-----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, LoTbM7HX7hUO5+rOgLGy0dUv8u8jRkSOGgOHoEIuYN82I4rbIjGb9MjFTFofaMax hvTfHhcsC/ILvG4jHm2KyQ== 0000820027-97-000647.txt : 19970912 0000820027-97-000647.hdr.sgml : 19970912 ACCESSION NUMBER: 0000820027-97-000647 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 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: SEC FILE NUMBER: 811-04646 FILM NUMBER: 97676558 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 FUND IDS State Tax-Exempt Funds Tax-exempt funds from the following states: California Massachusetts Michigan Minnesota New York Ohio 1997 ANNUAL REPORT (PROSPECTUS INCLUDED) AMERICAN EXPRESS Financial Advisors (Logo) (icon of) a column enclosed in a shield. Distributed by American Express Financial Advisors Inc. Twice the tax relief Many people who want to reduce their tax burden favor municipal bonds because the interest they pay is generally free from federal tax. If you want to eliminate state tax, too, you can invest in municipal bonds in the state in which you reside. This double tax-exemption makes this one of the best tax-advantaged investments still available to individuals. What's more, the money you invest is typically used by municipalities to fund projects such as schools and highways. So, with this investment, the benefits reach well beyond your pocketbook. Contents 1997 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 a Fund 20 Independent auditors' report 21 Financial statements 22 Notes to financial statements 29 Investments in securities 42 IDSmutual funds 74 Federal income tax information 78 1997 prospectus The Funds in brief 3p Sales charge and Fund expenses 4p Performance 8p Investment policies and risks 24p How to purchase, exchange or redeem shares 31p Special shareholder services 43p Distributions and taxes 44p How the Funds are organized 49p About American Express Financial Corporation 53p Appendices 54p The purpose of this annual report is to tell investors how the Funds performed. (icon of) one open book inside another. The prospectus, which is bound into the middle of this annual report, describes the Funds in detail. (This annual report is not part of the prospectus.) To our shareholders From the president If you're an experienced investor, you know that the past few years have been unusually strong ones in many financial markets. Perhaps just as important, you also know that history shows that bull markets don't last forever. Though they're often unpredictable, declines -- whether they're brief or long-lasting, moderate or substantial -- are always a possibility. That fact reinforces the need for investors to periodically review their long-term goals and examine whether their investment program remains on track to achieving them. Your quarterly investment statements are one part of that monitoring process. The other is a meeting with your American Express financial advisor. That becomes more important if there's a major change in your financial situation or in the financial markets. William R. Pearce (picture of) William R. Pearce President of the Fund (This annual report is not part of the prospectus.) From the portfolio manager Despite considerable volatility in the fixed-income market, municipal bonds fared relatively well during the past fiscal year. Reflecting the generally positive environment, all of the IDS State Tax-Exempt Funds Class A shares generated a total return (including net asset value change and dividends) in excess of 7% for the July 1996 through June 1997 period. After a sluggish summer, bonds were energized last fall by ongoing reports of stable, low inflation and moderate economic growth. Against that backdrop, long-term interest rates began falling, driving up bond prices in the process. The rally stalled out over the winter, however, then turned into a retreat in the spring as reports of stronger-than-expected economic growth reignited inflation fears and led to a rise in long-term interest rates. But the period ended on an up note, as benign economic and inflation data again enticed investors back into the market, allowing rates to come back down. Favorable supply/demand situation The Funds' performance roughly tracked that of the broad bond market -- gaining ground last fall, slipping back in the spring and rebounding in May and June. To the Funds' benefit, municipal bonds outperformed Treasury bonds for the year as a whole, thanks chiefly to a favorable supply/demand situation. A substantial number of municipal bonds were "called" by issuers (taken out of the market because issuers paid off the principal ahead of the bonds' maturity dates), while the number of new bonds coming to market was comparatively modest. The result was consistent demand and less supply - a positive for security prices. The flip side of the call situation was that it slightly eroded the Funds' dividends, which resulted from the fact that newly issued bonds didn't pay as much interest as the older bonds that were called away. Still, measured against comparable municipal bond funds, the Funds' dividends held up better than most. Also tempering performance a bit was the modest amount of investment capital flowing into the municipal bond market, especially compared to the enormous inflows into the stock market. This condition has persisted for more than three years, limiting the net-asset-value appreciation the Funds might otherwise have enjoyed. State updates In general, ongoing economic growth nationwide benefited each of the mutual funds. Beyond that, California, Massachusetts, Minnesota and Ohio enjoyed a favorable supply/demand situation for municipal bonds. In Michigan, an excess supply created by the seasonal issuance of school bonds last fall dissipated over the ensuing months. In New York, the potential for a huge new supply of bonds resulting from the possible acquisition of Long Island Lighting by another state agency continued to hang over the market, but had no material effect on performance. Given that the economy continues to expand, I think it's increasingly likely that we'll see somewhat higher inflation in the new fiscal year. Ultimately, I expect that will lead to moderately higher long-term interest rates, which may mean a more difficult environment for bonds, including municipals. In light of that possibility, I have structured the Funds more defensively, which includes a slightly higher amount of cash reserves and a shorter duration -- a strategy that helps cushion the Funds' net asset values when interest rates rise and, in general, lessens their volatility. In addition, I am concentrating on maintaining the Funds' dividends, which I expect to provide most of the Funds' returns in the months ahead. Paul B. Hylle (picture of) Paul B. Hylle Portfolio manager (This annual report is not part of the prospectus.) To our shareholders Performance California Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.24 June 30, 1996 $ 5.15 Increase $ 0.09 Distributions July 1, 1996 - June 30, 1997 From income $ 0.29 From capital gains $ 0.01 Total distributions $ 0.30 Total return* +7.8%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.24 June 30, 1996 $ 5.15 Increase $ 0.09 Distributions July 1, 1996 - June 30, 1997 From income $ 0.25 From capital gains $ 0.01 Total distributions $ 0.26 Total return* +7.0%** Massachusetts Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.42 June 30, 1996 $ 5.30 Increase $ 0.12 Distributions July 1, 1996 - June 30, 1997 From income $ 0.29 From capital gains $ -- Total distributions $ 0.29 Total return* +7.8%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.42 June 30, 1996 $ 5.30 Increase $ 0.12 Distributions July 1, 1996 - June 30, 1997 From income $ 0.25 From capital gains $ -- Total distributions $ 0.25 Total return* +7.0%** Michigan Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.44 June 30, 1996 $ 5.36 Increase $ 0.08 Distributions July 1, 1996 - June 30, 1997 From income $ 0.29 From capital gains $ -- Total distributions $ 0.29 Total return* +7.1%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.44 June 30, 1996 $ 5.36 Increase $ 0.08 Distributions July 1, 1996 - June 30, 1997 From income $ 0.25 From capital gains $ -- Total distributions $ 0.25 Total return* +6.3%** * The prospectus discusses the effect of sales charges, if any, on the various classes. ** The total return is a hypothetical investment in the Fund with all distributions reinvested. (This annual report is not part of the prospectus.) Performance Minnesota Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.30 June 30, 1996 $ 5.20 Increase $ 0.10 Distributions July 1, 1996 - June 30, 1997 From income $ 0.31 From capital gains $ -- Total distributions $ 0.31 Total return* +8.1%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.30 June 30, 1996 $ 5.20 Increase $ 0.10 Distributions July 1, 1996 - June 30, 1997 From income $ 0.27 From capital gains $ -- Total distributions $ 0.27 Total return* +7.2%** New York Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.15 June 30, 1996 $ 5.06 Increase $ 0.09 Distributions July 1, 1996 - June 30, 1997 From income $ 0.28 From capital gains $ -- Total distributions $ 0.28 Total return* +7.6%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.15 June 30, 1996 $ 5.06 Increase $ 0.09 Distributions July 1, 1996 - June 30, 1997 From income $ 0.25 From capital gains $ -- Total distributions $ 0.25 Total return* +6.8%** Ohio Class A 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.38 June 30, 1996 $ 5.28 Increase $ 0.10 Distributions July 1, 1996 - June 30, 1997 From income $ 0.29 From capital gains $ -- Total distributions $ 0.29 Total return* +7.4%** Class B 12-month performance (All figures per share) Net asset value (NAV) June 30, 1997 $ 5.38 June 30, 1996 $ 5.28 Increase $ 0.10 Distributions July 1, 1996 - June 30, 1997 From income $ 0.25 From capital gains $ -- Total distributions $ 0.25 Total return* +6.6%** * The prospectus discusses the effect of sales charges, if any, on the various classes. ** The total return is a hypothetical investment in the Fund with all distributions reinvested. (This annual report is not part of the prospectus.) The Fund's ten largest holdings
IDS California Tax-Exempt Fund Percent Value (of Fund's net assets) as of June 30, 1997) Anaheim Public Finance Authority Revenue Bonds 2nd Series Electric Utilities San Juan 5.75% 2022 4.61% $11,160,939 Sacramento Municipal Utility District Series R 6.00% 2015-2017 3.10 7,501,845 Long Beach Harbor Revenue Bonds Series 1989A A.M.T. 7.25% 2019 3.02 7,308,630 Los Angeles Department of Water & Power Electric Plant Revenue Bonds Series 1990 7.125% 2030 2.90 7,036,185 Statewide Community Development Authority Revenue Certificate of Participation St. Joseph Health System Group 6.50% 2015 2.46 5,961,560 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.00% 2020 2.22 5,369,700 University of Southern California Educational Facilities Authority Pre-Refunded Revenue Bonds Series 1989B 6.75% 2015 2.21 5,359,750 Statewide Community Development Authority Health Facilities Revenue Bonds Unihealth America Series 1993A Inverse Floater 7.114% 2011 2.19 5,293,750 San Diego Regional Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25% 2008 2.15 5,218,474 Rancho Mirage Joint Powers Finance Authority Certificate of Participation Eisenhower Memorial Hospital 7.00% 2022 1.98 4,788,560 Note: The Fund's investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.).
(icon of) pie chart The ten holdings listed here make up 26.84% of the Fund's net assets (This annual report is not part of the prospectus.) The Fund's long-term performance IDS California Tax-Exempt Fund Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $9,034. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS California Tax-Exempt Fund $20,000 $19,670 Lehman Brothers California Total Return Tax-Exempt Fund Municipal Bond Index Class A $10,000 $9,500 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) Since 1 year inception 5 years 10 years Class A +2.38% --% +5.15% +6.99% Class B +2.95% +3.94%* --% --% *Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing California Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.)
The Fund's ten largest holdings IDS Massachusetts Tax-Exempt Fund Percent Value (of Fund's net assets) (as of June 30, 1997) Boston City Hospital Refunding Revenue Bonds Series B 5.75% 2023 3.96% $2,952,360 Health & Educational Facilities Authority Revenue Bonds Suffolk University Series B 6.35% 2022 3.50 2,612,465 Health & Educational Facilities Authority Revenue Bonds Cape Cod Health System Series A 5.25% 2021 3.15 2,349,475 Health & Educational Facilities Authority Revenue Bonds Boston College Series J 6.625% 2021 2.90 2,164,580 Industrial Finance Agency Pollution Control Refunding Revenue Bonds Eastern Edison Series 1993 5.875% 2008 2.65 1,980,160 Health & Educational Facilities Authority Revenue Bonds Charlton Memorial Hospital Series 1991B 7.25% 2013 2.55 1,905,978 Industrial Finance Agency Resource Recovery Revenue Bonds SEMASS Series 1991A 9.00% 2015 2.26 1,684,290 North Attleborough Unlimited General Obligation Bonds Series 1997 5.25% 2017 2.20 1,644,649 Municipal Wholesale Electric Power Supply System Refunding Revenue Bonds Series B 4.75% 2011 2.19 1,632,715 Bay Transportation Authority General Transportation System Refunding Bonds Series 1992B 6.20% 2016 2.19 1,630,635 Note: The Fund's investment income from securities may be subject to the Alternative Minimum Tax (A.M.T.).
(icon of) pie chart The ten holdings listed here make up 27.55% of the Fund's net assets (This annual report is not part of the prospectus.) The Fund's long-term performance IDS Massachusetts Tax-Exempt Fund Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $8,500. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS Massachusetts Tax-Exempt Fund $20,000 $18,837 Lehman Brothers Massachusetts Total Return Tax-Exempt Fund Municipal Bond Index Class A $10,000 $9,500 7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) 1 year 5 years Since inception Class A +2.42% +5.37% +6.52%* Class B +3.00% --% +4.05%** *Inception date was July 2, 1987. **Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing Massachusetts Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.)
The Fund's ten largest holdings IDS Michigan Tax-Exempt Fund Percent Value (of Fund's net assets) (as of June 30, 1997) Romulus Township School District Unlimited Tax General Obligation Refunding Bonds 5.75% 2022 3.13% $2,513,850 State Building Authority Refunding Revenue Bonds Series 1991I 6.25% 2020 2.86 2,295,524 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds McLaren Obligated Group Series 1991A 7.50% 2021 2.47 1,984,605 Detroit Sewer Disposal Revenue Bonds 5.70% 2023 2.46 1,973,300 Grand Ledge Public Schools Unlimited Tax General Obligation Refunding Bonds Counties of Eaton, Clinton & Ionia Series 1995 5.375% 2024 2.40 1,926,980 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi 2 Plants Series CC A.M.T. 7.50% 2019 2.37 1,905,960 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Ford Motor Series 1991A 7.10% 2006 2.37 1,900,338 Battle Creek Water Supply System Pre-Refunded Revenue Bonds Series 1990B 6.375% 2008-2010 2.14 1,715,637 Buena Vista School District Saginaw County School Building & Site Unlimited Tax General Obligation Pre-Refunded Bonds Series 1991 7.20% 2016 2.09 1,674,300 Northville Public Schools Unlimited Tax General Obligation Bonds Series 1991B 7.00% 2008 2.04 1,640,910 Note: The Fund's investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.).
(icon of) pie chart The ten holdings listed here make up 24.33% of the Fund's net assets (This annual report is not part of the prospectus.) The Fund's long-term performance IDS Michigan Tax-Exempt Fund Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $8,837. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS Michigan Tax-Exempt Fund $20,000 $19,136 Lehman Brothers Michigan Total Return Tax-Exempt Fund Municipal Bond Index Class A $10,000 $9,500 7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) 1 year 5 years Since inception Class A +1.77% +5.39% +6.71%* Class B +2.32% --% +3.85%** *Inception date was July 2, 1987. **Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing Michigan Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.)
The Fund's ten largest holdings IDS Minnesota Tax-Exempt Fund Percent Value (of Fund's net assets) (as of June 30, 1997) State University Board of Regents General Obligation Bond Series 1996A 5.50% 2021 3.14% $12,516,500 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Healthspan Series 1993 4.75% 2018 3.00 11,941,155 St. Paul & Minneapolis Housing & Redevelopment Authority Health Care Facility Revenue Bonds Group Health Plan Series 1992 6.75% 2013 2.85 11,387,355 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series A 5.50% 2015 2.81 11,199,712 State General Obligation Various Purpose Pre-Refunded Bonds Series 1991 6.70% 2011 2.18 8,699,600 State Public Facilities Authority Water Pollution Control Revenue Bonds Series 1989A 7.00% 2009 2.12 8,467,873 Anoka County General Obligation Capital Improvement Revenue Bonds Series 1989B 7.00% 2007-10 2.07 8,240,652 Hennepin County Lease Revenue Certificate of Participation Series 1991 6.80% 2017 1.97 7,839,280 St. Paul Housing & Redevelopment Authority Sales Tax Revenue Bonds Civic Center 5.55% 2023 1.88 7,488,000 Edina Multi-family Housing Revenue Bonds Walker Assisted Living Series 1991 9.00% 2031 1.84 7,343,468 Note: The Fund's investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.). (This annual report is not part of the prospectus.)
(icon of) pie chart The ten holdings listed here make up 23.86% of the Fund's net assets The Fund's long-term performance IDS Minnesota Tax-Exempt Fund Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $9,115. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS Minnesota Tax-Exempt Fund $20,000 $19,635 Lehman Brothers Minnesota Total Return Tax-Exempt Fund Municipal Bond Index Class A $10,000 $9,500 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) Since 1 year inception 5 years 10 years Class A +2.65% --% +5.20% +6.97% Class B +3.23% +4.19%* --% --% *Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing Minnesota Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.)
The Fund's ten largest holdings IDS New York Tax-Exempt Fund Percent Value (of Fund's net assets) (as of June 30, 1997) State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1990A A.M.T. 7.50% 2025 4.59% $5,286,900 State Urban Development Correction Facility Pre-Refunded Revenue Bonds Series 1 7.50% 2020 4.28 4,928,175 United Nations Development Senior Lien Refunding Revenue Bonds Series 1992A 6.00% 2026 3.93 4,528,350 State Local Government Assistance Pre-Refunded Bonds Series 1991A 7.00% 2016 3.86 4,438,440 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series TT 7.50% 2015 3.71 4,276,440 State Dormitory Authority City University System Pre-Refunded Revenue Bonds 8.125% 2017 3.01 3,468,374 State Environmental Facility State Water & Pollution Control Revolving Fund Revenue Bonds New York City Municipal Water Finance Authority Series 1990A 7.50% 2012 2.87 3,308,010 Triborough Bridge & Tunnel Authority General Purpose Pre-Refunded Revenue Bonds Series S 7.00% 2021 2.87 3,299,580 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series 27 6.90% 2015 2.80 3,223,500 State Dormitory Authority City University System Revenue Bonds Series 1993A 5.75% 2013 2.64 3,034,470 Note: The Fund's investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.). (icon of) pie chart The ten holdings listed here make up 34.56% of the Fund's net assets (This annual report is not part of the prospectus.)
The Fund's long-term performance IDS New York Tax-Exempt Fund Assumes: o Holding period from 7/1/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $9,005. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS New York Tax-Exempt Fund $20,000 $19,698 Lehman Brothers New York Total Return Tax-Exempt Fund Municipal Bond Index Class A $10,000 $9,500 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) Since 1 year inception 5 years 10 years Class A +2.22% --% +4.85% +7.01% Class B +2.80% +3.37%* --% --% *Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing New York Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.)
The Fund's ten largest holdings IDS Ohio Tax-Exempt Fund Percent Value (of Fund's net assets) (as of June 30, 1997) Erie County Hospital Improvement Refunding Revenue Bonds Firelands Community Hospital Series 1992 6.75% 2015 3.06% $2,147,260 Lakota Local School District Unlimited Tax Improvement General Obligation Bonds 6.25% 2014 3.05 2,138,800 State Air Quality Development Authority Refunding Revenue Bonds Series 1994 A.M.T. 6.375% 2029 3.00 2,104,620 State Valley School District School Improvement Unlimited Tax General Obligation Bonds Counties of Adams & Highland Series 1995 5.25% 2021 2.74 1,920,200 Lorain County Hospital Facilities Refunding Revenue Bonds EMH Regional Medical Center Series 1995 5.375% 2021 2.74 1,919,920 State Municipal Electric Generation Agency Joint Venture #5 Revenue Bonds 5.375% 2024 2.73 1,914,000 Butler County Hospital Facility Improvement Refunding Revenue Bonds 7.50% 2010 2.66 1,870,050 Franklin County Convention Facilities Authority Tax & Lease Revenue Anticipation Pre-Refunded Bonds 7.00% 2019 2.36 1,654,905 State Housing Finance Agency Mortgage Revenue Bonds Aristrocrat South Board & Care Series 1991A A.M.T. 7.30% 2031 2.24 1,568,895 Cuyahoga County Hospital Refunding Revenue Bonds Cleveland Clinic Foundation Series 1992 5.50% 2011 2.16 1,518,930 Note: The Fund's investment income from certain securities may be subject to the Alternative Minimum Tax (A.M.T.).
(icon of) pie chart The ten holdings listed here make up 26.74% of the Fund's net assets (This annual report is not part of the prospectus.) The Fund's long-term performance IDS Ohio Tax-Exempt Fund Assumes: o Holding period from 7/2/87 to 6/30/97. o Returns do not reflect taxes payable on distributions. o Also see "Performance" in the Fund's current prospectus. o Reinvestment of all income and capital gain distributions for the Fund, with a value of $8,564. The Lehman Brothers Total Return Municipal Bond Index is an unmanaged list of municipal bonds used as a general measure of market performance. How your $10,000 has grown in IDS Ohio Tax-Exempt Fund $20,000 Lehman Brothers $18,702 Total Return Ohio Municipal Bond Index Tax-Exempt Fund $10,000 Class A $9,500 7/2/87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 Average annual total returns (as of June 30, 1997) 1 year 5 years Since inception Class A +2.05% +5.03% +6.47%* Class B +2.62% --% +3.61%** *Inception date was July 2, 1987. **Inception date was March 20, 1995. On the graph above you can see how the Fund's total return compared to a widely cited performance index, the Lehman Brothers Total Return Municipal Bond Index. In comparing Ohio Tax-Exempt Fund (Class A) to the index, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the index. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Average annual total return figures reflect the impact of the applicable sales charge up to a maximum of 5%. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. (This annual report is not part of the prospectus.) Making the most of a Fund Build your assets systematically To keep your assets growing steadily, one of the best ways to invest in a Fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when a Fund's share price is low, fewer shares when it is high. This does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Month Amount Per-share Number of shares purchased invested market price Jan. $100 $20 5.00 nnnnn Feb. 100 18 5.56 nnnnnn Mar. 100 17 5.88 nnnnnn Apr. 100 15 6.67 nnnnnnn May 100 16 6.25 nnnnnnn June 100 18 5.56 nnnnnn July 100 17 5.88 nnnnnn Aug. 100 19 5.26 nnnnnn Sept. 100 21 4.76 nnnnn Oct. 100 20 5.00 nnnnn By investing an equal number of dollars each month ... you automatically buy more shares when the per share market price is low ... (arrow pointing to the month of Apr.) and fewer shares when the per share market price is high. (arrow pointing to the month of Sept.) You have paid an average price of only $17.91 per share over the 10 months, while the average market price actually was $18.10. Three ways to benefit from a mutual fund: o your shares increase in value when a Fund's investments do well o you receive capital gains when the gains on investments sold by a Fund exceed losses o you receive income when a Fund's interest dividends and short-term gains exceed its expenses All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gains distributions to buy additional shares of a Fund or another fund. (This annual report is not part of the prospectus.) 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, 1997 and the related statements of operations for the year then ended and the statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the eight-year period ended June 30, 1997, the six months ended June 30, 1989 and each of the years in the two-year period ended December 31, 1988, of IDS California Tax-Exempt Fund, IDS Minnesota Tax-Exempt Fund and IDS New York Tax-Exempt Fund, and for each of the years in the ten-year period ended June 30, 1997, 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. 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, 1997, and the results of its operations 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 1, 1997 (This annual report is not part of the prospectus.)
Financial statements Statements of assets and liabilities IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust June 30, 1997 Assets California Massachusetts Michigan Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Investments in securities, at value (Note 1) (identified cost $219,017,594, $69,401,754 and $73,211,161) $238,094,586 $74,064,134 $79,000,976 Cash in bank on demand deposit -- 25,711 69,859 Accrued interest receivable 4,410,897 1,528,581 1,299,188 Receivable for investment securities sold 3,125 26,563 1,563 ----- ------ ----- Total assets 242,508,608 75,644,989 80,371,586 ----------- ---------- ---------- Liabilities Disbursements in excess of cash on demand deposit 136,618 -- -- Dividends payable to shareholders 155,908 42,961 48,278 Payable for investment securities purchased 10,000 946,016 3,125 Accrued investment management services fee 9,365 2,886 3,101 Accrued distribution fee 621 500 224 Accrued service fee 3,487 1,075 1,155 Accrued transfer agency fee 724 350 312 Accrued administrative services fee 797 246 264 Other accrued expenses 30,286 29,035 34,123 ------ ------ ------ Total liabilities 347,806 1,023,069 90,582 ------- --------- ------ Net assets applicable to outstanding shares $242,160,802 $74,621,920 $80,281,004 ============ =========== =========== Represented by Shares of beneficial interest -- $.01 par value, unlimited number of shares authorized $ 462,097 $ 137,722 $ 147,472 Additional paid-in capital 229,581,668 71,058,314 75,771,618 Undistributed (excess of distributions over) net investment income 310,708 -- 479 Accumulated net realized gain (loss) (Notes 1 and 6) (7,220,611) (1,222,907) (1,413,071) Unrealized appreciation (depreciation) on investments (Note 5) 19,026,940 4,648,791 5,774,506 - ---------- --------- --------- Total-- representing net assets applicable to outstanding shares $242,160,802 $74,621,920 $80,281,004 ============ =========== =========== Net assets applicable to outstanding shares: Class A $232,102,600 $66,508,071 $76,650,521 Class B $ 10,058,202 $ 8,113,849 $ 3,630,483 Outstanding shares of beneficial interest: Class A shares 44,289,909 12,274,597 14,080,312 Class B shares 1,919,755 1,497,590 666,891 Net asset value per share: Class A $ 5.24 $ 5.42 $ 5.44 Class B $ 5.24 $ 5.42 $ 5.44 See accompanying notes to financial statements. (This annual report is not part of the prospectus.) Statements of assets and liabilities IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust June 30, 1997 Assets Minnesota New York Ohio Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Investments in securities, at value (Note 1) (identified cost $370,020,219, $107,120,101 and $64,706,778) $393,801,571 $115,023,727 $69,191,185 Cash in bank on demand deposit 881,505 -- 35,232 Accrued interest receivable 8,265,587 2,485,221 984,208 Receivable for investment securities sold 121,250 4,688 1,579 ------- ----- ----- Total assets 403,069,913 117,513,636 70,212,204 ----------- ----------- ---------- Liabilities Disbursements in excess of cash on demand deposit -- 296,793 -- Dividends payable to shareholders 234,973 68,805 42,982 Payable for investment securities purchased 4,118,453 1,954,416 2,829 Accrued investment management services fee 15,107 4,461 2,711 Accrued distribution fee 1,374 458 218 Accrued service fee 5,739 1,661 1,009 Accrued transfer agency fee 1,700 504 299 Accrued administrative services fee 1,251 380 231 Other accrued expenses 23,539 30,388 19,134 ------ ------ ------ Total liabilities 4,402,136 2,357,866 69,413 --------- --------- ------ Net assets applicable to outstanding shares $398,667,777 $115,155,770 $70,142,791 ============ ============ =========== Represented by Shares of beneficial interest -- $.01 par value, unlimited number of shares authorized $ 752,692 $ 223,440 $ 130,499 Additional paid-in capital 383,697,800 110,305,222 67,213,157 Undistributed (excess of distributions over) net investment income 9,570 711 22,242 Accumulated net realized gain (loss) (Notes 1 and 6) (9,495,418) (3,177,889) (1,693,924) Unrealized appreciation (depreciation) on investments (Note 5) 23,703,133 7,804,286 4,470,817 - ---------- --------- --------- Total-- representing net assets applicable to outstanding shares $398,667,777 $115,155,770 $70,142,791 ============ ============ =========== Net assets applicable to outstanding shares: Class A $376,468,903 $107,604,673 $66,603,460 Class B $ 22,198,874 $ 7,551,097 $ 3,539,331 Outstanding shares of beneficial interest: Class A shares 71,077,793 20,878,902 12,391,446 Class B shares 4,191,393 1,465,084 658,475 Net asset value per share: Class A $ 5.30 $ 5.15 $ 5.38 Class B $ 5.30 $ 5.15 $ 5.38 See accompanying notes to financial statements. (This annual report is not part of the prospectus.) Statements of operations IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, 1997 Investment income California Massachusetts Michigan Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Income: Interest $15,487,124 $4,577,544 $5,042,077 ----------- ---------- ---------- Expenses (Note 2): Investment management services fee 1,136,825 349,582 382,131 Distribution fee-- Class B 61,667 50,354 23,438 Transfer agency fee 91,027 44,076 40,093 Incremental transfer agency fee-- Class B 325 276 143 Service fee Class A 403,439 117,243 134,983 Class B 14,022 11,749 5,345 Administrative services fees and expenses 96,751 28,771 32,522 Compensation of board members 17,078 7,732 7,508 Compensation of officers -- -- 305 Custodian fees 29,978 9,368 5,224 Postage 15,268 9,062 7,989 Registration fees 26,086 27,606 22,702 Reports to shareholders 6,893 310 4,246 Audit fees 17,000 15,500 15,500 Other 6,860 3,140 5,877 ----- ----- ----- Total expenses 1,923,219 674,769 688,006 Earnings credits on cash balances (Note 2) (40,056) (8,184) (3,149) - ------- ------ ------ Total net expenses 1,883,163 666,585 684,857 --------- ------- ------- Investment income-- net 13,603,961 3,910,959 4,357,220 ---------- --------- --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) 466,187 (8,568) (109,521) Financial futures contracts 962,668 252,709 288,241 ------- ------- ------- Net realized gain (loss) on investments 1,428,855 244,141 178,720 Net change in unrealized appreciation (depreciation) of investments 3,063,495 1,390,465 1,046,406 --------- --------- --------- Net gain (loss) on investments 4,492,350 1,634,606 1,225,126 --------- --------- --------- Net increase (decrease) in net assets resulting from operations $18,096,311 $5,545,565 $5,582,346 =========== ========== ========== See accompanying notes to financial statements. (This annual report is not part of the prospectus.) Statements of operations IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, 1997 Investment income Minnesota New York Ohio Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Income: Interest $26,420,518 $7,513,877 $4,492,346 ----------- ---------- ---------- Expenses (Note 2): Investment management services fee 1,856,870 555,919 335,881 Distribution fee-- Class B 144,457 45,744 20,664 Transfer agency fee 216,722 64,976 38,230 Incremental transfer agency fee-- Class B 845 284 140 Service fee Class A 665,929 194,228 118,535 Class B 33,682 10,494 4,821 Administrative services fees and expenses 153,661 47,312 28,586 Compensation of board members 7,785 3,288 7,871 Compensation of officers 1,395 6,322 315 Custodian fees 972 14,030 9,724 Postage 34,388 10,350 5,748 Registration fees 14,687 18,398 19,582 Reports to shareholders 6,739 5,589 2,181 Audit fees 18,000 17,000 15,500 Other 6,484 8,619 8,621 ----- ----- ----- Total expenses 3,162,616 1,002,553 616,399 Earnings credits on cash balances (Note 2) (45,776) (18,709) (13,707) - ------- ------- ------- Total net expenses 3,116,840 983,844 602,692 --------- ------- ------- Investment income-- net 23,303,678 6,530,033 3,889,654 ---------- --------- --------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions (Note 3) 191,203 184,680 204,013 Financial futures contracts 1,541,555 976,466 266,162 --------- ------- ------- Net realized gain (loss) on investments 1,732,758 1,161,146 470,175 Net change in unrealized appreciation (depreciation) of investments 6,062,416 939,832 744,941 --------- ------- ------- Net gain (loss) on investments 7,795,174 2,100,978 1,215,116 --------- --------- --------- Net increase (decrease) in net assets resulting from operations $31,098,852 $8,631,011 $5,104,770 =========== ========== ========== See accompanying notes to financial statements. (This annual report is not part of the prospectus.)
Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, Operations and distributions 1997 1996 1997 1996 California Massachusetts Tax-Exempt Fund Tax-Exempt Fund Investment income-- net $ 13,603,961 $ 13,093,048 $ 3,910,959 $ 3,831,143 Net realized gain (loss) on investments 1,428,855 553,259 244,141 95,554 Net change in unrealized appreciation (depreciation) on investments 3,063,495 323,151 1,390,465 202,491 --------- ------- --------- ------- Net increase (decrease) in net assets resulting from operations 18,096,311 13,969,458 5,545,565 4,129,188 ---------- ---------- --------- --------- Distributions to shareholders from: Net investment income Class A (12,900,026) (12,910,408) (3,608,592) (3,652,208) Class B (394,958) (184,985) (308,683) (172,619) Net realized gain Class A (518,965) (1,353,180) -- -- Class B (17,699) (20,647) -- -- ------- ------- Total distributions (13,831,648) (14,469,220) (3,917,275) (3,824,827) ----------- ----------- ---------- ---------- Share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 19,424,292 23,553,539 6,908,468 11,006,959 Class B shares 4,411,205 5,187,208 3,032,071 4,389,565 Reinvestment of distributions at net asset value Class A shares 9,248,935 10,071,476 2,774,110 2,835,422 Class B shares 327,596 184,290 269,072 149,356 Payments for redemptions Class A shares (34,815,979) (38,384,549) (12,428,315) (14,679,805) Class B shares (Note 2) (1,214,600) (960,392) (889,801) (790,581) ---------- -------- -------- -------- Increase (decrease) in net assets from share transactions (2,618,551) (348,428) (334,395) 2,910,916 ---------- -------- -------- --------- Total increase (decrease) in net assets 1,646,112 (848,190) 1,293,895 3,215,277 Net assets at beginning of year 240,514,690 241,362,880 73,328,025 70,112,748 ----------- ----------- ---------- ---------- Net assets at end of year $242,160,802 $240,514,690 $74,621,920 $73,328,025 ============ ============ =========== =========== Undistributed (excess of distributions over) net investment income $ 310,708 $ 1,254 $ -- $ 6,316 ------------ ------------ ----------- ----------- See accompanying notes to financial statements. (This annual report is not part of the prospectus.) Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, Operations and distributions 1997 1996 1997 1996 Michigan Minnesota Tax-Exempt Fund Tax-Exempt Fund Investment income-- net $ 4,357,220 $ 4,347,534 $ 23,303,678 $ 23,264,721 Net realized gain (loss) on investments 178,720 316,845 1,732,758 512,083 Net change in unrealized appreciation (depreciation) on investments 1,046,406 274,473 6,062,416 20,022 --------- ------- --------- ------ Net increase (decrease) in net assets resulting from operations 5,582,346 4,938,852 31,098,852 23,796,826 --------- --------- ---------- ---------- Distributions to shareholders from: Net investment income Class A (4,220,612) (4,267,967) (22,346,136) (22,792,680) Class B (145,774) (83,171) (975,607) (470,510) Net realized gain on securities Class A (19,158) (1,011,054) -- (300,981) Class B (747) (21,404) -- (6,713) ---- ------- ------- ------ Total distributions (4,386,291) (5,383,596) (23,321,743) (23,570,884) ---------- ---------- ----------- ----------- Share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 4,657,190 7,791,545 37,612,445 43,579,588 Class B shares 1,464,265 1,729,504 7,437,173 12,784,665 Reinvestment of distributions at net asset value Class A shares 3,050,415 3,972,959 17,393,622 18,480,882 Class B shares 108,932 85,004 781,646 401,374 Payments for redemptions Class A shares (11,286,452) (9,793,095) (78,924,930) (72,296,842) Class B shares (Note 2) (582,299) (166,982) (2,465,251) (1,011,844) -------- -------- ---------- ---------- Increase (decrease) in net assets from share transactions (2,587,949) 3,618,935 (18,165,295) 1,937,823 ---------- --------- ----------- --------- Total increase (decrease) in net assets (1,391,894) 3,174,191 (10,388,186) 2,163,765 Net assets at beginning of year 81,672,898 78,498,707 409,055,963 406,892,198 ---------- ---------- ----------- ----------- Net assets at end of year $80,281,004 $81,672,898 $398,667,777 $409,055,963 =========== =========== ============ ============ Undistributed (excess of distributions over) net investment income $ 479 $ (3,116) $ 9,570 $ 11,951 ----------- ----------- ------------ ------------ See accompanying notes to financial statements. (This annual report is not part of the prospectus.) Statements of changes in net assets IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Year ended June 30, Operations and distributions 1997 1996 1997 1996 New York Ohio Tax-Exempt Fund Tax-Exempt Fund Investment income-- net $ 6,530,033 $ 6,762,893 $ 3,889,654 $ 4,040,372 Net realized gain (loss) on investments 1,161,146 (312,952) 470,175 (450,527) Net change in unrealized appreciation (depreciation) of investments 939,832 (271,393) 744,941 579,615 ------- -------- ------- ------- Net increase (decrease) in net assets resulting from operations 8,631,011 6,178,548 5,104,770 4,169,460 --------- --------- --------- --------- Distributions to shareholders from: Net investment income Class A (6,237,111) (6,587,853) (3,739,886) (3,934,670) Class B (294,055) (175,051) (129,674) (69,847) Net realized gain Class A -- -- (7,128) (133,992) Class B -- -- (297) (3,014) --------- --------- --------- --------- Total distributions (6,531,166) (6,762,904) (3,876,985) (4,141,523) --------- --------- --------- --------- Share transactions (Note 4) Proceeds from sales Class A shares (Note 2) 11,232,398 9,808,292 5,210,610 6,884,856 Class B shares 3,038,506 3,827,013 1,817,909 1,761,407 Reinvestment of distributions at net asset value Class A shares 4,709,717 5,179,063 2,867,182 3,192,485 Class B shares 250,963 158,781 98,384 64,381 Payments for redemptions Class A shares (25,606,182) (18,878,694) (14,289,613) (11,876,308) Class B shares (Note 2) (800,957) (862,141) (607,746) (316,974) -------- -------- -------- -------- Increase (decrease) in net assets from share transactions (7,175,555) (767,686) (4,903,274) (290,153) ---------- -------- ---------- -------- Total increase (decrease) in net assets (5,075,710) (1,352,042) (3,675,489) (262,216) Net assets at beginning of year 120,231,480 121,583,522 73,818,280 74,080,496 ----------- ----------- ---------- ---------- Net assets at end of year $115,155,770 $120,231,480 $70,142,791 $73,818,280 ============ ============ =========== =========== Undistributed (excess of distributions over) net investment income $ 711 $ (11) $ 22,242 $ 695 ------------ ------------ ----------- ----------- See accompanying notes to financial statements. (This annual report is not part of the prospectus.)
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 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 and Class B shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differs among classes. Income, expenses (other than class-specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust The significant accounting policies followed by the Funds are summarized as follows: Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. (This annual report is not part of the prospectus.) 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. (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Option transactions In order to produce incremental earnings, protect gains and facilitate buying and selling of securities for investment purposes, the Funds may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. The Funds also have the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. The Funds also may write over-the-counter options where the completion of the obligation is dependent upon the credit standing of the other party. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. Each Fund will realize a gain or loss upon expiration or closing of the option transaction. When options on debt securities or futures are exercised, the Fund will realize a gain or loss. When other options are exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of the premium received or paid. (This annual report is not part of the prospectus.) Futures transactions In order to gain exposure to or protect itself from changes in the market, the Funds may buy and sell financial futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Funds may be required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Funds each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Funds recognize a realized gain or loss when the contract is closed or expires. (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Illiquid securities At June 30, 1997, investments in securities for IDS Minnesota Tax-Exempt Fund includes an issue that is illiquid. The Fund currently limits investments in illiquid securities to 10% of the net assets, at market value, at the time of purchase. The aggregate value of such securities at June 30, 1997 was $1,767,174 representing 0.4% of IDS Minnesota Tax-Exempt Fund's net assets. Pursuant to guidelines adopted by the board, certain unregistered securities are determined to be illiquid and are not included within the 10% limitation specified above. (This annual report is not part of the prospectus.) Federal income taxes Since each Fund intends to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Each Fund is treated as a separate entity for federal income tax purposes. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. The effect on dividend distributions of certain book-to-tax differences is presented as "excess distributions" in the statement of changes in net assets. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Funds. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, accumulated net realized 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 Massachusetts Michigan Minnesota New York Ohio Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Tax-Exempt Fund Fund Fund Fund Fund Fund - -------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) (477) -- (12,756) (17,583) (1,855) (1,453) Undistributed net investment income 477 -- 12,761 15,684 1,855 1,453 - -------------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital increase (decrease) -- -- (5) 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. (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust 2 Expenses and sales charges Effective March 20, 1995, each Fund entered into an agreement with AEFC for managing its portfolio, providing administrative services and serving as transfer agent. Under its Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of each Fund's average daily net assets in reducing percentages from 0.47% to 0.38% annually. Under its Administrative Services Agreement, each Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.04% to 0.02% annually. Additional administrative service expenses paid by the Fund are office expenses, consultants' fees and compensation of officers and employees. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees, and any other expenses properly payable by the Fund and approved by the board. 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: oClass A $15.50 oClass B $16.50 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. Sales charges received by American Express Financial Advisors Inc. for distributing the Funds' shares for the year ended June 30, 1997, are as follows: Fund Class A Class B IDS California $435,840 $11,470 IDS Massachusetts 209,807 7,304 IDS Michigan 128,154 3,875 IDS Minnesota 785,957 29,864 IDS New York 235,029 9,154 IDS Ohio 104,351 3,108 (This annual report is not part of the prospectus.) During the year ended June 30, 1997, the Funds' custodian and transfer agency fees were reduced as a result of earnings credits from overnight cash balances as follows: Fund Reduction IDS California $40,056 IDS Massachusetts 8,184 IDS Michigan 3,149 IDS Minnesota 45,776 IDS New York 18,709 IDS Ohio 13,707 3 Securities transactions For the year ended June 30, 1997, cost of purchases and proceeds from sales (other than short-term obligations) aggregated for each Fund are as follows: Fund Purchases Proceeds IDS California $33,886,695 $36,248,092 IDS Massachusetts 6,099,756 6,768,012 IDS Michigan 16,395,142 17,576,040 IDS Minnesota 54,229,350 71,939,676 IDS New York 14,151,185 17,523,775 IDS Ohio 6,450,116 12,788,350 Net realized gains and losses on investment sales are determined on an identified cost basis. 4
Capital share transactions Transactions in shares of each Fund for the periods indicated are as follows: California Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 3,727,951 847,908 Issued for reinvested distributions 1,775,984 62,918 Redeemed (6,684,505) (234,000) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (1,180,570) 676,826 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 4,511,208 995,477 Issued for reinvested distributions 1,925,937 35,294 Redeemed (7,378,222) (184,480) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (941,077) 846,291 - ---------------------------------------------------------------------------------------------------------------------------- (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Massachusetts Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 1,287,516 564,106 Issued for reinvested distributions 517,304 50,175 Redeemed (2,316,120) (166,069) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (511,300) 448,212 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 2,049,431 819,429 Issued for reinvested distributions 529,225 27,882 Redeemed (2,742,630) (147,842) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (163,974) 699,469 - ---------------------------------------------------------------------------------------------------------------------------- Michigan Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 859,824 270,029 Issues for reinvested distributions 563,716 20,129 Redeemed (2,086,380) (107,455) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (662,840) 182,703 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 1,429,150 315,865 Issued for reinvested distributions 725,994 15,490 Redeemed (1,794,375) (30,500) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) 360,769 300,855 - ---------------------------------------------------------------------------------------------------------------------------- (This annual report is not part of the prospectus.) Minnesota Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 7,159,020 1,414,781 Issued for reinvested distributions 3,311,994 148,821 Redeemed (15,031,003) (469,087) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (4,559,989) 1,094,515 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 8,270,935 2,429,988 Issued for reinvested distributions 3,510,209 76,278 Redeemed (13,742,113) (192,219) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (1,960,969) 2,314,047 - ---------------------------------------------------------------------------------------------------------------------------- New York Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 2,196,024 593,838 Issued for reinvested distributions 921,975 49,118 Redeemed (5,008,087) (156,652) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (1,890,088) 486,304 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 1,906,925 744,701 Issued for reinvested distributions 1,006,844 30,877 Redeemed (3,672,303) (166,438) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (758,534) 609,140 - ---------------------------------------------------------------------------------------------------------------------------- (This annual report is not part of the prospectus.) Notes to financial statements IDS California Tax-Exempt Trust IDS Special Tax-Exempt Series Trust Ohio Tax-Exempt Fund Year ended June 30, 1997 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 974,586 339,467 Issued for reinvested distributions 537,160 18,433 Redeemed (2,679,134) (113,803) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (1,167,388) 244,097 - ---------------------------------------------------------------------------------------------------------------------------- Year ended June 30, 1996 Class A Class B - ---------------------------------------------------------------------------------------------------------------------------- Sold 1,279,987 327,095 Issued for reinvested distributions 596,171 12,022 Redeemed (2,225,461) (59,086) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (349,303) 280,031 - ----------------------------------------------------------------------------------------------------------------------------
5 Interest rate futures contracts Investments in securities at June 30, 1997, included securities that were valued and pledged as collateral to cover initial margin deposits (see Summary of significant accounting policies) as follows: Open Open Market purchase sales Fund value contracts contracts IDS California $3,265,125 32 10 IDS Massachusetts 1,772,123 9 5 IDS Michigan 2,119,206 10 5 IDS Minnesota 6,535,000 51 20 IDS New York 3,708,997 63 15 IDS Ohio 2,180,123 9 5 The market value of the open purchase contracts at June 30, 1997, was as follows: Net Market unrealized Fund value gain (loss) IDS California $3,728,000 $ (55,000) IDS Massachusetts 1,048,500 (15,468) IDS Michigan 1,165,000 (17,188) IDS Minnesota 5,941,500 (87,656) IDS New York 7,339,500 (105,938) IDS Ohio 1,048,500 (15,469) (This annual report is not part of the prospectus.) The market value of the open sales contracts at June 30, 1997, was as follows: Net Market unrealized Fund value gain (loss) IDS California $1,165,000 $4,948 IDS Massachusetts 582,500 1,879 IDS Michigan 582,500 1,879 IDS Minnesota 2,330,000 9,437 IDS New York 1,747,500 6,598 IDS Ohio 582,500 1,879 The Funds maintain, in a segregated account with its custodian, advanced refunded bonds with at least a market value equal to the value of these open long futures contracts. Advanced refunded bonds are highly liquid, usually covered by government securities, which will be refunded at the bond's first call date. 6 Capital loss carryover For federal income tax purposes, capital loss carryovers were as follows at June 30, 1997: Expiration Fund Carryover date IDS California $1,643,088 2006 IDS Massachusetts 268,549 1999-2005 IDS Michigan 147,263 2005 IDS Minnesota 972,605 2005 IDS New York 1,956,275 2003-2005 IDS Ohio 527,216 2005 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 Financial highlights "Financial highlights" showing per share data and selected information are presented on pages 8-19 of the prospectus. (This annual report is not part of the prospectus.) Investments in securities
IDS California Tax-Exempt Fund June 30, 1997 (Percentages represent value of investments compared to net assets) Municipal bonds (97.7%) Name of issuer Coupon Maturity Principal Value(a) and 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 $ 3,464,910 ABAG Finance Authority for Nonprofit Corporations Certificate of Participation International School Project Series 1996 7.375 2026 2,200,0000 2,116,092 Anaheim Public Finance Authority Revenue Bonds 2nd Series Electric Utilities San Juan (FGIC Insured) 5.75 2022 11,100,000 11,160,939 Brea Redevelopment Agency Tax Allocation Refunding Bonds Redevelopment Project AB (MBIA Insured) 5.50 2017 1,800,000 1,771,956 Burbank Redevelopment Agency Tax Allocation Bonds Golden State Series 1993A 6.00 2023 2,000,000 2,011,680 Chapman College Educational Facilities Authority Revenue Bonds Series 1989B 7.50 2018 500,000 555,980 Clearlake Redevelopment Agency Highlands Park Community Development Tax Allocation Bonds Series 1993 6.40 2023 1,420,000 1,442,535 Eastern Municipal Water District Riverside County Water & Sewer Revenue Certificates of Participation Series 1991 6.00 2023 1,000,000 1,013,550 Eastern Municipal Water District Riverside County Water & Sewer Pre-Refunded Revenue Certificate of Participation Series 1991(FGIC Insured) 6.50 2020 3,000,000 3,296,760 El Camino Hospital District Hospital Pre-Refunded Revenue Certificate of Participation Series A 8.50 2017 1,500,000 1,541,505 Encinitas Unified School District Unlimited General Obligation Bonds Series 1996 Zero Coupon (MBIA Insured) 5.85 2015-16 3,500,000(h) 1,258,880 Fontana Redevelopment Agency Refunding Certificate of Participation Police Facility Series 1993 5.625 2016 4,500,000 4,435,515 Fontana Unified School District Unlimited General Obligation Bonds Series C (FGIC Insured) 6.15 2020 3,470,000 3,651,655 Fontana Unified School District Unlimited Tax General Obligation Bonds Series C Zero Coupon (FGIC Insured) 6.28 2022 2,000,000(e) 1,703,760 Foothill/Eastern Transportation Corridor Agency Toll Road Senior Lien Revenue Bonds Series 1995A 6.00 2034 1,775,000 1,780,094 Garden Grove Agency Community Development Tax Allocation Refunding Bonds Garden Grove Community 5.875 2023 3,000,000 2,969,970 Garden Grove Certificate of Participation Bahia Village/Emerald Isle (FSA Insured) 5.70 2023 2,660,000 2,666,677 Huntington Beach Certificate of Participation Revenue Bonds Civic Center Refinancing (AMBAC Insured) 5.50 2016 1,715,000 1,685,090 Indian Wells Improvement Bonds Assessment District #13 7.50 2008 350,000(g) 360,885 Irwindale Redevelopment Agency Sub Lien Tax Allocation Bonds Series 1996 7.00 2019 1,700,000 1,805,094 Janesville Union School District Lassen County General Obligation Bonds Series 1996 Election Bank Qualified 6.45 2021 875,000 882,516 Lake Elsinore School Financing Authority Revenue Bonds Series 1997 6.125 2019 1,235,000 1,238,335 Long Beach Harbor Revenue Bonds Series 1989A A.M.T. 7.25 2019 7,000,000(g) 7,308,630 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.00 2020 5,000,000 5,369,700 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.30 2009 1,000,000 1,079,990 Los Angeles Convention & Exhibition Center Pre-Refunded Certificate of Participation Series 1989A 7.375 2018 2,900,000 3,136,379 Los Angeles County Transportation Commission Sales Tax Refunding Revenue Bonds Series A 7.00 2019 4,150,000 4,425,809 Los Angeles County Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Series A 8.00 2016 2,000,000 2,040,220 Los Angeles County Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Series 1988A 7.875 2008 500,000 529,465 Los Angeles County Transportation Commission Sales Tax Refunding Revenue Bonds Series 1989A 7.40 2015 2,000,000 2,152,900 Los Angeles Department of Water & Power Electric Plant Revenue Bonds Series 1990 7.125 2030 6,500,000 7,036,185 Los Angeles Department of Water & Power Waterworks Refunding Revenue Bonds Second Issue (Secondary FGIC Insured) 4.50 2018 3,000,000 2,557,110 Los Angeles International Airport Revenue Bonds Series D (FGIC Insured) A.M.T. 5.50 2015 1,000,000 995,430 Los Angeles Multi-family Housing Revenue Bonds Park Parthenia Series 1986A (GNMA Insured) A.M.T. 7.40 2022 1,000,000 1,031,770 Los Angeles Single Family Home Mortgage Revenue Bonds Series 1991A (GNMA & FNMA Insured) A.M.T. 6.875 2025 810,000 846,806 Los Angeles State Building Authority Lease Pre-Refunded Revenue Bonds State Department of General Services Lease Series 1988A 7.25 2006 1,500,000 1,563,645 Los Angeles State Building Authority Lease Pre-Refunded Revenue Bonds State Department of General Services Lease Series 1988A 7.50 2011 1,500,000 1,566,090 Los Angeles State Harbor Revenue Bonds Series 1996B (MBIA Insured) A.M.T. 5.375 2019-23 3,300,000 3,156,084 Los Angeles State Harbor Revenue Bonds Escrowed to Maturity 7.60 2018 1,000,000 1,242,690 Los Angeles Wastewater System Pre-Refunded Revenue Bonds Series 1987 8.125 2017 1,000,000 1,034,070 Los Angeles Wastewater System Refunding Revenue Bonds Series D (FGIC Insured) 4.70 2017 1,000,000 882,630 Modesto Certificate of Participation Pre-Refunded Bonds Community Center 8.10 2015 1,000,000 1,033,990 Mount Diablo Hospital District Hospital Pre-Refunded Revenue Bonds Series 1990A (AMBAC Insured) 7.00 2017 3,000,000 3,317,910 North City West Community School Facility Authority Special Tax Refunding Revenue Bonds Series 1995B (CGIC Insured) 5.75 2015 1,000,000 1,022,250 Northern California Public Power Authority Power Pre-Refunded Revenue Bonds Hydroelectric Series 1986B-3 8.00 2024 2,000,000 2,082,280 Northern California Public Power Authority Power Pre-Refunded Revenue Bonds Hydroelectric #1 Series 1986B-1 8.00 2024 2,100,000 2,186,394 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS California Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Northern California Transmission Agency California-Oregon Transmission Pre-Refunded Revenue Bonds Series 1990A (MBIA Insured) 7.00 2024 2,000,000 2,177,020 Northern California Transmission Select Auction Variable Rate Security & Residual Interest Revenue Bonds Inverse Floater (MBIA Insured) 5.50 2024 4,500,000(f) 4,340,745 Novato Community Facility District #1 Vintage Oaks Public Improvement Special Tax Refunding Bonds 7.25 2021 2,000,000 2,115,600 Pleasanton Joint Powers Financing Authority Reassessment Revenue Bonds Series 1993A 6.15 2012 1,880,000 1,949,391 Port of Oakland Refunding Revenue Bonds Series 1997G (MBIA Insured) A.M.T. 5.375 2025 3,080,000 2,931,544 Rancho Cucamonga Redevelopment Agency 1990 Tax Allocation Pre-Refunded Bonds (MBIA Insured) 7.125 2019 3,540,000 3,831,094 Rancho Mirage Joint Powers Finance Authority Certificate of Participation Eisenhower Memorial Hospital7.00 2022 4,250,000 4,788,560 Redding Redevelopment Agency Tax Allocation Refunding Bonds Canby Hilltop Cypress Series D (CGIC Insured) 5.00 2023 4,700,000 4,266,895 Richmond Elementary School District Lassen County General Obligation Bonds Series 1996 Election Bank Qualified 6.50 2021 649,000 662,311 Richmond Joint Powers Financing Authority Leases and Gas Tax Refunding Revenue Bonds Series 1995A 5.25 2013 3,540,000 3,435,924 Sacramento Cogeneration Authority Cogeneration Revenue Bonds Procter & Gamble Series 1995 6.375 2010 1,000,000 1,058,740 Sacramento Municipal Utility District Series R 6.00 2015-17 7,500,000 7,501,845 Sacramento Municipal Utility District Pre-Refunded Series V 7.50 2018 2,775,000 2,887,471 Sacramento Municipal Utility District Pre-Refunded Series W 7.50 2018 1,980,000 2,060,249 Sacramento Municipal Utility District Pre-Refunded Series Y (MBIA Insured) 6.75 2019 3,400,000 3,778,454 Sacramento Power Authority Cogeneration Revenue Bonds Series 1995 6.00 2022 1,000,000 1,012,040 San Diego County Capital Asset Lease Certificate of Participation Series 1993 Inverse Floater (AMBAC Insured) 7.02 2007 3,200,000(f) 3,476,000 San Diego Regional Transportation Commission Sales Tax Pre-Refunded Revenue Bonds Limited Tax Series 1989A 6.25 2008 5,030,000 5,218,474 San Joaquin County Pre-Refunded Certificate of Participation Human Services Facility Series 1989 (BIG Insured) 6.70 2009 3,500,000 3,733,205 San Joaquin County Certificate of Participation Jail & Sheriffs Operation Center (MBIA Insured) 6.75 2015 2,000,000 2,158,780 San Jose Redevelopment Agency Merged Area RedevelopmentTax Allocation Bonds Series 1993 (MBIA Insured) 4.75 2024 3,055,000 2,660,569 San Jose Redevelopment Agency Merged Area Tax Allocation Bonds Series 1993 Inverse Floater (MBIA Insured) 6.973 2014 3,000,000(f) 2,898,750 San Mateo County Transit District Limited Tax Pre-Refunded Bonds Series 1990A (MBIA Insured) 6.50 2020 1,500,000 1,565,310 Santa Clara County Mountain View- Los Altos Union High School District Unlimited Tax General Obligation Bonds Series A 5.75 2015 1,200,000 1,211,820 Santa Cruz Certificate of Participation 8.375 2007 1,220,000 1,248,292 See Accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Southern California Home Financing Authority Single Family Mortgage Revenue Bonds 1990B (GNMA Insured) A.M.T. 7.75 2024 575,000 607,309 Southern California Public Power Authority Transmission Special Bonds 6.00 2012 2,700,000 2,786,994 South Tahoe Joint Powers Financing Authority Refunding Revenue Bonds Series 1995B 6.25 2020 2,700,000 2,746,683 State Department Water Resources Water System Pre-Refunded Revenue Bonds Central Valley Series D 7.70 2024 2,400,000 2,474,376 State Department Water Resource Water System Revenue Bonds Central Valley Series L 5.50 2023 3,000,000 2,914,440 State Education Facility Authority Revenue Bonds Pomona College 6.00 2017 3,000,000 3,087,150 State Education Facility Authority Revenue Bonds Series 1997B 6.30 2021 1,000,000 1,018,170 State Health Facility Finance Authority Pre-Refunded Revenue Bonds St. Joseph Health System Series 1989A 6.90 2014 3,500,000 3,753,225 State Housing Finance Agency Home Mortgage Revenue Bonds Series 1986B 6.90 2016 1,770,000 1,806,515 State Pollution Control Finance Authority Pollution Control Revenue Bonds Southern California Edison Series 1988A A.M.T. 6.90 2006 2,000,000 2,123,080 State Public Works Board Lease Revenue Bonds California Community Colleges Series 1994B 7.00 2019 2,000,000 2,333,840 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 1,789,740 State Public Works Board University of California Lease Pre-Refunded Revenue Bonds Series 1990A 7.00 2015 2,250,000 2,477,228 State Rural Home Mortgage Financing Authority Single Family Mortgage Revenue Bonds Series 1997A-3 (GNMA & FNMA Insured) A.M.T. 6.25 2029 1,500,000 1,632,855 State University Refunding Revenue Bonds Series C (AMBAC Insured) 5.00 2023 2,000,000 1,815,700 State Unlimited Tax General Obligation Bonds (Secondary FGIC Insured) 4.75 2023 1,325,000(g) 1,156,420 Statewide Community Development Authority Health Facilities Revenue Bonds Unihealth America Series 1993A Inverse Floater (AMBAC Insured) 7.11 2011 5,000,000(f) 5,293,750 Statewide Community Development Authority Revenue Certificate of Participation St. Joseph Health System Group 6.50 2015 5,500,000 5,961,560 Stockton Single Family Mortgage Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.50 2023 110,000 116,075 University of Southern California Educational Facilities Authority Pre-Refunded Revenue Bonds Series 1989B 6.75 2015 5,000,000 5,359,750 Upland Certificate of Participation Water System Refunding Bonds (FGIC Insured) 6.60 2016 1,000,000 1,084,700 Vacaville Limited Obligation Improvement Bonds Water Rights Assessment District 8.00 2007 750,000 773,138 Total municipal bonds (Cost: $217,417,594) $236,494,586
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.)
Investments in securities IDS California Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Short-term securities (0.7%) Issuer (d,i) Effective Amount Value(a) yield payable at maturity Municipal notes Irvine Ranch Water District Series 1985 V.R. 10-01-05 3.75% $ 400,000 $ 400,000 Tustin California Improvement Bonds Series 1995-2 V.R. 09-02-13 3.75 1,200,000 1,200,000 Total short-term securities (Cost $1,600,000) $ 1,600,000 Total investments in securities (Cost: $219,017,594)(j) $238,094,586
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) 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 6-30-97 6-30-96 AAA 61% 59% AA 19 19 A 9 13 BBB 8 7 BB and below 3 2 Non-rated -- -- Total 100% 100%
(c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation BIG -- Bond Investors Guarantee CGIC -- Capital Guaranty Insurance Company FGIC -- Financial Guarantee Insurance Corporation FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance GNMA -- Government National Mortgage Association MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax -- As of June 30, 1997, the value of securities subject to alternative minimum tax represented 8.6% of net assets. V.R. -- Variable Rate (e) For those zero coupon bonds that become coupon paying at a future date, the interest rate disclosed represents the annualized effective yield from the date of acquisition to interest reset date disclosed. (f) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or in a multiple of, a decline (increase) in market short-term rates. Interest rate disclosed is the rate in effect on June 30, 1997. Inverse floaters in the aggregate represent 6.6% of the Fund's net assets as of June 30, 1997. (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. 1997 $3,200,000 - --------------------------------------------------- Sale contracts - --------------------------------------------------- Municipal Bonds Index Sept. 1997 $1,000,000 - --------------------------------------------------- (h) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (i) The Fund is entitled to receive principal amount from issuer or corporate guarantor, if indicated in parenthesis, after a day or a week's notice. The maturity date disclosed represents the final maturity. Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1997. (j) At June 30, 1997, the cost of securities for federal income tax purposes was $218,758,032 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation ............................$19,426,756 Unrealized depreciation ................................(90,202) - ----------------------------------------------------------------- Net unrealized appreciation........................ $19,336,554 - ----------------------------------------------------------------- (This annual report is not part of the prospectus.)
IDS Massachusetts Tax-Exempt Fund June 30, 1997 (Percentages represent value of investments compared to net assets) Municipal bonds (97.4%) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Bay Transit Authority Series A (Secondary CGIC Insured) 5.50% 2021 $ 500,000 $ 484,525 Bay Transportation Authority General Transportation System Refunding Bonds Series 1992B 6.20 2016 1,500,000 1,630,635 Boston City Hospital Refunding Revenue Bonds Series B (FHA Insured) 5.75 2023 3,000,000(f) 2,952,360 Boston City Hospital Pre-Refunded Revenue Bonds Series A (FHA Insured) 7.625 2021 1,000,000 1,113,070 Boston General Obligation Bonds Series 1991A (MBIA Insured) 6.75 2011 500,000 551,680 Boston General Obligation Refunding Bonds Series 1993A (AMBAC Insured) 5.65 2009 1,500,000(f) 1,548,435 Boston Industrial Development Financing Authority Revenue Bonds Massachusetts College of Pharmacy Series 1993A (Connie Lee Insured) 5.25 2026 1,000,000 916,330 Boston Water & Sewer Commission General Pre-Refunded Revenue Bonds Senior Series 1991A (FGIC Insured) 7.00 2018 1,000,000 1,119,370 Boston Water & Sewer Commission General Subordinate Revenue Bonds Series A (MBIA Insured) 6.00 2008 500,000 506,280 Commonwealth General Obligation Consolidated Loan Pre-Refunded Bonds Series 1990A (FGIC Insured) 7.25 2009 500,000 546,110 Fall River General Obligation Refunding Bonds Series 1996 (MBIA Insured) 5.25 2010 1,000,000 990,710 Greater Lawrence Sanitary District North Andover General Obligation Bonds 8.50 2005 455,000 476,653 Haverhill City Unlimited Tax General Obligation Bonds Series 1997 (FGIC Insured) 5.00 2017 1,000,000 939,850 Health & Educational Facilities Authority Refunding Revenue Bonds Beth Israel Hospital Series 1989E 7.00 2009-14 550,000 582,779 Health & Educational Facilities Authority Revenue Bonds Berkshire Health Systems Series A (MBIA Insured) 7.50 2008 500,000 531,030 Health & Educational Facilities Authority Revenue Bonds Berkshire Health Systems Series C 5.90 2011 1,000,000 968,920 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Beverly Hospital Series D (MBIA Insured) 7.30 2019 400,000 431,184 Health & Educational Facilities Authority Revenue Bonds Boston College Series J (FGIC Insured) 6.625 2021 2,000,000 2,164,580 Health & Educational Facilities Authority Revenue Bonds Boston College Series K 5.25 2023 1,000,000 938,110 Health & Educational Facilities Authority Revenue Bonds Brigham & Women's Hospital Series C 6.75 2021 500,000 526,685 Health & Educational Facilities Authority Revenue Bonds Brigham & Women's Hospital Series 1991D 6.75 2024 1,000,000 1,075,790 Health & Educational Facilities Authority Revenue Bonds Cape Cod Health System Series A (Connie Lee Insured) 5.25 2021 2,500,000 2,349,475 Health & Educational Facilities Authority Revenue Bonds Charlton Memorial Hospital Series 1991B 7.25 2013 1,750,000 1,905,978 Health & Educational Facilities Authority Revenue Bonds Holyoke Hospital Series B 6.50 2015 1,000,000 1,006,690 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Lahey Clinic Medical Center Series A (MBIA Insured) 7.625 2018 500,000 527,940 Health & Educational Facilities Authority Revenue Bonds Melrose-Wakefield Hospital Series 1992B 6.375 2016 1,000,000 1,037,360 Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Mount Auburn Hospital Series A (MBIA Insured) 7.875 2018 205,000 216,935 Health & Educational Facilities Authority Revenue Bonds New England Deaconess Hospital Series 1992D 6.625 2012 1,000,000 1,051,710 Health & Educational Facilities Authority Revenue Bonds Newton Wellesley Hospital Series 1991D (MBIA Insured) 7.00 2015 1,000,000 1,111,280 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Northeastern University Series 1989C (AMBAC Insured) 7.10 2006 1,000,000 1,075,120 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Northeastern University Series E (MBIA Insured) 6.55 2022 1,000,000 1,088,590 Health & Educational Facilities Authority Revenue Bonds North Adams Regional Hospital Series 1 6.625 2018 1,000,000 1,013,160 Health & Educational Facilities Authority Revenue Bonds South Shore Hospital Series 1992D (MBIA Insured) 6.50 2022 1,000,000 1,076,220 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Stonehill College Series 1990D (AMBAC Insured) 7.70 2020 1,000,000 1,112,730 Health & Educational Facilities Authority Revenue Bonds Suffolk University Series B (Connie Lee Insured) 6.35 2022 2,495,000 2,612,465 Health & Educational Facilities Authority Pre-Refunded Revenue Bonds Wentworth Institute of Technology Series A (AMBAC Insured) 7.40 2010 750,000 823,642 Health & Educational Facilities Authority Revenue Bonds Valley Regional Health System Series C (Connie Lee Insured) 5.75 2018 1,000,000 997,580 Industrial Finance Agency Assumption College Revenue Bonds Series 1996 (Connie Lee Insured) 6.00 2026 1,000,000 1,022,630 Industrial Finance Agency Hampshire College Revenue Bonds Series 1997 5.80 2017 1,105,000 1,077,905 Industrial Finance Agency Pollution Control Refunding Revenue Bonds Eastern Edison Series 1993 5.875 2008 2,000,000 1,980,160 Industrial Finance Agency Resource Recovery Revenue Bonds Ogden Haverhill Series 1986A (AMBAC Insured) A.M.T. 7.375 2011 175,000 178,973 Industrial Finance Agency Resource Recovery Revenue Bonds SEMASS Series 1991A 9.00 2015 1,500,000 1,684,290 Industrial Finance Agency Revenue Bonds Museum of Science Series 1989 (FSA Insured) 7.30 2009 1,000,000 1,086,830 Leominster General Obligation Bonds (MBIA Insured) 7.50 2009 1,000,000 1,100,760 Mansfield General Obligation Bonds (AMBAC Insured) 6.70 2011 1,000,000 1,090,230 Municipal Wholesale Electric Power Supply System Pre-Refunded Revenue Bonds Series 1992B 6.75 2017 1,395,000 1,559,875 Municipal Wholesale Electric Power Supply System Refunding Revenue Bonds Series B (MBIA Insured) 4.75 2011 1,750,000 1,632,715 Municipal Wholesale Electric Power Supply System Revenue Bonds Special Pars & Inflows (AMBAC Insured) 5.45 2018 1,600,000 1,536,256 Nantucket General Obligation Bonds 6.80 2011 1,000,000 1,089,940 New Bedford General Obligation Bonds Series 1995 (AMBAC Insured) 5.50 2015 700,000 700,049 North Andover General Obligation Bonds (MBIA Insured) 7.35 2008 310,000 342,773 North Attleborough Unlimited General Obligation Bonds Series 1997 (AMBAC Insured) 5.25 2017 1,675,000 1,644,649 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Massachusetts Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Port Authority Revenue Bonds Series 1990A (FGIC Insured) A.M.T. 7.50 2020 1,000,000 1,087,910 Southeastern University Building Refunding Revenue Bonds Series A (AMBAC Insured) 5.75 2016 1,250,000 1,267,700 Southern Berkshire Regional School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.55 2010 1,000,000 1,106,500 State Education Loan Authority Educational Loan Revenue Bonds Issue E Series B (AMBAC Insured) A.M.T. 6.00 2012 975,000 1,006,453 State General Obligation Consolidated Loan Bonds Series 1991A (FGIC Insured) 6.00 2011 1,095,000 1,158,609 State Housing Finance Agency Single Family Housing Revenue Bonds Series 13 A.M.T. 7.95 2023 430,000 454,673 State Housing Finance Authority Residential Development Bonds Series 1992A (FNMA Insured) 6.875 2011 1,000,000 1,068,490 State Housing Finance Authority Single Family Mortgage Housing Revenue Bonds Series 4 7.375 2014 430,000(f) 441,128 State Housing Finance Authority Single Family Mortgage Housing Revenue Bonds Series 7 A.M.T. 8.10 2020 245,000 252,784 State Water Resource Authority Revenue Bonds Series A (Secondary MBIA Insured) 5.50 2022 1,100,000 1,066,538 University of Lowell Building Authority Facilities Revenue Bonds 4th Series A 7.40 2007 125,000 128,951 University of Lowell Building Authority Facilities Revenue Bonds 4th Series A 7.60 2012 50,000 51,613 University of Massachusetts Building Authority Revenue Bonds Series A (FSA Insured) 7.50 2014 500,000 524,755 University of Massachusetts Building Authority Revenue Bonds Series A Escrowed to Maturity 7.50 2011 115,000 131,505 Water Resource Authority General Pre-Refunded Revenue Bonds Series 1990A 7.625 2014 500,000 551,985 Water Resource Authority General Pre-Refunded Revenue Bonds Series 1991A 6.50 2019 1,000,000 1,101,240 Water Resource Authority General Revenue Bonds Series 1993B (MBIA Insured) 5.00 2022 1,365,000 1,240,840 Water Resource Authority General Revenue Bonds Series 1993C 5.25 2020 1,400,000 1,307,054 Worcester General Obligation Refunding Bonds Series 1995G (MBIA Insured) 5.30 2015 1,000,000 985,410 Total municipal bonds (Cost: $68,001,754) $72,664,134
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.)
Short-term security (1.9%) Issuer (d,e) Effective Amount Value(a) yield payable at maturity Municipal note State General Obligation Series B V.R. 12-01-97 4.00% $1,400,000 $ 1,400,000 Total short-term security (Cost: $1,400,000) $ 1,400,000 Total investments in securities (Cost: $69,401,754)(g) $74,064,134
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Massachusetts Tax-Exempt Fund 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 6-30-97 6-30-96 AAA 64% 66% AA 9 9 A 16 16 BBB 9 7 BB and below 2 2 Non-rated -- -- - -------------------------------------------------------------- Total 100% 100% - -------------------------------------------------------------- (c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation CGIC -- Capital Guaranty Insurance Company FGIC -- Financial Guarantee Insurance Corporation FHA -- Federal Housing Authority FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of securities subject to alternative tax represented 4.0% of net assets. V.R. -- Variable Rate (e) The Fund is entitled to receive principal amount from issuer or corporate guarantor, if indicated in parenthesis, after a day or a week's notice. The maturity date disclosed represents the final maturity. Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1997. (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. 1997 $900,000 - --------------------------------------------------------- Sale contracts - --------------------------------------------------------- Municipal Bonds Index Sept. 1997 $500,000 - --------------------------------------------------------- (g) At June 30, 1997, the cost of securities for federal income tax purposes was $69,382,621 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation ...................$4,789,739 Unrealized depreciation .....................(108,226) - ------------------------------------------------------ Net unrealized appreciation............... $4,681,513 - ------------------------------------------------------ (This annual report is not part of the prospectus.) IDS Michigan Tax-Exempt Fund June 30, 1997
(Percentages represent value of investments compared to net assets) Municipal bonds (98.3%) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Auburn Hills Limited Tax General Obligation Street Improvement Bonds 6.00% 2004 $ 200,000(f) $ 205,906 Battle Creek Calhoun County Downtown Development Authority Bonds Series 1994 7.65 2022 1,250,000 1,435,537 Battle Creek Water Supply System Pre-Refunded Revenue Bonds Series 1990B 6.375 2008-10 1,640,000 1,715,637 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) 1,674,300 Central Michigan University Revenue Bonds Series 1997 (FGIC Insured) 5.50 2026 750,000 733,920 Chelsea General Obligation Pre-Refunded Bonds (MBIA Insured) 8.20 2006 145,000 150,904 Chippewa Valley School District Unlimited Tax General Obligation Bonds (FGIC Insured) 5.00 2021 1,000,000 911,710 Comstock Park Public School Kent County Unlimited Tax General Obligation Pre-Refunded Bonds Series 1989 6.00 2016 400,000 419,688 Comstock Park Public School Kent County Unlimited Tax General Obligation Pre-Refunded Bonds Series 1989 6.875 2010 260,000 276,775 Detroit General Obligation Pre-Refunded Bonds Distributable State Aid Series 1989 (AMBAC Insured) 7.20 2009 1,000,000 1,072,040 Detroit Sewer Disposal Pre-Refunded Revenue Bonds 8.00 2008 500,000 510,055 Detroit Sewer Disposal Revenue Bonds (FGIC Insured) 5.70 2023 2,000,000(f) 1,973,300 Detroit Unlimited Tax General Obligation Bonds Pre-Refunded Series A 7.25 2009 1,000,000 1,070,580 Detroit Unlimited Tax General Obligation Bonds Pre-Refunded Series 1988A 7.875 2008 700,000 734,566 Detroit Unlimited Tax General Obligation Bonds Series A (FGIC Insured) 5.50 2016 1,000,000 990,680 Detroit Unlimited Tax General Obligation Bonds Series 1995A 6.80 2015 1,000,000 1,140,610 Detroit Downtown Development Authority Development Area Project #1 Junior Lien Refunded Tax Increment Series 1996D 6.50 2025 1,000,000 1,033,340 Detroit Water Supply System Second Lien Revenue Bonds Series 1995A (MBIA Insured) 5.50 2025 1,500,000 1,452,165 Detroit Water Supply System Pre-Refunded Revenue Bonds Series 1988 (MBIA Insured) 7.875 2008 400,000 423,408 East Lansing School District School Building & Site Unlimited Tax General Obligation Pre-Refunded Bonds Series 1991 6.625 2014 1,000,000 1,094,230 Farmington Hills Hospital Finance Authority Revenue Bonds Botsford General Hospital Series 1992A (MBIA Insured) 6.50 2022 1,500,000 1,608,570 Ferris State University Board of Trustees General Revenue & Refunding Bonds Series 1995 (MBIA Insured) 5.25 2020 1,000,000 944,790 Forest Hills School District Unlimited Tax General Obligation Pre-Refunded Bonds 7.375 2015 1,000,000 1,089,500 Frenchtown Resort Drainage District Monroe County Drain Pre-Refunded Revenue Bonds Series 1987 7.50 2011-12 615,000 662,760 Garden City School District Authority Pre-Refunded Revenue Bonds 7.80 2010 305,000 323,794 Genesee County General Obligation Bonds Sewer Disposal System Series A (AMBAC Insured) 5.40 2015 1,400,000 1,391,502 Grand Ledge Public Schools Unlimited Tax General Obligation Refunding Bonds Counties of Eaton, Clinton & Ionia Series 1995 (MBIA Insured) 5.375 2024 2,000,000 1,926,980 Grand Rapids Community College Limited Tax General Obligation Bonds Series 1996 (MBIA Insured) 5.375 2019 1,000,000 971,770 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) IDS Michigan Tax-Exempt Fund June 30, 1997 (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Grand Rapids Tax Increment Revenue Bonds Series 1994 (MBIA Insured) 6.875 2024 380,000 423,784 Grand Rapids Water Supply System Improvement Pre-Refunded Revenue Bonds Series 1988 7.875 2018 700,000 727,923 Grand Rapids Water Supply System Improvement Pre-Refunded Revenue Bonds Series 1990 (FGIC Insured) 7.25 2020 1,250,000 1,360,025 Hillman Cmmunity Schools General Obligation Bonds Series 1997 (FGIC Insured) 5.25 2023 1,000,000 951,110 Inkster School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2018 450,000 488,187 Iosco County Water Supply System Limited Tax General Obligation Bonds (AMBAC Insured) 5.50 2008-10 575,000 588,342 Kent County Hospital Pre-Refunded Revenue Bonds Butterworth Hospital Series 1989A 7.25 2013 500,000 532,390 Kent County Refuse Disposal System Limited Tax General Obligation Refunding Bonds Series 1987 8.40 2010 150,000 155,799 Lake Orion School District General Obligation Bonds (AMBAC Insured) 5.50 2020 1,000,000 978,300 Lincoln Park School Distict Wayne County School Building & Site Unlimited Tax General Obligation Bonds (FGIC Insured) 5.90 2026 1,000,000 1,021,590 Marquette Hospital Finance Authority Pre-Refunded Revenue Bonds Marquette General Hospital Series 1989C 7.50 2007-19 825,000 885,802 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi Plants Series 1990I (FGIC Insured) A.M.T. 7.65 2020 1,000,000 1,095,640 Monroe County Pollution Control Revenue Bonds Detroit Edison Fermi 2 Plants Series CC (AMBAC Insured) A.M.T. 7.50 2019 1,750,000 1,905,960 Muskegon Hospital Finance Authority Refunding Revenue Bonds Hackley Hospital Series 1988A 8.00 2008 400,000 415,112 Northville Public Schools Unlimited Tax General Obligation Bonds Series 1991B 7.00 2008 1,500,000 1,640,910 Ovid-Elsie School District Unlimited Tax General Obligation Bonds (Secondary MBIA Insured) 5.60 2021 1,000,000 986,960 Redford General Obligation Bonds (MBIA Insured) 5.25 2016 1,450,000 1,396,292 Richmond Limited Obligation Refunding Revenue Bonds K mart Series A 6.625 2007 530,000 543,526 Rochester Hill Unlimited Tax General Obligation Bonds Series 1990A 6.00 2009-10 735,000 756,339 Rockford Public Schools Kent County Unlimited Tax General Obligation Pre-Refunded Revenue Bonds 7.375 2019 1,000,000 1,087,540 Romulus Township School District Unlimited Tax General Obligation Refunding Bonds (FGIC Insured) 5.75 2022 2,500,000 2,513,850 St. Louis Public Schools Unlimited Tax General Obligation Refunding Revenue Bonds Counties of Gratiot, Midland & Isabella Series 1995 (FGIC Insured) 5.25 2024 755,000 714,464 Schoolcraft Community School District County of Kalamazoo School Building and Site Unlimited General Obligation Bonds Series 1996 (FGIC Insured) 5.375 2026 1,000,000 967,910 South Lake District Unlimited Tax General Obligation Pre-Refunded Bonds 6.80 2010 355,000 390,706 South Redford School District Unlimited General Obligation Bonds Series 1996 (FGIC Insured) 5.50 2022 1,000,000 980,020 State Building Authority Refunding Revenue Bonds Series 1991I6.25 2020 2,200,000 2,295,524 State Hospital Finance Authority Revenue Bonds St. Johns Hospital & Medical Center (AMBAC Insured) 5.25 2026 1,400,000 1,314,950 State Hospital Finance Authority Revenue Bonds Central Michigan Community Hospital 6.25 2027 1,000,000 1,001,560 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds Detroit Medical Center Series 1988A 8.125 2012 310,000 329,890 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds McLaren Obligated Group Series 1991A 7.50 2021 1,750,000 1,984,605 State Hospital Finance Authority Hospital Refunding Revenue Bonds Detroit Medical Center Series A 6.25 2013 1,200,000 1,249,476 State Hospital Finance Authority Hospital Refunding Revenue Bonds Detroit Medical Center Series 1988A 8.125 2012 90,000 95,122 State Hospital Finance Authority Hospital Pre-Refunded Revenue Bonds Detroit Medical Center Series 1988B 8.00 2008 500,000 531,410 State Hospital Finance Authority Hospital Refunding Revenue Bonds Sinai Hospital of Greater Detroit Series 1995 6.70 2026 1,000,000 1,058,590 State Hospital Finance Authority Pre-Refunded Revenue Bonds Oakwood Hospital Group Series 1990A (FGIC Insured) 7.10 2018 1,000,000 1,095,100 State Hospital Finance Authority Pre-Refunded Revenue Bonds Henry Ford Hospital Series 1990A 7.00 2010 1,000,000 1,092,310 State Hospital Finance Authority Revenue Bonds Presbyterian Villages of Michigan Obligated Group Series 1995 6.50 2025 1,000,000 1,013,740 State Hospital Finance Authority Revenue Bonds Presbyterian Villages of Michigan Obligated Group Series 1997 6.375 2025 700,000 699,370 State Public Power Agency Belle River Refunding Revenue Bonds Series A 5.25 2018 1,000,000 952,960 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Detroit Edison Series 1990BB (MBIA Insured) 7.00 2008 1,000,000 1,168,100 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Detroit Edison Series 1992BB (FGIC Insured) 6.50 2016 1,500,000 1,618,230 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Escrowed to Maturity Oxford Institute 7.875 2005 150,000 170,205 State Strategic Fund Limited Tax Obligation Refunding Revenue Bonds Ford Motor Series 1991A 7.10 2006 1,650,000(f) 1,900,338 State Strategic Fund Limited Tax Obligation Revenue Bonds Great Lakes Pulp & Fibre A.M.T. 10.25 2016 1,000,000(g) 479,020 State Trunk Line Bonds Series A (FGIC Insured) 5.75 2020 1,065,000 1,071,816 State University Revenue Bonds Series A 5.50 2022 560,000 540,753 Taylor Tax Increment Finance Authority Bonds Series 1989A (MBIA Insured) 6.00 2007-09 1,205,000 1,232,488 Troy City Downtown Development Authority County of Oakland Development Bonds Series 1995A (Asset Guaranty) 6.375 2018 1,500,000 1,597,425 Van Buren Township Tax Increment Revenue Bonds Series 1994 8.40 2016 1,000,000 1,130,850 Waterford School District Unlimited Tax General Obligation Bonds Series Q 6.25 2013 340,000 353,233 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in Securities IDS Michigan Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (Continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Wayne County Airport Revenue Bonds Detroit Metropolitan Airport Series 1990A (AMBAC Insured) A.M.T. 7.00 2020 1,080,000 1,167,437 Wyandotte Electric Pre-Refunded Revenue Bonds Series 1987 (AMBAC Insured) 7.875 2017 300,000 308,976 Total municipal bonds (Cost: $73,111,161) $78,900,976
Short-term security (0.1%) Issuer (d,e) Effective Amount Value(a) yield payable at maturity Municipal note State Strategic Fund Consumer Power Company Series 1988A V.R. 04-15-18 4.05% $100,000 $ 100,000 Total short-term security (Cost: $100,000) $ 100,000 Total investments in securities (Cost: $73,211,161)(h) $79,000,976
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) 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 6-30-97 6-30-96 - ---------------------------------------------------------------- AAA 74% 71% AA 11 12 A 5 6 BBB 9 9 BB and below 1 2 Non-rated -- -- Total 100% 100% (c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation FGIC -- Financial Guarantee Insurance Corporation MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of securities subject to alternative minimum tax represented 5.8% of net assets. V.R. -- Variable Rate (e) The Fund is entitled to receive principal amount from issuer or corporate guarantor, if indicated in parenthesis, after a day or a weeks notice. The maturity date disclosed represents the final maturity. Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1997. (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 Bond Index Sept. 97 $1,000,000 - -------------------------------------------------------- Sale contracts - -------------------------------------------------------- Municipal Bond Index Sept. 97 $ 500,000 - -------------------------------------------------------- (g) Non income producing. Item identified is in default as to payment of interest and/or principal. (h) At June 30, 1997, the cost of securities for federal income tax purposes was $73,160,033 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation ................$6,372,505 Unrealized depreciation ..................(531,562) - ---------------------------------------------------- Net unrealized appreciation............ $5,840,943 - ---------------------------------------------------- (This annual report is not part of the prospectus.) IDS Minnesota Tax-Exempt Fund June 30, 1997
(Percentages represent value of investments compared to net assets) Municipal bonds (97.7%) Name of issuer Coupon Maturity Principal Value(a) and 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 $8,240,652 Anoka County Resource Recovery Revenue Bonds Northern States Power Series 1985 7.15 2008 3,750,000 3,995,550 Becker Pollution Control Revenue Bonds Northern States Power Sherburne County Generating Station Units 1 & 2 Series 1987A 7.25 2005 2,000,000 2,004,740 Becker Solid Waste Disposal Facility Revenue Bonds Liberty Paper Series 1994B A.M.T. 9.00 2015 3,825,000 3,998,081 Bemidji Hospital Facilities 1st Mortgage Revenue Bonds North Country Health Services Series 1991 7.00 2021 1,755,000 1,958,369 Bloomington Community Development Refunding Revenue Bonds Note 24th Avenue Motel 8.50 2005 1,758,382(i) 1,767,174 Brooklyn Center Tax Credit Investor Refunding Revenue Bonds Four Courts Apartment Project Series 1995B A.M.T. 7.58 2009 2,450,000 2,475,259 Burnsville Multi-family Housing Refunding Revenue Bonds Summit Park Apartments Series 1993 (FHA Insured) 6.00 2033 4,000,000 4,030,280 Cambridge Independent School District #911 Unlimited Tax General Obligation School Building Bonds Series 1997A (MBIA Insured) 5.25 2018 1,900,000 1,855,255 Columbia Heights Multi-family Housing Revenue Bonds Crestview Lutheran Home Royce Place Series 1991 10.00 2032 555,000 594,183 Columbia Heights Multi-family Housing Revenue Bonds Crestview Lutheran Home Royce Place Series 1991 (FHA Insured) 7.75 2032 2,725,000 2,849,914 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 2,236,580 Duluth Hospital Facilities St. Lukes Hospital Pre-Refunded Revenue Bonds Series 1988 9.00 2018 2,500,000 2,653,300 Duluth Housing and Redevelopment Authority 1st Mortgage Revenue Bonds Lakeshore Lutheran Home 8.25 2009 125,000 125,234 Eden Prairie Housing Development Refunding Revenue Bonds Eden Commons Series 1990 (FHA Insured) 8.25 2025 6,195,000 6,344,423 Edina Hospital System Revenue Bonds Fairview Hospital & Health Care Services Series 1989A 7.125 2019 2,500,000 2,688,575 Edina Multi-family Housing Revenue Bonds Walker Assisted Living Series 1991 9.00 2031 6,700,000 7,343,468 Faribault Rice & Goodhue County Independent School District #656 General Obligation School Building Bonds Series 1995 (FSA Insured) 5.75 2015 6,900,000 7,013,643 Faribault Single Family Mortgage Refunding Revenue Bonds Series 1991A 7.50 2011 1,655,000 1,739,637 Fergus Falls Health Care Facilities Revenue Bonds LRHC Long-Term Care Facility Series 1995 6.50 2025 1,500,000 1,542,645 Hennepin County Lease Revenue Certificate of Participation Series 1991 6.80 2017 7,250,000 7,839,280 Hopkins Revenue Bonds Blake School 6.70 2024 3,120,000 3,457,802 Hubbard County Solid Waste Disposal Revenue Bonds Potlatch Series 1989 A.M.T. 7.375 2013 5,610,000 5,962,869 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount International Falls Solid Waste Disposal Revenue Bonds Boise Cascade Series 1990 A.M.T. 7.75 2015 4,000,000 4,190,720 Little Canada Multi-family Housing Revenue Bonds Provinces of Little Canada Series 1996 A.M.T. 7.00 2027 3,885,000 3,899,646 Mahtomedi Multi-family Housing Briarcliff Revenue Bonds A.M.T. 7.35 2036 2,280,000 2,326,079 Maplewood Care Institute Series 1994 7.75 2024 3,830,000 3,955,624 Maplewood Multi-family Housing Revenue Bonds Maplewood (FHA Insured) A.M.T. 7.75 2021 2,045,000 2,053,630 Maplewood Multi-family Housing Carefree Cottages of Maplewood III Refunding Revenue Bonds Series 1995 A.M.T. 7.20 2032 2,900,000 2,904,756 Minneapolis & St. Paul Housing Board Multi-family Mortgage Revenue Bonds Collateral Mortgage Revenue Loan Riverside Plaza Series 1988 (GNMA Insured) A.M.T. 8.25 2030 3,945,000 4,111,558 Minneapolis Community Development Agency Limited Tax Supported Development Revenue Common Bond Fund Series 1996-01 6.00 2011 980,000 983,969 Minneapolis General Obligation Bonds Sports Arena Series 1996 5.20 2024 4,940,000 4,698,088 Minneapolis Hospital Facility Pre-Refunded Revenue Bonds Lifespan Incorporated Series 1989A 7.00 2014 5,000,000 5,416,350 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care System Revenue Bonds Healthspan Series 1993 (AMBAC Insured) 4.75 2018 13,500,000 11,941,155 Minneapolis Nursing Home Revenue Bonds Walker Cityview & Southview Series 1992 8.50 2022 5,405,000 5,833,130 Minneapolis Special School District #1 Certificates of Participation Series 1997A (MBIA Insured) 5.375 2017 2,400,000 2,386,944 Minnetonka Multi-family Housing Refunding Revenue Bonds Cedar Hill West (FHA Insured) 7.75 2026 5,485,000 5,664,908 Minnetonka Multi-family Housing Revenue Bonds The Cedar Hills Series 1985 7.50 2017 500,000 515,660 New Brighton Tax Credit Investor Revenue Bonds Polynesian Village Apartments Series 1995B A.M.T. 7.75 2009 2,355,000 2,402,053 Northern Municipal Power Agency Electric System Refunding Revenue Bonds Series 1989A 7.25 2016 5,475,000 5,786,418 Northern Municipal Power Agency Electric System Pre-Refunded Revenue Bonds Series 1989A (AMBAC Insured) 7.40 2018 1,000,000 1,067,040 Northern Municipal Power Agency Electric System Pre-Refunded Revenue Bonds Series 1989B (AMBAC Insured) 7.40 2018 1,800,000 1,910,070 North St. Paul General Obligation School Bonds 5.125 2025 6,310,000 5,958,722 Owatanna Public Utilities Pre-Refunded Revenue Bonds Series 1991 6.75 2016 1,000,000 1,079,220 Plymouth Multi-family Housing Revenue Bonds Harbor Lane Apartments Series 1993 (Asset Guaranty Insured) A.M.T. 5.90 2013 2,325,000 2,339,741 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Minnesota Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Richfield Independent School District #280 Unlimited Tax General Obligation School Building Bonds Series 1993C Inverse Floater (FGIC Insured) 6.875 2010 3,300,000(f) 3,316,500 Richfield Independent School District #280 Unlimited Tax General Obligation School Building Bonds Series 1993C Trust Inverse Floater (FGIC Insured) 5.975 2012 2,510,000(f) 2,503,725 Richfield Multi-family Housing Refunding Revenue Bonds Village Shores Apartments Project Series 1996 7.625 2031 2,990,000 3,036,704 Robbinsdale Hospital Pre-Refunded Revenue Bonds North Memorial Medical Center Series 1989 (AMBAC Insured) 7.375 2019 2,200,000 2,345,706 Robbinsdale Multi-family Housing Revenue Bonds Series 1996A 7.35 2031 3,260,000 3,255,632 Rochester Health Care Facility Revenue Bonds Mayo Foundation Series A 4.951 2019 5,000,000 4,506,200 Rochester Multi-family Housing Development Revenue Bonds Civic Square Series 1991 (FHA Insured) A.M.T. 7.45 2031 4,390,000 4,640,230 St. Cloud Hospital Facility Refunding Revenue Bonds Series 1996B (AMBAC Insured) 5.00 2020 3,000,000 2,765,160 St. Cloud Hospital Facility Refunding Revenue Bonds Series B (AMBAC Insured) 5.00 2012 2,900,000 2,793,309 St. Cloud Hospital Facility Revenue Bonds St. Cloud Hospital Series 1990B (AMBAC Insured) 7.00 2020 5,000,000(h) 5,562,250 St. Cloud Hospital Facility Refunding Revenue Bonds Series C (AMBAC Insured) 5.30 2020 1,515,000 1,437,326 St. Louis Park Health Care Facilities Revenue Bonds Healthsystem Minnesota Obligated Group Series 1993 (AMBAC Insured) 5.20 2023 5,000,000 4,669,500 St. Louis Park Health Care Facilities Revenue Bonds Healthsystem Minnesota Obligated Group Series 1993B Inverse Floater (AMBAC Insured) 5.475 2013 7,000,000(f) 6,317,500 St. Louis Park Health Care Facilities Pre-Refunded Revenue Bonds Park Nicollet Medical Center Series 1990A 9.25 2020 4,000,000 4,536,480 St. Louis Park Health Care Facilities Pre-Refunded Revenue Bonds Park Nicollet Medical Center Series 1991A 8.625 2021 2,000,000 2,272,800 St. Louis Park Multi-family Housing Revenue Refunding Bonds Park Blvd Towers Series 1996A 7.00 2031 3,970,000 4,026,255 St. Paul & Minneapolis Housing & Redevelopment Authority Health Care Facility Revenue Bonds Group Health Plan Series 1992 6.75 2013 10,500,000(h) 11,387,355 St. Paul Housing & Development Bonds Highland Retirement (FHA Insured) 7.013 2026 5,210,000(j) 5,157,900 St. Paul Housing & Redevelopment Authority Commercial Development Refunding Revenue Bonds Beverly Enterprises Series 1992 7.75 2002 2,355,000 2,392,091 St. Paul Housing & Redevelopment Authority Health Care Facility Revenue Bonds Lyngblomsten Care Center Series 1993A 7.125 2017 1,880,000 1,946,947 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount St. Paul Housing & Redevelopment Authority Health Care Facility Revenue Bonds Lyngblomsten Care Center Series 1993A 7.125 2006 950,000 975,774 St. Paul Housing & Redevelopment Authority Health Care Facility Multi-family Rental Housing Revenue Bonds Lynblomsten 1993B 7.00 2024 1,890,000 1,878,358 St. Paul Housing & Redevelopment Authority Sales Tax Revenue Bonds Civic Center (Secondary MBIA Insured) 5.55 2023 7,500,000 7,488,000 St. Paul Housing & Redevelopment Authority Single Family Mortgage Refunding Revenue Bonds Middle Income Phase II Mortgage Backed (FNMA Insured) 6.80 2028 3,460,000 3,689,363 St. Paul Port Authority Unlimited Tax General Obligation Bonds 5.125 2024 4,770,000 4,476,597 Shoreview Senior Housing Revenue Bonds Series 1996 7.25 2026 2,700,000 2,683,638 Southern Minnesota Municipal Power Agency Power Supply System Revenue Bonds Zero Coupon Series 1994A (MBIA Insured) 6.67 2019 19,500,000(g) 5,762,835 Southern Minnesota Municipal Power Agency Power Supply System Revenue Bonds Zero Coupon (MBIA Insured) 6.08 2024 5,150,000(g) 1,132,279 Southern Minnesota Municipal Power Agency Power Supply System Revenue Bonds Zero Coupon Series 1994A (MBIA Insured) 6.88 2022 12,000,000(g) 2,966,280 Southern Minnesota Municipal Power Agency Pre-Refunded Bonds Series 1988A 8.125 2018 1,315,000 1,369,047 Southern Minnesota Municipal Power Agency Pre-Refunded Bonds Series 1988B 8.125 2018 1,000,000 1,041,100 Southern Minnesota Municipal Power Agency Pre-Refunded Revenue Bonds Escrowed to Maturity Series A (Secondary MBIA Insured) 5.75 2018 1,970,000 1,990,007 Southern Minnesota Municipal Power Agency Revenue Bonds (Secondary MBIA Insured) 4.75 2016 6,415,000 5,784,855 Southern Minnesota Municipal Power Agency Un-Refunded Balance Power Revenue Bonds Series A 5.75 2018 1,895,000 1,885,961 Spring Park Health Care Facility Revenue Bonds Twin Birch Health Care Center Series 1991 8.25 2011 1,780,000 1,904,636 State Agricultural and Economic Development Board Health Care System Fairview Hospital & Healthcare Service Series 1997A (MBIA Insured) 5.75 2026 2,000,000 1,999,840 State General Obligation Various Purpose Pre-Refunded Bonds Series 1990 7.00 2009 6,250,000 6,657,312 State General Obligation Various Purpose Pre-Refunded Bonds Series 1991 6.70 2011 8,000,000 8,699,600 State Higher Education Facilities Authority Augsburg College Mortgage Revenue Bonds Series 4-F1 6.25 2023 1,750,000 1,808,258 State Higher Education Facilities Authority MacAlester College Revenue Bonds Series 1997 4-J 5.55 2017 1,000,000 998,730 State Higher Education Facility Authority Mortgage Pre-Refunded Revenue Bonds St. Mary's College Series 2-M 8.375 2017 1,000,000 1,072,450 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Minnesota Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount State Housing Facility Authority Housing Finance Agency Housing Development Single Family Mortgage Bonds Series B 7.25 2016 325,000 329,092 State Housing Finance Agency Single Family Mortgage Bonds Series 1989A A.M.T. 8.00 2029 1,210,000 1,257,396 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series 1997D A.M.T. 5.85 2019 3,000,000 3,004,980 State Housing Finance Agency Single Family Mortgage Bonds Series 1990A A.M.T. 7.95 2022 3,165,000 3,344,171 State Housing Finance Agency Single Family Mortgage Bonds Series 1991A A.M.T. 7.45 2022 3,575,000 3,764,582 State Housing Finance Agency Single Family Mortgage Bonds Series 1992A 6.95 2016 2,930,000 3,092,556 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series L A.M.T. 6.70 2020 1,045,000 1,092,453 State Public Facilities Authority Water Pollution Control Revenue Bonds Series 1989A 7.00 2009 7,850,000 8,467,873 State University Board of Regents General Obligation Bonds Inverse Floater Series 1993A Bonds 5.564 2003 5,000,000(f) 5,062,500 State University Board of Regents General Obligation Pre-Refunded Bonds Series 1989A 6.00 2011 4,625,000 4,977,379 State University Board of Regents General Obligation Bonds Series 1996A 5.50 2021 12,500,000 12,516,500 State University Board State University System Pre-Refunded Revenue Bonds Series 1989A (MBIA Insured) 7.40 2019 2,250,000 2,391,187 Vadnais Heights Multi-family Housing Cottages of Vadnais Heights Refunding Revenue Bonds Series 1995 A.M.T. 7.00 2031 3,190,000 3,189,745 Vadnais Heights Multi-family Housing Cottages of Vadnais Heights Tax Credit Revenue Bonds Series 1997 A.M.T. 7.00 2009 1,080,000 1,073,887 Washington County General Obligation Capital Improvement Bonds Series 1989A 7.00 2009-10 4,425,000 4,586,778 Washington County Housing & Redevelopment Authority Woodbury Multi-family Housing Refunding Revenue Bonds Series 1996 6.95 2023 1,985,000 1,992,603 Western Minnesota Municipal Power Agency Revenue Bonds Escrowed to Maturity (AMBAC Insured) 6.75 2016 5,935,000 6,392,648 Western Minnesota Municipal Power Agency Supply Refunding Revenue Bonds Series A (Secondary MBIA Insured) 5.50 2015 11,250,000 11,199,712 White Bear Lake Industrial Development Revenue Bonds Taylor Series 1988A A.M.T. 8.75 2008 2,250,000 2,388,645 Total municipal bonds (Cost: $365,620,219) $389,401,571
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.)
Short-term securities (1.1%) Issuer (d,e) Effective Amount Value(a) yield payable at maturity Municipal note Duluth Health Facilities Revenue Bond V.R. 06-01-19 4.25% $ 100,000 $ 100,000 Minneapolis & St. Paul Housing & Redevelopment Authority Health Care Revenue Bond Series B V.R. 08-15-25 4.30 4,300,000 4,300,000 Total short-term securities (Cost: $4,400,000) $ 4,400,000 Total investments in securities (Cost: $370,020,219)(k) $393,801,571 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.)
Investments in securities IDS Minnestoa Tax-Exempt Fund 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 6-30-97 6-30-96 - --------------------------------------------------------- AAA 44% 48% AA 22 18 A 13 15 BBB 9 7 BB and below 12 10 Non-rated -- 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 FGIC -- Financial Guarantee Insurance Corporation FNMA -- Federal National Mortgage Association FHA -- Federal Housing Authority FSA -- Financial Security Assurance GNMA -- Government National Mortgage Association MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax -- As of June 30, 1997, the value of securities subject to alternative minimum tax represented 15.2% of net assets. V.R. -- Variable Rate (e) The Fund is entitled to receive principal amount from issuer or corporate guarantor, if indicated in parenthesis, after a day or week's notice. The maturity date disclosed represents the final maturity. Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1997. (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, 1997. Inverse floaters in the aggregate represent 4.3% of the Fund's net assets as of June 30, 1997. (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. 1997 $5,100,000 - ------------------------------------------------- Sales contracts - ------------------------------------------------- Municipal Bonds Index Sept. 1997 $2,000,000 - ------------------------------------------------- (i) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at June 30, 1997, is as follows:
Acquisition Purchase Security date cost - -------------------------------------------------------------------------------------- Bloomington Community Development Refunding Revenue Note 24th Avenue Motel 03-31-88 $1,758,382 (j) Non-income producing. Item identified is in default as to payment of interest and/or principal. (k) At June 30, 1997, the cost of securities for federal income tax purposes was $369,560,056 and the aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation ...........................$24,335,871 Unrealized depreciation ...............................(94,356) - --------------------------------------------------------------- Net unrealized appreciation....................... $24,241,515 - -------------------------------------------------------------- (This annual report is not part of the prospectus.) IDS New York Tax-Exempt Fund (Percentages represent value of June 30, 1997 investments compared to net assets)
Municipal bonds (99.9%) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Albany County Airport Authority Revenue Bonds Series 1997 (FSA Insured) A.M.T. 5.50 % 2019 $ 250,000 (g) $ 241,250 Broome County Certificates of Partication Public Safety Facility Series 1994 (MBIA Insured) 5.25 2022 2,650,000 2,495,929 Buffalo Municipal Water Agency Authority Water System Revenue Bonds Series 1995 (FGIC Insured) 5.00 2025 1,000,000 918,310 City of Buffalo School Serial Bonds Series 1997B (AMBAC Insured) 5.375 2016 500,000 493,900 Erie County Unlimited Tax General Obligation Bonds Series B (FGIC Insured) 5.50 2025 700,000 684,348 Erie County Water Authority Fourth Resolution Water Refunding Revenue Bonds Zero Coupon Series 1992 (AMBAC Insured) 7.30 2017 1,215,000(e) 281,880 Erie County Water Authority Water Works System Revenue Bonds Escrowed to Maturity Series 1990A (AMBAC Insured) 6.00 2008 1,765,000 1,887,403 Fallsburg Sullivan County Unlimited Tax General Obligation Improvement Pre-Refunded Bonds Series 1991 7.05 2011-14 1,300,000 1,450,501 Great Neck North Water Authority Water System Pre-Refunded Revenue Bonds Series 1989A 6.00 2020 1,415,000 1,472,180 Metropolitan Transportation Authority Commuter Facilities 1987 Service Contract Refunding Bonds Series 5 6.50 2016 1,775,000 1,871,152 Monroe County Utility General Obligation Pre-Refunded Bonds Water Improvement System 7.10 2008-09 1,000,000 1,061,500 Municipal Assistance New York City Series 59 7.75 2006 660,000 673,266 Municipal Assistance New York City Series 62 6.75 2006 2,200,000 2,244,176 Municipal Assistance Troy New York General Revenue Bonds Series 1996A (MBIA Insured) 5.00 2022 1,250,000 1,155,263 New York & New Jersey Port Authority Special Obligation Revenue Bonds KIAC Partners Project Series 4 A.M.T. 6.75 2019 1,500,000 1,592,805 New York City General Obligation Bonds Series 1995B 7.00 2016 1,500,000 1,632,900 New York City General Obligation Bonds Series J 5.875 2019 1,000,000 993,270 New York City Industrial Development Agency Civil Facility Lease Revenue Bonds Series 1997 (MBIA Insured) 5.25 2017-27 2,000,000 1,904,240 New York City Industrial Development Agency Civil Facility Revenue Bonds Series 1993 5.375 2023 2,000,000 1,925,520 New York City Industrial Development Agency Civil Facility Lease Revenue Bonds Series 1997 5.80 2016 1,000,000 989,930 New York City Municipal Water Finance Authority Water & Sewer System Revenue Bonds Series B Inverse Floater (MBIA Insured) 6.34 2009 2,000,000(f) 1,935,000 New York City Municipal Water Finance Authority Water & Sewer System Revenue Bonds Series B (MBIA Insured) 5.75 2026 500,000 503,375 New York City Unlimited Tax General Obligation Bonds Series 1996G 5.75 2017 1,500,000 1,475,700 New York City Water Finance Authority Water & Sewer System Pre-Refunded Revenue Bonds Series A (FGIC Insured) 6.75 2014 1,185,000 1,259,904 New York City Water Finance Authority Water & Sewer System Revenue Bonds Series A (FGIC Insured) 6.75 2014 565,000 600,714 State Dormitory Authority City University System Consolidated 3rd Resolution Revenue Bonds Series 1994-2 (MBIA Insured) 6.25 2019 1,500,000 1,583,355 See accompanying notes to investments in securities. (This annual report is ot part of the prospectus.) IDS New York Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount State Dormitory Authority City University System Pre-Refunded Revenue Bonds 8.125 2017 3,400,000 3,468,374 State Dormitory Authority City University System Revenue Bonds Series 1993A 5.75 2013 3,000,000 3,034,470 State Dormitory Authority College Revenue Bonds Series 1996 (AMBAC Insured) 5.25 2016 1,140,000 1,101,445 State Dormitory Authority Revenue Bonds NYACK Hospital Series 1996 6.25 2013 1,000,000 1,027,950 State Dormitory Authority State University Education Facility Cooper Union Insured College Revenue Bonds Series 1996 (AMBAC Insured) 5.375 2020 860,000 834,062 State Dormitory Authority State University Education Facility Pre-Refunded Revenue Bonds Series 1990A 7.70 2012 1,750,000 1,943,165 State Dormitory Authority State University Education Facility Refunding Revenue Bonds Series 1990B 7.50 2011 1,900,000 2,226,724 State Dormitory Authority State University Education Facility Revenue Bonds (Secondary AMBAC Insured) 5.25 2015 1,000,000 993,060 State Dormitory Authority State University Education Facility Revenue Bonds (Secondary AMBAC Insured) 5.50 2019 2,000,000 2,010,000 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1986A A.M.T. 7.50 2021 1,750,000 1,788,903 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1989A A.M.T. 7.75 2024 1,000,000 1,029,170 State Energy Research & Development Authority Electric Facility Revenue Bonds Consolidated Edison Series 1990A A.M.T. 7.50 2025 5,000,000(g) 5,286,900 State Energy Research & Development Authority Gas Facilities Industrial Development Revenue Bonds Series 1996 (MBIA Insured) 5.50 2021 2,000,000 1,961,240 State Energy Research & Development Authority Pollution Control Refunding Revenue Bonds Rochester Gas & Electric (MBIA Insured) A.M.T. 6.50 2032 2,500,000 2,669,300 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 2,948,190 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 3,308,010 State Local Government Assistance Bonds Series C 5.50 2022 1,500,000 1,443,015 State Local Government Assistance Pre-Refunded Bonds Series 1991A 7.00 2016 4,000,000 4,438,440 State Medical Care Facility Finance Agency Hospital & Nursing Home Mortgage Revenue Bonds Montefiore Hospital Series 1989A (FHA Insured) 7.25 2024 1,400,000 1,493,828 State Medical Care Facility Finance Agency Mental Health Services Facility Improving Refunding Revenue Bonds Series 1993F (Secondary FSA Insured) 5.375 2014 1,000,000 980,030 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 1,406,820 State Medical Care Facility Finance Agency Pre-Refunded Bonds Presbyterian Hospital Series 1985B 8.00 2025 1,320,000(g) 1,352,987 State Medical Care Facility Finance Agency Revenue Bonds Buffalo General Hospital Series 1988C (FHA Insured) 7.60 2008 1,500,000 1,589,775 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount State Medical Care Facility Finance Agency Revenue Bonds Buffalo General Hospital Series 1988C (FHA Insured) 7.70 2022 1,950,000 2,068,735 State Medical Care Facility Finance Agency Secured Hospital Revenue Bonds Series 1987A 7.10 2027 550,000 561,643 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series TT 7.50 2015 4,000,000 4,276,440 State Mortgage Agency Homeowner Mortgage Revenue Bonds Series 27 6.90 2015 3,000,000 3,223,500 State Mortgage Agency Revenue Bonds Series 9 A.M.T. 7.30 2017 970,000 990,758 State Thruway Authority Local Highway & Bridge Service Contract Bonds Series 1991 6.00 2011 2,500,000 2,519,500 State Urban Development Correction Facility Pre-Refunded Revenue Bonds Series 1 (FSA Insured) 7.50 2020 4,500,000 4,928,175 State Urban Development Correctional Capital Facilities Refunding Revenue Bonds Series 1993A 5.25 2021 2,500,000 2,306,725 State Urban Development Correctional Capital Facilities Revenue Bonds Series 5 (MBIA Insured) 5.50 2025 750,000 733,365 State Urban Development Revenue Bonds Higher Education Applied Technology Grants Series 1995 (MBIA Insured) 5.75 2015 1,000,000 1,021,610 Triborough Bridge & Tunnel Authority General Purpose Pre-Refunded Revenue Bonds Series S 7.00 2021 3,000,000 3,299,580 Triborough Bridge & Tunnel Authority Special Obligation Refunding Bonds Series 1991B (FGIC Insured) 6.875 2015 2,000,000 2,162,180 United Nations Development Senior Lien Refunding Revenue Bonds Series 1992A 6.00 2026 4,500,000 4,528,350 Utica Industrial Development Agency Civic Facility Revenue Bonds Series 1996A (MBIA Insured) 5.50 2016 750,000 739,537 Total municipal bonds (Cost: $107,120,101) $115,023,727 Total investments in securities (Cost: $107,120,101)(h) $115,023,727
See accompanying notes to investments in securietis. (This annual report is not part of the prospectus.) Investments in securities IDS New York Tax-Exempt Fund 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 6-30-97 6-30-96 - ------------------------------------------------------------------- AAA 58% 52% AA 13 18 A 12 15 BBB 16 14 BB and below 1 1 Non-rated -- -- - ------------------------------------------------------------------- Total 100% 100% - ------------------------------------------------------------------- (c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation FGIC -- Financial Guarantee Insurance Corporation FHA -- Federal Housing Authority FSA -- Financial Security Assurance MBIA -- Municipal Bond Investors Assurance (d) The following abbreviation is used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of securities subject to alternative minimum tax represented 14.4% of net assets. (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, 1997. Inverse floaters in the aggregate represent 1.7% of the Fund's net assets as of June 30, 1997. (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. 1997 $6,300,000 - ------------------------------------------------------- Sales contracts - ------------------------------------------------------- Municipal Bonds Index Sept. 1997 $1,500,000 - ------------------------------------------------------- (h) At June 30, 1997, the cost of securities for federal income tax purposes was $107,052,857 and the gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation ......................$8,082,388 Unrealized depreciation ........................(111,518) - --------------------------------------------------------- Net unrealized appreciation.................. $7,970,870 - --------------------------------------------------------- (This annual report is not part of the prospectus.) IDS Ohio Tax-Exempt Fund June 30, 1997
(Percentages represent value of investments compared to net assets) Municipal bonds (96.4%) Name of issuer Coupon Maturity Principal Value(a) and 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 $ 754,768 Bellefontaine Hospital Facility Refunding Revenue Bonds Mary Rutan Health Association of Logan County Series 1993 6.00 2013 1,000,000 984,160 Buckeye Valley Local School District School Improvement Unlimited Tax General Obligation Bonds Series 1995A (MBIA Insured) 5.25 2020 1,000,000 960,900 Butler County Hospital Facility Improvement Refunding Revenue Bonds 7.50 2010 1,750,000 1,870,050 Carroll Water & Sewer District Water System Improvement Unlimited Tax General Obligation Bonds 6.25 2010 955,000 916,466 Celina Local School District Unlimited General Obligation Bonds Series 1996 (FGIC Insured) 5.25 2020 1,000,000 960,900 Clermont County Hospital Facility Revenue Bonds Mercy Health System Province of Cincinnati Series 1989A (AMBAC Insured) 7.50 2019 750,000 820,319 Cleveland Airport Systems Revenue Bonds Series 1990A (MBIA Insured) A.M.T. 7.40 2020 500,000 537,475 Cleveland General Obligation Pre-Refunded Bonds 7.375 2003 125,000 128,489 Cleveland Public Power System 1st Mortgage Pre-Refunded Revenue Bonds 8.375 2017 100,000(f) 102,377 Cleveland Waterworks Improvement 1st Mortgage Refunding Revenue Bonds Series F 1992B (AMBAC Insured) 6.25 2016 1,000,000(f) 1,062,520 Cleveland Waterworks Improvement 1st Mortgage Revenue Bonds Series 1987E 6.00 2017 200,000 200,450 Coshocton County Solid Waste Disposal Refunding Revenue Bonds Stone Container Series 1992 7.875 2013 1,000,000 1,060,830 Cuyahoga County Health Care Facilities Refunding Revenue Bonds Judson Retirement Community Series A 7.25 2018 1,000,000 1,015,740 Cuyahoga County Hospital Improvement Revenue Bonds Cleveland Clinic Foundation 7.00 2013 500,000 504,970 Cuyahoga County Hospital Improvement Pre-Refunded Revenue Bonds Cleveland Clinic Foundation Series 1987A 7.875 2010 275,000 285,018 Cuyahoga County Hospital Improvement Revenue Bonds Mount Sinai Medical Center Series 1991 (AMBAC Insured) 6.625 2021 600,000 662,736 Cuyahoga County Hospital Improvement Revenue Bonds University Hospitals Health System Series 1992 (AMBAC Insured) 6.50 2011 500,000 535,790 Cuyahoga County Hospital Refunding Revenue Bonds Cleveland Clinic Foundation Series 1992 5.50 2011 1,500,000 1,518,930 Cuyahoga County Hospital Refunding Revenue Bonds Mount Sinai Medical Center Series 1987A 8.125 2014 400,000 414,180 Cuyahoga County Hospital Revenue Bonds Meridia Health Series 1991 7.00 2023 1,000,000 1,070,590 Cuyahoga County Limited Tax General Obligation Bonds 5.60 2013 500,000 517,675 Cuyahoga Hospital Revenue Bonds Metrohealth System Series 1989 (MBIA Insured) 6.00 2019 1,000,000 1,024,250 Delaware County Sewer Improvement Limited Tax General Obligation Bonds 5.25 2015 1,000,000 973,490 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Ohio Tax-Exempt Fund (Percentages represent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Dover Limited Tax Improvement General Obligation Bonds Municipal Sewer System 7.10 2009 1,000,000 1,065,230 Elyria Limited Tax Improvement General Obligation Recreation Facility Bonds 7.10 2009 715,000 767,581 Erie County Hospital Improvement Refunding Revenue Bonds Firelands Community Hospital Series 1992 6.75 2015 2,000,000(f) 2,147,260 Franklin County Convention Facilities Authority Tax & Lease Revenue Anticipation Pre-Refunded Bonds (MBIA Insured) 7.00 2019 1,500,000 1,654,905 Highland Heights Limited Tax Improvement General Obligation Street Bonds 7.75 2008 400,000 425,344 Hilliard County School District Unlimited Tax General Obligation Bonds Series A (FGIC Insured) 5.00 2020 1,000,000 935,810 Lake County Water System Limited Tax Improvement General Obligation Pre-Refunded Bonds Series 1987-2 8.125 2010 700,000 726,117 Lakota Local School District Butler County School Unlimited Tax Improvement Bonds 7.00 2012 500,000 532,935 Lakota Local School District Butler County School Unlimited Tax Improvement Pre-Refunded Bonds 7.90 2011 200,000 210,686 Lakota Local School District Unlimited Tax Improvement General Obligation Bonds (AMBAC Insured) 6.25 2014 2,000,000 2,138,800 Lima Limited Tax Improvement General Obligation Sanitary Sewer System Pre-Refunded Bonds 8.25 2012 200,000 207,590 Lorain County Hospital Facilities Refunding Revenue Bonds Elyria United Methodist Series C 6.875 2022 1,000,000 1,023,270 Lorain County Hospital Facilities Refunding Revenue Bonds EMH Regional Medical Center Series 1995 (AMBAC Insured) 5.375 2021 2,000,000 1,919,920 Lucas County Hospital Refunding Revenue Bonds St. Vincent's Medical Center Series B (MBIA Insured) 5.25 2020 1,000,000 944,960 Marietta Sewer System Improvement Bonds (BIG Insured) 7.50 2007 200,000 206,472 Marion County Health Care Facilities Improvement Refunding Revenue Bonds United Church Homes Series 1993 6.375 2010 1,000,000 1,024,050 Marysville Sewer System 1st Mortgage Revenue Bonds Series 1988 (BIG Insured) A.M.T. 7.85 2008 400,000 419,204 Marysville Water System Mortgage Revenue Bonds Series 1991 (MBIA Insured) 7.05 2021 1,000,000 1,115,290 Medina County Hospital Revenue Bonds Medina County Community Hospital Series 1987 (AMBAC Insured) 6.875 2016 100,000 103,255 Montgomery County Health Facilities Revenue Bonds Friendship Village Dayton Series 1990A 9.25 2016 1,000,000 1,054,410 Montgomery County Hospital Facility Refunding Revenue & Improvement Bonds Ketter Medical Center Series 1996 (MBIA Insured) 5.50 2026 1,000,000 970,410 Montgomery County Water Revenue Bonds Greater Moraine - Beavercreek District (FGIC Insured) 6.25 2017 1,000,000 1,068,660 North Olmsted County General Obligation Bonds (AMBAC Insured) 5.00 2016 1,500,000 1,426,575 North Olmsted County General Obligation Bonds (AMBAC Insured) 5.00 2021 200,000 186,896 Parma Hospital Improvement Revenue Bonds Parma Community General Hospital Series 1989B (MBIA Insured) 7.125 2013 500,000 527,715 Pickerington Local School District Unlimited Tax General Obligation Pre-Refunded Bonds (AMBAC Insured) 7.00 2013 1,000,000 1,103,270 Rural Loraine County Water Authority Water Resource Improvement Pre-Refunded Revenue Bonds Series 1991 (AMBAC Insured) 7.00 2011 1,000,000 1,108,470 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount Southwest Local School District Hamilton & Butler Counties School Unlimited Tax Improvement Bonds (AMBAC Insured) 7.65 2010 500,000 555,170 State Air Quality Development Authority Refunding Revenue Bonds JMG Funding Limited Partnership (AMBAC Insured) A.M.T. 6.375 2029 500,000 526,155 State Air Quality Development Authority Refunding Revenue Bonds Series 1994 (AMBAC Insured) A.M.T. 6.375 2029 2,000,000 2,104,620 State Air Quality Development Authority Revenue Bonds Cleveland Electric Illuminating Series A 7.00 2009 340,000 340,105 State Air Quality Development Authority Revenue Bonds Columbus & Southern Series A (FGIC Insured) 6.375 2020 1,000,000 1,082,310 State Building Authority Local Jail Grant Bonds Series 1989A (MBIA Insured) 7.35 2009 500,000 548,725 State Building Authority State Facility Pre-Refunded Bonds Columbus State Office Building Series 1985C 7.35 2005 1,000,000 1,095,860 State Higher Educational Facility Pre-Refunded Revenue Bonds Oberlin College Series 1989 7.375 2014 500,000 542,505 State Housing Finance Agency Mortgage Revenue Bonds Aristocrat South Board & Care Series 1991A (FHA Insured) A.M.T. 7.30 2031 1,500,000 1,568,895 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series 1990A (GNMA Insured) A.M.T. 7.80 2030 460,000 482,494 State Housing Finance Agency Single Family Mortgage Revenue Bonds Series 1990C (GNMA Insured) A.M.T. 7.85 2021 760,000 807,804 State Municipal Electric Generation Agency Joint Venture #5 Revenue Bonds (AMBAC Insured) 5.375 2024 2,000,000 1,914,000 State Turnpike Revenue Bonds Series A 5.75 2024 1,000,000 1,003,290 State Turnpike Revenue Bonds Series A (MBIA Insured) 5.50 2026 1,000,000 985,750 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 1,920,200 State Water & Air Quality Development Authority Cleveland Electric Illumination Pollution Control Refunding Revenue Bonds Series 1995 7.70 2025 1,000,000 1,093,670 State Water Development Authority Bonds Toledo Edison Series 1994 A.M.T. 8.00 2023 1,000,000 1,090,790 State Water Development Authority Pollution Control Revenue Bonds Phillip Morris 7.25 2008 150,000 155,921 State Water Development Authority Water Development Pre-Refunded Bonds Pure Water Series 1988I 7.00 2014 500,000 514,325 State Water Development Authority Water Development Refunding Revenue Bonds Pure Water (AMBAC Insured) 5.50 2018 750,000 737,003 State Water Development Solid Waste Disposal Northstar BHP Steel LLC-Cargill Series 1995 Revenue Bonds A.M.T. 6.30 2020 500,000(f) 524,045 Summit County Industrial Development Revenue Bonds Century Products 7.75 2005 100,000 102,775 Summit County Limited Tax General Obligation Pre-Refunded Bonds Human Services Facility (AMBAC Insured) 8.00 2007 95,000 98,520 Sycamore Board of Education Community School District Hamilton County School Improvement Bonds 6.50 2009 500,000 516,635 University of Cincinnati Certificates of Participation Student Recreation Center (MBIA Insured) 5.125 2024 1,000,000 940,920 University of Cincinnati General Receipt Pre-Refunded Bonds Series I-1 7.10 2010 750,000 804,675 See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) Investments in securities IDS Ohio Tax-Exempt Fund (Percentages repersent value of investments compared to net assets) Municipal bonds (continued) Name of issuer Coupon Maturity Principal Value(a) and title of issue (b, c, d) rate year amount University of Toledo General Receipt Pre-Refunded Bonds Series 1990 (MBIA Insured) 7.125 2020 500,000 547,610 Warren County Various Purpose Limited Tax General Obligation Bonds Series 1992 6.10 2012 500,000 543,410 Whitehall City School District Franklin County Unlimited Tax Improvement General Obligation Pre-Refunded Revenue Bonds 7.25 2013 500,000 544,845 Total municipal bonds (Cost: $63,106,778) $67,591,185
Short-term securities (2.3%) Issuer (d, e) Effective Amount Value(a) yield payable at maturity Municipal notes State Air Quality Development Authority Revenue Bonds Cincinnati Gas & Electric Series 1985B V.R. 12-01-15 5.50% $ 500,000 $ 500,000 State Air Quality Development Authority Revenue Bonds Cincinnati Gas & Electric Series A V.R. 09-01-30 4.00 1,100,000 1,100,000 Total short-term securities (Cost: $1,600,000) $ 1,600,000 Total investments in securities (Cost: $64,706,778)(g) $69,191,185
See accompanying notes to investments in securities. (This annual report is not part of the prospectus.) 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 6-30-97 6-30-96 - ---------------------------------------------------------------- AAA 64% 68% AA 9 10 A 9 9 BBB 10 7 BB and below 8 6 Non-rated -- -- - ---------------------------------------------------------------- Total 100% 100% - ---------------------------------------------------------------- (c) The following abbreviations are used in portfolio descriptions to identify the insurer of the issue: AMBAC -- American Municipal Bond Association Corporation BIG -- Bond Investors Guarantee FGIC -- Financial Guarantee Insurance Corporation FHA -- Federal Housing Authority GNMA -- Government National Mortgage Association MBIA -- Municipal Bond Investors Assurance (d) The following abbreviations are used in portfolio descriptions: A.M.T. -- Alternative Minimum Tax-- As of June 30, 1997, the value of securities subject to alternative minimum tax represented 11.5% of net assets. V.R. -- Variable Rate (e) The Fund is entitled to receive principal from issuer or corporate guarantor, if indicated in parenthesis, after a day or a week's notice. The maturity date disclosed represents the final maturity. Interest rate varies to reflect current market conditions; rate shown is the effective rate on June 30, 1997. (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. 1997 $900,000 - ----------------------------------------------------- Sale contracts - ------------------------------------------------------ Municipal Bonds Index Sept. 1997 $500,000 - ------------------------------------------------------ (g) At June 30, 1997, the cost of securities for federal income tax purposes was $64,643,308 and the gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation .........................$4,568,086 Unrealized depreciation ............................(20,209) - ------------------------------------------------------------- Net unrealized appreciation..................... $4,547,877 - ------------------------------------------------------------- (This annual report is not part of the prospectus.) IDS mutual funds Global/International funds Funds in this group seek capital growth and/or income by investing primarily in foreign securities. Foreign investments may be subject to currency fluctuations and political and economic risks of the countries in which the investments are made. They are high risk mutual funds with a potential for high reward. IDS Emerging Markets Fund Invests in a Portfolio comprised primarily of stocks of companies in developing countries throughout the world that are believed to offer growth potential. Seeks to provide long-term growth of capital. (icon of) world with countries IDS Global Growth Fund Invests in a Portfolio comprised primarily of stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The Fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Global Balanced Fund Invests in stocks and bonds in, for the most part, major markets throughout the world, including the U.S. Seeks to provide a balance of growth of capital and current income. (icon of) scale holding two worlds IDS Global Bond Fund Invests in a Portfolio comprised primarily of debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe Growth funds Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. A highly aggressive and speculative fund that seeks long-term growth of capital. (icon of) cart of precious gems IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Small Company Index Fund Invests in all or a representative group of the equity securities comprising the S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation. (icon of) office building IDS Strategy Aggressive Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Research Opportunities Fund Invests in a Portfolio comprised primarily of equity securities of companies included in the S&P 500 Index that are believed to have strong growth potential. The Portfolio is managed using a research methodology by the Research Department of AEFC. Goal is long-term appreciation. (icon of) magnifying glass (This annual report is not part of the prospectus.) IDS Growth Fund Invests in a Portfolio comprised primarily of companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) trees (This annual report is not part of the prospectus.) IDS New Dimensions Fund Invests in a Portfolio comprised primarily of companies with significant growth potential due to superiority in technology, marketing or management. The Fund frequently changes its industry mix. (icon of) dimension IDS Progressive Fund Invests primarily in undervalued common stocks. The Fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star Growth & income funds These funds focus on securities of medium to large, well-established companies that offer long-term growth of capital and reasonable income from dividends and interest. Foreign investments may be subject to currency fluctuations and political and economic risks of the countries in which the investments are made. IDS Equity Select Fund Invests primarily in a combination of moderate growth stocks, 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 Managed Allocation Fund Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and foreign debt securities, foreign equity securities and money market instruments. The Fund provides diversification among these major investment categories and has a target mix that represents the way the Fund's investments will be allocated over the long term. Seeks maximum total return. (icon of) gyroscope IDS Stock Fund Invests in a Portfolio comprised primarily of common stock of companies representing many sectors of the economy. Seeks current income and growth of capital. (icon of) building with columns IDS Equity Value Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) three growing flowers IDS Utilities Income Fund Invests primarily in the stocks of public utility companies to seek high current income and growth of income and capital with reduced volatility. (icon of) light bulb IDS Diversified Equity Income Fund Invests in a Portfolio comprised primarily of high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) two puzzle pieces IDS Mutual Invests in a Portfolio that seeks to balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice (This annual report is not part of the prospectus.) IDS mutual funds Income funds The funds in this group invest their assets primarily in corporate bonds or government securities to seek interest income. Secondary objective is capital growth. Risk varies by bond quality. IDS Extra Income Fund Invests in a Portfolio comprised mainly of long-term, high-yielding corporate fixed-income securities in the lower rated, higher risk bond categories to seek high current income. Secondary objective is capital growth. (icon of) coins IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column IDS Selective Fund Invests in a Portfolio comprised primarily of high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests in a Portfolio comprised primarily of securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) shield with eagle head enclosed Tax-exempt income funds These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax, but a portion of the income may be subject to state and local taxes. Risk varies by bond quality. IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column 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 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 High Yield Tax-Exempt Fund Invests in a Portfolio comprised primarily of medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed IDS Intermediate Tax-Exempt Fund Invests in mainly investment-grade bonds and other debt securities with intermediate-term maturities issued by state and local government units. Goal is to seek a high level of current income exempt from federal taxes. (icon of) shield with a tree enclosed (This annual report is not part of the prospectus.) Money market funds These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. An investment in these funds is neither insured nor guaranteed by the U.S. government, and there can be no assurance that these funds will be able to maintain a stable net asset value of $1.00 per share. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposit (CDs) and other bank securities. (icon of) piggy bank IDS Tax-Free Money Fund Invests primarily in short-term bonds and notes issued by state and local governments to seek high current income exempt from federal income taxes. (icon of) shield with piggy bank enclosed For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial advisor or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. (This annual report is not part of the prospectus.) Federal income tax information IDS California Tax-Exempt Fund The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS California Tax-Exempt Fund Fiscal year ended June 30, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02217 Aug. 26, 1996 0.02323 Sept. 25, 1996 0.02306 Oct. 28, 1996 0.02491 Nov. 26, 1996 0.02259 Dec. 26, 1996 0.02287 Jan. 29, 1997 0.02605 Feb. 26, 1997 0.02413 March 26, 1997 0.02190 April 28, 1997 0.02644 May 28, 1997 0.02447 June 26, 1997 0.02464 Total $0.28646 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00007 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00275 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00886 Total distributions $0.29814 (This annual report is not part of the prospectus.) Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.01902 Aug. 26, 1996 0.01990 Sept. 25, 1996 0.01986 Oct. 28, 1996 0.02137 Nov. 26, 1996 0.01948 Dec. 26, 1996 0.01966 Jan. 29, 1997 0.02238 Feb. 26, 1997 0.02109 March 26, 1997 0.01893 April 28, 1997 0.02292 May 28, 1997 0.02123 June 26, 1997 0.02154 Total $0.24738 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00007 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00275 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00886 Total distributions $0.25906 (This annual report is not part of the prospectus.) Federal income tax information IDS California Tax-Exempt Fund Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 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. (This annual report is not part of the prospectus.) IDS Massachusetts Tax-Exempt Fund The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. Some of the dividends listed below were reported to you on your year-end statement, last January. Dividends paid to you since the end of last year will be reported to you on a tax statement sent next January. IDS Massachusetts Tax-Exempt Fund Fiscal year ended June 30, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02137 Aug. 26, 1996 0.02179 Sept. 25, 1996 0.02474 Oct. 28, 1996 0.02615 Nov. 26, 1996 0.02332 Dec. 26, 1996 0.02333 Jan. 29, 1997 0.02653 Feb. 26, 1997 0.02426 March 26, 1997 0.02194 April 28, 1997 0.02624 May 28, 1997 0.02325 June 26, 1997 0.02283 Total distributions $0.28575 (This annual report is not part of the prospectus.) Federal income tax information IDS Massachusetts Tax-Exempt Fund Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.01810 Aug. 26, 1996 0.01836 Sept. 25, 1996 0.02144 Oct. 28, 1996 0.02248 Nov. 26, 1996 0.02008 Dec. 26, 1996 0.01999 Jan. 29, 1997 0.02277 Feb. 26, 1997 0.02113 March 26, 1997 0.01884 April 28, 1997 0.02262 May 28, 1997 0.01992 June 26, 1997 0.01957 Total distributions $0.24530 (This annual report is not part of the prospectus.) Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 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. (This annual report is not part of the prospectus.) 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 Form 1099-DIV, Dividends and Distributions, last January. Dividends paid to you since the end of last year will be reported to ou on a tax statement sent next January. IDS Michigan Tax-Exempt Fund Fiscal year ended June 30, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02145 Aug. 26, 1996 0.02349 Sept. 25, 1996 0.02477 Oct. 28, 1996 0.02670 Nov. 26, 1996 0.02419 Dec. 26, 1996 0.02412 Jan. 29, 1997 0.02674 Feb. 26, 1997 0.02326 March 26, 1997 0.02251 April 28, 1997 0.02644 May 28, 1997 0.02341 June 26, 1997 0.02369 Total $0.29077 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00075 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00082 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00051 Total distributions $0.29285 (This annual report is not part of the prospectus.) Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.01822 Aug. 26, 1996 0.02003 Sept. 25, 1996 0.02143 Oct. 28, 1996 0.02305 Nov. 26, 1996 0.02090 Dec. 26, 1996 0.02076 Jan. 29, 1997 0.02297 Feb. 26, 1997 0.02010 March 26, 1997 0.01937 April 28, 1997 0.02282 May 28, 1997 0.02006 June 26, 1997 0.02043 Total $0.25014 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00075 Taxable dividend -- short-term capital gain taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00082 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00051 Total distributions $0.25222 (This annual report is not part of the prospectus.) Federal income tax information IDS Michigan Tax-Exempt Fund Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 was derived from interest on Michigan municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax advisor about reporting this income for state and local tax purposes. (This annual report is not part of the prospectus.) 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, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02415 Aug. 26, 1996 0.02514 Sept. 25, 1996 0.02730 Oct. 28, 1996 0.02723 Nov. 26, 1996 0.02431 Dec. 26, 1996 0.02497 Jan. 29, 1997 0.02809 Feb. 26, 1997 0.02594 March 26, 1997 0.02349 April 28, 1997 0.02802 May 28, 1997 0.02462 June 26, 1997 0.02221 Total $0.30547 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00011 Total distributions $0.30558 (This annual report is not part of the prospectus.) Federal income tax information IDS Minnesota Tax-Exempt Fund Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02094 Aug. 26, 1996 0.02179 Sept. 25, 1996 0.02407 Oct. 28, 1996 0.02365 Nov. 26, 1996 0.02116 Dec. 26, 1996 0.02169 Jan. 29, 1997 0.02438 Feb. 26, 1997 0.02287 March 26, 1997 0.02044 April 28, 1997 0.02447 May 28, 1997 0.02137 June 26, 1997 0.01903 Total $0.26586 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00011 Total distributions $0.26597 (This annual report is not part of the prospectus.) Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 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. (This annual report is not part of the prospectus.) 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, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02245 Aug. 26, 1996 0.02369 Sept. 25, 1996 0.02365 Oct. 28, 1996 0.02541 Nov. 26, 1996 0.02291 Dec. 26, 1996 0.02302 Jan. 29, 1997 0.02592 Feb. 26, 1997 0.02280 March 26, 1997 0.02235 April 28, 1997 0.02606 May 28, 1997 0.02289 June 26, 1997 0.02273 Total $0.28388 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00005 Total distributions $0.28393 (This annual report is not part of the prospectus.) Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.01933 Aug. 26, 1996 0.02043 Sept. 25, 1996 0.02051 Oct. 28, 1996 0.02192 Nov. 26, 1996 0.01984 Dec. 26, 1996 0.01983 Jan. 29, 1997 0.02232 Feb. 26, 1997 0.01982 March 26, 1997 0.01941 April 28, 1997 0.02272 May 28, 1997 0.01972 June 26, 1997 0.01964 Total $0.24549 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00005 Total distributions $0.24554 (This annual report is not part of the prospectus.) Federal income tax information IDS New York Tax-Exempt Fund Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 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. (This annual report is not part of the prospectus.) 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, 1997 Class A Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.02319 Aug. 26, 1996 0.02406 Sept. 25, 1996 0.02415 Oct. 28, 1996 0.02592 Nov. 26, 1996 0.02327 Dec. 26, 1996 0.02393 Jan. 29, 1997 0.02675 Feb. 26, 1997 0.02458 March 26, 1997 0.02235 April 28, 1997 0.02496 May 28, 1997 0.02353 June 26, 1997 0.02361 Total $0.29030 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00031 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00025 Total distributions $0.29086 (This annual report is not part of the prospectus.) Federal income tax information IDS Ohio Tax-Exempt Fund Class B Exempt-interest dividends -- taxable status explained below. Payable date Per share July 26, 1996 $0.01994 Aug. 26, 1996 0.02063 Sept. 25, 1996 0.02084 Oct. 28, 1996 0.02226 Nov. 26, 1996 0.02010 Dec. 26, 1996 0.02059 Jan. 29, 1997 0.02297 Feb. 26, 1997 0.02147 March 26, 1997 0.01925 April 28, 1997 0.02134 May 28, 1997 0.02022 June 26, 1997 0.02040 Total $0.25001 Taxable dividend -- income distribution taxable as dividend income. Payable date Per share Dec. 26, 1996 $0.00031 Taxable dividend -- taxable as long-term capital gain. Payable date Per share Dec. 26, 1996 $0.00025 Total distributions $0.25057 (This annual report is not part of the prospectus.) Source of distributions 100% of exempt-interest distributions during the fiscal year ended June 30, 1997 was derived from interest on Ohio municipal securities. Federal taxation Exempt-interest dividends are exempt from federal income taxes and should not be included in shareholders' gross income. Other taxation Exempt-interest dividends may be subject to state and local taxes. Each shareholder should consult a tax advisor about reporting this income for state and local tax purposes. (This annual report is not part of the prospectus.) Quick telephone reference - ----------------------------------------------------------------- American Express Financial Advisors 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 - ----------------------------------------------------------------- TTY Service For the hearing impaired 800-846-4852 - ----------------------------------------------------------------- American Express Financial Advisors Easy Access Line Automated account information (TouchToneR phones only), including current fund prices and performance, account values and recent account transactions 800-862-7919 AMERICAN EXPRESS Financial Advisors IDS State Tax-Exempt Funds IDS Tower 10 Minneapolis, MN 55440-0010 STATEMENT OF DIFFERENCES Difference Description 1) The layout is different 1) Some of the layout in the throughout the annual report annual report to shareholders is in two columns. 2) Headings. 2) The headings in the annual report and prospectus are placed in a blue strip at the top of the page. 3) There are pictures, icons and 3) Each picture, icon and graph is graphs throughout the annual described in parentheses. report and prospectus. 4) Footnotes for charts and graphs 4) The footnotes for each chart or are described at the left margin. graph are typed below the description of the chart or graph. -----END PRIVACY-ENHANCED MESSAGE-----