SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 (File No. 333-32152) [X]
Post-Effective Amendment No. [ ]
AXP HIGH YIELD TAX-EXEMPT FUND, INC.
IDS Tower 10
Minneapolis, MN 55440-0010
Leslie L. Ogg
901 S. Marquette Avenue, Suite 2810
Minneapolis, MN 55402-3268
(612) 330-9283
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the Registration Statement.
Title of Securities Being Registered: Common Stock
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.
This Registration Statement shall hereafter become effective in accordance with
the provisions of Section 8(a) of the Securities Act of 1933.
<PAGE>
<PAGE>
STRATEGIST FUND GROUP
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 2000
Strategist Growth Fund, Inc.
-Strategist Growth Fund
-Strategist Growth Trends Fund
-Strategist Special Growth Fund
Strategist Growth and Income Fund, Inc.
-Strategist Balanced Fund
-Strategist Equity Fund
-Strategist Equity Income Fund
-Strategist Total Return Fund
Strategist Income Fund, Inc.
-Strategist Government Income Fund
-Strategist High Yield Fund
-Strategist Quality Income Fund
Strategist World Fund, Inc.
-Strategist Emerging Markets Fund
-Strategist World Growth Fund
-Strategist World Income Fund
-Strategist World Technologies Fund
Strategist Tax-Free Income Fund, Inc.
-Strategist Tax-Free High Yield Fund
Your Fund will hold a special shareholders' meeting at 2:00 p.m. on May 9, 2000,
at the IDS Tower, 80 South Eighth Street, Minneapolis, MN, in Conference Room A
on the 27th floor. This will be a joint meeting for all of the Funds listed
above. At the meeting, shareholders will consider the following:
- - A proposal to approve an Agreement and Plan of Reorganization between the
Strategist Fund and the corresponding AXP Fund investing in the same master
fund. Under this Agreement, the Strategist Fund will transfer all of its
assets to the AXP Fund in exchange for Class A shares of the AXP Fund. These
shares will be distributed proportionately to you and the other shareholders
of the Strategist Fund. The AXP Fund will assume the Strategist Fund's
liabilities. The Board of Directors recommends that you vote FOR the
proposal.
- - Any other business that may come before the meeting.
Please take a few minutes to read the proxy statement. It discusses the proposal
in more detail. If you were a shareholder on April 5, 2000, you may vote at the
meeting or any adjournment of the meeting. We hope you can attend the meeting.
For those of you who cannot attend, please complete and return the enclosed
proxy card. If you have questions, please call 1-800-775-5805. This proxy
statement was first mailed to shareholders the week of April 17, 2000.
April 17, 2000
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
DATED APRIL 17, 2000
This document is a proxy statement for each of the Strategist Funds and a
prospectus for the corresponding AXP Fund as shown in the table below. It
contains the information you should know before voting on the proposed
reorganization of the Strategist Fund into the corresponding AXP Fund (the
"Reorganization"). Please read it carefully and keep it for future reference.
The table shows the investment objective for each Strategist Fund and
corresponding AXP Fund. Investment policies for the Strategist Fund and its
corresponding AXP Fund are identical. The address of the Strategist Fund is IDS
Tower 10, Minneapolis, Minnesota 55440-0010. The address of the AXP Fund is 901
Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268.
FUND NAMES AND INVESTMENT OBJECTIVES
<TABLE>
<CAPTION>
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<S> <C> <C>
STRATEGIST FUND AXP FUND INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------------
Strategist Balanced AXP Mutual Balance of growth of capital and
current income.
- --------------------------------------------------------------------------------------
Strategist Emerging AXP Emerging Long-term capital growth.
Markets Markets
- --------------------------------------------------------------------------------------
Strategist Equity AXP Stock Current income and growth of capital.
- --------------------------------------------------------------------------------------
Strategist Equity AXP Diversified High level of current income.
Income Equity Income Secondary goal is steady growth of
capital.
- --------------------------------------------------------------------------------------
Strategist Government AXP Federal High level of current income and
Income Income safety of principal consistent with
investment in U.S. government and
government agency securities.
- --------------------------------------------------------------------------------------
Strategist Growth AXP Growth Long-term capital growth.
- --------------------------------------------------------------------------------------
Strategist Growth AXP New Long-term growth of capital.
Trends Dimensions
- --------------------------------------------------------------------------------------
Strategist High Yield AXP Extra Income High current income. Secondary goal is
capital growth.
- --------------------------------------------------------------------------------------
Strategist Quality AXP Selective Current income and preservation of
Income capital.
- --------------------------------------------------------------------------------------
</TABLE>
2
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<TABLE>
<CAPTION>
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<S> <C> <C>
STRATEGIST FUND AXP FUND INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------------
Strategist Special AXP Research Long-term capital growth.
Growth Opportunities
- --------------------------------------------------------------------------------------
Strategist Tax-Free AXP High Yield High yield generally exempt from
High Yield Tax-Exempt federal income taxes.
- --------------------------------------------------------------------------------------
Strategist Total Return AXP Managed Maximum total return through a
Allocation combination of growth of capital and
current income.
- --------------------------------------------------------------------------------------
Strategist World Growth AXP Global Growth Long-term capital growth.
- --------------------------------------------------------------------------------------
Strategist World Income AXP Global Bond High total return through income and
growth of capital.
- --------------------------------------------------------------------------------------
Strategist World AXP Innovations Long-term capital growth.
Technologies
- --------------------------------------------------------------------------------------
</TABLE>
HOW THE REORGANIZATION WILL WORK
- - The Strategist Fund will transfer all of its assets to the corresponding AXP
Fund. The AXP Fund will assume the Strategist Fund's stated liabilities.
- - The AXP Fund will issue Class A shares to the Strategist Fund in an amount
equal to the value of the assets it receives, less the liabilities it
assumes. These Class A shares will be distributed to the Strategist Fund's
shareholders in proportion to their holdings in the Strategist Fund. You will
not pay any sales charge in connection with this distribution of shares.
Please note that the AXP Fund is not a bank deposit, is not federally insured,
is not endorsed by any bank or government agency and is not guaranteed to
achieve its goal.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
3
<PAGE>
WHERE TO GET MORE INFORMATION*
<TABLE>
<CAPTION>
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<S> <C>
The AXP Fund's most recent prospectus In the same envelope as this proxy
and annual report. statement/prospectus.
- ------------------------------------------------------------------------------------
The AXP Fund's most recent statement of Incorporated by reference into this
additional information and semi-annual proxy statement/prospectus. For a copy
report to shareholders (if a semi-annual at no charge, call toll-free
report has been issued subsequent to the 1-800-862-7919 or write to the address
most recent annual report). below.
- ------------------------------------------------------------------------------------
The Strategist Fund's most recent Incorporated by reference into this
prospectus. proxy statement/prospectus. For a copy
at no charge, call toll-free
1-800-297-8800 or write to the address
below.
- ------------------------------------------------------------------------------------
The Strategist Fund's most recent annual Incorporated by reference into this
report and semi-annual report to proxy statement/prospectus. For a copy
shareholders (if a semi-annual report at no charge, call toll-free
has been issued subsequent to the most 1-800-297-8800 or write to the address
recent annual report). below.
- ------------------------------------------------------------------------------------
Statement of additional information Incorporated by reference into this
dated the same date as this proxy proxy statement/prospectus. For a copy
statement/prospectus. This document at no charge, call toll-free
contains information about both the 1-800-862-7919 or write to the address
Strategist Fund and the AXP Fund. below.
- ------------------------------------------------------------------------------------
To ask questions about this proxy Call toll-free 1-800-775-5805 or write
statement/prospectus. to: American Express Client Service
Corporation, P.O. Box 534, Minneapolis,
MN 55440-0534.
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</TABLE>
* See Table G-2 for the dates of each of these documents.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
A. Summary.................................................. 7
- How the Reorganization Will Work........................ 7
- Comparison of the Strategist Fund to the AXP Fund....... 8
- Tax Consequences........................................ 10
- Investment Policies and Risk Factors.................... 10
B. Fees and Expenses........................................ 13
C. The Reorganization....................................... 17
- Terms of the Reorganization............................. 17
- Conditions to Closing the Reorganization................ 18
- Termination of the Agreement............................ 18
- Tax Status of the Reorganization........................ 18
- Reasons for the Proposed Reorganization and Board
Deliberations........................................... 19
- Boards' Determination................................... 21
D. Information Concerning the Meeting....................... 22
- Recommendation and Vote Required........................ 22
- Voting.................................................. 22
- Revoking Your Proxy..................................... 22
- Simultaneous Meetings................................... 22
- Solicitation of Proxies................................. 22
- Dissenters' Right of Appraisal.......................... 23
- Other Business.......................................... 23
- Adjournment............................................. 23
</TABLE>
5
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<TABLE>
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PAGE
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E. Capitalization and Ownership of Fund Shares.............. 24
- Capitalization.......................................... 24
- Ownership of Fund Shares................................ 25
F. Experts.................................................. 28
G. Additional Information About the Funds' Businesses....... 28
EXHIBITS
1. Form of Agreement and Plan of Reorganization between the
Strategist Fund and the AXP Fund.......................... 30
2. Minnesota Business Corporation Act Sections 302A.471 and
302A.473.................................................. 42
3. Most recent AXP Fund prospectus and annual report
(enclosed)
</TABLE>
6
<PAGE>
A. SUMMARY
This proxy statement/prospectus is being used by the Board of Directors (the
"Board") of the Strategist Fund to solicit proxies to vote at a special meeting
of shareholders. The purpose of the meeting is to consider a proposal to approve
an Agreement and Plan of Reorganization (the "Agreement") providing for the
Reorganization of the Strategist Fund into the corresponding AXP Fund invested
in the same master fund.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus and the exhibits because they contain details that are not
in the summary. The materials in the statement of additional information dated
the same date as this proxy statement/prospectus for the Strategist Fund and the
AXP Fund are incorporated by reference into this proxy statement/prospectus.
HOW THE REORGANIZATION WILL WORK.
- - The Strategist Fund will transfer all of its assets to the corresponding AXP
Fund. The AXP Fund will assume all the Strategist Fund's stated liabilities.
There are no outstanding liabilities with respect to the Strategist Fund's
12b-1 plan.
- - The AXP Fund will issue Class A shares to the Strategist Fund in an amount
equal to the value of the assets it receives, less the liabilities it
assumes. These Class A shares will be distributed to the Strategist Fund's
shareholders in proportion to their holdings in the Strategist Fund.
- - Neither the Strategist Fund nor the shareholders of the Strategist Fund will
pay any sales charge in connection with the Reorganization.
- - After the Reorganization is completed, Strategist shareholders will be
shareholders of Class A shares of the corresponding AXP Fund. The Strategist
Fund will be deregistered as a mutual fund and terminated under state law.
7
<PAGE>
TABLE A-1.
COMPARISON OF THE STRATEGIST FUND TO THE AXP FUND
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIST FUND AXP FUND
<S> <C> <C>
- ---------------------------------------------------------------------------------------
General A series of capital stock of A series of capital stock of
an open-end management an open-end management
investment company organized investment company organized
as a Minnesota corporation. as a Minnesota corporation.
- ---------------------------------------------------------------------------------------
Investment Structure A feeder fund, as shown in A feeder fund, as shown in
Table A-2, investing all of Table A-2, investing all of
its assets in a master fund. its assets in a master fund.
- ---------------------------------------------------------------------------------------
Investment Adviser American Express Financial AEFC is the investment
Corporation ("AEFC") is the adviser for the master fund.
investment adviser for the
master fund.
- ---------------------------------------------------------------------------------------
Investment Objectives, Identical for both Funds.
Policies, Investment See Table A-2 for more information on each fund.
Strategies, Risks and
Restrictions
- ---------------------------------------------------------------------------------------
Pricing Each Fund calculates its net asset value per share at the
close of trading on the New York Stock Exchange (the "NYSE")
(normally 3:00 p.m. Central Time) each business day.
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
STRATEGIST FUND AXP FUND
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Classes of Shares One class of shares, offered Three classes of shares.
without a sales charge. Only Class A shares are
Effective October 4, 1999 being offered to Strategist
the Strategist Fund Fund shareholders in this
discontinued a 0.25% 12b-1 proxy statement/prospectus.
fee. - Class A has a front-end
sales charge and a 0.25%
12b-1 fee.*
- Class B has a contingent
deferred sales charge and a
1% 12b-1 fee.
- Class Y is offered only to
institutional investors with
no sales charge and a 0.10%
service fee.
*No sales charge will be
charged as part of the
Reorganization. On
subsequent purchases, the
sales charge will be waived
permanently for former
Strategist shareholders.
- ---------------------------------------------------------------------------------------
Buying and Selling Strategist Fund shares are Investors may purchase and
Shares no longer available for new redeem shares directly,
investment. Existing through their American
shareholders may make add-on Express financial advisor or
purchases to existing through other authorized
accounts. broker-dealers or third
parties.
- ---------------------------------------------------------------------------------------
Minimum Investment Initial: No new investments Initial: $2,000*
Amounts allowed Subsequent: $100
Subsequent: $100 for *The AXP Fund will waive the
existing investors minimum investment amount
for any Strategist Fund
account that, after the
Reorganization, contains
less than $2,000.
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</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
STRATEGIST FUND AXP FUND
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Exchanges Permitted only between Class A shares of the AXP
existing Strategist Fund Fund may be exchanged for
accounts. Class A shares of 38 other
AXP Funds.
- ---------------------------------------------------------------------------------------
Voting Rights No cumulative voting rights Cumulative voting rights
when voting on the election when voting on the election
of directors. of directors.
- ---------------------------------------------------------------------------------------
</TABLE>
TAX CONSEQUENCES. The Reorganization is expected to be tax-free for federal
income tax purposes and will not take place unless the Strategist Fund and the
AXP Fund receive a satisfactory opinion from the law firm of Ropes & Gray,
substantially to that effect.
INVESTMENT POLICIES AND RISK FACTORS. Because both the Strategist Fund and the
AXP Fund invest in the same master fund and are subject to the same investment
objectives, investment strategies and restrictions, the risks of an investment
in the AXP Fund are identical to the risks of an investment in the Strategist
Fund. Investment policies and risk factors are described in detail in the
enclosed AXP Fund prospectus under the headings "Investment Strategies" and
"Risks". The following table provides a brief summary of the investment policies
and risks.
10
<PAGE>
TABLE A-2.
SUMMARY OF PRIMARY INVESTMENT POLICIES AND RISKS
(policies and risks are identical for the Strategist Fund and its corresponding
AXP Fund)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIST FUND AXP FUND PRIMARY INVESTMENT POLICIES PRIMARY INVESTMENT RISKS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Balanced AXP Mutual Primarily invests in a combination of Market risk, interest rate risk,
common stocks and senior securities. sector/ concentration risk,
call/prepayment risk, credit risk,
liquidity risk, style risk
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Emerging AXP Emerging Markets Primarily invests in equity Market risk, foreign/emerging markets
Markets securities of companies in emerging risk, liquidity risk, style risk,
market countries. sector/ concentration risk
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Equity AXP Stock Primarily invests in common stocks Market risk, inflation risk, foreign
and securities convertible into risk
common stocks.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Equity AXP Diversified Equity Primarily invests in dividend-paying Market risk, sector/concentration
Income Income equity securities. risk, inflation risk
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Government AXP Federal Income Primarily invests in debt obligations Market risk, correlation risk,
Income issued or guaranteed as to principal interest rate risk, call/prepayment
and interest by the U.S. government, risk
its agencies or instrumentalities.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Growth AXP Growth Primarily invests in common stocks Market risk, style risk, foreign risk
and securities convertible into
common stocks that appear to offer
growth opportunities.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Growth AXP New Dimensions Primarily invests in common stocks Market risk, style risk, foreign risk
Trends showing potential for significant
growth.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist High Yield AXP Extra Income Primarily invests in high-yielding, Market risk, interest rate risk,
high risk corporate bonds (junk credit risk
bonds).
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
TABLE A-2.
SUMMARY OF PRIMARY INVESTMENT POLICIES AND RISKS
(policies and risks are identical for the Strategist Fund and its corresponding
AXP Fund)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIST FUND AXP FUND PRIMARY INVESTMENT POLICIES PRIMARY INVESTMENT RISKS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Quality AXP Selective Primarily invests in debt obligations Market risk, interest rate risk,
Income that are investment grade or credit risk
equivalent.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Special AXP Research Primarily invests in securities of Market risk, issuer risk, style risk
Growth Opportunities companies that are part of the S&P
500 and are believed to be
undervalued or offer the potential
for long-term growth.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Tax-Free AXP High Yield Tax- Primarily invests in medium and lower Market risk, interest rate risk,
High Yield Exempt quality bonds (junk bonds) and other credit risk, legal/legislative risk,
debt obligations issued by or on call/ prepayment risk
behalf of state or local governmental
units whose interest is exempt from
federal income tax.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist Total AXP Managed Allocation Primarily allocates investments among Market risk, interest rate risk,
Return four asset classes: U.S. equities, foreign/ emerging markets risk,
U.S. and foreign debt securities, call/prepayment risk, credit risk,
foreign equity securities and cash. event risk, liquidity risk, small
company risk
- ----------------------------------------------------------------------------------------------------------------------------
Strategist World AXP Global Growth Primarily invests in equity Market risk, foreign/emerging markets
Growth securities of companies around the risk, style risk
world that are positioned to meet
market needs in a changing world
economy.
- ----------------------------------------------------------------------------------------------------------------------------
Strategist World AXP Global Bond Primarily invests in debt obligations Interest rate risk, foreign/emerging
Income of U.S. and foreign issuers. markets risk, credit risk, liquidity
risk
- ----------------------------------------------------------------------------------------------------------------------------
Strategist World AXP Innovations Primarily invests in equity Market risk, sector/concentration
Technologies securities of companies in the risk, style risk
information technology industry.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
B. FEES AND EXPENSES
The following table describes the fees and expenses that you pay if you buy and
hold shares of the Strategist Fund or Class A shares of the AXP Fund. The table
also shows Pro Forma expenses of Class A shares of the AXP Fund assuming the
proposed Reorganization had been effective during the most recent fiscal year.
13
<PAGE>
TABLE B-1.
ACTUAL AND PRO FORMA FUND EXPENSES
For the Most Recent Fiscal Year
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER FEES ANNUAL OPERATING EXPENSES(A)
(fees paid directly (expenses that are deducted from Fund assets)
FUND from your investment) (as a percent of average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum sales Management Distribution Other
charge fees(b) (12b-1) fees(c) expenses(d) Total(e)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Balanced............................. 0% 0.48% 0.25% 2.41% 3.14%
AXP Mutual - Class A............................ 5% 0.46% 0.25% 0.19% 0.90%
AXP Mutual - Class A Pro Forma.................. * 0.46% 0.25% 0.19% 0.90%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Emerging Markets..................... 0% 1.10% 0.25% 4.82% 6.17%
AXP Emerging Markets - Class A.................. 5% 1.10% 0.25% 0.76% 2.11%
AXP Emerging Markets - Class A Pro Forma........ * 1.10% 0.25% 0.76% 2.11%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Equity............................... 0% 0.48% 0.25% 1.42% 2.15%
AXP Stock - Class A............................. 5% 0.48% 0.25% 0.15% 0.88%
AXP Stock - Class A Pro Forma................... * 0.48% 0.25% 0.15% 0.88%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Equity Income........................ 0% 0.49% 0.25% 2.88% 3.62%
AXP Diversified Equity Income - Class A......... 5% 0.49% 0.25% 0.22% 0.96%
AXP Diversified Equity Income - Class A
Pro Forma....................................... * 0.49% 0.25% 0.22% 0.96%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Government Income.................... 0% 0.50% 0.25% 0.66% 1.41%
AXP Federal Income - Class A.................... 5% 0.50% 0.25% 0.23% 0.98%
AXP Federal Income - Class A Pro Forma.......... * 0.50% 0.25% 0.23% 0.98%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Growth............................... 0% 0.52% 0.25% 0.26% 1.03%
AXP Growth - Class A............................ 5% 0.53% 0.25% 0.19% 0.97%
AXP Growth - Class A Pro Forma.................. * 0.53% 0.25% 0.19% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Growth Trends........................ 0% 0.53% 0.25% 0.17% 0.95%
AXP New Dimensions -- Class A................... 5% 0.53% 0.25% 0.15% 0.93%
AXP New Dimensions -- Class A Pro Forma......... * 0.53% 0.25% 0.15% 0.93%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist High Yield........................... 0% 0.56% 0.25% 1.04% 1.85%
AXP Extra Income - Class A...................... 5% 0.56% 0.25% 0.20% 1.01%
AXP Extra Income - Class A Pro Forma............ * 0.56% 0.25% 0.20% 1.01%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Quality Income....................... 0% 0.52% 0.25% 2.81% 3.58%
AXP Selective - Class A......................... 5% 0.51% 0.25% 0.22% 0.98%
AXP Selective - Class A Pro Forma............... * 0.51% 0.25% 0.22% 0.98%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
TABLE B-1.
ACTUAL AND PRO FORMA FUND EXPENSES
For the Most Recent Fiscal Year
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER FEES ANNUAL OPERATING EXPENSES(A)
(fees paid directly (expenses that are deducted from Fund assets)
FUND from your investment) (as a percent of average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum sales Management Distribution Other
charge fees(b) (12b-1) fees(c) expenses(d) Total(e)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Special Growth....................... 0% 0.64% 0.25% 1.38% 2.27%
AXP Research Opportunities - Class A............ 5% 0.63% 0.25% 0.33% 1.21%
AXP Research Opportunities - Class A
Pro Forma....................................... * 0.63% 0.25% 0.33% 1.21%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Tax-Free High Yield.................. 0% 0.45% 0.25% 2.55% 3.25%
AXP High Yield Tax-Exempt - Class A............. 5% 0.44% 0.25% 0.11% 0.80%
AXP High Yield Tax-Exempt - Class A
Pro Forma....................................... * 0.44% 0.25% 0.11% 0.80%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist Total Return......................... 0% 0.44% 0.25% 0.62% 1.31%
AXP Managed Allocation - Class A................ 5% 0.43% 0.25% 0.21% 0.89%
AXP Managed Allocation - Class A Pro Forma...... * 0.43% 0.25% 0.21% 0.89%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist World Growth......................... 0% 0.75% 0.25% 1.85% 2.85%
AXP Global Growth - Class A..................... 5% 0.74% 0.25% 0.32% 1.31%
AXP Global Growth - Class A Pro Forma........... * 0.74% 0.25% 0.32% 1.31%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist World Income......................... 0% 0.75% 0.25% 2.46% 3.46%
AXP Global Bond - Class A....................... 5% 0.74% 0.25% 0.28% 1.27%
AXP Global Bond - Class A Pro Forma............. * 0.74% 0.25% 0.28% 1.27%
- ---------------------------------------------------------------------------------------------------------------------------------
Strategist World Technologies................... 0% 0.72% 0.25% 2.24% 3.21%
AXP Innovations - Class A....................... 5% 0.72% 0.25% 0.15% 1.12%
AXP Innovations - Class A Pro Forma............. * 0.72% 0.25% 0.15% 1.12%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* The 5% sales charge will be waived permanently for former
Strategist shareholders.
(a) For all Funds, operating expenses include expenses charged
by both the Fund and the master fund. Expenses are based on
actual expenses for the last fiscal year, restated to
reflect current fees.
(b) The management fee is paid by the master fund and is
allocated between the Strategist Fund and the AXP Fund based
on respective net assets. For some Funds, the chart shows a
slight difference between the management fee for the
Strategist Fund and the management fee for the AXP Fund.
This difference is due to rounding.
(c) Effective October 4, 1999 the 0.25% distribution fee was
discontinued for the Strategist Fund.
(d) Other expenses include an administrative services fee, a
transfer agency fee and other nonadvisory expenses.
(e) For the Strategist Fund, AEFC has agreed to waive certain
fees and to absorb certain other Fund expenses until the end
of the Fund's current fiscal year. The agreement may be
terminated at any time after that date. Under the agreement,
total expenses will not exceed 0.95% for Tax-Free High
Yield; 1.10% for Government Income and Quality Income; 1.20%
for High Yield; 1.25% for Balanced, Equity and Equity
Income; 1.30% for Growth, Growth Trends and Total Return;
1.35% for World Income and World Technologies; 1.40% for
Special Growth; 1.75% for World Growth; and 2.20% for
Emerging Markets. For the most recent fiscal year, actual
total expenses with fee waivers and expense reimbursement
were 0.95% for Tax-Free High Yield; 1.09% for Government
Income, 1.09% for Quality Income, 1.19% for High Yield;
0.98% for Balanced; 1.25% for Equity; 1.25% for Equity
Income; 1.03% for Growth; 0.95% for Growth Trends; 1.22% for
Total Return; 1.35% for World Income, 1.47% for World
Technologies; 1.39% for Special Growth; 1.71% for World
Growth; and 2.20% for Emerging Markets.
</TABLE>
15
<PAGE>
EXAMPLE: This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. Assume you invest
$10,000 and the Fund earns a 5% return. The operating expenses remain the same
each year. If you hold your shares until the end of the year shown, the
following table shows your costs under the current arrangements and your costs
if the proposed reorganization had been in effect. The numbers for the AXP Fund
reflect the costs that would be incurred if a shareholder paid $500 in sales
charge to purchase Class A shares. You will not incur that cost since the sales
charge will be waived permanently for former Strategist Fund shareholders.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Strategist Balanced........................ $317 $ 969 $1,645 $3,451
AXP Mutual - Class A....................... 587 773 974 1,557
AXP Mutual - Class A Pro Forma............. 587 773 974 1,557
- --------------------------------------------------------------------------------------
Strategist Emerging Markets................ 613 1,819 2,996 5,823
AXP Emerging Markets - Class A............. 703 1,128 1,578 2,824
AXP Emerging Markets - Class A Pro Forma.. 703 1,128 1,578 2,824
- --------------------------------------------------------------------------------------
Strategist Equity.......................... 218 673 1,155 2,487
AXP Stock - Class A........................ 585 767 964 1,534
AXP Stock - Class A Pro Forma.............. 585 767 964 1,534
- --------------------------------------------------------------------------------------
Strategist Equity Income................... 365 1,109 1,874 3,882
AXP Diversified Equity Income - Class A.... 593 791 1,005 1,623
AXP Diversified Equity Income - Class A
Pro Forma.................................. 593 791 1,005 1,623
- --------------------------------------------------------------------------------------
Strategist Government Income............... 144 447 772 1,696
AXP Federal Income - Class A............... 595 797 1,015 1,646
AXP Federal Income - Class A Pro Forma..... 595 797 1,015 1,646
- --------------------------------------------------------------------------------------
Strategist Growth.......................... 105 328 570 1,264
AXP Growth - Class A....................... 594 794 1,010 1,634
AXP Growth - Class A Pro Forma............. 594 794 1,010 1,634
- --------------------------------------------------------------------------------------
Strategist Growth Trends................... 97 303 526 1,171
AXP New Dimensions - Class A............... 590 782 990 1,590
AXP New Dimensions - Class A Pro Forma..... 590 782 990 1,590
- --------------------------------------------------------------------------------------
Strategist High Yield...................... 188 582 1,002 2,174
AXP Extra Income - Class A................. 598 806 1,031 1,679
AXP Extra Income - Class A Pro Forma....... 598 806 1,031 1,679
- --------------------------------------------------------------------------------------
Strategist Quality Income.................. 361 1,097 1,855 3,847
AXP Selective - Class A.................... 595 797 1,015 1,646
AXP Selective - Class A Pro Forma.......... 595 797 1,015 1,646
- --------------------------------------------------------------------------------------
Strategist Special Growth.................. 230 710 1,216 2,610
AXP Research Opportunities - Class A....... 617 865 1,133 1,897
AXP Research Opportunities - Class A
Pro Forma.................................. 617 865 1,133 1,897
- --------------------------------------------------------------------------------------
Strategist Tax-Free High Yield............. 328 1,001 1,698 3,552
AXP High Yield Tax-Exempt - Class A........ 578 743 923 1,444
AXP High Yield Tax-Exempt - Class A
Pro Forma.................................. 578 743 923 1,444
- --------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
1 3 5 10
FUND YEAR YEARS YEARS YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategist Total Return.................... $133 $ 415 $ 719 $1,584
AXP Managed Allocation - Class A........... 586 770 969 1,545
AXP Managed Allocation - Class A
Pro Forma.................................. 586 770 969 1,545
- --------------------------------------------------------------------------------------
Strategist World Growth.................... 288 883 1,504 3,179
AXP Global Growth - Class A................ 627 895 1,183 2,005
AXP Global Growth - Class A Pro Forma...... 627 895 1,183 2,005
- --------------------------------------------------------------------------------------
Strategist World Income.................... 349 1,062 1,798 3,740
AXP Global Bond - Class A.................. 623 883 1,163 1,962
AXP Global Bond - Class A Pro Forma........ 623 883 1,163 1,962
- --------------------------------------------------------------------------------------
Strategist World Technologies.............. 324 989 1,679 3,515
AXP Innovations - Class A.................. 608 838 1,087 1,800
AXP Innovations - Class A Pro Forma........ 608 838 1,087 1,800
- --------------------------------------------------------------------------------------
</TABLE>
C. THE REORGANIZATION
TERMS OF THE REORGANIZATION. The Board has approved the Agreement, a copy of
which is attached as Exhibit 1. The Agreement provides for Reorganization on the
following terms:
- - The Reorganization is scheduled to occur on the first day that the NYSE is
open for business following shareholder approval and receipt of any necessary
regulatory approvals, but may occur on any later date agreed to by the Funds.
- - The Strategist Fund will transfer all of its assets to the AXP Fund and, in
exchange, the AXP Fund will assume the Strategist Fund's stated liabilities
and issue Class A shares.
- - The AXP Fund will issue Class A shares to the Strategist Fund in an amount
equal to the value of the assets received by the AXP Fund, less the
liabilities assumed by the AXP Fund in the transaction. These shares will
immediately be distributed by the Strategist Fund to its shareholders in
proportion to their holdings in the Strategist Fund. As a result,
shareholders of the Strategist Fund will become Class A shareholders of the
AXP Fund.
- - Neither the Strategist Fund nor the shareholders of the Strategist Fund will
pay any sales charge in connection with the Reorganization.
- - The net asset value of both Funds will be computed as of 3:00 p.m. Central
time, on the closing date.
17
<PAGE>
- - After the Reorganization, the Strategist Fund will be deregistered as a
mutual fund and terminated under state law.
CONDITIONS TO CLOSING THE REORGANIZATION. The completion of the Reorganization
is subject to certain conditions described in the Agreement, including:
- - The Strategist Fund will have declared and paid a dividend that will
distribute all of the Fund's taxable income, if any, to the shareholders of
the Strategist Fund for the taxable years ending at or prior to the closing.
- - The Funds will have received any approvals, consents or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
- - A registration statement on Form N-14 will have been filed with the SEC and
declared effective for each of the Funds.
- - The shareholders of the Strategist Funds will have approved the Agreement.
- - The Funds will have received an opinion of tax counsel that the proposed
Reorganization will be tax-free for each Fund and its shareholders.
TERMINATION OF THE AGREEMENT. The Agreement and the transactions contemplated
by it may be terminated and abandoned by resolutions of the Board of the
Strategist Fund or the AXP Fund at any time prior to closing. In the event of a
termination, there will be no liability for damages on the part of either the
Strategist Fund or the AXP Fund or the directors, officers or shareholders of
either Fund.
TAX STATUS OF THE REORGANIZATION. The Reorganization is expected to be tax-free
for federal income tax purposes and will not take place unless the Strategist
Fund and the AXP Fund receive a satisfactory opinion from the law firm of
Ropes & Gray, substantially to the effect that:
- - The transfer of the Strategist Fund's assets to the AXP Fund in exchange for
Class A shares of the AXP Fund and the assumption of the Strategist Fund's
liabilities, followed by the distribution of those shares to the Strategist
Fund's shareholders and the termination of the Strategist Fund will be a
"reorganization" within the meaning of Section 368(a)(1) of the Internal
Revenue Code of 1986 (the "Code"), and the Strategist Fund and the
corresponding AXP Fund will each be
18
<PAGE>
a "party to the reorganization" within the meaning of Section 368(b) of the
Code.
- - No gain or loss will be recognized by the Strategist Fund upon the transfer
of all of its assets to the AXP Fund or on the distribution by the Strategist
Fund of Class A shares of the AXP Fund to Strategist Fund shareholders.
- - No gain or loss will be recognized by the AXP Fund upon the receipt of the
Strategist Fund's assets solely in exchange for the issuance of the AXP
Fund's Class A shares to the Strategist Fund and the assumption of all of the
Strategist Fund's liabilities by the AXP Fund.
- - The basis of the assets of the Strategist Fund acquired by the AXP Fund will
be, in each instance, the same as the basis of those assets in the hands of
the Strategist Fund immediately before the transfer.
- - The tax holding period of the assets of the Strategist Fund in the hands of
the AXP Fund will include the Strategist Fund's tax holding period for those
assets.
- - The shareholders of the Strategist Fund will not recognize gain or loss upon
the exchange of all their shares of the Strategist Fund solely for the AXP
Fund Class A shares as part of the Reorganization.
- - The basis of the Class A shares of the AXP Fund received by the Strategist
Fund shareholders in the Reorganization will be the same as the basis of the
shares of the Strategist Fund surrendered in exchange.
- - The tax holding period of the Class A shares of the AXP Fund received by the
Strategist Fund shareholders will include, for each shareholder, the tax
holding period of the shares of the Strategist Fund surrendered in exchange,
provided that the Class A shares of the AXP Fund were held as capital assets
on the date of the exchange.
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS. The Board
believes that the proposed Reorganization will be advantageous to the Strategist
Fund shareholders for several reasons. The Board considered the following
matters, among others, in approving the Reorganization.
- - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms
and conditions of the Reorganization as described in the previous paragraphs.
19
<PAGE>
- - TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
- - CONTINUITY OF INVESTMENT. The Board took into account the fact that,
following the Reorganization, shareholders of the Strategist Funds will be
invested in a fund holding an identical investment securities portfolio, with
identical investment objectives, policies, and restrictions.
- - CONTINUED NO-LOAD PURCHASES. The Board took into account that shareholders of
the Strategist Fund will be able to make future purchases of shares of the
AXP Fund on a no-load basis.
- - EXPENSE RATIOS. Following the Reorganization, the expense ratio for the AXP
Fund is expected to be lower than the expense ratio of the Strategist Fund.
The Reorganization is expected to eliminate or reduce costs associated with
maintaining separate funds, including costs of separate audits, printing
costs and blue sky fees. The Strategist Fund has been unable to attract
sufficient assets to operate effectively without significant expense
subsidization. Since commencement of operations, AEFC has been waiving a
portion of its fees. AEFC has committed to continue capping fees through the
end of the 2000 fiscal year for the Strategist Fund, although waivers can be
discontinued at any time after that. AEFC does not expect to waive fees
indefinitely and, without continued fee waivers or growth in assets, the
Strategist Fund's expense ratios would likely exceed those of many other
funds with similar investment objectives. This could have an adverse impact
on the Strategist Fund's performance. As a result, it is possible that the
Strategist Fund's asset base will decline and the Strategist Fund's expense
ratio will rise even higher as fixed costs are spread over a shrinking asset
base.
The AXP Fund, on the other hand, has achieved viable size. Certain fixed
shareholder expenses (such as accounting fees, printing costs and blue sky
expenses) are expected to be lower for the AXP fund than they would be for
the Strategist Fund if AEFC discontinued waiving fees. Thus, Strategist Fund
shareholders will experience lower per share fixed costs by holding AXP Fund
shares than they would if they continued to hold shares in the Strategist
Fund. Expense ratios for each of the Funds for the last fiscal year are
shown under the heading "Fees and Expenses".
- - POTENTIAL BENEFITS TO AEFC AND ITS AFFILIATES. Although not a reason for
approving the Reorganization, as part of its deliberations the Board also
considered the potential benefits from the Reorganization
20
<PAGE>
that could be realized by AEFC and its affiliates. The Board recognized that
the potential benefits to AEFC consist principally of the elimination of
expenses incurred in duplicative efforts to administer two separate funds.
AEFC also will benefit to the extent it no longer waives its fees. The Board
also noted, however, that shareholders of the Strategist Funds will benefit
directly from any decrease in overall operating ratios resulting from the
proposed Reorganization.
- - COSTS. The Board considered the fact that AEFC has agreed to bear the costs
of effecting the Reorganization.
- - ALTERNATIVE SOLUTIONS. The Board determined that the Reorganization provided
greater benefits to shareholders than other options, such as the liquidation
of the Strategist Fund. Liquidating the Strategist Fund would require most
shareholders, subject to federal income taxation, to recognize either gains
or losses in the current tax year when many shareholders might prefer to
defer those gains or losses. Another alternative, a voluntary exchange into
the corresponding AXP Fund, generally also would require shareholders to
recognize a gain or loss for tax purposes. The Reorganization, on the other
hand, is expected to be achieved on a tax-free basis resulting in a deferral
of any gain or loss for federal income tax purposes. Any shareholder who does
not want to participate in the Reorganization may redeem shares. This would
be a taxable event for the shareholder similar to what would happen if the
Strategist Fund was liquidated.
BOARDS' DETERMINATION. After considering the factors described above and other
relevant information, at a meeting held on March 10, 2000, the Strategist Fund
Board members, including a majority of the Independent Directors, found that
participation in the Reorganization is in the best interests of the Strategist
Fund and that the interests of existing shareholders of the Fund will not be
diluted as a result of the Reorganization. The Independent Directors were
advised, in their deliberations, by special counsel as to their fiduciary duties
under state law and the Investment Company Act of 1940 (the "1940 Act"), and met
separately on a number of occasions with counsel prior to approving the
Reorganization. In addition, AEFC agreed that, following the Reorganization, it
will provide the Independent Directors with the same level of indemnification
for their actions as directors of the Fund as is currently provided by the Fund.
The Board of Directors of the AXP Fund approved the Agreement at a meeting held
on March 8-9, 2000. The Board members considered the terms of the Agreement, the
provisions intended to avoid the dilution of
21
<PAGE>
shareholder interests and the anticipated tax consequences of the
Reorganization. The Board found that participation in the Reorganization is in
the best interests of the AXP Fund and that the interests of existing
shareholders of the Fund will not be diluted as a result of the Reorganization.
D. INFORMATION CONCERNING THE MEETING
RECOMMENDATION AND VOTE REQUIRED. The Board recommends that shareholders
approve the proposed Agreement. The Agreement must be approved by a majority of
the Fund's shares voted at the meeting. If the Agreement is not approved, the
Board will consider what further action should be taken.
VOTING. Each share is entitled to one vote. For those of you who cannot come to
the meeting, the Board is asking permission to vote for you. The shares will be
voted as you instruct. Signed proxy cards returned without instructions will be
voted in favor of the proposal.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Broker non-votes will be counted toward a quorum but not toward the
approval of the proposal. Broker non-votes are shares for which the underlying
owner has not voted and the broker holding the shares does not have authority to
vote.
REVOKING YOUR PROXY. If your plans change and you can attend the meeting,
simply inform the Secretary at the meeting that you will be voting your shares
in person. Also, if you change your mind after you vote, you may change your
vote or revoke it by writing us or by sending another card.
SIMULTANEOUS MEETINGS. The meeting of your Fund will be held simultaneously
with meetings of the other funds in the Strategist Fund Group. If any
shareholder objects to the holding of simultaneous meetings, the shareholder may
move for an adjournment of his or her Fund's meeting to a time immediately after
the simultaneous meetings so that a meeting of that Fund may be held separately.
If a shareholder makes this motion, the persons named as proxies will take into
consideration the reasons for the objection in deciding whether to vote in favor
of the adjournment.
SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote
as promptly as possible. AEFC will pay the expenses for the proxy material and
the postage. Supplementary solicitations may be made by mail, telephone,
electronic means or personal contact. The expenses of supplementary solicitation
will be paid by AEFC.
22
<PAGE>
DISSENTERS' RIGHT OF APPRAISAL. Under Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, Strategist Fund shareholders are entitled to
assert dissenters' rights in connection with the Reorganization and obtain
payment of the "fair value" of their shares, provided that they comply with the
requirements of Minnesota law. A copy of the relevant provisions is attached as
Exhibit 2.
Notwithstanding the provisions of Minnesota law, the SEC has taken the position
that use of state appraisal procedures by a mutual fund would be a violation of
Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that
no mutual fund may redeem its shares other than at net asset value next computed
after receipt of a request for redemption. It is the SEC's position that Rule
22c-1 supersedes appraisal provisions in state statutes.
In the interest of ensuring equal valuation for all shareholders, dissenters'
rights will be determined in accordance with the SEC's interpretation. As a
result, if any shareholder elects to exercise dissenters' rights under Minnesota
law, the Strategist Fund intends to submit this question to a court of competent
jurisdiction. In that event, a dissenting shareholder would not receive any
payment until the end of the court proceeding.
OTHER BUSINESS. The Board does not know at this time of any other business to
come before the meetings. If something does come up, the proxies will use their
best judgment to vote for you on the matter.
ADJOURNMENT. In the event that not enough votes are received by the time
scheduled for the meeting, the persons named as proxies may move for one or more
adjournments of the meeting for a period of not more than 120 days in the
aggregate to allow further solicitation of shareholders on the proposal. Any
adjournment requires the affirmative vote of a majority of the shares present at
the meeting. The persons named as proxies will vote in favor of adjournment
those shares they are entitled to vote that have voted in favor of the
proposals. They will vote against any adjournment those shares that have voted
against any of the proposals. AEFC will pay the costs of any additional
solicitation and of any adjourned meeting.
23
<PAGE>
E. CAPITALIZATION AND OWNERSHIP OF FUND SHARES
CAPITALIZATION. The following table shows the capitalization of the Strategist
Fund and the AXP Fund as of February 29, 2000 and on a pro forma basis, assuming
the proposed Reorganization had taken place.
TABLE E-1.
CAPITALIZATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Strategist Balanced............. $ 1,121,480 $14.19 79,051
AXP Mutual - Class A............ 2,845,139,084 11.80 241,151,956
AXP Mutual - Class A
Pro Forma....................... 2,846,260,564 11.80 241,246,997
- -----------------------------------------------------------------------------------
Strategist Emerging Markets..... 838,627 5.57 150,488
AXP Emerging Markets -
Class A......................... 345,604,086 6.63 52,129,590
AXP Emerging Markets - Class A
Pro Forma....................... 346,442,713 6.63 52,256,080
- -----------------------------------------------------------------------------------
Strategist Equity............... 1,268,457 33.36 38,021
AXP Stock - Class A............. 3,435,951,038 26.88 127,833,144
AXP Stock - Class A
Pro Forma....................... 3,437,219,495 26.88 127,880,334
- -----------------------------------------------------------------------------------
Strategist Equity Income........ 911,061 8.90 102,388
AXP Diversified Equity Income -
Class A......................... 1,753,394,316 8.06 217,495,354
AXP Diversified Equity Income -
Class A Pro Forma............... 1,754,305,377 8.06 217,608,389
- -----------------------------------------------------------------------------------
Strategist Government Income.... 839,068 4.55 184,345
AXP Federal Income - Class A.... 1,333,443,659 4.67 285,435,290
AXP Federal Income - Class A
Pro Forma....................... 1,334,282,727 4.67 285,614,962
- -----------------------------------------------------------------------------------
Strategist Growth............... 30,296,472 58.84 514,904
AXP Growth - Class A............ 6,211,706,008 53.38 116,377,239
AXP Growth - Class A
Pro Forma....................... 6,242,002,480 53.38 116,944,801
- -----------------------------------------------------------------------------------
Strategist Growth Trends........ 29,539,340 37.92 779,012
AXP New Dimensions - Class A.... 17,183,848,180 35.80 480,021,047
AXP New Dimensions - Class A
Pro Forma....................... 17,213,387,520 35.80 480,846,168
- -----------------------------------------------------------------------------------
Strategist High Yield........... 1,695,722 3.73 454,423
AXP Extra Income - Class A...... 2,501,563,029 3.75 667,793,439
AXP Extra Income - Class A
Pro Forma....................... 2,503,258,751 3.75 668,245,632
- -----------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Strategist Quality Income....... $ 740,918 $ 8.68 85,385
AXP Selective - Class A......... 1,014,413,269 8.46 119,970,541
AXP Selective - Class A
Pro Forma....................... 1,015,154,187 8.46 120,058,120
- -----------------------------------------------------------------------------------
Strategist Special Growth....... 1,913,631 5.99 319,504
AXP Research Opportunities -
Class A......................... 555,284,904 7.60 73,040,677
AXP Research Opportunities -
Class A Pro Forma............... 557,198,535 7.60 73,292,471
- -----------------------------------------------------------------------------------
Strategist Tax-Free High
Yield........................... 785,483 4.24 185,369
AXP High Yield Tax-Exempt -
Class A......................... 4,794,230,093 4.27 1,123,660,941
AXP High Yield Tax-Exempt -
Class A Pro Forma............... 4,795,015,576 4.27 1,123,844,895
- -----------------------------------------------------------------------------------
Strategist Total Return......... 868,449 12.73 68,215
AXP Managed Allocation -
Class A......................... 1,879,003,429 10.22 183,876,234
AXP Managed Allocation -
Class A Pro Forma............... 1,879,871,878 10.22 183,961,209
- -----------------------------------------------------------------------------------
Strategist World Growth......... 1,093,025 11.46 95,390
AXP Global Growth - Class A..... 1,576,608,728 10.30 153,028,755
AXP Global Growth - Class A
Pro Forma....................... 1,577,701,753 10.30 153,134,874
- -----------------------------------------------------------------------------------
Strategist World Income......... 597,880 5.56 107,505
AXP Global Bond - Class A....... 501,761,454 5.57 90,123,823
AXP Global Bond - Class A
Pro Forma....................... 502,359,334 5.57 90,231,162
- -----------------------------------------------------------------------------------
Strategist World Technologies... 2,448,011 22.60 108,321
AXP Innovations - Class A....... 16,240,712 22.69 715,673
AXP Innovations - Class A
Pro Forma....................... 18,688,723 22.69 823,562
- -----------------------------------------------------------------------------------
</TABLE>
OWNERSHIP OF FUND SHARES. The following table provides information on
shareholders who owned more than 5% of any Fund's outstanding shares as of
February 29, 2000. As of that date, AEFC or its parent company, American Express
Company, held more than 25% of the outstanding shares of each of the Strategist
Funds. Under the 1940 Act, any person who owns more than 25% of the voting
securities of a company is presumed to "control" the company. Under this
definition, as shown below, AEFC and American Express are deemed to be
controlling persons of the Strategist Funds. As of February 29, 2000, officers
and directors of each of the Funds as a group owned less than 1% of the
outstanding shares of each of the Funds.
25
<PAGE>
TABLE E-2.
OWNERSHIP OF FUND SHARES*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF AXP
CLASS A SHARES
NUMBER OF PERCENT OF HELD FOLLOWING THE
FUND 5% OWNERS SHARES HELD SHARES HELD REORGANIZATION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Strategist
Balanced............. AEFC (1) 52,033 65.8% 0.03%
AXP Mutual........... None -- -- --
- ----------------------------------------------------------------------------------
Strategist Emerging
Markets.............. AEFC 120,595 80.0% 0.19%
AXP Emerging
Markets.............. None -- -- --
- ----------------------------------------------------------------------------------
Strategist Equity.... AEFC 28,661 75.4% 3.15%
AXP Stock............ None -- -- --
- ----------------------------------------------------------------------------------
Strategist Equity
Income............... AEFC 82,394 80.5% 0.04%
AXP Diversified
Equity Income........ None -- -- --
- ----------------------------------------------------------------------------------
Strategist Government AEFC 134,197 72.8% 0.05%
Income............... (2) 17,348 9.4% **
(3) 10,947 5.9% **
AXP Federal Income... None -- -- --
- ----------------------------------------------------------------------------------
Strategist Growth.... (4) 402,401 78.2% 0.38%
AXP Growth........... None -- -- --
- ----------------------------------------------------------------------------------
Strategist Growth
Trends............... (4) 621,855 79.8% 0.14%
AXP New Dimensions... None -- -- --
- ----------------------------------------------------------------------------------
Strategist High AEFC 165,462 36.4% 0.03%
Yield................ (5) 123,529 27.4% 0.02%
(6) 104,720 23.0% 0.01%
AXP Extra Income..... None -- -- --
- ----------------------------------------------------------------------------------
Strategist Quality AEFC 71,657 83.9% 0.06%
Income............... (7) 5,328 6.2% **
AXP Selective........ None -- -- --
- ----------------------------------------------------------------------------------
Strategist Special
Growth............... AEFC 163,702 51.2% 0.18%
AXP Research
Opportunities........ None -- -- --
- ----------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF AXP
CLASS A SHARES
NUMBER OF PERCENT OF HELD FOLLOWING THE
FUND 5% OWNERS SHARES HELD SHARES HELD REORGANIZATION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Strategist Tax-Free AEFC 141,173 76.2% 0.01%
High Yield........... (8) 16,723 9.0% **
AXP High Yield Tax-
Exempt............... None -- -- --
- ----------------------------------------------------------------------------------
Strategist Total AEFC 58,061 85.1% 0.04%
Return............... (9) 6,530 9.6% **
AXP Managed
Allocation........... None -- -- --
- ----------------------------------------------------------------------------------
Strategist World AEFC 80,173 84.0%
Growth............... (10) 6,185 6.5% 0.06%
AXP Global Growth.... None -- -- --
- ----------------------------------------------------------------------------------
Strategist World
Income............... AEFC 101,305 94.2% 0.11%
AXP Global Bond...... None -- -- --
- ----------------------------------------------------------------------------------
Strategist World
Technologies......... AEFC 108,321 100% 100%
AXP Innovations...... AEFC 759,090 100% 100%
- ----------------------------------------------------------------------------------
</TABLE>
* For the AXP Fund, 5% ownership is shown for Class A shares.
** Less than 0.01%
(1) AEFC, a Delaware corporation, is located at IDS Tower 10, Minneapolis, MN
55440-0010.
(2) Norrine F. Baggett, 326 East Southfield Road, Shreveport, LA 71105.
(3) Nadia Hamidian, 22 68th Street, Guttenberg, NJ 07093.
(4) American Express Company, a Delaware corporation, the parent company of
AEFC, is located at American Express Tower, World Financial Center, New
York, NY 10285.
(5) American Latvian Association in the US, Inc., 400 Hurley Ave., Rockville,
MD 20850.
(6) Latvijas Brivibas Fonds LTD, 400 Hurley Ave., Rockville, MD 20850.
(7) Barbara B. Ismel, 328 West 86th No. 2C, New York, NY 10024.
(8) John L. and Rosana L. Warren, 4971 Little Cub Creek Road, Evergreen, CO
80439.
(9) Peter L. Rowe and Fredda Rosenblatt, 6887 Palm Grove Court, West Palm
Beach, FL 33418.
(10) William J. and Frances M. Russell, 1443 Creekside Court, Vienna, VA 22182.
27
<PAGE>
F. EXPERTS
The audited financial statements for the Strategist Fund and the AXP Fund
included in or incorporated by reference in this proxy statement/ prospectus or
the Statement of Additional Information, have been audited by KPMG LLP,
independent auditors for the Funds, whose reports are included in the annual
report. The financial statements have been incorporated in this document in
reliance on KPMG's reports given on their authority as experts in auditing and
accounting matters.
G. ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES
The following table shows where in each Fund's prospectus you can find
additional information about the business of the Fund.
TABLE G-1.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HEADING IN PROSPECTUS
TYPE OF INFORMATION STRATEGIST FUND AXP FUND
<S> <C> <C>
- -------------------------------------------------------------------------------------
Investment objective Goal Goal
- -------------------------------------------------------------------------------------
Principal investment strategies Investment Strategy Investment Strategy
- -------------------------------------------------------------------------------------
Principal risks Risks Risks
- -------------------------------------------------------------------------------------
Fee table Fees and Expenses Fees and Expenses
- -------------------------------------------------------------------------------------
Management Management Management
- -------------------------------------------------------------------------------------
Fund share price Valuing Fund Shares Valuing Fund Shares
- -------------------------------------------------------------------------------------
Buying and selling fund shares Purchasing Shares; Purchasing Shares;
Exchanging/Selling Exchanging/Selling
Shares Shares
- -------------------------------------------------------------------------------------
Distributions and taxes Distributions and Distributions and
Taxes Taxes
- -------------------------------------------------------------------------------------
Financial highlights Financial Highlights Financial Highlights
- -------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
TABLE G-2.
DATES OF FUND DOCUMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEMI-ANNUAL
ANNUAL REPORT
REPORT (IF APPLICABLE)
PROSPECTUS SAI (FOR PERIOD (FOR PERIOD
FUND (DATED) (DATED) ENDED) ENDED)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------
Strategist Balanced........... 11/29/99 11/29/99 9/30/99 NA
AXP Mutual.................... 11/29/99 11/29/99 9/30/99 NA
- -------------------------------------------------------------------------------------
Strategist Equity............. 11/29/99 11/29/99 9/30/99 NA
AXP Stock..................... 11/29/99 11/29/99 9/30/99 NA
- -------------------------------------------------------------------------------------
Strategist Equity Income...... 11/29/99 11/29/99 9/30/99 NA
AXP Diversified Equity
Income........................ 11/29/99 11/29/99 9/30/99 NA
- -------------------------------------------------------------------------------------
Strategist Emerging Markets... 12/30/99 12/30/99 10/31/99 NA
AXP Emerging Markets.......... 12/30/99 12/30/99 10/31/99 NA
- -------------------------------------------------------------------------------------
Strategist Government Income.. 7/30/99 7/30/99 5/31/99 11/30/99
AXP Federal Income............ 7/30/99 7/30/99 5/31/99 11/30/99
- -------------------------------------------------------------------------------------
Strategist Growth............. 9/29/99 9/29/99 7/31/99 1/31/00
AXP Growth.................... 9/29/99 9/29/99 7/31/99 1/31/00
- -------------------------------------------------------------------------------------
Strategist Growth Trends...... 9/29/99 9/29/99 7/31/99 1/31/00
AXP New Dimensions............ 9/29/99 9/29/99 7/31/99 1/31/00
- -------------------------------------------------------------------------------------
Strategist High Yield......... 7/30/99 7/30/99 5/31/99 11/30/99
AXP Extra Income.............. 7/30/99 7/30/99 5/31/99 11/30/99
- -------------------------------------------------------------------------------------
Strategist Quality Income..... 7/30/99 7/30/99 5/31/99 11/30/99
AXP Selective................. 7/30/99 7/30/99 5/31/99 11/30/99
- -------------------------------------------------------------------------------------
Strategist Special Growth..... 9/29/99 9/29/99 7/31/99 1/31/00
AXP Research Opportunities.... 9/29/99 9/29/99 7/31/99 1/31/00
- -------------------------------------------------------------------------------------
Strategist Tax-Free High
Yield......................... 1/28/00 1/28/00 11/30/99 NA
AXP High Yield Tax-Exempt..... 1/28/00 1/28/00 11/30/99 NA
- -------------------------------------------------------------------------------------
Strategist Total Return....... 11/29/99 11/29/99 9/30/99 NA
AXP Managed Allocation........ 11/29/99 11/29/99 9/30/99 NA
- -------------------------------------------------------------------------------------
Strategist World Growth....... 12/30/99 12/30/99 10/31/99 NA
AXP Global Growth............. 12/30/99 12/30/99 10/31/99 NA
- -------------------------------------------------------------------------------------
Strategist World Income....... 12/30/99 12/30/99 10/31/99 NA
AXP Global Bond............... 12/30/99 12/30/99 10/31/99 NA
- -------------------------------------------------------------------------------------
Strategist World
Technologies.................. 12/30/99 12/30/99 10/31/99 NA
AXP Innovations............... 3/15/00 3/15/00 10/31/99 NA
- -------------------------------------------------------------------------------------
</TABLE>
Each Fund is subject to the information requirements of the Securities Exchange
Act of 1934 and the 1940 Act and files reports, proxy materials and other
information with the SEC. These reports, proxy materials and other information
can be inspected and copied at the Public Reference Room maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C., the Midwest Regional Office of the
SEC at 500 West Madison Street, Suite 400, Chicago, Illinois 60611, and the
Northeast Regional Office of the SEC at 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of these materials also can be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. In addition, copies of these documents may be viewed
on-line or downloaded from the SEC's website at http://www.sec.gov.
29
<PAGE>
EXHIBIT 1
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of March 10, 2000 (the
"Agreement") is between Strategist Growth and Income Fund, Inc. (the "Strategist
Corporation"), a Minnesota corporation, on behalf of Strategist Balanced Fund
(the "Acquired Fund"), a series of capital stock of the Strategist Corporation,
and AXP Investment Series, Inc. (the "AXP Corporation"), a Minnesota
corporation, on behalf of AXP Mutual (the "Acquiring Fund"), a series of capital
stock of the AXP Corporation. The Acquired Fund and the Acquiring Fund are
feeder funds investing in a single master trust.
In consideration of the mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL
The Acquired Fund will call a meeting of its shareholders for the purpose of
approving the Agreement and the transactions it contemplates (the
"Reorganization"). The Acquiring Fund agrees to furnish data and information,
as reasonably requested, for the proxy statement to be furnished to
shareholders of the Acquired Fund.
2. REORGANIZATION
a. Plan of Reorganization. At the closing, the Strategist Corporation will
convey all of the assets of the Acquired Fund to the Acquiring Fund. The
Acquiring Fund will assume all liabilities of the Acquired Fund, reflected on
an unaudited statement of assets and liabilities, as of the Closing. At the
Closing, the AXP Corporation will deliver Class A shares of the Acquiring
Fund, including fractional shares, to the Strategist Corporation. The number
of shares will be determined by dividing the value of the net assets of the
Acquired Fund, computed as described in paragraph 3(a), by the net asset value
of one share of the Acquiring Fund, computed as described in paragraph 3(b).
The Acquired Fund will not pay a sales charge on the receipt of Acquiring Fund
shares in exchange for the assets of the Acquired Fund. In addition, the
shareholders of the Acquired Fund will not pay a sales charge on distribution
to them of Class A shares of the Acquiring Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization and
all related acts necessary to complete the Reorganization (the
30
<PAGE>
"Closing") will occur on the first day on which the New York Stock Exchange
(the "NYSE") is open for business following approval of shareholders of the
Acquired Fund and receipt of all necessary regulatory approvals, or such later
date as the parties may agree.
3. VALUATION OF NET ASSETS
a. The value of the net assets of the Acquired Fund will be computed as of the
close of regular trading on the NYSE on the day of Closing (the "Valuation
Date") using the valuation procedures in the Acquiring Fund's prospectus.
b. The net asset value per share of Class A shares of the Acquiring Fund will
be determined as of the close of regular trading on the NYSE on the Valuation
Date, using the valuation procedures in the Acquiring Fund's prospectus.
c. At the Closing, the Acquired Fund will provide the Acquiring Fund with a
copy of the computation showing the valuation of the Acquired Fund's net
assets on the Valuation Date. The Acquiring Fund will provide the Acquired
Fund with a copy of the computation showing the determination of the net asset
value per share of Class A shares of the Acquiring Fund on the Valuation Date.
Both computations will be certified by an officer of American Express
Financial Corporation.
4. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUND
a. As soon as practicable after the Valuation Date, the Strategist Corporation
will liquidate the Acquired Fund and distribute Class A shares of the
Acquiring Fund to the Acquired Fund's shareholders of record. The Acquiring
Fund will establish shareholder accounts in the names of each Acquired Fund
shareholder, representing the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each shareholder. All issued
and outstanding shares of the Acquired Fund will simultaneously be cancelled
on the books of the Strategist Corporation. Shareholder accounts will be
established by the Acquiring Fund or its transfer agent in accordance with
instructions from the Strategist Corporation.
b. Immediately after the Valuation Date, the share transfer books of the
Strategist Corporation relating to the Acquired Fund will be closed and no
further transfer of shares will be made.
31
<PAGE>
c. Promptly after the distribution, the Acquiring Fund or its transfer agent
will notify each shareholder of the Acquired Fund of the number of Class A
shares distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Acquired Fund, and
in no event later than twelve months from the date of the Closing, the
Acquired Fund will be dissolved.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE AXP CORPORATION ON BEHALF OF
THE ACQUIRING FUND
The AXP Corporation represents and warrants to the Strategist Corporation as
follows:
a. Organization, Existence, etc. The AXP Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Minnesota and has the power to carry on its business as it is now being
conducted.
b. Registration as Investment Company. The Acquiring Fund is a series of the
AXP Corporation, registered under the Investment Company Act of 1940 (the
"1940 Act") as an open-end, management investment company.
c. Capitalization. The Acquiring Fund has authorized capital of 10,000,000,000
shares of common stock, par value $0.01 per share. All of the outstanding
shares have been duly authorized and are validly issued, fully paid and
non-assessable. Since the Acquiring Fund is engaged in the continuous offering
and redemption of its shares, the number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of the
last fiscal year, and the subsequent unaudited semi-annual financial
statements, if any (the "Acquiring Fund Financial Statements"), fairly present
the financial position of the Acquiring Fund, and the results of its
operations and changes in its net assets for the periods shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at the time of
the Closing, will be validly issued, fully paid and non-assessable.
f. Authority Relative to the Agreement. The AXP Corporation has the power to
enter into and carry out the obligations described in this
32
<PAGE>
Agreement. The Agreement and the transactions contemplated by it have been
duly authorized by the Board of Directors and no other proceedings by the AXP
Corporation or the Acquiring Fund are necessary.
g. No Violation. The AXP Corporation is not in violation of its Articles of
Incorporation or By-Laws (the "Articles") or in default in the performance of
any material agreement to which it is a party. The execution of this Agreement
and the completion of the transactions contemplated by it will not conflict
with, or constitute a breach of, any material contract or other instrument to
which the Acquiring Fund is subject. Nor will the transactions result in any
violation of the provisions of the Articles or any law, administrative
regulation or administrative or court decree applicable to the Acquiring Fund.
h. Liabilities. There are no liabilities of the Acquiring Fund other than:
- liabilities disclosed in the Acquiring Fund Financial Statements
- liabilities incurred in the ordinary course of business subsequent to the
date of the latest annual or semi-annual financial statements, or
- liabilities previously disclosed to the Strategist Corporation, none of
which has been materially adverse to the business, assets or results of
operation of the Acquiring Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending or, to
the knowledge of the Acquiring Fund, threatened, that would materially and
adversely affect the Acquiring Fund, its financial condition or the conduct of
its business, or that would prevent or hinder completion of the transactions
contemplated by this Agreement. The Acquiring Fund knows of no facts that
might form the basis for the institution of any such litigation, proceeding or
investigation and is not a party to or subject to the provisions of any order,
decree or judgment.
j. Contracts. Except for contracts and agreements previously disclosed to the
Strategist Corporation, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license or permit.
k. Taxes. The federal tax returns of the Acquiring Fund have been filed for
all taxable years since commencement of its operations. The Acquiring Fund has
qualified and will qualify as a regulated investment company under the
Internal Revenue Code with respect to each taxable year since commencement of
its operations.
33
<PAGE>
l. Registration Statement. The Acquiring Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the Securities and
Exchange Commission under the Securities Act of 1933 (the "1933 Act") relating
to the shares to be issued in the Reorganization. At the time the Registration
Statement becomes effective, at the time of the shareholders' meeting and at
the Closing, the Registration Statement will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein not misleading. However, none of the representations and
warranties in this subsection apply to statements in, or omissions from, the
Registration Statement made in reliance on information furnished by the
Strategist Corporation for use in the Registration Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STRATEGIST CORPORATION ON
BEHALF OF THE ACQUIRED FUND
The Strategist Corporation represents and warrants to the AXP Corporation as
follows:
a. Organization, Existence, etc. The Strategist Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota and has the power to carry on its business as it is now
being conducted.
b. Registration as Investment Company. The Acquired Fund is a series of the
Strategist Corporation, registered under the 1940 Act as an open-end,
management investment company.
c. Capitalization. The Acquired Fund has authorized capital of 10,000,000,000
shares of common stock, par value $0.01 per share. All of the outstanding
shares have been duly authorized and are validly issued, fully paid and
non-assessable. Since the Acquired Fund is engaged in the continuous offering
and redemption of its shares, the number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of the
last fiscal year, and the subsequent unaudited semi-annual financial
statements, if any, (the "Acquired Fund Financial Statements") fairly present
the financial position of the Acquired Fund, and the results of its operations
and changes in its net assets for the periods shown.
e. Authority Relative to the Agreement. The Strategist Corporation has the
power to enter into and to carry out its obligations under this Agreement. The
Agreement and the transactions contemplated by it
34
<PAGE>
have been duly authorized by the Board of Directors and no other proceedings
by the Strategist Corporation or the Acquired Fund are necessary.
f. No Violation. The Strategist Corporation is not in violation of its
Articles or in default in the performance of any material agreement to which
it is a party. The execution of this Agreement and the completion of the
transactions contemplated by it will not conflict with or constitute a breach
of, any material contract to which the Acquired Fund is subject. Nor will the
transactions result in any violation of the provisions of the Articles or any
law, administrative regulation or administrative or court decree applicable to
the Acquired Fund.
g. Liabilities. There are no liabilities of the Acquired Fund other than:
- liabilities disclosed in the Acquired Fund Financial Statements
- liabilities incurred in the ordinary course of business subsequent to the
date of the latest annual or semi-annual financial statements, or
- liabilities previously disclosed to the AXP Corporation, none of which has
been materially adverse to the business, assets or results of operation of
the Acquired Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending or, to
the knowledge of the Acquired Fund, threatened, that would materially and
adversely affect the Acquired Fund, its financial condition or the conduct of
its business, or that would prevent or hinder completion of the transactions
contemplated by this Agreement. The Acquired Fund knows of no facts that might
form the basis for the institution of any such litigation, proceeding or
investigation and is not a party to or subject to the provisions of any order,
decree or judgment.
i. Contracts. Except for contracts and agreements previously disclosed to the
AXP Corporation, the Acquired Fund is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license or permit.
j. Taxes. The federal tax returns of the Acquired Fund have been filed for all
taxable years since commencement of its operations. The Acquired Fund has
qualified and will qualify as a regulated investment company under the
Internal Revenue Code with respect to each taxable year since commencement of
its operations.
k. Fund Securities. All securities listed in the schedule of investments of
the Acquired Fund as of the Closing will be owned by the Acquired
35
<PAGE>
Fund free and clear of any encumbrances, except as indicated in the schedule.
l. Registration Statement. The Acquired Fund will cooperate with the Acquiring
Fund and will furnish information relating to the Strategist Corporation and
the Acquired Fund required in the Registration Statement. At the time the
Registration Statement becomes effective, at the time of the shareholders'
meeting and at the Closing, the Registration Statement, as it relates to the
Strategist Corporation or the Acquired Fund, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading. However, the representations and
warranties in this subsection apply only to statements in or omissions from
the Registration Statement made in reliance upon information furnished by the
Strategist Corporation for use in the Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE AXP CORPORATION
The obligations of the AXP Corporation with respect to the Reorganization are
subject to the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the outstanding shares of
common stock of the Acquired Fund.
b. Representations, Warranties and Agreements. The Strategist Corporation and
the Acquired Fund will have complied with this Agreement and each of the
representations and warranties in this Agreement will be true in all material
respects as of the Closing. An officer of the Strategist Corporation will
provide a certificate to the AXP Corporation confirming that, as of the
Closing, the representations and warranties set forth in Section 6 are true
and correct and that there have been no material adverse changes in the
financial condition, results of operations, business, properties or assets of
the Acquired Fund since the date of its last financial statement, except as
otherwise indicated in any financial statements, certified by an officer of
the Strategist Corporation, and delivered to the AXP Corporation on or prior
to the last business day before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Section 5(l) will be effective and
no stop orders under the 1933 Act will have been issued.
- All necessary approvals, consents and exemptions from federal and state
regulatory authorities will have been obtained.
36
<PAGE>
d. Tax Opinion. The AXP Corporation will have received the opinion of Ropes &
Gray dated as of the Closing, as to the federal income tax consequences of the
Reorganization to the Acquiring Fund and its shareholders. For purposes of
rendering their opinion, Ropes & Gray may rely, as to factual matters, upon
the statements made in this Agreement, the proxy statement which will be
distributed to the shareholders of the Acquired Fund, and other written
representations as an officer of the Strategist Corporation and the AXP
Corporation, respectively will have verified as of Closing. The opinion of
Ropes & Gray will be to the effect that: (i) neither the Acquired Fund nor the
Acquiring Fund will recognize any gain or loss upon the transfer of the assets
of the Acquired Fund to, and assumption of its liabilities by, the Acquiring
Fund in exchange for shares of the Acquiring Fund and upon the distribution of
the shares to the Acquired Fund shareholders in exchange for their shares of
the Acquired Fund; (ii) the shareholders of the Acquired Fund who receive
shares of the Acquiring Fund in the Reorganization will not recognize any gain
or loss on the exchange of their shares of the Acquired Fund for the shares of
the Acquiring Fund; (iii) the holding period and the basis of the shares
received by the Acquired Fund shareholders will be the same as the holding
period and the basis of the shares of the Acquired Fund surrendered in the
exchange; (iv) the holding period and the basis of the assets acquired by the
Acquiring Fund will be the same as the holding period and the basis of the
assets to the Acquired Fund immediately prior to the Reorganization.
e. Opinion of Counsel. The AXP Corporation will have received an opinion of
counsel for the Acquired Fund, dated as of the Closing, to the effect that:
(i) the Strategist Corporation is a corporation duly organized and validly
existing under the laws of the state of Minnesota; (ii) the Acquired Fund is a
series of the Strategist Corporation, an open-end investment company
registered under the 1940 Act; (iii) this Agreement and the Reorganization
have been duly authorized and approved by all requisite action of the
Strategist Corporation and the Acquired Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Acquired Fund.
f. Declaration of Dividend. The Strategist Corporation will have declared a
dividend with respect to the Acquired Fund which, together with all previous
dividends, will have the effect of distributing to the Acquired Fund's
shareholders all of the Acquired Fund's investment company taxable income for
the taxable years ending on or prior to the Closing (computed without regard
to deduction for dividends paid) and
37
<PAGE>
all of its net capital gain realized in taxable years ending on or prior to
the Closing (after reduction for capital loss carry forward).
8. CONDITIONS TO OBLIGATIONS OF THE STRATEGIST CORPORATION
The obligations of the Strategist Corporation with respect to the
Reorganization are subject to the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the outstanding shares of
common stock of the Acquired Fund.
b. Representations, Warranties and Agreements. The Acquiring Fund will have
complied with this Agreement and each of the representations and warranties in
this Agreement will be true in all material respects as of the Closing. An
officer of the AXP Corporation will provide a certificate to the Strategist
Corporation confirming that, as of the Closing, the representations and
warranties set forth in Section 5 are true and correct and that there have
been no material adverse changes in the financial condition, results of
operations, business, properties or assets of the Acquiring Fund since the
date of its last financial statement, except as otherwise indicated in any
financial statements, certified by an officer of the AXP Corporation, and
delivered to the Strategist Corporation on or prior to the last business day
before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Section 5(l) will be effective and
no stop orders under the 1933 Act will have been issued.
- All necessary approvals, consents and exemptions from federal and state
regulatory authorities will have been obtained.
d. Tax Opinion. The Strategist Corporation will have received the opinion of
Ropes & Gray dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Acquired Fund and its shareholders.
For purposes of rendering their opinion, Ropes & Gray may rely, as to factual
matters, upon the statements made in this Agreement, the proxy statement which
will be distributed to the shareholders of the Acquired Fund, and other
written representations as an officer of the Strategist Corporation and the
AXP Corporation, respectively will have verified as of Closing. The opinion of
Ropes & Gray will be to the effect that: (i) neither the Acquired Fund nor the
Acquiring Fund will recognize any gain or loss upon the transfer of the assets
of the Acquired Fund to, and assumption of its liabilities by, the Acquiring
38
<PAGE>
Fund in exchange for shares of the Acquiring Fund and upon the distribution of
the shares to the Acquired Fund shareholders in exchange for their shares of
the Acquired Fund; (ii) the shareholders of the Acquired Fund who receive
shares of the Acquiring Fund in the Reorganization will not recognize any gain
or loss on the exchange of their shares of the Acquired Fund for the shares of
the Acquiring Fund; (iii) the holding period and the basis of the shares
received by the Acquired Fund shareholders will be the same as the holding
period and the basis of the shares of the Acquired Fund surrendered in the
exchange; (iv) the holding period and the basis of the assets acquired by the
Acquiring Fund will be the same as the holding period and the basis of the
assets to the Acquired Fund immediately prior to the Reorganization.
e. Opinion of Counsel. The Strategist Corporation will have received the
opinion of counsel for the Acquiring Fund, dated as of the Closing, to the
effect that: (i) the AXP Corporation is a corporation duly organized and
validly existing under the laws of the state of Minnesota; (ii) the Acquiring
Fund is a series of the AXP Corporation, an open-end investment company
registered under the 1940 Act; (iii) this Agreement and the Reorganization
have been authorized and approved by all requisite action of the AXP
Corporation and the Acquiring Fund and this Agreement has been duly executed
by, and is a valid and binding obligation of, the AXP Corporation; and
(iv) the shares to be issued in the Reorganization are duly authorized and
upon issuance in accordance with this Agreement will be validly issued, fully
paid and non-assessable shares of the Acquiring Fund.
9. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
a. This Agreement may be amended in writing if authorized by the respective
Boards of Directors. The Agreement may be amended at any time before or after
approval by the shareholders of the Acquired Fund, but after shareholder
approval, no amendment shall be made that substantially changes the terms of
paragraphs 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in writing
(i) any inaccuracies in the representations and warranties made to it and (ii)
compliance with any of the covenants or conditions made for its benefit.
c. The Strategist Corporation may terminate this Agreement at any time prior
to the Closing by notice to the AXP Corporation if a material
39
<PAGE>
condition to its performance or a material covenant of the AXP Corporation is
not fulfilled on or before the date specified for its fulfillment or a
material breach of this Agreement is made by the AXP Corporation and is not
cured.
d. The AXP Corporation may terminate this Agreement at any time prior to the
Closing by notice to the Strategist Corporation if a material condition to its
performance or a material covenant of the Strategist Corporation is not
fulfilled on or before the date specified for its fulfillment or a material
breach of this Agreement is made by the Strategist Corporation and is not
cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the Acquired
Fund, without any liability on the part of either party or its respective
directors, officers, or shareholders, on written notice to the other party,
and shall be terminated without liability as of the close of business on
December 31, 2000, or a later date agreed upon by the parties, if the Closing
is not on or prior to that date.
f. The representations, warranties and covenants contained in this Agreement,
or in any document delivered in connection with this Agreement, will survive
the Reorganization.
10. EXPENSES
The expenses of the reorganization, whether or not the Reorganization is
completed, will be borne by American Express Financial Corporation.
11. GENERAL
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any other
person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state of
Minnesota.
12. INDEMNIFICATION
Each party will indemnify and hold the other and its officers and directors
(each an "Indemnitee") harmless from and against any liability or other cost
and expense, in connection with the defense or disposition of any action,
suit, or other proceeding, before any court or administrative
40
<PAGE>
or investigative body in which the Indemnitee may be involved as a party, with
respect to actions taken under this Agreement. However, no Indemnitee will be
indemnified against any liability or expense arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the Indemnitee's position.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
Strategist Growth and Income Fund, Inc.
on behalf of Strategist Balanced Fund
<TABLE>
<S> <C>
By /s/ James A. Mitchell
------------------------
James A. Mitchell
President
AXP Investment Series, Inc.
on behalf of AXP Mutual
By /s/ Leslie L. Ogg
------------------------
Leslie L. Ogg
Vice President
</TABLE>
The undersigned is a party to this Agreement for the purposes of Sections 3c and
10 only.
American Express Financial Corporation
<TABLE>
<S> <C>
By /s/ Pamela J. Moret
------------------------
Pamela J. Moret
Senior Vice President
</TABLE>
41
<PAGE>
EXHIBIT 2
MINNESOTA BUSINESS CORPORATION ACT
SECTIONS 302A.471 AND 302A.473
Minnesota law requires that we provide you with a copy of the state law on
dissenters' rights. Notwithstanding the provisions of the law set out below, the
SEC has taken the position that use of state appraisal procedures by a
registered mutual fund such as the Strategist Fund would be a violation of
Rule 22c-1, the forward pricing rule, under the 1940 Act. As a result, if any
shareholder elects to exercise dissenters' rights under Minnesota law, the
Strategist Fund intends to submit this question to a court of competent
jurisdiction. In that event, a dissenting shareholder would not receive any
payment until the end of the court proceeding.
302A.471. RIGHTS OF DISSENTING SHAREHOLDERS
SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or to
cumulate votes, except as the right may be excluded or limited through
the authorization or issuance of securities of an existing or new class
or series with similar or different voting rights; except that an
amendment to the articles of an issuing public corporation that provides
that section 302A.671 does not apply to a control share acquisition does
not give rise to the right to obtain payment under this section;
42
<PAGE>
(b) A sale, lease, transfer, or other disposition of all or substantially all of
the property and assets of the corporation, but not including a transaction
permitted without shareholder approval in section 302A.661, subdivision 1,
or a disposition in dissolution described in section 302A.725, subdivision
2, or a disposition pursuant to an order of a court, or a disposition for
cash on terms requiring that all or substantially all of the net proceeds of
disposition be distributed to the shareholders in accordance with their
respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to which
the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote with respect
to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.
SUBDIVISION 2. BENEFICIAL OWNERS.
(a) A shareholder shall not assert dissenters' rights as to less than all of the
shares registered in the name of the shareholder, unless the shareholder
dissents with respect to all the shares that are beneficially owned by
another person but registered in the name of the shareholder and discloses
the name and address of each beneficial owner on whose behalf the
shareholder dissents. In that event, the rights of the dissenter shall be
determined as if the shares as to which the shareholder has dissented and
the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of
this section and section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
43
<PAGE>
SUBDIVISION 3. RIGHTS NOT TO APPLY.
(a) Unless the articles, the bylaws, or a resolution approved by the board
otherwise provide, the right to obtain payment under this section does not
apply to a shareholder of the surviving corporation in a merger, if the
shares of the shareholder are not entitled to be voted on the merger.
(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on
an action described in subdivision 1, only shareholders as of the date
fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters' rights.
SUBDIVISION 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
SUBDIVISION 1. DEFINITIONS.
(a) For purposes of this section, the terms defined in this subdivision have the
meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a corporation
immediately before the effective date of the corporate action referred to in
section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date of
the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in
section 549.09 for interest on verdicts and judgments.
SUBDIVISION 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting
at which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this
44
<PAGE>
section and a brief description of the procedure to be followed under these
sections.
SUBDIVISION 3. NOTICE OF DISSENT. If the proposed action must be approved by
the shareholders, a shareholder who is entitled to dissent under section
302A.471 and who wishes to exercise dissenters' rights must file with the
corporation before the vote on the proposed action a written notice of intent to
demand the fair value of the shares owned by the shareholder and must not vote
the shares in favor of the proposed action.
SUBDIVISION 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES.
(a) After the proposed action has been approved by the board and, if necessary,
the shareholders, the corporation shall send to all shareholders who have
complied with subdivision 3 and to all shareholders entitled to dissent if
no shareholder vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date
by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder
must demand payment and deposit certificated shares or comply with any
restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all
other rights of a shareholder until the proposed action takes effect.
SUBDIVISION 5. PAYMENT; RETURN OF SHARES.
(a) After the corporate action takes effect, or after the corporation receives a
valid demand for payment, whichever is later, the corporation shall remit to
each dissenting shareholder who has complied with
45
<PAGE>
subdivisions 3 and 4 the amount the corporation estimates to be the fair
value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim
financial statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief description of
the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from
a person who was not a shareholder on the date the action dissented from was
first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for
withholding the remittance, and an offer to pay to the dissenter the amount
listed in the materials if the dissenter agrees to accept that amount in
full satisfaction. The dissenter may decline the offer and demand payment
under subdivision 6. Failure to do so entitled the dissenter only to the
amount offered. If the dissenter makes demand, subdivision 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of
certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
SUBDIVISION 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
46
<PAGE>
SUBDIVISION 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in a court a petition requesting that
the court determine the fair value of the shares, plus interest. The petition
shall be filed in the county in which the registered office of the corporation
is located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedures apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
SUBDIVISION 8. COSTS; FEES; EXPENSES.
(a) The court shall determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and expenses
against the corporation, except that the court may assess part or all of
those costs and expenses against a dissenter
47
<PAGE>
whose action in demanding payment under subdivision 6 is found to be
arbitrary, vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially
with this section, the court may assess all fees and expenses of any experts
or attorneys as the court deems equitable. These fees and expenses may also
be assessed against a person who has acted arbitrarily, vexatiously, or not
in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney for
the dissenters out of the amount awarded to the dissenters, if any.
48
<PAGE>
AXPSM High Yield Tax-Exempt Fund
PROSPECTUS Jan. 28, 2000
American
Express(R)
Funds
AXP High Yield Tax-Exempt Fund seeks to provide shareholders with a high yield
generally exempt from federal income taxes.
Please note that this Fund:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal
Like all mutual funds, the Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>
Table of Contents
TAKE A CLOSER LOOK AT:
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 5p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Transactions through Third Parties 14p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 23p
Master/Feeder Structure 25p
Other Information 26p
Financial Highlights 27p
Appendix 29p
<PAGE>
FUND INFORMATION KEY
Goal and Investment Strategy
The Fund's particular investment goal and the strategies it intends to use in
pursuing its goal.
Risks
The major risk factors associated with the Fund.
Fees and Expenses
The overall costs incurred by an investor in the Fund, including sales charges
and annual expenses.
Master/Feeder Structure
Describes the Fund's investment structure.
Management
The individual or group designated by the investment manager to handle the
Fund's day-to-day management.
Financial Highlights
Tables showing the Fund's financial performance.
<PAGE>
The Fund
GOAL
AXP High Yield Tax-Exempt Fund (the Fund) seeks to provide shareholders with a
high yield generally exempt from federal income taxes. Because any investment
involves risk, achieving this goal cannot be guaranteed.
The Fund seeks to achieve its goal by investing all of its assets in a master
portfolio rather than by directly investing in and managing its own portfolio of
securities. The master portfolio has the same goal and investment policies as
the Fund.
INVESTMENT STRATEGY
The Fund's assets primarily are invested in medium and lower quality bonds (junk
bonds) and other debt obligations. Under normal market conditions, the Fund will
invest at least 80% of its net assets in bonds and in other debt obligations
issued by or on behalf of state or local governmental units whose interest is
exempt from federal income tax and is not subject to the alternative minimum
tax. However, the Fund may invest up to 20% of its net assets in debt
obligations the interest from which is subject to the alternative minimum tax.
The selection of municipal obligations that are tax-exempt is the primary
decision in building the investment portfolio.
In pursuit of the Fund's goal, American Express Financial Corporation (AEFC),
the Fund's investment manager, chooses investments by:
o Considering opportunities and risks in municipal obligations given current
and expected interest rates.
o Identifying municipal obligations that:
-- are medium or lower quality,
-- have similar qualities, in AEFC's opinion, even though they are not
rated or have been given a lower rating by a rating agency,
-- have long-term maturities with higher yields,
-- have characteristics (coupon, call, maturity, etc.) that fit our
investment strategy at the time of purchase.
o Identifying investments that contribute to portfolio diversification. AEFC
will weight certain sectors more heavily based on AEFC's expectations for
growth and for expected market trends.
In evaluating whether to sell a security, AEFC considers, among other factors,
whether:
-- the security is overvalued relative to alternative investments,
-- the issuer's credit rating declines or AEFC expects a decline (the
Fund may continue to own securities that are downgraded until AEFC
believes it is advantageous to sell),
-- political, economic, or other events could affect the issuer's
performance,
-- AEFC expects the issuer to call the security,
-- AEFC identifies a more attractive opportunity, and
-- the issuer or the security continues to meet the other standards
described above.
Although not a primary investment strategy, the Fund also may invest in other
instruments, such as money market securities and other short-term tax-exempt
securities, and derivatives (such as futures, options, and forward contracts).
During weak or declining markets, the Fund may invest more of its assets in
money market securities or certain taxable investments. Although the Fund
primarily will invest in these securities to avoid losses, this type of
investing also could prevent the Fund from achieving its investment objective.
During these times, AEFC may make frequent securities trades that could result
in increased fees, expenses, and taxes.
For more information on strategies and holdings, see the Fund's Statement of
Additional Information (SAI) and the annual/semiannual reports.
<PAGE>
RISKS
Please remember that with any mutual fund investment you may lose money.
Principal risks associated with an investment in the Fund include:
Market Risk
Interest Rate Risk
Credit Risk
Legal/Legislative Risk
Call/Prepayment Risk
Market Risk
The market may drop and you may lose money. Market risk may affect a single
issuer, sector of the economy, industry, or the market as a whole. The market
value of all securities may move up and down, sometimes rapidly and
unpredictably.
Interest Rate Risk
The risk of losses attributable to changes in interest rates. This term is
generally associated with bond prices (when interest rates rise, bond prices
fall). In general, the longer the maturity of a bond, the higher its yield and
the greater its sensitivity to changes in interest rates.
Credit Risk
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise become unable to honor a financial obligation (such as
payments due on a bond or note). The price of junk bonds may react more to the
ability of the issuing company to pay interest and principal when due than to
changes in interest rates. Junk bonds have greater price fluctuations and are
more likely to experience a default than investment grade bonds.
Legal/Legislative Risk
Congress and other governmental units have the power to change existing laws
affecting securities. A change in law might affect an investment adversely.
Call/Prepayment Risk
The risk that a bond or other security might be called (or otherwise converted,
prepaid, or redeemed) before maturity. This type of risk is closely related to
reinvestment risk, which is the risk that an investor will not be able to
reinvest income or principal at the same rate it currently is earning.
<PAGE>
PAST PERFORMANCE
The following bar chart and table indicate the risks and variability of
investing in the Fund by showing:
o how the Fund's performance has varied for each full calendar year shown on
the chart below, and
o how the Fund's average annual total returns compare to a recognized index.
How the Fund has performed in the past does not indicate how the Fund will
perform in the future.
- --------------------------------------------------------------------------------
Class A Performance* (based on calendar years)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
+11.39% +5.10% +12.02% +8.70% +9.73% -5.07% +17.39% +2.71% +9.37% +5.58% -2.69%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>
During the period shown in the bar chart, the highest return for a calendar
quarter was +6.69% (quarter ending March 1995) and the lowest return for a
calendar quarter was -4.90% (quarter ending March 1994).
The 5% sales charge applicable to Class A shares of the Fund is not reflected in
the bar chart; if reflected, returns would be lower than those shown. The
performance of Class B and Class Y may vary from that shown above because of
differences in sales charges and fees.
The Fund's year to date return as of Dec. 31, 1999 was -2.69%.
<PAGE>
Average Annual Total Returns (as of Dec. 31, 1999)
1 year 5 years 10 years Since inception
High Yield:
Class A -7.56% +5.18% +5.55% --%
Class B -7.10% --% --% +4.16%a
Class Y -2.42% --% --% +5.46%a
Lehman Brothers
Municipal Bond Index -2.06% +6.91% +6.89% +5.76%b
Lipper General Municipal
Debt Index -4.07% +6.14% +6.29% +4.95%
a Inception date was March 20, 1995.
b Measurement period started April 1, 1995.
This table shows total returns from hypothetical investments in Class A, Class B
and Class Y shares of the Fund. These returns are compared to the indexes shown
for the same periods. The performance of Classes A, B and Y vary because of
differences in sales charges and fees. Past performance for Class Y for the
periods prior to March 20, 1995 may be calculated based on the performance of
Class A, adjusted to reflect differences in sales charges, although not for
other differences in expenses.
For purposes of this calculation we assumed:
o a sales charge of 5% for Class A shares,
o sales at the end of the period and deduction of the applicable contingent
deferred sales charge (CDSC) for Class B shares,
o no sales charge for Class Y shares, and
o no adjustments for taxes paid by an investor on the reinvested income and
capital gains.
Lehman Brothers Municipal Bond Index, an unmanaged index, is made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held by the fund.
The Lipper General Municipal Debt Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
<PAGE>
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class Y
Maximum sales charge (load) imposed
on purchases(a) (as a percentage of
offering price) 5% none none
Maximum deferred sales charge (load)
imposed on sales (as a percentage of
offering price at time of purchase) none 5% none
Annual Fund operating expenses(b) (expenses that are deducted from Fund assets)
As a percentage of average daily
net assets: Class A Class B Class Y
Management fees 0.44% 0.44% 0.44%
Distribution (12b-1) fees 0.25% 1.00% 0.00%
Other expenses(c) 0.11% 0.11% 0.20%
Total 0.80% 1.55% 0.64%
a This charge may be reduced depending on your total investments in American
Express mutual funds. See "Sales Charges."
b Both in this table and the following example, fund operating expenses include
expenses charged by both the Fund and its Master Portfolio as described under
"Management." Expenses for Class A, Class B and Class Y are based on actual
expenses for the last fiscal year, restated to reflect current fees.
c Other expenses include an administrative services fee, a shareholder services
fee for Class Y, a transfer agency fee and other nonadvisory expenses.
<PAGE>
Example
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
Assume you invest $10,000 and the Fund earns a 5% annual return. The operating
expenses remain the same each year. If you hold your shares until the end of the
years shown, your costs would be:
1 year 3 years 5 years 10 years
Class A(a) $578 $743 $923 $1,444
Class B(b) $558 $790 $946 $1,648(d)
Class B(c) $158 $490 $846 $1,648(d)
Class Y $65 $205 $357 $ 802
a Includes a 5% sales charge.
b Assumes you sold your Class B shares at the end of the period and incurred the
applicable CDSC.
c Assumes you did not sell your Class B shares at the end of the period.
d Based on conversion of Class B shares to Class A shares in the ninth year of
ownership.
This example does not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown.
MANAGEMENT
The Fund's assets are invested in Tax-Free High Yield Portfolio (the Portfolio),
which is managed by AEFC. Kurt Larson, vice president and senior portfolio
manager, joined AEFC in 1961. He has managed the assets of the Fund since 1979.
Buying and Selling Shares
VALUING FUND SHARES
The public offering price for Class A is the net asset value (NAV) adjusted for
the sales charge. For Class B and Class Y, it is the NAV.
The NAV is the value of a single Fund share. The NAV usually changes daily, and
is calculated at the close of business of the New York Stock Exchange, normally
3 p.m. Central Time (CT), each business day (any day the New York Stock Exchange
is open).
<PAGE>
Fund shares may be purchased through various third-party organizations,
including 401(k) plans, banks, brokers and investment advisers. Where authorized
by the Fund, orders will be priced at the NAV next computed after receipt by the
organization or their selected agent.
The Fund's investments are valued based on market quotations, or where market
quotations are not readily available, based on methods selected in good faith by
the board. If the Fund's investment policies permit it to invest in securities
that are listed on foreign stock exchanges that trade on weekends or other days
when the Fund does not price its shares, the value of the Fund's underlying
investments may change on days when you could not buy or sell shares of the
Fund. Please see the SAI for further information.
INVESTMENT OPTIONS
1. Class A shares are sold to the public with a sales charge at the time of
purchase and an annual distribution (12b-1) fee.
2. Class B shares are sold to the public with a CDSC and an annual
distribution (12b-1) fee.
3. Class Y shares are sold to qualifying institutional investors without a
sales charge or distribution fee. Please see the SAI for information on
eligibility to purchase Class Y shares.
Investment options summary:
Class A Maximum sales charge of 5%
Initial sales charge waived or reduced for certain purchases
Annual distribution fee of 0.25% of average daily net assets*
Lower annual expenses than Class B shares
Class B No initial sales charge
CDSC on shares sold in the first six years (maximum of 5%
in first year, reduced to 0% after year six)
CDSC waived in certain circumstances
Shares convert to Class A in ninth year of ownership
Annual distribution fee of 1.00% of average daily net assets*
Higher annual expenses than Class A shares
Class Y No initial sales charge
No annual distribution fee
Service fee of 0.10% of average daily net assets
Available only to certain qualifying institutional investors
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940 that allows it to pay distribution and servicing-related fees for the sale
of Class A and Class B shares. Because these fees are paid out of the Fund's
assets on an on-going basis, the fees may cost long-term shareholders more than
paying other types of sales charges imposed by some mutual funds.
<PAGE>
Should you purchase Class A or Class B shares?
If your investments in American Express mutual funds total $250,000 or more,
Class A shares may be the better option. If you qualify for a waiver of the
sales charge, Class A shares will be the best option.
If you invest less than $250,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee and a CDSC for six
years. To help you determine what is best for you, consult your financial
advisor.
Class B shares convert to Class A shares in the ninth calendar year of
ownership. Class B shares purchased through reinvested dividends and
distributions also will convert to Class A shares in the same proportion as the
other Class B shares.
PURCHASING SHARES
To purchase shares through a brokerage account or from entities other than
American Express Financial Advisors Inc., please consult your selling agent. The
following section explains how you can purchase shares from American Express
Financial Advisors (the Distributor).
If you do not have a mutual fund account, you need to establish one. Your
financial advisor will help you fill out and submit an application. Once your
account is set up, you can choose among several convenient ways to invest.
When you purchase shares for a new or existing account, your order will be
priced at the next NAV calculated after your order is accepted by the Fund. If
your application does not specify which class of shares you are purchasing, we
will assume you are investing in Class A shares.
Important: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide the correct TIN, you could be subject to backup
withholding of 31% of taxable distributions and proceeds from certain sales and
exchanges. You also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN,
o a civil penalty of $500 if you make a false statement that results in no
backup withholding, and
o criminal penalties for falsifying information.
You also could be subject to backup withholding, if the IRS notifies us to do
so, because you failed to report required interest or dividends on your tax
return.
How to determine the correct TIN
<TABLE>
<CAPTION>
<S> <C>
For this type of account: Use the Social Security or Employer Identification number of:
- ------------------------- -------------------------------------------------------------
Individual or joint account The individual or one of the owners listed on the joint account
Custodian account of a minor The minor (Uniform Gifts/Transfers to Minors Act)
A revocable living trust The grantor-trustee (the person who puts the money into the trust)
An irrevocable trust, pension The legal entity (not the personal representative or trustee,
trust or estate unless no legal entity is designated in the account title)
Sole proprietorship The owner
Partnership The partnership
Corporate The corporation
Association, club or tax-exempt The organization
organization
</TABLE>
For details on TIN requirements, contact your financial advisor to obtain a copy
of federal Form W-9, "Request for Taxpayer Identification Number and
Certification." You also may obtain the form on the Internet at
(http://www.irs.gov/prod/forms_pubs/).
Three ways to invest
1 By mail:
Once your account has been established, send your check with the account number
on it to:
American Express Funds
P.O. Box 74
Minneapolis, MN 55440-0074
Minimum amounts
Initial investment: $2,000
Additional investments: $100
Account balances: $300
If your account balance falls below $300, you will be asked to increase it to
$300 or establish a scheduled investment plan. If you do not do so within 30
days, your shares can be sold and the proceeds mailed to you.
<PAGE>
2 By scheduled investment plan:
Contact your financial advisor for assistance in setting up one of the following
scheduled plans:
o automatic payroll deduction,
o bank authorization,
o direct deposit of Social Security check, or
o other plan approved by the Fund.
Minimum amounts
Initial investment: $100
Additional investments: $100/mo.
Account balances: none (on active plans with monthly payments)
If your account balance is below $2,000, you must make payments at least
monthly.
3 By wire or electronic funds transfer:
If you have an established account, you may wire money to:
Norwest Bank Minnesota
Routing Transit No. 091000019
Give these instructions:
Credit American Express Financial Advisors Account #0000030015 for personal
account # (your account number) for (your name). Please remember that you need
to provide all 10 digits.
If this information is not included, the order may be rejected, and all money
received by the Fund, less any costs the Fund or American Express Client Service
Corporation (AECSC) incurs, will be returned promptly.
Minimum amounts
Each wire investment: $1,000
<PAGE>
TRANSACTIONS THROUGH THIRD PARTIES
You may buy or sell shares through certain 401(k) plans, banks, broker-dealers,
financial advisors or other investment professionals. These organizations may
charge you a fee for this service and may have different policies. Some policy
differences may include different minimum investment amounts, exchange
privileges, fund choices and cutoff times for investments. The Fund and the
Distributor are not responsible for the failure of one of these organizations to
carry out its obligations to its customers. Some organizations may receive
compensation from the Distributor or its affiliates for shareholder
recordkeeping and similar services. Where authorized by the Fund, some
organizations may designate selected agents to accept purchase or sale orders on
the Fund's behalf. To buy or sell shares through third parties or determine if
there are policy differences, please consult your selling agent. For other
pertinent information related to buying or selling shares, please refer to the
appropriate section in the prospectus.
SALES CHARGES
Class A -- initial sales charge alternative
When you purchase Class A shares, you pay a 5% sales charge on the first $50,000
of your total investment and less on investments after the first $50,000:
Total investment Sales charge as percentage of:(a)
Public offering price(b) Net amount invested
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00
a To calculate the actual sales charge on an investment greater than $50,000 and
less than $1,000,000, you must total the amounts of all increments that apply.
b Offering price includes a 5% sales charge.
The sales charge on Class A shares may be lower than 5%, depending on the total
amount:
o you now are investing in this Fund,
o you have previously invested in this Fund, or
<PAGE>
o you and your primary household group are investing or have invested in
other American Express mutual funds that have a sales charge. (The primary
household group consists of accounts in any ownership for spouses or
domestic partners and their unmarried children under 21. For purposes of
this policy, domestic partners are individuals who maintain a shared
primary residence and have joint property or other insurable interests.)AXP
Tax-Free Money Fund and Class A shares of AXP Cash Management Fund do not
have sales charges.
Other Class A sales charge policies:
o IRA purchases or other employee benefit plan purchases made through a
payroll deduction plan or through a plan sponsored by an employer,
association of employers, employee organization or other similar group, may
be added together to reduce sales charges for all shares purchased through
that plan, and
o if you intend to invest $1 million over a period of 13 months, you can
reduce the sales charges in Class A by filing a letter of intent. For more
details, please see the SAI.
Waivers of the sales charge for Class A shares
Sales charges do not apply to:
o current or retired board members, officers or employees of the Fund or AEFC
or its subsidiaries, their spouses or domestic partners and unmarried
children under 21.
o current or retired American Express financial advisors, their spouses or
domestic partners and unmarried children under 21.
o investors who have a business relationship with a newly associated
financial advisor who joined the Distributor from another investment firm
provided that (1) the purchase is made within six months of the advisor's
appointment date with the Distributor, (2) the purchase is made with
proceeds of shares sold that were sponsored by the financial advisor's
previous broker-dealer, and (3) the proceeds are the result of a sale of an
equal or greater value where a sales load was assessed.
o qualified employee benefit plans offering participants daily access to
American Express mutual funds. Eligibility must be determined in advance.
For assistance, please contact your financial advisor. (Participants in
certain qualified plans where the initial sales charge is waived may be
subject to a deferred sales charge of up to 4%.)
o shareholders who have at least $1 million invested in American Express
mutual funds. If the investment is sold in the first year after purchase, a
CDSC of 1% will be charged. The CDSC will be waived only in the
circumstances described for waivers for Class B shares.
<PAGE>
o purchases made within 90 days after a sale of shares (up to the amount
sold):
-- of American Express mutual funds in a qualified plan subject to a
deferred sales charge, or
-- in a qualified plan or account where American Express Trust Company
has a recordkeeping, trustee, investment management, or investment
servicing relationship.
Send the Fund a written request along with your payment, indicating the
date and the amount of the sale.
o purchases made:
-- with dividend or capital gain distributions from this Fund or from the
same class of another American Express mutual fund that has a sales
charge,
-- through or under a wrap fee product or other investment product
sponsored by the Distributor or another authorized broker-dealer,
investment adviser, bank or investment professional,
-- within the University of Texas System ORP,
-- within a segregated separate account offered by Nationwide Life
Insurance Company or Nationwide Life and Annuity Insurance Company,
-- within the University of Massachusetts After-Tax Savings Program, or
-- through or under a subsidiary of AEFC offering Personal Trust
Services' Asset-Based pricing alternative.
Class B -- contingent deferred sales charge (CDSC) alternative
A CDSC is based on the sale amount and the number of calendar years -- including
the year of purchase -- between purchase and sale. The following table shows how
CDSC percentages on sales decline after a purchase:
If the sale is made during the: The CDSC percentage rate is:
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
If the amount you are selling causes the value of your investment in Class B
shares to fall below the cost of the shares you have purchased during the last
six years including the current year, the CDSC is based on the lower of the cost
of those shares purchased or market value.
<PAGE>
Example:
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 15 months, including reinvested dividends
and capital gain distributions. You could sell up to $2,000 worth of shares
without paying a CDSC ($12,000 current value less $10,000 purchase amount). If
you sold $2,500 worth of shares, the CDSC would apply to the $500 representing
part of your original purchase price. The CDSC rate would be 4% because the sale
was made during the second year after the purchase.
Because the CDSC is imposed only on sales that reduce your total purchase
payments, you never have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains. In addition, the CDSC rate on your sale will be based on your
oldest purchase payment. The CDSC on the next amount sold will be based on the
next oldest purchase payment.
The CDSC on Class B shares will be waived on sales of shares:
o in the event of the shareholder's death,
o held in trust for an employee benefit plan, or
o held in IRAs or certain qualified plans if American Express Trust Company
is the custodian, such as Keogh plans, tax-sheltered custodial accounts or
corporate pension plans, provided that the shareholder is:
-- at least 591/2 years old AND
-- taking a retirement distribution (if the sale is part of a transfer to
an IRA or qualified plan, or a custodian-to-custodian transfer, the
CDSC will not be waived) OR
-- selling under an approved substantially equal periodic payment
arrangement.
<PAGE>
EXCHANGING/SELLING SHARES
Exchanges
You can exchange your Fund shares at no charge for shares of the same class of
any other publicly offered American Express mutual fund. Exchanges into AXP
Tax-Free Money Fund may only be made from Class A shares. For complete
information on the other funds, including fees and expenses, read that fund's
prospectus carefully. Your exchange will be priced at the next NAV calculated
after it is accepted by that fund.
You may make up to three exchanges (11/2 round trips) within any 30-day period.
These limits do not apply to scheduled exchange programs and certain employee
benefit plans. Exceptions may be allowed with pre-approval of the Fund.
Other exchange policies:
o Exchanges must be made into the same class of shares of the new fund.
o If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for another
exchange.
o If your shares are pledged as collateral, the exchange will be delayed
until AECSC receives written approval from the secured party.
AECSC and the Fund reserve the right to reject any exchange, limit the amount,
or modify or discontinue the exchange privilege, to prevent abuse or adverse
effects on the Fund and its shareholders. For example, if exchanges are too
numerous or too large, they may disrupt the Fund's investment strategies or
increase its costs.
<PAGE>
Selling Shares
You can sell your shares at any time. The payment will be mailed within seven
days after accepting your request.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is accepted by the Fund, minus any applicable CDSC.
You can change your mind after requesting a sale and use all or part of the
proceeds to purchase new shares in the same account from which you sold. If you
reinvest in Class A, you will purchase the new shares at NAV rather than the
offering price on the date of a new purchase. If you reinvest in Class B, any
CDSC you paid on the amount you are reinvesting also will be reinvested. To take
advantage of this option, send a request within 90 days of the date your sale
request was received and include your account number. This privilege may be
limited or withdrawn at any time and may have tax consequences.
The Fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
<PAGE>
To sell or exchange shares held through a brokerage account or with entities
other than American Express Financial Advisors, please consult your selling
agent. The following section explains how you can exchange or sell shares held
with American Express Financial Advisors.
Requests to sell shares of the Fund are not allowed within 30 days of a
telephoned-in address change.
Important: If you request a sale of shares you recently purchased by a check or
money order that is not guaranteed, the Fund will wait for your check to clear.
It may take up to 10 days from the date of purchase before payment is made.
(Payment may be made earlier if your bank provides evidence satisfactory to the
Fund and AECSC that your check has cleared.)
Two ways to request an exchange or sale of shares
1 By letter:
Include in your letter:
o the name of the fund(s),
o the class of shares to be exchanged or sold,
o your mutual fund account number(s) (for exchanges, both funds must be
registered in the same ownership),
o your Social Security number or Employer Identification number,
o the dollar amount or number of shares you want to exchange or sell,
o signature(s) of all registered account owners,
o for sales, indicate how you want your money delivered to you, and
o any paper certificates of shares you hold.
Regular mail:
American Express Client Service Corporation
Attn: Transactions
P.O. Box 534
Minneapolis, MN 55440-0534
Express mail:
American Express Client Service Corporation
Attn: Transactions
733 Marquette Ave.
Minneapolis, MN 55402
<PAGE>
2 By telephone:
American Express Client Service Corporation
Telephone Transaction Service
800-437-3133
o The Fund and AECSC will use reasonable procedures to confirm authenticity
of telephone exchange or sale requests.
o Telephone exchange and sale privileges automatically apply to all accounts
except custodial, corporate or qualified retirement accounts. You may
request that these privileges NOT apply by writing AECSC. Each registered
owner must sign the request.
o Acting on your instructions, your financial advisor may conduct telephone
transactions on your behalf.
o Telephone privileges may be modified or discontinued at any time.
Minimum sale amount: $100 Maximum sale amount: $50,000
<PAGE>
Three ways to receive payment when you sell shares
1 By regular or express mail:
o Mailed to the address on record.
o Payable to names listed on the account.
NOTE:The express mail delivery charges you pay will vary depending on the
courier you select.
2 By wire or electronic funds transfer:
o Minimum wire: $1,000.
o Request that money be wired to your bank.
o Bank account must be in the same ownership as the American Express mutual
fund account.
NOTE:Pre-authorization required. For instructions, contact your financial
advisor or AECSC.
3 By scheduled payout plan:
o Minimum payment: $50.
o Contact your financial advisor or AECSC to set up regular payments on a
monthly, bimonthly, quarterly, semiannual or annual basis.
o Purchasing new shares while under a payout plan may be disadvantageous
because of the sales charges.
<PAGE>
Distributions and Taxes
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as dividends. Capital
gains are realized when a security is sold for a higher price than was paid for
it. Each realized capital gain or loss is long-term or short-term depending on
the length of time the Fund held the security. Realized capital gains and losses
offset each other. The Fund offsets any net realized capital gains by any
available capital loss carryovers. Net short-term capital gains are included in
net investment income. Net realized long-term capital gains, if any, are
distributed by the end of the calendar year as capital gain distributions.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:
o you request distributions in cash, or
o you direct the Fund to invest your distributions in the same class of any
publicly offered American Express mutual fund for which you have previously
opened an account.
We reinvest the distributions for you at the next calculated NAV after the
distribution is paid.
If you choose cash distributions, you will receive cash only for distributions
declared after your request has been processed.
<PAGE>
TAXES
Dividends distributed from interest earned on tax-exempt securities
(exempt-interest dividends) are exempt from federal income taxes but may be
subject to state and local taxes. Dividends distributed from capital gain
distributions and other income earned are not exempt from federal income taxes.
Distributions are taxable in the year the Fund declares them regardless of
whether you take them in cash or reinvest them.
Interest on certain private activity bonds is a preference item for purposes of
the individual and corporate alternative minimum taxes. To the extent the Fund
earns such income, it will flow through to its shareholders and may be taxable
to those shareholders who are subject to the alternative minimum tax.
Because interest on municipal bonds and notes is tax-exempt for federal income
tax purposes, any interest on money you borrow that is used directly or
indirectly to purchase Fund shares is not deductible on your federal income tax
return. You should consult a tax advisor regarding its deductibility for state
and local income tax purposes.
If you buy shares shortly before the record date of a distribution you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which maybe taxable.
For tax purposes, an exchange is considered a sale and purchase and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held for more
than one year).
If you buy Class A shares of this or another American Express mutual fund and
within 91 days exchange into this Fund, you may not include the sales charge in
your calculation of tax gain or loss on the sale of the first fund you
purchased. The sales charge may be included in the calculation of your tax gain
or loss on a subsequent sale of this Fund.
Important: This information is a brief and selective summary of some of the tax
rules that apply to this Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
<PAGE>
Master/Feeder Structure
This Fund uses a master/feeder structure. This means that the Fund (a feeder
fund) invests all of its assets in the Portfolio (the master fund). Other feeder
funds also invest in the Portfolio. The master/feeder structure offers the
potential for reduced costs because it spreads fixed costs of portfolio
management over a larger pool of assets. The Fund may withdraw its assets from
the Portfolio at any time if the Fund's board determines that it is best. In
that event, the board would consider what action should be taken, including
whether to hire an investment advisor to manage the Fund's assets directly or to
invest all of the Fund's assets in another pooled investment entity. Here is an
illustration of the structure:
Investors buy shares in the Fund
The Fund buys units in the Portfolio
The Portfolio invests in securities, such as stocks or bonds
Other feeders may include mutual funds and institutional accounts. These feeders
buy the Portfolio's securities on the same terms and conditions as the Fund and
pay their proportionate share of the Portfolio's expenses. However, their
operating costs and sales charges are different from those of the Fund.
Therefore, the investment returns for other feeders are different from the
returns of the Fund.
<PAGE>
Other Information
YEAR 2000
The Fund could be adversely affected if the computer systems used by AEFC and
the Fund's other service providers do not properly process and calculate
date-related information from and after Jan. 1, 2000. While Year 2000-related
computer problems could have a negative effect on the Fund, AEFC is working to
avoid such problems and to obtain assurances from service providers that they
are taking similar steps.
The companies, governments or international markets in which the Fund invests
also may be adversely affected by Year 2000 issues. To the extent a portfolio
holding is adversely affected by a Year 2000 processing issue, the Fund's return
could be adversely affected.
INVESTMENT MANAGER
The investment manager of the Portfolio is AEFC, located at IDS Tower 10,
Minneapolis, MN 55440-0010. The Portfolio pays AEFC a fee for managing its
assets. The Fund pays its proportionate share of the fee. Under the Investment
Management Services Agreement, the fee for the most recent fiscal year was 0.44%
of its average daily net assets. Under the agreement, the Portfolio also pays
taxes, brokerage commissions and nonadvisory expenses. AEFC is a wholly-owned
subsidiary of American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center, New York, NY
10285.
<PAGE>
Financial Highlights
Fiscal period ended Nov. 30,
Per share income and capital changes(a)
<TABLE>
<CAPTION>
Class A
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
Net asset value, beginning of period $4.68 $4.64 $4.56 $4.66 $4.18
Income from investment operations:
Net investment income (loss) .26 .26 .27 .27 .28
Net gains (losses) (both realized
and unrealized) (.34) .04 .08 (.10) .48
Total from investment operations (.08) .30 .35 .17 .76
Less distributions:
Dividends from net investment income (.26) (.26) (.27) (.27) (.28)
Net asset value, end of period $4.34 $4.68 $4.64 $4.56 $4.66
Ratios/supplemental data
Net assets, end of period
(in millions) $5,110 $5,722 $5,785 $6,001 $6,316
Ratio of expenses to average
daily net assets(b) .74% .70% .70% .70% .68%
Ratio of net investment income (loss)
to average daily net assets 5.73% 5.56% 5.85% 6.02% 6.31%
Portfolio turnover rate (excluding
short-term securities) 16% 14% 4% 9% 14%
Total return(c) (1.86%) 6.67% 7.86% 4.02% 18.64%
</TABLE>
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
c Total return does not reflect payment of a sales charge.
<PAGE>
Fiscal period ended Nov. 30,
Per share income and capital changes(a)
<TABLE>
<CAPTION>
Class B Class Y
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995(b) 1999 1998 1997 1996 1995(b)
Net asset value,
beginning of period $4.68 $4.64 $4.56 $4.66 $4.46 $4.68 $4.64 $4.56 $4.66 $4.46
Income from investment operations:
Net investment income
(loss) .23 .22 .23 .24 .19 .26 .26 .27 .28 .22
Net gains (losses
(both realized
and unrealized) (.34) .04 .08 (.10) .20 (.33) .04 .08 (.10) .20
Total from investment
operations (.11) .26 .31 .14 .39 (.07) .30 .35 .18 .42
Less distributions:
Dividends from net
investment income (.23) (.22) (.23) (.24) (.19) (.26) (.26) (.27) (.28) (.22)
Net asset value,
end of period $4.34 $4.68 $4.64 $4.56 $4.66 $4.35 $4.68 $4.64 $4.56 $4.66
Ratios/supplemental data
Net assets, end of
period (in millions) $311 $270 $190 $138 $71 $6 $7 $9 $21 $25
Ratio of expenses to
average daily
net assets(c) 1.50% 1.45% 1.46% 1.46% 1.48%(d) .64% .62% .61% .53% .54%(d)
Ratio of net investment
income (loss) to average
daily net assets 4.99% 4.81% 5.06% 5.29% 5.36(d) 5.77% 5.63% 5.88% 6.15% 6.32%(d)
Portfolio turnover rate
excluding short-term
securities) 16% 14% 4% 9% 14% 16% 14% 4% 9% 14%
Total return(e) (2.58%) 5.85% 7.08% 3.22% 9.02% (1.56%) 6.73% 7.96% 4.22% 9.15%
</TABLE>
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995.
c Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
d Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
The information in these tables has been audited by KPMG LLP, independent
auditors. The independent auditors' report and additional information about the
performance of the Fund are contained in the Fund's annual report which, if not
included with this prospectus, may be obtained without charge.
<PAGE>
APPENDIX
2000 federal tax-exempt and taxable equivalent yield calculation
These tables will help you determine your federal taxable yield equivalents for
given rates of tax-exempt income.
STEP 1: Calculating your marginal tax rate.
Using your Taxable Income and Adjusted Gross Income figures as guides, you can
locate your Marginal Tax Rate in the table below.
First, locate your Taxable Income in a filing status and income range in the
left-hand column. Then, locate your Adjusted Gross Income at the top of the
chart. At the point where your Taxable Income line meets your Adjusted Gross
Income column the percentage indicated is an approximation of your federal
Marginal Tax Rate. For example: Let's assume you are married filing jointly,
your taxable income is $138,000 and your adjusted gross income is $175,000.
Under Taxable Income married filing jointly status, $138,000 is in the
$105,950-$161,450 range. Under Adjusted Gross Income, $175,000 is in the
$128,950 to $193,400 column. The Taxable Income line and Adjusted Gross Income
column meet at 31.93%. This is the rate you'll use in Step 2.
<PAGE>
<TABLE>
<CAPTION>
Adjusted gross income*
<S> <C> <C> <C> <C>
Taxable income** $0 $128,950 $193,400
to to to Over
$128,950(1) $193,400(2) $315,900(3) $315,900(2)
Married Filing Jointly
$0 - $ 43,850 15.00%
43,850 -105,950 28.00 28.84%
105,950 -161,450 31.00 31.93 33.32%
161,450 -288,350 36.00 37.08 38.69 37.08%
288,350 + 39.60 42.56*** 40.79
Adjusted gross income*
Taxable income** $0 $128.950
to to Over
$128,950(1) $251,450(3) $251,450(2)
Single
$ 0 - $ 26,250 15.00%
26,250 -63,550 28.00
63,550 -132,600 31.00 32.62%
132,600 -288,350 36.00 37.89 37.08%
288,350 + 39.60 40.79
</TABLE>
* Gross income with certain adjustments before taking itemized deductions and
personal exemptions.
** Amount subject to federal income tax after itemized deductions (or standard
deduction) and personal exemptions.
*** This rate is applicable only in the limited case where your adjusted gross
income is less than $315,900 and your taxable income exceeds $288,350.
(1) No Phase-out -- Assumes no phase-out of itemized deductions or personal
exemptions.
(2) Itemized Deductions Phase-out -- Assumes a phase-out of itemized deductions
and no current phase-out of personal exemptions.
(3) Itemized Deductions and Personal Exemption Phase-outs -- Assumes a single
taxpayer has one personal exemption, joint taxpayers have two personal
exemptions, personal exemptions phase-out and itemized deductions continue to
phase-out. If these assumptions do not apply to you, it will be necessary to
construct your own personalized tax equivalency table.
<PAGE>
STEP 2: Determining your federal taxable yield equivalents. Using 31.93%, you
may determine that a tax-exempt yield of 4% is equivalent to earning a taxable
5.88% yield.
<TABLE>
<CAPTION>
For these Tax-Exempt Rates:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
Marginal Tax Rates Equal the Taxable Rates shown below:
15.00% 4.12 4.71 5.29 5.88 6.47 7.06 7.65 8.24
28.00% 4.86 5.56 6.25 6.94 7.64 8.33 9.03 9.72
28.84% 4.92 5.62 6.32 7.03 7.73 8.43 9.13 9.84
31.00% 5.07 5.80 6.52 7.25 7.97 8.70 9.42 10.14
31.93% 5.14 5.88 6.61 7.35 8.08 8.81 9.55 10.28
32.62% 5.19 5.94 6.68 7.42 8.16 8.90 9.65 10.39
33.32% 5.25 6.00 6.75 7.50 8.25 9.00 9.75 10.50
36.00% 5.47 6.25 7.03 7.81 8.59 9.38 10.16 10.94
37.08% 5.56 6.36 7.15 7.95 8.74 9.54 10.33 11.13
37.89% 5.64 6.44 7.25 8.05 8.86 9.66 10.47 11.27
38.69% 5.71 6.52 7.34 8.16 8.97 9.79 10.60 11.42
39.60% 5.79 6.62 7.45 8.28 9.11 9.93 10.76 11.59
40.79% 5.91 6.76 7.60 8.44 9.29 10.13 10.98 11.82
42.56% 6.09 6.96 7.83 8.70 9.58 10.45 11.32 12.19
</TABLE>
<PAGE>
American
Express(R)
Funds
This Fund, along with the other American Express mutual funds, is distributed by
American Express Financial Advisors Inc. and can be purchased from an American
Express financial advisor or from other authorized broker-dealers or third
parties. The Fund can be found under the "Amer Express" banner in most mutual
fund quotations.
Additional information about the Fund and its investments is available in the
Fund's Statement of Additional Information (SAI), annual and semiannual reports
to shareholders. In the Fund's annual report, you will find a discussion of
market conditions and investment strategies that significantly affected the Fund
during its last fiscal year. The SAI is incorporated by reference in this
prospectus. For a free copy of the SAI, the annual report or the semiannual
report contact your selling agent or American Express Client Service
Corporation.
American Express Client Service Corporation
P.O. Box 534, Minneapolis, MN 55440-0534
800-862-7919 TTY:800-846-4852
Web site address:http://www.americanexpress.com/advisors
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-800-SEC-0330). Reports and other information about the Fund are available on
the Commission's Internet site at (http://www.sec.gov). Copies of this
information may be obtained by writing and paying a duplicating fee to the
Public Reference Section of the Commission, Washington, D.C.
20549-6009.
Investment Company Act File #811-2901
TICKER SYMBOL
Class A: INHYX Class B: IHYBX Class Y: IHTYXS-6430-99 R (1/00)
AMERICAN EXPRESS(R) (logo)
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD AND SHAREHOLDERS AXP HIGH YIELD TAX-EXEMPT FUND, INC.
We have audited the accompanying statement of assets and liabilities of AXP High
Yield Tax-Exempt Fund, Inc. as of November 30, 1999, and the related statement
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 ended November 30, 1999, and
the financial highlights for each of the years in the five-year period ended
November 30, 1999. 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 audits 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. 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 AXP High Yield Tax-Exempt Fund,
Inc. as of November 30, 1999, and the results of its operations, changes in its
net assets and the financial highlights for the periods stated in the first
paragraph above, in conformity with generally accepted accounting principles.
/s/ KPMG LP
KPMG LLP
Minneapolis, Minnesota
January 7, 2000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
AXP High Yield Tax-Exempt Fund, Inc.
Nov. 30, 1999
Assets
<S> <C>
Investments in Tax-Free High Yield Portfolio (Note 1) $5,433,095,941
Liabilities
Dividends payable to shareholders 6,008,743
Accrued distribution fee 43,710
Accrued service fee 16
Accrued transfer agency fee 7,599
Accrued administrative services fee 4,558
Other accrued expenses 90,951
------
Total liabilities 6,155,577
---------
Net assets applicable to outstanding capital stock $5,426,940,364
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 12,499,324
Additional paid-in capital 5,344,927,934
Undistributed net investment income 233,909
Accumulated net realized gain (loss) (Note 4) (149,200,550)
Unrealized appreciation (depreciation) on investments 218,479,747
-----------
Total -- representing net assets applicable to outstanding capital stock $5,426,940,364
==============
Net assets applicable to outstanding shares: Class A $5,110,460,186
Class B $ 310,690,143
Class Y $ 5,790,035
Net asset value per share of outstanding capital stock: Class A shares 1,177,039,848 $ 4.34
Class B shares 71,562,975 $ 4.34
Class Y shares 1,329,624 $ 4.35
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
AXP High Yield Tax-Exempt Fund, Inc.
Year ended Nov. 30, 1999
Investment income
Income:
<S> <C>
Interest $ 376,860,450
-------------
Expenses (Note 2):
Expenses allocated from Tax-Free High Yield Portfolio 26,111,169
Distribution fee
Class A 5,577,985
Class B 2,610,960
Transfer agency fee 2,484,010
Incremental transfer agency fee
Class A 269,172
Class B 32,641
Service fee
Class A 5,659,881
Class B 300,864
Class Y 2,498
Administrative services fees and expenses 1,787,976
Compensation of board members 15,508
Printing and postage 437,874
Registration fees 120,501
Audit fees 12,000
Other 16,470
------
Total expenses 45,439,509
Earnings credits on cash balances (Note 2) (104,220)
--------
Total net expenses 45,335,289
----------
Investment income (loss) -- net 331,525,161
-----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (29,738,220)
Financial futures contracts (4,549,195)
----------
Net realized gain (loss) on investments (34,287,415)
Net change in unrealized appreciation (depreciation) on investments (400,328,060)
------------
Net gain (loss) on investments (434,615,475)
------------
Net increase (decrease) in net assets resulting from operations $(103,090,314)
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
AXP High Yield Tax-Exempt Fund, Inc.
Year ended Nov. 30, 1999 1998
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 331,525,161 $ 332,169,566
Net realized gain (loss) on investments (34,287,415) (5,082,151)
Net change in unrealized appreciation (depreciation)
on investments (400,328,060) 61,776,386
------------ ----------
Net increase (decrease) in net assets resulting from
operations (103,090,314) 388,863,801
------------ -----------
Distributions to shareholders from:
Net investment income
Class A (316,514,834) (320,696,664)
Class B (15,198,150) (11,052,190)
Class Y (146,846) (291,004)
-------- --------
Total distributions (331,859,830) (332,039,858)
------------ ------------
Capital share transactions (Note 3)
Proceeds from sales
Class A shares (Note 2) 2,427,018,443 2,190,389,184
Class B shares 117,997,999 103,906,651
Class Y shares 32,471,874 15,951,744
Reinvestment of distributions at net asset value
Class A shares 216,707,335 217,522,599
Class B shares 12,147,187 8,764,909
Class Y shares 8,234 705
Payments for redemptions
Class A shares (2,844,128,938)(2,525,842,128)
Class B shares (Note 2) (65,500,854) (35,324,448)
Class Y shares (34,066,205) (17,386,399)
----------- -----------
Increase (decrease) in net assets from capital
share transactions (137,344,925) (42,017,183)
------------ -----------
Total increase (decrease) in net assets (572,295,069) 14,806,760
Net assets at beginning of year 5,999,235,433 5,984,428,673
------------- -------------
Net assets at end of year $ 5,426,940,364 $5,999,235,433
=============== ==============
Undistributed net investment income $ 233,909 $ 568,578
--------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AXP High Yield Tax-Exempt Fund, Inc.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The Fund has 10 billion
authorized shares of capital stock.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee, incremental 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.
Investment in Tax-Free High Yield Portfolio
The Fund invests all of its assets in Tax-Free High Yield Portfolio (the
Portfolio), a series of Tax-Free Income Trust (the Trust), an open-end
investment company that has the same objectives as the Fund. The Portfolio
invests primarily in medium- and lower-quality tax-exempt bonds and other debt
obligations.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of Nov. 30, 1999 was 99.99%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts and losses deferred due to "wash sale" transactions.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
2. EXPENSES AND SALES CHARGES
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows: The Fund has an agreement with American Express
Financial Corporation (AEFC) to provide administrative services. Under an
Administrative Services Agreement, the 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. A minor portion of
additional administrative service expenses paid by the Fund are consultants'
fees and fund office expenses. 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, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19.50
o Class B $20.50
o Class Y $17.50
Under terms of a prior agreement that ended Jan. 31, 1999, the Fund paid a
transfer agency fee at an annul rate per shareholder account of $15.50 for Class
A and $16.50 for Class B. Under terms of a prior agreement that ended March 31,
1999, the Fund paid a transfer agency fee at an annual rate per shareholder
account of $15.50 for Class Y.
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution (the Plan), the Fund pays a distribution fee at an
annual rate up to 0.25% of the Fund's average daily net assets attributable to
Class A shares and up to 1.00% for Class B shares. The Plan went into effect
July 1, 1999. Under terms of a prior Plan and Agreement of Distribution (the
Prior Plan) that ended June 30, 1999, the Fund paid a distribution fee for Class
B shares at an annual rate up to 0.75% of average daily net assets.
The Prior Plan was not effective with respect to Class A shares.
Under a Shareholder Service Agreement, the Fund's Class Y shares pay a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares. Under terms of a prior agreement that
ended June 30, 1999, the Fund paid a shareholder service fee for Class A and
Class B shares at a rate of 0.175% of average daily net assets. Effective July
1, 1999, the agreement for Class A and Class B shares was converted to the Plan
and Agreement of Distribution discussed above.
Sales charges received by the Distributor for distributing Fund shares were
$10,404,130 for Class A and $539,993 for Class B for the year ended Nov. 30,
1999.
During the year ended Nov. 30, 1999, the Fund's transfer agency fees were
reduced by $104,220 as a result of earnings credits from overnight cash
balances.
<PAGE>
<TABLE>
<CAPTION>
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
Year ended Nov. 30, 1999
Class A Class B Class Y
<S> <C> <C> <C>
Sold 534,033,995 25,822,169 7,179,293
Issued for reinvested distributions 47,780,178 2,682,823 1,838
Redeemed (626,523,698) (14,523,453) (7,443,522)
------------ ----------- ----------
Net increase (decrease) (44,709,525) 13,981,539 (262,391)
Year ended Nov. 30, 1998
Class A Class B Class Y
Sold 468,619,472 22,219,938 3,428,457
Issued for reinvested distributions 46,549,715 1,875,641 151
Redeemed (539,880,213) (7,554,155) (3,697,495)
------------ ---------- ----------
Net increase (decrease) (24,711,026) 16,541,424 (268,887)
</TABLE>
<PAGE>
4. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund has a capital loss carryover of
$110,883,075 as of Nov. 30, 1999, that will expire in 2002 through 2007 if not
offset by subsequent capital gains. It is unlikely the board will authorize a
distribution of any net realized capital gains until the available capital loss
carryover has been offset or expires.
5. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express mutual funds, permits
borrowings up to $200 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or
the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to
90 days after such loan is executed. The Fund also pays a commitment fee equal
to its pro rata share of the amount of the credit facility at a rate of 0.05%
per annum. The Fund had no borrowings outstanding during the year ended Nov. 30,
1999.
6. FINANCIAL HIGHLIGHTS
"Financial highlights" showing per share data and selected financial information
is presented on pages 27 and 28 of the prospectus.
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF TRUSTEES AND UNITHOLDERS TAX-FREE INCOME TRUST
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Tax-Free High Yield Portfolio (a
series of Tax-Free Income Trust) as of November 30, 1999, the related statement
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 ended November 30, 1999.
These financial statements are the responsibility of portfolio management. Our
responsibility is to express an opinion on these financial statements 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 1999, by correspondence with
the custodian and brokers. 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 Tax-Free High Yield Portfolio
as of November 30, 1999, and the results of its operations and the changes in
its net assets for the periods stated in the first paragraph above, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 7, 2000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Tax-Free High Yield Portfolio
Nov. 30, 1999
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $5,078,490,354) $5,298,793,350
Accrued interest receivable 107,840,921
Receivable for investment securities sold 108,162,361
-----------
Total assets 5,514,796,632
-------------
Liabilities
Disbursements in excess of cash on demand deposit 20,022,442
Payable for investment securities purchased 60,767,096
Accrued investment management services fee 66,191
Other accrued expenses 40,986
------
Total liabilities 80,896,715
----------
Net assets $5,433,899,917
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Tax-Free High Yield Portfolio
Year ended Nov. 30, 1999
Investment income
Income:
<S> <C>
Interest $ 376,929,579
-------------
Expenses (Note 2):
Investment management services fee 25,735,619
Compensation of board members 23,565
Custodian fees 249,607
Audit fees 36,000
Other 98,696
------
Total expenses 26,143,487
Earnings credits on cash balances (Note 2) (28,204)
-------
Total net expenses 26,115,283
----------
Investment income (loss) -- net 350,814,296
-----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (29,764,364)
Financial futures contracts (4,549,924)
----------
Net realized gain (loss) on investments (34,314,288)
Net change in unrealized appreciation (depreciation) on investments (400,370,743)
------------
Net gain (loss) on investments (434,685,031)
------------
Net increase (decrease) in net assets resulting from operations $ (83,870,735)
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Tax-Free High Yield Portfolio
Year ended Nov. 30, 1999 1998
Operations
<S> <C> <C>
Investment income (loss) -- net $ 350,814,296 $ 348,535,304
Net realized gain (loss) on investments (34,314,288) (5,085,468)
Net change in unrealized appreciation (depreciation)
on investments (400,370,743) 61,787,273
------------ ----------
Net increase (decrease) in net assets resulting
from operations (83,870,735) 405,237,109
Net contributions (withdrawals) from partners (487,924,306) (387,941,646)
------------ ------------
Total increase (decrease) in net assets (571,795,041) 17,295,463
Net assets at beginning of year 6,005,694,958 5,988,399,495
------------- -------------
Net assets at end of year $5,433,899,917 $6,005,694,958
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Tax-Free High Yield Portfolio
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Tax-Free High Yield Portfolio (the Portfolio) is a series of Tax-Free Income
Trust (the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. Tax-Free High
Yield Portfolio invests primarily in medium- and lower-quality tax-exempt bonds
and other debt obligations. The declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and sell put and call
options and write covered call options on portfolio securities as well as write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity for profit if the market price of the
security increases. The risk in writing a put option is that the Portfolio 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 Portfolio pays a premium
whether or not the option is exercised. The Portfolio also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist. The Portfolio may write over-the-counter options where
completing the obligation depends 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. The Portfolio
will realize a gain or loss when the option transaction expires or closes. When
options on debt securities or futures are exercised, the Portfolio will realize
a gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts. Risks of entering into futures contracts
and related options include the possibility of 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 Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio 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 Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuations, and they may affect the Portfolio's net assets the same as owned
securities. The Portfolio designates cash or liquid high-grade debt securities
at least equal to the amount of its commitment. As of Nov. 30, 1999, the
Portfolio had entered into outstanding when-issued or forward-commitments of
$7,669,520.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. As a "pass-through" entity, the Portfolio therefore
does not pay any income dividends or capital gain distributions.
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.
2. FEES AND EXPENSES
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC to manage its portfolio. Under this agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.49% to 0.36% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the year ended Nov. 30, 1999, the Portfolio's custodian fees were reduced
by $28,204 as a result of earnings credits from overnight cash balances. The
Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $930,880,531 and $1,021,532,823, respectively, for the
year ended Nov. 30, 1999. For the same period, the portfolio turnover rate was
16%. Realized gains and losses are determined on an identified cost basis.
4. INTEREST RATE FUTURES CONTRACTS
As of Nov. 30, 1999, investments in securities included securities valued at
$1,852,510 that were pledged as collateral to cover initial margin deposits on
970 open purchase contracts. The market value of the open purchase contracts as
of Nov. 30, 1999 was $101,226,313 with a net unrealized loss of $1,817,255. See
"Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Tax-Free High Yield Portfolio Nov. 30, 1999
(Percentages represent value of investments compared to net assets)
Municipal bonds (97.5%)
Name of issuer and Coupon Principal Value(a)
title of issue(b,e) rate amount
Alabama (0.3%)
Baldwin County Eastern Shore Health Care Authority
Hospital Revenue Bonds Thomas Hospital Series 1991
<S> <C> <C> <C> <C> <C>
04-01-16 8.50% $4,765,000 $5,099,789
Camden Industrial Development Board Solid Waste Disposal Revenue Bonds MacMillan
Bloedel Series 1991A A.M.T.
04-01-19 7.75 8,500,000 8,850,965
Total 13,950,754
Alaska (0.2%)
Industrial Development & Exploration Authority
Electric Power Revenue Bonds
Upper Lynn Canal Regional Power
Series 1997 A.M.T.
01-01-18 5.80 830,000 726,723
01-01-32 5.88 1,800,000 1,527,372
North Slope Borough General Obligation Bonds
Zero Coupon Series 1994B (CGIC Insured)
06-30-04 7.05 7,000,000(d) 5,594,540
06-30-05 7.15 7,000,000(d) 5,298,650
Total 13,147,285
Arizona (1.3%)
Chandler Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.63 2,540,000 2,589,174
Flagstaff Industrial Development Authority
Lifecare Revenue Bonds Northern Arizona
Senior Living Community Series 1998
09-01-28 6.20 5,020,000 4,388,785
09-01-38 6.30 6,165,000 5,340,616
Maricopa County Hospital System Revenue Bonds
Samaritan Health Services Series 1981
01-01-08 12.00 255,000 372,231
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds Series B
07-01-26 7.38 2,270,000 2,540,811
Maricopa County Industrial Development Authority
Senior Living Facilities Revenue Bonds Series 1997A
04-01-27 7.88 15,000,000 15,320,100
Maricopa County Pollution Control Refunding
Revenue Bonds Palo Verde Public Service
08-15-23 6.38 3,500,000 3,373,405
Navajo Industrial Development Authority Revenue Bonds
Stone Container Corporation Series 1997 A.M.T.
06-01-27 7.20 3,000,000 3,136,770
Peoria Industrial Development Authority
Refunding Revenue Bonds
Sierra Winds Lifecare Community Series 1999A
08-15-29 6.38 5,700,000 5,108,112
Phoenix Industrial Development Authority
Refunding Revenue Bonds Christian Care Apartments
01-01-26 6.50 9,525,000 9,316,117
Pima County Industrial Development Authority Multi-family Housing Revenue Bonds
Las Villas De Kino Apartments Series 1997 A.M.T.
08-01-29 6.90 7,000,000 6,826,750
Pima County Industrial Development Authority Multi-family Housing Revenue Bonds
Las Villas Kino Apartments Series 1998 A.M.T.
08-01-30 6.25 3,920,000 3,582,488
Pima County Industrial Development Authority
Revenue Bonds LaPosada Park Centre Series 1996A
05-15-27 7.00 5,750,000 5,643,223
Scottsdale Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.63 2,805,000 2,861,072
Total 70,399,654
Arkansas (0.2%)
Pope County Solid Waste Disposal Revenue Bonds Arkansas Power & Light Series
1991 A.M.T.
01-01-21 8.00 3,250,000 3,377,628
Washington County District 5
General Obligation Refunding Improvement Bonds
02-01-09 7.00 7,135,000 6,764,907
Total 10,142,535
California (9.0%)
ABAG Financial Authority for Nonprofit Corporations
Certificate of Participation International School
Series 1996
05-01-26 7.38 8,000,000 8,249,280
Anaheim Public Financing Authority Lease
Capital Appreciation Revenue Bonds
Zero Coupon (FSA Insured)
09-01-23 5.94 25,865,000(d) 6,149,662
09-01-26 5.65 20,000,000(d) 3,945,800
09-01-29 5.95 12,800,000(d) 2,105,088
09-01-31 5.77 24,500,000(d) 3,554,460
09-01-36 5.73 10,000,000(d) 1,057,600
Community Development Authority Health Facilities
Unihealth America Certificate of Participation
Series 1993 Inverse Floater (AMBAC Insured)
10-01-11 7.77 22,400,000(c) 24,164,000
Contra Costa County Residential Rent Facility
Multi-family Housing Revenue Bonds Cypress Meadows
Series 1998E A.M.T.
09-01-28 7.00 5,000,000 4,429,550
East Bay Municipal Utility District
Water Systems Revenue Bonds Inverse Floater
(MBIA Insured)
06-01-08 6.42 15,500,000(c) 15,639,500
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A (MBIA Insured)
01-01-35 5.00 41,070,000 34,909,499
Fresno Health Facility Refunding Revenue Bonds
Holy Cross Health System (MBIA Insured)
12-01-13 5.63 3,000,000 3,031,140
Irwindale Redevelopment Agency Subordinate Lien
Tax Allocation Bonds
12-01-26 7.05 5,750,000 6,037,443
Lake Elsinore Public Finance Authority
Local Agency Revenue Bonds Series 1997F
09-01-20 7.10 11,930,000 12,189,000
Los Angeles County Pre-refunded Certificates of
Participation
05-01-15 6.71 20,000,000 21,049,400
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
Delta Airlines
11-01-25 6.35 13,000,000 12,893,010
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
United Airlines Series 1984
11-15-21 8.80 11,650,000 12,281,081
Los Angeles Water & Power Electric Plant
Refunding Revenue Bonds Series 1992
02-01-20 6.38 10,000,000 10,374,500
Millbrae Residential Facility Revenue Bonds
Magnolia of Millbrae Series 1997A A.M.T.
09-01-27 7.38 2,500,000 2,516,175
Northern California Power Agency Geothermal 3
Revenue Bonds
07-01-09 5.00 49,635,000 49,537,172
Novato Community Facility District 1 Vintage Oaks
Public Improvement Special Tax Refunding Bonds
08-01-21 7.25 5,000,000 5,201,100
Oceanside Certificate of Participation Refunding Bonds
Oceanside Civic Center (MBIA Insured)
08-01-19 5.25 7,000,000 6,543,390
Orange County Special Tax Community Facilities Bonds
Aliso Veijo District 88-1 Series 1992A
08-15-18 7.35 6,000,000 6,579,300
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A
09-02-12 6.15 4,350,000 4,431,650
Sacramento Cogeneration Authority
Pre-refunded Revenue Bonds Procter & Gamble Series 1995
07-01-14 6.50 3,800,000 4,208,880
Sacramento Cogeneration Authority
Revenue Bonds Procter & Gamble Series 1995
07-01-21 6.50 8,000,000 8,860,800
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (FSA Insured)
11-15-05 7.12 15,800,000(c) 16,767,750
11-15-06 7.32 16,400,000(c) 17,425,000
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (MBIA Insured)
11-15-15 7.77 15,000,000(c) 14,812,500
Sacramento Power Authority Cogeneration
Revenue Bonds Campbell Soup Series 1995
07-01-22 6.00 25,000,000 24,043,000
San Joaquin Hills Orange County Transportation
Corridor Agency Senior Lien Toll Road Revenue Bonds
01-01-32 6.75 14,785,000 16,062,128
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue
Bonds Zero Coupon Series 1997A (MBIA Insured)
01-15-24 5.62 9,000,000(d) 2,082,420
01-15-25 5.03 43,510,000(d) 9,451,677
01-15-26 5.51 30,000,000(d) 6,132,900
01-15-27 5.51 6,670,000(d) 1,283,108
01-15-32 5.41 21,500,000(d) 3,032,360
San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Revenue Bonds
Zero Coupon Escrowed to Maturity
01-01-17 5.35 34,860,000(d) 12,994,065
San Jose Redevelopment Agency Merged Area
Tax Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured)
08-01-14 7.41 33,600,000(c) 32,634,000
Santa Nella County Water District Improvement
Limited Obligation Refunding Improvement Bonds
Series 1998
09-02-28 6.25 2,760,000 2,559,238
Sierra Unified School District Fresno County
Certificate of Participation Capital Funding
Refunding Bonds Series 1993
03-01-18 6.13 6,470,000 6,333,742
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds South Tahoe Area 1
Series 1995B
10-01-28 6.00 9,900,000 9,455,886
Southern California Public Power Authority
Power Revenue Bonds Palo Verde
Series 1993 Inverse Floater (FGIC Insured)
07-01-17 6.92 20,000,000(c) 20,225,000
Ukiah Unified School District
Mendocino County Certificates of Participation
Series 1993
09-01-10 6.00 5,000,000 5,202,300
University of California Refunding Revenue Bonds
Multiple Purpose Project (AMBAC Insured)
09-01-16 5.25 6,000,000 5,766,840
West Sacramento Financing Authority
Special Tax Revenue Bonds Series 1999F
09-01-29 6.10 9,500,000 8,621,060
Total 484,823,454
Colorado (7.5%)
Arapahoe County Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 4,000,000 4,288,720
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund E-470 Highway
Pre-refunded Revenue Bonds
08-31-26 7.00 22,000,000 24,990,899
Aurora Centretech Metropolitan District
Arapahoe County Series 1987B
12-01-23 10.53 5,699,785 6,083,210
Bowles Metropolitan District General Obligation Bonds
Series 1995
12-01-15 7.75 15,500,000 17,598,080
Briargate Public Building Authority
Landowner Assessment Lien Bonds Series 1985A
12-15-00 10.25 3,880,190(f) 3,565,507
Castle Rock Ranch Public Facility Improvement
Revenue Bonds Series 1996
12-01-17 6.25 10,000,000 10,038,600
Colorado Springs Hospital Revenue Bonds
Memorial Hospital Series 1990
12-15-10 7.88 5,000,000 5,189,750
Colorado Springs Utilities System
Pre-refunded Revenue Bonds Series 1991C
11-15-15 6.50 1,505,000 1,595,676
Colorado Springs Utilities System
Refunding Revenue Bonds Series 1991C
11-15-15 6.50 24,895,000 26,259,743
11-15-21 6.75 30,000,000 31,851,677
Dawson Ridge Metropolitan District
Refunding Revenue Bonds
Zero Coupon Series B Escrowed to Maturity
10-01-22 5.21 40,000,000(d) 8,881,200
Denver City & County Airport Systems Revenue Bonds
Series 1991A A.M.T.
11-15-23 8.75 10,000,000 10,871,741
Denver City & County Airport Systems Revenue Bonds
Series 1991D A.M.T.
11-15-21 7.75 8,650,000 9,236,541
Denver City & County Airport Systems Revenue Bonds
Series 1992A
11-15-25 7.25 20,975,000 22,953,781
Denver City & County Airport Systems Revenue Bonds
Series 1992B A.M.T.
11-15-23 7.25 20,500,000 21,954,421
Denver City & County Airport Systems Revenue Bonds
Series 1994A
11-15-12 7.50 5,000,000 5,510,400
Denver City & County Airport Systems Revenue Bonds
Series 1994A A.M.T.
11-15-23 7.50 19,340,000 21,315,016
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1991
12-01-06 8.00 1,385,000 1,594,412
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1995B
12-01-06 11.00 730,000 695,924
Denver Special Facility Airport Revenue Bonds
United Air Lines Series A A.M.T.
10-01-32 6.88 25,400,000 25,281,889
Denver Urban Renewal Authority Tax Increment Revenue Bonds Downtown Denver
Redevelopment Adams Mark Hotel Series 1989 A.M.T.
09-01-15 8.00 15,800,000 17,535,156
09-01-16 8.00 1,785,000 1,981,029
09-01-17 8.00 1,930,000 2,141,953
Denver Urban Renewal Authority Tax Increment
Revenue Bonds South Broadway Montgomery Ward
Urban Renewal Series 1992
05-01-16 8.50 13,415,000 14,478,810
Denver West Metropolitan District
General Obligation Bonds Series 1996
06-01-16 6.50 2,560,000 2,632,218
Denver West Metropolitan District
General Obligation Refunding Improvement Bonds
Series 1995
12-01-14 7.00 4,230,000 4,512,014
Eagle Bend Metropolitan District 2
Limited General Obligation Bonds
12-01-18 6.88 7,500,000 7,480,275
Edgewater Redevelopment Authority
Tax Increment Refunding Revenue Bonds
Edgewater Redevelopment Series 1999
12-01-08 5.50 3,615,000 3,392,605
Educational & Cultural Facilities Authority Revenue Bonds
Bolder County Day School Series 1999
09-01-24 6.75 4,720,000 4,589,539
Hotchkiss Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 1,500,000 1,610,145
Housing Finance Authority Single Family Program
Senior Bonds Series 1991B (FGIC Insured)
08-01-11 7.25 1,295,000(g) 1,334,174
02-01-18 7.30 1,180,000 1,213,960
Lowry Economic Redevelopment Authority
Revenue Bonds Series 1996
12-01-10 7.50 19,000,000 20,978,659
Lowry Economic Redevelopment Authority
Series A
12-01-10 7.00 3,600,000 3,872,628
Saddle Rock Metropolitan District Limited Tax
General Obligation Bonds Series 1997
12-01-16 7.63 5,300,000 5,383,793
State Health Facilities Authority Retirement Facilities
Revenue Bonds Liberty Heights Zero Coupon
Escrowed to Maturity
07-15-22 7.50 81,465,000(d) 19,373,192
State Health Facility Authority Hospital Improvement
Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995
09-01-25 6.13 7,000,000 6,685,700
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings Series 1994B
12-01-13 8.25 2,580,000 2,989,317
12-01-13 8.50 12,000,000 12,901,560
Thornton Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 4,500,000 4,824,810
Trailmark Metropolitan District
General Obligation Bonds
Series 1999B
12-01-18 5.80 5,000,000 4,585,550
Westminster Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 3,500,000 3,757,005
Total 408,011,279
Connecticut (0.2%)
State Development Authority Pollution Control
Refunding Revenue Bonds Conneticut Light & Power
Series 1993B A.M.T.
09-01-28 5.95 10,000,000 8,954,600
District of Columbia (0.7%)
General Obligation Refunding Bonds Series 1994A
(MBIA Insured)
06-01-10 6.00 27,875,000 29,817,887
06-01-11 6.10 7,580,000 8,138,722
Housing Finance Agency Multi-family Mortgage
Revenue Bonds Temple Courts Section 8
Series 1985 (FHA Insured)
02-01-22 12.00 1,300,000 1,446,133
Total 39,402,742
Florida (4.8%)
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 1996
05-01-18 7.60 4,880,000 5,078,226
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 1998
05-01-19 6.30 1,390,000 1,315,593
Brooks of Bonita Springs Community
Development District Special Assessment
District Capital Improvement Revenue Bonds
Series 1998A
05-01-19 6.20 11,200,000 10,480,736
Brooks of Bonita Springs Community
Development District Special Assessment
District Capital Improvement Revenue Bonds
Series 1998B
05-01-06 5.65 1,070,000 1,030,945
Championsgate Community Development District
Capital Improvement Revenue Bonds Series 1998A
05-01-20 6.25 2,840,000 2,653,923
Championsgate Community Development District
Capital Improvement Revenue Bonds Series 1998B
05-01-05 5.70 1,515,000 1,470,338
Charlotte County Development Authority 1st Mortgage
Refunding Revenue Bonds
Royal Palm Retirement Centre Series 1991
03-01-14 9.50 3,830,000 4,032,416
Crossings at Fleming Island Community Development
District Special Assessment Bonds Series 1995
05-01-16 8.25 9,810,000 10,430,090
Crossings at Fleming Island Community Development
District Utility Revenue Bonds Series 1994
10-01-19 7.38 12,945,000 13,379,564
Crossings at Fleming Island Community Development
District Utility Revenue Bonds Series 1999
10-01-25 6.75 6,000,000 5,884,320
Department of Transportation Turnpike Revenue Bonds
Series 1991A (AMBAC Insured)
07-01-20 6.25 20,000,000 20,612,599
Grand Haven Community Development District
Special Assessment Bonds Flagler County
Series 1997A
05-01-02 6.30 4,400,000 4,407,524
Grand Haven Community Development District
Special Assessment Revenue Bonds
Series 1998A
05-01-19 6.90 1,000,000 998,860
Heritage Harbor Community Development District
Special Assessment Revenue Bonds
Series 1997B
05-01-03 6.00 1,135,000 1,124,842
05-01-05 5.75 1,650,000 1,617,644
Heritage Palms Community Development District
Capital Improvement Revenue Bonds
Series 1998
11-01-03 5.40 3,635,000 3,534,965
Hillsborough County Housing Finance Authority
Multi-family Housing Revenue Bonds
Park Springs Apartments A.M.T. V.R.
07-01-39 6.00 9,300,000 8,591,619
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A
08-01-14 7.00 24,000,000 25,106,230
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A (MBIA Insured)
08-01-16 6.50 24,760,000 25,993,295
Lakewood Ranch Community Development District 1
Manatec County Benefit Special Assessment Bonds
Series 1998
05-01-17 7.30 3,180,000 3,082,469
Lakewood Ranch Community Development District 1
Special Assessment Bonds Series 1994
05-01-14 8.25 2,175,000 2,292,820
Miami Health Facility Authorization Revenue Bonds
Inverse Floater (AMBAC Insured)
08-15-15 7.04 3,500,000(c) 3,097,500
North Springs Improvement Special Assessment
District Revenue Bonds Heron Bay Series 1997
05-01-19 7.00 3,000,000 3,045,420
North Springs Improvement Special Assessment
District Revenue Bonds Parkland Isles Series 1997B
05-01-05 6.25 2,500,000 2,473,900
Orange County Housing Finance Authority
Multi-family Housing Revenue Bonds
Dunwoodie Apartments Series 1999E A.M.T.
07-01-35 6.50 6,020,000 5,545,985
Palm Beach County Health Facilities Authority Hospital
Revenue Bonds Good Samaritan Health Series 1993
10-01-22 6.30 3,750,000 4,020,825
Palm Beach County Housing Finance Authority
Multi-family Revenue Bonds Lake Delray
Series A A.M.T.
01-01-31 6.40 14,000,000 13,023,500
Polk County Industrial Development Authority 1st Mortgage
Refunding Revenue Bonds Spring Haven II
12-01-14 8.75 5,760,000 6,114,874
Port Everglades Port Authority Revenue Bonds Junior Lien
09-01-16 5.00 18,635,000 17,161,903
River Ridge Community Development District
Special Assessment Revenue Bonds Series 1998
05-01-08 5.75 3,100,000 2,974,109
Riverwood Community Development District
Charlotte County Special Assessment Revenue Bonds
Series 1992A-B
05-01-12 8.50 460,000 477,324
05-01-14 8.50 4,925,000 5,110,476
State Housing Finance
Revenue Bonds Westbrook Apartments
Series U-1 A.M.T.
01-01-39 6.45 4,880,000 4,432,504
Stoneybrook Community Development District
Capital Improvement Revenue Bonds
Lee County Series 1998A
05-01-19 6.10 1,660,000 1,537,326
Stoneybrook Community Development District
Capital Improvement Revenue Bonds
Lee County Series 1998B
05-01-08 5.70 1,180,000 1,129,024
Sumter County Industrial Development Authority Industrial Development Revenue
Bonds Little Sumter Utility Company Series 1997 A.M.T.
10-01-27 7.25 4,200,000 4,027,422
Sumter County Industrial Development Authority Industrial Development Water &
Sewer Revenue Bonds Little Sumter Utility Company Series 1998 A.M.T.
10-01-27 6.75 2,915,000 2,695,005
Sumter County Village Community Development
District 1 Capital Improvement Revenue Bonds
Series 1992
05-01-12 8.40 535,000 558,230
Sunrise Utility System Refunding & Improvement
Revenue Bonds
10-01-18 10.75 5,000,000 5,271,250
Village Center Community Development District
Sub Recreational Revenue Bonds
Series 1998C
01-01-19 7.38 2,640,000 2,524,236
Village Center Community District Recreational
Revenue Bonds Series 1996B
01-01-17 8.25 2,695,000 2,802,800
Village Community Development District 2
Special Assessment District Revenue Bonds
Series 1996
05-01-17 7.63 4,830,000 4,963,646
Volusia County Industrial Development Authority
1st Mortgage Refunding Revenue Bonds Series 1996
11-01-26 7.63 10,925,000 12,690,917
Total 258,797,194
Georgia (2.6%)
Americus-Sumter County Hospital Authority
Refunding Revenue Bonds South Georgia
Methodist Home for the Aging Obligated Group
Magnolia Manor Series 1999
05-15-29 6.38 5,500,000 4,957,205
Atlanta Special Purpose Facility Revenue Bonds
Delta Air Lines Series 1989B A.M.T.
12-01-18 7.90 13,500,000 13,794,435
12-01-19 6.25 8,685,000 8,458,061
Atlanta Water & Wastewater Refunding Revenue
Bonds Series 1999A (FGIC Insured)
11-01-38 5.00 29,275,000 24,466,288
Colquitt County Development Authority Revenue Bonds
Zero Coupon Escrowed to Maturity
12-01-21 6.87 46,350,000(d) 10,308,704
Effingham County Pollution Control Revenue Bonds
Fort Howard Series 1988
10-01-05 7.90 19,850,000 20,330,569
Fulco Hospital Authority Revenue Anticipation Certificate
Georgia Baptist Health Care Systems Series 1992A
09-01-22 6.38 20,300,000 21,594,531
George L. Smith II World Congress Center Authority Miscellaneous Revenue Bonds
Dome Stadium Series 2000 (MBIA Insured) A.M.T.
07-01-20 5.50 8,000,000(h) 7,368,560
Municipal Electric Authority Power Revenue Bonds
Series L
01-01-20 5.00 1,150,000 993,830
Rockdale County Development Authority Solid Waste Disposal Revenue Bonds Visy
Paper Series 1993 A.M.T.
01-01-26 7.50 10,000,000 10,348,300
Savannah Economic Development Authority
1st Mortgage Revenue Bonds Zero Coupon Series 1991A
12-01-21 5.40 13,730,000(d) 3,053,689
Savannah Economic Development Authority
Revenue Bonds Zero Coupon Escrowed to Maturity
12-01-21 6.87 64,220,000(d) 14,283,170
Total 139,957,342
Hawaii (0.4%)
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B Inverse Floater
09-07-06 6.52 10,000,000(c) 10,300,000
09-11-08 6.82 10,000,000(c) 10,300,000
Total 20,600,000
Illinois (8.4%)
Bradley Kankakee County Tax Increment
Refunding Revenue Bonds Series 1993
12-01-12 8.40 5,590,000 6,063,138
Broadview Cook County Senior Lien Tax Increment
Revenue Bonds Series 1993
07-01-13 8.25 10,995,000 12,576,851
Chicago Board of Education Unlimited General
Obligation Bonds Capital Appreciation School Reform
Zero Coupon Series B-1 (FGIC Insured)
12-01-29 5.20 25,000,000 3,798,500
Chicago Board of Education Unlimited General
Obligation Bonds School Reform Series 1997A
(AMBAC Insured)
12-01-22 5.25 5,000,000 4,529,650
Chicago Board of Education School Reform
Unlimited Tax General Obligation Refunding Bonds
Zero Coupon Series 1999A (FGIC Insured)
12-01-28 5.30 31,500,000(d) 5,097,645
12-01-29 5.30 30,500,000(d) 4,634,170
12-01-30 5.30 36,135,000(d) 5,140,565
Chicago Capital Appreciation Unlimited
General Obligation Bonds City Colleges
Zero Coupon (FGIC Insured)
01-01-36 6.26 32,670,000(d) 3,447,338
Chicago General Obligation Bonds
Series 1991 (AMBAC Insured)
01-01-16 6.00 6,170,000 6,478,377
Chicago General Obligation Bonds
Series 1994A (AMBAC Insured)
01-01-22 5.88 17,850,000 18,698,232
Chicago General Obligation Refunding Bonds
Series 1995A (AMBAC Insured)
01-01-18 5.50 20,000,000 19,419,400
Chicago O'Hare International Airport
General Airport Refunding Revenue Bonds Series 1993A
01-01-16 5.00 14,450,000 12,930,149
Chicago O'Hare International Airport
General Airport Revenue Bonds Series 1990A A.M.T.
01-01-16 7.50 21,000,000 21,479,009
01-01-18 6.00 29,000,000 29,625,239
Chicago O'Hare International Airport
Special Facility Revenue Bonds United Airlines
Series 1999A
09-01-16 5.35 5,000,000 4,355,550
Chicago O'Hare International Airport
Special Revenue Bonds (FGIC Insured) A.M.T.
11-01-25 7.88 17,750,000 18,453,788
Chicago O'Hare International Airport
Special Revenue Bonds A.M.T.
01-01-17 7.50 32,250,000 32,988,202
Chicago O'Hare International Airport
Special Revenue Facility Bonds Delta Airlines
Series 1992
05-01-18 6.45 10,000,000 9,997,200
Chicago Ridge Special Service Area 1 Unlimited
Ad Valorem Tax Bonds Series 1990
12-01-08 9.00 2,700,000 2,881,143
Chicago Wastewater Transmission Revenue Bonds
Series 1994 (MBIA Insured)
01-01-24 6.38 22,500,000 24,509,474
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds
01-01-06 7.00 990,000 1,021,838
01-01-12 7.38 1,700,000 1,762,458
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds Mark IV Series 1992
03-01-12 9.75 1,675,000 1,873,136
Development Finance Authority Lifecare Revenue Bonds
Presbyterian Homes Series 1996B
09-01-31 6.40 6,700,000 6,829,444
Development Finance Authority Pollution Control
Refunding Revenue Bonds Central Illinois
Public Service 2nd Series 1993B
06-01-28 5.90 2,500,000 2,414,175
Development Finance Authority Pollution Control
Refunding Revenue Bonds Commonwealth Edison
Series 1994
01-15-09 5.70 2,000,000 2,077,680
01-15-14 5.85 4,500,000 4,626,180
DuPage County Tax Increment Revenue Bonds
Series 1997
01-01-17 7.88 4,690,000 5,020,926
Educational Facilities Authority Refunding Revenue Bonds
Lewis University Series 1996
10-01-26 6.13 8,780,000 8,307,197
Educational Facilities Authority Refunding Revenue Bonds
Loyola University of Chicago Series 1993
Inverse Floater (FGIC Insured)
07-01-12 7.57 11,000,000(c) 11,745,580
Granite City Madison County Hospital
Refunding Revenue Bonds St. Elizabeth Medical Center
Series 1989A
06-01-08 8.13 2,920,000 2,899,210
Health Facilities Authority Refunding Revenue Bonds
Morris Hospital
12-01-23 6.13 3,005,000 2,909,681
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Series 1993 Inverse Floater
(MBIA Insured)
08-15-14 8.02 10,000,000(c) 9,850,000
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1992
05-15-12 7.25 2,000,000 2,164,400
05-15-22 7.25 2,000,000 2,164,400
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1996B
02-15-22 5.75 2,915,000 2,653,233
Health Facility Authority Revenue Bonds
South Suburban Hospital Series 1992
02-15-09 7.00 4,000,000 4,357,743
02-15-18 7.00 5,000,000 5,504,594
Hodgkins General Obligation Tax Increment Bonds
Series 1991
12-01-09 9.50 11,200,000 12,453,216
Hodgkins General Tax Increment Bonds
Series 1995A
12-01-13 7.63 9,000,000 9,557,280
Huntley Special Tax Bonds
Series 1998
02-01-25 6.75 2,450,000 2,352,539
Huntley Special Tax Bonds
Series 1999
03-01-28 6.30 2,305,000 2,107,185
Lakemoor Special Tax Revenue Bonds
Series 1997
03-01-27 7.80 9,000,000 9,240,750
Lansing Tax Increment Refunding Revenue Bonds
Landings Redevelopment Area Limited Sales
Tax Pledge Series 1992
12-01-08 7.00 10,000,000 10,590,400
Marion General Obligation Hospital Alternate
Revenue Source Bonds Series 1991
12-01-16 7.50 3,800,000 4,093,892
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (FGIC Insured)
06-15-19 6.37 6,000,000(d) 1,822,980
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (MBIA Insured)
06-15-17 6.61 11,210,000(d) 3,920,249
06-15-28 6.61 41,900,000(d) 7,143,950
Metropolitan Pier & Exposition Authority
Sales Tax & Miscellaneous Tax Revenue
Capital Appreciation Refunding Bonds
Zero Coupon Series 1996A (MBIA Insured)
12-15-22 6.05 16,225,000(d) 3,947,056
Regional Transportation Authority General
Obligation Bonds Counties of Cook, DuPage, Kane, Lake,
McHenry & Will Series 1992A (AMBAC Insured)
06-01-22 6.13 7,200,000 7,489,584
Schaumburg Special Assessment District
Revenue Bonds Woodfield Road
Series 1998
12-01-28 6.75 3,403,000 3,088,120
State Development Finance Authority Pollution Control
Refunding Revenue Bonds Illinois Power
Series 1991A
07-01-21 7.38 19,250,000 20,849,868
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Zero Coupon
Series 1991B Escrowed to Maturity
07-15-25 5.49 10,000,000(d) 1,833,800
State Development Finance Authority Retirement Housing
Revenue Bonds Zero Coupon Escrowed to Maturity
04-15-20 7.75 68,000,000(d) 17,651,440
State Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A
02-15-19 6.00 6,350,000 6,097,842
State Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center Series 1993
10-01-19 5.50 2,000,000 1,784,760
Tinley Park Cook & Will Counties Limited Sales Tax
Revenue Bonds Series 1988
11-01-99 10.25 895,000(f) 321,520
Tinley Park Cook & Will Counties Unlimited Ad Valorem
Tax Bonds of Special Service
12-01-99 10.65 80,000 79,921
12-01-00 10.65 90,000 83,601
12-01-01 10.65 100,000 91,890
12-01-02 10.65 110,000 101,079
12-01-03 10.65 120,000 110,268
12-01-04 10.65 135,000 124,052
12-01-05 10.65 150,000 137,835
12-01-06 10.65 165,000 151,619
12-01-07 10.65 185,000 169,997
Total 452,682,188
Indiana (2.3%)
Brazil 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.38 4,025,000 4,177,990
Carmel Retirement Rental Housing Refunding
Revenue Bonds Beverly Enterprises Series 1992
12-01-08 8.75 6,275,000 6,743,554
Development Finance Authority Environmental
Improvement Refunding Revenue Bonds USX Corporation
Series 1996
07-15-30 6.25 2,000,000 1,889,520
East Chicago Elementary School Building Lake County
1st Mortgage Refunding Bonds Series 1996
01-05-16 6.25 8,000,000 8,472,160
Hanover 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.38 6,590,000 6,837,125
Health Facility Authority Hospital Revenue Bonds
Community Hospital of Anderson Series 1993
01-01-23 6.00 10,000,000 9,417,100
Health Facility Authority Hospital Revenue Bonds
Union Hospital Series 1993 (MBIA Insured)
09-01-18 5.13 10,000,000 8,949,500
Health Facility Finance Authority Hospital Revenue Bonds
Hancock Memorial Series 1996
08-15-17 6.13 2,295,000 2,239,576
La Porte County Hospital Authority Hospital Refunding
Revenue Bonds La Porte Hospital Series 1993
03-01-12 6.25 5,070,000 5,083,993
03-01-23 6.00 2,990,000 2,809,912
Lawrenceburg Pollution Control Refunding Revenue Bonds
Methodist Hospital Series 1989
09-01-08 6.50 15,555,000 15,897,988
Marion County Hospital Authority Refunding Revenue Bonds
Methodist Hospital Series 1989 (MBIA Insured)
09-01-13 6.50 4,115,000 4,164,709
Rockport Pollution Control Refunding Revenue Bonds
Indiana Michigan Electric Series B
03-01-16 7.60 5,500,000 5,726,105
St. Joseph County Hospital Facility Revenue Bonds
Memorial Hospital of South Bend
06-01-10 9.40 1,770,000 2,154,302
Vincennes Economic Development
Improvement Refunding Revenue Bonds
Southwest Regional Youth Facilities Series 1999
01-01-24 6.25 24,535,000 22,659,546
Vincennes Economic Development
Revenue Bonds Southwest Indiana
Regional Youth Village Facility Series 1993
01-01-24 8.50 16,575,000 18,276,092
Total 125,499,172
Iowa (0.6%)
Keokuk Hospital Facilities Refunding Revenue Bonds
Keokuk Area Hospital Series 1991
12-01-21 7.63 5,350,000 5,770,029
Muscatine Electric Refunding Revenue Bonds Series 1986
01-01-05 6.00 10,845,000 10,859,315
01-01-06 6.00 11,330,000 11,344,955
01-01-07 5.00 2,250,000 2,231,393
01-01-08 5.00 5,100,000 5,019,930
Total 35,225,622
Kansas (0.2%)
Manhattan Health Care Facility Revenue Bonds
Meadowlark Hills Retirement Community
Series 1999A
05-15-28 6.50 1,500,000 1,378,305
State Development Financing Authority
Multi-family Revenue Bonds
Tiffany Gardens Apartments A.M.T.
09-01-29 6.75 5,100,000 4,795,683
Wyandotte County Kansas City Multi-family
Housing Revenue Bonds Park Victoria Apartments
Series 1998 A.M.T.
08-01-28 6.25 4,980,000 4,591,859
Total 10,765,847
Kentucky (1.0%)
Development Finance Authority Hospital Facility
Revenue Bonds St. Luke Hospital Series 1989B
10-01-19 6.00 22,695,000 23,184,985
Economic Development Finance Authority Hospital
Refunding Revenue & Improvement Bonds
Appalachian Regional Hospital Series 1997
10-01-22 5.88 5,000,000 4,043,600
Jefferson County Student Housing Industrial Building
Revenue Bonds Collegiate Housing Foundation
Series 1999A
09-01-29 7.13 4,000,000 3,943,480
Muhlenberg County Hospital Refunding Revenue Bonds
Muhlenberg Community Hospital Series 1996
07-01-10 6.75 8,535,000 8,382,224
Turnpike Authority Economic Road Development
Refunding Revenue Bonds Series 1993 Inverse Floater
(AMBAC Insured)
06-06-12 7.84 15,000,000(c) 15,112,500
Total 54,666,789
Louisiana (2.7%)
Calcasieu Parish Industrial Development Pollution Control
Refunding Revenue Bonds Gulf State Utilities
Series 1992
10-01-12 6.75 10,500,000 10,657,710
Energy & Power Authority Refunding Revenue Bonds
Rodemacher Unit 2 Series 1991 (FGIC Insured)
01-01-13 6.00 28,000,000 28,335,160
Hodge Village Combined Utility System Revenue Bonds
Stone Container Series 1990 A.M.T.
03-01-10 9.00 23,000,000 23,591,560
New Orleans Audubon Park Commission Aquarium
Revenue Bonds Series 1992A
04-01-12 8.00 7,100,000 7,764,205
Public Facilities Authority Revenue Bonds
Glen Retirement Systems Series 1995
12-01-15 6.50 1,000,000 995,570
12-01-25 6.70 1,500,000 1,510,035
Southern Louisiana Port Commission Terminal
Refunding Revenue Bonds GATX Terminal Series 1993
03-01-23 7.00 13,180,000 13,668,714
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light 2nd Series 1984
12-01-14 8.00 29,155,000 30,032,566
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light Series 1991 A.M.T.
06-01-21 7.50 20,700,000 21,511,026
West Feliciana Parish Demand Pollution Control
Revenue Bonds Gulf State Utilities Series 1985B
05-01-15 9.00 6,000,000 6,260,520
Total 144,327,066
Maine (0.2%)
Finance Authority Multi-family Housing Revenue
Obligation Securities Huntington Common
Series 1997A
09-01-27 7.50 5,000,000 4,756,600
Kennebunk Special Obligation Revenue Bonds
Series 1999A
07-01-24 7.00 4,750,000 4,402,300
Total 9,158,900
Maryland (0.8%)
Frederick County Economic Refunding Revenue Bonds
Alumax Series 1992
04-01-17 7.25 9,880,000 10,325,292
Frederick County Obligation Special Tax Revenue Bonds
Urbana Community Development Authority Series 1998
07-01-25 6.63 6,000,000 5,719,680
Harford County Industrial Development Revenue Bonds
Dorsey
04-16-05 8.00 449,000 450,248
Prince George's County Hospital Revenue Bonds
Dimensions Health Series 1992
07-01-17 7.25 11,400,000 12,377,436
07-01-22 7.00 7,000,000 7,557,900
State Transportation Authority Facility
Capital Appreciation Revenue Bonds
Zero Coupon Series 1992 (FGIC Insured)
07-01-10 6.33 3,000,000(d) 1,708,440
07-01-11 6.33 6,700,000(d) 3,589,391
State Transportation Authority Facility
Revenue Bonds Zero Coupon
Series 1992 (FGIC Insured)
07-01-12 6.35 5,000,000(d) 2,507,300
Total 44,235,687
Massachusetts (2.7%)
Bay Transportation Authority Refunding Revenue Bonds
Series 1994A (MBIA Insured)
03-01-12 6.00 8,000,000 8,277,781
Health & Educational Facilities Authority
Revenue Bonds Berkshire Health Systems
Series C
10-01-11 5.90 1,700,000 1,623,245
10-01-20 6.00 4,000,000 3,764,360
Health & Educational Facilities Authority
Revenue Bonds Beverly Hospital Inverse Floater
(MBIA Insured)
06-18-20 7.92 8,000,000(c) 7,380,000
Health & Educational Facilities Authority
Revenue Bonds Charlton Memorial Hospital
Series 1991B
07-01-13 7.25 6,455,000 6,848,884
Health & Educational Facilities Authority
Revenue Bonds Holyoke Hospital
Series B
07-01-15 6.50 500,000 493,515
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison
Series 1993
08-01-08 5.88 4,250,000 4,124,795
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
07-01-15 9.00 18,885,000 20,284,756
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991B A.M.T.
07-01-15 9.25 24,700,000 26,532,247
Municipal Wholesale Electric Power
Supply System Pre-refunded Revenue Bonds
Series 1992B
07-01-17 6.75 10,130,000 10,886,407
Municipal Wholesale Electric Power
Supply System Revenue Bonds
Series 1993A Inverse Floater (AMBAC Insured)
07-01-18 7.12 6,500,000(c) 5,703,750
State Health & Educational Facilities Authority
Refunding Revenue Bonds Christopher House Series 1999A
01-01-29 6.88 5,000,000 4,718,850
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Marina Bay LLC
Series 1997 A.M.T.
12-01-27 7.50 2,000,000 2,038,220
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Newton Group Properties LLC
Series 1997 A.M.T.
09-01-27 8.00 4,300,000 4,538,865
Water Resource Authority General
Refunding Revenue Bonds Series 1992B
11-01-15 5.50 22,175,000 21,488,462
Water Resource Authority General
Revenue Bonds Series 1992A
07-15-19 6.50 3,500,000 3,770,550
Water Resource Authority General
Revenue Bonds Series 1993B-95B
(MBIA Insured)
12-01-25 5.00 9,000,000 7,780,140
Water Resource Authority General
Revenue Bonds Series B (MBIA Insured)
03-01-22 5.00 10,000,000 8,779,600
Total 149,034,427
Michigan (4.0%)
Chippewa Valley Schools Unlimited Tax
General Obligation Refunding Bonds
Series 1998 (AMBAC Insured)
05-01-23 4.75 14,240,000 11,916,886
Concord Academy Certificate of Participation Series 1998
10-01-19 7.00 1,000,000 918,830
Countryside Charter School
Full Term Certificates of Participation
Berrien County Series 1999
04-01-29 7.00 2,635,000 2,426,888
Crawford County Economic Development Corporation
Environmental Improvement Revenue Bonds
Weyerhaeuser Series 1991A
07-15-07 7.13 10,800,000 11,798,676
Detroit Unlimited Tax General Obligation Bonds
Series 1993
04-01-14 6.35 5,510,000 5,757,179
Detroit Unlimited Tax General Obligation Bonds
Series 1995A
04-01-15 6.80 1,375,000 1,518,853
Lincoln Consolidated School District Unlimited Tax
General Obligation Refunding Bonds (FGIC Insured)
05-01-18 5.85 6,455,000 6,817,425
Livingston Academy Certificate of Participation
Series 1999
05-01-27 7.00 3,080,000 2,863,661
Midland County Economic Development Corporation Pollution Control Limited
Obligation Refunding Revenue Bonds Midland Cogeneration Series 1990 A.M.T.
07-23-09 9.50 35,200,000 36,470,367
Midland County Economic Development Corporation
Pollution Control Limited Obligation Refunding Revenue
Bonds Midland Cogeneration Series 1990C
07-23-09 8.50 18,900,000 19,488,168
Plymouth Educational Center Certificates of Participation
07-01-29 7.00 7,875,000 7,498,181
State Hospital Finance Authority
Hospital Pre-refunded Revenue Bonds
McLaren Obligated Group Series 1991A
09-15-21 7.50 7,500,000 8,047,875
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995
01-01-26 6.70 3,000,000 2,820,990
State Hospital Finance Authority
Refunding Revenue Bonds
Detroit Medical Center
Series 1993A
08-15-18 6.50 10,000,000 9,343,500
State Hospital Finance Authority
Refunding Revenue Bonds
Greater Detroit Sinai Hospital Series 1995
01-01-16 6.63 2,750,000 2,615,580
State Hospital Finance Authority
Revenue Bonds Central Michigan Community Hospital
10-01-27 6.25 2,095,000 1,957,819
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Ford Motor
Series 1991A
02-01-06 7.10 16,400,000 18,277,308
Strategic Fund Environmental Improvement Limited
Obligation Refunding Revenue Bonds
Crown Paper Company Series 1997B
08-01-12 6.25 1,100,000 923,604
Strategic Fund Limited Obligation Refunding
Revenue Bonds Detroit Edison
Series 1995AA (MBIA Insured)
09-01-25 6.40 12,000,000 12,227,280
Strategic Fund Limited Obligation Refunding
Revenue Bonds Great Lakes Pulp & Fibre
Series 1994 A.M.T.
12-01-27 5.00 23,933,770 16,753,639
Summit Academy Certificates of Participation
Junior High School Facility Series 1999
09-01-29 7.00 4,000,000 3,669,760
Summit Academy Certificates of Participation Series 1998
09-01-18 7.00 2,500,000 2,325,100
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A (Asset Guaranty)
11-01-18 6.38 1,000,000 1,022,040
Van Buren Township Tax Increment Revenue Bonds
Series 1994
10-01-16 8.40 3,955,000 4,341,483
Wayne Charter County Special Airport Facilities Revenue Bonds Northwest Airlines
Series 1999 A.M.T.
12-01-29 6.00 8,235,000 7,401,289
Wayne County Special Airport Facilities
Refunding Revenue Bonds Northwest Airlines Series 1995
12-01-15 6.75 11,265,000 11,325,718
Wayne Charter County Airport Facilities
Revenue Bonds Detroit Metropolitan Wayne County Airport
Series 1998B (MBIA Insured)
12-01-23 4.88 9,940,000 8,382,700
Total 218,910,799
Minnesota (4.6%)
Anoka County Housing & Redevelopment Authority
Revenue Bonds Epiphany Assisted Living LLC
12-01-29 7.40 4,000,000 3,952,520
Becker Solid Waste Disposal Facility Revenue Bonds
Liberty Paper Series 1994B A.M.T.
08-01-15 9.00 16,800,000 17,175,480
Bloomington Health Care Facility Revenue Bonds
Friendship Village of Bloomington Series 1992
04-01-02 8.50 2,385,000(g) 2,452,519
Brainerd Economic Development Authority
Health Care Facility Revenue Bonds
Benedictine Health System St. Joseph Medical Center
Series 1990
02-15-20 8.38 4,670,000 4,804,823
Duluth Economic Development Authority Health Care
Facilities Pre-refunded Revenue Bonds Benedictine
Health System St. Mary's Medical Center
Series 1990
02-15-20 8.38 8,300,000 8,539,621
Fergus Falls Health Care Facilities Revenue Bonds
LRHC Long-term Care Facility Series 1995
12-01-25 6.50 1,530,000 1,531,408
Fridley Senior Housing Revenue Bonds
Banfill Crossing Homes Series 1999
09-01-34 6.75 7,000,000 6,590,430
International Falls Solid Waste Disposal Revenue
Bonds Boise Cascade Series 1990 A.M.T.
01-01-15 7.75 10,000,000 10,208,100
Little Canada Multi-family Housing Revenue Bonds
Housing Alternatives Development Company
Series 1997A
12-01-27 6.25 1,755,000 1,655,737
Mahtomedi Multi-family Housing Revenue Bonds
Briarcliff A.M.T.
06-01-36 7.35 1,995,000 2,002,481
Maplewood Elder Care Facilities Revenue Bonds Care
Institute Series 1994
01-01-24 7.75 8,000,000 7,884,320
Maplewood Multi-family Housing Refunding Revenue
Bonds Carefree Cottages of Maplewood III
Series 1995 A.M.T.
11-01-32 7.20 4,905,000 4,784,729
Mille Lacs Capital Improvement Authority Infrastructure
Revenue Bonds Series 1992A
11-01-12 9.25 4,150,000 4,756,855
Minneapolis Housing & Healthcare Facility Revenue Bonds
Augustana Chapel View Homes Incorporated Series 1997
06-01-22 6.70 1,885,000 1,792,786
06-01-27 6.75 2,640,000 2,510,666
Richfield Multi-family Housing Refunding Revenue
Bonds Village Shores Apartments Series 1996
08-01-31 7.63 4,895,000 4,859,511
Robbinsdale Multi-family Housing Revenue Bonds
Copperfield Hill Series 1996A
12-01-31 7.35 3,500,000 3,407,705
Rochester Multi-family Housing Development
Revenue Bonds Wedum Shorewood Campus
06-01-36 6.60 10,000,000 9,302,100
Roseville Housing Facilities Nursing Home
Refunding Revenue Bonds College Properties
Series 1998
10-01-28 5.88 7,500,000 6,346,125
Sartell Health Care & Housing Facilities Revenue Bonds
The Foundation for Health Care Continuums
Series 1999A
09-01-29 6.63 4,000,000 3,721,200
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Series 1992
01-01-18 5.75 32,210,000 31,223,085
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-21 6.87 13,500,000(d) 3,794,715
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-22 6.73 17,500,000(d) 4,621,925
01-01-23 6.74 27,500,000(d) 6,822,750
01-01-24 6.75 19,960,000(d) 4,651,079
01-01-25 6.75 27,500,000(d) 6,017,275
01-01-26 6.75 27,500,000(d) 5,649,325
01-01-27 6.75 12,450,000(d) 2,407,083
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota
Obligated Group Series 1993 Inverse Floater
(AMBAC Insured)
07-01-05 5.43 10,200,000(c) 9,881,250
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota Obligated Group
Series 1993B Inverse Floater (AMBAC Insured)
07-01-13 5.73 18,000,000(c) 16,132,500
St. Louis Park Multi-family Housing Refunding
Revenue Bonds Park Boulevard Towers
Series 1996A
04-01-31 7.00 11,350,000 11,334,224
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Lyngblomsten
Care Center Series 1993A
11-01-06 7.13 1,465,000 1,460,942
11-01-17 7.13 2,550,000 2,573,282
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Lyngblomsten
Multi-family Rental Housing Series 1993B
11-01-24 7.00 2,665,000 2,588,461
St. Paul Port Authority Redevelopment Multi-family
Refunding Revenue Bonds Burlington Apartments
Series A (GNMA Insured)
05-01-31 5.75 14,355,000 13,655,194
St. Paul Port Authority Redevelopment Multi-family
Subordinate Refunding Revenue Bonds
Burlington Apartments Series A
02-01-31 8.63 3,770,000 3,683,705
St. Paul Port Authority Revenue Bonds
Hotel Facilities Radisson Kellogg 2nd Series 1999
08-01-29 7.38 6,500,000 6,428,045
Vadnais Heights Multi-family Housing Refunding
Revenue Bonds Cottages of Vadnais Heights
Series 1995 A.M.T.
12-01-31 7.00 1,980,000 1,928,302
Washington County Housing & Redevelopment
Authority Refunding Revenue Bonds Woodbury
Multi-family Housing Series 1996
12-01-23 6.95 4,740,000 4,658,614
Total 247,790,872
Mississippi (0.9%)
Gulfport Urban Renewal
Multi-family Housing Revenue Bonds
Woodchase Apartments Series 1998 A.M.T.
12-01-28 6.75 3,075,000 2,754,216
Harrison County Waste Water Management District
Refunding Bonds Series 1986
02-01-15 5.00 4,250,000 4,003,755
Jackson Industrial Development Revenue Bonds Dorsey
04-16-05 8.00 392,000 394,952
Long Beach Urban Renewal Multi-family Housing
Revenue Bonds Long Beach Square Apartments
Series 1998 A.M.T.
08-01-28 6.75 3,830,000 3,484,534
Lowndes County Solid Waste Disposal Pollution Control
Refunding Revenue Bonds Weyerhaeuser Series 1989
Inverse Floater
04-01-22 8.80 4,000,000(c) 4,259,760
Lowndes County Solid Waste Disposal Pollution Control Revenue Bonds Weyerhaeuser
Series 1989 A.M.T.
12-01-05 7.88 12,250,000 12,642,734
State Business Finance Pollution Control Revenue Bonds
System Energy Resources Series 1999
05-01-22 5.90 12,900,000 11,398,053
State Hospital Refunding Revenue Bonds University
of Mississippi Medical Center Educational Building
Series 1998B (AMBAC Insured)
12-01-23 5.50 12,650,000 11,896,693
Total 50,834,697
Missouri (0.5%)
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor Series 1991B
08-15-21 7.00 5,810,000 6,294,322
Sikeston Electric System Refunding Revenue Bonds
Series 1992 (MBIA Insured)
06-01-02 5.80 4,165,000 4,303,778
St. Louis Industrial Development Authority
Refunding Revenue Bonds Kiel Center
Multi-purpose Arena Series 1992 A.M.T.
12-01-24 7.88 15,400,000 16,204,957
St. Louis Regional Convention & Sports Complex Authority
Pre-refunded Revenue Bonds Series 1991C
08-15-21 7.90 125,000 132,588
St. Louis Regional Convention & Sports Complex Authority
Refunding Revenue Bonds Series 1991C
08-15-21 7.90 2,575,000 2,867,340
Total 29,802,985
Nebraska (--%)
Omaha Public Power District Electric System
Revenue Bonds Series 1986A
02-01-15 6.00 1,370,000 1,389,509
Nevada (0.8%)
Clark County Collateralized Pollution Control Revenue Bonds
Nevada Power A.M.T.
10-01-09 7.80 11,850,000 12,187,014
Clark County Industrial Development Revenue Bonds
Nevada Power Series 1990 A.M.T.
06-01-20 7.80 5,000,000 5,150,550
Clark County Passenger Facility Charge Airport
Refunding Revenue Bonds
Las Vegas McCarran International Airport
Series 1998 (MBIA Insured)
07-01-22 4.75 9,000,000 7,539,750
Las Vegas Redevelopment Agency Tax Increment
Subordinate Lien Revenue Bonds Series 1994A
06-15-10 6.00 2,000,000 2,016,040
06-15-14 6.10 2,750,000 2,731,603
Las Vegas Special Improvement District 707
Local Improvement Bonds
Summerlin Area Series 1996
06-01-16 7.10 5,925,000 6,155,186
Washoe County Hospital Revenue Bonds
Washoe Medical Center Series 1993A
06-01-15 6.00 7,250,000 7,228,250
Total 43,008,393
New Hampshire (2.2%)
Business Financial Authority Pollution Control
& Solid Waste Disposal Refunding Revenue Bonds
Crown Paper Company Series 1996
01-01-22 7.75 4,255,000 3,865,327
Business Financial Authority Pollution Control
Refunding Revenue Bonds United Illuminating
Series 1993A
10-01-33 5.88 13,200,000 11,942,568
Higher Education & Health Facilities Authority
Lifecare Revenue Bonds Rivermead at Peterborough
Retirement Community Series 1998
07-01-18 5.63 1,365,000 1,167,635
07-01-28 5.75 2,500,000 2,078,625
Industrial Development Authority Pollution Control
Revenue Bonds State Public Service Series 1991B
05-01-21 7.50 51,485,000 53,006,382
Industrial Development Authority Pollution Control Revenue Bonds State Public
Service Series 1991C A.M.T.
05-01-21 7.65 25,000,000 25,771,500
Industrial Development Authority Pollution Control
Revenue Bonds United Illuminating Series 1989A A.M.T.
12-01-14 8.00 8,000,000 8,251,040
State Higher Education & Health Facility Authority Hospital
Revenue Bonds Hitchcock Clinic Series 1994
(MBIA Insured)
07-01-24 6.00 13,000,000 12,834,640
State Turnpike System Refunding Revenue Bonds
Series 1999A (FGIC Insured)
04-01-29 4.75 3,000,000 2,446,260
Total 121,363,977
New Jersey (0.2%)
Health Care Facility Finance Authority Revenue Bonds
St. Peter Medical Center Series 1994F (MBIA Insured)
07-01-16 5.00 10,000,000 9,174,500
New Mexico (1.9%)
Albuquerque Health Care System Revenue Bonds
Lovelace Medical Fund
03-01-11 10.25 55,000 55,769
Bernalillo County Muti-family Housing Revenue Bonds
Series 1997D
04-01-27 7.70 14,770,000 14,568,833
Farmington Pollution Control Refunding Revenue Bonds
Series 1996A-B
12-01-16 6.30 10,000,000 9,874,900
Farmington Pollution Control Refunding Revenue Bonds
Series 1997A
10-01-20 6.95 4,000,000 4,042,000
Farmington Pollution Control Refunding Revenue Bonds
State Public Service San Juan Series 1994A
08-15-23 6.40 30,650,000 30,096,461
Farmington Power Refunding Revenue Bonds
Generating Division
01-01-13 9.88 5,000,000 6,200,500
Las Vegas Hospital Facility Refunding Revenue Bonds
Northeastern Regional Hospital Series 1987
08-01-13 9.63 5,195,000 5,234,482
Lordsberg Pollution Control Refunding Revenue Bonds
Phelps Dodge
04-01-13 6.50 20,000,000 20,239,800
Sandoval County Multi-family Housing
Refunding Revenue Bonds Meadowlark Apartments
Series 1998A A.M.T.
07-01-38 6.38 11,300,000 10,537,815
Sandoval County Multi-family Housing
Refunding Revenue Bonds Meadowlark Apartments
Series 1998B A.M.T.
07-01-01 6.38 1,000,000 992,530
Santa Fe County Lifecare Revenue Bonds
El Castillo Retirement Series 1998A
05-15-15 5.50 1,000,000 879,140
05-15-25 5.63 2,500,000 2,058,350
Total 104,780,580
New York (7.2%)
Battery Park City Authority Refunding Revenue Bonds
Series 1993A
11-01-10 5.50 9,940,000 10,074,687
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990C
07-01-16 6.00 27,230,000 27,115,089
07-01-17 5.00 20,820,000 18,226,869
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990D
07-01-09 7.00 5,000,000 5,491,400
Dormitory Authority New York Court Facility Lease
Revenue Bonds Series 1993A
05-15-16 5.38 11,000,000 10,254,200
Dormitory Authority New York State
University Education Facility Revenue Bonds
Series 1993A
05-15-13 5.50 24,530,000 24,552,322
Huntington Housing Authority Senior Housing
Facilities Revenue Bonds Gurwin Jewish Senior
Residences Series 1999A
05-01-39 6.00 2,000,000 1,793,880
Long Island Power Authority
Revenue Bonds Series A
12-01-26 5.25 8,445,000 7,439,876
12-01-29 5.50 1,000,000 914,020
New York & New Jersey Port Authority Special
Obligation Revenue Bonds KIAC Partners
4th Series 1996 A.M.T.
10-01-19 6.75 3,500,000 3,600,310
New York City General Obligation Bonds Series 1992B
02-01-00 7.40 30,000,000 30,166,500
New York City General Obligation Bonds Series 1996F-G
02-01-19 5.75 5,500,000 5,325,870
02-01-20 5.75 2,325,000 2,238,905
New York City General Obligation Bonds Series 1998H
08-01-22 5.00 15,000,000 12,904,350
New York City Industrial Development Agency
Civic Facilities Revenue Bonds Touro College
Series 1999A
06-01-29 6.35 6,250,000 5,893,875
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series 1994B Inverse Floater (MBIA Insured)
06-15-09 6.42 15,500,000(c) 15,383,750
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series A
06-15-21 6.25 55,500,000 56,537,849
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series B
06-15-17 5.00 6,255,000 5,676,538
New York City Unlimited Tax General Obligation
Bonds Series 1996G
02-01-17 5.75 20,000,000 19,592,600
New York City Unlimited Tax General Obligation
Bonds Series 1998F
08-01-23 5.00 7,235,000 6,196,054
New York City Unlimited Tax General Obligation
Pre-refunded Bonds Series 1994B-1
08-15-16 7.00 16,500,000 18,276,225
North Hempstead Unlimited Tax General Obligation
Various Purpose Bonds Series 1998A
(FGIC Insured)
01-15-23 4.75 3,100,000 2,598,172
Port Authority Special Project Bonds La Guardia Airport Passenger Terminal
Continental & Eastern Airlines A.M.T.
12-01-06 9.00 2,645,000 2,782,223
Port Authority Special Project Bonds La Guardia Airport Passenger Terminal
Continental & Eastern Airlines Series 2 A.M.T.
12-01-10 9.00 8,800,000 9,256,544
12-01-15 9.13 17,500,000 18,437,825
State Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1994A
07-01-18 5.75 5,500,000 5,395,445
State Housing Finance Agency Service Contract Obligation
Revenue Bonds Series 1995A
03-15-25 6.50 12,475,000 13,729,484
State Housing Finance Agency State University Construction
Refunding Bonds Series 1986A
05-01-13 6.50 3,500,000 3,880,625
State Medical Facilities Finance Agency
Mental Health Services Improvement Refunding
Revenue Bonds Series 1993D
08-15-23 5.25 15,000,000 13,173,150
State Medical Facilities Finance Agency
Mental Health Services Improvement Refunding
Revenue Bonds Series 1993F
02-15-19 5.25 5,790,000 5,182,803
State Urban Development Capital Correctional
Facilities Refunding Revenue Bonds Series 1994A
01-01-21 5.25 12,110,000 10,752,832
State Urban Development Correctional Facility
Refunding Revenue Bonds Series A
01-01-16 5.50 2,750,000 2,598,393
State Urban Development Correctional Facility
Revenue Bonds Series 6
01-01-25 5.38 9,000,000 8,060,760
State Urban Development Correctional Facility
Sub Lien Revenue Bonds Series 1996
07-01-26 5.60 6,630,000 6,138,850
Total 389,642,275
North Carolina (3.7%)
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1986A
01-01-17 5.00 6,500,000 6,006,630
01-01-18 4.00 8,675,000 6,906,428
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1988A
01-01-26 6.00 1,940,000 1,985,415
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1989A
01-01-10 7.50 29,160,000 33,487,842
01-01-11 5.50 37,800,000 36,077,454
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1991A
01-01-19 5.75 55,000,000 49,743,099
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1993B
01-01-12 6.25 24,655,000 24,727,732
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1994B
01-01-07 7.25 5,000,000 5,441,750
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series B
01-01-09 6.13 10,000,000 10,191,100
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993D
01-01-13 5.88 2,300,000 2,225,526
Municipal Power Agency 1 Catawba Electric
Revenue Bonds Series 1993
Inverse Floater (MBIA Insured)
01-01-12 7.22 7,400,000(c) 7,326,000
01-01-20 7.42 15,000,000(c) 13,462,500
State Medical Care Community Hospital Refunding
Revenue Bonds Pitt County Memorial Hospital
Series 1998A (MBIA Insured)
12-01-28 4.75 5,730,000 4,650,755
Total 202,232,231
North Dakota (0.3%)
Fargo Hospital Refunding Revenue & Improvement Bonds
Dakota Hospital Series 1992
11-15-12 6.88 3,000,000 3,235,650
11-15-22 7.00 4,250,000 4,597,140
Ward County Health Care Facilities
Refunding Revenue Bonds Trinity Group Series 1996A
07-01-26 6.25 6,110,000 5,880,142
Ward County Health Care Facilities Refunding
Revenue Bonds Trinity Obligated Group
Series 1996B
07-01-21 6.25 4,000,000 3,876,440
Total 17,589,372
Ohio (2.7%)
Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Company Series 1997B
08-01-20 6.00 10,000,000 9,242,700
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association of Logan County
Series 1993
12-01-13 6.00 5,330,000 4,985,256
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
Fort Hamilton-Hughes Memorial Center
Series 1991
01-01-10 7.50 9,800,000 10,182,396
Carroll Water & Sewer District
Unlimited Tax General Obligation Bonds
12-01-10 6.25 1,795,000 1,798,303
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds
12-01-10 6.25 7,855,000 7,940,541
Cleveland Parking Facilities Improvement
Revenue Bonds Series 1992
09-15-22 8.10 15,000,000 16,651,800
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992
08-01-13 7.88 17,500,000 18,553,150
Cuyahoga County Health Care Facilities
Lifecare Refunding Revenue Bonds
Judson Retirement Community Series 1996A
11-15-13 7.25 2,080,000 2,092,126
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds
Judson Retirement Community Series A
11-15-18 7.25 4,130,000 4,154,078
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital
Series 1992
01-01-15 6.75 6,540,000 6,736,396
Franklin County Health Care Facilities
Refunding Revenue Bonds
Lutheran Senior City Incorporated
Series 1999
12-15-28 6.13 4,705,000 4,079,658
Franklin County Multi-family Housing
Refunding Revenue Bonds
Jefferson Chase Apartments Series 1998B A.M.T.
11-01-35 6.40 1,465,000 1,341,032
Franklin County Multi-family Housing
Refunding Revenue Bonds
West Bay Apartments A.M.T.
12-01-25 6.38 8,365,000 7,904,925
Lorain County Independent Living & Hospital Facilities
Refunding Revenue Bonds Elyria United Methodist
Series 1996C
06-01-22 6.88 3,100,000 3,089,460
Marion County Health Care Facilities
Improvement Refunding Revenue Bonds
United Church Homes Series 1993
11-15-10 6.38 1,880,000 1,840,144
Marion County Health Care Facilities
Refunding & Improvement Revenue Bonds
United Church Homes Series 1993
11-15-15 6.30 1,800,000 1,730,016
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
08-01-25 7.70 13,000,000 13,960,440
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Ohio Edison Series 1993A
05-15-29 5.95 13,300,000 12,135,053
State Water Development Authority Pollution Control
Refunding Revenue Bonds Toledo Edison
Series 1994A A.M.T.
10-01-23 8.00 10,000,000 10,789,700
Water Development Authority Pollution Control
Revenue Bonds Ohio Edison A.M.T.
10-01-23 8.10 10,000,000 10,220,200
Total 149,427,374
Oklahoma (1.1%)
Grand River Dam Authority Refunding Revenue Bonds
Series 1987
06-01-12 5.00 10,105,000 9,749,809
Hinton Economic Development Authority
Certificate of Participation
Dominion Leasing Series 1990A
07-01-15 9.75 19,090,000 20,722,958
Hinton Economic Development Authority
Certificate of Participation
Series 1994
07-01-15 8.75 11,135,000 11,958,545
Jackson County Hospital Authority
Refunding Revenue Bonds
Jackson County Memorial Hospital Series 1994
08-01-15 7.30 6,580,000 6,609,939
Midwest City Memorial Hospital Authority Hospital
Revenue Bonds Series 1992
04-01-22 7.38 7,815,000 8,431,838
Stillwater Medical Center Authority
Hospital Revenue Bonds Series 1997B
05-15-19 6.50 1,750,000 1,690,990
Total 59,164,079
Oregon (0.6%)
Clackamas County Hospital Facilities Authority
Revenue Bonds Senior Living Facility
Mary's Woods at Marylhurst Series 1999A
05-15-29 6.63 4,000,000 3,752,480
State Health Housing Educational & Cultural Facilities
Authority Revenue Bonds Oregon Baptist Retirement
Homes-Weidler Retirement Center Series 1995
11-15-26 8.00 7,565,000 7,947,411
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994A
01-01-21 7.13 13,600,000 14,066,072
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994B A.M.T.
01-01-16 7.40 9,000,000 9,426,150
Total 35,192,113
Pennsylvania (3.6%)
Allegheny County Industrial Development Authority
Environment Improvement Revenue Bonds
USX Corporation Series 1994A
12-01-20 6.70 6,000,000 6,067,260
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
05-01-25 7.63 7,500,000 8,046,150
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995A
07-15-25 7.75 21,150,000 22,848,556
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Toledo Edison Series 1995A
05-01-20 7.75 14,000,000 15,161,300
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds
Toledo Edison-Beaver Valley Series 1995
05-01-20 7.63 11,700,000 12,551,994
Butler County Industrial Development Authority Health Care
Refunding Revenue Bonds Pittsburgh Lifetime Care
Community Sherwood Oaks Series 1993
06-01-11 5.75 2,000,000 1,965,380
06-01-16 5.75 3,000,000 2,841,000
Convention Center Authority Refunding Revenue Bonds
Philadelphia Series 1994A
09-01-19 6.75 5,300,000 5,554,188
Delaware County Authority 1st Mortgage Revenue Bonds
Riddle Village Series 1996
06-01-26 7.00 10,000,000 9,811,100
Delaware County Authority Revenue Bonds
Health Systems Catholic Health East Series 1998A
(AMBAC Insured)
11-15-26 4.88 20,600,000 16,976,048
Harrisburg Dauphin County General Obligation Bonds
Zero Coupon Series 1997F (AMBAC Insured)
09-15-20 5.50 3,000,000(d) 842,910
09-15-21 5.52 1,000,000(d) 263,210
09-15-22 5.52 1,000,000(d) 247,030
Montgomery County Higher Education & Health Authority
Retirement Community Revenue Bonds G.D.L. Farms
Series A
01-01-20 9.50 3,000,000 3,073,260
Montgomery County Higher Education & Health Authority
Revenue Bonds Temple Continuing Care Center
Series 1999
07-01-29 6.75 10,000,000 9,128,800
Philadelphia Gas Works Revenue Bonds Series 13
06-15-21 7.70 4,150,000 4,438,176
Philadelphia Municipal Authority Lease
Refunding Revenue Bonds Series 1993D
07-15-13 6.25 2,500,000 2,523,325
07-15-17 6.30 1,550,000 1,551,457
Philadelphia Water & Sewer Revenue Bonds Series 16
08-01-10 7.50 13,200,000 14,124,924
08-01-18 7.00 14,000,000 14,610,680
Philadelphia Water & Wastewater Revenue Bonds
Series 1993 (FSA Insured)
06-15-15 5.50 11,000,000 11,058,196
State Department of General Services
Certificate of Participation
Series 1994A (AMBAC Insured)
07-01-15 5.00 25,000,000 22,490,250
Wilkins Industrial Development Authority Revenue Bonds
Retirement Community Longwood at Oakmont
Series 1991A
01-01-21 10.00 8,495,000 9,229,903
Total 195,405,097
South Carolina (1.0%)
Cherokee County Spring City Industrial Development
Revenue Bonds Knitting Cluett Peabody
09-01-09 7.40 5,200,000 5,932,160
Jobs Economic Development Authority
1st Mortgage Health Facilities Nursing Home Refunding
Revenue Bonds Lutheran Homes Series 1998
05-01-26 5.70 5,235,000 4,403,839
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1986B
01-01-24 5.75 7,550,000 6,568,500
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1998A
01-01-25 4.75 5,000,000 4,077,700
Public Service Authority Electric System
Expansion Revenue Bonds Santee Cooper
Series 1991D
07-01-31 6.63 14,975,000 16,055,596
Public Service Authority Electric System
Revenue Bonds Santee Cooper
Series 1993A Inverse Floater (MBIA Insured)
06-28-13 7.55 17,700,000(c) 17,346,000
Total 54,383,795
South Dakota (0.6%)
Heartland Consumers Power District Electric System
Refunding Revenue Bonds Series 1986
01-01-10 6.00 10,205,000 10,673,410
Sioux Falls Multi-family Housing Revenue Bonds
Series 1996A
12-01-34 7.50 12,200,000 12,370,922
State Lease Revenue Trust Certificates Series 1993
(CGIC Insured)
09-01-17 6.70 7,260,000 8,054,607
Total 31,098,939
Tennessee (0.4%)
Nashville & Davidson Counties Health & Education
Facilities 1st Mortgage Revenue Bonds
Blakeford at Green Hills CCRC
07-01-24 9.25 12,230,000 14,583,785
Nashville & Davidson Counties Health & Education
Facilities Board Revenue Bonds
Zero Coupon Escrowed to Maturity
06-01-21 5.38 29,109,000(d) 7,356,718
Total 21,940,503
Texas (7.4%)
Alliance Airport Authority Special Facility Revenue Bonds
American Airlines Series 1990 A.M.T.
12-01-29 7.50 37,400,000 38,916,195
Austin Combined Utilities System Refunding Revenue Bonds
Series 1986
11-15-13 5.00 19,985,000 18,632,016
Board of Regents of the University System General
Refunding Revenue Bonds Series 1986
08-15-07 6.50 2,565,000 2,757,272
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1990A A.M.T.
02-01-20 8.13 13,205,000 13,518,223
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1991A A.M.T.
03-01-21 7.88 24,450,000 25,595,972
Carrol Independent School District
Unlimited General Obligation Bonds Series 1998A
(Permanent School Fund Guarantee)
02-15-23 4.50 5,825,000 4,669,320
Castlewood Municipal Utility District Water &
Sewer Systems Unlimited Tax & Refunding Revenue Bonds
Series 1997
04-01-14 6.75 2,820,000 2,839,063
Colony Municipal Utility District 1 Denton County
Series 1980
08-01-07 9.25 1,000,000 1,272,630
Crowley Independent School District
Unlimited General Obligation Bonds
(Permanent School Fund Guarantee)
08-01-27 5.13 6,000,000 5,257,020
Cypress Hill Municipal Utility District 1
General Obligation Bonds
09-01-22 5.30 2,045,000 1,783,751
Dallas & Fort Worth International Airport Special Facility Revenue Bonds
American Airlines Series 1990 A.M.T.
11-01-25 7.50 26,200,000 27,163,898
Dallas & Fort Worth International Airport Special Facility Revenue Bonds
American Airlines Series 1999 A.M.T.
05-01-35 6.38 11,415,000 11,018,785
Dallas & Fort Worth International Airport Special Facility Revenue Bonds Delta
Air Lines Series 1991 A.M.T.
11-01-26 7.13 13,500,000 13,779,180
Denison Hospital Authority Hospital Revenue Bonds
Texoma Medical Center Series 1994
08-15-24 7.10 3,950,000 4,224,771
Harris County Health Facilities Hospital Revenue Bonds
Memorial Hospital Series 1992
06-01-15 7.13 16,000,000 17,092,960
Harris County Industrial Development Marine Terminal
Refunding Revenue Bonds GATX Terminal Series 1992
02-01-22 6.95 15,000,000 15,444,750
Hidalgo County Health Services Corporation
Hospital Revenue Bonds Mission Hospital
Series 1996
08-15-26 6.88 7,880,000 7,981,731
Houston Water & Sewer System Junior Lien
Capital Appreciation Refunding Revenue Bonds
Zero Coupon Series 1998A (FSA Insured)
12-01-25 5.34 30,000,000(d) 6,039,900
Interstate Municipal Utility District
Unlimited Tax Bonds Harris County Series 1996
09-01-21 6.75 3,020,000 3,095,077
Karnes County Public Facility Lease Revenue Bonds
03-01-15 9.20 15,270,000 18,458,834
Katy Development Authority Metro Contract
Revenue Bonds Sales Tax
Series 1999A
06-01-09 5.75 14,755,000 14,089,992
Keller Independent School District
Unlimited General Obligation Bonds
(Permanent School Fund Guarantee)
08-15-30 5.00 8,345,000 7,117,951
Kings Manor Municipal Utility District
Waterworks & Sewer Systems Combination
Unlimited Tax & Revenue Bonds Series 1995
03-01-18 6.88 2,470,000 2,590,882
Lubbock Health Facilities Development
Corporation Fixed Rate 1st Mortgage Revenue Bonds
Carillon Series 1999A
07-01-29 6.50 20,145,000 17,945,770
Midland County Hospital District Revenue Bonds Series 1992
06-01-16 7.50 3,025,000 3,257,169
Mineral Wells Independent School Districts Palo Pinto &
Parker Counties Unlimited Tax General Obligation School
Building & Refunding Bonds Series 1998
(Permanent School Fund Guarantee)
02-15-22 4.75 5,430,000 4,567,445
Montgomery County Municipal Utility District 42
Unlimited General Obligation Bonds
Waterworks & Sewer Systems
09-01-23 6.88 2,035,000 2,035,163
Municipal Power Agency
Refunding Revenue Bonds (MBIA Insured)
09-01-09 5.25 8,000,000 8,090,640
Municipal Power Agency
Revenue Bonds
09-01-13 5.50 7,410,000 7,324,933
North Central Health Facilities Development Revenue
Bonds Retirement Facility Northwest Senior Housing
Series 1999A
11-15-29 7.50 15,000,000 14,463,750
North Tollway Authority Revenue Bonds
Dallas North Tollway System (FGIC Insured)
01-01-29 4.75 5,000,000 4,080,100
Rio Grande City Consolidated Independent School District
Public Facilities Lease Revenue Bonds Series 1995
07-15-10 6.75 4,000,000 4,198,440
Sabine River Authority Collateralized Pollution Control Revenue Bonds Texas
Utilities Electric Series 1990A A.M.T.
02-01-20 8.13 30,500,000 31,224,070
West Side Calhoun County Navigation District Solid Waste Disposal Revenue Bonds
Union Carbide Chemical & Plastics Series 1991 A.M.T.
03-15-21 8.20 17,550,000 18,399,420
Wichita County Health Facilities Development
Refunding Revenue Bonds
Rolling Meadows Series 1998A
01-01-28 6.25 23,425,000 20,833,024
Total 399,760,097
Utah (1.9%)
Carbon County Solid Waste Disposal
Refunding Revenue Bonds Sunnyside
Cogeneration Series 1999A A.M.T.
08-15-23 7.10 12,840,000 12,757,952
Carbon County Solid Waste Disposal
Refunding Revenue Bonds Sunnyside
Cogeneration Zero Coupon Series 1999B A.M.T.
08-15-24 6.82 3,920,000(d) 645,546
Eagle Mountain Special Assessment
Revenue Bonds Special Improvement
District 98-1 Series 1999
12-15-12 6.25 12,105,000 11,204,146
Housing Finance Agency Single Family Mortgage
Senior Bonds Series 1991C (FGIC Insured)
07-01-11 7.30 235,000 241,625
07-01-16 7.35 185,000 190,062
Hurricane Health Facilities Development Revenue Bonds
Mission Health Services Series 1990
07-01-20 10.50 7,500,000 7,870,725
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1993B Inverse Floater
07-01-11 7.57 7,600,000(c) 7,619,000
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C (MBIA Insured)
07-01-17 5.70 46,000,000 45,374,859
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series F (AMBAC Insured)
07-01-13 5.00 5,000,000 4,744,350
Intermountain Power Agency Power Supply
Revenue Bonds Series 1987A (MBIA Insured)
07-01-12 5.00 8,000,000 7,688,880
Tooele County Pollution Control Refunding Revenue Bonds
Laidlaw Environmental Services Incorporated
Series 1997A A.M.T.
07-01-27 7.55 4,000,000 4,198,080
Total 102,535,225
Virginia (0.8%)
Fairfax County Economic Development Authority
Educational Facilities Revenue Bonds
Browne Academy Series 1998
10-01-08 6.00 1,385,000 1,323,645
10-01-23 6.45 5,200,000 4,781,244
Fairfax County Redevelopment & Housing Authority
Multi-family Housing Revenue Bonds
Burkeshire Commons Series 1996
10-01-36 7.60 13,055,000 13,659,054
Hopewell City Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Stone Container Series 1992
05-01-10 8.25 3,170,000 3,385,877
Housing Development Authority Commonwealth
Mortgage Bonds Series 1992A
01-01-33 7.15 11,890,000 12,197,951
Prince William County Service Authority Water & Sewer
Systems Refunding Revenue Bonds
Series 1997 (FGIC Insured)
07-01-29 4.75 1,875,000 1,532,269
Upper Occoquan Sewer Authority Regional Sewer
Revenue Bonds Series 1995A (MBIA Insured)
07-01-29 4.75 9,500,000 7,763,495
Total 44,643,535
Washington (2.7%)
Central Puget Sound Regional Transit Authority
Sales Tax Revenue Bonds (FGIC Insured)
02-01-28 4.75 12,000,000 9,756,360
Chelan County Public Utility District 1
Capital Appreciation Bonds
Columbia River Rock Island Highway
Zero Coupon Series 1997A
06-01-27 5.74 22,685,000(d) 4,137,290
06-01-29 5.74 24,595,000(d) 3,945,284
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A
03-01-26 7.20 4,000,000 4,003,840
Longview Industrial Development Corporation Solid Waste
Revenue Bonds Weyerhauser Series 1991 A.M.T.
02-01-13 7.45 20,000,000 20,832,200
Public Power Supply System Nuclear Project 1
Refunding Revenue Bonds Bonneville Power Administration
Series 1993A Inverse Floater (FSA Insured)
07-01-11 7.72 25,000,000(c) 26,250,000
Public Power Supply System Nuclear Project 1
Revenue Bonds Series 1990A
07-01-17 6.00 38,875,000 39,332,947
Public Power Supply System Nuclear Project 2
Revenue Bonds Series 1994A
07-01-11 5.38 10,000,000 9,935,700
Snohomish County Public Utilitiy District 1
Generation System Revenue Bonds Series 1986A
01-01-20 5.00 17,750,000 15,999,318
State General Obligation
Refunding Revenue Bonds
Zero Coupn Series 1997A
07-01-19 5.95 16,260,000(d) 4,945,642
State Housing Finance Commission
Refunding Revenue Bonds Horizon House
Series 1995A (Asset Guaranty)
07-01-17 6.00 3,700,000 3,751,763
07-01-27 6.13 3,845,000 3,927,014
Total 146,817,358
West Virginia (1.3%)
Kanawha County Pollution Control
Revenue Bonds Union Carbide Series 1984
08-01-04 7.35 3,000,000 3,273,540
Mason County Pollution Control
Refunding Revenue Bonds Appalachian Power
Series 1992J
10-01-22 6.60 25,000,000 25,231,251
Pea Ridge Public Service District Sewer
Refunding Revenue Bonds Series 1990
05-01-20 9.25 2,505,000 2,632,404
Princeton Hospital Revenue Bonds
Community Hospital Association
Series 1999
05-01-29 6.10 5,095,000 4,616,681
Putnam County Pollution Control Revenue Bonds
Appalachian Power Series C
07-01-19 6.60 10,600,000 10,808,502
School Building Authority Capital Improvement
Revenue Bonds Series 1991A
07-01-21 6.00 20,785,000 21,336,426
South Charleston Pollution Control Refunding
Revenue Bonds Union Carbide Series 1985
08-01-05 7.63 3,000,000 3,330,900
Total 71,229,704
Wisconsin (0.8%)
Health & Educational Facilities Authority
Revenue Bonds FH Healthcare Development
Series 1999
11-15-28 6.25 10,000,000 9,230,600
Health & Educational Facilities Authority
Revenue Bonds St. Clare Hospital
02-15-22 7.00 12,115,000 12,939,547
Madison Industrial Development
Refunding Revenue Bonds Madison Gas & Electric
Series 1992B
10-01-27 6.70 19,300,000 20,224,469
State Health & Education Facilities Authority
Lifecare Revenue Bonds United Lutheran
Program for the Aging - Luther Manor Series 1998
03-01-28 5.70 3,250,000 2,677,708
Total 45,072,324
Wyoming (0.2%)
Natrona County Hospital Revenue Bonds
Wyoming Medical Center
09-15-10 8.13 6,500,000 6,833,580
State Farm Loan Board Capital Facilities
Revenue Bonds Series 1994
04-01-24 6.10 5,000,000 4,986,900
Total 11,820,480
Total municipal bonds
(Cost: $5,078,490,354) $5,298,793,350
Total investments in securities
(Cost: $5,078,490,354)(i) $5,298,793,350
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in portfolio descriptions to
identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) 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 Nov. 30, 1999. Inverse floaters in the aggregate represent 6.12% of
the Portfolio's net assets as of Nov. 30, 1999.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(e) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax -- As of Nov. 30, 1999, the value of
securities subject to alternative minimum tax represented 16.73%
of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(f) Non-income producing. Item identified is in default as to payment of
interest and/or principal.
(g) Partially pledged as initial deposit on the following open
interest rate futures contracts (see Note 4 to the financial statements):
Type of security Notional amount
Purchase contracts
Municipal Bonds, December 1999 $63,700,000
Municipal Bonds, March 2000 33,300,000
(h) At Nov. 30, 1999, the cost of securities purchased, including interest
purchased, on a when-issued basis was $7,669,520.
(i) At Nov. 30, 1999, the cost of securities for federal income tax purposes was
$5,078,735,893 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $318,804,534
Unrealized depreciation (98,747,077)
-----------
Net unrealized appreciation $220,057,457
<PAGE>
Form of Proxy Card
Proxy Card Front
Proxy Card
[Fund name]
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Heidi S. Brommer, James A. Mitchell and Eileen
J. Newhouse, or any one of them, as proxies, with full power of substitution, to
represent and to vote all of the shares of the undersigned at the special
meeting to be held on May 9, 2000, and any adjournment thereof.
TO HAVE YOUR VOTE COUNTED, YOU MUST SIGN, DATE AND RETURN THIS PROXY. IT WILL BE
VOTED AS MARKED, OR IF NOT MARKED, WILL BE VOTED "FOR" THE PROPOSAL.
THE BOARD RECOMMENDS A VOTE
"FOR" THE PROPOSAL.
_____________________________________
Signature(s)
Date _______, 2000
Owners please sign as names appear at
left. Executors, administrators,
trustees, etc., should indicate
position when signing.
Proxy Card Back
Vote on Proposal
Approve the Agreement and Plan of Reorganization between the Strategist Fund and
the AXP Fund providing for the acquisition of all of the assets of the
Strategist Fund by the AXP Fund in exchange for Class A shares of the AXP Fund
and assumption by the AXP Fund of the liabilities of the Strategist Fund, to be
followed by distribution of those Class A shares to the shareholders of the
Strategist Fund and the subsequent termination of the Strategist Fund.
For _____ Against _____ Abstain _____
<PAGE>
Statement of Additional Information
April 17, 2000
AXP Mutual
AXP Stock
AXP Diversified Equity Income
AXP Emerging Markets
AXP Federal Income
AXP Growth
AXP New Dimensions
AXP Extra Income
AXP Selective
AXP Research Opportunities
AXP High Yield Tax-Exempt
AXP Managed Allocation
AXP Global Growth
AXP Global Bond
AXP Innovations
This statement of additional information ("SAI") covers each of the funds listed
above (each an "AXP Fund") and consists of this cover page and the following
information:
1. The AXP Fund's most recent SAI, dated as shown in the table below, which
has been previously filed and is incorporated by reference.
2. The AXP Fund's most recent annual report and semi-annual report to
shareholders, if a semi-annual report has been issued subsequent to the
date of the most recent annual report, for the period shown in the table
below, which have been previously filed and are incorporated by reference.
3. The Strategist Fund's most recent SAI, dated as shown in the table below,
which has been previously filed and is incorporated by reference.
4. The Strategist Fund's most recent annual report and, if applicable,
semi-annual report to shareholders, for the period shown in the table
below, which have been previously filed and are incorporated by reference.
This SAI is not a prospectus. It should be read in conjunction with the proxy
statement/prospectus, which may be obtained by calling 1-800-862-7919 or writing
American Express Client Service Corporation, P.O. Box 534, Minneapolis, MN
55440-0534.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Report Semi-Annual
Fund SAI (for period Report
(dated) ended) (if applicable)
(for period
ended)
Strategist Balanced 11/29/99 9/30/99 NA
AXP Mutual 11/29/99 9/30/99 NA
Strategist Equity 11/29/99 9/30/99 NA
AXP Stock 11/29/99 9/30/99 NA
Strategist Equity Income 11/29/99 9/30/99 NA
AXP Diversified Equity Income 11/29/99 9/30/99 NA
Strategist Emerging Markets 12/30/99 10/31/99 NA
AXP Emerging Markets 12/30/99 10/31/99 NA
Strategist Government Income 7/30/99 5/31/99 11/30/99
AXP Federal Income 7/30/99 5/31/99 11/30/99
Strategist Growth 9/29/99 7/31/99 1/31/00
AXP Growth 9/29/99 7/31/99 1/31/00
Strategist Growth Trends 9/29/99 7/31/99 1/31/00
AXP New Dimensions 9/29/99 7/31/99 1/31/00
Strategist High Yield 7/30/99 5/31/99 11/30/99
AXP Extra Income 7/30/99 5/31/99 11/30/99
Strategist Quality Income 7/30/99 5/31/99 11/30/99
AXP Selective 7/30/99 5/31/99 11/30/99
Strategist Special Growth 9/29/99 7/31/99 1/31/00
AXP Research Opportunities 9/29/99 7/31/99 1/31/00
Strategist Tax-Free High Yield 1/28/00 11/30/99 NA
AXP High Yield Tax-Exempt 1/28/00 11/30/99 NA
Strategist Total Return 11/29/99 9/30/99 NA
AXP Managed Allocation 11/29/99 9/30/99 NA
Strategist World Growth 12/30/99 10/31/99 NA
AXP Global Growth 12/30/99 10/31/99 NA
Strategist World Income 12/30/99 10/31/99 NA
AXP Global Bond 12/30/99 10/31/99 NA
Strategist World Technologies 12/30/99 10/31/99 NA
AXP Innovations 3/15/00 10/31/99 NA
</TABLE>
<PAGE>
AXP INNOVATIONS FUND
STRATEGIST WORLD TECHNOLOGIES FUND
INTRODUCTION TO PROPOSED FUND MERGER
OCTOBER 31, 1999
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
funds at and for the 12-month period ending October 31, 1999. These statements
have been derived from annual reports for AXP Innovations Fund (a series of AXP
Global Series, Inc.) and Strategist World Technologies Fund (a series of
Strategist World Fund, Inc.) as of October 31, 1999. Each Fund invests all of
its assets in World Technologies Portfolio (the Portfolio), a series of World
Trust, an open-end investment company that has the same objectives as the Funds.
The Portfolio invests in technology common stocks. Management of the Funds has
elected not to present a combining Schedule of Investments for the Portfolio
because it will not change as a result of the merger. The schedule of
investments for the Portfolio is included in the Funds' annual reports, which
are available upon request.
Under the proposed Agreement and Plan of Reorganization, shares of the
Strategist World Technologies Fund would be exchanged for Class A shares of the
AXP Innovations Fund.
The pro forma combining statements have been prepared based upon the various fee
structures of the funds in existence as of October 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
AXP Innovations Fund
Strategist World Technologies Fund
Pro forma Combining
Statement of assets and liabilities
October 31, 1999
(Unaudited)
Strategist World
AXP Innovations Technologies
Fund Fund Combined
Assets
<S> <C> <C> <C>
Investments in World Technologies Portfolio (Note 1) $ 7,897,520 $ 1,125,654 $ 9,023,174
----------- ----------- -----------
Liabilities
Accrued distribution fee 4 - 4
Accrued administrative services fee 12 2 14
Other accrued expenses 16,790 4,447 21,237
------ ----- ------
Total liabilities 16,806 4,449 21,255
------ ----- ------
Net assets applicable
to outstanding capital stock $ 7,880,714 $ 1,121,205 $ 9,001,919
=========== =========== ===========
Represented by
Capital stock --- $.01 par value (Note 1) $ 7,000 $ 1,000 $ 8,000
Additional paid-in capital 3,399,239 484,163 3,883,402
Accumulated net realized gain (loss) 970,722 136,387 1,107,109
Unrealized appreciation (depreciation)
on investments and on translation
of assets and liabilities in foreign currencies 3,503,753 499,655 4,003,408
--------- ------- ---------
Total --- representing net assets applicable
to outstanding capital stock $ 7,880,714 $ 1,121,205 $ 9,001,919
=========== =========== ===========
Net assets applicable to outstanding shares: Class A $ 7,435,047 $ 8,556,252
Class B $ 220,363 $ 220,363
Class Y $ 225,304 $ 225,304
Net asset value per share of outstanding
capital stock: (Note 2) Class A shares 660,000 $ 11.27 100,000 $ 11.21 759,485 $ 11.27
Class B shares 20,000 $ 11.02 20,000 $ 11.02
Class Y shares 20,000 $ 11.27 20,000 $ 11.27
See accompanying notes to pro forma combining financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AXP Innovations Fund
Strategist World Technologies Fund
Pro forma Combining
Statement of Operations
October 31, 1999
(Unaudited)
Strategist World Pro forma
Investment income AXP Innovations Technologies Pro forma AXP Innovations
Income: Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
Dividends $ 6,134 $ 874 $ 7,008
Less foreign taxes withheld (328) (47) (375)
---- --- ----
Total Income 5,806 827 6,633
----- --- -----
Expenses:
Expenses allocated from World Technologies Portfolio 63,721 9,085 72,806
Distribution fee
Class A 5,263 1,900 7,163
Class B 1,395 1,395
Transfer agency fee 48 20 (2) a 66
Incremental transfer agency fee
Class A 2 2
Class B 2 2
Administrative services fees and expenses 2,467 504 2,971
Compensation of board members 818 818
Registration fees 414 414
Audit fees 3,600 3,600
Other 2,490 2,490
----- -----
Total Expenses 72,898 18,831 (2) 91,727
Less expenses voluntarily reimbursed by AEFC (6,548) (6,496) (13,044)
------ ------ -------
Total net expenses 66,350 12,335 (2) 78,683
------ ------ -- ------
Investment income (loss) -- net (60,544) (11,508) 2 (72,050)
------- ------- - -------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 1,376,509 196,456 1,572,965
Foreign currency transactions (38) (5) (43)
Options contracts written (1,470) (210) (1,680)
------ ---- ------
Net realized gain (loss) on investments 1,375,001 196,241 1,571,242
Net change in unrealized apprciation
(depreciation) on investments and on
translation of assets and liabilities
in foreign currencies 2,778,956 396,216 3,175,172
--------- ------- ---------
Net gain (loss) on investments and foreign currencies 4,153,957 592,457 4,746,414
--------- ------- ---------
Net increase (decrease) in net assets
resulting from operations $ 4,093,413 $ 580,949 $ 2 $ 4,674,364
=========== ========= === ===========
a) Adjustment for transfer agency fee from $20 to Innovation Class A $19 per account.
See accompanying notes to pro forma combining financial statements.
</TABLE>
<PAGE>
AXP INNOVATIONS FUND
STRATEGIST WORLD TECHNOLOGIES FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED AS TO OCTOBER 31, 1999)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two funds at and for the
12-month period ending October 31, 1999. These statements have been derived from
annual reports for AXP Innovations Fund (a series of AXP Global Series, Inc.)
and Strategist World Technologies Fund (a series of Strategist World Fund, Inc.)
as of October 31, 1999.
Each Fund invests all of its assets in World Technologies Portfolio (the
Portfolio), a series of World Trust, an open-end investment company that has the
same objectives as the Funds. The Portfolio invests in technology common stocks.
Management of the Funds has elected not to present a combining schedule of
investments for the Portfolio because it will not change as a result of the
merger. The schedule of investments for the Portfolio is included in the Funds'
annual reports, which are available upon request.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of Strategist World Technologies Fund in exchange for Class A shares
of AXP Innovations Fund under generally accepted accounting principles. The
results of operations for AXP Innovations Fund will not be restated for
Strategist World Technologies Fund's results of operations for pre-combination
periods. The pro forma statements do not reflect the expenses of either fund in
carrying out its obligation under the Agreement and Plan of Reorganization.
American Express Financial Corporation has agreed to bear the costs of effecting
the Reorganization, which is estimated at $7,500.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the surviving entity, AXP Innovations Fund, as if
the transaction had occurred at the beginning of the year presented.
2. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A shares of AXP Innovations Fund if the reorganization were to have taken place
on October 31, 1999. The pro forma number of Class A shares outstanding of
759,485 consists of 99,485 shares assumed to be issued to shareholders of
Strategist World Technologies Fund plus 660,000 shares of AXP Innovations Fund
outstanding as of October 31, 1999.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification
The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
Item 16. Exhibits
(1) Articles of Incorporation, dated October 17, 1988, filed as Exhibit 1
to Registrant's Post-Effective Amendment No. 19 to Registration
Statement No. 2-63552, are incorporated by reference.
(2) By-laws, as amended Feb 14, 1991, filed as Exhibit 2 to Registrant's
Post-Effective Amendment No. 20 to Registration Statement No. 2-63552,
are incorporated by reference.
(3) Voting Trust Agreement: Not Applicable.
(4) Form of Agreement and Plan of Reorganization, dated March 10, 2000,
filed electronically herewith as Exhibit 1 to Part A of this
Registration Statement.
(5) Stock certificate, filed as Exhibit 4 to Registrant's Registration
Statement No. 2-63552, on February 9, 1979, is incorporated by
reference.
(6) Investment Management Services Agreement between Registrant and
American Express Financial Corporation, dated March 20, 1995, filed
electronically as Exhibit 5 to Registrant's Post-Effective Amendment
No. 34 to Registration Statement No. 2-63552, is incorporated by
reference. The agreement was assumed by the Portfolio when the Fund
adopted the master/feeder structure.
(7) Distribution Agreement, dated July 8, 1999, between AXP Utilities
Income Fund, Inc. and American Express Financial Advisors Inc. is
incorporated by reference to Exhibit (e) to AXP Utilities Income Fund,
Inc. Post-Effective Amendment No. 22, to Registration Statement No.
33-20872 filed on or about August 27, 1999. Registrant's Distribution
Agreement differs from the one incorporated by reference only by the
fact that Registrant is one executing party.
<PAGE>
(8) All employees are eligible to participate in a profit sharing plan.
Entry into the plan is Jan. 1 or July 1. The Registrant contributes
each year an amount up to 15 percent of their annual salaries, the
maximum deductible amount permitted under Section 404(a) of the
Internal Revenue Code.
(9)(a) Custodian Agreement between Registrant and First National Bank of
Minneapolis, dated August 16, 1979, filed electronically as Exhibit
8(a) to Registrant's Post-Effective Amendment No. 34 to Registration
Statement No. 2-63552, is incorporated by reference.
(9)(b) Addendum to the Custodian Agreement between Registrant, First Bank
National Association and American Express Financial Corporation, dated
May 13, 1996 filed electronically as Exhibit 8(b) to Registrant's
Post-Effective Amendment No. 34 to Registration Statement No. 2-63552,
is incorporated by reference.
(10)(a) Plan and Agreement of Distribution dated July 1, 1999, between AXP
Discovery Fund, Inc. and American Express Financial Advisors Inc. is
incorporated by reference: to Exhibit (m) to AXP Discovery Fund, Inc.
Post-Effective Amendment No. 36 to Registration Statement No. 2-72174
filed on or about July 30, 1999. Registrant's Plan and Agreement of
Distribution differs from the one incorporated by reference only by
the fact that Registrant is one executing party.
(10)(b) Rule 18f-3 Plan, dated April 1999, is incorporated by reference to
Exhibit (o) to IDS Precious Metals Fund, Inc. Post-Effective Amendment
No. 33 to Registration Statement No. 2-93745 filed on or about May 24,
1999.
(11) Opinion and consent of counsel as to the legality of the securities
being registered is incorporated by reference to Exhibit (11) to
Registration Statement No. 333-32152 filed on or about March 10, 2000.
(12) Tax Opinion to be filed by amendment.
(13)(a) Administrative Services Agreement between Registrant and American
Express Financial Corporation, dated March 20, 1995, filed
electronically as Exhibit 9(e) to Registrant's Post-Effective
Amendment No. 34 to Registration Statement No. 2-63552, is
incorporated by reference.
(13)(b) Agreement and Declaration of Unitholders between Registrant and
Strategist Tax-Free Income Fund, Inc., dated May 13, 1996, filed
electronically as Exhibit 9(f) to Registrant's Post-Effective
Amendment No. 34 to Registration Statement No. 2-63552, is
incorporated by reference.
(13)(c) License Agreement between Registrant and IDS Financial Corporation
dated January 25, 1988, filed as Exhibit 9(c) to Registrant's
Post-Effective Amendment No. 21 to Registration Statement No. 2-63552,
is incorporated by reference.
(13)(d) License Agreement, dated June 17, 1999, between the American Express
Funds and American Express Company, filed electronically on or about
September 23, 1999, as Exhibit (h)(4) to AXP Stock Fund, Inc's.
Post-Effective Amendment No. 98 to Registration Statement No. 2-11358,
is incorporated by reference.
(13)(e) Plan and Agreement of Merger, dated April 10, 1986, filed
electronically as Exhibit No. 9 to Registrant's Post-Effective
Amendment No. 13 to Registration Statement No. 2-63552, is
incorporated by reference.
<PAGE>
(13)(f) Class Y Shareholder Service Agreement between IDS Precious Metals
Fund, Inc. and American Express Financial Advisors Inc., dated May 9,
1997, filed electronically on or about May 27, 1997 as Exhibit 9(e) to
IDS Precious Metals Fund, Inc.'s Post-Effective Amendment No. 30 to
Registration Statement No. 2-93745, is incorporated by reference.
Registrant's Class Y Shareholder Service Agreement differs from the
one incorporated by reference only by the fact that Registrant is one
executing party.
(13)(g) Transfer Agency Agreement between Registrant and American Express
Client Service Corporation, dated February 1, 1999, is incorporated by
reference to Exhibit (h)(8) to Registrant's Post-Effective Amendment
No. 38 to Registration Statement No. 2-63552 filed on or about Jan.
26, 2000.
(14) Independent Auditors' Consent is filed electronically herewith.
(15) Omitted Financial Statements: Not Applicable.
(16)(a) Directors' Power of Attorney dated January 13, 2000, is incorporated
by reference to Exhibit (p)(1) to Registrant's Post-Effective
Amendment No. 38 to Registration Statement No. 2-63552 filed on or
about Jan. 26, 2000.
(16)(b) Officers' Power of Attorney dated January 13, 2000, is incorporated by
reference to Exhibit (p)(2) to Registrant's Post-Effective Amendment
No. 38 to Registration Statement No. 2-63552 filed on or about Jan.
26, 2000.
(16)(c) Trustees' Power of Attorney dated January 13, 2000, is incorporated by
reference to Exhibit (p)(3) to Registrant's Post-Effective Amendment
No. 38 to Registration Statement No. 2-63552 filed on or about Jan.
26, 2000.
(16)(d) Officers' Power of Attorney dated January 13, 2000, is incorporated by
reference to Exhibit (p)(4) to Registrant's Post-Effective Amendment
No. 38 to Registration Statement No. 2-63552 filed on or about Jan.
26, 2000.
(17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically on or about March 30, 2000 as Exhibit (p)(1) to AXP
Market Advantage Series, Inc.'s Post-Effective Amendment No. 24 to
Registration Statement No. 33-30770, is incorporated by reference.
(17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
advisor and principal underwriter filed electronically on or about
March 30, 2000 as Exhibit (p)(2) to AXP Market Advantage Series,
Inc.'s Post-Effective Amendment No. 24 to Registration Statement No.
33-30770, is incorporated by reference.
Item 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act [17 CFR 230.145c], the reoffering prospectus will
contain the information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registrant statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The Registrant undertakes to file by Post-Effective Amendment an
Opinion of Counsel supporting the tax consequences of the proposed
reorganization within a reasonable time after receipt of such opinion.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed on behalf of the Registrant, in the City of
Minneapolis and the State of Minnesota on the 17th day of April, 2000.
AXP HIGH YIELD TAX-EXEMPT FUND, INC.
By /s/ Arne H. Carlson**
Arne H. Carlson, Chief Executive Officer
By /s/ John M. Knight
John M. Knight, Treasurer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities
indicated on the 17th day of April, 2000.
Signature Capacity
_____________________________ Director
Peter J. Anderson
/s/ H. Brewster Atwater, Jr.* Director
H. Brewster Atwater, Jr.
/s/ Arne H. Carlson** Chairman of the Board
Arne H. Carlson
/s/ Lynne V. Cheney* Director
Lynne V. Cheney
/s/ David R. Hubers* Director
David R. Hubers
/s/ Heinz F. Hutter* Director
Heinz F. Hutter
/s/ Anne P. Jones* Director
Anne P. Jones
/s/ William R. Pearce* Director
William R. Pearce
/s/ Alan K. Simpson* Director
Alan K. Simpson
<PAGE>
Signature Capacity
/s/ John R. Thomas* Director
John R. Thomas
/s/ C. Angus Wurtele* Director
C. Angus Wurtele
*Signed pursuant to Directors' Power of Attorney dated January 13, 2000, filed
electronically as Exhibit (p)(1) to Registrant's Post-Effective Amendment No.
38 to Registration Statement No. 2-63552 , by:
/s/ Leslie L. Ogg
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated January 13, 2000, filed
electronically as Exhibit (p)(2) to Registrant's Post-Effective Amendment No.
38 to Registration Statement No. 2-63552, by:
/s/ Leslie L. Ogg
Leslie L. Ogg
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, TAX-FREE INCOME TRUST consents to the
filing of this Amendment to the Registration Statement signed on behalf of the
Registrant, in the City of Minneapolis and the State of Minnesota, on the 17th
day of April, 2000.
TAX-FREE INCOME TRUST
By /s/ Arne H. Carlson****
Arne H. Carlson, Chief Executive Officer
By /s/ John M. Knight
John M. Knight, Treasurer
As required by the Securities Act of 1933, this Amendment to the Registration
Statement has been signed below by the following persons in the capacities
indicated on the 17th day of April, 2000.
Signatures Capacity
_____________________________ Trustee
Peter J. Anderson
/s/ H. Brewster Atwater, Jr.*** Trustee
H. Brewster Atwater, Jr.
/s/ Arne H. Carlson*** Chairman of the Board
Arne H. Carlson
/s/ Lynne V. Cheney*** Trustee
Lynne V. Cheney
/s/ David R. Hubers*** Trustee
David R. Hubers
/s/ Heinz F. Hutter*** Trustee
Heinz F. Hutter
/s/ Anne P. Jones*** Trustee
Anne P. Jones
/s/ William R. Pearce*** Trustee
William R. Pearce
/s/ Alan K. Simpson*** Trustee
Alan K. Simpson
/s/ John R. Thomas*** Trustee
John R. Thomas
/s/ C. Angus Wurtele*** Trustee
C. Angus Wurtele
<PAGE>
*** Signed pursuant to Trustees Power of Attorney dated January 13, 2000, filed
electronically as Exhibit (p)(3) to Registrant's Post-Effective Amendment No.
38 to Registration Statement No. 2-63552, by:
/s/ Leslie L. Ogg
Leslie L. Ogg
**** Signed pursuant to Officers Power of Attorney dated January 13, 2000, filed
electronically as Exhibit (p)(4) to Registrant's Post-Effective Amendment No. 38
to Registration Statement No. 2-63552, by:
/s/ Leslie L. Ogg
Leslie L. Ogg
<PAGE>
CONTENTS OF THIS AMENDMENT TO THE REGISTRATION STATEMENT
This Amendment to the Registration Statement comprises the following papers and
documents:
The facing sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Part C.
Other information.
Exhibits.
Undertakings.
The Signatures.
AXP High Yield Tax-Exempt Fund, Inc.
EXHIBIT INDEX
Exhibit (14) Independent Auditors' Consent
Independent auditors' consent
The board and shareholders
AXP High Yield Tax-Exempt Fund, Inc.
The board and shareholders
Strategist Tax-Free Income Fund, Inc.
Strategist Tax-Free High Yield Fund
The board of trustees and unitholders
Tax-Free Income Trust:
Tax-Free High Yield Portfolio
We consent to the use of our reports included or incorporated herein by
reference and to the references to our Firm under the heading "Financial
Highlights" in the prospectuses included or incorporated herein by reference,
under the heading "INDEPENDENT AUDITORS" in the Statement of Additional
Information incorporated herein by reference and under the heading "Experts" of
the Combined Proxy Statement/Prospectus on Form N-14.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
April 17, 2000
