 1,097,810 PAGE 66 State Hospital Finance Authority Revenue Bonds Presbyterian Villages of Michigan Obligated Group Series 1995 6.50 2025 1,000,000 946,250 State Public Power Agency Belle River Refunding Revenue Bonds Series A 5.25 2018 1,000,000 908,920 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Detroit Edison Series 1990BB (MBIA Insured) 7.00 2008 1,000,000 1,145,110 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Detroit Edison Series 1992BB (FGIC Insured) 6.50 2016 1,500,000 1,574,400 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Escrowed to Maturity Oxford Institute 7.875 2005 150,000 170,157 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Ford Motor Series 1991A 7.10 2006 1,650,000 1,857,075 State Strategic Fund Limited Tax Obligation Revenue Bonds Great Lakes Pulp & Fibre A.M.T. 10.25 2016 1,000,000 873,420 State Trunk Line Bonds Series A (FGIC Insured) 5.75 2020 1,065,000 1,051,176 State University Revenue Bonds Series A 5.50 2022 560,000 516,331 Taylor Tax Increment Finance Authority Bonds Series 1989A (MBIA Insured) 6.00 2007-09 1,205,000 1,233,741 Troy City Downtown Development Authority County of Oakland Development Bonds Series 1995A (Asset Guaranty) 6.375 2018 1,500,000 1,513,695 Van Buren Township Tax Increment Revenue Bonds Series 1994 8.40 2016 1,000,000 1,107,830 Waterford School District Unlimited Tax General Obligation Bonds Series Q 6.25 2013 340,000 352,107 Wayne County Airport Revenue Bonds Detroit Metropolitan Airport Series 1986 (FGIC Insured) A.M.T. 8.00 2014 250,000 258,843 Wayne County Airport Revenue Bonds Detroit Metropolitan Airport Series 1990A (AMBAC Insured) A.M.T. 7.00 2020 1,080,000 1,157,155 Wyandotte Electric Pre-Refunded Revenue Bonds Series 1987 (AMBAC Insured) 7.875 2017 300,000 320,532 _____________________________________________________________________________________________________________________________ Total municipal bonds (Cost: $74,401,580) $79,039,025 _____________________________________________________________________________________________________________________________
Short-term securities (1.7%) _____________________________________________________________________________________________________________________________ Issuer (d,e) Effective Amount Value(a) yield payable at maturity _____________________________________________________________________________________________________________________________ Municipal notes State Strategic Fund Consumer Power Company Series 1988A V.R. 04-15-18 3.55% $600,000 $600,000 State University Medical Service Plan Series 1995A V.R. 12-01-27 3.55 800,000 800,000 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $1,400,000) $1,400,000 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $75,801,580)(g) $80,439,025 _____________________________________________________________________________________________________________________________ PAGE 67 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Investments in bonds, by rating category as a percentage of total bonds, are as follows: (Unaudited) Rating 6-30-96 06-30-95 ______________________________________________________________________________________________________ AAA 71% 65% AA 12 17 A 6 10 BBB 9 6 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 FGIC -- Financial Guarantee Insurance Corporation MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: V.R. -- Variable Rate A.M.T. -- Alternative Minimum Tax - As of June 30, 1996, the value of securities subject to alternative minimum tax represented 6.5% of net assets. (e) Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 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 Sept. 1996 $3,400,000 __________________________________________________________________________ (g) At June 30, 1996, the cost of securities for federal income tax purposes was $75,754,513 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $5,284,286 Unrealized depreciation (599,744) __________________________________________________________________________ Net unrealized appreciation $4,684,512 __________________________________________________________________________
PAGE 68
Investments in securities (Percentages represent IDS Minnesota Tax-Exempt Fund value of investments June 30, 1996 compared to net assets) _____________________________________________________________________________________________________________________________ Municipal bonds (97.9%) _____________________________________________________________________________________________________________________________ Name of issuer and Coupon Maturity Principal Value(a) title of issue (b,c,d) rate year amount _____________________________________________________________________________________________________________________________ Anoka County General Obligation Capital Improvement Revenue Bonds Series 1989B 7.00 % 2007-10 $ 7,950,000 $ 8,371,032 Anoka County Resource Recovery Revenue Bonds Northern States Power Series 1985 7.15 2008 3,750,000 4,004,062 Appleton Correctional Facility Revenue Bonds Series 1990A 9.875 2020 4,000,000 (e) 2,520,000 Becker Pollution Control Revenue Bonds Northern States Power Sherburne County Generating Station Units 1 & 2 Series 1987A 7.25 2005 2,000,000 2,024,760 Becker Solid Waste Disposal Facility Revenue Bonds Liberty Paper Series 1994B A.M.T. 9.00 2015 3,825,000 3,897,598 Bemidji Hospital Facilities 1st Mortgage Revenue Bonds North Country Health Services Series 1991 7.00 2021 1,755,000 1,959,949 Bloomington Community Development Refunding Revenue Bonds Note 24th Avenue Motel 8.50 2005 1,794,725 1,812,672 Braham Independent School District #314 Refunding Revenue Bonds 5.20 2019 3,340,000 3,121,096 Brooklyn Center Tax Credit Investor Revenue Bonds Four Courts Apartment Project Series 1995B A.M.T. 7.58 2009 2,450,000 2,453,699 Burnsville Multi-family Housing Refunding Revenue Bonds FHA-Summit Park Apartments Series 1993 6.00 2033 4,000,000 3,890,040 Chaska Advance Refunded Certificate of Participation Lease Purchase Agreement Bonds Series 1986C 7.25 2001 800,000 804,320 Columbia Heights Multi-family Housing Revenue Bonds Crestview Lutheran Home Royce Place Series 1991 10.00 2032 560,000 595,353 Columbia Heights Multi-family Housing Revenue Bonds Crestview Lutheran Home Royce Place Series 1991 (FHA Insured) 7.75 2032 2,735,000 2,851,347 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 2,279,200 Duluth Hospital Facilities St. Lukes Hospital Pre-Refunded Revenue Bonds Series 1988 9.00 2018 2,500,000 2,758,300 Duluth Housing and Redevelopment Authority 1st Mortgage Revenue Bonds Lakeshore Lutheran Home 8.25 2009 125,000 125,191 Duluth Recreation Revenue Certificate of Participation 9.00 2004-07 1,180,000 1,223,200 Eden Prairie Housing Development Refunding Revenue Bonds Eden Commons Series 1990 (FHA Insured) 8.25 2025 6,265,000 6,371,129 Edina Hospital System Revenue Bonds Fairview Hospital & Health Care Services Series 1989A 7.125 2019 2,500,000 2,669,500 Edina Multi-family Housing Revenue Bonds Walker Assisted Living Series 1991 9.00 2031 6,700,000 7,311,978 See accompanying notes to investments in securities. PAGE 69 Faribault Rice & Goodhue County Independent School District #656 General Obligation School Building Bonds Series 1995 (CGIC Insured) 5.75 2015 6,900,000 6,875,988 Faribault Single Family Mortgage Refunding Revenue Bonds Series 1991A 7.50 2011 2,165,000 2,254,220 Fergus Falls Health Care Facilities Revenue Bonds LRHC Long-Term Care Facility Series 1995 6.50 2025 1,500,000 1,471,950 Hennepin County Lease Revenue Certificate of Participation Series 1991 6.80 2017 7,250,000 7,819,488 Hennepin County Solid Waste Resource Recovery General Obligation Revenue Bonds Series 1987A A.M.T. 8.20 2009 1,760,000 1,780,416 Hopkins Revenue Bonds Blake School 6.70 2024 3,120,000 3,384,919 Hubbard County Solid Waste Disposal Revenue Bonds Potlatch Series 1989 A.M.T. 7.375 2013 5,610,000 5,993,163 International Falls Solid Waste Disposal Revenue Bonds Boise Cascade Series 1990 A.M.T. 7.75 2015 4,000,000 4,159,160 Little Canada Multi-family Housing Revenue Bonds Provinces of Little Canada Series 1996 A.M.T. 7.00 2027 3,885,000 3,733,174 Long Prairie/Grey Eagle Unlimited Tax General Obligation School Bonds 5.00 2017 3,500,000 3,207,715 Mahtomedi Multi-family Housing Briarcliff Revenue Bonds 7.35 2036 2,300,000 2,314,306 Maplewood Care Institute Series 1994 7.75 2024 3,830,000 3,854,512 Maplewood Multi-family Housing Revenue Bonds Maplewood (FHA Insured) A.M.T. 7.75 2021 2,090,000 2,104,860 Maplewood Multi-family Housing Carefree Cottages of Maplewood III Refunding Revenue Bonds Series 1995 A.M.T. 7.20 2032 2,900,000 2,834,286 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 4,150,337 Minneapolis Community Development Agency Limited Tax Supported Development Revenue Common Bond Fund Series 1996-01 6.00 2011 980,000 954,540 Minneapolis Community Development Agency & St. Paul Housing & Redevelopment Authority Home Ownership Mortgage Revenue Bonds Family Housing Mortgage Phase II 7.875 2017 1,515,000 1,545,815 Minneapolis General Obligation Refunding Bonds Sports Arena Series 1996 5.125 2020 5,000,000 4,624,200 Minneapolis General Obligation Bonds Sports Arena Series 1996 5.20 2024 1,940,000 1,799,292 Minneapolis Hospital Facility Pre-Refunded Revenue Bonds Lifespan Incorporated Series 1987A 8.125 2017 3,630,000 3,819,595 Minneapolis Hospital Facility Pre-Refunded Revenue Bonds Lifespan Incorporated Series 1989A 7.00 2014 5,000,000 5,463,250 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Healthspan Series 1993 (AMBAC Insured) 4.75 2018 13,500,000 11,450,295 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Series 1995A (CGIC Insured) 5.50 2025 2,500,000 2,388,200 Minneapolis Nursing Home Revenue Bonds Walker Cityview & Southview Series 1992 8.50 2022 5,460,000 5,814,736 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Healthspan Series 1993A (AMBAC Insured) 5.00 2013 2,955,000 2,665,144 Minnetonka Multi-family Housing Refunding Revenue Bonds Cedar Hill West (FHA Insured) 7.75 2026 5,535,000 5,691,807 Minnetonka Multi-family Housing Revenue Bonds The Cedar Hills Series 1985 Inverse Floater 7.50 2017 500,000 (f) 508,385 New Brighton Tax Credit Investor Revenue Bonds Polynesian Village Apartments Series 1995B A.M.T. 7.75 2009 2,355,000 2,380,057 Northern Municipal Power Agency Electric System Refunding Revenue Bonds Series 1989A 7.25 2016 5,475,000 5,813,355 PAGE 70 Northern Municipal Power Agency Electric System Pre-Refunded Revenue Bonds Series 1989A (AMBAC Insured) 7.40 2018 1,000,000 1,087,940 Northern Municipal Power Agency Electric System Pre-Refunded Revenue Bonds Series 1989B (AMBAC Insured) 7.40 2018 1,800,000 1,939,536 Owatanna Public Utilities Pre-Refunded Revenue Bonds Series 1991 6.75 2016 1,000,000 1,079,470 Plymouth Multi-family Housing Revenue Bonds Harbor Lane Apartments Series 1993 (Asset Guaranty Insured) A.M.T. 5.90 2013 2,325,000 2,292,706 Port Authority St. Paul Unlimited Tax General Obligation Bonds 5.125 2024 2,770,000 2,492,584 Red Wing Industrial Development Refunding Revenue Bonds K mart Series 1993 5.50 2008 400,000 328,428 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) 3,180,375 Richfield Independent School District #280 Unlimited Tax General Obligation School Building Bonds Series 1993C Trust Inverse Floater (FGIC Insured) 6.68 2012 2,510,000 (f) 2,378,225 Robbinsdale Hospital Pre-Refunded Revenue Bonds North Memorial Medical Center Series 1989 (AMBAC Insured) 7.375 2019 2,200,000 2,392,170 Rochester Health Care Facility Revenue Bonds Mayo Foundation Series A 4.951 2019 5,000,000 4,278,050 Rochester Multi-family Housing Development Revenue Bonds Civic Square Series 1991 (FHA Insured) A.M.T. 7.45 2031 4,425,000 4,653,905 Roseville Health Care Facility Refunding Revenue Bonds Presbyterian Homes of Minnesota Series 1987 7.50 2007 2,250,000 2,315,160 Rush City Independent School District #139 Unlimited Tax School Building Refunding Bonds School Credit Enhancement Program 5.25 2018 2,595,000 2,435,563 St. Cloud Hospital Facility Refunding Revenue Bonds Series 1996B (AMBAC Insured) 5.00 2020 2,000,000 1,772,780 St. Cloud Hospital Facility Refunding Revenue Bonds Series B (AMBAC Insured) 5.00 2012 2,900,000 2,680,064 St. Cloud Hospital Facility Revenue Bonds St. Cloud Hospital Series 1990B (AMBAC Insured) 7.00 2020 5,000,000 5,570,500 St. Cloud Hospital Facility Refunding Revenue Bonds Series C (AMBAC Insured) 5.30 2020 1,515,000 1,392,906 St. Cloud Hydro Electric Generation Facility Gross Revenue Bonds Series 1986 7.375 2018 1,100,000 1,133,143 St. Louis Park Health Care Facilities Revenue Bonds Healthsystem Minnesota Obligated Group Series 1993 (AMBAC Insured) 5.20 2023 6,000,000 5,406,300 St. Louis Park Health Care Facilities Revenue Bonds Healthsystem Minnesota Obligated Group Series 1993B Inverse Floater (AMBAC Insured) 6.275 2013 7,000,000 (f) 5,766,250 St. Louis Park Health Care Facilities Pre-Refunded Revenue Bonds Park Nicollet Medical Center Series 1990A 9.25 2020 4,000,000 4,653,840 St. Louis Park Health Care Facilities Pre-Refunded Revenue Bonds Park Nicollet Medical Center Series 1991A 8.625 2021 2,000,000 2,312,960 St. Louis Park Multi-family Housing Revenue Refunding Bonds Park Blvd Towers Series 1996A 7.00 2031 4,000,000 3,983,880 St. Louis Park Multi-family Rental Housing Revenue Bonds Mortgage Loan Community Housing & Services Series 1985 (FHA Insured) 7.375 2028 2,250,000 2,368,193 St. Paul & Minneapolis Housing & Redevelopment Authority Health Care Facility Revenue Bonds Group Health Plan Series 1992 6.75 2013 10,500,000 (h) 11,273,115 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 5,000,000 4,758,700 St. Paul Housing & Redevelopment Authority Commercial Development Refunding Revenue Bonds Beverly Enterprises Series 1992 7.75 2002 2,540,000 2,615,336 PAGE 71 St. Paul Housing & Redevelopment Authority Health Care Facility Revenue Bonds Lyngblomsten Care Center Series 1993A 7.125 2017 1,915,000 1,932,158 St. Paul Housing & Redevelopment Authority Health Care Facility Revenue Bonds Lyngblomsten Care Center Series 1993A 9.60 2006 1,005,000 1,057,461 St. Paul Housing & Redevelopment Authority Health Care Facility Multi-family Rental Housing Revenue Bonds Lynblomsten 1993B 7.00 2024 1,910,000 1,848,173 St. Paul Housing & Redevelopment Authority Sales Tax Revenue Bonds Civic Center (Secondary MBIA Insured) 5.55 2023 7,500,000 7,036,125 St. Paul Housing & Redevelopment Authority Single Family Mortgage Refunding Revenue Bonds Middle Income Phase II FNMA Mortgage Backed 6.80 2028 3,460,000 3,657,428 St. Paul Independent School District #625 Unlimited Tax General Obligation Bonds (FSA Insured) 5.75 2016 3,500,000 3,487,575 Shoreview Senior Housing Revenue Bonds Series 1996 7.25 2026 2,700,000 2,619,918 Southern Minnesota Municipal Power Agency Bonds Escrowed to Maturity 5.75 2018 370,000 368,642 Southern Minnesota Municipal Power Agency Power Supply System Revenue Bonds Zero Coupon Series 1994A (MBIA Insured) 6.67 2019 19,500,000 (g) 5,049,330 Southern Minnesota Municipal Power Agency Power Supply System Revenue Bonds Zero Coupon Series 1994A (MBIA Insured) 6.88 2022 12,000,000 (g) 2,586,120 Southern Minnesota Municipal Power Agency Pre-Refunded Bonds Series 1988A 8.125 2018 1,315,000 1,419,477 Southern Minnesota Municipal Power Agency Pre-Refunded Bonds Series 1988B 8.125 2018 1,000,000 1,079,450 Southern Minnesota Municipal Power Agency Pre-Refunded Revenue Bonds Escrowed to Maturity Series A (Secondary MBIA Insured) 5.75 2018 1,600,000 1,594,128 Southern Minnesota Municipal Power Agency Revenue Bonds (Secondary MBIA Insured) 4.75 2016 6,415,000 5,560,073 Southern Minnesota Municipal Power Agency Series A (Secondary MBIA Insured) 5.75 2018 2,135,000 2,114,205 Southern Minnesota Municipal Power Agency Un-Refunded Balance Power Revenue Bonds Series A 5.75 2018 1,895,000 1,847,094 Spring Park Health Care Facility Revenue Bonds Twin Birch Health Care Center Series 1991 8.25 2011 1,780,000 1,917,772 State General Obligation Various Purpose Pre-Refunded Bonds Series 1990 7.00 2009 7,850,000 8,511,519 State General Obligation Various Purpose Pre-Refunded Bonds Series 1991 6.70 2011 8,000,000 8,690,240 State Higher Education Facilities Authority Augsburg College Mortgage Revenue Bonds Series 4-F1 6.25 2023 1,750,000 1,747,550 State Higher Education Facility Authority Mortgage Pre-Refunded Revenue Bonds St. Mary's College Series 2-M 8.375 2017 1,000,000 1,100,510 State Housing Facility Authority Housing Finance Agency Housing Development Single Family Mortgage Bonds Series B 7.25 2016 355,000 362,945 State Housing Finance Agency Single Family Mortgage Bonds Series 1989A A.M.T. 8.00 2029 1,265,000 1,314,664 State Housing Finance Agency Single Family Mortgage Bonds Series 1990A A.M.T. 7.95 2022 3,415,000 3,605,455 State Housing Finance Agency Single Family Mortgage Bonds Series 1991A A.M.T. 7.45 2022 3,575,000 3,727,903 State Housing Finance Agency Single Family Mortgage Bonds Series 1992A 6.95 2016 3,130,000 3,278,769 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series L A.M.T. 6.70 2020 1,100,000 1,125,586 State Public Facilities Authority Water Pollution Control Revenue Bonds Series 1989A 7.00 2009 6,250,000 6,763,313 PAGE 72 State University Board of Regents General Obligation Inverse Floater Bonds Series 1993A Bonds 5.87 2003 5,000,000 (f) 4,775,000 State University Board of Regents General Obligation Pre-Refunded Bonds Series 1989A 6.00 2011 4,625,000 4,810,324 State University Board State University System Pre-Refunded Revenue Bonds Series 1989A (MBIA Insured) 7.40 2019 2,250,000 2,430,855 Vadnais Heights Multi-family Housing Cottages of Vadnais Heights Refunding Revenue Bonds Series 1995 A.M.T. 7.00 2031 3,200,000 3,110,144 Washington County General Obligation Capital Improvement Bonds Series 1989A 7.00 2009-10 4,425,000 4,692,536 Washington County Housing & Redevelopment Authority Multi-family Housing Revenue Bonds Orleans Homes Series 1987-2 A.M.T. 9.00 2017 2,000,000 2,081,460 Western Minnesota Municipal Power Agency Revenue Bonds Escrowed to Maturity (AMBAC Insured) 6.75 2016 5,935,000 6,315,671 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series 1987A 5.50 2015 5,000,000 4,744,200 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series 1987A 6.875 2007 2,500,000 2,579,650 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series 1987A 7.00 2013 7,300,000 7,537,177 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series A (Secondary MBIA Insured) 5.50 2015 6,250,000 6,052,625 White Bear Lake Industrial Development Revenue Bonds Taylor Series 1988A A.M.T. 8.75 2008 2,250,000 2,447,033 _____________________________________________________________________________________________________________________________ Total investment in securities (Cost: $383,139,342) (i) $400,295,278 ______________________________________________________________________________________________________________________________ /TABLE PAGE 73 ___________________________________________________________________ Notes to investments in securities ___________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Investments in bonds, by rating category as a percentage of total bonds, are as follows:
(Unaudited) Rating 6-30-96 06-30-95 ______________________________________________________________________ AAA 48% 47% AA 18 22 A 15 16 BBB 7 6 BB and below 10 7 Non-rated 2 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 FHA -- Financial Security Assurance MBIA -- Municipal Bond Investors Assurance (d) The following abbreviation is used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax -- As of June 30, 1996, the value of securities subject to alternative minimum tax represented 14.7% of net assets V.R.D.B. -- Variable Rate Demand Bond (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 June 30, 1996. Inverse floaters in the aggregate represent 4.5% of the Fund's net assets as of June 30, 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 Sept 1996 $18,100,000 __________________________________________________________________ (i) At June 30, 1996, the cost of securities for federal income tax purposes was $382,381,393 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: PAGE 74 Unrealized appreciation $21,442,883 Unrealized depreciation (3,528,998) ___________________________________________________________________ Net unrealized appreciation $17,913,885 ___________________________________________________________________ PAGE 75
Investments in securities IDS New York Tax-Exempt Fund (Percentages represent value of June 30, 1996 investments compared to net assets) _____________________________________________________________________________________________________________________________ Municipal bonds (97.3%) _____________________________________________________________________________________________________________________________ Name of issuer Coupon Maturity Principal Value(a) and title of issue (b,c,d) rate year amount _____________________________________________________________________________________________________________________________ Battery Park City Authority Senior Refunding Revenue Bonds Series 1993A 5.25 % 2017 $4,000,000 $ 3,557,600 Broome County Certificates of Partication Public Safety Facility Series 1994 (MBIA Insured) 5.25 2022 2,650,000 2,423,081 Buffalo Municipal Water Agency Authority Water System Revenue Bonds Series 1995 (FGIC Insured) 5.00 2025 1,000,000 875,690 Erie County Unlimited Tax General Obligation Bonds Series B (FGIC Insured) 5.50 2025 700,000 665,987 Erie County Water Authority Fourth Resolution Water Refunding Revenue Bonds Zero Coupon Series 1992 (AMBAC Insured) 7.30 2017 1,215,000 (e) 263,047 Erie County Water Authority Water Works System Revenue Bonds Escrowed to Maturity Series 1990A (AMBAC Insured) 6.00 2008 1,765,000 1,871,377 Fallsburg Sullivan County Unlimited Tax General Obligation Improvement Pre-Refunded Bonds Series 1991 7.05 2011-14 1,300,000 1,453,764 Great Neck North Water Authority Water System Pre-Refunded Revenue Bonds Series 1989A 6.00 2020 1,415,000 1,478,505 Metropolitan Transportation Authority Commuter Facilities 1987 Service Contract Refunding Bonds Series 5 6.50 2016 1,775,000 1,796,850 Monroe County Utility General Obligation Pre-Refunded Bonds Water Improvement System 7.10 2008-09 1,000,000 1,084,240 Municipal Assistance New York City Series 59 7.75 2006 660,000 694,538 Municipal Assistance New York City Series 62 6.75 2006 2,200,000 2,288,330 New York & New Jersey Port Authority Consolidated Revenue Bonds Series 62 A.M.T. 8.00 2023 1,000,000 1,022,750 New York & New Jersey Port Authority Special Obligation Revenue Bonds KIAC Partners Project Series 4 A.M.T. 6.75 2019 1,500,000 1,492,470 New York City General Obligation Bonds Series 1995B 7.00 2016 1,500,000 1,569,075 New York City General Obligation Bonds Series J 5.875 2019 1,000,000 928,600 New York City Municipal Water Finance Authority Water & Sewer System Revenue Bonds Series B Inverse Floater (MBIA Insured) 6.44 2009 2,000,000 (f) 1,840,000 New York City Municipal Water Finance Authority Water & Sewer System Revenue Bonds Series B (AMBAC Insured) 5.375 2019 500,000 467,795 New York City Municipal Water Finance Authority Water & Sewer System Revenue Bonds Series B (MBIA Insured) 5.75 2026 500,000 490,190 New York City Unlimited Tax General Obligation Bonds Series 1996G 5.75 2017 1,500,000 1,379,550 New York City Water Finance Authority Water & Sewer System Pre-Refunded Revenue Bonds Series A (FGIC Insured) 6.75 2014 1,185,000 1,276,506 New York City Water Finance Authority Water & Sewer System Revenue Bonds Series A (FGIC Insured) 6.75 2014 565,000 607,810 New York City Water Finance Authority Water & Sewer System Revenue Pre-Refunded Bonds Series 1988A 7.00 2018 1,000,000 1,045,430 See accompanying notes to investments in securities. PAGE 76 State Dormitory Authority City University System Consolidated 3rd Resolution Revenue Bonds Series 1994-2 (MBIA Insured) 6.25 2019 1,500,000 1,535,040 State Dormitory Authority City University System Pre-Refunded Revenue Bonds 8.125 2017 3,400,000 3,615,798 State Dormitory Authority City University System Revenue Bonds Series 1993A 5.75 2013 3,000,000 2,883,660 State Dormitory Authority Revenue Bonds The Devereux Foundation Series 1995 (MBIA Insured) 5.00 2015 1,000,000 901,130 State Dormitory Authority Revenue Bonds NYACK Hospital Series 1996 6.25 2013 1,000,000 980,530 State Dormitory Authority State University Education Facility Pre-Refunded Revenue Bonds Series 1990A 7.70 2012 1,750,000 1,969,730 State Dormitory Authority State University Education Facility Refunding Revenue Bonds Series 1990B 7.50 2011 1,900,000 2,192,011 State Dormitory Authority State University Education Facility Revenue Bonds (Secondary AMBAC Insured) 5.25 2015 1,000,000 949,410 State Dormitory Authority State University Education Facility Revenue Bonds (Secondary AMBAC Insured) 5.50 2019 2,000,000 1,936,660 State Dormitory Authority Upstate Community Colleges Series A (Connie Lee Insured) 5.625 2012 1,500,000 1,480,545 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1986A A.M.T. 7.50 2021 1,750,000 1,800,120 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1989A A.M.T. 7.75 2024 1,000,000 1,053,100 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1990A A.M.T. 7.50 2025 5,000,000 (h) 5,370,800 State Energy Research & Development Authority Gas Facility Revenue Bonds Brooklyn Union Gas Series I 7.125 2020 2,000,000 2,056,980 State Energy Research & Development Authority Gas Facility Revenue Bonds Brooklyn Union Gas Series II 7.00 2020 1,500,000 1,536,750 State Energy Research & Development Authority Pollution Control Refunding Revenue Bonds Rochester Gas & Electric (MBIA Insured) A.M.T. 6.50 2032 2,500,000 2,580,525 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 2,871,900 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 3,300,210 State Local Government Assistance Bonds Series C 5.50 2022 1,500,000 1,389,180 State Local Government Assistance Pre-Refunded Bonds Series 1991A 7.00 2016 4,000,000 4,464,680 State Medical Care Facility Finance Agency Hospital & Nursing Home Mortgage Revenue Bonds Montefiore Hospital Series 1989A (FHA Insured) 7.25 2024 1,400,000 1,492,624 State Medical Care Facility Finance Agency Mental Health Services Facility Improving Refunding Revenue Bonds Series 1993F (Secondary FSA Insured) 5.375 2014 1,000,000 949,160 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 1,368,750 State Medical Care Facility Finance Agency Pre-Refunded Bonds Presbyterian Hospital Series 1985B 8.00 2025 1,320,000 1,407,925 State Medical Care Facility Finance Agency Revenue Bonds Buffalo General Hospital Series 1988C (FHA Insured) 7.60 2008 1,500,000 1,633,965 State Medical Care Facility Finance Agency Revenue Bonds Buffalo General Hospital Series 1988C (FHA Insured) 7.70 2022 1,950,000 2,128,094 State Medical Care Facility Finance Agency Mental Health Services Facility Mental Health Services Series F (Secondary Capital Guaranty) 5.375 2014 1,570,000 1,490,181 State Medical Care Facility Finance Agency Revenue Bonds North Shore University Glen Cove Series A (MBIA Insured) 5.125 2012 1,000,000 926,370 State Medical Care Facility Finance Agency Secured Hospital Revenue Bonds Series 1987A 7.10 2027 550,000 564,850 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series TT 7.50 2015 4,000,000 4,238,440 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series 27 6.90 2015 3,000,000 (h) 3,155,670 State Mortgage Agency Revenue Bonds Series 9 A.M.T. 7.30 2017 970,000 993,241 State Thruway Authority Local Highway & Bridge Service Contract Bonds Series 1991 6.00 2011 2,500,000 2,440,925 State Urban Development Correction Facility Pre-Refunded Revenue Bonds Series 1 (FSA Insured) 7.50 2020 4,500,000 4,999,725 State Urban Development Correctional Capital Facilities Refunding Revenue Bonds Series 1993A 5.25 2021 2,500,000 2,171,625 State Urban Development Correctional Capital Facilities Revenue Bonds Series 5 (MBIA Insured) 5.50 2025 750,000 710,812 PAGE 77 State Urban Development Revenue Bonds Higher Education Applied Technology Grants Series 1995 (MBIA Insured) 5.75 2015 1,000,000 995,360 Triborough Bridge & Tunnel Authority General Purpose Pre-Refunded Revenue Bonds Series S 7.00 2021 3,000,000 3,322,920 Triborough Bridge & Tunnel Authority Special Obligation Refunding Bonds Series 1991B (FGIC Insured) 6.875 2015 2,000,000 2,138,140 United Nations Development Senior Lien Refunding Revenue Bonds Series 1992A 6.00 2026 4,500,000 4,432,275 _____________________________________________________________________________________________________________________________ Total municipal bonds (Cost: $110,308,011) $117,002,996 _____________________________________________________________________________________________________________________________ Short-term security (0.8%) ______________________________________________________________________________________________________________________________ Issuer (c,d,g) Effective Amount Value (a) yield payable at maturity _____________________________________________________________________________________________________________________________ Municipal note New York City Municipal Water Authority Water & Sewer System Revenue Bonds (FGIC Insured) V.R. 06-15-23 3.60 900,000 900,000 _____________________________________________________________________________________________________________________________ Total short-term security (Cost: $900,000) $ 900,000 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $111,208,011)(i) $117,902,996 _____________________________________________________________________________________________________________________________
PAGE 78 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 06-30-96 06-30-95 ___________________________________________________________________ AAA 52% 55% AA 18 20 A 15 15 BBB 14 10 BB and below 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 June 30, 1996, the value of securities subject to alternative minimum tax represented 14.3% 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 June 30, 1996. Inverse floaters in the aggregate represent 1.5% of the fund's net assets as of June 30, 1996. (g) Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 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 Sept. 1996 $6,400,000 ___________________________________________________________________ PAGE 79 (i) At June 30, 1996, the cost of securities for federal income tax purposes was $110,149,750 and the gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $7,628,819 Unrealized depreciation (875,573) ___________________________________________________________________ Net unrealized appreciation $6,753,246 ___________________________________________________________________ PAGE 80
Investments in securities IDS Ohio Tax-Exempt Fund June 30, 1996 (Percentages represent value of 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 _____________________________________________________________________________________________________________________________ Barberton Limited Tax Various Purpose General Obligation Bonds Series 1989-1 7.35 % 2009 $ 700,000 $ 763,672 Bellefontaine Hospital Facility Refunding Revenue Bonds Mary Rutan Health Association of Logan County Series 1993 6.00 2013 1,000,000 933,460 Buckeye Valley Local School District School Improvement Unlimited Tax General Obligation Bonds Series 1995A (MBIA Insured) 5.25 2020 1,000,000 928,590 Butler County Hospital Facility Improvement Refunding Revenue Bonds 7.50 2010 1,750,000 1,854,125 Carroll Water & Sewer District Water System Improvement Unlimited Tax General Obligation Bonds 6.25 2010 1,000,000 939,400 Clermont County Hospital Facility Revenue Bonds Mercy Health System Province of Cincinnati Series 1989A (AMBAC Insured) 7.50 2019 750,000 831,663 Cleveland Airport Systems Revenue Bonds Series 1990A (MBIA Insured) A.M.T. 7.40 2020 500,000 539,200 Cleveland General Obligation Pre-Refunded Bonds 7.375 2003 125,000 132,661 Cleveland Public Power System 1st Mortgage Pre-Refunded Revenue Bonds 8.375 2017 100,000 106,809 Cleveland Waterworks Improvement 1st Mortgage Refunding Revenue Bonds Series F 1992B (AMBAC Insured) 6.25 2016 1,000,000 (f) 1,025,850 Cleveland Waterworks Improvement 1st Mortgage Revenue Bonds Series 1987E 6.00 2017 200,000 198,368 Cleveland Waterworks Improvement 1st Mortgage Pre-Refunded Revenue Bonds Series 1987E 7.875 2016 650,000 676,481 Coshocton County Solid Waste Disposal Refunding Revenue Bonds Stone Container Series 1992 7.875 2013 1,000,000 1,052,400 Cuyahoga County Hospital Improvement Revenue Bonds Cleveland Clinic Foundation 7.00 2013 500,000 511,010 Cuyahoga County Hospital Improvement Pre-Refunded Revenue Bonds Cleveland Clinic Foundation Series 1987A 7.875 2010 275,000 295,361 Cuyahoga County Hospital Improvement Revenue Bonds Mount Sinai Medical Center Series 1991 (AMBAC Insured) 6.625 2021 600,000 661,542 Cuyahoga County Hospital Improvement Revenue Bonds University Hospitals Health System Series 1992 (AMBAC Insured) 6.50 2011 500,000 527,685 Cuyahoga County Hospital Refunding Revenue Bonds Cleveland Clinic Foundation Series 1992 5.50 2011 1,500,000 1,475,460 Cuyahoga County Hospital Refunding Revenue Bonds Mount Sinai Medical Center Series 1987A 8.125 2014 400,000 430,356 Cuyahoga County Hospital Revenue Bonds Meridia Health Series 1991 7.00 2023 1,000,000 (f) 1,071,560 See accompanying notes to investments in securities. PAGE 81 Cuyahoga County Limited Tax General Obligation Bonds 5.60 2013 500,000 487,190 Cuyahoga Hospital Revenue Bonds Metrohealth System Series 1989 (MBIA Insured) 6.00 2019 1,000,000 1,001,200 Dayton International Airport Refunding Revenue Bonds (AMBAC Insured) 5.25 2015 2,000,000 1,879,360 Delaware County Sewer Improvement Limited Tax General Obligation Bonds 5.25 2015 1,000,000 935,250 Dover Limited Tax Improvement General Obligation Bonds Municipal Sewer System 7.10 2009 1,000,000 1,083,510 Dublin City School District: Franklin, Delaware, & Union Counties Unlimited General Obligation School Building Improvement Bonds Series 1995 (FGIC Insured) 5.00 2018 1,500,000 1,352,175 Elyria Limited Tax Improvement General Obligation Recreation Facility Bonds 7.10 2009 715,000 774,710 Erie County Hospital Improvement Refunding Revenue Bonds Firelands Community Hospital Series 1992 6.75 2015 2,000,000 2,088,380 Franklin County Convention Facilities Authority Tax & Lease Revenue Anticipation Pre-Refunded Bonds (MBIA Insured) 7.00 2019 1,500,000 1,660,110 Hamilton County Sewer System Improvement Metropolitan Sewer District of Greater Cincinnati Refunding Revenue Bonds Series A (FGIC Insured) 5.50 2017 1,000,000 970,580 Highland Heights Limited Tax Improvement General Obligation Street Bonds 7.75 2008 400,000 434,108 Hilliard County School District Unlimited Tax General Obligation Bonds Series A (FGIC Insured) 5.00 2020 1,000,000 896,160 Kettering School District Improvement General Obligation Bonds (FGIC Insured) 5.25 2022 1,000,000 926,060 Lake County Water System Limited Tax Improvement General Obligation Pre-Refunded Bonds Series 1987-2 8.125 2010 700,000 753,319 Lakewood Unlimited Tax General Obligation Bonds 5.50 2015 1,500,000 1,459,815 Lakota Local School District Butler County School Unlimited Tax Improvement Bonds 7.00 2012 500,000 537,765 Lakota Local School District Butler County School Unlimited Tax Improvement Pre-Refunded Bonds 7.90 2011 200,000 216,594 Lakota Local School District Unlimited Tax Improvement General Obligation Bonds (AMBAC Insured) 6.25 2014 2,000,000 2,073,340 Lima Limited Tax Improvement General Obligation Sanitary Sewer System Pre-Refunded Bonds 8.25 2012 200,000 215,722 Lorain County Hospital Facilities Refunding Revenue Bonds EMH Regional Medical Center Series 1995 (AMBAC Insured) 5.375 2021 2,000,000 1,872,600 Lucas County Hospital Refunding Revenue Bonds St. Vincent's Medical Center Series B (MBIA Insured) 5.25 2020 2,000,000 1,836,080 Lucas County Hospital Pre-Refunded Revenue Bonds Toledo Hospital (MBIA Insured) 7.00 2014 100,000 102,819 Mahoning County Hospital Improvement Bonds Western Reserve Care System (MBIA Insured) 5.375 2015 1,000,000 947,610 Marietta Sewer System Improvement Bonds (BIG Insured) 7.50 2007 200,000 211,802 Marion County Health Care Facilities Improvement Refunding Revenue Bonds United Church Homes Series 1993 6.375 2010 1,000,000 975,600 Marysville Sewer System 1st Mortgage Revenue Bonds Series 1988 (BIG Insured) A.M.T. 7.85 2008 400,000 427,128 Marysville Water System Mortgage Revenue Bonds Series 1991 (MBIA Insured) 7.05 2021 1,000,000 1,115,550 Medina County Hospital Revenue Bonds Medina County Community Hospital Series 1987 (AMBAC Insured) 6.875 2016 100,000 104,689 Miami County Hospital Facility Refunding Revenue Bonds Upper Valley Medical Center Series 1987A 8.375 2013 75,000 78,275 Montgomery County Health Facilities Revenue Bonds Friendship Village Dayton Series 1990A 9.25 2016 1,000,000 1,046,440 Montgomery County Hospital Facility Refunding Revenue & Improvement Bonds Ketter Medical Center Series 1996 (MBIA Insured) 5.50 2026 1,000,000 953,530 Montgomery County Water Revenue Bonds Greater Moraine - Beavercreek District (FGIC Insured) 6.25 2017 1,000,000 1,030,120 Parma Hospital Improvement Revenue Bonds Parma Community General Hospital Series 1989B (MBIA Insured) 7.125 2013 500,000 535,220 Pickerington Local School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2013 1,000,000 1,106,740 Rural Loraine County Water Authority Water Resource Improvement Pre-Refunded Revenue Bonds Series 1991 (AMBAC Insured) 7.00 2011 1,000,000 1,110,340 Southwest Licking Local School District School Facilities Unlimited Tax General Obligation Bonds (FGIC Insured) 5.75 2022 1,000,000 993,230 Southwest Local School District Hamilton & Butler Counties School Unlimited Tax Improvement Bonds (AMBAC Insured) 7.65 2010 500,000 561,480 State Air Quality Development Authority Refunding Revenue Bonds JMG Funding Limited Partnership (AMBAC Insured) A.M.T. 6.375 2029 500,000 514,925 State Air Quality Development Authority Refunding Revenue Bonds Series 1994 (AMBAC Insured) A.M.T. 6.375 2029 2,000,000 2,059,700 PAGE 82 State Air Quality Development Authority Revenue Bonds Cleveland Electric Illuminating Series A 7.00 2009 345,000 334,360 State Air Quality Development Authority Revenue Bonds Columbus & Southern Series A (FGIC Insured) 6.375 2020 1,000,000 1,037,170 State Building Authority Local Jail Grant Bonds Series 1989A (MBIA Insured) 7.35 2009 500,000 554,040 State Building Authority State Correctional Facility Revenue Bonds Series B 7.125 2009 75,000 76,826 State Building Authority State Facility Pre-Refunded Bonds Columbus State Office Building Series 1985C 7.35 2005 1,000,000 1,109,720 State Higher Educational Facility Pre-Refunded Revenue Bonds Oberlin College Series 1989 7.375 2014 500,000 549,475 State Housing Finance Agency Mortgage Revenue Bonds Aristocrat South Board & Care Series 1991A (FHA Insured) A.M.T. 7.30 2031 1,500,000 1,561,080 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.80 2030 560,000 588,297 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series 1990C (GNMA Insured) A.M.T. 7.85 2021 855,000 900,409 State Municipal Electric Generation Agency Joint Venture #5 Revenue Bonds (AMBAC Insured) 5.375 2024 2,000,000 1,867,880 State Turnpike Revenue Bonds Series A 5.75 2024 1,000,000 975,600 State Turnpike Revenue Bonds Series A (MBIA Insured) 5.50 2026 1,000,000 953,630 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 1,854,580 State Water & Air Quality Development Authority Cleveland Electric Illumination Pollution Control Refunding Revenue Bonds Series 1995 7.70 2025 1,000,000 1,013,420 State Water Development Authority Bonds Toledo Edison Series 1994 A.M.T. 8.00 2023 1,000,000 1,019,550 State Water Development Authority Pollution Control Revenue Bonds Phillip Morris 7.25 2008 150,000 158,261 State Water Development Authority Water Development Pre-Refunded Bonds Pure Water Series 1987I 7.75 2006-14 200,000 211,182 State Water Development Authority Water Development Pre-Refunded Bonds Pure Water Series 1988I 7.00 2014 500,000 525,920 State Water Development Authority Water Development Refunding Revenue Bonds Pure Water (AMBAC Insured) 5.50 2018 750,000 719,212 State Water Development Solid Waste Disposal Northstar BHP Steel LLC-Cargill Series 1995 Revenue Bonds A.M.T. 6.30 2020 500,000 510,195 Summit County Industrial Development Revenue Bonds Century Products 7.75 2005 100,000 103,966 Summit County Limited Tax General Obligation Pre-Refunded Bonds Human Services Facility (AMBAC Insured) 8.00 2007 100,000 107,576 Sycamore Board of Education Community School District Hamilton County School Improvement Bonds 6.50 2009 500,000 519,175 University General Receipts Refunding Revenue Bonds Student Recreation Center (FGIC Insured) 5.00 2013 1,000,000 901,780 University of Cincinnati General Receipt Pre-Refunded Bonds Series I-1 7.10 2010 750,000 816,668 University of Toledo General Receipt Pre-Refunded Bonds Series 1990 (MBIA Insured) 7.125 2020 500,000 551,120 Warren County Various Purpose Limited Tax General Obligation Bonds Series 1992 6.10 2012 500,000 524,395 Whitehall City School District Franklin County Unlimited Tax Improvement General Obligation Pre-Refunded School Building Construction 7.25 2013 500,000 550,915 _____________________________________________________________________________________________________________________________ Total municipal bonds (Cost: $69,240,999) $72,881,281
_____________________________________________________________________________________________________________________________ Short-term security (0.2%) _____________________________________________________________________________________________________________________________ Issuer (d,e) Effective Amount Value(a) yield payable at maturity _____________________________________________________________________________________________________________________________ Municipal note State Air Quality Development Authority Revenue Bonds Cincinati Gas & Electric Series A V.R. 09-01-30 3.55% $100,000 $ 100,000 PAGE 83 _____________________________________________________________________________________________________________________________ Total short-term security (Cost: $100,000) 100,000 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $69,340,999)(g) $72,981,281 ___________________________________________________________________________________________________________________________
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 06-30-96 12-31-95 ___________________________________________________________________ AAA 68% 68% AA 10 A 9 10 BBB 7 6 B and below 6 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 June 30, 1996, the value of securities subject to alternative minimum tax represented 11.0% of net assets. V.R. -- Variable Rate (e) Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1996. (f) Partially pledged as initial deposit on the following open interest rate futures contracts (see Note 5 to the financial statements): Type of security Notional amount ___________________________________________________________________ Purchase contracts Municipal Bonds Index Sept. 1996 $3,200,000 ___________________________________________________________________ PAGE 84 (g) At June 30, 1996, the cost of securities for federal income tax purposes was $ and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ Unrealized depreciation ___________________________________________________________________ Net unrealized appreciation $ ___________________________________________________________________ PAGE 85 IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposits (CDs) and other bank securities. (icon of) piggy bank IDS Tax-Free Money Fund Invests primarily in short-term bonds and notes issued by state and local governments to seek high current income exempt from federal income taxes. (icon of) shield with piggy bank enclosed Income investments The funds in this group invest their assets primarily in corporate bonds or government securities to seek interest income. Secondary objective is capital growth. Risk varies by bond quality. IDS Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests mainly in long-term, high-yielding corporate fixed-income securities in the lower rated, higher risk bond categories to seek high current income. Secondary objective is capital growth. (icon of) coins IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column PAGE 86 IDS Selective Fund Invests in high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests primarily in securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) shield with eagle head enclosed Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed IDS State Tax-Exempt Funds (CA, MA, MI, MN, NY, OH) Invests primarily in high- and medium-grade municipal securities to provide income to residents of each respective state that is exempt from federal, state and local income taxes. (New York is the only state that is exempt at the local level.) (icon of) shield with U.S. enclosed IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column enclosed IDS Insured Tax-Exempt Fund Invests primarily in municipal securities that are insured as to the timely payment of principal and interest. The insurance feature minimizes credit risk of the fund but does not guarantee the market value of the fund's shares. (icon of) shield with star enclosed PAGE 87 Growth and income investments These funds focus on securities of medium to large, well- established companies that offer long-term growth of capital and reasonable income from dividends and interest. Moderate risk. IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Managed Allocation Fund Invests in U.S. equity securities, U.S. and foreign debt securities, foreign equity securities and money market instruments. The fund provides diversification among these major investment categories and has a target mix that represents the way the fund's investments will be allocated over the long term. Seeks maximum total return. (icon of) bird in a nest IDS Equity Select Fund Invests primarily in a combination of moderate growth stocks, higher-yielding equities and bonds. Seeks growth of capital and income. (icon of) three pine trees IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by our research analysts as the best from each industry represented on the index. Offers potential for long-term growth as well as dividend income. (icon of) ribbon IDS Stock Fund Invests in common stock of companies representing many sectors of the economy. Seeks current income and growth of capital. (icon of) building with columns IDS Equity Value Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) three growing flowers PAGE 88 IDS Utilities Income Fund Invests primarily in the stocks of public utility companies to seek high current income and growth of income and capital with reduced volatility. (icon of) light bulb IDS Diversified Equity Income Fund Invests primarily in high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) two puzzle pieces IDS Mutual Invests in a balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Small Company Index Fund Invests in all or a representative group of the equity securities comprising the S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation. (icon of) office building IDS Progressive Fund Invests primarily in undervalued common stocks. The fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star PAGE 89 IDS Global Growth Fund Invests in stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS Strategy Aggressive Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Research Opportunities Fund Invests primarily in equity securities of companies included in the S&P 500 Index that are believed to have strong growth potential. The Portfolio is managed using a research methodology by the Research Department of AEFC. Goal is long-term appreciation. (icon of) magnifying glass IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) trees IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The fund frequently changes its industry mix. (icon of) dimension Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems PAGE 90 For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial advisor or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. PAGE 91 Federal income tax information IDS California Tax-Exempt Fund _____________________________________________________ The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on Form 1099-DIV, Dividends and Distributions, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS California Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest distributions taxable status explained below. Payable date Per share July 26, 1995 $0.02289 Aug. 25, 1995 0.02293 Sept. 25, 1995 0.02441 Oct. 26, 1995 0.02385 Nov. 27, 1995 0.02512 Dec. 27, 1995 0.02282 Jan. 25, 1996 0.02193 Feb. 26, 1996 0.02590 March 27, 1996 0.02315 April 26, 1996 0.02353 May 28, 1996 0.02433 June 26, 1996 0.02235 Total $0.28321 Taxable dividend -- short-term capitalgain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00006 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.02950 Total distributions $0.31277 PAGE 92 Class B Exempt-interest dividends taxable status explained below. Payable date Per share July 26, 1995 $0.01968 Aug. 25, 1995 0.01977 Sept. 25, 1995 0.02109 Oct. 26, 1995 0.02050 Nov. 27, 1995 0.02162 Dec. 27, 1995 0.01950 Jan. 25, 1996 0.01872 Feb. 26, 1996 0.02238 March 27, 1996 0.01991 April 26, 1996 0.02036 May 28, 1996 0.02098 June 26, 1996 0.01934 Total $0.24385 Taxable dividend -- short-term capital gain taxable as dividend income Payable date Per share Dec. 27, 1995 $0.00006 Capital gain distribution -- taxable as long-term capital gains. Payable date Per share Dec. 27, 1995 $0.02950 Total distributions $0.27341 Class Y Exempt-interest dividends taxable status explained below. Payable date Per share July 26, 1995 $0.02369 Aug. 25, 1995 0.02388 Sept. 25, 1995 0.02514 Oct. 26, 1995 0.02472 Nov. 27, 1995 0.02581 Dec. 27, 1995 0.02378 Jan. 25, 1996 0.02276 Feb. 26, 1996 0.02660 March 27, 1996 0.02372 April 26, 1996 0.02445 May 28, 1996 0.02506 June 26, 1996 0.02325 Total $0.29286 PAGE 93 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00006 Capital gain distribution -- taxable as long-term capital gain. Payable date Per share Dec. 27, 1995 $0.02950 Total distributions $0.32242 Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1996 was derived from interest on California municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax adviser about reporting this income for state and local tax purposes. PAGE 94 Federal income tax information IDS Massachusetts Tax-Exempt Fund __________________________________________________________ The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a statement sent next January. IDS Massachusetts Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest dividends--taxable status explained below. Payable date Per share July 26, 1995 $0.02320 Aug. 25, 1995 0.02323 Sept. 25, 1995 0.02461 Oct. 26, 1995 0.02400 Nov. 27, 1995 0.02538 Dec. 27, 1995 0.02170 Jan. 25, 1996 0.02220 Feb. 26, 1996 0.02612 March 27, 1996 0.02321 April 26, 1996 0.02381 May 28, 1996 0.02348 June 26, 1996 0.02133 Total distributions $0.28227 Class B Exempt-interest dividends--taxable status explained below. Payable date Per share July 26, 1995 $0.01997 Aug. 25, 1995 0.02000 Sept. 25, 1995 0.02121 Oct. 26, 1995 0.02058 Nov. 27, 1995 0.02181 Dec. 27, 1995 0.01831 Jan. 25, 1996 0.01892 Feb. 26, 1996 0.02252 March 27, 1996 0.01993 April 26, 1996 0.02055 May 28, 1996 0.02001 June 26, 1996 0.01820 Total distributions $0.24201 PAGE 95 Class Y Exempt-interest dividends--taxable status explained below. Payable date Per share July 26, 1995 $0.02389 Aug. 25, 1995 0.02393 Sept. 25, 1995 0.02538 Oct. 26, 1995 0.02469 Nov. 27, 1995 0.02617 Dec. 27, 1995 0.02263 Jan. 25, 1996 0.02335 Feb. 26, 1996 0.02714 March 27, 1996 0.02414 April 26, 1996 0.02468 May 28, 1996 0.02427 June 26, 1996 0.02222 Total distributions $0.29249 Source of distributions 100% of exempt interest distributions during the fiscal year ended June 30, 1996 was derived from interest on Massachusetts municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax adviser about reporting this income for state and local tax purposes. PAGE 96 Federal income tax information IDS Michigan Tax-Exempt Fund _____________________________________________________ The fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS Michigan Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02397 Aug. 25, 1995 0.02388 Sept. 25, 1995 0.02547 Oct. 26, 1995 0.02473 Nov. 27, 1995 0.02674 Dec. 27, 1995 0.02469 Jan. 25, 1996 0.02243 Feb. 26, 1996 0.02718 March 27, 1996 0.02404 April 26, 1996 0.02458 May 28, 1996 0.02546 June 26, 1996 0.02222 Total $0.29539 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.04082 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.02901 Total distributions $0.36522 Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02062 Aug. 25, 1995 0.02057 Sept. 25, 1995 0.02200 Oct. 26, 1996 0.02121 Nov. 27, 1995 0.02307 Dec. 27, 1995 0.02121 Jan. 25, 1996 0.01910 Feb. 26, 1996 0.02350 March 27, 1996 0.02065 April 26, 1996 0.02129 May 28, 1996 0.02192 June 26, 1996 0.01904 Total $0.25418 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.04082 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1996 $0.02901 Total distributions $0.32401 Class Y Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02458 Aug. 25, 1995 0.02479 Sept. 25, 1995 0.02631 Oct. 26, 1996 0.02577 Nov. 27, 1995 0.02753 Dec. 27, 1995 0.02531 Jan. 25, 1996 0.02320 Feb. 26, 1996 0.02801 March 27, 1996 0.02466 April 26, 1996 0.02556 May 28, 1996 0.02615 June 26, 1996 0.02321 Total distributions $0.30508 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.04082 PAGE 97 Capital gain distribution -- taxable for long-term capital gain Payable date Per share Dec. 27, 1995 $0.02901 Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1996 was derived from interest on Michigan municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax adviser about reporting this income for state and local tax purposes. PAGE 98 Federal income tax information IDS Minnesota Tax-Exempt Fund _____________________________________________________ The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS Minnesota Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02459 Aug. 25, 1995 0.02423 Sept. 25, 1995 0.02553 Oct. 26, 1995 0.02507 Nov. 27, 1995 0.02664 Dec. 27, 1995 0.02411 Jan. 25, 1996 0.02329 Feb. 26, 1996 0.02790 March 27, 1996 0.02469 April 26, 1996 0.02484 May 28, 1996 0.02520 June 26, 1996 0.02309 Total $0.29923 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00024 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00369 Total distributions $0.30316 PAGE 99 Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02139 Aug. 25, 1995 0.02104 Sept. 25, 1995 0.02218 Oct. 26, 1995 0.02171 Nov. 27, 1995 0.02318 Dec. 27, 1995 0.02080 Jan. 25, 1996 0.02007 Feb. 26, 1996 0.02436 March 27, 1996 0.02142 April 26, 1996 0.02165 May 28, 1996 0.02180 June 26, 1996 0.02001 Total $0.25961 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00024 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00369 Total distributions $0.26354 PAGE 100 Class Y Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02535 Aug. 25, 1995 0.02477 Sept. 25, 1995 0.02633 Oct. 26, 1995 0.02605 Nov. 27, 1995 0.02738 Dec. 27, 1995 0.02554 Jan. 25, 1996 0.02426 Feb. 26, 1996 0.02866 March 27, 1996 0.02530 April 26, 1996 0.02577 May 28, 1996 0.02618 June 26, 1996 0.02372 Total $0.30931 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00024 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00369 Total distributions $0.31324 Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1996 was derived from interest on Minnesota municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax adviser about reporting this income for state and local tax purposes. PAGE 101 Federal income tax information IDS New York Tax-Exempt Fund _____________________________________________________ The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS New York Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02720 Aug. 25, 1995 0.02324 Sept. 25, 1995 0.02461 Oct. 26, 1995 0.02396 Nov. 27, 1995 0.02540 Dec. 27, 1995 0.02311 Jan. 25, 1996 0.02245 Feb. 26, 1996 0.02614 March 27, 1996 0.02323 April 26, 1996 0.02367 May 28, 1996 0.02390 June 26, 1996 0.02153 Total distributions $0.28844 Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02405 Aug. 25, 1995 0.02011 Sept. 25, 1995 0.02132 Oct. 26, 1995 0.02066 Nov. 27, 1995 0.02197 Dec. 27, 1995 0.01986 Jan. 25, 1996 0.01929 Feb. 26, 1996 0.02266 March 27, 1996 0.02005 April 26, 1996 0.02054 May 28, 1996 0.02058 June 26, 1996 0.01853 Total distributions $0.24962 PAGE 102 Class Y Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02810 Aug. 25, 1995 0.02416 Sept. 25, 1995 0.02520 Oct. 26, 1995 0.02493 Nov. 27, 1995 0.02655 Dec. 27, 1995 0.02409 Jan. 25, 1996 0.02309 Feb. 26, 1996 0.02721 March 27, 1996 0.02390 April 26, 1996 0.02452 May 28, 1996 0.02464 June 26, 1996 0.02231 Total distributions $0.29870 Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1996 was derived from interest on New York municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax adviser about reporting this income for state and local tax purposes. PAGE 103 Federal income tax information IDS Ohio Tax-Exempt Fund _____________________________________________________ The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on Form 1099-DIV, Dividends and Distributions, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS Ohio Tax-Exempt Fund Fiscal year ended June 30, 1996 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02238 Aug. 25, 1995 0.02053 Sept. 25, 1995 0.02497 Oct. 26, 1995 0.02431 Nov. 27, 1995 0.02565 Dec. 27, 1995 0.02354 Jan. 25, 1996 0.02262 Feb. 26, 1996 0.02635 March 27, 1996 0.02345 April 26, 1996 0.02394 May 28, 1996 0.02478 June 26, 1996 0.02303 Total $0.28555 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00007 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00966 Total distributions $0.29528 Class B PAGE 104 Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.01909 Aug. 25, 1995 0.01728 Sept. 25, 1995 0.02154 Oct. 26, 1995 0.02087 Nov. 27, 1995 0.02209 Dec. 27, 1995 0.02018 Jan. 25, 1996 0.01933 Feb. 26, 1996 0.02275 March 27, 1996 0.02012 April 26, 1996 0.02067 May 28, 1996 0.02128 June 26, 1996 0.01989 Total $0.24509 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00007 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00966 Total distributions $0.25482 Class Y Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1995 $0.02311 Aug. 25, 1995 0.02144 Sept. 25, 1995 0.02577 Oct. 26, 1995 0.02544 Nov. 27, 1995 0.02646 Dec. 27, 1995 0.02459 Jan. 25, 1996 0.02347 Feb. 26, 1996 0.02722 March 27, 1996 0.02431 April 26, 1996 0.02495 May 28, 1996 0.02563 June 26, 1996 0.02402 Total distributions $0.29641 PAGE 105 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 27, 1995 $0.00007 Capital gain distribution -- taxable for long-term capital gain. Payable date Per share Dec. 27, 1995 $0.00966 Total distributions $0.30614 Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1996, was derived from interest on Ohio municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax advisor about reporting this income for state and local tax purposes. PAGE 106 Quick telephone reference American Express Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchToneR 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 Your IDS financial advisor: IDS State Tax-Exempt Funds IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 107 STATEMENT OF DIFFERENCES Difference Description 1) The layout is different 1) Some of the layout in the throughout the annual report. annual report to shareholders is in two columns. 2) Headings. 2) The headings in the annual report and prospectus are placed in blue strip at the top of the page. 3) There are pictures, icons 3) Each picture, icon and and graphs throughout the graph is described in annual report and prospectus. parentheses. 4) Footnotes for charts and 4) The footnotes for each graphs are described at chart or graph are typed the left margin. below the description of the chart or graph. -----END PRIVACY-ENHANCED MESSAGE-----