<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 79 File No. 2-10700) /X/
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29 (File No. 811-499) /X/
------------------------
IDS SELECTIVE FUND
IDS Tower 10, Minneapolis, MN 55440
Leslie L. Ogg
901 S. Marquette Avenue, Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/X/ on Mar. 3, 1995 pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
------------------------
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OR AMOUNT OF SECURITIES UNDER
THE SECURITIES ACT OF 1933 PURSUANT TO SECTION 24(F) OF THE INVESTMENT COMPANY
ACT OF 1940. REGISTRANT'S RULE 24F-2 NOTICE FOR ITS MOST RECENT FISCAL YEAR
ENDED NOVEMBER 30, 1994 WILL BE FILED ON OR ABOUT JAN. 27, 1995.
- --------------------------------------------------------------------------------
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<PAGE>
CROSS REFERENCE
SHEET SHOWING LOCATION IN THE PROSPECTUS AND THE STATEMENT OF
ADDITIONAL INFORMATION OF THE INFORMATION CALLED FOR BY THE ITEMS
ENUMERATED IN PARTS A AND B OF FORM N-1A.
Negative answers omitted from prospectus are so indicated.
<TABLE>
<CAPTION>
PART A
- ---------------------------------------
Page Number in
Item No. Prospectus
- ---------------- ---------------------
<S> <C>
1 3
2 5;5-6
3(a) 6-7
(b) NA
(c) 6-8
(d) 6-7
4(a) 5;8-11;23-26
(b) 8-11
(c) 8-11
5(a) 23; 23-24
(b) 23-26;26
(b)(i) 26
(b)(ii) 24-25
(b)(iii) 24-25
(c) 5
(d) 5
(e) 24-25
(f) 25-26
(g) 24-25
5A(a) *
(b) *
6(a) 23;23
(b) NA
(c) NA
(d) 23
(e) 3;20
(f) 21;21
(g) 21-22
7(a) 25-26
(b) 8-10;11
(c) 11-20
(d) 14
(e) NA
(f) 25-26
8(a) 15-17
(b) NA
(c) 14
(d) 17
9 None
<CAPTION>
PART B
- ---------------------------------------
Page Number in
Statement of
Additional
Item No. Information
- ---------------- ---------------------
<S> <C>
10 27
11 28
12 NA
13(a) 29-31;52-65
(b) 29-31
(c) 30-31
(d) 33
14(a) 23-24**;47-50
(b) 47-50
(c) 50
15(a) NA
(b) NA
(c) 50
16(a)(i) 23-26**;26**
(a)(ii) 44-45;46-47
(a)(iii) 44
(b) 44-45;46-47
(c) NA
(d) None
(e) NA
(f) 45-46;46-47
(g) NA
(h) 50;50
(i) 45;50
17(a) 31-33
(b) 33-34
(c) 31-33
(d) 32
(e) 33
18(a) 23
(b) NA
19(a) 37-41
(b) 36-37;37-41
(c) NA
20 43-44
21(a) 45
(b) 46
(c) NA
22(a) NA
(b) 34-35
23 50
</TABLE>
*Designates information is in annual report.
**Designates page number in prospectus.
<PAGE>
IDS SELECTIVE FUND
PROSPECTUS
MARCH 3, 1995
The goals of IDS Selective Fund, Inc. are current income and the preservation of
capital by investing in investment-grade bonds.
This prospectus contains facts that can help you decide if the fund is the right
investment for you. Read it before you invest and keep it for future reference.
Additional facts about the fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission. The SAI, dated March
3, 1995, is incorporated here by reference. For a free copy, contact American
Express Shareholder Service.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE FUND IN BRIEF..........................................
Goals....................................................
Types of fund investments................................
Manager and distributor..................................
Portfolio manager........................................
Alternative sales arrangements...........................
SALES CHARGE AND FUND EXPENSES.............................
Sales charge.............................................
Operating expenses.......................................
PERFORMANCE................................................
Financial highlights.....................................
Total returns............................................
Yield....................................................
Key terms................................................
INVESTMENT POLICIES AND RISKS..............................
Facts about investments and their risks..................
Alternative investment option............................
Valuing assets...........................................
HOW TO BUY, EXCHANGE OR SELL SHARES........................
Alternative sales arrangements...........................
How to buy shares........................................
How to exchange shares...................................
How to sell shares.......................................
Reductions of the sales charge...........................
Waivers of the sales charge..............................
SPECIAL SHAREHOLDER SERVICES...............................
Services.................................................
Quick telephone reference................................
DISTRIBUTIONS AND TAXES....................................
Dividend and capital gain distributions..................
Reinvestments............................................
Taxes....................................................
HOW THE FUND IS ORGANIZED..................................
Shares...................................................
Voting rights............................................
Shareholder meetings.....................................
Directors and officers...................................
Investment manager and transfer agent....................
Distributor..............................................
ABOUT AEFC.................................................
General information......................................
</TABLE>
2
<PAGE>
THE FUND IN BRIEF
GOALS
IDS Selective Fund seeks to provide shareholders with current income and
preservation of capital by investing in investment-grade bonds. Because any
investment involves risk, achieving these goals cannot be guaranteed. Only
shareholders can change the goals.
TYPES OF FUND INVESTMENTS
The fund is a diversified mutual fund that invests at least 90% of its net
assets in the four highest investment grades of corporate debt securities,
certain unrated debt securities the portfolio manager believes have the same
investment qualities, government securities, derivative instruments and money
market securities. Other investments may include common and preferred stocks and
convertible securities. The investments are both U.S. and foreign. Some of the
fund's investments may be considered speculative and involve additional
investment risks.
MANAGER AND DISTRIBUTOR
The fund is managed by American Express Financial Corporation (AEFC), a provider
of financial services since 1894. AEFC currently manages more than $38 billion
in assets for the IDS MUTUAL FUND GROUP. Shares of the fund are sold through
American Express Financial Advisors Inc., a wholly owned subsidiary of AEFC.
PORTFOLIO MANAGER
Ray Goodner joined AEFC in 1977 and serves as vice president and senior
portfolio manager. He began his career in portfolio management in 1980. He has
managed this fund since 1985. Since 1989 he also has served as portfolio manager
of IDS Global Bond Fund.
ALTERNATIVE SALES ARRANGEMENTS
The fund offers its shares in three classes. Class A shares are subject to a
sales charge at the time of purchase. Class B shares are subject to a contingent
deferred sales charge (CDSC) on redemptions made within 6 years of purchase and
an annual distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors. Other differences between the
classes include the fees paid by each class. The fund offers these alternatives
so you may choose the method of purchasing shares that is most beneficial given
the amount of purchase, length of time you expect to hold the shares and other
circumstances.
SALES CHARGE AND FUND EXPENSES
SALES CHARGE
When you buy Class A shares, you pay a maximum sales charge of 5% of the public
offering price. This charge can be reduced, depending on your total investments
in IDS funds. See "Reductions of the sales charge." No sales charge applies at
the time of purchase of Class B shares, although Class B shares may be subject
to a CDSC on redemptions made within 6 years and are subject to annual
distribution (12b-1) fees. Class Y shares are sold without a sales charge to
qualifying institutional investors.
3
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Class A Class B Class Y
------------- ------------- -------------
<S> <C> <C> <C>
Maximum sales charge on purchases (as a percentage of
offering price).................................... 5% 0% 0%
Maximum deferred sales charge imposed on redemptions
(as a percent of original purchase price).......... 0% 5% 0%
</TABLE>
OPERATING EXPENSES
The fund pays certain expenses out of its assets for each class of shares. The
expenses are reflected in the fund's daily share price and dividends, and are
not charged directly to shareholder accounts. The following chart gives a
projection of these expenses -- based on historical expenses.
ANNUAL FUND OPERATING EXPENSES
(% of average daily net assets):
<TABLE>
<CAPTION>
Class A Class B Class Y
----------- ----------- -----------
<S> <C> <C> <C>
Management fee...................................... 0.00% 0.00% 0.00%
12b-1 fee........................................... 0.00% 0.00% 0.00%
Other expenses...................................... 0.00% 0.00% 0.00%
Total............................................... 0.00% 0.00% 0.00%
</TABLE>
Expenses for Class A are based on actual expenses for the last fiscal year,
restated to reflect current fees. Expenses for Class B and Class Y are estimated
based on the restated expenses for Class A, except that the 12b-1 fee for Class
B is based on the Plan and Agreement of Distribution for that class.
EXAMPLE: Suppose for each year for the next 10 years, fund expenses are as
above and annual return is 5%. If you sold your shares at the end of the
following years, for each $1,000 invested, you would pay total expenses of:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years**
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Class A......................... $ $ $ $
Class B......................... $ $ $ $
Class B*........................ $ $ $ $
Class Y......................... $ $ $ $
<FN>
*Assuming Class B shares are not redeemed at the end of the period.
**Assuming conversion of Class B shares to Class A shares after 8 years.
</TABLE>
THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. Because Class B pays annual
distribution (12b-1) fees, long-term shareholders of Class B may indirectly pay
an equivalent of more than a 6.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.
PERFORMANCE
FINANCIAL HIGHLIGHTS
The information in this table has been audited by KPMG Peat Marwick 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. Information on Class B and Class Y shares is not included because no
shares of those classes were outstanding for the periods shown.
4
<PAGE>
TOTAL RETURNS
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS as of Nov. 30, 1994
- ----------------------------------------------------------------------------------
1 year 5 years 10 years
Purchase made ago ago ago
- ------------------------------------------------ --------- --------- ----------
<S> <C> <C> <C>
Selective:
Class A....................................... -9.49 +6.76 +9.64
Lehman Aggregate Bond Index..................... -3.65 +7.43 +9.98
<CAPTION>
CUMULATIVE TOTAL RETURNS as of Nov. 30, 1994
- ----------------------------------------------------------------------------------
1 year 5 years 10 years
Purchase made ago ago ago
- ------------------------------------------------ --------- --------- ----------
<S> <C> <C> <C>
Selective:
Class A....................................... -9.49 +38.67 +150.97
Lehman Aggregate Bond Index..................... -3.65 +43.09 +158.92
</TABLE>
These examples show total returns from hypothetical investments in Class A
shares of the fund. No shares for Class B and Class Y were outstanding during
the periods presented. These returns are compared to those of a popular index
for the same periods.
For purposes of calculation, information about the fund assumes:
- - a sales charge of 5% for Class A shares
- - no adjustments for taxes an investor may have paid on the reinvested income
and capital gains
- - a period of widely fluctuating securities prices. Returns shown should not be
considered a representation of the fund's future performance.
The fund invests primarily in corporate bonds and other debt securities that may
be different from those in the index. The index reflects reinvestment of all
distributions and changes in market prices, but excludes brokerage commissions
or other fees.
Lehman Aggregate Bond Index is made up of a representative list of government
and corporate bonds as well as asset-backed and mortgage-backed securities. The
index is frequently used as a general measure of bond market performance.
However, the securities used to create the index may not be representative of
the bonds held in the fund.
YIELD
The fund's annualized yield for the 30-day period ended Nov. 30, 1994, was
____%.
The fund calculates this 30-day annualized yield by dividing:
- - net investment income per share deemed earned during a 30-day period by
- - the public offering price per share on the last day of the period, and
- - converting the result to a yearly equivalent figure.
THIS YIELD CALCULATION DOES NOT INCLUDE ANY CONTINGENT DEFERRED SALES CHARGE,
RANGING FROM 5% TO 0% ON CLASS B SHARES, WHICH WOULD REDUCE THE YIELD QUOTED.
The fund's yield varies from day to day, mainly because share values and
offering prices (which are calculated daily) vary in response to changes in
5
<PAGE>
interest rates. Net investment income normally changes much less in the short
run. Thus, when interest rates rise and share values fall, yield tends to rise.
When interest rates fall, yield tends to follow.
Past yields should not be considered an indicator of future yields.
KEY TERMS
NET ASSET VALUE (NAV)
Value of a single fund share. For each class, it is the total market value of
all of a fund's investments and other assets attributable to that class, less
any liabilities attributable to that class, divided by the number of shares of
that class outstanding.
When you buy shares, you pay the NAV plus any applicable sales charge. When you
sell shares, the price you receive is the NAV minus any applicable sales charge.
The NAV usually changes daily, and is calculated at the close of business,
normally 3 p.m. Central time, each business day (any day the New York Stock
Exchange is open). NAV generally declines as interest rates increase and rises
as interest rates decline.
PUBLIC OFFERING PRICE
Price at which you buy shares. It is the NAV plus the sales charge for Class A.
It is the NAV for Class B and Class Y. NAVs and public offering prices of IDS
funds are listed each day in major newspapers and financial publications.
INVESTMENT INCOME
Dividends and interest earned on securities held by the fund.
CAPITAL GAINS OR LOSSES
Increase or decrease in value of the securities the fund holds. Gains or losses
are realized when securities that have increased or decreased in value are sold.
A fund also may have unrealized gains or losses when securities increase or
decrease in value but are not sold.
DISTRIBUTIONS
Payments to shareholders of two types: investment income (dividends) and
realized net long-term capital gains (capital gains distributions).
TOTAL RETURN
Sum of all of your returns for a given period, assuming you reinvest all
distributions. Calculated by taking the total value of shares you own at the end
of the period (including shares acquired by reinvestment), less the price of
shares you purchased at the beginning of the period.
AVERAGE ANNUAL TOTAL RETURN
The annually compounded rate of return over a given time period (usually two or
more years) -- total return for the period converted to an equivalent annual
figure.
YIELD
Net investment income earned per share for a specified time period, divided by
the offering price at the end of the period.
INVESTMENT POLICIES AND RISKS
The fund invests in the four highest investment grades of marketable corporate
debt securities, certain unrated debt securities the portfolio manager
6
<PAGE>
believes have the same investment qualities, government securities, derivative
instruments and money market instruments. Under normal market conditions, at
least 90% of the fund's net assets will be in these investments. The remaining
10% of the fund's net assets may be invested in common and preferred stocks and
convertible securities. The investments are both U.S. and foreign.
The various types of investments the portfolio manager uses to achieve
investment performance are described in more detail in the next section and in
the SAI.
FACTS ABOUT INVESTMENTS AND THEIR RISKS
DEBT SECURITIES: The price of an investment-grade bond fluctuates as interest
rates change or if its credit rating is upgraded or downgraded. The fund does
not invest in securities considered by the portfolio manager to have investment
qualities lower than investment grade. Securities that are subsequently
downgraded in quality may continue to be held by the fund and will be sold only
if the fund's portfolio manager believes it is advantageous to do so.
COMMON STOCKS: Common stocks are subject to market fluctuations. Stocks of
larger, established companies that pay dividends may be less volatile than the
stock market as a whole.
PREFERRED STOCKS: If a company earns a profit, it generally must pay its
preferred stockholders a dividend at a pre-established rate.
CONVERTIBLE SECURITIES: These securities generally are preferred stocks or
bonds that can be exchanged for other securities, usually common stock, at
prestated prices. When the trading price of the common stock makes the exchange
likely, the convertible securities trade more like common stock.
FOREIGN INVESTMENTS: Securities of foreign companies and governments may be
traded in the United States, but often they are traded only on foreign markets.
Frequently, there is less information about foreign companies and less
government supervision of foreign markets. Foreign investments are subject to
political and economic risks of the countries in which the investments are made,
including the possibility of seizure or nationalization of companies, imposition
of withholding taxes on income, establishment of exchange controls or adoption
of other restrictions that might affect an investment adversely. If an
investment is made in a foreign market, the local currency must be purchased.
This is done by using a forward contract in which the price of the foreign
currency in U.S. dollars is established on the date the trade is made, but
delivery of the currency is not made until the securities are received. As long
as the fund holds foreign currencies or securities valued in foreign currencies,
the price of a fund share will be affected by changes in the value of the
currencies relative to the U.S. dollar. Because of the limited trading volume in
some foreign markets, efforts to buy or sell a security may change the price of
the security, and it may be difficult to complete the transaction. The fund may
invest up to 25% of its total assets in foreign investments.
DERIVATIVE INSTRUMENTS: The portfolio manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate
7
<PAGE>
trading, to reduce transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no initial
payment and a daily change in price based on or derived from a security, a
currency, a group of securities or currencies, or an index. A number of
strategies or combination of instruments can be used to achieve the desired
investment performance characteristics. A small change in the value of the
underlying security, currency or index will cause a sizable gain or loss in the
price of the derivative instrument. Derivative instruments allow the portfolio
manager to change the investment performance characteristics very quickly and at
lower costs. Risks include losses of premiums, rapid changes in prices, defaults
by other parties, and inability to close such instruments. The fund will use
derivative instruments only to achieve the same investment performance
characteristics it could achieve by directly holding those securities and
currencies permitted under the investment policies. The fund will designate cash
or appropriate liquid assets to cover its portfolio obligations. No more than 5%
of the fund's net assets can be used at any one time for good faith deposits on
futures and premiums for options on futures that do not offset existing
investment positions. For further information, see the options and futures
appendix in the SAI.
SECURITIES AND DERIVATIVE INSTRUMENTS THAT ARE ILLIQUID: Illiquid means the
security or derivative instrument cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. All securities and derivative instruments,
however, can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The portfolio manager
will follow guidelines established by the board of directors and consider
relevant factors such as the nature of the security and the number of likely
buyers when determining whether a security is illiquid. No more than 10% of the
fund's net assets will be held in securities and derivative instruments that are
illiquid.
MONEY MARKET INSTRUMENTS: Short-term debt securities rated in the top two
grades are used to meet daily cash needs and at various times to hold assets
until better investment opportunities arise. Generally less than 25% of the
fund's total assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that amount for a
limited period of time.
The investment policies described above may be changed by the board of
directors.
LENDING PORTFOLIO SECURITIES: The fund may lend its securities to earn income
so long as borrowers provide collateral equal to the market value of the loans.
The risks are that borrowers will not provide collateral when required or return
securities when due. Unless shareholders approve otherwise, loans may not exceed
30% of the fund's net assets.
ALTERNATIVE INVESTMENT OPTION
In the future, the board of the fund may determine for operating efficiencies to
use a master feeder structure. Under that structure, the fund's investment
portfolio would be managed by another investment company with the same goal as
the fund, rather than investing directly in a portfolio of securities.
8
<PAGE>
VALUING ASSETS
- - Securities (except bonds) and assets with available market values are valued
on that basis.
- - Securities maturing in 60 days or less are valued at amortized cost.
- - Bonds and assets without readily available market values are valued according
to methods selected in good faith by the board of directors.
HOW TO BUY, EXCHANGE OR SELL SHARES
HOW TO BUY SHARES -- ALTERNATIVE SALES ARRANGEMENTS
The fund offers three different classes of shares -- Class A, Class B and Class
Y. The primary differences among the classes are in the sales charge structures
and in their ongoing expenses. These differences are summarized in the table
below. You may choose the class that best suits your circumstances and
objectives.
<TABLE>
<CAPTION>
Sales charge and Service fee
distribution (12b-1) (as a % of average
fee daily net assets) Other information
----------------------- -------------------- -----------------------
<S> <C> <C> <C>
Class A Maximum initial sales Service fee of Initial sales charge
charge of 5% 0.175% waived or reduced for
certain purchases
Class B No initial sales Service fee of Shares convert to Class
charge; distribution 0.175% A after 8 years; CDSC
fee of 0.75% of daily waived in certain
net assets; maximum circumstances
CDSC of 5% declines to
0% after 6 years
Class Y None None Available only to
certain qualifying
institutional investors
</TABLE>
CONVERSION OF CLASS B SHARES TO CLASS A SHARES_--_Eight calendar years after
Class B shares were originally purchased, Class B shares will convert to Class A
shares and will no longer be subject to a distribution fee. The conversion will
be on the basis of relative net asset values of the two classes, without the
imposition of any sales charge. Class B shares purchased through reinvested
dividends and distributions will convert to Class A shares in a pro-rata portion
as the Class B shares purchased other than through reinvestment.
9
<PAGE>
CONSIDERATIONS IN DETERMINING WHETHER TO PURCHASE CLASS A OR CLASS B
SHARES_--_You should consider the information below in determining whether to
purchase Class A or Class B shares.
<TABLE>
<CAPTION>
If you purchase Class A shares If you purchase Class B shares
- --------------------------------------- ---------------------------------------
<S> <C>
SALES CHARGES ON PURCHASE OR REDEMPTION
- - You will not have all of your - All of your money is invested in
purchase price invested. Part of shares of stock. However, you will
your purchase price will go to pay pay a sales charge if you redeem
the sales charge. You will not pay a your shares within 6 years of
sales charge when you redeem your purchase.
shares.
- - You will be able to take advantage - No reductions of the sales charge
of reductions in the sales charge. are available for large purchases.
If your investments in IDS funds
total $250,000 or more, you are
better off paying the reduced sales
charge in Class A than paying the
higher fees in Class B. If you
qualify for a waiver of the sales
charge, you should purchase Class A
shares.
- - The sales charges and distribution fee are structured so that you will have
approximately the same total return at the end of 8 years regardless of which
class you chose.
<CAPTION>
ONGOING EXPENSES
<S> <C>
- - Your shares will have a lower - The distribution and transfer agent
expense ratio than Class B shares fees for Class B will cause your
because Class A does not pay a shares to have a higher expense
distribution fee and the transfer ratio and to pay lower dividends
agent fee for Class A is lower than than Class A shares. After 8 years,
the fee for Class B. As a result, Class B shares will convert to Class
Class A shares will pay higher A shares and will no longer be
dividends than Class B shares. subject to higher fees.
</TABLE>
You should consider how long you plan to hold your shares and whether the
accumulated higher fees and CDSC on Class B shares prior to conversion would be
less than the initial sales charge on Class A shares. Also consider to what
extent the difference would be offset by the lower expenses on Class A shares.
To help you in this analysis, the Example in the "Sales charge and fund
expenses" section of the prospectus illustrates the charges applicable to each
class of shares.
10
<PAGE>
You should consider how long you plan to hold your shares and whether the
accumulated higher fees and CDSC on Class B shares prior to conversion would be
less than the initial sales charge on Class A shares. Also consider to what
extent the difference would be offset by the lower expenses on Class A shares.
To help you in this analysis, the Example in the "Sales charge and fund
expenses" section of the prospectus illustrates the charges applicable to each
class of shares.
CLASS Y SHARES -- Class Y shares are offered to certain institutional investors.
Class Y shares are sold without a front-end sales charge or a CDSC and are not
subject to either a service fee or a distribution fee. The following investors
are eligible to purchase Class Y shares:
- Qualified employee benefit plans* if the plan:
-- uses a daily transfer recordkeeping service offering participants daily
access to IDS funds and has
-- at least $10 million in plan assets or
-- 500 or more participants; or
-- does not use daily transfer recordkeeping and has
-- at least $3 million invested in funds of the IDS MUTUAL FUND GROUP
or
-- 500 or more participants.
- Trust companies or similar institutions, and charitable organizations that
meet the definition in Section 501(c)(3) of the Internal Revenue Code.*
These must have at least $10 million invested in funds of the IDS MUTUAL
FUND GROUP.
- Nonqualified deferred compensation plans* whose participants are included
in a qualified employee benefit plan described above.
*Eligibility must be determined in advance by AEFC. To do so, contact your
financial advisor.
Financial advisors may receive different compensation for selling Class A, Class
B and Class Y shares.
HOW TO BUY SHARES
If you're investing in this fund for the first time, you'll need to set up an
account. 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.
IMPORTANT: When opening an account, you must provide AEFC with your correct
Taxpayer Identification Number (Social Security or Employer Identification
number). See "Distributions and taxes."
When you buy shares for a new or existing account, the price you pay per share
is determined at the close of business on the day your investment is received
and accepted at the Minneapolis headquarters.
PURCHASE POLICIES:
- - Investments must be received and accepted in the Minneapolis headquarters on a
business day before 3 p.m. Central time to be included in your account that
day and to receive that day's share price. Otherwise your purchase will be
processed the next business day and you will pay the next day's share price.
- - The minimums allowed for investment may change from time to time.
11
<PAGE>
- - Wire orders can be accepted only on days when your bank, AEFC the fund and
Norwest Bank Minneapolis are open for business.
- - Wire purchases are completed when wired payment is received and the fund
accepts the purchase.
- - AEFC and the fund are not responsible for any delays that occur in wiring
funds, including delays in processing by the bank.
- - You must pay any fee the bank charges for wiring.
- - The fund reserves the right to reject any application for any reason.
- - If your application does not specify which class of shares you are purchasing,
it will be assumed that you are investing in Class A shares.
THREE WAYS TO INVEST
<TABLE>
<S> <C> <C>
1 Send your check and application MINIMUM AMOUNTS
BY REGULAR (or your name and account number Initial investment: $2,000
ACCOUNT if you have an established Additional investments: $100
account) to: Account balances: $300*
American Express Financial Qualified retirement
Advisors Inc. accounts: none
P.O. Box 74
Minneapolis, MN 55440-0074
Your financial advisor will help
you with this process.
2 Contact your financial advisor MINIMUM AMOUNTS
BY SCHEDULED to set up one of the following Initial investment: $100
INVESTMENT scheduled plans: Additional investments: $100/mo
PLAN - automatic payroll deduction Account balances: none
- bank authorization (on active plans of monthly
- direct deposit of payments)
Social Security check
- other plan approved by the
fund
3 If you have an established If this information is not
BY WIRE account, you may wire money to: included, the order may be
Norwest Bank Minneapolis rejected and all money received
Routing No. 091000019 by the fund, less any costs the
Minneapolis, MN fund or AEFC will be returned
Attn: Domestic Wire Dept. promptly.
Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your
name).
<FN>
*If your account balance falls below $300, AEFC will ask you in writing to bring
it up to $300 or establish a scheduled investment plan. If you don't do so
within 30 days, your shares can be redeemed and the proceeds mailed to you.
</TABLE>
HOW TO EXCHANGE SHARES
You can exchange your shares of the fund at no charge for shares of the same
class of any other publicly offered fund in the IDS MUTUAL FUND GROUP available
in your state. For complete information, including fees and expenses, read the
prospectus carefully before exchanging into a new fund.
If your exchange request arrives at the Minneapolis headquarters before the
close of business, your shares will be redeemed at the net asset value set for
12
<PAGE>
that day. The proceeds will be used to purchase new fund shares the same day.
Otherwise, your exchange will take place the next business day at that day's net
asset value.
For tax purposes, an exchange represents a sale and purchase and may result in a
gain or loss. However, you cannot create a tax loss (or reduce a taxable gain)
by exchanging from the fund within 91 days of your purchase. For further
explanation, see the SAI.
HOW TO SELL SHARES
You can sell (redeem) your shares at any time. American Express Shareholder
Service will mail payment within seven days after receiving your request.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your shares will be redeemed at net asset value, minus any
applicable sales charge, at the close of business on the day your request is
accepted at the Minneapolis headquarters. If your request arrives after the
close of business, the price per share will be the net asset value, minus any
applicable sales charge, at the close of business on the next business day.
A redemption is a taxable transaction. If the fund's net asset value when you
sell shares is more or less than the cost of your shares, you will have a gain
or loss, which can affect your tax liability. Redeeming shares held in an IRA or
qualified retirement account may subject you to certain federal taxes, penalties
and reporting requirements. Consult your tax advisor.
TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
<TABLE>
<S> <C> <C>
1 Include in your letter:
BY LETTER - the name of the fund(s)
- the class of shares to be redeemed
- your account number(s) (for exchanges, both
funds must be registered in the same ownership)
- your Taxpayer Identification Number (TIN)
- the dollar amount or number of shares you want
to exchange or sell
- signature of all registered account owners
- for redemptions, indicate how you want your
sales proceeds delivered to you
- any paper certificates of shares you hold
REGULAR MAIL:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534
EXPRESS MAIL:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402
</TABLE>
13
<PAGE>
<TABLE>
<S> <C> <C>
2 - The fund and AEFC will honor any telephone
BY PHONE exchange or redemption request believed to be
American Express Telephone authentic and will use reasonable procedures to
Transaction Service: confirm that they are. This includes asking
800-437-3133 or identifying questions and tape recording calls.
612-671-3800 So long as reasonable procedures are followed,
neither the fund nor AEFC will be liable for any
loss resulting from fraudulent requests.
- Phone exchange and redemption privileges
automatically apply to all accounts except
custodial, corporate or qualified retirement
accounts unless you request these privileges NOT
apply by writing American Express Shareholder
Service. Each registered owner must sign the
request.
- AEFC answers phone requests promptly, but you
may experience delays when call volume is high.
If you are unable to get through, use mail
procedure as an alternative.
- Phone privileges may be modified or discontinued
at any time.
MINIMUM AMOUNT
Redemption: $100
MAXIMUM AMOUNT
Redemption: $50,000
</TABLE>
EXCHANGE POLICIES:
- - You may make up to three exchanges within any 30-day period, with each limited
to $300,000. These limits do not apply to scheduled exchange programs and
certain employee benefit plans or other arrangements through which one
shareholder represents the interests of several. Exceptions may be allowed
with pre-approval of the fund.
- - Exchanges must be made into the same class in the new fund.
- - If your exchange creates a new account, it must satisfy the minimum investment
amount for new purchases.
- - Once we receive your exchange request, you cannot cancel it.
- - Shares of the new fund may not be used on the same day for another exchange.
- - If your shares are pledged as collateral, the exchange will be delayed until
written approval is obtained from the secured party.
- - AEFC 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.
REDEMPTION POLICIES:
- - A "change of mind" option allows you to change your mind after requesting a
redemption and to use all or part of the proceeds to buy new shares in the
same account at the net asset value, rather than the offering price on the
date of a new purchase. If you reinvest in this manner, any CDSC you paid on
the amount you are reinvesting also will be reinvested in the fund. To take
advantage of this option, send a written request within 30 days of the date
your redemption request was received. Include your account number and mention
this option. This privilege may be limited or withdrawn at any time, and it
may have tax consequences.
14
<PAGE>
- - A telephone redemption request will not be allowed within 30 days of a
phoned-in address change.
IMPORTANT: If you request a redemption of shares you recently purchased by a
check or money order that is not guaranteed, the fund will wait for your check
to clear. Please expect a minimum of 10 days from the date of purchase before
AEFC mails a check to you. (A check may be mailed earlier if your bank provides
evidence satisfactory to the fund and AEFC that your check has cleared.)
THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES
<TABLE>
<S> <C> <C>
1 - Mailed to the address on record.
BY REGULAR OR EXPRESS MAIL - Payable to names listed on the account.
NOTE: The express mail delivery charges you pay
will vary depending on the courier you select.
2 - Minimum wire redemption: $1,000.
BY WIRE - Request that money be wired to your bank.
- Bank account must be in the same ownership as
the IDS fund account.
NOTE: Pre-authorization required. For
instructions, contact your financial advisor or
American Express Shareholder Service.
3 - Minimum payment: $50.
BY SCHEDULED PAYOUT PLAN - Contact your financial advisor or American
Express Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
- Buying new shares while under a payout plan may
be disadvantageous because of the sales charges.
</TABLE>
CLASS A -- INITIAL SALES CHARGE ALTERNATIVE
On purchases of 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:
<TABLE>
<CAPTION>
Sales charge as a percent
of:*
---------------------------
Public
offering Net amount
Total investment price invested
- ------------------------ ------------- ------------
<S> <C> <C>
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
More than $1,000,000 0.0 0.00
<FN>
*To calculate the actual sales charge on an investment greater than $50,000,
amounts for each applicable increment must be totaled. See the SAI.
</TABLE>
REDUCTIONS OF THE SALES CHARGE ON CLASS A SHARES
Your sales charge may be reduced, depending on the totals of:
- - the amount you are investing in this fund now,
- - the amount of your existing investment in this fund, if any, and
- - the amount you and your immediate family (spouse or unmarried children under
21) are investing or have in other funds in the IDS MUTUAL FUND GROUP that
carry a sales charge.
Other policies that affect your sales charge:
15
<PAGE>
- - IDS Tax-Free Money Fund and Class A shares of IDS Cash Management Fund do not
carry sales charges. However, you may count investments in these funds if you
acquired shares in them by exchanging shares from IDS funds that carry sales
charges.
- - 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 entity, may be added
together to reduce sales charges for all shares purchased through that plan.
For more details, see the SAI.
WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES
Sales charges do not apply to:
- - Current or retired trustees, directors, officers or employees of the fund or
AEFC or its subsidiaries, their spouses and unmarried children under 21.
- - Current or retired American Express financial advisors, their spouses and
unmarried children under 21.
- - Qualified employee benefit plans* using a daily transfer recordkeeping system
offering participants daily access to IDS funds.
(Participants in certain qualified plans for which the initial sales charge is
waived may be subject to a deferred sales charge of up to 4% on certain
redemptions. For more information, see the SAI.)
- - Shareholders who have at least $1 million invested in funds of the IDS MUTUAL
FUND GROUP. If the investment is redeemed in the first year after purchase, a
CDSC of 1% will be charged on the redemption.
- - Purchases made within 30 days after a redemption of shares (up to the amount
redeemed):
-- of a product distributed by American Express Financial Advisors in a
qualified plan subject to a deferred sales charge or
-- in a qualified plan where American Express Trust Company acts as trustee
or recordkeeper.
Send the fund a written request along with your payment, indicating the amount
of the redemption and the date on which it occurred.
- - Purchases made with dividend or capital gain distributions from another fund
in the IDS MUTUAL FUND GROUP that has a sales charge.
*Eligibility must be determined in advance by AEFC. To do so, contact your
financial advisor.
16
<PAGE>
CLASS B -- CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE
Where a CDSC is imposed on a redemption, it is based on the amount of the
redemption and the number of calendar years, including the year of purchase,
between purchase and redemption. The following table shows the declining scale
of percentages that apply to redemptions during each year after a purchase:
<TABLE>
<CAPTION>
If a
redemption
is made The percentage rate
during the for the CDSC is:
- -------------- --------------------
<S> <C>
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
</TABLE>
If the amount you are redeeming reduces the current net asset value of your
investment in Class B shares below the total dollar amount of all your purchase
payments during the last 6 years (including the year in which your redemption is
made), the CDSC is based on the lower of the redeemed purchase payments or
market value.
The following example illustrates how the CDSC is applied. 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 dividend and capital gain
distributions. You could redeem any amount up to $2,000 without paying a CDSC
($12,000 current value less $10,000 purchase amount). If you redeemed $2,500,
the CDSC would apply only to the $500 that represented part of your original
purchase price. The CDSC rate would be 4% because a redemption after 15 months
would take place during the second year after purchase.
Because the CDSC is imposed only on redemptions that reduce the total of your
purchase payments, you never have to pay a CDSC on any amount you redeem that
represents appreciation in the value of your shares, income earned by your
shares or capital gains. In addition, when determining the rate of any CDSC,
your redemption will be made from the oldest purchase payment you made. Of
course, once a purchase payment is considered to have been redeemed, the next
amount redeemed is the next oldest purchase payment. By redeeming the oldest
purchase payments first, lower CDSCs are imposed than would otherwise be the
case.
WAIVERS OF THE SALES CHARGE FOR CLASS B SHARES
The CDSC on Class B shares will be waived on redemptions of shares:
- - In the event of the shareholder's death,
- - Purchased by any trustee, director, officer or employee of a fund or AEFC or
its subsidiaries,
- - Purchased by any American Express financial advisor,
- - Held in a trusteed employee benefit plan,
17
<PAGE>
- - Held in IRAs or certain qualified plans for which AEFC acts as custodian, such
as Keogh plans, tax-sheltered custodial accounts or corporate pension plans,
provided that the shareholder is:
-- at least 59 1/2 years old, and
-- taking a retirement distribution (if the redemption is part of a
transfer to an IRA or qualified plan in a product distributed by
American Express Financial Advisors, or a custodian-to-custodian
transfer to a product not distributed by American Express Financial
Advisors, the CDSC will not be waived), or
-- redeeming under an approved substantially equal periodic payment
arrangement.
SPECIAL SHAREHOLDER SERVICES
SERVICES
To help you track and evaluate the performance of your investments, AEFC
provides these services:
QUARTERLY STATEMENTS listing all of your holdings and transactions during the
previous three months.
YEARLY TAX STATEMENTS featuring average-cost-basis reporting of capital gains or
losses if you redeem your shares along with distribution information -- which
simplifies tax calculations.
A PERSONALIZED MUTUAL FUND PROGRESS REPORT detailing returns on your initial
investment and cash-flow activity in your account. It calculates a total return
to reflect your individual history in owning fund shares. This report is
available from your financial advisor. QUICK TELEPHONE REFERENCE
AMERICAN EXPRESS TELEPHONE TRANSACTION SERVICE
Redemptions and exchanges, dividend payments or reinvestments and automatic
payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
AMERICAN EXPRESS SHAREHOLDER SERVICE
Fund performance, objectives and account inquiries
612-671-3733
TTY SERVICE
For the hearing impaired
800-846-4852
AMERICAN EXPRESS INFOLINE
Automated account information (TouchTone-R- phones only), including current fund
prices and performance, account values and recent account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
DISTRIBUTIONS AND TAXES
The fund distributes to shareholders investment income and net capital gains. It
does so to qualify as a regulated investment company and to avoid paying
corporate income and excise taxes. Dividend and capital gains distributions will
have tax consequences you should know about.
18
<PAGE>
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
The fund distributes its net investment income (dividends and interest earned on
securities held by the fund, less operating expenses) to shareholders of record
monthly. Short-term capital gains distributed are included in net investment
income. Net realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they're distributed, net
capital gains are included in the value of each share. After they're
distributed, the value of each share drops by the per-share amount of the
distribution. (If your distributions are reinvested, the total value of your
holdings will not change.)
Dividends paid by each class will be calculated at the same time, in the same
manner and in the same amount, except the expenses attributable solely to Class
A, Class B and Class Y will be paid exclusively by that class. Class B
shareholders will receive lower per share dividends than Class A and Class Y
shareholders because expenses for Class B are higher than for Class A or Class
Y. Class A shareholders will receive lower per share dividends than Class Y
shareholders because expenses for Class A are higher than for Class Y.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the fund, unless:
- - you request the fund in writing or by phone to pay distributions to you in
cash, or
- - you direct the fund to invest your distributions in any publicly available IDS
fund for which you've previously opened an account. You pay no sales charge on
shares purchased through reinvestment from this fund into any IDS fund.
The reinvestment price is the net asset value at close of business on the day
the distribution is paid. (Your quarterly statement will confirm the amount
invested and the number of shares purchased.)
If you choose cash distributions, you will receive only those declared after
your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash distributions,
we will reinvest the checks into your account at the then-current net asset
value and make future distributions in the form of additional shares.
TAXES
Distributions are subject to federal income tax and also may be subject to state
and local taxes. Distributions are taxable in the year the fund pays them
regardless of whether you take them in cash or reinvest them.
Each January, AEFC sends you a statement showing the kinds and total amount of
all distributions you received during the previous year. You must report all
distributions on your tax returns, even if they are reinvested in additional
shares.
"Buying a dividend" creates a tax liability. This means buying shares shortly
before a capital gain distribution. You pay the full pre-distribution price for
the shares, then receive a portion of your investment back as a distribution,
which is taxable.
19
<PAGE>
Redemptions and exchanges subject you to a tax on any capital gain. If you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be either short term (for shares held for one year or less) or long term (for
shares held for more than one year).
YOUR TAXPAYER IDENTIFICATION NUMBER (TIN) IS IMPORTANT. As with any financial
account you open, you must list your current and correct Taxpayer Identification
Number (TIN) -- either your Social Security or Employer Identification number.
The TIN must be certified under penalties of perjury on your application when
you open an account at AEFC.
If you don't provide the TIN to AEFC, or the TIN you report is incorrect, 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:
- - a $50 penalty for each failure to supply your correct TIN
- - a civil penalty of $500 if you make a false statement that results in no
backup withholding
- - criminal penalties for falsifying information
You also could be subject to backup withholding because you failed to report
interest or dividends on your tax return as required.
HOW TO DETERMINE THE CORRECT TIN
<TABLE>
<CAPTION>
Use the Social Security or Employer
For this type of account: Identification number of:
- --------------------------------------- ---------------------------------------
<S> <C>
Individual or joint account The individual or first person listed
on the account
Custodian account of a minor (Uniform The minor
Gifts/Transfers to Minors Act)
A living trust The grantor-trustee (the person who
puts the money into the trust)
An irrevocable trust, pension trust or The legal entity (not the personal
estate representative or trustee, unless no
legal entity is designated in the
account title)
Sole proprietorship or partnership The owner or partnership
Corporate The corporation
Association, club or tax-exempt The organization
organization
</TABLE>
For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors office for Federal Form W-9, "Request for Taxpayer
Identification Number and Certification."
IMPORTANT: This information is a brief and selective summary of certain federal
tax rules that apply to this fund. Tax matters are highly individual and
complex, and you should consult a qualified tax advisor about your personal
situation.
20
<PAGE>
HOW THE FUND IS ORGANIZED
The fund is a diversified, open-end management investment company, as defined in
the Investment Company Act of 1940. Originally incorporated on Feb. 10, 1945 in
Nevada, the fund changed its state of incorporation on June 13, 1986 by merging
into a Minnesota corporation incorporated on April 7, 1986. The fund
headquarters are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN
55402--3268.
SHARES
The fund is owned by its shareholders. The fund issues shares in three classes
- -- Class A, Class B and Class Y. Each class has different sales arrangements and
bears different expenses. Each class represents interests in the assets of the
fund. Par value is 1 cent per share. Both full and fractional shares can be
issued.
The fund no longer issues stock certificates.
VOTING RIGHTS
As a shareholder, you have voting rights over the fund's management and
fundamental policies. You are entitled to one vote for each share you own. Each
class has exclusive voting rights with respect to the provisions of the fund's
distribution plan that pertain to a particular class and other matters for which
separate class voting is appropriate under applicable law.
SHAREHOLDER MEETINGS
The fund does not hold annual shareholder meetings. However, the directors may
call meetings at their discretion, or on demand by holders of 10% or more of the
outstanding shares, to elect or remove directors.
DIRECTORS AND OFFICERS
Shareholders elect a board of directors that oversees the operations of the fund
and chooses its officers. Its officers are responsible for day-to-day business
decisions based on policies set by the board. The board has named an executive
committee that has authority to act on its behalf between meetings. The
directors also serve on the boards of all of the other funds in the IDS MUTUAL
FUND GROUP, except for Mr. Dudley, who is a director of all publicly offered
funds.
DIRECTORS AND OFFICERS OF THE FUND
PRESIDENT AND INTERESTED DIRECTOR
WILLIAM R. PEARCE
President of all funds in the IDS MUTUAL FUND GROUP.
INDEPENDENT DIRECTORS
LYNNE V. CHENEY
Distinguished fellow, American Enterprise Institute for Public Policy Research.
ROBERT F. FROEHLKE
Former president of all funds in the IDS MUTUAL FUND GROUP.
21
<PAGE>
HEINZ F. HUTTER
Former president and chief operating officer, Cargill, Inc.
ANNE P. JONES
Attorney and telecommunications consultant.
DONALD M. KENDALL
Former chairman and chief executive officer, PepsiCo, Inc.
MELVIN R. LAIRD
Senior counsellor for national and international affairs, The Reader's Digest
Association, Inc.
LEWIS W. LEHR
Former chairman and chief executive officer, Minnesota Mining and Manufacturing
Company (3M).
EDSON W. SPENCER
Former chairman and chief executive officer, Honeywell, Inc.
WHEELOCK WHITNEY
Chairman, Whitney Management Company.
C. ANGUS WURTELE
Chairman of the board and chief executive officer, The Valspar Corporation.
INTERESTED DIRECTORS WHO ARE OFFICERS AND/OR EMPLOYEES OF AEFC
WILLIAM H. DUDLEY
Executive vice president, AEFC.
DAVID R. HUBERS
President and chief executive officer, AEFC.
JOHN R. THOMAS
Senior vice president, AEFC.
OTHER OFFICER
LESLIE L. OGG
Vice president of all funds in the IDS MUTUAL FUND GROUP and general counsel and
treasurer of the publicly offered funds.
Refer to the SAI for the directors' and officers' biographies.
INVESTMENT MANAGER AND TRANSFER AGENT
The fund pays AEFC for managing its portfolio, providing administrative services
and serving as transfer agent (handling shareholder accounts).
Under its Investment Management Services Agreement, AEFC determines which
securities will be purchased, held or sold (subject to the direction and
22
<PAGE>
control of the fund's board of directors). Effective March 3, 1995, the fund
pays AEFC a fee for these services based on the average daily net assets of the
fund, as follows:
<TABLE>
<CAPTION>
Annual rate
Assets at each asset
(billions) level
- ----------- ------------------
<S> <C>
First $1.0 0.520%
Next1.0 0.495
Next1.0 0.470
Next3.0 0.445
Next3.0 0.420
Over9.0 0.395
</TABLE>
For the fiscal year ended Nov. 30, 1994, under a prior agreement, the fund paid
AEFC a total investment management fee of 0.52% of its average daily net assets.
Under the Agreement, the fund also pays taxes, brokerage commissions and
nonadvisory expenses.
Under an Administrative Services Agreement, the fund pays AEFC for
administration and accounting services at an annual rate of 0.05% decreasing in
gradual percentages to 0.025% as assets increase.
In addition, under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The fund pays AEFC an annual fee per
shareholder account for this service as follows:
- - Class A $15.50
- - Class B $16.50
- - Class Y $15.50
DISTRIBUTOR
The fund sells shares through American Express Financial Advisors, a wholly
owned subsidiary of AEFC, under a Distribution Agreement. Financial advisors
representing American Express Financial Advisors provide information to
investors about individual investment programs, the fund and its operations, new
account applications, exchange and redemption requests. The cost of these
services is paid partially by the fund's sales charge.
Portions of sales charges may be paid to securities dealers who have sold the
fund's shares, or to banks and other financial institutions. The proceeds paid
to others range from 0.8% to 4% of the fund's offering price depending on the
monthly sales volume.
For Class B shares, to help defray costs not covered by sales charges, including
costs for marketing, sales administration, training, overhead, direct marketing
programs, advertising and related functions, the fund pays American Express
Financial Advisors a distribution fee, also known as a 12b-1 fee. This fee is
paid under a Plan and Agreement of Distribution that follows the terms of Rule
12b-1 of the Investment Company Act of 1940. Under this Agreement, the fund pays
a distribution fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares for distribution-related services. The
total 12b-1 fee paid by the fund under a prior agreement for the fiscal year
ended Nov. 30, 1994 was 0.04% of its average daily net assets. This fee will not
cover all of the costs incurred by American Express Financial Advisors.
23
<PAGE>
Under a Shareholder Service Agreement, the fund also pays a fee for service
provided to shareholders by financial advisors and other servicing agents. The
fee is calculated at a rate of 0.175% of the fund's average daily net assets
attributable to Class A and Class B shares.
Total expenses paid by the fund in the fiscal year ended Nov. 30, 1994 were
0.72% of its average daily net assets.
Total fees and expenses (excluding taxes and brokerage commissions) cannot
exceed the most restrictive applicable state expense limitation.
ABOUT AEFC
GENERAL INFORMATION
The AEFC family of companies offers not only mutual funds but also insurance,
annuities, investment certificates and a broad range of financial management
services.
Besides managing investments for all publicly offered funds in the IDS MUTUAL
FUND GROUP, AEFC also manages investments for itself and its subsidiaries, IDS
Certificate Company and IDS Life Insurance Company. Total assets under
management on Nov. 30, 1994 were more than $__ billion.
American Express Financial Advisors serves individuals and businesses through
its nationwide network of more than 175 offices and more than 7,800 advisors.
Other AEFC subsidiaries provide investment management and related services for
pension, profit sharing, employee savings and endowment funds of businesses and
institutions.
AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It 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. The fund may pay brokerage commissions to broker-dealer affiliates of
American Express and AEFC.
24
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS SELECTIVE FUND
March 3, 1995
This Statement of Additional Information (SAI) is not a prospectus. It should
be read together with the prospectus and the financial statements contained in
the Annual Report which may be obtained from your American Express financial
advisor or by writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534.
This SAI is dated March 3, 1995, and it is to be used with the prospectus dated
March 3, 1995, and the Annual Report for the fiscal year ended Nov. 30, 1994.
-1-
<PAGE>
TABLE OF CONTENTS
Goal and Investment Policies . . . . . . . . . . . . . . . . . See Prospectus
Additional Investment Policies . . . . . . . . . . . . . . . . . . .p.
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . p.
Brokerage Commissions Paid to Brokers Affiliated with AEFC . . . . . p.
Performance Information. . . . . . . . . . . . . . . . . . . . . . . p.
Valuing Fund Shares. . . . . . . . . . . . . . . . . . . . . . . . . p.
Investing in the Fund. . . . . . . . . . . . . . . . . . . . . . . . p.
Redeeming Shares . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Pay-out Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Capital Loss Carryover . . . . . . . . . . . . . . . . . . . . . . . p.
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . p.
Principal Holders of Securities. . . . . . . . . . . . . . . . . . . p.
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . p.
Financial Statements . . . . . . . . . . . . . . . . . . . . .See Annual Report
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p.
Appendix A: Foreign Currency Transactions . . . . . . . . . . . . . p.
Appendix B: Options and Interest Rate Futures Contracts
and Additional Information on Investment
Policies. . . . . . . . . . . . . . . . . . . . . . . . p.
Appendix C: Mortgage-Backed Securities. . . . . . . . . . . . . . . p.
Appendix D: Description of Corporate Bond Ratings . . . . . . . . . p.
Appendix E: Dollar-Cost Averaging . . . . . . . . . . . . . . . . . p.
-2-
<PAGE>
ADDITIONAL INVESTMENT POLICIES
These are investment policies in addition to those presented in the prospectus.
Unless holders of a majority of the outstanding shares agree to make the change
the fund will not:
'Act as an underwriter (sell securities for others). However, under the
securities laws, the fund may be deemed to be an underwriter when it purchases
securities directly from the issuer and later resells them.
'Borrow money or property, except as a temporary measure for extraordinary
or emergency purposes, in an amount not exceeding one-third of the market value
of its total assets (including borrowings) less liabilities (other than
borrowings) immediately after the borrowing. The fund has not borrowed in the
past and has no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the fund's
total assets.
'Concentrate in any one industry. According to the present interpretation
by the Securities and Exchange Commission (SEC), this means no more than 25% of
the fund's total assets, based on current market value at time of purchase, can
be invested in any one industry.
'Purchase more than 10% of the outstanding voting securities of an issuer.
'Invest more than 5% of its total assets, at market value, in securities of any
one company, government or political subdivision thereof, except the limitation
will not apply to investments in securities issued by the U.S. government, its
agencies or instrumentalities, and except that up to 25% of the fund's total
assets may be invested without regard to this limitation.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the fund from investing in
securities or other instruments backed by real estate or securities of companies
engaged in the real estate business.
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the fund from
buying or selling options and futures contracts or from investing in securities
or other instruments backed by, or whose value is derived from, physical
commodities.
'Make a loan of any part of its assets to American Express Financial Corporation
(AEFC), to the directors and officers of AEFC or to its own directors and
officers.
'Purchase securities of an issuer if the directors and officers of the fund and
of American Express Financial Corporation (AEFC) hold more than a certain
percentage of the issuer's outstanding securities. If the holdings of all
directors and officers of the fund and of AEFC who own more than 0.5% of an
issuer's securities
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<PAGE>
are added together, and if in total they own more than 5%, the fund will not
purchase securities of that issuer.
'Lend portfolio securities in excess of 30% of its net assets. This policy may
not be changed without shareholder approval. The current policy of the fund's
board of directors is to make these loans, either long- or short-term, to
broker-dealers. In making such loans the fund gets the market price in cash,
U.S. government securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board of directors. If the
market price of the loaned securities goes up, the fund will get additional
collateral on a daily basis. The risks are that the borrower may not provide
additional collateral when required or return the securities when due. During
the existence of the loan, the fund receives cash payments equivalent to all
interest or other distributions paid on the loaned securities. A loan will not
be made unless the investment manager believes the opportunity for additional
income outweighs the risks.
Unless changed by the board of directors, the fund will not:
'Buy on margin or sell short, except it may enter into interest rate futures
contracts.
'Pledge or mortgage its assets beyond 30% of the cost of total assets. If the
fund were ever to do so, valuation of the pledged or mortgaged assets would be
based on market values. For purposes of this restriction, collateral
arrangements for margin deposits on interest rate futures contracts are not
deemed to be a pledge of assets.
'Invest more than 5% of its total assets, at cost, in securities of companies,
including any predecessors, that have a record of less than three years
continuous operations.
'Invest in securities of investment companies except by purchases in the
open market where the dealer's or sponsor's profit is the regular commission.
'Invest in a company to control or manage it.
'Invest in exploration or development programs, such as oil, gas or mineral
programs.
'Invest more than 5% of its net assets in warrants. Under one state's law no
more than 2% of the fund's net assets may be invested in warrants not listed on
an Exchange.
'Invest more than 10% of the fund's net assets in securities and derivative
instruments that are illiquid. For purposes of this policy illiquid securities
include some privately placed securities, public securities and Rule 144A
securities that for one reason or another may no longer have readily available
markets, loans and loan participations, repurchase agreements with maturities
greater than seven days, non-negotiable fixed-time deposits and over-the-counter
options.
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<PAGE>
In determining the liquidity of Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the
United States government or its agencies and instrumentalities, the investment
manager, under guidelines established by the board of directors, will consider
any relevant factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of marketplace trades.
In determining the liquidity of commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933,
the investment manager, under guidelines established by the board of directors,
will evaluate relevant factors such as the issuer and the size and nature of its
commercial paper programs, the willingness and ability of the issuer or dealer
to repurchase the paper, and the nature of the clearance and settlement
procedures for the paper.
The fund may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the fund may use are short-term
U.S. and Canadian government securities and negotiable certificates of deposit,
non-negotiable fixed-time deposits, bankers' acceptances and letters of credit
of banks or savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual financial
statements) in excess of $100 million (or the equivalent in the instance of a
foreign branch of a U.S. bank) at the date of investment. Any cash-equivalent
investments in foreign securities will be subject to the limitations on foreign
investments described in the prospectus. The fund also may purchase short-term
corporate notes and obligations rated in the top two classifications by Moody's
or S&P or the equivalent and may use repurchase agreements with broker-dealers
registered under the Securities Exchange Act of 1934 and with commercial banks.
A risk of a repurchase agreement is that if the seller seeks the protection of
the bankruptcy laws, the fund's ability to liquidate the security involved could
be impaired.
Notwithstanding any of the fund's other investment policies, the fund may invest
its assets in an open-end management investment company having substantially the
same investment objectives, policies and restrictions as the fund for the
purpose of having those assets managed as part of a combined pool.
For a discussion about foreign currency transaction, see Appendix A. For a
discussion on options and interest rate futures contracts and additional
information on investment policies, see Appendix B. For a discussion on
mortgage-backed securities, see Appendix C. For a description of corporate bond
ratings, see Appendix D.
PORTFOLIO TRANSACTIONS
When paying a commission that might not otherwise be charged or a commission in
excess of the amount another broker might charge, AEFC must follow procedures
authorized by the board of directors. To date, three procedures have been
authorized. One procedure
-5-
<PAGE>
permits AEFC to direct an order to buy or sell a security traded on a national
securities exchange to a specific broker for research services it has provided.
The second procedure permits AEFC, in order to obtain research, to direct an
order on an agency basis to buy or sell a security traded in the
over-the-counter market to a firm that does not make a market in that security.
The commission paid generally includes compensation for research services. The
third procedure permits AEFC, in order to obtain research and brokerage
services, to cause a fund to pay a commission in excess of the amount another
broker might have charged. AEFC has advised the funds that it is necessary to
do business with a number of brokerage firms on a continuing basis to obtain
such services as the handling of large orders, the willingness of a broker to
risk its own money by taking a position in a security, and the specialized
handling of a particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some portfolio transactions may
not be effected at the lowest commission, but AEFC believes it may obtain better
overall execution. AEFC has assured the funds that under all three procedures
the amount of commission paid will be reasonable and competitive in relation to
the value of the brokerage services performed or research provided.
All other transactions shall be placed on the basis of obtaining the best
available price and the most favorable execution. In so doing, if in the
professional opinion of the person responsible for selecting the broker or
dealer, several firms can execute the transaction on the same basis,
consideration will be given to those firms offering research services. Research
services may be used by AEFC in providing advice to all the funds in the IDS
MUTUAL FUND GROUP even though it is not possible to relate the benefits to any
particular fund or account.
Each investment decision made for a fund is made independently from any decision
made for another fund in the IDS MUTUAL FUND GROUP or other account advised by
AEFC or any AEFC subsidiary. When a fund buys or sells the same security as
another fund or account, AEFC carries out the purchase or sale in a way the fund
agrees in advance is fair. Although sharing in large transactions may adversely
affect the price or volume purchased or sold by the fund, the fund hopes to gain
an overall advantage in execution. AEFC has assured the funds it will continue
to seek ways to reduce brokerage costs.
On a periodic basis, AEFC makes a comprehensive review of the broker-dealers and
the overall reasonableness of their commissions. The review evaluates
execution, operational efficiency and research services.
The fund paid total brokerage commissions of $_________ for the fiscal year
ended Nov. 30, 1994, $7,120 for fiscal year 1993, and $96,633 for fiscal year
1992. Substantially all firms through whom transactions were executed provide
research services. [In fiscal year 1994, transactions amounting to $_____, on
which $____ in commissions were imputed or paid, were specifically directed to
firms.]
-6-
<PAGE>
[No transactions were directed to brokers because of research services they
provided to the fund.]
The fund acquired no securities of its regular brokers or dealers or of the
parents of those brokers or dealers that derived more than 15% of gross revenue
from securities-related activities during the fiscal year ended November 30,
1994.
On November 30, 1994, at the end of the fiscal year, the fund held securities of
its regular brokers or dealers or of the parent of those brokers or dealers that
derived more than 15% of gross revenue from securities-related activities as
presented below:
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
- -------------- -------------------
The portfolio turnover rate was _____% in the fiscal year ended Nov. 30, 1994,
and 30% in fiscal year 1993. [The variation in turnover rates can be attributed
to:]
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AEFC
Affiliates of American Express Company (American Express) (of which AEFC is a
wholly owned subsidiary) may engage in brokerage and other securities
transactions on behalf of the fund according to procedures adopted by the fund's
board of directors and to the extent consistent with applicable provisions of
the federal securities laws. AEFC will use an American Express affiliate only
if (i) AEFC determines that the fund will receive prices and executions at least
as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for the fund and (ii) the affiliate charges
the fund commission rates consistent with those the affiliate charges comparable
unaffiliated customers in similar transactions and if such use is consistent
with terms of the Investment Management Services Agreement.
No brokerage commissions were paid to brokers affiliated with AEFC for the three
most recent fiscal years.
Information about brokerage commissions paid by the fund for the last three
fiscal years to brokers affiliated with AEFC is contained in the following
table:
<TABLE>
<CAPTION>
For the Fiscal Year Ended Nov. 30,
1994 1993 1992
--------------------------------------------- ----------- -----------
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
------ ----------- ----------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ % % -0- -0-
</TABLE>
(1) Until May 31, 1994, under common control with AEFC as a subsidiary of
American Express. As of May 31, 1994 is no longer a subsidiary of American
Express.
-7-
<PAGE>
(2) Under common control with AEFC as an indirect subsidiary of American
Express.
(3) Wholly owned subsidiary of AEFC.
(4) Under common control with AEFC as an indirect subsidiary of American Express
until July 30, 1993.
(5) Under common control with AEFC as a subsidiary of American Express until
July 30, 1993.
PERFORMANCE INFORMATION
The fund may quote various performance figures to illustrate past performance.
Average annual total return and current yield quotations used by the fund are
based on standardized methods of computing performance as required by the SEC.
An explanation of these and any other methods used by the fund to compute
performance follows below.
AVERAGE ANNUAL TOTAL RETURN
The fund may calculate average annual total return for a class for certain
periods by finding the average annual compounded rates of return over the period
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
AGGREGATE TOTAL RETURN
The fund may calculate aggregate total return for a class for certain periods
representing the cumulative change in the value of an investment in the fund
over a specified period of time according to the following formula:
ERV - P
-------
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
ANNUALIZED YIELD
The fund may calculate an annualized yield for a class by dividing the net
investment income per share deemed earned during a period by the net asset value
per share on the last day of the period and annualizing the results.
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<PAGE>
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
--
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period
The fund's annualized yield was ____% for the 30-day period ended Nov. 30, 1994.
The fund's yield, calculated as described above according to the formula
prescribed by the SEC, is a hypothetical return based on market value yield to
maturity for the fund's securities. It is not necessarily indicative of the
amount which was or may be paid to the fund's shareholders. Actual amounts paid
to fund shareholders are reflected in the distribution yield.
DISTRIBUTION YIELD
Distribution yield is calculated according to the following formula:
D divided by POP F equals DY
--- -----
30 30
where: D = sum of dividends for 30-day period
POP = sum of public offering price for 30-day period
F = annualizing factor
DY = distribution yield
The fund's distribution yield was ____% for the 30-day period ended Nov. 30,
1994.
In its sales material and other communications, the fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster, Newsweek,
The New York Times, Personal Investor, Stanger Report, Sylvia Porter's Personal
Finance, USA Today, U.S. News and World Report, The Wall Street Journal and
Wiesenberger Investment Companies Service.
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<PAGE>
VALUING FUND SHARES
The value of an individual share for each class is determined by using the net
asset value before shareholder transactions for the day. On December 1, 1994,
the first business day following the end of the fiscal year, the computation
looked like this:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A* $ divided by equals $
<FN>
*Shares of Class B and Class Y were not outstanding on that date.
</TABLE>
In determining net assets before shareholder transactions, the fund's portfolio
securities are valued as follows as of the close of business of the New York
Stock Exchange:
'Securities, except bonds other than convertibles, traded on a securities
exchange for which a last-quoted sales price is readily available are valued at
the last-quoted sales price on the exchange where such security is primarily
traded.
'Securities traded on a securities exchange for which a last-quoted sales price
is not readily available are valued at the mean of the closing bid and asked
prices, looking first to the bid and asked prices on the exchange where the
security is primarily traded and, if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which a
last-quoted sales price is not readily available, and other securities traded
over-the-counter but not included in the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.
'Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.
'Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the New York Stock Exchange (the "Exchange"). Foreign securities quoted in
foreign currencies are translated into U.S. dollars at the current rate of
exchange. Occasionally, events affecting the value of such securities may occur
between such times and the close of the Exchange that will not be reflected in
the computation of the fund's net asset value. If events materially affecting
the value of such securities occur during such period, these securities will be
valued at their fair value according to procedures decided upon in good faith by
the fund's board of directors (the "board").
'Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short-term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at
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<PAGE>
amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of market value
determined by systematically increasing the carrying value of a security if
acquired at a discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the maturity date.
'Securities without a readily available market price, bonds other than
convertibles and other assets are valued at fair value as determined in good
faith by the board. The board is responsible for selecting methods it believes
provide fair value. When possible, bonds are valued by a pricing service
independent from the fund. If a valuation of a bond is not available from a
pricing service, the bond will be valued by a dealer knowledgeable about the
bond if such a dealer is available.
The New York Stock Exchange, AEFC and the fund will be closed on the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
INVESTING IN THE FUND
Sales Charge
Shares of the fund are sold at the public offering price determined at the close
of business on the day an application is accepted. The public offering price is
the net asset value of one share plus a sales charge, if applicable. For Class
B and Class Y, there is no initial sales charge so the public offering price is
the same as the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made Dec. 1, 1994, was determined by dividing
the net asset value of one share, $______, by 0.95 (1.00-0.05 for a maximum 5%
sales charge) for a public offering price of $_____. The sales charge is paid
to American Express Financial Advisors by the person buying the shares.
Class A - Calculation of the Sales Charge
Sales charges are determined as follows:
<TABLE>
<CAPTION>
Within each increment,
sales charge as a
percentage of:
----------------------------------------
Public Net
Amount of Investment Offering Price Amount Invested
- -------------------- -------------- ---------------
<S> <C> <C> <C>
First $ 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
More than 1,000,000 0.0 0.00
</TABLE>
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<PAGE>
Sales charges on an investment greater than $50,000 are calculated for each
increment separately and then totaled. The resulting total sales charge,
expressed as a percentage of the public offering price and of the net amount
invested, will vary depending on the proportion of the investment at different
sales charge levels.
For example, compare an investment of $60,000 with an investment of $85,000.
The $60,000 investment is composed of $50,000 that incurs a sales charge of
$2,500 (5.0% x $50,000) and $10,000 that incurs a sales charge of $450 (4.5% x
$10,000). The total sales charge of $2,950 is 4.92% of the public offering
price and 5.17% of the net amount invested.
In the case of the $85,000 investment, the first $50,000 also incurs a sales
charge of $2,500 (5.0% x $50,000) and $35,000 incurs a sales charge of $1,575
(4.5% x $35,000). The total sales charge of $4,075 is 4.79% of the public
offering price and 5.04% of the net amount invested.
The following table shows the range of sales charges as a percentage of the
public offering price and of the net amount invested on total investments at
each applicable level.
<TABLE>
<CAPTION>
On total investment, sales
charge as a percentage of
-------------------------------------------
Public Net
Offering Price Amount Invested
-------------- ---------------
Amount of Investment ranges from:
- -------------------- -------------------------------------------
<S> <C> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.75 4.71-3.90
More than 500,000 to 1,000,000 3.75-2.00 3.90-2.04
More than 1,000,000 0.00 0.00
</TABLE>
The initial sales charge is waived for certain qualified plans that meet the
requirements described in the prospectus. Participants in these qualified plans
may be subject to a deferred sales charge on certain redemptions. The deferred
sales charge on certain redemptions will be waived if the redemption is a result
of a participant's death, disability, retirement, attaining age 59 1/2, loans or
hardship withdrawals. The deferred sales charge varies depending on the number
of participants in the qualified plan and total plan assets as follows:
Deferred Sales Charge
<TABLE>
<CAPTION>
Number of Participants
----------------------
Total Plan Assets 1-99 100 or more
- ----------------- ---- -----------
<S> <C> <C>
Less than $1 million 4% 0%
$1 million or more 0% 0%
- ---------------------------------------------------------
</TABLE>
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<PAGE>
Class A - Reducing the Sales Charge
Sales charges are based on the total amount of your investments in the fund.
The amount of all prior investments plus any new purchase is referred to as your
"total amount invested." For example, suppose you have made an investment of
$20,000 and later decide to invest $40,000 more. Your total amount invested
would be $60,000. As a result, $10,000 of your $40,000 investment qualifies for
the lower 4.5% sales charge that applies to investments of more than $50,000 to
$100,000.
The total amount invested includes any shares held in the fund in the name of a
member of your immediate family (spouse and unmarried children under 21). For
instance, if your spouse already has invested $20,000 and you want to invest
$40,000, your total amount invested will be $60,000 and therefore you will pay
the lower charge of 4.5% on $10,000 of the $40,000.
Until a spouse remarries, the sales charge is waived for spouses and unmarried
children under 21 of deceased trustees, directors, officers or employees of the
fund or AEFC or its subsidiaries and deceased advisors.
The total amount invested also includes any investment you or your immediate
family already have in the other publicly offered funds in the IDS MUTUAL FUND
GROUP where the investment is subject to a sales charge. For example, suppose
you already have an investment of $25,000 in IDS Growth Fund and $5,000 in this
fund. If you invest $40,000 more in this fund, your total amount invested in
the funds will be $70,000 and therefore $20,000 of your $40,000 investment will
incur a 4.5% sales charge.
Finally, Individual Retirement Account (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 entity, may be added together to reduce sales charges for shares
purchased through that plan.
Class A - Letter of Intent
You can reduce the sales charges in Class A by filing a letter-of-intent stating
that you intend to invest $1 million over a period of 13 months. The agreement
can start at any time and will remain in effect for 13 months. Your investment
will be charged normal sales charges until you have invested $1 million. At
that time, the sales charges previously paid will be reversed. If you do not
invest $1 million by the end of 13 months, there is no penalty, you'll just miss
out on the sales charge adjustment. A letter-of-intent is not an option
(absolute right) to buy shares.
Here's an example. You file a letter-of-intent to invest $1 million and make an
investment of $100,000 at that time. You pay the normal 5% sales charge on the
first $50,000 and 4.5% sales charge on the next $50,000 of this investment.
Let's say you make a second investment of $900,000 (bringing the total up to $1
million) one month before the 13-month period is up. What sales
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<PAGE>
charge do you pay? AEFC makes an adjustment on your last purchase so that
there's no sales charge on the total $1 million investment, just as if you had
invested $1 million all at once.
Systematic Investment Programs
After you make your initial investment of $2,000 or more, you can arrange to
make additional payments of $100 or more on a regular basis. These minimums do
not apply to all systematic investment programs. You decide how often to make
payments - monthly, quarterly or semiannually. You are not obligated to make
any payments. You can omit payments or discontinue the investment program
altogether. The fund also can change the program or end it at any time. If
there is no obligation, why do it? Putting money aside is an important part of
financial planning. With a systematic investment program, you have a goal to
work for.
How does this work? Your regular investment amount will purchase more shares
when the net asset value per share decreases, and fewer shares when the net
asset value per share increases. Each purchase is a separate transaction.
After each purchase your new shares will be added to your account. Shares
bought through these programs are exactly the same as any other fund shares.
They can be bought and sold at any time. A systematic investment program is not
an option or an absolute right to buy shares.
The systematic investment program itself cannot ensure a profit, nor can it
protect against a loss in a declining market. If you decide to discontinue the
program and redeem your shares when their net asset value is less than what you
paid for them, you will incur a loss.
For a discussion on dollar-cost averaging, see Appendix E.
Automatic Directed Dividends
Dividends, including capital gain distributions, paid by another fund in the IDS
MUTUAL FUND GROUP subject to a sales charge, may be used to automatically
purchase shares in the same class of this fund without paying a sales charge.
Dividends may be directed to existing accounts only. Dividends declared by a
fund are exchanged to this fund the following day. Dividends can be exchanged
into one fund but cannot be split to make purchases in two or more funds.
Automatic directed dividends are available between accounts of any ownership
EXCEPT:
'Between a non-custodial account and an IRA, or 401(k) plan account or other
qualified retirement account of which American Express Trust Company acts as
custodian;
'Between two American Express Trust Company custodial accounts with different
owners (for example, you may not exchange dividends from your IRA to the IRA of
your spouse);
'Between different kinds of custodial accounts with the same ownership (for
example, you may not exchange dividends from your IRA to your 401(k) plan
account, although you may exchange dividends from one IRA to another IRA).
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Dividends may be directed from accounts established under the Uniform Gifts to
Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) only into other UGMA
or UTMA accounts with identical ownership.
The fund's investment goal is described in its prospectus along with other
information, including fees and expense ratios. Before exchanging dividends
into another fund, you should read its prospectus. You will receive a
confirmation that the automatic directed dividend service has been set up for
your account.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.
DURING AN EMERGENCY, the board of directors (the "board") can suspend the
computation of net asset value, stop accepting payments for purchase of shares
or suspend the duty of the fund to redeem shares for more than seven days. Such
emergency situations would occur if:
'The New York Stock Exchange (the "Exchange") closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is restricted, or
'Disposal of the fund's securities is not reasonably practicable or it is not
reasonably practicable for the fund to determine the fair value of its net
assets, or
'The SEC, under the provisions of the Investment Company Act of 1940, as
amended, declares a period of emergency to exist.
Should the fund stop selling shares, the board may make a deduction from the
value of the assets held by the fund to cover the cost of future liquidations of
the assets so as to distribute fairly these costs among all shareholders.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment in regular
installments. If you redeem Class B shares you may be subject to a contingent
deferred sales charge as discussed in the prospectus. While the plans differ on
how the pay-out is figured, they all are based on the redemption of your
investment. Net investment income dividends and any capital gain distributions
will automatically be reinvested, unless you elect to receive them in cash. If
you are redeeming a tax-qualified plan account for which American Express Trust
Company acts as custodian, you can elect to receive your dividends and other
distributions in cash when permitted by law. If you redeem an IRA or a
qualified retirement account, certain restrictions, federal tax penalties and
special federal income tax reporting requirements may apply. You should consult
your tax advisor about this complex area of the tax law.
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Applications for a systematic investment in a class of the fund subject to a
sales charge normally will not be accepted while a pay-out plan for any of those
funds is in effect. Occasional investments, however, may be accepted.
To start any of these plans, please write or call American Express Shareholder
Service, P.O. Box 534, Minneapolis, MN 55440-0534, 612- 671-3733. Your
authorization must be received in the Minneapolis headquarters at least five
days before the date you want your payments to begin. The initial payment must
be at least $50. Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you change or cancel
it.
The following pay-out plans are designed to take care of the needs of most
shareholders in a way AEFC can handle efficiently and at a reasonable cost. If
you need a more irregular schedule of payments, it may be necessary for you to
make a series of individual redemptions, in which case you'll have to send in a
separate redemption request for each pay-out. The fund reserves the right to
change or stop any pay-out plan and to stop making such plans available.
Plan #1: Pay-out for a fixed period of time
If you choose this plan, a varying number of shares will be redeemed at regular
intervals during the time period you choose. This plan is designed to end in
complete redemption of all shares in your account by the end of the fixed
period.
Plan #2: Redemption of a fixed number of shares
If you choose this plan, a fixed number of shares will be redeemed for each
payment and that amount will be sent to you. The length of time these payments
continue is based on the number of shares in your account.
Plan #3: Redemption of a fixed dollar amount
If you decide on a fixed dollar amount, whatever number of shares is necessary
to make the payment will be redeemed in regular installments until the account
is closed.
Plan #4: Redemption of a percentage of net asset value
Payments are made based on a fixed percentage of the net asset value of the
shares in the account computed on the day of each payment. Percentages range
from 0.25% to 0.75%. For example, if you are on this plan and arrange to take
0.5% each month, you will get $50 if the value of your account is $10,000 on the
payment date.
EXCHANGES
If you buy shares in the fund and then exchange into another fund, it is
considered a sale and subsequent purchase of shares. Under the tax laws, if
this exchange is done within 91 days, any sales
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<PAGE>
charge waived on Class A shares on a subsequent purchase of shares applies to
the new shares acquired in the exchange. Therefore, you cannot create a tax
loss or reduce a tax gain attributable to the sales charge when exchanging
shares within 91 days.
Retirement Accounts
If you have a nonqualified investment in the fund and you wish to move part or
all of those shares to an IRA or qualified retirement account in the fund, you
can do so without paying a sales charge. However, this type of exchange is
considered a sale of shares and may result in a gain or loss for tax purposes.
In addition, this type of exchange may result in an excess contribution under
IRA or qualified plan regulations if the amount exchanged plus the amount of the
initial sales charge applied to the amount exchanged exceeds annual contribution
limitations. For example: If you were to exchange $2,000 in Class A shares
from a nonqualified account to an IRA without considering the 5% ($100) initial
sales charge applicable to that $2,000, you may be deemed to have exceeded
current IRA annual contribution limitations. You should consult your tax
advisor for further details about this complex subject.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, the fund had a capital loss
carryover of $___________ at _______________, 19__, that will
expire as follows:
199 199
---- ----
It is unlikely that the board of directors will authorize a distribution of any
net realized capital gains until the available capital loss carryover has been
offset or has expired except as required by Internal Revenue Service rules.
TAXES
Net investment income dividends received should be treated as dividend income
for federal income tax purposes. Corporate shareholders are generally entitled
to a deduction equal to 70% of that portion of the fund's dividend that is
attributable to dividends the fund received from domestic (U.S.) securities.
For the fiscal year ended Nov. 30, 1994, __% of the fund's net investment income
dividends qualified for the corporate deduction.
Capital gain distributions received by individual and corporate shareholders, if
any, should be treated as long-term capital gains regardless of how long they
owned their shares. Short-term capital gains earned by the fund are paid to
shareholders as part of their ordinary income dividend and are taxable.
Under federal tax law and an election made by the fund under federal tax
regulations, by the end of a calendar year the fund must declare and pay
dividends representing 98% of ordinary income for that calendar year and 98% of
net capital gains (both long-term
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<PAGE>
and short-term) for the 12-month period ending Oct. 31 of that calendar year.
The fund is subject to an excise tax equal to 4% of the excess, if any, of the
amount required to be distributed over the amount actually distributed. The
fund intends to comply with federal tax law and avoid any excise tax.
The fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or
more of its gross income for the taxable year is passive income or if 50% or
more of the average value of its assets consists of assets that produce or could
produce passive income. The fund has no current intention to invest in PFICs.
This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state and local income tax laws to fund distributions.
AGREEMENTS
Investment Management Services Agreement
The fund has an Investment Management Services Agreement with AEFC. For its
services, AEFC is paid a fee based on the following schedule:
Assets Annual rate at
(billions) each asset level
- ---------- ----------------
First $1.0 0.520%
Next 1.0 0.495
Next 1.0 0.470
Next 3.0 0.445
Next 3.0 0.420
Over 9.0 0.395
On March 3, 1995, the daily rate applied to the fund's assets is expected
to be approximately 0.___% on an annual basis. The fee is calculated for
each calendar day on the basis of net assets as of the close of business two
business days prior to the day for which the calculation is made.
The management fee is paid monthly. Under a prior agreement, the total amount
paid was $___________ for the fiscal year ended Nov. 30, 1994, $8,932,798 for
fiscal year 1993, and $8,159,007 for fiscal year 1992.
Under the current Agreement, the fund also pays taxes, brokerage commissions and
nonadvisory expenses, that include custodian fees; audit and certain legal fees;
fidelity bond premiums; registration fees for shares; fund office expenses;
consultants' fees; compensation of directors, officers and employees; corporate
filing fees; organizational expenses; expenses incurred in connection with
lending portfolio securities of the fund; and expenses properly payable by the
fund, approved by the board of directors. Under a
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prior agreement, the fund paid nonadvisory expenses of $________ for the fiscal
year ended Nov. 30, 1994, $778,877 for fiscal year 1993, and $654,094 for fiscal
year 1992.
Administrative Services Agreement
The fund has an Administrative Services Agreement with AEFC. Under this
agreement, the fund pays AEFC for providing administration and accounting
services. The fee is calculated as follows:
Assets Annual rate
(billions) each asset level
---------- ----------------
First $1 0.050%
Next 1 0.045
Next 1 0.040
Next 3 0.035
Next 3 0.030
Over 9 0.025
Transfer Agency Agreement
The fund has a Transfer Agency Agreement with AEFC. This agreement governs
AEFC's responsibility for administering and/or performing transfer agent
functions, for acting as service agent in connection with dividend and
distribution functions and for performing shareholder account administration
agent functions in connection with the issuance, exchange and redemption or
repurchase of the fund's shares. Under the agreement, AEFC will earn a fee from
the fund determined by multiplying the number of shareholder accounts at the end
of the day by a rate determined for each class and dividing by the
number of days in the year. The rate for Class A and for Class Y is
$15.50 per year. The rate for Class B is $16.50 per year.
The fees paid to AEFC may be changed from time to time upon agreement of the
parties without shareholder approval. The fund paid fees of $____________ for
the fiscal year ended Nov. 30, 1994.
Distribution Agreement
Under a Distribution Agreement, sales charges deducted for distributing fund
shares are paid to American Express Financial Advisors daily. These charges
amounted to $_________ for the fiscal year ended Nov. 30, 1994. After paying
commissions to personal financial planners, and other expenses, the amount
retained was $_________. The amounts were $7,381,370 and $2,611,931 for fiscal
year 1993, and $7,205,702 and $2,577,031 for fiscal year 1992.
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<PAGE>
Additional information about commissions and compensation for the fiscal year
ended Nov. 30, 1994, is contained in the following table:
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
- ----------- ------------- ----------- ----------- ------------
AEFC None None $______* $_________**
American
Express
Financial
Advisors $________ None None None
*For further information see "Brokerage Commissions Paid to Brokers Affiliated
with AEFC.
**Distribution fees paid pursuant to the Plan and Supplemental Agreement of
Distribution.
Shareholder Service Agreement
The fund pays a fee for service provided to shareholders by financial advisors
and other servicing agents. The fee is calculated at a rate of 0.175% of the
fund's average daily net assets attributable to Class A and Class B shares.
Plan and Agreement of Distribution
For Class B shares, to help American Express Financial Advisors defray the cost
of distribution and servicing, not covered by the sales charges received under
the Distribution Agreement, the fund and American Express Financial Advisors
entered into a Plan and Agreement of Distribution (Plan). These costs cover
almost all aspects of distributing the fund's shares except compensation to the
sales force. A substantial portion of the costs are not specifically identified
to any one fund in the IDS MUTUAL FUND GROUP. Under the Plan, American Express
Financial Advisors is paid a fee at an annual rate of 0.75% of the fund's
average daily net assets attributable to Class B shares.
The Plan must be approved annually by the board of directors (the "directors"),
including a majority of the disinterested directors, if it is to continue for
more than a year. At least quarterly, the directors must review written reports
concerning the amounts expended under the Plan and the purposes for which such
expenditures were made. The Plan and any agreement related to it may be
terminated at any time by vote of a majority of directors who are not interested
persons of the fund and have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan, or by vote of a
majority of the outstanding voting securities of the fund or by American Express
Financial Advisors. The Plan (or any agreement related to it) will terminate in
the event of its assignment, as that term is defined in the Investment Company
Act of 1940, as amended. The Plan may not be amended to increase the amount to
be spent for distribution
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<PAGE>
without shareholder approval, and all material amendments to the Plan must be
approved by a majority of the directors, including a majority of the directors
who are not interested persons of the fund and who do not have a financial
interest in the operation of the Plan or any agreement related to it. The
selection and nomination of disinterested directors is the responsibility of the
other disinterested directors. No interested person of the fund, and no
director who is not an interested person, has any direct or indirect financial
interest in the operation of the Plan or any related agreement.
`Total fees and nonadvisory expenses cannot exceed the most restrictive
applicable state limitation. Currently, the most restrictive applicable state
expense limitation, subject to exclusion of certain expenses, is 2.5% of the
first $30 million of the fund's average daily net assets, 2% of the next $70
million and 1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the fund exceed
this limitation for the fund's fiscal year in progress, AEFC will assume all
expenses in excess of the limitation. AEFC then may bill the fund for such
expenses in subsequent months up to the end of that fiscal year, but not after
that date. No interest charges are assessed by AEFC for expenses it assumes.
DIRECTORS AND OFFICERS
The following is a list of the fund's directors who, except for Mr. Dudley, also
are directors of all other funds in the IDS MUTUAL FUND GROUP. Mr. Dudley is a
director of all publicly offered funds. All shares have cumulative voting
rights when voting on the election of directors.
LYNNE V. CHENEY+'
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of the Humanities.
Director, The Reader's Digest Association Inc., Lockheed Corp., and the
Interpublic Group of Companies, Inc. (advertising).
WILLIAM H. DUDLEY+**
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of AEFC.
ROBERT F. FROEHLKE+
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP. Director, the ICI
Mutual Insurance Co., Institute for Defense Analyses, Marshall Erdman and
Associates, Inc. (architectual engineering) and Public Oversight Board of the
American Institute of Certified Public Accountants.
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<PAGE>
DAVID R. HUBERS**
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of AEFC. Previously, senior
vice president, finance and chief financial officer of AEFC.
HEINZ F. HUTTER+
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated (commodity
merchants and processors) from February 1991 to September 1994. Executive vice
president from 1981 to February 1991.
ANNE P. JONES+
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law firm of
Sutherland, Asbill & Brennan. Director, Motorola, Inc. and C-Cor Electronics,
Inc.
DONALD M. KENDALL'
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
MELVIN R. LAIRD+
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The Reader's Digest
Association, Inc. Chairman of the board, COMSAT Corporation, former nine-term
congressman, secretary of defense and presidential counsellor. Director, Martin
Marietta Corp., Metropolitan Life Insurance Co., The Reader's Digest
Association, Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section, American
Institute of Certified Public Accountants).
LEWIS W. LEHR'
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota Mining and
Manufacturing Company (3M). Director, Jack Eckerd Corporation (drugstores).
Advisory Director, Peregrine Inc. (microelectronics).
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<PAGE>
WILLIAM R. PEARCE+*
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June 1993. Former
vice chairman of the board, Cargill, Incorporated (commodity merchants and
processors).
EDSON W. SPENCER
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the board, Mayo
Foundation (healthcare). Former chairman of the board and chief executive
officer, Honeywell Inc. Director, Boise Cascade Corporation (forest products)
and CBS Inc. Member of International Advisory Councils, Robert Bosch (Germany)
and NEC (Japan).
JOHN R. THOMAS**
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of AEFC.
WHEELOCK WHITNEY+
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. ANGUS WURTELE
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar Corporation
(paints). Director, Bemis Corporation (packaging), Donaldson Company (air
cleaners & mufflers) and General Mills, Inc. (consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of the fund.
**Interested person by reason of being an officer, director, employee and/or
shareholder of AEFC or American Express.
The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.
Besides Mr. Pearce, who is president, the fund's other officer is:
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<PAGE>
LESLIE L. OGG
901 S. Marquette Ave.
Minneapolis, MN
Vice president of all funds in the IDS MUTUAL FUND GROUP and general counsel and
treasurer of the publicly offered funds.
During the fiscal year that ended Nov. 30, 1994, the members of the board, for
attending up to __ meetings, received the following compensation, in total, from
all funds in the IDS MUTUAL FUND GROUP.
Board compensation
Aggregate Retirement Estimated Total Cash
compensation benefits annual compensation
from the accrued as benefit on from the IDS
Board member fund fund expenses retirement MUTUAL FUND GROUP
- --------------------------------------------------------------------------------
$ $ $ $
On Nov. 30, 1994, the fund's directors and officers as a group owned less than
1% of the outstanding shares. During the fiscal year ended Nov. 30, 1994, no
director or officer earned more than $60,000 from this fund. All directors and
officers as a group earned $_______, including $______ of retirement plan
expense, from this fund.
PRINCIPAL HOLDERS OF SECURITIES
As of Nov. 30, 1994, ________ held ____ % of fund shares.
CUSTODIAN
The fund's securities and cash are held by First Bank National Association, 180
E. Fifth St., St. Paul, MN 55101-1631, through a custodian agreement. The
custodian is permitted to deposit some or all of its securities in central
depository systems as allowed by federal law.
INDEPENDENT AUDITORS
The financial statements contained in the Annual Report to shareholders, for the
fiscal year ended Nov. 30, 1994, were audited by independent auditors, KPMG Peat
Marwick LLP, 4200 Norwest Center, 90 S. Seventh St., Minneapolis, MN
55402-3900. The independent auditors also provide other accounting and
tax-related services as requested by the fund.
FINANCIAL STATEMENTS
The Independent Auditors' Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the 1994 Annual Report to shareholders, pursuant to Section 30(d)
of the Investment Company Act of 1940, as amended, are hereby incorporated in
this SAI by reference. No other portion of the Annual Report however, is
incorporated by reference.
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<PAGE>
PROSPECTUS
The prospectus for IDS Selective Fund dated March 3, 1995 is hereby incorporated
in this SAI by reference.
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<PAGE>
APPENDIX A
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies of foreign
countries, and since the fund may hold cash and cash-equivalent investments in
foreign currencies, the value of the fund's assets as measured in U.S. dollars
may be affected favorably or unfavorably by changes in currency exchange rates
and exchange control regulations. Also, the fund may incur costs in connection
with conversions between various currencies.
SPOT RATES AND FORWARD CONTRACTS. The fund conducts its foreign currency
exchange transactions either at the spot (cash) rate prevailing in the foreign
currency exchange market or by entering into forward currency exchange contracts
(forward contracts) as a hedge against fluctuations in future foreign exchange
rates. A forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days from the
contract date, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirements. No commissions are charged at any stage
for trades.
The fund may enter into forward contracts to settle a security transaction or
handle dividend and interest collection. When the fund enters into a contract
for the purchase or sale of a security denominated in a foreign currency or has
been notified of a dividend or interest payment, it may desire to lock in the
price of the security or the amount of the payment in dollars. By entering into
a forward contract, the fund will be able to protect itself against a possible
loss resulting from an adverse change in the relationship between different
currencies from the date the security is purchased or sold to the date on which
payment is made or received or when the dividend or interest is actually
received.
The fund also may enter into forward contracts when management of the fund
believes the currency of a particular foreign country may suffer a substantial
decline against another currency. It may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the fund's portfolio securities denominated in such
foreign currency. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since the future
value of such securities in foreign currencies more than likely will change
between the date the forward contract is entered into and the date it matures.
The projection of short- term currency market movements is extremely difficult
and successful execution of a short-term hedging strategy is highly uncertain.
The fund will not enter into such forward contracts or maintain a net exposure
to such contracts when consummating the contracts would obligate the fund to
deliver an amount of foreign currency in excess of the value of the fund's
portfolio securities or other assets denominated in that currency.
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<PAGE>
The fund will designate cash or securities in an amount equal to the value of
the fund's total assets committed to consummating forward contracts entered into
under the second circumstance set forth above. If the value of the securities
declines, additional cash or securities will be designated on a daily basis so
that the value of the cash or securities will equal the amount of the fund's
commitments on such contracts.
At maturity of a forward contract, the fund may either sell the portfolio
security and make delivery of the foreign currency or retain the security and
terminate its contractual obligation to deliver the foreign currency by
purchasing an offsetting contract with the same currency trader obligating it to
buy, on the same maturity date, the same amount of foreign currency.
If the fund retains the portfolio security and engages in an offsetting
transaction, the fund will incur a gain or a loss (as described below) to the
extent there has been movement in forward contract prices. If the fund engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the foreign currency. Should forward prices decline between
the date the fund enters into a forward contract for selling foreign currency
and the date it enters into an offsetting contract for purchasing the foreign
currency, the fund will realize a gain to the extent that the price of the
currency it has agreed to sell exceeds the price of the currency it has agreed
to buy. Should forward prices increase, the fund will suffer a loss to the
extent the price of the currency it has agreed to buy exceeds the price of the
currency it has agreed to sell.
It is impossible to forecast what the market value of portfolio securities will
be at the expiration of a contract. Accordingly, it may be necessary for the
fund to buy additional foreign currency on the spot market (and bear the expense
of such purchase) if the market value of the security is less than the amount of
foreign currency the fund is obligated to deliver and a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the fund is obligated to deliver.
The fund's dealing in forward contracts will be limited to the transactions
described above. This method of protecting the value of the fund's portfolio
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes
a rate of exchange that can be achieved at some point in time. Although such
forward contracts tend to minimize the risk of loss due to a decline in value of
hedged currency, they tend to limit any potential gain that might result should
the value of such currency increase.
Although the fund values its assets each business day in terms of U.S. dollars,
it does not intend to convert its foreign currencies into U.S. dollars on a
daily basis. It will do so from time to time, and shareholders should be aware
of currency conversion costs. Although foreign exchange dealers do not charge a
fee for
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conversion, they do realize a profit based on the difference (spread) between
the prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the fund at one rate, while
offering a lesser rate of exchange should the fund desire to resell that
currency to the dealer.
OPTIONS ON FOREIGN CURRENCIES. The fund may buy put and write covered call
options on foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which portfolio securities are
denominated will reduce the dollar value of such securities, even if their value
in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the fund may buy put options
on the foreign currency. If the value of the currency does decline, the fund
will have the right to sell such currency for a fixed amount in dollars and will
thereby offset, in whole or in part, the adverse effect on its portfolio which
otherwise would have resulted.
As in the case of other types of options, however, the benefit to the fund
derived from purchases of foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, the
fund could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.
The fund may write options on foreign currencies for the same types of hedging
purposes. For example, when the fund anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in exchange rates,
it could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised and the diminution in value of portfolio securities will be
fully or partially offset by the amount of the premium received.
As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the fund would be required to buy or sell
the underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the fund also
may be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements on exchange rates.
All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if the fund holds currency sufficient to cover the
option or has an absolute and immediate right to acquire that currency without
additional cash consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An
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<PAGE>
option writer could lose amounts substantially in excess of its initial
investments, due to the margin and collateral requirements associated with such
positions.
Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an over-the-
counter trading environment, many of the protections afforded to exchange
participants will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an
unlimited extent over a period of time. Although the purchaser of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost.
Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the OCC, thereby reducing the risk of counterparty
default. Further, a liquid secondary market in options traded on a national
securities exchange may be more readily available than in the over-the-counter
market, potentially permitting the fund to liquidate open positions at a profit
prior to exercise or expiration, or to limit losses in the event of adverse
market movements.
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the- counter market. For
example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in certain foreign
countries for the purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the orderly settlement
of foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
FOREIGN CURRENCY FUTURES AND RELATED OPTIONS. The fund may enter into currency
futures contracts to sell currencies. It also may buy put and write covered
call options on currency futures. Currency futures contracts are similar to
currency forward contracts, except that they are traded on exchanges (and have
margin requirements) and are standardized as to contract size and delivery date.
Most currency futures call for payment of delivery in U.S. dollars. The fund
may use currency futures for the same purposes as currency forward contracts,
subject to CFTC
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limitations, including the limitation on the percentage of assets that may be
used, described in the prospectus. All futures contracts are aggregated for
purposes of the percentage limitations.
Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the values of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect the fund
against price decline if the issuer's creditworthiness deteriorates. Because
the value of the fund's investments denominated in foreign currency will change
in response to many factors other than exchange rates, it may not be possible to
match the amount of a forward contract to the value of the fund's investments
denominated in that currency over time.
The fund will not use leverage in its currency options and futures strategies.
The fund will hold securities or other options or futures positions whose values
are expected to offset its obligations. The fund will not enter into an option
or futures position that exposes the fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or (ii) cash,
receivables and short-term debt securities with a value sufficient to cover its
potential obligations.
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APPENDIX B
OPTIONS AND INTEREST RATE FUTURES CONTRACTS AND ADDITIONAL INFORMATION ON
INVESTMENT POLICIES
The fund may buy or write options traded on any U.S. or foreign exchange or in
the over-the-counter market. The fund may enter into interest rate futures
contracts traded on any U.S. or foreign exchange. The fund also may buy or
write put and call options on these futures. Options in the over-the-counter
market will be purchased only when the investment manager believes a liquid
secondary market exists for the options and only from dealers and institutions
the investment manager believes present a minimal credit risk. Some options are
exercisable only on a specific date. In that case, or if a liquid secondary
market does not exist, the fund could be required to buy or sell securities at
disadvantageous prices, thereby incurring losses. Under normal market
conditions, the fund will invest no more than ___% of its net assets in
derivatives.
OPTIONS. An option is a contract. A person who buys a call option for a
security has the right to buy the security at a set price for the length of the
contract. A person who sells a call option is called a writer. The writer of a
call option agrees to sell the security at the set price when the buyer wants to
exercise the option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a security at a set
price for the length of the contract. A person who writes a put option agrees
to buy the security at the set price if the purchaser wants to exercise the
option, no matter what the market price of the security is at that time. An
option is covered if the writer owns the security (in the case of a call) or
sets aside the cash (in the case of a put) that would be required upon exercise.
The price paid by the buyer for an option is called a premium. In addition the
buyer generally pays a broker a commission. The writer receives a premium, less
a commission, at the time the option is written. The cash received is retained
by the writer whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the market price rises
above the exercise price. A writer of a put option may have to pay an
above-market price for the security if its market price decreases below the
exercise price.
Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options and futures contracts may benefit the fund and its shareholders by
improving the fund's liquidity and by helping to stabilize the value of its net
assets.
BUYING OPTIONS. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. They also may
be used for investment. Options are used as a trading technique to take
advantage of any disparity between the price of the underlying security in the
securities market and its price on the options market. It is anticipated the
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trading technique will be utilized only to effect a transaction when the price
of the security plus the option price will be as good or better than the price
at which the security could be bought or sold directly. When the option is
purchased, the fund pays a premium and a commission. It then pays a second
commission on the purchase or sale of the underlying security when the option is
exercised. For record-keeping and tax purposes, the price obtained on the
purchase of the underlying security will be the combination of the exercise
price, the premium and both commissions. When using options as a trading
technique, commissions on the option will be set as if only the underlying
securities were traded.
Put and call options also may be held by the fund for investment purposes.
Options permit the fund to experience the change in the value of a security with
a relatively small initial cash investment. The risk the fund assumes when it
buys an option is the loss of the premium. To be beneficial to the fund, the
price of the underlying security must change within the time set by the option
contract. Furthermore, the change must be sufficient to cover the premium paid,
the commissions paid both in the acquisition of the option and in a closing
transaction or in the exercise of the option and subsequent sale (in the case of
a call) or purchase (in the case of a put) of the underlying security. Even
then the price change in the underlying security does not ensure a profit since
prices in the option market may not reflect such a change.
WRITING COVERED OPTIONS. The fund will write covered options when it feels it
is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on the basis of
investment considerations consistent with the fund's goal.
'All options written by the fund will be covered. For covered call options if a
decision is made to sell the security, the fund will attempt to terminate the
option contract through a closing purchase transaction.
'The fund will write options only as permitted under federal or state laws or
regulations, such as those that limit the amount of total assets subject to the
options. While no limit has been set by the fund, it will conform to the
requirements of those states. For example, California limits the writing of
options to 50% of the assets of a fund.
Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains. Since the fund is taxed as a regulated
investment company under the Internal Revenue Code, any gains on options and
other securities held less than three months must be limited to less than 30% of
its annual gross income.
If a covered call option is exercised, the security is sold by the fund. The
fund will recognize a capital gain or loss based upon the difference between the
proceeds and the security's basis.
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<PAGE>
Options on many securities are listed on options exchanges. If the fund writes
listed options, it will follow the rules of the options exchange. Options are
valued at the close of the New York Stock Exchange. An option listed on a
national exchange, CBOE or NASDAQ will be valued at the last quoted sales price
or, if such a price is not readily available, at the mean of the last bid and
asked prices.
FUTURES CONTRACTS. A futures contract is an agreement between two parties to
buy and sell a security for a set price on a future date. They have been
established by boards of trade which have been designated contracts markets by
the Commodity Futures Trading Commission (CFTC). Futures contracts trade on
these markets in a manner similar to the way a stock trades on a stock exchange,
and the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures contracts based on
such debt securities as long-term U.S. Treasury bonds, Treasury notes, GNMA
modified pass-through mortgage-backed securities, three-month U.S. Treasury
bills and bank certificates of deposit. While futures contracts based on debt
securities do provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the futures
contract is terminated by entering into an offsetting transaction. An
offsetting transaction for a futures contract sale is effected by the fund
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and same delivery date. If the price in
the sale exceeds the price in the offsetting purchase, the fund immediately is
paid the difference and realizes a gain. If the offsetting purchase price
exceeds the sale price, the fund pays the difference and realizes a loss.
Similarly, closing out a futures contract purchase is effected by the fund
entering into a futures contract sale. If the offsetting sale price exceeds
the purchase price, the fund realizes a gain, and if the offsetting sale price
is less than the purchase price, the fund realizes a loss. At the time a
futures contract is made, a good-faith deposit called initial margin is set up
within a segregated account at the fund's custodian bank. The initial margin
deposit is approximately 1.5% of a contract's face value. Daily thereafter, the
futures contract is valued and the payment of variation margin is required so
that each day the fund would pay out cash in an amount equal to any decline in
the contract's value or receive cash equal to any increase. At the time a
futures contract is closed out, a nominal commission is paid, which is generally
lower than the commission on a comparable transaction in the cash markets.
The purpose of a futures contract, in the case of a portfolio holding long-term
debt securities, is to gain the benefit of changes in interest rates without
actually buying or selling long-term debt securities. For example, if the fund
owned long-term bonds and interest rates were expected to increase, it might
enter into futures contracts to sell securities which would have much the same
effect as selling some of the long-term bonds it owned.
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Futures contracts are based on types of debt securities referred to above, which
have historically reacted to an increase or decline in interest rates in a
fashion similar to the debt securities the fund owns. If interest rates did
increase, the value of the debt securities in the portfolio would decline, but
the value of the fund's futures contracts would increase at approximately the
same rate, thereby keeping the net asset value of the fund from declining as
much as it otherwise would have. If, on the other hand, the fund held cash
reserves and interest rates were expected to decline, the fund might enter into
interest rate futures contracts for the purchase of securities. If short-term
rates were higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the fund's earnings. Even
if short-term rates were not higher, the fund would still benefit from the
income earned by holding these short-term investments. At the same time, by
entering into futures contracts for the purchase of securities, the fund could
take advantage of the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the fund's cash reserves could then be used to
buy long-term bonds on the cash market. The fund could accomplish similar
results by selling bonds with long maturities and investing in bonds with short
maturities when interest rates are expected to increase or by buying bonds with
long maturities and selling bonds with short maturities when interest rates are
expected to decline. But by using futures contracts as an investment tool,
given the greater liquidity in the futures market than in the cash market, it
might be possible to accomplish the same result more easily and more quickly.
Successful use of futures contracts depends on the investment manager's ability
to predict the future direction of interest rates. If the investment manager's
prediction is incorrect, the fund would have been better off had it not entered
into futures contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to buy or sell
futures contracts in the future. Unlike a futures contract, which requires the
parties to the contract to buy and sell a security on a set date, an option on a
futures contract merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into such a contract.
If the holder decides not to enter into the contract, all that is lost is the
amount (premium) paid for the option. Furthermore, because the value of the
option is fixed at the point of sale, there are no daily payments of cash to
reflect the change in the value of the underlying contract. However, since an
option gives the buyer the right to enter into a contract at a set price for a
fixed period of time, its value does change daily and that change is reflected
in the net asset value of the fund.
RISKS. There are risks in engaging in each of the management tools described
above. The risk the fund assumes when it buys an option is the loss of the
premium paid for the option. Purchasing options also limits the use of monies
that might otherwise be available for long-term investments.
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The risk involved in writing options on futures contracts the fund owns, or on
securities held in its portfolio, is that there could be an increase in the
market value of such contracts or securities. If that occurred, the option
would be exercised and the asset sold at a lower price than the cash market
price. To some extent, the risk of not realizing a gain could be reduced by
entering into a closing transaction. The fund could enter into a closing
transaction by purchasing an option with the same terms as the one it had
previously sold. The cost to close the option and terminate the fund's
obligation, however, might be more or less than the premium received when it
originally wrote the option. Furthermore, the fund might not be able to close
the option because of insufficient activity in the options market.
A risk in employing futures contracts to protect against the price volatility of
portfolio securities is that the prices of securities subject to futures
contracts may not correlate perfectly with the behavior of the cash prices of
the fund's portfolio securities. The correlation may be distorted because the
futures market is dominated by short-term traders seeking to profit from the
difference between a contract or security price and their cost of borrowed
funds. Such distortions are generally minor and would diminish as the contract
approached maturity.
Another risk is that the fund's investment manager could be incorrect in
anticipating as to the direction or extent of various interest rate movements or
the time span within which the movements take place. For example, if the fund
sold futures contracts for the sale of securities in anticipation of an increase
in interest rates, and interest rates declined instead, the fund would lose
money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, the fund intends to
identify futures contracts as mixed straddles and not mark them to market, that
is, not treat them as having been sold at the end of the year at market value.
Such an election may result in the fund being required to defer recognizing
losses incurred by entering into futures contracts and losses on underlying
securities identified as being hedged against.
Federal income-tax treatment of gains or losses from transactions in options on
futures contracts and indexes is presently unclear, although the fund's tax
advisers currently believe marking to market is not required. Depending on
developments, and although no assurance is given, the fund may seek Internal
Revenue Service (IRS) rulings clarifying questions concerning such treatment.
Certain provisions of the Internal Revenue Code may also limit the fund's
ability to engage in futures contracts and related options transactions. For
example, at the close of each quarter of the fund's taxable year, at least 50%
of the value of its assets must consist of cash, government securities and other
securities, subject to certain diversification requirements. Less than 30% of
its gross income must be derived from sales of securities held less than three
months.
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<PAGE>
The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50%-of-assets test and that its issuer is the issuer of the
underlying security, not the writer of the option, for purposes of the
diversification requirements. In order to avoid realizing a gain within the
three-month period, the fund may be required to defer closing out a contract
beyond the time when it might otherwise be advantageous to do so. The fund
also may be restricted in purchasing put options for the purpose of hedging
underlying securities because of applying the short sale holding period rules
with respect to such underlying securities.
Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (the fund's agent in acquiring the futures position). During the
period the futures contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a daily basis
to reflect the market value of the contract at the end of each day's trading.
Variation margin payments will be made or received depending upon whether gains
or losses are incurred. All contracts and options will be valued at the
last-quoted sales price on their primary exchange.
WHEN-ISSUED SECURITIES
The fund may purchase some securities in advance of when they are issued. Price
and rate of interest are set on the date the commitments are given but no
payment is made or interest earned until the date the securities are issued,
usually within two months, but other terms may be negotiated. The commitment
requires the fund to buy the security when it is issued so the commitment is
valued daily the same way as owning a security would be valued. The fund
designates cash or liquid high-grade debt securities to at least equal the
amount of its commitment. [Under normal market conditions, the fund does not
intend to commit more than 5% of its total assets to these practices.] The fund
may sell the commitment just like it can sell a security. Frequently, the fund
has the opportunity to sell the commitment back to the institution.
INVERSE FLOATERS
The Fund may invest in securities called "inverse floaters." Inverse floaters
are created by underwriters using the interest payments on securities. A
portion of the interest received is paid to holders of instruments based on
current interest rates for short-term securities. What is left over, less a
servicing fee, is paid to holders of the inverse floaters. As interest rates go
down, the holders of the inverse floaters receive more income and an increase in
the price for the inverse floaters. As interest rates go up, the holders of the
inverse floaters receive less income and a decrease in the price for the inverse
floaters.
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<PAGE>
APPENDIX C
MORTGAGE-BACKED SECURITIES
A mortgage pass through certificate is one that represents an interest in a
pool, or group, of mortgage loans assembled by the Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal
National Mortgage Association (FNMA) or non-governmental entities. In
pass-through certificates, both principal and interest payments, including
prepayments, are passed through to the holder of the certificate. Prepayments
on underlying mortgages result in a loss of anticipated interest, and the actual
yield (or total return) to the fund, which is influenced by both stated interest
rates and market conditions, may be different than the quoted yield on
certificates. Some U.S. government securities may be purchased on a
"when-issued" basis, which means that it may take as long as 45 days after the
purchase before the securities are delivered to the fund.
STRIPPED MORTGAGE-BACKED SECURITIES. The fund may invest in stripped
mortgage-backed securities. Generally, there are two classes of stripped
mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs
entitle the holder to receive distributions consisting of all or a portion of
the interest on the underlying pool of mortgage loans or mortgage-backed
securities. POs entitle the holder to receive distributions consisting of all
or a portion of the principal of the underlying pool of mortgage loans or
mortgage-backed securities. The cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments (including prepayments) on
the underlying mortgage loans or mortgage-backed securities. A rapid rate of
principal payments may adversely affect the yield to maturity of IOs. A slow
rate of principal payments may adversely affect the yield to maturity of POs.
If prepayments of principal are greater than anticipated, an investor may incur
substantial losses. If prepayments of principal are slower than anticipated,
the yield on a PO will be affected more severely than would be the case with a
traditional mortgage-backed security.
MORTGAGE-BACKED SECURITY SPREAD OPTIONS. The fund may purchase mortgage-backed
security (MBS) put spread options and write covered MBS call spread options.
MBS spread options are based upon the changes in the price spread between a
specified mortgage-backed security and a like-duration Treasury security. MBS
spread options are traded in the OTC market and are of short duration, typically
one to two months. The fund would buy or sell covered MBS call spread options
in situations where mortgage-backed securities are expected to under perform
like-duration Treasury securities.
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APPENDIX D
DESCRIPTION OF CORPORATE BOND RATINGS
BOND RATINGS
The ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price. Ratings by Moody's Investors Service,
Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
Bonds rated Aaa and AAA are judged to be of the best quality and carry the
smallest degree of investment risk. Capacity to pay interest and repay
principal is extremely strong. Prices are responsive only to interest rate
fluctuations.
Bonds rated Aa and AA also are judged to be high-grade although margins of
protection for interest and principal may not be quite as good as Aaa or AAA
rated securities. Long-term risk may appear greater than the Aaa or AAA group.
Prices are primarily responsive to interest rate fluctuations.
Bonds rated A are considered upper-medium grade. Protection for interest and
principal is deemed adequate but susceptible to future impairment. The market
prices of such obligations move primarily with interest rate fluctuations but
also with changing economic or trade conditions.
Bonds rated Baa and BBB are considered medium-grade obligations. Protection for
interest and principal is adequate over the short-term; however, these
obligations have certain speculative characteristics. They are susceptible to
changing economic conditions and require constant review. Such bonds are more
responsive to business and trade conditions than to interest rate fluctuations.
Bonds rated Ba and BB are considered to have speculative elements. Their future
cannot be considered well assured. The protection of interest and principal
payments may be very moderate and not well safeguarded during future good and
bad times. Uncertainty of position characterizes these bonds.
Bonds rated B or lower lack characteristics of the desirable investments. There
may be small assurance over any long period of time of the payment of interest
and principal or of the maintenance of other contract terms. Some of these
bonds are of poor standing and may be in default or have other marked
short-comings.
Bonds rated Caa and CCC are of poor standing. Such issues may be in default or
there may be elements of danger with respect to principal or interest.
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<PAGE>
Bonds rated Ca and CC represent obligations that are highly speculative. Such
issues are often in default or have other marked shortcomings.
Bonds rated C are obligations with a higher degree of speculation. These
securities have major risk exposures to default.
Bonds rated D are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
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<PAGE>
APPENDIX E
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more shares will be purchased when
the price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
shares lower than the average market price of shares purchased, although there
is no guarantee.
While this does not ensure a profit and does not protect against a loss if the
market declines, it is an effective way for many shareholders who can continue
investing through changing market conditions to accumulate shares in a fund to
meet long term goals.
DOLLAR-COST AVERAGING
<TABLE>
<CAPTION>
- --------------------------------------------------------
REGULAR MARKET PRICE SHARES
INVESTMENT OF A SHARE ACQUIRED
- --------------------------------------------------------
<S> <C> <C>
$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
AVERAGE MARKET PRICE OF A SHARE OVER 5 PERIODS: $5.00 ($25.00 DIVIDED BY 5).
THE AVERAGE PRICE YOU PAID FOR EACH SHARE: $4.84 ($500 DIVIDED BY 103.4).
</TABLE>
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<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<C> <C> <S>
(a) FINANCIAL STATEMENTS:
Registrant's semi-annual report to shareholders filed electronically pursuant to Section
270.30d-1 on or about July 21, 1994 is herein incorporated by reference.
(b) EXHIBITS:
1. Articles of Incorporation, as amended October 17, 1988, filed electronically
as Exhibit 1 to Registrant's Post-Effective Amendment No. 69 to Registration
Statement No. 2-10700, is incorporated herein by reference.
2. By-laws, as amended January 12, 1989, filed electronically as Exhibit 2 to
Registrant's Post-Effective Amendment No. 69 to Registration Statement No.
2-10700, is incorporated herein by reference.
3. Not Applicable.
4. Stock certificate, filed as Exhibit 3 to Registrant's Form N-1Q for the
calendar quarter ended September 30, 1979, is incorporated herein by
reference.
5. Investment Management and Services Agreement between Registrant and IDS
Financial Corporation dated November 14, 1991, filed electronically as Exhibit
5 to Post-Effective Amendment No. 73 to Registrant's Registration Statement
No. 2-10700, is incorporated herein by reference.
6. Distribution Agreement between Registrant and IDS Financial Services, Inc.
dated January 1, 1987, filed as Exhibit 6 to Registrant's Post-Effective
Amendment No. 64 to Registration Statement No. 2-10700, is incorporated herein
by reference.
7. 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.
8. Custodian Agreement, dated July 23, 1986, between Registrant and First
National Bank of Minneapolis and Amendment to the Custodian Agreement, dated
August 5, 1987, filed electronically as Exhibit 8 to Registrant's
Post-Effective Amendment No. 69 to Registration Statement No. 2-10700, is
incorporated herein by reference.
9.(a) Plan and Agreement of Merger dated April 10, 1986, filed as Exhibit 9 to
Registrant's Post-Effective Amendment No. 62 to Registration Statement No.
2-10700, is incorporated herein by reference.
(b) Transfer Agency Agreement between the Registrant and IDS Financial Corporation
dated November 14, 1991, filed electronically as Exhibit 9(b) to
Post-Effective Amendment No. 73 to Registrant's Registration Statement No.
2-10700, is incorporated herein by reference.
(c) Copy of License Agreement, dated January 25, 1988, between IDS Financial
Corporation and Registrant, filed electronically as Exhibit 9(c) to
Registrant's Post Effective Amendment No. 69 to Registration Statement No.
2-10700, is incorporated herein by reference.
10. Not Applicable.
11. Not Applicable.
12. None.
13. Not Applicable.
14. Forms of Keogh, IRA and other retirement plans, filed as Exhibits 14(a)
through 14(n) to IDS Growth Fund, Inc., Post Effective Amendment No. 34 to
Registration Statement No. 2-38355, are incorporated herein by reference.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
15. Plan and Supplemental Agreement of Distribution between Registrant and IDS
Financial Services Inc. dated January 1, 1987, filed as Exhibit 15 to
Registrant's Post-Effective Amendment No. 64 to Registration Statement No.
2-10700, is incorporated herein by reference.
16. Copy of Schedule for computation of each performance quotation provided in the
Registration Statement in response to Item 22(b), filed as Exhibit 16 to
Post-Effective Amendment No. 75 to Registrant's Registration Statement No.
2-10700, is incorporated herein by reference.
17. Not applicable.
18.(a) Directors' Power of Attorney to sign Amendments to this Registration
Statement, dated Nov. 10, 1994, filed electronically herewith.
(b) Officers' Power of Attorney to sign Amendments to this Registration Statement,
dated June 1, 1993, filed concurrently as Exhibit 17(b) to Post-Effective
Amendment No. 76 to Registration Statement No. 2-10700, is incorporated herein
by reference.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
Number of
Record
Holders as of
Title of Class Dec. 5, 1994
- -------------- --------------
<S> <C>
Common Stock 81,086
</TABLE>
II-2
<PAGE>
Item 27. 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.
<PAGE>
<PAGE>
PAGE 1
<TABLE><CAPTION>
Item 28a. Business and Other Connections of Investment Adviser (IDS Financial Corporation)
Directors and officers of IDS Financial Corporation who are directors and/or officers of one
or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Field Administration
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Field
Administration
Douglas A. Alger, Vice President--Total Compensation
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President and Controller--Mutual Funds Operations
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Mutual Funds
Operations
Peter J. Anderson, Director and Senior Vice President--Investments
IDS Advisory Group Inc. IDS Tower 10 Director and Chairman
Minneapolis, MN 55440 of the Board
IDS Capital Holdings Inc. Director and President
IDS Financial Services Inc. Senior Vice President-
Investments
IDS Fund Management Limited Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President--Sales and Marketing, IDS Institutional Retirement Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, IDS
Institutional Retirement
Services
Alvan D. Arthur, Region Vice President--Pacific Northwest Region
American Express Service Corporation IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Region Vice President-
Pacific Northwest Region
<PAGE>
PAGE 2
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Kent L. Ashton, Vice President--Financial Education Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Education Services
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Senior
Portfolio Manager
Robert C. Basten, Vice President--Tax and Business Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
Timothy V. Bechtold, Vice President--Insurance Product Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Insurance
Minneapolis, MN 55440 Product Development
IDS Life Insurance Company Vice President-Insurance
Product Development
John D. Begley, Region Vice President--Mid-Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Mid-Central Region
IDS Insurance Agency of Alabama Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Nevada Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Ohio Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Mid-Central
Region
Carl E. Beihl, Vice President--Strategic Technology Planning
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
<PAGE>
PAGE 3
Item 28a. Business and Other Connections of Investment Adviser (IDS Financial
Corporation)(cont'd)
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Financial Planning
Systems
Brent L. Bisson, Region Vice President--Northwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Northwest Region
IDS Insurance Agency of Alabama Inc. Vice President-
Northwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Northwest Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Northwest Region
IDS Insurance Agency of Nevada, Inc. Vice President-
Northwest Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Northwest Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Northwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Northwest Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Northwest Region
John C. Boeder, Vice President--Mature Market Group
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel
American Express Minnesota Foundation IDS Tower 10 Director
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director and President
IDS Financial Services Inc. Senior Vice President-
Corporate Affairs and
Special Counsel
Harold E. Burke, Vice President and Assistant General Counsel
American Express Service Corporation IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Vice President and
Assistant General Counsel
<PAGE>
PAGE 4
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Daniel J. Candura, Vice President--Marketing Support
IDS Financial Services Inc. IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--IDS Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
IDS Financial Services Inc. Vice President-IDS
Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Minnesota Foundation IDS Tower 10 Director
American Express Service Corporation Minneapolis, MN 55440 Vice President
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
IDS Financial Services Inc. IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
<PAGE>
PAGE 5
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Roger C. Corea, Region Vice President--Northeast Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Northeast Region
IDS Insurance Agency of Alabama Inc. Vice President -
Northeast Region
IDS Insurance Agency of Arkansas Inc. Vice President -
Northeast Region
IDS Insurance Agency of Massachusetts Inc. Vice President -
Northeast Region
IDS Insurance Agency of Nevada Inc. Vice President -
Northeast Region
IDS Insurance Agency of New Mexico Inc. Vice President -
Northeast Region
IDS Insurance Agency of North Carolina Inc. Vice President -
Northeast Region
IDS Insurance Agency of Ohio, Inc. Vice President -
Northeast Region
IDS Insurance Agency of Wyoming Inc. Vice President -
Northeast Region
IDS Life Insurance Co. of New York Box 5144 Director
Albany, NY 12205
Kevin F. Crowe, Region Vice President--Atlantic Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President -
Atlantic Region
Alan R. Dakay, Vice President--Institutional Insurance Marketing
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Partners Life Insurance Co. Director and President
IDS Financial Services Inc. Vice President -
Institutional Insurance
Marketing
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
William F. Darland, Region Vice President--South Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
South Central Region
IDS Insurance Agency of Alabama Inc. Vice President-
South Central Region
IDS Insurance Agency of Arkansas Inc. Vice President -
South Central Region
<PAGE>
PAGE 6
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of Massachusetts Inc. Vice President-
South Central Region
IDS Insurance Agency of Nevada Inc. Vice President-
South Central Region
IDS Insurance Agency of New Mexico Inc. Vice President-
South Central Region
IDS Insurance Agency of North Carolina Inc. Vice President-
South Central Region
IDS Insurance Agency of Ohio Inc. Vice President-
South Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-
South Central Region
William H. Dudley, Director and Executive Vice President--Investment Operations
IDS Advisory Group Inc. IDS Tower 10 Director
Minneapolis, MN 55440
IDS Capital Holdings Inc. Director
IDS Financial Services Inc. Director and Executive
Vice President-
Investment Operations
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director and Senior Vice President--Information Systems
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information Systems
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
IDS Financial Services Inc. IDS Tower 10 Senior Vice President and
General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
<PAGE>
PAGE 7
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Retail Services
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
IDS Advisory Group Inc. IDS Tower 10 Executive Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Mutual Fund Equity
Investments
IDS International Inc. Vice President and
Portfolio Manager
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Financial Services Inc. Senior Vice President and
Chief Financial Officer
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
IDS Trust Company Director
Investors Syndicate Development Corp. Vice President
Douglas L. Forsberg, Vice President--Securities Services
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Securities Services
<PAGE>
PAGE 8
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Carl W. Gans, Region Vice President--North Central Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
North Central Region
Robert G. Gilbert, Vice President--Real Estate
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Co. Vice President and
Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Vice President and
Treasurer
IDS Cable II Corporation Vice President and
Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Financial Services Inc. Vice President and
Corporate Treasurer
<PAGE>
PAGE 9
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Vice President and
Treasurer
IDS Partnership Services Corporation Vice President and
Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Vice President and
Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
<PAGE>
PAGE 10
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
David A. Hammer, Vice President and Marketing Controller
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Robert L. Harden, Region Vice President--Mid-Atlantic Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Mid Atlantic Region
IDS Insurance Agency of Alabama Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Nevada Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Ohio Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Mid Atlantic Region
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Financial Services Inc. Vice President-Insurance
Investments
IDS Life Insurance Company Vice President-Investments
Investors Syndicate Development Corp. Vice President-Investments
Mark S. Hays, Vice President--Senior Portfolio Manager, IDS International
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager, IDS
International
IDS Fund Management Limited Director
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 11
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Brian M. Heath, Region Vice President--Southwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Southwest Region
IDS Insurance Agency of Alabama Inc. Vice President-
Southwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southwest Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Southwest Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southwest Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southwest Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Southwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southwest Region
IDS Insurance Agency of Texas Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Vice President-
Southwest Region
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Vice President
IDS Financial Services Inc. Minneapolis, MN 55440 Vice President-Senior
Portfolio Manager
James G. Hirsh, Vice President and Assistant General Counsel
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Paul C. Hopkins, Vice President--Senior Portfolio Manager-IDS International
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager-IDS
International
IDS International, Inc. Senior Vice President
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Service Corporation Vice President
IDS Financial Services Inc. Vice President-
Government and
Customer Relations
IDS Securities Corporation Vice President and Chief
Compliance Officer
<PAGE>
PAGE 12
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
David R. Hubers, Director, President and Chief Executive Officer
American Express Service Corporation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Financial Services Inc. Chairman, Chief Executive
Officer and President
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
Douglas R. Jordal, Vice President--Taxes
IDS Aircraft Services Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Taxes
Craig A. Junkins, Vice President--IDS 1994 Implementation Planning and Financial Planning
Development
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-IDS 1994
Implementation Planning
and Financial Planning
Development
James E. Kaarre, Vice President--Marketing Information
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
G. Michael Kennedy, Vice President--Investment Services and Investment Research
IDS Financial Services Inc. IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Minnesota Foundation IDS Tower 10 Director
Minneapolis, MN 55440
American Express Service Corporation Vice President
IDS Financial Services Inc. Senior Vice President-
Human Resources
<PAGE>
PAGE 13
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Financial Services Inc. Senior Vice President-
Risk Management Products
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A&B Member of Board of
Managers, Chairman of the
Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Harold D. Knutson, Vice President--System Services
IDS Financial Services Inc. IDS Tower 10 Vice President--
Minneapolis, MN 55440 System Services
Paul F. Kolkman, Vice President--Actuarial Finance
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
David S. Kreager, Vice President--Field Management Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Development
Christopher R. Kudrna, Vice President--Systems and Technology Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Systems and
Minneapolis, MN 55440 Technology Development
<PAGE>
PAGE 14
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Director and Senior Vice
President-Field
Management and Business
Systems
Mitre Kutanovski, Region Vice President--Midwest Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Midwest Region
Edward Labenski, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Senior Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Senior Portfolio
Manager
Peter L. Lamaison, Vice President--IDS International Division
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 IDS International
Division
IDS Fund Management Limited Director and Chairman of
the Board
IDS International, Inc. Director, President and
Chief Executive Officer
Kurt A. Larson, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Ryan R. Larson, Vice President--IPG Product Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
<PAGE>
PAGE 15
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Peter A. Lefferts, Director, Senior Vice President and Chief Marketing Officer
IDS Financial Services Inc. IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Chief Marketing Officer
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
IDS Trust Company Director and Chairman of
the Board
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Director and Executive
Vice President-Private
Client Group
Mary J. Malevich, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
IDS Financial Services Inc. IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 16
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
IDS Cable Corporation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Cable II Corporation Director and President
IDS Financial Services Inc. Vice President-
Variable Assets
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Variable Annuity Funds A&B Director
IDS Life Series Fund, Inc. Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
IDS Certificate Company Director and Chairman of
the Board
IDS Financial Services Inc. Executive Vice President-
Marketing and Products
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Minnesota Foundation IDS Tower 10 Director and President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Corporate Communications
Barry J. Murphy, Director and Senior Vice President--Client Service
IDS Financial Services Inc. IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
Robert J. Neis, Vice President--Information Systems Operations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
<PAGE>
PAGE 17
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Vernon F. Palen, Region Vice President--Rocky Mountain Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Rocky Mountain Region
IDS Insurance Agency of Alabama Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Nevada Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Ohio Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Rocky Mountain Region
James R. Palmer, Vice President--Insurance Operations
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Judith A. Pennington, Vice President--Field Technology
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Technology
George M. Perry, Vice President--Corporate Strategy and Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
IDS Financial Services Inc. IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
<PAGE>
PAGE 18
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Ronald W. Powell, Vice President and Assistant General Counsel
IDS Cable Corporation IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
James M. Punch, Vice President--TransAction Services
IDS Financial Services Inc. Vice President-Trans
Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
IDS Advisory Group Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President--
Taxable Mutual Fund
Investments
Roger B. Rogos, Region Vice President--Great Lakes Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Great Lakes Region
IDS Insurance Agency of Alabama Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Nevada Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Ohio Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Great Lakes Region
<PAGE>
PAGE 19
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
ReBecca K. Roloff, Vice President--1994 Program Director
IDS Financial Services Inc. IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
IDS Advisory Group Inc. IDS Tower 10 President and Chief
Minneapolis, MN 55440 Executive Officer
IDS Financial Services Inc. Vice President-Advisory
Institutional Marketing
Robert A. Rudell, Vice President--IDS Institutional Retirement Services
IDS Financial Services Inc. IDS Tower 10 Vice President-IDS
Minneapolis, MN 55440 Institutional Retirement
Services
IDS Sales Support Inc. Director and President
IDS Trust Company Director
John P. Ryan, Vice President and General Auditor
IDS Financial Services Inc. IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
<PAGE>
PAGE 20
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
R. Reed Saunders, Director and Senior Vice President--Corporate Strategy and Development
American Express Service Corporation IDS Tower 10 Director and Vice
Minneapolis, MN 55440 President
IDS Financial Services Inc. Director and Senior
Vice President-Corporate
Strategy and Development
IDS Property Casualty Insurance Co. Director
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
IDS Certificate Company Director and President
IDS Financial Services Inc. Vice President-
Assured Assets
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Financial Services Inc. Vice President-Senior
Portfolio Manager
Insurance Investments
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
IDS Financial Services Inc. IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
<PAGE>
PAGE 21
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Julian W. Sloter, Region Vice President--Southeast Region
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Region Vice President-
Southeast Region
IDS Insurance Agency of Alabama Inc. Vice President-
Southeast Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southeast Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Southeast Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southeast Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southeast Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Southeast Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southeast Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Southeast Region
Ben C. Smith, Vice President--Workplace Marketing
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
James B. Solberg, Vice President--Advanced Financial Planning
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Advanced Financial
Planning
Bridget Sperl, Vice President--Human Resources Management Services
IDS Financial Services Inc. IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 22
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Lois A. Stilwell, Vice President--Planner Training and Development
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Planner Training and
Development
William A. Stoltzmann, Vice President and Assistant General Counsel
American Partners Life Insurance Co. IDS Tower 10 Director, Vice President,
Minneapolis, MN 55440 General Counsel and
Secretary
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund, Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity Funds A&B General Counsel and
Assistant Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
IDS Financial Services Inc. IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
Neil G. Taylor, Vice President--Field Business Systems
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Business Systems
<PAGE>
PAGE 23
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
IDS Bond Fund, Inc. IDS Tower 10 Director
Minneapolis, MN 55440
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Plus Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Financial Services Inc. Senior Vice President-
Information and
Technology
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Financial Services Inc. Vice President and
Corporate Controller
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
IDS Advisory Group Inc. IDS Tower 10 Executive Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-
Senior Portfolio Manager
IDS Fund Management Limited Director
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 24
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Norman Weaver, Jr., Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
Pacific Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Pacific Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
Pacific Region
IDS Insurance Agency of Nevada Inc. Vice President-
Pacific Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Pacific Region
IDS Insurance Agency of North Carolina Inc. Vice President-
Pacific Region
IDS Insurance Agency of Ohio Inc. Vice President-
Pacific Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Pacific Region
Michael L. Weiner, Vice President--Corporate Tax Operations
IDS Capital Holdings Inc. IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Corporate
Tax Operations
IDS Futures III Corporation Vice President, Treasurer
and Secretary
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
IDS Financial Services Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
William N. Westhoff, Director and Senior Vice President--Fixed Income Management
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Fixed Income Management
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 25
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Edwin M. Wistrand, Vice President and Assistant General Counsel
IDS Financial Services Inc. IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Service Corporation IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Financial Services Inc. Senior Vice President-
Field Management
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 26
Item 29. Principal Underwriters.
(a) IDS Financial Services Inc. acts as principal underwriter
for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Plus Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Field Administration
Minneapolis, MN 55440
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Jerome R. Amundson Vice President and None
IDS Tower 10 Controller-Mutual Funds
Minneapolis, MN 55440 Operations
Peter J. Anderson Senior Vice President- None
IDS Tower 10 Investments
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 IDS Institutional Retirement
Services
Alvan D. Arthur Region Vice President- None
IDS Tower 10 Pacific Northwest Region
Minneapolis, MN 55440
Kent L. Ashton Vice President- None
IDS Tower 10 Financial Education
Minneapolis, MN 55440 Services
<PAGE>
PAGE 27
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
John D. Begley Region Vice President- None
Olentangy Valley Center Mid-Central Region
Suite 300
7870 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Region Vice President- None
Seafirst Financial Northwest Region
Center, Suite 1730
601 W. Riverside Ave.
Spokane, WA 99201
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President-IDS None
IDS Tower 10 Securities Services
Minneapolis, MN 55440
<PAGE>
PAGE 28
Item 29. (continued)
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James E. Choat Senior Vice President- None
Suite 124 Field Management
6210 Campbell Rd.
Dallas, TX 75248
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Region Vice President- None
345 Woodcliff Drive Northeast Region
Fairport, NY 14450
Kevin F. Crowe Region Vice President- None
IDS Tower 10 Atlantic Region
Minneapolis, MN 55440
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
William F. Darland Region Vice President- None
Suite 108C South Central Region
301 Sovereign Court
Manchester, MO 63011
William H. Dudley Director and Executive Director/
IDS Tower 10 Vice President- Trustee
Minneapolis MN 55440 Investment Operations
Roger S. Edgar Senior Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
Douglas L. Forsberg Vice President- None
IDS Tower 10 Securities Services
Minneapolis, MN 55440
Carl W. Gans Region Vice President- None
IDS Tower 10 North Central Region
Minneapolis, MN 55440
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Robert L. Harden Region Vice President- None
Suite 403 Mid-Atlantic Region
8500 Leesburg Pike
Vienna, VA 22180
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Mark S. Hays Vice President-Senior None
IDS Tower 10 Portfolio Manager, IDS
Minneapolis, MN 55440 International
Brian M. Heath Region Vice President- None
IDS Tower 10 Southwest Region
Minneapolis, MN 55440
<PAGE>
PAGE 30
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Paul C. Hopkins Vice President- None
IDS Tower 10 Senior Portfolio Manager,
Minneapolis, MN 55440 IDS International
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief None
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Douglas R. Jordal Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Craig A. Junkins Vice President - IDS 1994 None
IDS Tower 10 Implementation Planning
Minneapolis, MN 55440 and Financial Planning
Development
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
Harold D. Knutson Vice President- None
IDS Tower 10 System Services
Minneapolis, MN 55440
<PAGE>
PAGE 31
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Vice President-Field None
IDS Tower 10 Management Development
Minneapolis, MN 55440
Christopher R. Kudrna Vice President- None
IDS Tower 10 Systems and Technology
Minneapolis, MN 55440 Development
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Region Vice President- None
IDS Tower 10 Midwest Region
Minneapolis, MN 55440
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Peter L. Lamaison Vice President- None
One Broadgate IDS International
London, England Division
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Peter A. Lefferts Senior Vice President and None
IDS Tower 10 Chief Marketing Officer
Minneapolis, MN 55440
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
<PAGE>
PAGE 32
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
Vernon F. Palen Region Vice President- None
Suite D-222 Rocky Mountain Region
7100 E. Lincoln Drive
Scottsdale, AZ 85253
James R. Palmer Vice President- None
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
Judith A. Pennington Vice President- None
IDS Tower 10 Field Technology
Minneapolis, MN 55440
<PAGE>
PAGE 33
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
George M. Perry Vice President- None
IDS Tower 10 Corporate Strategy
Minneapolis, MN 55440 and Development
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 TransAction Services
Minneapolis, MN 55440
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
Roger B. Rogos Region Vice President- None
Suite 15, Parkside Place Great Lakes Region
945 Boardman-Canfield Rd
Youngstown, Ohio 44512
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Robert A. Rudell Vice President- None
IDS Tower 10 IDS Institutional
Minneapolis, MN 55440 Retirement Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven A. Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Braintree, MA 02184
R. Reed Saunders Director and Senior None
IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Strategy and Development
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
<PAGE>
PAGE 34
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Region Vice President- None
9040 Roswell Rd. Southeast Region
River Ridge-Suite 600
Atlanta, GA 30350
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Vice President- None
IDS Tower 10 Advanced Financial
Minneapolis, MN 55440 Planning
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Lois A. Stilwell Vice President- None
IDS Tower 10 Planner Training and
Minneapolis, MN 55440 Development
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Vice President- None
IDS Tower 10 Field Business Systems
Minneapolis, MN 55440
<PAGE>
PAGE 35
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
John R. Thomas Senior Vice President- Director/
IDS Tower 10 Information and Trustee
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
Suite 215 Field Management
1501 Westcliff Drive
Newport Beach, CA 92660
Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
William N. Westhoff Senior Vice President- None
IDS Tower 10 Fixed Income Management
Minneapolis, MN 55440
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
Suite 815 Field Management
8585 Broadway
Merrillville, IN 46410
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
IDS Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
<PAGE>
PAGE 36
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, IDS Selective Fund has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis and State of
Minnesota on the 22nd day of December, 1994.
IDS SELECTIVE FUND
By /s/ WILLIAM R. PEARCE**
------------------------------------
William R. Pearce,
PRESIDENT
Pursuant to the requirements of 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 22nd day of December, 1994.
Signature Capacity
- ----------------------------------- -------------------------
/s/ WILLIAM R. PEARCE** President, Principal
- ----------------------------------- Executive Officer and
William R. Pearce Director
Treasurer, Principal
/s/ LESLIE L. OGG** Financial Officer and
- ----------------------------------- Principal Accounting
Leslie L. Ogg Officer
/s/ LYNNE V. CHENEY*
- ----------------------------------- Director
Lynne V. Cheney
/s/ WILLIAM H. DUDLEY*
- ----------------------------------- Director
William H. Dudley
/s/ ROBERT F. FROEHLKE*
- ----------------------------------- Director
Robert F. Froehlke
/s/ DAVID R. HUBERS*
- ----------------------------------- Director
David R. Hubers
/s/ HEINZ F. HUTTER*
- ----------------------------------- Director
Heinz F. Hutter
II-3
<PAGE>
Signature Capacity
- ----------------------------------- -------------------------
/s/ ANNE P. JONES*
- ----------------------------------- Director
Anne P. Jones
/s/ DONALD M. KENDALL*
- ----------------------------------- Director
Donald M. Kendall
/s/ MELVIN R. LAIRD*
- ----------------------------------- Director
Melvin R. Laird
/s/ LEWIS W. LEHR*
- ----------------------------------- Director
Lewis W. Lehr
/s/ EDSON W. SPENCER*
- ----------------------------------- Director
Edson W. Spencer
/s/ JOHN R. THOMAS*
- ----------------------------------- Director
John R. Thomas
/s/ WHEELOCK WHITNEY*
- ----------------------------------- Director
Wheelock Whitney
/s/ C. ANGUS WURTELE*
- ----------------------------------- Director
C. Angus Wurtele
*Signed pursuant to Directors' Power of Attorney dated Nov. 10, 1994, filed
electronically herewith as Exhibit 18(a) by:
/s/ LESLIE L. OGG
- -------------------------------------------
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated June 1, 1993, filed as
Exhibit 17(b) to Registrant's Post-Effective Amendment No. 76 to Registration
Statement No. 2-10700 by:
/s/ LESLIE L. OGG
- -------------------------------------------
Leslie L. Ogg
II-4
<PAGE>
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 79
TO REGISTRATION STATEMENT NO. 2-10700
This Post-Effective Amendment comprises the following papers and documents:
The facing sheet.
The cross-reference page.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Part C.
Other information.
Exhibits.
The signatures.
<PAGE>
PAGE 1
IDS Selective Fund, Inc.
Registration Number 2-10700/811-499
EXHIBIT INDEX
Exhibit 18(a) Directors' Power of Attorney, dated Nov. 10, 1994
<PAGE>
Exhibit 18(a)
DIRECTORS/TRUSTEES POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors and trustees of the
below listed open-end, diversified investment companies that
previously have filed registration statements and amendments
thereto pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
----------- -----------
IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Select Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522
hereby constitutes and appoints William R. Pearce and Leslie L. Ogg
or either one of them, as her or his attorney-in-fact and agent, to
sign for her or him in her or his name, place and stead any and all
further amendments to said registration statements filed pursuant
to said Acts and any rules and regulations thereunder, and to file
such amendments with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission,
granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in
connection therewith.
Dated the 10th day of November, 1994.
<PAGE>
/s/ Lynne V. Cheney /s/ Melvin R. Laird
- -------------------------- ----------------------------
Lynne V. Cheney Melvin R. Laird
/s/ William H. Dudley /s/ Lewis W. Lehr
- -------------------------- ----------------------------
William H. Dudley Lewis W. Lehr
/s/ Robert F. Froehlke /s/ William R. Pearce
- -------------------------- ----------------------------
Robert F. Froehlke William R. Pearce
/s/ David R. Hubers /s/ Edson W. Spencer
- -------------------------- ----------------------------
David R. Hubers Edson W. Spencer
/s/ Heinz F. Hutter /s/ John R. Thomas
- -------------------------- ----------------------------
Heinz F. Hutter John R. Thomas
/s/ Anne P. Jones /s/ Wheelock Whitney
- -------------------------- ----------------------------
Anne P. Jones Wheelock Whitney
/s/ Donald M. Kendall /s/ C. Angus Wurtele
- -------------------------- ----------------------------
Donald M. Kendall C. Angus Wurtele
