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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /
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IDS INTERNATIONAL FUND, INC.
IDS TOWER 10,
MINNEAPOLIS, MINNESOTA 55440-0010
(612) 330-9283
LESLIE L. OGG
901 S. MARQUETTE AVENUE, SUITE 2810
MINNEAPOLIS, MINNESOTA 55402-3268
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Rule 24f-2 (a) (1) Declaration:
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The registrant is filing as an exhibit to this Registration Statement a copy of
its earlier declaration under Rule 24f-2. Registrant filed its Rule 24f-2 Notice
on December 30, 1993 for its most recent fiscal year ended October 31, 1993.
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE FOLLOWING EFFECTIVENESS OF THIS
REGISTRATION STATEMENT.
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Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
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IDS INTERNATIONAL FUND, INC.
CROSS-REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
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Part A of Form N-14 Prospectus/Proxy Caption
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1. Beginning of Registration Statement and Outside Front
Cover Page of Prospectus........................... Cross Reference Sheet and Cover Page
2. Beginning and Outside Back Cover Page of
Prospectus......................................... Table of Contents
3. Synopsis Information and Risk Factors................ Summary; Risk Factors
4. Information about the Transaction.................... Reasons for the Reorganization; Information about the
Reorganization; Voting Information
5. Information about the Registrant..................... Inside Front Cover; Additional Materials; Information
about International and Worldwide Growth;
Comparison of Goals and Investment Policies;
Reclassification of International Investment
Policies from Fundamental to Non-Fundamental
6. Information about the Company Being Acquired......... Additional Materials; Information about International
and Worldwide Growth; Comparison of Goals and
Investment Policies
7. Voting Information................................... Summary; Information about the Reorganization; Voting
Information
8. Interest of Certain Persons and Experts.............. Voting Information
9. Additional Information............................... Not Applicable
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Statement of
Part B of Form N-14 Additional Information Caption
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10. Cover Page........................................... Cover Page
11. Table of Contents.................................... Not Applicable
12. Additional Information about the Registrant.......... Cover Page (Incorporation of Documents by Reference)
13. Additional Information about the Company Being
Acquired........................................... Cover Page (Incorporation of Documents by Reference)
14. Financial Statements................................. Cover Page (Incorporation of Documents by Reference);
Pro Forma Financial Statements
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Part C of Form N-14
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Information required to be included in Part C is set forth under the appropriate item in Part C of this Registration
Statement.
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IDS STRATEGY FUND, INC. - WORLDWIDE GROWTH FUND
IDS TOWER 10
MINNEAPOLIS, MINNESOTA 55440-0010
September , 1994
Dear Shareholder:
The packet of material you are receiving is lengthy and in some places
complex. Let me guide you through it. First, what is your Board doing? We and
the other Boards of the funds in the IDS MUTUAL FUND GROUP are proposing each of
the funds offer multiple classes of shares so an investor can select the way he
or she pays the sales charge. In addition, one or more classes of shares will be
offered to institutional and individual investors and retirement plans that pay
the costs of distribution in ways other than through a sales charge. Second, why
does it take so many pages to explain? To offer multiple classes of shares, the
funds must approve new agreements with IDS. At the same time they are electing
members of the Boards, changing some investment policies, and explaining the
possibility of sometime in the future developing a master investment fund and
feeder shareholder funds structure. For your fund, we are asking you to take an
additional step and consider merging it into another fund. All of this takes a
lot of pages to cover the information we feel you should have together with that
required by the Securities and Exchange Commission.
IDS Strategy - Worldwide Growth Fund is a series of capital shares issued by
IDS Strategy Fund, Inc. and is a separate mutual fund. Its investment objectives
and policies are the same as IDS International Fund, Inc. and, except for the
differences in cash flow, its investment portfolio closely ties to
International. Both funds are managed by an IDS Financial Corporation subsidiary
in London, England. Worldwide Growth was created to give investors the same
opportunity to select the method of paying the sales charge that will now be
available with multiple classes of shares since the multiple class structure was
not an option at the time Worldwide Growth was created. By consolidating the two
funds, the Board believes investors will be better served in that they will not
have to choose between two separate funds in order to select the sales charge
best suited for them and shareholders may benefit by the larger asset base.
To consolidate the two funds, under a plan of reorganization, International
will acquire all the assets and liabilities of Worldwide Growth and your shares
will become shares of International. Your new International shares will have the
same total value as your Worldwide Growth shares on the date of the
consolidation. The consolidation will be tax free.
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As you read through the material, you will find the nominees for the Board
are the same for Worldwide Growth and International, so both groups of
shareholders are voting on the same persons. The same is true for auditors.
There is a lengthy description about the current agreements and new agreements
with IDS. If you were not being asked to consolidate Worldwide Growth with
International, you would have been asked to approve the new agreements. Under
these new agreements your cost as a shareholder of International is expected to
be very similar to your cost as a shareholder of Worldwide Growth. Proposed
changes in investment policies will allow International's Board to change those
policies without shareholder approval in the future and will permit the fund to
engage in certain investment strategies in the cash market that it can now do in
the derivatives market. While you are not being asked to vote on these matters
directly, by approving the consolidation, you are agreeing to the new agreements
and changes in investment strategy.
If you have any questions regarding the proposed transaction or other
matters with respect to which your vote is requested, please feel free to call
your IDS financial planner.
Sincerely,
WILLIAM R. PEARCE
President
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IDS STRATEGY FUND, INC. - WORLDWIDE GROWTH FUND
901 S. MARQUETTE AVE.
SUITE 2810
MINNEAPOLIS, MINNESOTA 55402-3268
NOTICE OF REGULAR MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 9, 1994
We will hold a regular meeting of shareholders of Worldwide Growth Fund
("Worldwide Growth"), a separate series of capital stock forming part of IDS
Strategy Fund, Inc. (the "Corporation") on November 9, 1994, at [ ] .m. at
[ ] Minneapolis, Minnesota. The agenda for the meeting is:
1. To approve or reject the Agreement and Plan of Reorganization (the
"Plan") dated as of [ , 1994] providing for (i) the acquisition
of all of the assets of Worldwide Growth by IDS International Fund, Inc.
("International"), in exchange for shares of International and the
assumption by International of the liabilities of Worldwide Growth, (ii)
the distribution of shares of International to shareholders of Worldwide
Growth in liquidation of Worldwide Growth and (iii) the subsequent
dissolution of Worldwide Growth. It is expected that the Reorganization,
if approved, will occur shortly before March 31, 1995.
2. To elect Board members.
3. To ratify or reject the selection of KPMG Peat Marwick as the independent
auditors for the fiscal year ending March 31, 1995.
4. To transact any other business that may come before the meeting.
Please take the time to read the prospectus/proxy statement which discusses
each agenda item. The Board of Directors has approved the proposals and
recommends that you vote in favor of each item. If you were a shareholder on
September 11, 1994, you may vote at the meeting or any adjournment of the
meeting. We hope you can attend. For those of you who cannot attend, the
enclosed card is for your vote. Please be sure to sign the card and return it to
us as soon as possible in the enclosed postage-paid envelope. The latest annual
report was previously mailed to you.
By order of the Board of Directors
LESLIE L. OGG
Secretary
September , 1994
IT IS IMPORTANT THAT YOU VOTE PROMPTLY. PLEASE FILL IN AND SIGN THE ENCLOSED
CARD. PROMPT RESPONSE WILL SAVE YOUR FUND THE COST OF ADDITIONAL MAILINGS.
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PROSPECTUS/PROXY STATEMENT DATED SEPTEMBER , 1994
ACQUISITION OF THE ASSETS OF
WORLDWIDE GROWTH FUND OF IDS STRATEGY FUND, INC.
901 S. MARQUETTE AVE.
SUITE 2810
MINNEAPOLIS, MINNESOTA 55402-3268
BY AND IN EXCHANGE FOR SHARES OF
IDS INTERNATIONAL FUND, INC.
IDS TOWER 10
MINNEAPOLIS, MINNESOTA 55440-0010
This Prospectus/Proxy Statement is being furnished to shareholders of
Worldwide Growth Fund ("Worldwide Growth"), a separate series of capital stock
forming part of IDS Strategy Fund, Inc. (the "Corporation"), in connection with
a regular meeting of shareholders to be held on November 9, 1994, at [ ] p.m.,
Minneapolis time, at [ ], and any adjournments thereof. The
meeting is being held for the following purposes:
1. To approve or reject an Agreement and Plan of Reorganization (the "Plan")
which provides for the acquisition of Worldwide Growth assets by IDS
International Fund, Inc. ("International") in exchange for shares of
International,
2. To elect members to the Board of the Corporation, and
3. To ratify or reject the selection of KPMG Peat Marwick as the independent
auditors for the fiscal year ending March 31, 1995.
The Plan provides that International will acquire all of the assets of
Worldwide Growth in exchange for shares of International and will assume the
liabilities of Worldwide Growth (the "Reorganization") (Worldwide Growth and
International are referred to individually as a "Fund" and collectively as the
"Funds"). Following the Reorganization, shares of International will be
distributed to shareholders of Worldwide Growth and Worldwide Growth will be
dissolved. As a result of the proposed Reorganization, each shareholder of
Worldwide Growth will receive shares of International equal in value to the
value of that shareholder's shares of Worldwide Growth on the effective date of
the Reorganization. Any contingent deferred sales charge ("CDSC") applicable to
a Worldwide Growth shareholder's investment will continue to apply, and, in
calculating the applicable CDSC payable upon a subsequent redemption of Class B
shares of International, the period during which a Worldwide Growth shareholder
held shares of Worldwide Growth will be counted. The Reorganization is being
structured as a tax-free reorganization.
International is an open-end, diversified management investment company. The
Corporation, of which Worldwide Growth forms a part, is also an open-end
management investment company. The goals of International and
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Worldwide are identical: long-term growth of capital. The investment policies of
each Fund are substantially similar. The differences in the Funds' investment
policies are described under "Comparison of Goals and Investment Policies."
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth the information about International that a prospective
investor should know before investing. Certain relevant documents listed below,
which have been filed with the Securities and Exchange Commission ("SEC"), are
incorporated herein by reference. A Statement of Additional Information dated
September , 1994 relating to this Prospectus/Proxy Statement and the
Reorganization, has been filed with the SEC and is incorporated by reference
into this Prospectus/Proxy Statement. A copy of the Statement of Additional
Information and the Worldwide Growth Prospectus referred to below are available
upon request and without charge by writing to IDS Shareholder Service, P.O. Box
534, Minneapolis, Minnesota 55440-0534 or by calling (612) 671-3733.
1. The Prospectus dated December 30, 1993 of IDS International Fund, Inc. is
incorporated in its entirety by reference and a copy is included herein.
2. The Prospectus dated May 27, 1994 of IDS Strategy Fund, Inc. - Worldwide
Growth Fund is incorporated in its entirety by reference.
Also accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of
the Plan for the proposed transaction.
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/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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Page
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(1) Proposed Reorganization
Summary............................................................. 7
Risk Factors........................................................ 12
Reasons for the Reorganization...................................... 13
Information about the Reorganization................................ 13
Information about International and Worldwide Growth................ 17
Comparison of Goals and Investment Policies......................... 18
Recommendation and Vote Required.................................... 19
(2) Election of Board Members............................................ 19
(3) Ratify or Reject the Selection of KPMG Peat Marwick as
Independent Auditors................................................ 24
Voting Information........................................................ 24
Financial Statements and Experts.......................................... 28
Exhibit A: Agreement and Plan of Reorganization........................... A-1
Exhibit B: Matters Subject to Approval at Regular Meeting of International
Shareholders............................................................. B-1
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(1) APPROVE OR REJECT THE PROPOSED REORGANIZATION
SUMMARY
PROPOSED REORGANIZATION. The Plan provides for the transfer of all of the
assets of Worldwide Growth in exchange for shares of International and the
assumption by International of the liabilities of Worldwide Growth. The Plan
also calls for the distribution of shares of International to Worldwide Growth
shareholders in liquidation of Worldwide Growth. (The proposed transaction is
referred to in this Prospectus/Proxy Statement as the "Reorganization"). As a
result of the Reorganization, each shareholder of Worldwide Growth will become
the owner of full and fractional shares of International having value equal to
the value of the shareholder's shares of Worldwide Growth as of the close of
business on the date that Worldwide Growth's assets are exchanged for shares of
International.
For the reasons set forth below under "Reasons for the Reorganization," the
Board of Directors of the Corporation, including all of the "non-interested"
Directors, as that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), has concluded that the Reorganization would be in the
best interests of the shareholders of Worldwide Growth and that the interests of
Worldwide Growth's existing shareholders would not be diluted as a result of the
transaction contemplated by the Reorganization. Therefore, the Board of
Directors has approved the Reorganization and has submitted the Plan for
approval by Worldwide Growth's shareholders. Approval of the Reorganization will
require the affirmative vote of a majority of the outstanding shares of
Worldwide Growth. The Board of Directors of International has also concluded
that the Reorganization would be in the best interests of International's
existing shareholders and has therefore approved the Reorganization.
TAX CONSEQUENCES. Prior to completion of the Reorganization, Worldwide
Growth will have received from counsel an opinion that, upon the Reorganization
and the transfer of the assets of Worldwide Growth, no gain or loss will be
recognized by Worldwide Growth or its shareholders for federal income tax
purposes. The holding period and aggregate tax basis of shares of International
that are received by each Worldwide Growth shareholder will be the same as the
holding period and aggregate tax basis of the shares of Worldwide Growth
previously held by that shareholder. In addition, the holding period and tax
basis of the assets of Worldwide Growth in the hands of International as a
result of the Reorganization will be the same as in the hands of Worldwide
Growth immediately prior to the Reorganization.
GOALS, INVESTMENT POLICIES AND RESTRICTIONS. International and Worldwide
Growth have identical goals. The goal of each Fund is to provide long-
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term growth of capital. The investment policies and restrictions of each Fund
are substantially similar and are described under the heading "Comparison of
Goals and Investment Policies."
Contemporaneously with the meeting of Worldwide Growth shareholders held to
approve the Reorganization, a regular meeting of International shareholders will
be held to approve, among other things, reclassifying certain of International's
investment policies and restrictions from fundamental to non-fundamental to the
extent permitted by the 1940 Act. International has proposed reclassifying the
status of such policies and restrictions in order to provide the Fund with
greater flexibility in managing its portfolio of investments. There can be no
assurance that shareholders of International will vote to approve such
reclassification.
IMPLEMENTATION OF REORGANIZATION. The Reorganization is expected to occur
shortly before March 31, 1995. The Class B shares will be created by
International pursuant to an exemptive order (the "Exemptive Order") of the SEC
obtained on behalf of International and other funds managed by IDS. The multiple
class structure will involve creating three separate classes of shares, Class A
shares, Class B shares and Class Y shares. Class A shares, Class B shares and
Class Y shares will represent identical interests in International's portfolio
of investments; however, Class A shares will be subject to a front-end sales
load, Class B shares will be subject to a contingent deferred sales charge
("CDSC") and Class Y shares will not be subject to a sales charge. In addition,
as discussed below, Class B shares will be subject to a Rule 12b-1 distribution
fee while Class A and Class Y shares will not be subject to distribution fees.
The higher 12b-1 fees for Class B shares are necessary to help defray costs not
covered by contingent deferred sales charges. Class B shares will convert to
Class A shares after a holding period of eight years, and the number of years a
Worldwide Growth shareholder held shares prior to the Reorganization will be
included for purposes of calculating this holding period. Existing shareholders
of International, whose shares are subject to a front-end sales load, will
receive either Class A shares or, upon meeting certain requirements, Class Y
shares of International at the time the multiple class structure is implemented.
Most shareholders of Worldwide Growth at the time of the Reorganization will
receive Class B shares of International in exchange for their shares of
Worldwide Growth. Shareholders of Worldwide Growth entitled to a waiver of the
CDSC will receive Class A shares of International.
As discussed under "Fees and Expenses" below, it is anticipated that IDS
Financial Corporation ("IDS"), as the sole Class B shareholder immediately prior
to the Reorganization, will approve the Rule 12b-1 and management and service
fees applicable to Class B shares. If approved, the Rule 12b-1 fee applicable to
Class B shares of International will be calculated in a manner different from
the current Rule 12b-1 fee applicable to Worldwide Growth shares.
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FEES AND EXPENSES. International and Worldwide Growth each have agreements
with IDS pursuant to which they pay IDS for managing their respective
portfolios, providing administrative services and serving as transfer agent.
Each Fund pays IDS a fee based on two components for providing investment
management and services that is calculated in the same manner for each Fund. The
first component is based on the combined average daily net assets of all mutual
funds (other than money market funds) publicly offered by IDS and is calculated
at a rate of 0.46 percent of the first $5 billion in net assets and decreasing
thereafter at reduced percentage rates for each additional $5 billion in net
assets to a minimum rate of 0.32 percent on all net assets of more than $50
billion. The second component of the investment management and services fee is
based on each Fund's average daily net assets during the fiscal year and is
calculated at a rate of 0.46 percent of such assets for both International and
Worldwide. International's investment management and services fee has a third
component, which is a performance incentive adjustment. This incentive
performance adjustment may increase or decrease the fee paid to IDS, up to a
maximum of 0.12 percent, based on the Fund's performance in comparison to the
Lipper International Fund Average. Worldwide Growth investment management and
services fees are not subject to a performance adjustment. For the fiscal year
ended October 31, 1993, International paid IDS a total investment management fee
of 0.85 percent of its average daily net assets. For the fiscal year ended March
31, 1994, Worldwide Growth paid IDS a total investment management fee of 0.86
percent of its average daily net assets. Each Fund also pays taxes, brokerage
commissions and non-advisory expenses.
IDS has separate advisory agreements for each Fund with IDS International,
Inc., pursuant to which IDS International, Inc. determines which securities will
be purchased, held or sold for each of the two Funds (subject to the direction
and control of the Funds' respective boards of directors). Under these
agreements IDS pays IDS International, Inc. a fee equal to 0.35 percent of the
average daily net assets of International or Worldwide Growth, respectively.
International and Worldwide Growth each has a transfer agency agreement with
IDS pursuant to which IDS maintains shareholder accounts and records for each
Fund. International pays IDS an annual fee of $15 per shareholder account and
Worldwide Growth pays IDS an annual fee of $16 per shareholder account for the
transfer agency services rendered by IDS.
Currently the shares of International and the shares of Worldwide Growth are
both sold subject to distribution plans adopted pursuant to Rule 12b-1 under the
1940 Act. Under the 12b-1 plan for International, IDS is paid a distribution fee
at the annual rate of $6 per shareholder account. Total 12b-1 fees paid by
International were 0.11 percent of its average daily net assets for the fiscal
year ended October 31, 1993.
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Under the Rule 12b-1 plan for Worldwide Growth, IDS is paid a distribution
fee at an annual rate equal to 1 percent of the lesser of (i) aggregate purchase
payments of shares sold since inception, including purchase payments of shares
exchanged from another fund in the IDS MUTUAL FUND GROUP (the "GROUP") and the
value of all shares exchanged from another fund in the GROUP (excluding
appreciation, dividend reinvestments and capital gain distributions), less the
aggregate amount of any redemptions of purchase payments, or (ii) the fund's
average daily net assets. Of the Rule 12b-1 fee for Worldwide Growth the first
0.75 percent is for distribution of Fund shares and the balance of the fee, up
to 0.25 percent, represents service fees for personal services rendered to
shareholders of the Fund. Total Rule 12b-1 fees paid by Worldwide Growth were
0.83 percent of its average daily net assets for the fiscal year ended March 31,
1994.
Total fees and expenses for International stated as a percentage of average
net assets for the fiscal year ended October 31, 1993 were 1.47 percent. Total
fees and expenses for Worldwide Growth stated as a percentage of average net
assets for the fiscal year ended March 31, 1994 were 2.45 percent. Worldwide
Growth shares are and, subsequent to the Reorganization, International Class B
shares will be sold subject to a CDSC and an ongoing distribution fee.
It is anticipated that the investment management and services fees, the
transfer agency fees and the Rule 12b-1 distribution fees of International will
change at the time of the Reorganization. Contemporaneously with the meeting of
Worldwide Growth shareholders to vote on the Reorganization, a meeting of
International shareholders will be held to vote on, among other matters, a new
investment management and services agreement with IDS. If approved, the new
investment management and services agreement will eliminate the portion of the
management fee based on GROUP assets and will provide for a graduated fee to be
paid to IDS calculated at a rate of 0.86 percent on the first $250 million in
net assets and decreasing thereafter at reduced percentage rates for each
additional $250 million in net assets to a minimum rate of 0.74 percent on all
net assets of International in excess of $1 billion. The management fee paid to
IDS will continue to be subject to a performance adjustment of up to 0.12
percent based on the Fund's performance relative to the Lipper International
Fund Average. IDS will continue its advisory agreement with IDS International,
Inc. under which it pays IDS International, Inc.
The new transfer agency agreement with IDS will provide that International
will pay IDS an annual fee of $15 per shareholder account for Class A shares and
$16 per shareholder account for Class B shares and $15 for Class Y shares. The
fees assessed on each class of shares reflect the different costs and expenses
allocated to the respective class.
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Immediately prior to the Reorganization, IDS, as the sole Class B
shareholder of International, will vote to approve a new Rule 12b-1 distribution
plan applicable to Class B shares, including Class B shares received by
Worldwide Growth shareholders in the Reorganization. This Rule 12b-1
distribution plan will provide for an annual distribution fee to be paid to IDS.
The distribution fee will be calculated at the rate of 0.75 percent of
International's average daily net assets. In addition, Class B shares will be
subject to a service fee calculated at a rate of 0.175 percent of
International's average daily net assets. Class A shares will not be subject to
a Rule 12b-1 distribution fee, but will be subject to a service fee calculated
in the same manner. Class Y shares will not be subject to a distribution fee or
a service fee. The expense ratio of Class B shares of International is expected
to be substantially similar to the expense ratio of Worldwide Growth. If the
changes in management and Rule 12b-1 distribution fees and transfer agency
expenses are approved as discussed below, it is expected that total
International fees and expenses stated as a percentage of average net assets
subsequent to the Reorganization will be 1.61 percent for Class A, 2.39 percent
for Class B and 1.43 percent for Class Y.
PURCHASE AND SALE PROCEDURES. Purchase of shares of International and
Worldwide Growth must be made through IDS Financial Services Inc. at their
respective public offering prices (net asset value next determined).
International shares and Worldwide Growth shares may be redeemed at their
net asset value next determined per share. Redemptions of Worldwide Growth
shares are and International Class B shares will be subject to a CDSC.
Redemptions of International and Worldwide Growth shares may be made in writing
or by telephone.
EXCHANGE PRIVILEGES. Shareholders of International may exchange at net
asset value all or a portion of their shares for shares in any publicly offered
fund in the GROUP, except IDS Planned Investment Account. Shareholders of
Worldwide Growth may exchange at net asset value all or a portion of their
shares for shares of any of the other four mutual funds forming part of the
Corporation. The CDSC does not apply to exchanges between these funds. No
exchanges are permitted into other funds in the GROUP. Shareholders of Worldwide
Growth may, however, sell their shares and purchase shares of another fund in
the GROUP.
Subsequent to the Reorganization, Class A, Class B and Class Y shareholders
of International may exchange at net asset value all or a portion of their
shares for shares of the same class in any fund in the GROUP. No initial sales
charge will be imposed on the shares being acquired and no CDSC will be imposed
on the shares being exchanged. The holding period of Class B shares received in
an exchange will include the holding period of the Class B shares disposed of in
an exchange for purposes of calculating the CDSC.
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Any exchange will be a taxable event for which a shareholder may have to
recognize a gain or loss under federal income tax provisions. Exchanges are
subject to minimum investment and other requirements of the fund into which
exchanges are made.
DIVIDENDS. The dividend and distribution policies of International and
Worldwide Growth are the same. Each Fund distributes its net investment income
(dividends and interest earned on securities held by the Fund, less operating
expenses) to shareholders of record by the end of the calendar year.
Distributions of short-term capital gains are included in the net investment
income. Distributions of any net realized capital gains are made before the end
of the calendar year. For each Fund, dividend and capital gain distributions are
automatically reinvested in additional shares of the Fund, unless the
shareholder has requested distributions be made in cash or directed to the
purchase of shares of another fund in the GROUP.
SHAREHOLDER VOTING RIGHTS. Subsequent to the Reorganization, Class A
shares, Class B shares and Class Y shares will be treated as separate classes of
shares issued by International. Class A shares, Class B shares and Class Y
shares will vote together as a single class on most issues, such as election of
directors, and as separate classes on issues that affect only a particular
class, such as Rule 12b-1 distribution plans.
The Funds do not hold regular meetings of shareholders on an annual basis.
Meetings of shareholders may be called by the directors at their discretion or
on demand by the holders of 10 percent or more of the outstanding shares for the
purpose of electing or removing directors.
RISK FACTORS
Because the goals and investment policies of International and Worldwide
Growth are substantially the same, the investment risks associated with each
Fund are substantially the same. These risks are generally those typically
associated with investing in common stocks and securities convertible into
common stocks of foreign issuers, including trading in foreign markets that
often have less trading volume and are subject to less government supervision
than U.S. markets, less available information about foreign issuers, foreign
currency fluctuations and political and economic instability in the countries in
which the investments are made, for example, the possibility of seizure or
nationalization of companies, imposition of withholding taxes on income or
establishment of exchange controls or adoption of other restrictions that might
adversely affect an investment. For a more complete discussion of the risks
associated with investing in the Funds, see "Facts about Investments and their
Risks" in the accompanying Prospectus of International and the Prospectus of
Worldwide Growth.
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REASONS FOR THE REORGANIZATION
The Board of Directors of the Corporation, including all of the non-
interested directors, has determined that it is advantageous to combine
Worldwide Growth with International. The Funds have identical goals and
substantially similar investment policies and the Funds have the same investment
manager, the same portfolio managers based in London, England, and the same
custodian, auditors and transfer agent.
Worldwide Growth was created to provide investors wanting to invest in a
portfolio of international securities like International with the option to pay
the sales charge on such an investment over time by way of a CDSC. With the
ability to offer multiple classes of shares in one fund pursuant to the Order,
it is no longer necessary to offer shares in two separate mutual funds with
substantially similar investment portfolios. Accordingly, the Board of Directors
determined that the Reorganization should eliminate the duplication inherent in
marketing two funds with similar investment goals. The Board of Directors also
determined that a combination of the Funds would not dilute the interests of
Worldwide Growth shareholders and has received advice from counsel that the
Reorganization will be effected as a tax-free organization.
In light of the foregoing, the Board of Directors has decided that it is in
the best interests of Worldwide Growth and its shareholders to combine with
International.
The Board of Directors of International also determined that a combination
of the Funds would not dilute the interests of International shareholders and
has received advice from counsel that the Reorganization will be effected as a
tax-free reorganization. Accordingly, the Board of Directors has decided that it
is in the best interests of International and its shareholders to acquire the
assets of Worldwide Growth and has approved the Reorganization.
INFORMATION ABOUT THE REORGANIZATION
PLAN OF REORGANIZATION. The Plan, a copy of which is attached as Exhibit A,
provides that International will acquire all of the assets of Worldwide Growth
in exchange for shares of International and the assumption by International of
the liabilities of Worldwide Growth on or about March 31, 1995, or a later date
agreed upon by the parties (the "Closing Date"). International will not assume
any liabilities of Worldwide Growth other than those reflected in an unaudited
statement of assets and liabilities of Worldwide Growth prepared as of the close
of regular trading on the New York Stock Exchange on the Closing Date. The
number of full and fractional shares of International to be issued to Worldwide
Growth shareholders will be determined on the basis of the relative net asset
values of International and Worldwide Growth as of the close of business on the
New York Stock
13
<PAGE>
Exchange on the Closing Date. Net asset value is determined by dividing total
assets, less liabilities, by the total number of shares outstanding. Both of the
Funds will utilize IDS as agent to determine the value of their respective
portfolios of securities. The method of valuation employed will be consistent
with Rule 22c-1 of the 1940 Act.
At or prior to the Closing Date, Worldwide Growth will declare a dividend
which, together with all previous such dividends, shall have the effect of
distributing to Worldwide Growth's shareholders all taxable income for the
taxable year ending on or prior to the Closing Date (computed without regard to
any deduction for dividends paid) and all of its net capital gains realized in
the taxable year ending on or prior to the Closing Date (after reductions for
any capital loss carryforward).
As soon as practicable after the Closing Date, the Corporation will
distribute pro rata to the shareholders of record of Worldwide Growth as of the
close of business on the Closing Date the shares of International to be issued
to Worldwide Growth shareholders, and the Corporation will take all necessary
steps to effect the liquidation and termination of Worldwide Growth. The
distribution of shares of International will be accomplished by the
establishment of open accounts on the share records of International in the name
of each shareholder of Worldwide Growth representing the respective number of
shares, including fractional shares, of International due each shareholder.
Shareholders of Worldwide Growth whose shares are represented by certificates
will be required to surrender such certificates to International in order to
redeem International shares held in their accounts. In the event of lost
certificates, adequate bond must be posted.
The Reorganization is subject to a number of conditions set forth in the
Plan, some of which may be waived by the Board of Directors or an authorized
officer of the Corporation. The Plan may be terminated and the proposed
transaction abandoned at any time, before or after approval by the shareholders
of Worldwide Growth, prior to the Closing Date by either the Board of Directors
of the Corporation or a designated officer of the Corporation.
International and Worldwide Growth each will pay its own expenses, if any,
incurred in connection with the Reorganization; provided, however, that certain
expenses of Worldwide Growth that are solely and directly related to the
Reorganization (such as legal and accounting expenses, appraisal fees,
registration fees and expenses, and administrative costs, including costs
incurred for printing, clerical work and telephone) may be assumed by
International in the same manner as the other liabilities of Worldwide Growth.
Approval of the Plan will require the affirmative vote of a majority of the
outstanding shares of Worldwide Growth. If the Reorganization is not approved,
the Board of Directors will consider other possible courses of action.
Shareholders of Worldwide Growth may assert dissenters' rights with respect to
the Reorganization and their shares; however, the staff of the Commission
14
<PAGE>
has taken the position that the 1940 Act requires that an investment company
only redeem shares at net asset value and that this requirement supersedes
appraisal provisions in state statutes.
DESCRIPTION OF INTERNATIONAL SHARES. Assuming the multiple class share
structure discussed in the summary is implemented, full and fractional shares of
the common stock of International will be issued in accordance with the
procedures detailed in the Plan and as described in International's Prospectus.
Most shareholders will receive Class B shares of International in exchange for
their shares of Worldwide Growth. Shareholders of Worldwide Growth who are not
subject to the CDSC will receive Class A shares of International. The shares of
International will represent shares of common stock, with $.01 par value, in
International, which is an open-end, management investment company incorporated
under the laws of the State of Minnesota. Class B shares together with Class A
and Class Y shares will represent identical and equal proportionate interests in
International's portfolio of investments. The only differences among the three
classes will be (i) that Class B shares will be subject to a CDSC while Class A
shares will be subject to a front-end sales charge and Class Y shares will not
be subject to a sales charge and (ii) that Class B shares will be subject to a
Rule 12b-1 distribution fee and a service fee while Class A shares will be
subject to a service fee but not a Rule 12b-1 distribution fee and Class Y
shares will not be subject to a distribution fee or a service fee. Class A,
Class B and Class Y shares will have one vote for each share held on matters on
which they are entitled to vote. Class A, Class B and Class Y shares will vote
together as one class on most matters subject to shareholder approval, such as
election of directors and changes in fundamental investment objectives or
policies, and as separate classes on issues that affect only a particular class,
such as changes in Rule 12b-1 distribution policies. Class A, Class B and Class
Y shares of International will have no pre-emptive or conversion rights, except
to the extent that Class B shares will convert to Class A shares after they have
been held for approximately eight years and Class A shares will convert to Class
Y shares upon meeting the shareholder eligibility requirements for Class Y
shares. Each class of shares may be exchanged for shares of the same class of
other funds in the GROUP as described in the International Prospectus and
Statement of Additional Information. International does not issue certificates
to shareholders.
FEDERAL INCOME TAX CONSEQUENCES. The completion of the Reorganization is
contingent upon the receipt by the Corporation of an opinion from Ropes & Gray
to the effect that the Reorganization will constitute a tax-free reorganization.
As such, no gain or loss will be recognized by Worldwide Growth, International
or their respective shareholders as a result of the proposed transaction, the
tax basis of the shares of International received by Worldwide Growth
shareholders will be the same as the tax basis of their
15
<PAGE>
Worldwide Growth shares, and the tax basis of the assets of Worldwide Growth in
the hands of International will be the same as the tax basis of such assets in
the hands of Worldwide Growth prior to the Reorganization.
RELATED PROPOSALS OF INTEREST TO WORLDWIDE GROWTH SHAREHOLDERS.
Contemporaneously with the meeting of Worldwide Growth shareholders to approve
the Reorganization, a regular meeting of International shareholders will be held
to vote on the following matters: (1) election of directors; (2) ratification of
KPMG Peat Marwick as the independent auditors for the fiscal year ending October
31, 1995; (3) approval of an investment management and services agreement
between International and IDS; (4) approval of changes in the investment
policies of International to permit investment of all its assets in another
investment company with substantially the same investment objective, policies
and restrictions of International; and (5) approval of changes to certain of
International's fundamental policies. Each of the above matters to be voted on
by International shareholders is discussed in detail in Exhibit B. In addition,
the investment management and Rule 12b-1 distribution fees and expenses and the
reclassification of the fundamental policies that would result from such vote
are discussed below. There can be no assurance that shareholders of
International will vote to approve any or all of the matters set forth above.
The new investment management and services agreement, if approved, will
provide for a graduated management fee to be paid to IDS calculated at a rate of
0.86 percent on the first $250 million in net assets and decreasing thereafter
at reduced percentage rates for each additional $250 million in net assets to a
minimum rate of 0.74 percent on all net assets of International in excess of $1
billion. The management fee paid to IDS will continue to be subject to a
performance adjustment of up to 0.12 percent based on the Fund's performance
relative to the Lipper International Fund Average.
A service fee will apply to International Class A shares. The service fee
will be calculated at a rate of 0.175 percent of International's average daily
net assets. Class B shares will be subject to a Rule 12b-1 distribution plan.
This Rule 12b-1 distribution plan will provide for an annual distribution fee to
be paid to IDS calculated at the rate of 0.75 percent of International's average
daily net assets. In addition, a service fee calculated at a rate of 0.175
percent of International's average daily net assets will apply to Class B
shares. Class B shareholders of International will have the right to vote on any
changes in the Rule 12b-1 plan applicable to International Class B shares after
the Reorganization. Class Y shares will not be subject to distribution fees or
to service fees.
At the meeting of International shareholders, shareholders will also vote on
whether to approve reclassifying certain of International's investment policies
and restrictions from fundamental to non-fundamental to the extent permitted by
the 1940 Act.
16
<PAGE>
CAPITALIZATION. The following table shows the capitalization of Worldwide
Growth and International as of April 30, 1994 and on a pro forma basis as of
that date, giving effect to the proposed acquisition of assets at net asset
value:
<TABLE>
<CAPTION>
Worldwide Pro forma for
International* Growth** Reorganization
-------------- -------------- --------------
(In thousands, except per share values)
<S> <C> <C> <C>
Class A Shares
- - - -------------------------------
Net assets..................... $ 582,489,160 $ 0 $ 582,489,160
Net asset value per share...... $ 10.32 $ 0.00 $ 10.32
Shares outstanding............. 56,440,547 0 56,440,547
Class B Shares
- - - -------------------------------
Net assets..................... $ 0 $ 237,823,674 $ 237,823,674
Net asset value per share...... $ 0.00 $ 5.53 $ 10.32
Shares outstanding............. 0 43,009,377 23,044,930
Class Y Shares
- - - -------------------------------
Net assets..................... $ 53,348,981 $ 0 $ 53,348,981
Net asset value per share...... $ 10.32 $ 0.00 $ 10.32
Shares outstanding............. 5,168,974 0 5,168,474
<FN>
*Current shares of International are shown as either Class A shares or Class Y
shares, into which such shares will be converted immediately prior to the
Reorganization upon implementation of the multiple class structure.
**Current shares of Worldwide Growth are shown as Class B shares, for which such
shares will be exchanged upon the Reorganization.
</TABLE>
INFORMATION ABOUT INTERNATIONAL
AND WORLDWIDE GROWTH
Information concerning International is incorporated by reference from the
current International Prospectus, dated December 30, 1993, accompanying this
Prospectus/Proxy Statement. Information concerning Worldwide Growth is
incorporated by reference from the Corporation's Prospectus, dated May 27, 1994.
Both International and the Corporation are subject to the informational
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith file reports and other information including proxy
material, reports and charter documents with the SEC. These reports can be
inspected and copies obtained at the Public Reference Facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the New York
Regional Office of the SEC, Seven World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates.
A copy of the Prospectus of the Corporation
17
<PAGE>
is available upon request and without charge by writing IDS Shareholder Service,
P.O. Box 534, Minneapolis, Minnesota 55440-0010 or by calling (612) 671-3733.
COMPARISON OF GOALS AND INVESTMENT POLICIES
The goals and investment policies and restrictions of International and
Worldwide Growth are substantially similar. As discussed below under
"Reclassification of International Investment Policies and Restrictions from
Fundamental to Non-Fundamental," certain of International's investment policies
and restrictions will, subject to approval by International shareholders, be
reclassified from fundamental to non-fundamental.
GOAL
The goals of International and Worldwide Growth are identical. The goal of
each Fund is to provide shareholders with long-term growth of capital. Because
any investment involves risk, there can be no guarantee that either Fund will
achieve its goal. The goal of each Fund can be changed only if holders of a
majority of the outstanding shares of the applicable Fund agree to make the
change.
INVESTMENT POLICIES
Under normal market conditions, at least 80% of International's total assets
and at least 65% of Worldwide Growth's total assets will be invested in common
stocks or securities convertible into common stocks of foreign issuers that have
a potential for superior growth, which is measured as growth that is better than
the [Morgan Stanley Capital International World Index (the "World Index")]
[Morgan Stanley Capital International EAFE Index (the "EAFE Index")].
The percentage of assets of each Fund invested in particular countries or
regions of the world will change according to their political stability and
economic condition. Ordinarily each Fund will invest in companies domiciled in
at least three foreign countries.
With respect to both International and Worldwide Growth, investments in U.S.
issuers generally will constitute less than 20% of the Fund's portfolio. If,
however, investments in foreign securities appear to be relatively unattractive
in the judgement of a Fund's investment manager because of current or
anticipated adverse political or economic conditions, as a temporary defensive
strategy, each Fund may invest any portion of its assets in securities of U.S.
issuers appearing to offer opportunities for superior growth.
Each Fund may also invest in securities other than common stocks, such as
preferred stocks, debt securities, derivative instruments and money market
instruments.
There is only one investment restriction that International and Worldwide
Growth do not have in common. Worldwide Growth may not pledge or
18
<PAGE>
mortgage its assets beyond thirty percent of its total assets taken at market
value. International is subject to this restriction, but the portion of its
assets that it may pledge or mortgage is subject to a limit of fifteen percent
of its total assets at cost.
In connection with a meeting of International shareholders to be held
contemporaneously with the meeting of Worldwide Growth shareholders,
International shareholders will vote on whether to approve the reclassification
of certain of International's investment policies and restrictions from
fundamental to non-fundamental to the extent permitted by the 1940 Act. The goal
of International will remain unchanged. The Board of Directors of International
has proposed the reclassification in order to provide the Fund with greater
flexibility in managing its portfolio of investments.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors of Worldwide Growth, including the "non-interested"
directors, recommends that shareholders approve the Plan. Approval of the Plan
requires the affirmative vote of a majority of the outstanding shares of
Worldwide Growth entitled to vote.
(2) ELECTION OF BOARD MEMBERS
The Board has set the number of persons who serve on the Board at . Each
Board member will serve until the next regular shareholders' meeting or until he
or she reaches the mandatory retirement age established by resolution of the
Board. Under the current resolution of the Board, members who were serving on
the Board of any fund in the GROUP on January 1, 1988, serve until the end of
the meeting of the Board following their 75th birthday and all other members
serve through the meeting following their 70th birthday.
In voting for Board members, you may vote all of your Worldwide Growth
shares cumulatively. This means that you have the right to give each nominee an
equal number of votes or divide the votes among the nominees as you wish. You
have as many votes as the number of shares you own, including fractional shares,
multiplied by the number of members to be elected. By completing the card, you
give the proxies the right to vote for the persons named below. If you elect to
withhold authority for any individual nominee or nominees, you may do so by
marking the box labeled "Exception," and by striking the name of any excepted
nominee, as is further explained on the card itself. If you do withhold
authority, the proxies will not vote shares equivalent to the proportionate
number applicable to the names for which authority is withheld.
The persons nominated to serve on the Board are set forth below. Each of the
nominees is a nominee for trustee or director of each of the other
19
<PAGE>
funds within the GROUP. The GROUP currently consists of 42 funds with assets of
approximately $44 billion. Each nominee was elected a member of the Board at the
last shareholders' meeting except for Ms. Cheney and Mr. Hubers.
All of the nominees have agreed to serve. If an unforeseen event prevents a
nominee from serving, your votes will be cast for the election of a substitute
selected by the Board. Information about each nominee is provided in the table
below. It includes the period of service as a Board member of funds in the
GROUP, the number of shares each owns in Worldwide Growth and in all the funds
in the GROUP on September 1, 1994 and the current committee assignments. The
shareholders of Worldwide Growth and the other funds forming part of the
Corporation vote as a group in electing directors. Election requires a vote by a
majority of the shares present or represented at the meeting.
LYNNE V. CHENEY Board member since 1994 Age 53
Distinguished Fellow, American Enterprise Institute for Public Policy Research.
Former Chair of National Endowment of the Humanities. Director, the Reader's
Digest Association, Inc., Lockheed Corporation, and the Interpublic Group of
Companies, Inc.
Shares owned: Worldwide Growth GROUP
Committee assignment: Audit
WILLIAM H. DUDLEY** Board member since 1991 Age 62
Executive vice president and director of IDS Financial Corporation ("IDS").
Shares owned: Worldwide Growth GROUP
Committee assignment: Executive
ROBERT F. FROEHLKE Board member since 1987 Age 71
Former president of all funds in the GROUP. Director, the ICI Mutual Insurance
Co., Institute for Defense Analyses, Marshall Erdman and Associates, Inc.
(architectural engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
Shares owned: Worldwide Growth GROUP
Committee assignments: Contracts, Executive, Personnel
DAVID R. HUBERS** Board member since 1993 Age 51
President, chief executive officer and director of IDS. Previously, senior vice
president, finance and chief financial officer of IDS.
Shares owned: Worldwide Growth GROUP
20
<PAGE>
ANNE P. JONES Board member since 1985 Age 59
Partner, law firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
Shares owned: Worldwide Growth GROUP
Committee assignment: Contracts
DONALD M. KENDALL Board member since 1968 Age 73
Former chairman and chief executive officer, PepsiCo, Inc.
Shares owned: Worldwide Growth GROUP
Committee assignment: Audit
MELVIN R. LAIRD Board member since 1974 Age 72
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).
Shares owned: Worldwide Growth GROUP
Committee assignment: Personnel
LEWIS W. LEHR Board member since 1986 Age 73
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).
Shares owned: Worldwide Growth GROUP
Committee assignments: Audit, Personnel
WILLIAM R. PEARCE* Board member since 1980 Age 66
President of all funds in the GROUP since June 1993. Former vice chairman of the
board, Cargill, Incorporated (commodity merchants and processors).
Shares owned: Worldwide Growth GROUP
Committee assignments: Contracts, Executive
EDSON W. SPENCER Board member since 1991 Age 68
President, Spencer Associates Inc. (consulting). Chairman of the Board, Mayo
Foundation (healthcare). Former chairman of the board and chief
21
<PAGE>
executive officer, Honeywell Inc. Director, Boise Cascade Corporation (forest
products) and CBS Inc. Member of International Advisory Councils, Robert Bosch
(Germany) and NEC (Japan).
Shares owned: Worldwide Growth GROUP
Committee assignments: Audit, Executive
JOHN R. THOMAS** Board member since 1987 Age 57
Senior vice president and director of IDS.
Shares owned: Worldwide Growth GROUP
WHEELOCK WHITNEY Board member since 1977 Age 68
Chairman, Whitney Management Company (manages family assets).
Shares owned: Worldwide Growth GROUP
Committee assignment: Audit, Contracts, Executive, Personnel
*Interested person by reason of being an officer and employee of Worldwide
Growth.
**Interested person by reason of being an officer, director, securityholder
and/or employee of IDS of American Express Company ("American Express").
+Shares owned by family members in which nominee disclaims any beneficial
ownership.
As of September 1, 1994, all executive members and Board members as a group
beneficially owned directly or indirectly less than 1% of the shares of
Worldwide Growth.
The committees have been appointed to facilitate the work of the Board. The
Executive Committee has authority to act for the full Board between meetings. It
focuses on investment activities, routine compliance issues and oversight of
various operational functions. The Joint Audit Committee meets with
representatives of the independent auditors to consider the scope of annual
audits and reviews the results of those audits. It receives reports from IDS
Internal Audit that pertain to the operations of the Corporation and the funds
forming part of the Corporation, including Worldwide Growth, and addresses
special areas of concern. The Contracts Committee, under the full Board's
direction, negotiates contracts and monitors, evaluates and reports to the Board
the performance under the terms of those contracts. The Joint Personnel
Committee makes recommendations with respect to the composition of the Board and
the compensation of the members, officers and staff of the Corporation and the
funds forming part of the Corporation, including Worldwide Growth. Candidates
for vacancies must have a background that gives promise of making a significant
contribution to furthering the interests of all shareholders. Shareholders
wishing to suggest candidates should write in care of Joint Personnel Committee,
IDS MUTUAL FUND GROUP, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN
55402-3268.
22
<PAGE>
Over the last fiscal year, the Board held 10 meetings, the Executive
Committee met twice a month, and the Audit, Contracts and Personnel Committees
met 5, 5 and 4 times, respectively. Average attendance at the Board was % and
no nominee attended less than 75% of the meetings of the Board and the
committees on which she or he serves.
Members who are not officers of Worldwide Growth or directors of IDS receive
an annual fee and retirement benefits from Worldwide Growth. They also receive
attendance and other fees, the cost of which Worldwide Growth shares with the
other funds in the GROUP. Members of the Board receive an annual fee of $1,000
and upon retirement at age 70, or earlier if for health reasons, such members
receive monthly payments equal to 1/2 of the annual fee divided by 12 for as
many months as the member served on the Board up to 120 months or until the date
of death. There are no death benefits and the plan is not funded. The fees
shared with other funds are those for attendance for meetings of the Contracts
Committee or Board, $500, meetings of the Audit, Executive, and Personnel
Committees, $300, out-of-state, $500, and Chair of Contracts Committee, $5,000.
Expenses are also reimbursed.
During the fiscal year ended March 31, 1994 the members of the Board, for
attending up to 48 meetings, received the following compensation, in total, from
all the funds in the GROUP.
<TABLE>
<CAPTION>
Retirement
Aggregate Benefits
Compensation Accrued as Estimated Total Cash
from Worldwide Annual Compensation
Worldwide Growth Benefit on from
Nominee Growth Expenses Retirement GROUP
- - - ------------------------- --------------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Lynne V. Cheney
Robert F. Froehlke
(part of year)
Anne P. Jones
Donald M. Kendall
Melvin R. Laird
Lewis W. Lehr
William R. Pearce
(part of year)
Edson W. Spencer
Wheelock Whitney
</TABLE>
Besides Mr. Pearce, who is president, Worldwide Growth's other officer is:
Leslie L. Ogg, 56, Vice president and general counsel of all publicly
offered funds in the GROUP since 1978. Vice president of the Life Funds and
treasurer of all publicly offered funds in the GROUP since July 1989.
Officers serve at the pleasure of the Board.
23
<PAGE>
During the last fiscal year, no officer earned more than $60,000 from
Worldwide Growth. All officers as a group (two persons) earned cash
compensation, including salaries and thrift plan, of $ for the last fiscal
year.
(3) RATIFY OR REJECT THE SELECTION OF KPMG PEAT
MARWICK AS INDEPENDENT AUDITORS
For the fiscal year ending March 31, 1995, KPMG Peat Marwick has been
selected to serve as the independent auditors for the Corporation and the funds
forming part of the Corporation, including Worldwide Growth. This selection was
made by the members of the Board who are not officers of the Corporation or
associated with the investment manager pursuant to a recommendation by the Joint
Audit Committee. When a meeting of shareholders is held, the selection also is
considered by the shareholders.
The audit services provided to the funds in the GROUP by KPMG Peat Marwick
include the examination of the annual financial statements, assistance in
connection with filings with the Commission and meeting with the Joint Audit
Committee. A representative of KPMG Peat Marwick is expected to be at the
meetings and will have the opportunity to make a statement and answer questions.
RECOMMENDATION AND VOTE REQUIRED. The Board recommends that you vote to
ratify the selection of the independent auditors. Ratification of the selection
requires a vote by a majority of the shares present or represented at the
meeting. The shareholders of Worldwide Growth and the other funds forming part
of the Corporation vote as a group in ratifying or rejecting the selection of
independent auditors. If the selection of the independent auditors is not
ratified, the Board will consider what further action must be taken.
VOTING INFORMATION
GENERAL. This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of the Corporation to be used
at the meeting of Worldwide Growth shareholders to be held at [ ] p.m. on
November 9, 1994, at [ ], Minneapolis, Minnesota and at any
adjournments thereof. This Prospectus/Proxy Statement is first being mailed to
shareholders of Worldwide Growth on or about September , 1994. Only
shareholders of record as of the close of business on September 11, 1994 (the
"Record Date") will be entitled to notice of, and to vote at, the meeting or any
adjournment thereof. If the enclosed form of proxy is properly executed and
returned in time to be voted at the meeting, the proxies named therein will vote
the shares represented by the proxy in accordance with the instructions marked
thereon. Unmarked proxies will be voted FOR the proposed Reorganization and FOR
election of the persons
24
<PAGE>
nominated to the Board and ratification of the Board's selection of independent
auditors and FOR any other matters deemed appropriate. A proxy may be revoked at
any time on or before the meeting by written notice to IDS Strategy Fund, Inc. -
Worldwide Growth Fund, IDS Tower 10, Minneapolis, Minnesota 55440-0010, c/o the
Corporate Secretary. Approval of the Plan will require the affirmative vote of a
majority of the outstanding shares of Worldwide Growth. Shareholders of
Worldwide Growth are entitled to one vote for each share.
Election of members to the Board and ratification or rejection of the
selection of independent auditors will require the affirmative vote of a
majority of the shares of the funds forming part of the Corporation.
Shareholders of the funds forming part of the Corporation vote together as a
group on such matters. Simultaneously with the meeting of Worldwide Growth
shareholders, shareholders of the other funds forming part of the Corporation
will vote at shareholder meetings for the purpose of electing directors and
ratifying or rejecting the selection of independent auditors.
The funds forming part of the Corporation in addition to Worldwide Growth
include Aggressive Equity Fund, Equity Fund, Income Fund and Short-Term Income
Fund. As of the Record Date, the funds forming part of the Corporation had
[ ] shares outstanding, and each of the funds had shares outstanding as
follows: Aggressive Equity -- [ ] shares; Equity Fund -- [ ] shares;
Income Fund -- [ ] shares; Short-Term Income Fund -- [ ] shares; and
Worldwide Growth -- [ ] shares.
Proxies are solicited by mail. Additional solicitations may be made by
telephone, telegraph or personal contact by officers or employees of IDS and its
affiliates. The cost of solicitation will be borne by Worldwide Growth.
In the event that sufficient votes in favor of any of the proposals set
forth in the Notice of the Meeting and Proxy Statement are not received by the
time scheduled for the meeting, the persons named as proxies may move for one or
more adjournments of the meeting for a period or periods of not more than 60
days in the aggregate to permit further solicitation of proxies with respect to
any of the proposals. Any adjournment will require the affirmative vote of a
majority of the shares present at the meeting. The persons named as proxies will
vote in favor of adjournment those shares which they are entitled to vote which
have voted in favor of the proposals. They will vote against any adjournment
those proxies which have voted against any of the proposals. The costs of any
additional solicitation and of any adjourned session will be borne by the Fund.
Shareholders of International are not entitled to vote on the Reorganization
and their votes are not being solicited by this Prospectus/Proxy Statement.
DISSENTERS' RIGHTS. Pursuant to Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act (the "MBCA Sections"), record holders of
shares of Worldwide Growth on September 11, 1994 are entitled
25
<PAGE>
to assert dissenters' rights in connection with the Reorganization and obtain
payment of the "fair value" of their shares, provided that such shareholders
comply with the requirements of the MBCA Sections. The following is a summary of
the statutory procedures to be followed by Worldwide Growth shareholders
electing to exercise their dissenters' rights. Shareholders who wish to assert
their dissenters' rights or who wish to preserve the right to do so should
review the MBCA sections carefully, since failure to comply with the procedures
set forth in the MBCA Sections will result in the loss of such dissenters'
rights.
Notwithstanding the provisions of the MBCA Sections discussed below, the
Division of Investment Management of the SEC has taken the position that
adherence to state appraisal procedures by a registered investment company
issuing redeemable securities would constitute a violation of Rule 22c-1 under
the 1940 Act. This rule provides that no open-end investment company may redeem
its shares other than at net asset value next computed after receipt of a tender
of such security for redemption. It is the view of the Division of Investment
Management that Rule 22c-1 supersedes appraisal provisions in state statutes.
In the interests of ensuring equal valuation of all interests in Worldwide
Growth, the Corporation will determine dissenters' rights in accordance with the
Division's interpretation. Accordingly, in the event that any shareholder elects
to exercise dissenters' rights under Minnesota law, the Corporation intends to
submit this question to a court of competent jurisdiction. In such event, a
dissenting shareholder would not receive any payment until disposition of any
such court proceeding.
Shareholders who elect to exercise dissenters' rights must satisfy each of
the following conditions: Dissenting holders must file with the Corporation
before the vote on the Reorganization is taken, written notice of their
intention to demand payment of the fair value of their shares (this written
notice must be in addition to and separate from any proxy or vote against the
Reorganization -- voting against or failing to vote for the Reorganization will
not constitute such a notice); and dissenting holders must not vote in favor of
the Reorganization (a failure to vote will satisfy this requirement, but a vote
in favor of the Reorganization, by proxy or in person, will constitute a waiver
of dissenters' rights and will nullify any previously filed written notice of
intent to demand payment). Shareholders who fail to comply with either of these
conditions will have no dissenters' rights with respect to their shares.
All written notices should be addressed to: IDS Strategy Fund, Inc. -
Worldwide Growth Fund, IDS Tower 10, Minneapolis, Minnesota 55440-0010,
Attention: Corporate Secretary, and should be executed by, or with the consent
of, the holder of record. The notice must identify the shareholder and indicate
the intention of such shareholder to demand payment of fair value of his or her
shares. In the notice the shareholder's name should be stated as it appears on
his or her stock certificates, if any, or in the
26
<PAGE>
manner in which his or her shares are registered. A beneficial owner of shares
who is not the registered owner may assert dissenters' rights as to shares held
on such person's behalf, provided that such beneficial owner submits a written
consent of the registered owner to the Corporation at or before the time such
rights are asserted.
A Worldwide Growth shareholder may not assert dissenters' rights as to less
than all of the shares registered in such shareholder's name except in the
situation in which certain shares are beneficially owned by another person but
registered in such shareholder's name. If a shareholder wishes to dissent with
respect to shares beneficially owned by another person, such shareholder must
dissent with respect to all of such shares and disclose the name and address of
the beneficial owner on whose behalf the holder is dissenting.
After a vote approving the Reorganization, and assuming the Reorganization
is consummated, the Corporation must give written notice that the Reorganization
has been approved to each shareholder who filed a written notice of intent to
demand payment for such shareholder's shares and who did not vote in favor of
the Reorganization. This notice sent by the Corporation shall specify the
address to which a demand for payment and stock certificates, if any, must be
sent by such shareholder in order to obtain payment and shall include a form for
demanding payment to be completed by the shareholder. In order to receive the
fair value of his or her shares, a dissenting shareholder must, within 30 days
after the date of such notice, send such holder's share certificates, if any,
together with certain information concerning such shareholder's shares, on the
form supplied by the Corporation. After a valid demand for payment and the
related certificates, if any, are received, the Corporation must remit to each
dissenting shareholder who has complied with the above-referenced requirements
the amount it deems to be the fair value of that shareholder's shares, plus
interest from the fifth day after the effective date of the Reorganization to
the date of such payment, together with a brief description of the method used
to reach such estimate and certain updated interim financial data of the
Corporation, if available.
If a dissenting shareholder believes that the amount remitted by the
Corporation is less than the fair value of such shareholder's shares, plus
interest, the shareholder may give written notice to the Corporation of their
own estimate of fair value of their Worldwide Growth shares within 30 days after
the mailing date of the remittance and demand payment of the difference. If the
shareholder fails to give written notice of such estimate and demand for the
difference within the 30-day time period, the shareholder will be entitled only
to the amount remitted.
If the Corporation and the dissenting shareholder are unable to settle the
shareholder's demand within 60 days, the Corporation shall file in court a
petition requesting that the court determine the fair value of the shares, plus
interest. All shareholders whose demands are not settled within the applicable
60-day settlement periods shall be made parties to this proceeding. The
27
<PAGE>
court, after determining that the shareholder has complied with all statutory
requirements, may use any valuation method or combination of methods it deems
appropriate, whether or not used by the Corporation or the dissenting
shareholder, or may appoint appraisers to determine the fair value of the
shares. The court's determination is binding on all shareholders of Worldwide
Growth and the court must enter judgment for any amount by which the court
determines fair value exceeds the amount remitted to the shareholders by the
Corporation.
The costs and expenses of such a proceeding, including the expenses and
compensation of any appraisers, will be assessed against the Corporation, unless
the court, in its discretion, determines that the dissenting shareholder's
action in demanding supplemental payment was arbitrary, vexatious or not in good
faith, in which event the court may assess all or a part of such costs against
the shareholder. Fees and expenses of counsel for the dissenting shareholder may
be awarded by the court out of the amount, if any, awarded to such shareholder.
The Board of the Directors of the Corporation recommends that each Worldwide
Growth shareholder address any questions such shareholder may have with respect
to his or her rights under the MBCA Sections to his or her legal counsel.
INTEREST OF CERTAIN PERSONS. The following receive payments from
International for services rendered pursuant to contractual arrangements with
International and Worldwide Growth: IDS Financial Corporation, as investment
adviser, receives payments for its investment advisory and management services
and, as transfer agent, receives payments for transfer agent and dividend
disbursing services. IDS Financial Services Inc. is compensated for its services
in connection with the distribution of the Funds' shares. IDS Trust Company
receives payments for its services as custodian for the Funds.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of International and Worldwide Growth as of
October 31, 1993 and March 31, 1994, respectively, and the respective statement
of operations for the year then ended and changes in net assets for the two
years then ended and condensed financial information, all as included in the
respective Statements of Additional Information of International, dated December
30, 1993, and of the Corporation, dated May 27, 1994, have been incorporated by
reference into this Prospectus/ Proxy Statement in reliance on the reports of
KPMG Peat Marwick, independent auditors for each of the Funds, given on the
authority of such firms as experts in accounting and auditing.
28
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED SEPTEMBER , 1994
ACQUISITION OF THE ASSETS OF
WORLDWIDE GROWTH FUND OF IDS STRATEGY FUND, INC.
IDS TOWER 10
MINNEAPOLIS, MINNESOTA 55440-0010
BY AND IN EXCHANGE FOR SHARES OF
IDS INTERNATIONAL FUND, INC.
IDS TOWER 10
MINNEAPOLIS, MINNESOTA 55440-0010
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets of the Worldwide Growth Fund ("Worldwide
Growth"), a separate series of IDS Strategy Fund, Inc. (the "Corporation"), to
IDS International Fund ("International"), in exchange for shares of
International and the assumption by International of the liabilities of
Worldwide Growth, consists of this cover page and the following documents, each
of which is incorporated herein by reference.
1. Statement of Additional Information of IDS International Fund, Inc.,
dated December 30, 1993.
2. Annual Report of IDS International Fund, Inc. for the fiscal year ended
October 31, 1993.
3. Semi-Annual Report of IDS International Fund, Inc. for the six months
ended April 30, 1994.
4. Statement of Additional Information of IDS Strategy Fund, Inc. -
Worldwide Growth Fund, dated May 27, 1994.
5. Annual Report of IDS Strategy Fund, Inc. - Worldwide Growth Fund for the
fiscal year ended March 31, 1994.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus/Proxy Statement, dated September ,
1994, relating to the above-referenced matter, which may be obtained without
charge by calling or writing either International or the Corporation at the
addresses set forth above, or by contacting any IDS personal financial planner,
or by calling IDS Shareholder Service at (612) 671-3733.
The date of this Statement of Additional Information is September , 1994.
29
<PAGE>
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Strategy-
Worldwide International
Growth Fund Combined
-------------- -------------- --------------
<S> <C> <C> <C>
Investments in securities, at value (Note 1)
(Identified cost, $221,738,906; $582,319,802 and $804,058,708
respectively)................................................... $ 239,886,522 $ 650,223,446 $ 890,109,968
Cash in bank on demand deposit................................... 1,592,572 2,394,045 3,986,617
Dividends receivable............................................. 1,006,846 3,254,694 4,261,540
Receivable for investment securities sold........................ 2,850,323 17,500,120 20,350,443
Receivable for foreign currency contracts held, at value (Notes 1
and 5).......................................................... 1,912,526 9,392,887 11,305,413
U.S. government securities held as collateral (Note 4)........... 1,992,443 10,991,869 12,984,342
-------------- -------------- --------------
Total assets................................................. $ 249,241,262 $ 693,757,061 $ 942,998,323
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES
Payable for investment securities purchased...................... $ 4,787,774 $ 17,130,150 $ 21,917,924
Payable for foreign currency contracts held, at value (Notes 1
and 5).......................................................... 1,895,750 9,260,949 11,156,699
Payable upon return of securities loaned (Note 4)................ 4,202,973 30,793,199 34,996,172
Accrued investment management and services fee................... 152,311 413,892 566,203
Accrued 12b-1 and distribution fee............................... 150,666 45,299 195,965
Accrued transfer agency fee...................................... 63,833 113,119 176,952
Other accrued expenses........................................... 164,281 162,312 326,593
-------------- -------------- --------------
Total liabilities............................................ 11,417,588 57,918,920 69,336,508
-------------- -------------- --------------
Net assets applicable to outstanding capital stock........... $ 237,823,674 $ 635,838,141 $ 873,661,815
-------------- -------------- --------------
-------------- -------------- --------------
REPRESENTED BY
Capital stock -- authorized 10,000,000,000 shares of $.01 par
value; outstanding, 43,009,377; 61,609,521 and 84,654,451
shares, respectively............................................ $ 430,094 $ 616,095 $ 1,046,189
Additional paid-in capital....................................... 223,417,792 541,257,921 764,675,713
Undistributed net investment income.............................. (836,103) 933,998 97,895
Accumulated net realized gain (Note 1)........................... (3,352,501) 24,994,545 21,642,044
Unrealized appreciation (Note 5)................................. 18,164,392 68,035,582 86,199,974
-------------- -------------- --------------
Total -- representing net assets applicable to outstanding
capital stock.............................................. 237,823,674 635,838,141 873,661,815
-------------- -------------- --------------
Net asset value per share of outstanding capital stock........... $ 5.53 $ 10.32 $ 10.32
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to pro forma
combining financial statements.
30
<PAGE>
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
APRIL 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Strategy-
Worldwide International
Growth Fund Combined
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld)........................ $ 2,296,869 $ 7,877,843 $10,174,712
Interest......................................................... 409,978 984,267 1,394,245
------------ ------------ ------------
Total income................................................. $ 2,706,847 $ 8,862,110 $11,568,957
------------ ------------ ------------
Expenses (Note 2):
Investment management and service fee.......................... 1,152,815 3,633,609 4,786,424
12b-1 and distribution fee..................................... 1,108,935 421,528 1,530,463
Transfer agency fee............................................ 521,462 1,050,756 1,572,218
Compensation of directors...................................... 9,722 5,860 15,582
Compensation of officers....................................... 1,001 2,902 3,903
Custodian fees................................................. 207,672 427,061 634,733
Postage........................................................ 90,767 127,533 218,300
Registration fees.............................................. 86,694 156,471 243,165
Reports to shareholders........................................ 17,711 31,726 49,437
Audit fees..................................................... 24,065 30,000 54,065
Administrative................................................. 1,984 7,832 9,816
Other.......................................................... 4,369 14,272 18,641
------------ ------------ ------------
Total net expenses........................................... 3,227,197 5,909,550 9,136,747
------------ ------------ ------------
Investment income -- net................................... (520,350) 2,952,560 2,432,210
------------ ------------ ------------
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN -- NET
Net realized gain (loss) on security and foreign currency
transactions (Note 3)........................................... 6,074,331 33,116,728 39,191,059
Net change in unrealized appreciation or depreciation............ 11,408,976 31,722,762 43,131,738
------------ ------------ ------------
Net gain on investments and foreign currency..................... 17,483,307 64,839,490 82,322,797
------------ ------------ ------------
Net increase in assets resulting from operations................. $ 16,962,957 $67,792,050 $84,755,007
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See accompanying notes to pro forma
combining financial statements.
31
<PAGE>
IDS INTERNATIONAL FUND, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED AS TO APRIL 30, 1994)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Pro Forma Financial Statements give effect to the proposed merger of IDS
Strategy -- Worldwide Growth with IDS International Fund. The merger would be
accomplished by an acquisition of the net assets of the Strategy Fund in
exchange for shares of the International Fund at net asset value. Significant
accounting policies followed by the merged funds are summarized below:
VALUATION OF SECURITIES. All securities are valued at the close of each
business day. Securities traded on national securities exchanges or included in
national market systems are valued at the last quoted sales price; securities
for which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board of directors.
Determination of fair value involves, among other things, reference to market
indexes, matrixes and data from independent brokers. Short-term securities
maturing in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY
CONTRACTS. Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of securities
and income and expenses are translated at the exchange rate on the transaction
date. It is not practicable to identify that portion of realized and unrealized
gain (loss) arising from changes in the exchange rates from the portion arising
from changes in the market value of investments.
The fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
FEDERAL TAXES. Since the fund's policy is to comply with all sections of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders, no provision for income or
excise taxes is required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
32
<PAGE>
IDS INTERNATIONAL FUND, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS -- CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
losses on certain futures contracts, the recognition of certain foreign currency
gains (losses) as ordinary income (loss) for tax purposes, and losses deferred
due to "wash sale" transactions. The character of distributions made during the
year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. The effect on
dividend distributions of certain book-to-tax differences is presented as
"excess distributions" in the statement of changes in net assets. Also, due to
the timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the fund.
DIVIDENDS TO SHAREHOLDERS. An annual dividend declared and paid at the end
of the calendar year from net investment income is reinvested in additional
shares of the fund at net asset value or payable in cash. Capital gains, when
available, are distributed along with the income dividend.
OTHER. Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date or upon
receipt of ex-dividend notification in the case of certain foreign securities.
Interest income including level-yield amortization of premium and discount, is
accrued daily.
2. EXPENSES AND SALES CHARGES
Under terms of an agreement dated Nov. 14, 1991, the fund pays IDS Financial
Corporation (IDS) a fee for managing its investments, recordkeeping and other
specified services. The fee is a percentage of the fund's average daily net
assets consisting of a group asset charge in reducing percentages from 0.46% to
0.32% annually on the combined net assets of all non-money market funds in the
IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.46% of average
daily net assets. The fee is adjusted upward or downward by a performance
incentive adjustment based on the fund's average daily net assets over a rolling
12-month period as measured against the change in the Lipper International Fund
Index. The maximum adjustment is 0.12% of the fund's average daily net assets
after deducting 1% from the performance difference. If the performance
difference is less than 1%, the adjustment will be zero. The adjustment
decreased the fee by $123,376 for the year ended April 10, 1994. From its fees
IDS pays IDS International, Inc. a subadvisory fee equal to 0.35% of the fund's
average daily net assets.
33
<PAGE>
IDS INTERNATIONAL FUND, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS -- CONTINUED
2. EXPENSES AND SALES CHARGES -- CONTINUED
The fund also pays IDS a distribution fee at an annual rate of $6 per
shareholder account and a transfer agency fee at an annual rate of $15 per
shareholder account. The transfer agency fee is reduced by earnings on monies
pending shareholder redemptions.
IDS will assume and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive applicable state expense
limitation.
Sales charges by IDS Financial Services Inc. for distributing fund shares
were $6,435,953 for the year ended April 30, 1994. The fund also pays custodian
fees to IDS Trust Company, an affiliate of IDS.
The fund has a retirement plan for its independent directors. Upon
retirement, directors receive monthly payments equal to one-half of the retainer
fee for as many months as they served as directors up to 120 months. There are
no death benefits. The plan is not funded but the fund recognizes the cost of
payments during the time the directors serve on the board. The retirement plan
expense amounted to $9,510 for the year ended April 30, 1994.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securites (other than
short-term obligations) aggregated $747,097,459 and $316,608,757, respectively,
for the year ended April 30, 1994. Realized gains and losses are determined on
an identified cost basis.
4. LENDING OF PORTFOLIO SECURITIES
At April 30, 1994, securities valued at $33,529,340 were on loan to brokers.
For collateral, the fund received $22,011,830 in cash and U.S. government
securities valued at $12,984,342. Income from securities lending amounted to
$166,225 for the year ended April 30, 1994. The risks to the fund of securities
lending are that the borrower may not provide additional collateral when
required or return the securities when due.
5. FOREIGN CURRENCY CONTRACTS
At April 30, 1994, the fund had entered into ten foreign currency exchange
contracts that obligate the fund to deliver currencies at specified
34
<PAGE>
IDS INTERNATIONAL FUND, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS -- CONTINUED
5. FOREIGN CURRENCY CONTRACTS -- CONTINUED
future dates. The unrealized appreciation of $148,714 on these contracts is
included in the accompanying financial statements. The terms of the open
contracts are as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
value value
Currency to be as of Currency to be as of
Exchange date delivered April 30, 1994 received April 30, 1994
- - - ------------- -------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
May 2, 1994 267,311 $ 267,311 372,533 $ 266,640
U.S. Dollar Australian
Dollar
May 3, 1994 1,638,930 1,638,930 1,111,742 1,680,731
U.S. Dollar British Pound
May 3, 1994 221,241 221,241 1,607,206 222,864
U.S. Dollar Norway Krona
May 6, 1994 127,607 127,607 13,015,933 127,295
U.S. Dollar Japanese Yen
May 9, 1994 493,604,803 4,827,431 4,875,591 4,875,591
Japanese Yen U.S. Dollar
May 31, 1994 2,178,429 2,178,429 12,610,490 2,219,766
U.S. Dollar French Franc
May 2, 1994 105,078 105,078 146,439 104,814
U.S. Dollar Australian
Dollar
May 3, 1994 79,133 79,133 574,863 79,714
U.S. Dollar Norway Krona
May 6, 1994 49,589 49,589 5,058,121 49,468
U.S. Dollar Japanese Yen
May 9, 1994 169,934,379 1,661,950 1,678,530 1,678,530
Japanese Yen U.S. Dollar
---------------- ----------------
11,156,699 11,305,413
</TABLE>
35
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of [ ], 1994,
between IDS Strategy Fund, Inc., a Minnesota corporation ("the Corporation"), on
behalf of its Worldwide Growth Fund ("Worldwide Growth") and IDS International
Fund, Inc., a Minnesota corporation ("International").
In consideration of the mutual promises herein contained, the Parties hereto
agree as follows:
1. SHAREHOLDER APPROVAL
APPROVAL BY THE SHAREHOLDERS. A meeting of the shareholders of Worldwide
Growth shall be called and held for the purpose of acting upon this Agreement
and the transactions contemplated herein. International shall furnish to the
Corporation such data and information as shall be reasonably requested by the
Corporation for inclusion in the information to be furnished to its Worldwide
Growth shareholders in connection with the meeting for the purpose of acting
upon this Agreement and the transactions contemplated herein.
2. REORGANIZATION
(a) PLAN OF REORGANIZATION. The Corporation will convey, transfer and
deliver to International all of the then existing assets of Worldwide Growth at
the closing provided for in Section 2(b) (hereinafter called the "Closing").
International shall assume all liabilities, expenses, costs, charges and
reserves reflected on an unaudited statement of assets and liabilities of
Worldwide Growth as of the Valuation Date (as defined in paragraph 3(a)), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. International shall assume only those liabilities
of Worldwide Growth reflected in such unaudited statement of assets and
liabilities and shall not assume any other liabilities, whether absolute or
contingent, known or unknown, accrued or unaccrued. International agrees to
deliver at the Closing to the Corporation the number of shares of common stock
of International (the "Shares") including fractional Shares, determined by
dividing the value of the net assets of Worldwide Growth, computed in the manner
and as of the time and date set forth in paragraph 3(a), by the net asset value
of one Share computed in the manner and as of the time and date set forth in
paragraph 3(b). It is expressly agreed that there will be no sales charge on the
sale of International's Shares to Worldwide Growth in exchange for the assets of
Worldwide Growth, or to any of the shareholders of Worldwide Growth upon
distribution of the Shares to
A-1
<PAGE>
them. Shareholders of Worldwide Growth subject to a CDSC will receive Class B
Shares of International in exchange for their Shares of Worldwide Growth.
Shareholders of Worldwide Growth not subject
(b) CLOSING AND EFFECTIVE TIME OF THE REORGANIZATION. The Closing shall
occur on (a) the later of (i) receipt of all necessary regulatory approvals,
(ii) the final adjournment of the meeting of shareholders of Worldwide Growth at
which this Agreement will be considered and (iii) implementation of a multiple
class share structure by International pursuant to an Exemptive Order (the
"Exemptive Order") obtained on behalf of International and other funds managed
by IDS Financial Corporation and, in connection therewith, creation of the Class
B Shares to be delivered to Worldwide Growth shareholders in accordance with the
terms thereof, or (b) such later date as the Parties may mutually agree (the
"Effective Time of the Reorganization").
3. VALUATION OF NET ASSETS
(a) The value of the net assets of Worldwide Growth to be transferred to
International hereunder shall be computed as of the close of regular trading on
the New York Stock Exchange, Inc. (the "NYSE"), currently 4:00 p.m. New York
time, on the day of the Closing (hereinafter the "Valuation Date") using the
valuation procedures as set forth in the International Prospectus.
(b) The net asset value per share of International's Shares for purposes of
Section 2(a) hereof shall be determined as of the close of regular trading on
the NYSE, currently 4:00 p.m. New York time, on the Valuation Date by
International using the same valuation procedures as set forth in the
International Prospectus.
(c) A copy of the computations showing in reasonable detail the valuation of
Worldwide Growth's net assets on the Valuation Date pursuant to Section 3(a)
above, certified by an officer of the Corporation, shall be furnished by the
Corporation to International at the Closing. A copy of the computations showing
in reasonable detail the determination of the net asset value per share of
International's Shares on the Valuation Date pursuant to Section 3(b) above,
certified by an officer of International, shall be furnished by International to
the Corporation at the Closing.
4. LIQUIDATION AND DISSOLUTION OF WORLDWIDE GROWTH
(a) As soon as practicable after the Valuation Date, the Corporation will
liquidate and distribute pro rata to its Worldwide Growth shareholders of record
as of the close of regular trading on the NYSE, currently 4:00 p.m. New York
time, the International Shares received by the Corporation pursuant to this
Section. Such liquidation and distribution will be accomplished by the
establishment of shareholder accounts on the share records of International in
the names of each such shareholder of Worldwide Growth, representing the
respective pro rata number of full and fractional Shares of
A-2
<PAGE>
International due to each. All issued and outstanding shares of Worldwide Growth
will simultaneously be cancelled on the books of the Corporation, although stock
certificates representing interests in Worldwide Growth will represent a number
of Shares of International after the Valuation Date determined in accordance
with Section 2(a). No such shareholder accounts shall be established by
International or its transfer agent except pursuant to written instructions from
the Corporation, and the Corporation agrees to provide on the Valuation Date
instructions to transfer to a shareholder account for each such former
shareholder of Worldwide Growth a pro rata share of the number of Shares of
International received pursuant to Section 2(a) hereof.
(b) Promptly after the distribution described in Section 4(a) above,
appropriate notification will be mailed by International or its transfer agent
to each shareholder of Worldwide Growth receiving such distribution of the
Shares informing such shareholder of the number of such shares distributed to
such shareholder and confirming the registration thereof in such shareholder's
name.
(c) As promptly as practicable after the liquidation of Worldwide Growth,
and in no event later than twelve months from the date hereof, Worldwide Growth
shall be dissolved.
(d) Immediately after the Valuation Date, the share transfer books of the
Corporation relating to Worldwide Growth shall be closed and no transfer of
shares shall thereafter be made on such books.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INTERNATIONAL
International represents and warrants to the Corporation as follows:
(a) ORGANIZATION, EXISTENCE, ETC. International is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the power to carry on its business as it is now being
conducted. International has all necessary federal, state and local
authorization to own all of its properties and assets and to carry on its
business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. International is a corporation
registered under the Investment Company Act of 1940 (the "1940 Act") as an
open-end, management investment company; such registration has not been revoked
or rescinded and is in full force and effect.
(c) CAPITALIZATION. International has an authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share, of which as of
, 1994, shares of common stock of International were outstanding
and no shares were held in the treasury of International. All of the outstanding
shares have been duly authorized and are validly issued, fully paid and
non-assessable. Since International is engaged in the continuous offering and
redemption of its shares, the number of outstanding
A-3
<PAGE>
shares may change prior to the Effective Time of the Reorganization.
International has the authority, pursuant to the Exemptive Order, to implement a
multiple class share structure and to create multiple classes of Common Stock,
including the Class B Shares. International hereby agrees that, prior to the
Closing, it shall implement a multiple class structure in accordance with the
Exemptive Order and create the Class B Shares to be issued to Worldwide Growth
shareholders in accordance with the terms hereof.
(d) FINANCIAL STATEMENTS. The audited financial statements as of October
30, 1993 and the unaudited semi-annual financial statements as of April 30, 1994
of International (the "International Financial Statements"), previously
delivered to the Corporation, fairly present the financial position of
International as of such respective dates, and the results of its operations and
changes in its net assets for the periods then ended.
(e) SHARES TO BE ISSUED UPON REORGANIZATION. The Shares to be issued in
connection with the Reorganization will have been duly authorized and upon
consummation of the Reorganization will be validly issued, fully paid and
non-assessable.
(f) AUTHORITY RELATIVE TO THIS AGREEMENT. International has the power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and no other proceedings by International are necessary to authorize
its officers to effectuate this Agreement and the transactions contemplated
hereby.
(g) NO VIOLATION. International is not in violation of its Articles of
Incorporation or By-Laws (the "Charter") or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it or its
properties may be bound; and the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein will not conflict with
or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
International pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which International is subject,
nor will such action result in any violation of the provisions of the Charter or
any law, administrative regulation or administrative or court decree applicable
to International; and no consent, approval, authorization or order of any court
or governmental authority or agency is required for the consummation by
International of the transactions contemplated by this Agreement other than the
effectiveness of the Registration Statement described below in Section 5(1).
(h) LIABILITIES. There are no liabilities of International, whether or not
determined or determinable, other than liabilities disclosed or provided
A-4
<PAGE>
for in International's Financial Statements and liabilities incurred in the
ordinary course of business subsequent to October 31, 1993, or otherwise
previously disclosed to the Corporation, none of which has been materially
adverse to the business, assets or results of operations of International.
(i) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of International, threatened which would adversely affect
International or its assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby.
(j) CONTRACTS. Except for contracts and agreements previously disclosed to
the Corporation under which no default exists, International is not a party to
or subject to any material contract, debt instrument, plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(k) TAXES. The federal income tax returns of International have been filed
for all taxable years to and including the taxable year ended December 31, 1993.
International has qualified and will qualify as a regulated investment company
under the Internal Revenue Code with respect to each taxable year of
International since commencement of its operations.
(l) REGISTRATION STATEMENT. International shall cause to be filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form N-14 (the "Registration Statement") under the Securities Act of 1933
("Securities Act") relating to the Shares issuable hereunder. At the time the
Registration Statement becomes effective, the Registration Statement (i) will
comply in all material respects with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder (the "Regulations") and
(ii) will not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to in Section 1,
and at the Effective Time of the Reorganization, the prospectus and statement of
additional information included therein, as amended or supplemented by any
amendments or supplements filed by International, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties in this subsection shall apply to statements in or omissions from the
Registration Statement or Prospectus and Statement of Additional Information
made in reliance upon and in conformity with information furnished by the
Corporation for use in the Registration Statement or Prospectus and Statement of
Additional Information as provided in Section 6(1).
A-5
<PAGE>
6. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE CORPORATION
The Corporation represents and warrants to International as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has power to carry on its business as it is now being conducted.
The Corporation has all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Corporation is a corporation
registered under the 1940 Act as a open-end diversified management investment
company; such registration has not been revoked or rescinded and is in full
force and effect.
(c) CAPITALIZATION. The Corporation has an authorized capital of [ ]
shares of common stock, par value $0.01 per share, of which as of [ ],
1994, shares of Worldwide Growth were outstanding and no shares were held in
the treasury of the Corporation. All of the outstanding shares of Worldwide
Growth have been duly authorized and are validly issued, fully paid and
non-assessable. Since the Corporation is engaged in the continuous offering and
redemption if its shares, the number of outstanding shares of Worldwide Growth
may change prior to the Effective Time of the Reorganization.
(d) FINANCIAL STATEMENTS. The audited financial statements as of March 31,
1994 of Worldwide Growth (the "Worldwide Growth Financial Statements"),
previously delivered to International, fairly present the financial position of
Worldwide Growth as of such date, and the results of its operations and changes
in its net assets for the period then ended.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Corporation has the power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated have been duly authorized by its Board of Directors,
and except for obtaining approval by the holders of shares of Worldwide Growth
common stock, no other proceedings by the Corporation are necessary to authorize
its officers to effectuate this Agreement and the transactions contemplated
hereby.
(f) NO VIOLATION. The Corporation is not in violation of its Articles of
Incorporation or By-Laws (the "Charter") or in default in the performance or
observance of any material obligation, agreement, lease or other instrument to
which it is a party or by which it or its properties may be bound; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of Worldwide Growth pursuant
to any material contract, indenture, mortgage, loan agreement, note, lease or
A-6
<PAGE>
other instrument to which the law, administrative regulation or administrative
or court decree applicable to the Corporation; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Corporation of the transactions
contemplated by this Agreement.
(g) LIABILITIES. There are no liabilities of Worldwide Growth, whether or
not determined or determinable, other than liabilities disclosed or provided for
in the Worldwide Growth Financial Statements and liabilities incurred in the
ordinary course of business subsequent to March 31, 1994, or otherwise
previously disclosed to International, none of which has been materially adverse
to the business, assets or results of operations of Worldwide Growth.
(h) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Corporation, threatened which would adversely affect
Worldwide Growth or its assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby.
(i) CONTRACTS. Except for contracts and agreements previously disclosed to
International under which no default exists, the Corporation is not a party to
or subject to any material contract, debt instrument, plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(j) TAXES. The federal income tax returns of the Corporation have been
filed for all taxable years to and including the taxable year ended December 31,
1993, and all taxes payable pursuant to such returns have been paid. Worldwide
Growth has qualified, and will qualify, as a regulated investment company under
the Internal Revenue Code with respect to each taxable year of the Corporation
since commencement of its operations.
(k) FUND SECURITIES. All securities to be listed in the schedule of
investments of Worldwide Growth as of the Effective Time of the Reorganization
will be owned by the Corporation on behalf of Worldwide Growth free and clear of
any liens, claims, charges, options and encumbrances, except as indicated in
said schedule, and, except as so indicated, none of such securities is or, after
the Reorganization as contemplated hereby, will be subject to any restrictions,
legal or contractual, on the disposition thereof (including restrictions as to
the public offering or sale thereof under the Securities Act), and all such
securities are or will be readily marketable.
(l) REGISTRATION STATEMENT. In connection with the Registration Statement,
the Corporation will cooperate with International and will furnish to
International the information relating to the Corporation or Worldwide Growth
required by the Securities Act and the Regulations to be set forth in the
Registration Statement (including the Prospectus and Statement of Additional
Information). At the time the Registration Statement becomes effective, the
Registration Statement, insofar as it related to the Corporation and Worldwide
Growth, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue
A-7
<PAGE>
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at the time the Registration Statement becomes effective, at the time of the
shareholders' meeting referred to in Section 1 and at the Effective Time of the
Reorganization, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed by International,
insofar as it related to the Corporation or Worldwide Growth, will not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to statements
in or omissions from the Registration Statement or Prospectus and Statement of
Additional Information made in reliance upon and in conformity with information
furnished by the Corporation for use in the Registration Statement or Prospectus
and Statement of Additional Information as provided in this Section 6(1).
7. CONDITIONS TO OBLIGATIONS OF THE CORPORATION.
The obligations of the Corporation hereunder with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
affirmative vote of the holders of the majority, as such term is defined in the
1940 Act, of the outstanding shares of common stock of Worldwide Growth.
(b) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. International shall have
complied with each of its agreements contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization, and except as otherwise
indicated in any financial statements of International audited or certified by
an officer of International, which may be delivered to the Corporation on or
prior to the last business day preceding the Effective Time of the
Reorganization, as of the Effective Time of the Reorganization there shall have
been no material adverse change in the financial condition, results of
operations, business, properties or assets of International since October 31,
1993, and the Corporation shall have received a certificate of the Chairman or
President of International satisfactory in form and substance to the Corporation
so stating.
(c) CREATION OF CLASS B SHARES. International shall have implemented the
multiple class share structure contemplated by the Exemptive Order and shall
have created and authorized the issuance of the Class B Shares to be issued to
Worldwide Growth shareholders in accordance with the terms hereof.
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<PAGE>
(d) REGULATORY APPROVAL. The Registration Statement referred to in Section
5(1) shall have become effective and no stop orders under the Securities Act
pertaining thereto shall have been issued; and all approvals, registrations, and
exemptions under federal and state securities laws considered to be necessary
shall have been obtained.
(e) TAX OPINION. The Corporation shall have received the opinion of Ropes
& Gray, dated the Effective Time of the Reorganization, addressed to and in form
and substance satisfactory to the Corporation, as to certain of the Federal
income tax consequences of the Reorganization under the Internal Revenue Code of
1986 to Worldwide Growth and International and the shareholders of Worldwide
Growth and International. For purposes of rendering their opinion Ropes & Gray
may rely exclusively and without independent verification, as to factual
matters, upon the statements made in this Agreement, the proxy statement which
will be distributed to the shareholders of Worldwide Growth in connection with
the Reorganization, and upon such other written representations as the President
or Vice President of the Corporation and International, respectively, will have
verified as of the Effective Time of the Reorganization. The opinion of Ropes &
Gray will be to the effect that, based on the facts and assumptions stated
therein, for federal income tax purposes: (i) neither Worldwide Growth nor
International will recognize any gain or loss upon the transfer of the assets of
Worldwide Growth to, and the assumption of its liabilities by, International in
exchange for the Shares and upon the distribution (whether actual or
constructive) of the Shares to its shareholders in exchange for their shares of
common stock of Worldwide Growth; (ii) the shareholders of Worldwide Growth who
receive the Shares pursuant to the Reorganization will not recognize any gain or
loss upon the exchange (whether actual or constructive) of their shares of
common stock of Worldwide Growth for the Shares (including any fractional share
interests they are deemed to have received) pursuant to the Reorganization;
(iii) the holding period and the basis of the Shares received by the Worldwide
Growth shareholders will be the same as the holding period and the basis of the
shares of common stock of Worldwide Growth surrendered in the exchange; and (iv)
the holding period and the basis of the assets acquired by International will be
the same as the holding period and the basis of such assets to Worldwide Growth
immediately prior to the Reorganization.
(f) OPINION OF COUNSEL. The Corporation shall have received the opinion of
[ ], counsel for International, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to the
Corporation, to the effect that: (i) International is a corporation duly
organized and validly existing under the laws of the State of Minnesota; (ii)
International is an open-end investment company of the management type
registered under the 1940 Act; (iii) this Agreement and the Reorganization
provided for herein and the execution of this Agreement have been duly
authorized and approved by all requisite action of International and this
A-9
<PAGE>
Agreement has been duly executed and delivered by International and is a valid
and binding obligation of International; and (iv) the Shares to be issued in the
Reorganization are, to the extent of the number of shares of common stock
authorized to be issued by International in its Charter less the number of the
then outstanding shares of common stock, duly authorized and upon issuance
thereof in accordance with this Agreement will be validly issued, fully paid and
non-assessable shares of common stock of International.
8. CONDITIONS TO OBLIGATIONS OF INTERNATIONAL
The obligations of International hereunder with respect to the consummation
of the Reorganization are subject to the satisfaction of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
affirmative vote of the holders of a majority of the outstanding shares of
common stock of Worldwide Growth.
(b) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Corporation shall have
complied with each of its agreements contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization, and except as otherwise
indicated in any financial statements of the Corporation or Worldwide Growth,
audited or certified by an officer of the Corporation, which may be delivered to
International on or prior to the last business day preceding the Effective Time
of the Reorganization, as of the Effective Time of the Reorganization there
shall have been no material adverse change in the financial condition, results
of operations, business, properties or assets of Worldwide Growth since May 31,
1994 and International shall have received a certificate of the President of the
Corporation satisfactory in form and substance to International so stating.
(c) REGULATORY APPROVAL. All approvals, registrations, and exemptions
under federal and state securities laws considered to be necessary shall have
been obtained.
(d) OPINION OF COUNSEL. International shall have received the opinion of
[ ], counsel for the Corporation, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to
International, to the effect that (a) the Corporation is a corporation duly
organized and validly existing under the laws of the State of Minnesota; (b) the
Corporation is an open-end investment company of the management type registered
under the 1940 Act; (c) this Agreement and the Reorganization provided for
herein and the execution and filing of this Agreement have been duly authorized
and approved by all requisite action of the Corporation and this Agreement has
been duly executed and delivered by the Corporation and is a valid and binding
obligation of the Corporation with respect to Worldwide Growth.
A-10
<PAGE>
(e) DECLARATION OF DIVIDEND. The Corporation shall have declared a
dividend with respect to Worldwide Growth which, together with all previous such
dividends, shall have the effect of distributing to Worldwide Growth's
shareholders all of Worldwide Growth's investment company taxable income for all
taxable years ending on or prior to the Closing (computed without regard to
deduction for dividends paid) and all of its net capital gain realized in
taxable years ending on or prior to the Closing (after reduction for capital
loss carryforward).
9. AMENDMENT; TERMINATIONS; NON-SURVIVAL OF
COVENANTS, WARRANTIES AND REPRESENTATIONS.
(a) The Parties hereto may, by agreement in writing authorized by their
respective Boards of Directors, amend this agreement at any time before or after
approval by the shareholders of Worldwide Growth but after such approval, no
amendment shall be made which substantially changes the terms of Paragraphs 2
and 3.
(b) At any time prior to the Effective Time of the Reorganization, any of
the Parties may by written instrument signed by it (i) waive any inaccuracies in
the representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
(c) The Corporation may terminate this Agreement at any time prior to the
Effective Time of the Reorganization by notice to International if (i) a
material condition to its performance or a material covenant of International
shall not be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this Agreement shall be
made by International that is not cured.
(d) International may terminate this Agreement at any time prior to the
Effective Time of the Reorganization by notice to the Corporation if (i) a
material condition to its performance or a material covenant of the Corporation
shall not be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this Agreement shall be
made by the Corporation that is not cured.
(e) This Agreement may be terminated at any time prior to the Effective Time
of the Reorganization, whether before or after approval by the shareholders of
Worldwide Growth, without any liability on the part of either Party hereto or
its respective directors, officers or shareholders, by any Party on written
notice to the other Party, and shall be terminated without liability as of the
close of business on [ , 1995], or such later date as agreed upon by the
Parties, if the Effective Time of the Reorganization is not on or prior to such
date.
(f) No representation, warranty or covenant in or pursuant to this Agreement
(including certificates of officers) shall survive the Reorganization.
A-11
<PAGE>
10. EXPENSES
Each Party shall bear its respective expenses of entering into and carrying
out the provisions of this Agreement as has been separately incurred by each
whether or not the Reorganization is consummated although such expenses may be
subject to expense limitation undertakings by the respective investment advisers
to the Parties hereto.
11. GENERAL
This Agreement supersedes all prior agreements between the Parties (written
or oral), is intended as a complete and exclusive statement of the terms of the
Agreement between the Parties and may not be changed or terminated orally. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts have been executed by the Corporation and International and
delivered to each of the Parties hereto. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies under or by reason of this Agreement.
12. INDEMNIFICATION
Each Party shall indemnify and hold the other and their officers, directors,
agents and persons controlled or controlling any of them (each an "indemnitee")
harmless from and against any liability, damage, deficiency, tax, assessment,
charge or other cost and expense, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable corporate law) reasonably incurred by
such indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which he may be or may have been
involved as a party or otherwise or with which he may be or may have been
threatened, with respect to actions taken hereunder or thereafter by reason of
his having so acted in any such capacity, provided, however, that no indemnitee
shall be indemnified hereunder against any liability or any expense of such
indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii)
gross negligence or (iv) reckless disregard of the duties involved in the
conduct of his position.
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<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement and Plan
of Reorganization to be executed on its behalf by its President or a Vice
President and its seal to be affixed hereto and attested by its Secretary or
Assistant Secretary, all of the day and year first above written.
(SEAL)
Attest: IDS International Fund, Inc.
By -------------------------- By --------------------------
Secretary Name:
Title:
(SEAL)
IDS Strategy Fund, Inc.
on behalf of the
Worldwide Growth Fund
By -------------------------- By --------------------------
Secretary Name:
Title:
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<PAGE>
EXHIBIT B
MATTERS TO BE VOTED ON BY
INTERNATIONAL SHAREHOLDERS
In addition to voting on directors and auditors, International Shareholders
will consider the following issues:
(3) APPROVE OR REJECT A
NEW INVESTMENT MANAGEMENT AGREEMENT
IDS has provided the Fund investment advice, administrative services,
transfer agent services and distribution since the Fund began operation. These
services are now provided under four separate contracts.
The Fund is considering two changes in its current structure. First, it is
considering issuing multiple classes of shares. This would permit investors to
choose when and how to pay a sales charge. Second, at some future time, the Fund
may separate the asset management function from the investor services function,
creating what are known as master/feeder funds. The master fund will offer its
shares only to other investment companies and investment groups including
pension plans and trust accounts. The master/feeder structure facilitates the
use of a number of different distribution channels. The master/feeder structure
will not be used by all funds in the GROUP and will be implemented for this Fund
only if the Board determines that it is in the best interests of the Fund and
its shareholders.
In order to proceed with the changes, new contracts with IDS are necessary.
Under the proposed contracts, based on the net asset values and the number of
shareholder accounts in the Fund in 1993, shareholders would have paid an
additional $ for each $1,000 invested. In return for that increase, IDS
believes it can provide more and better services to shareholders.
The proposed contracts will become effective only if and when the Fund
issues multiple classes of shares. If the proposed contracts are approved, the
Fund plans to offer multiple classes of shares before the end of March, 1995.
BOARD DELIBERATIONS. In considering the desirability of issuing multiple
classes of shares, the members of the Board took several steps. First, they
asked the Board's Contracts Committee, composed of members who are not
affiliated with IDS ("independent members"), to test and evaluate a plan to
offer multiple classes of shares. The Committee determined that many investment
companies are now offering multiple classes of shares because they give
investors the choice among several sales load options. Also, they determined
that issuing multiple classes of shares enables an investment company to offer
shares more effectively to institutional and retirement accounts.
B-1
<PAGE>
Second, the Board asked the Committee to consider terms of the new contracts. By
the end of 1993, proposed contract terms were deemed sufficiently complete to be
considered and evaluated by all independent members of the Board. Third, the
members of the Board approved the filing of an application with the SEC for the
necessary authority to offer multiple classes of shares. An order approving the
application was granted on March 16, 1994. Fourth, the Board authorized the Fund
to seek a private letter ruling from the Internal Revenue Service to assure the
plan to offer multiple classes of shares would not create any tax problems for
the Fund or its shareholders. Multiple classes of shares will be issued only if
that assurance is provided.
In February, the independent members of the Board began an evaluation of the
plan and the proposed contracts against two standards: first, they had to offer
important benefits both to the Fund and its shareholders and, second, they had
to be fair to the Fund and its shareholders. In the course of this evaluation,
independent members met with representatives of American Express, the parent
company of IDS, and IDS to discuss the business plans of both companies. Also,
they reviewed the changes taking place in the money management industry with
noted research analysts and industry executives. And, they considered the
benefits existing shareholders derive from continued growth of the Fund and
tested the fairness of contract terms by employing the services of consultants
considered experts in their fields.
Independent members of the Board also reviewed five performance reports
prepared by IDS and an extensive review of those reports by Price Waterhouse, a
service it has provided the Fund in each of the past 13 years. The five reports,
prepared for the Fund each year by IDS, cover investment performance,
shareholder services, compliance, sales and marketing, and IDS' profitability
from its relationships with all funds in the GROUP. In addition, they considered
information provided by IDS in response to questions asked by the independent
members and the Fund's staff and from various periodic reports given to the
Board or to Committees of the Board.
CURRENT INVESTMENT MANAGEMENT AND SERVICES AGREEMENT. Currently IDS
provides investment advice and administrative services to the Fund under an
Investment Management and Services Agreement (the "IMS Agreement") which was
last approved by shareholders on November 13, 1991. At that time, shareholders
approved a change in the rate of the fee payable to IDS, [a new performance
incentive adjustment,] a change in the language pertaining to payment of
expenses, and the elimination of the contractual provisions applicable to
services provided as transfer agent and dividend-disbursing agent. The Fund and
IDS then entered into a separate Transfer Agent Agreement (the "TA Agreement").
The fee paid IDS for its services under the IMS Agreement is based on three
components. The first component of the fee, a group asset charge, is based on a
graduated scale applied to the net assets of all the funds, except the
money-market funds, in the GROUP. The scale begins at 0.46% of net
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<PAGE>
assets for the first $5 billion and declines for each additional $5 billion
until a fee of 0.32% is paid for net assets exceeding $50 billion. The second
component, an individual asset charge, is a fixed fee of .46% of the net assets
of the Fund itself.
The third component of the fee is the performance incentive adjustment. It
is computed by measuring the percentage difference over a rolling 12-month
period between the performance of one capital share of the Fund and the change
in the Lipper International Fund Average. One percentage point is subtracted
from the calculation to help assure that incentive adjustments are attributable
to IDS' investment decisions rather than random fluctuations. The maximum
adjustment for a year is .012% of assets.]
The Fund pays its taxes, brokerage commissions and nonadvisory expenses,
which include custodian fees; audit and certain legal fees; fidelity bond
premiums; registration fees for shares; office expenses of the Fund; consultant
fees; compensation of Board members, officers and employees (except anyone who
is also an officer, director or employee of IDS or its affiliates); corporate
filing fees; a portion of the Investment Company Institute dues; organizational
expenses; expenses incurred in connection with lending portfolio securities; and
other expenses properly payable by the Fund, approved by the Board.
If, at the end of any month, the fees payable by the Fund under the IMS
Agreement and its nonadvisory expenses exceed the most restrictive applicable
state expense limitation -- which at the current time is 2.5% of the first $30
million of the 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 -- IDS will assume
all expenses in excess of the limit. IDS then may bill the Fund for those
expenses in subsequent months up to the end of that fiscal year, but not after
that date.
PROPOSED INVESTMENT MANAGEMENT AND SERVICES AGREEMENT. The proposed
agreement covering investment advice and administration retains features of the
current IMS Agreement. The proposed contract has the same performance incentive
adjustment, the Fund pays the same expenses it now pays, and the services to be
provided by IDS are the same. But, there are also two important differences. The
fee is based solely on the assets of the Fund, not on assets of the GROUP and on
the unique characteristics of the Fund, including the Fund's use of the services
provided by IDS in the areas of
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<PAGE>
investment research, portfolio management and investment services. Moreover, the
contract is designed to become two separate contracts if the Board ultimately
approves a master/feeder structure. The proposed fee is shown below:
PROPOSED FEE
<TABLE>
<CAPTION>
Assets Annual Rate At
(Billions) Each Asset Level
- - - --------- ---------------------
<S> <C>
First $1 0.%
Next $1 0.
Next $1 0.
Next $3 0.
Over $6 0.
</TABLE>
Based on the current net assets in the GROUP, the effective rate paid by the
Fund under the current IMS Agreement is 0. % and under the proposed IMS
Agreement is 0. %. Should the IMS Agreement become two separate contracts, the
fee for accounting and administration would be 0. % for the first billion in
net assets, 0. % for the second billion, 0. % for the next billion and 0. %
for assets above $4 billion. The fee for investment advice would be the same as
the IMS Agreement less those amounts. In subsequent years, the Board could
consider changing the fees for administration without shareholder approval.
On , 1994, the Fund's daily net assets were approximately
$ billion. For 1993, the average daily net assets were approximately
$ billion. For 1992, they were $ .
The Board's independent members based their evaluation of the proposed IMS
Agreement on a number of factors. The IDS annual report on investment
performance describes the total return of each of the funds in the GROUP;
reviews IDS' organizational structure and the performance of the portfolio
managers; and provides other information about IDS' qualifications to serve as
investment advisor. Periodic reports to committees of the Board reflect the
ability of IDS to actually carry out the duties of administrator which include,
among other things, pricing portfolios, maintaining accurate accounting records,
issuing timely financial and tax reports, and complying with federal and state
requirements. Terms of the proposed contract, especially the graduated fee scale
and the types of expenses paid by the Fund, were compared to those of other
investment companies deemed by a respected, independent industry authority most
comparable to the Fund. The independent members concluded that IDS has the
qualifications needed to serve the Fund as investment adviser and administrator
under the IMS Agreement. Overall the funds in the GROUP have benefited from IDS'
accurate and timely recordkeeping and, as a GROUP, a majority of funds are
consistently in the second quartile of their competitive groupings.
B-4
<PAGE>
NEW CONTRACTS TO BE APPROVED BY THE BOARD. If shareholders approve the
proposed IMS Agreement, the Board will approve a 12b-1 plan and new contracts
necessary for issuing multiple classes of shares. The Fund intends to offer
shares with a front-end sales charge and a service fee (Class A), a rear-end
sales charge, service fee and 12b-1 fee (Class B) and, for certain institutional
retirement and fixed fee accounts, no sales charge or service fee (Class Y). The
12b-1 plan and the contracts the Board will approve are discussed below. The
class of shares you currently own will be Class A shares.
- A NEW CONTRACT WITH IDS FOR SHAREHOLDER SERVICES. IDS now provides
shareholder services under a plan and supplemental agreement of distribution.
Because distribution services are included, it is a 12b-1 plan (so called
because it is authorized under Rule 12b-1, a regulation issued under the
Investment Company Act). The Fund currently pays a fee determined by multiplying
all the active shareholder accounts by $6. The fee is intended to help IDS
defray that portion of its distribution costs not covered by the sales charges,
further costs incurred in maintaining and improving shareholder services and in
financing the sale of shares. The fee paid to IDS in 1993 under this plan was
equal to 0. % of net assets.
The proposed contract for shareholder services does not cover any
distribution costs and is not a 12b-1 plan. The Fund will pay directly for the
benefit of planners and servicing agents 0.15% of net assets of accounts holding
Class A or Class B shares for the services they provide shareholders. The Fund
also will pay IDS 0.025% for use in monitoring those services and providing
additional training and support to planners and servicing agents to assure the
Fund shareholders receive good service. The services provided are designed to
help shareholders consider thoughtfully their investment goals and monitor the
progress they are making in achieving those goals. The Fund will pay the service
fee only with respect to net assets of accounts actually serviced by an IDS
planner or other servicing agents. The fee will not be used to finance the sale
of shares.
In evaluating the proposed contract, the independent members of the
Board considered both the general use of such fees in the industry, the proposed
level in relation to the services provided and similar fees charged by others.
They concluded the services contemplated will provide important benefits to
shareholders and that the terms of the proposed contract are fair both to the
Fund and its shareholders. Accordingly, the Board will approve the contract for
shareholder services if shareholders approve the proposed IMS Agreement.
- A 12B-1 PLAN TO PAY IDS FOR DISTRIBUTION SERVICES. IDS, as exclusive
underwriter for the Fund, has agreed to offer multiple classes of shares for the
Fund. IDS will incur substantial costs on the date Class B shares (those shares
that do not pay a sales charge at the time of purchase) are sold. IDS is repaid
those costs by the Fund over several years out of the assets of Class B shares.
B-5
<PAGE>
The 12b-1 plan applies only to Class B shares. Under the plan, the Fund will
pay IDS 0.75% of the assets of that class each year to cover the sales costs IDS
incurs. After eight years, Class B shares will be automatically converted to
Class A shares. Class B shares redeemed before being converted to Class A shares
will be assessed a contingent deferred sales charge designed to approximate the
sales charge that would have been paid had the shares been held for eight years.
The sales charges for Class A and Class B shares are structured so that
investors will have the same total returns at the end of eight years regardless
of which class is chosen.
The independent members concluded that the proposed contract should
contribute to positive cash flows, growing asset size, and services of enhanced
scope and quality that can be provided by a growing and profitable investment
manager and distributor. The ability to offer multiple classes of shares should
help IDS develop new markets for the Fund in light of current trends in the
investment market. The members of the Board have approved the adoption of the
multiple class structure believing that it serves the best interest of the Fund
and its shareholders. Accordingly, the Board will approve the 12b-1 plan if the
shareholders approve the proposed IMS Agreement. Any changes in the 12b-1 plan
will require the approval of the Class B shareholders, if and when shares of
that class are sold.
- A CONTRACT WITH IDS FOR TRANSFER AGENT SERVICES. The Board reviewed the
annual report provided by IDS with respect to the scope and quality of the
services it provides shareholders as transfer agent. The report describes the
standards by which IDS measures the quality of transfer agent services and
assesses how well it has met those standards. The report describes the types of
services IDS offers (including providing shareholders with an average cost basis
of their investments in the Fund made over time) compares them to the services
offered by others. Under the proposed TA Agreement, IDS will be paid a fee by
the Fund for these services out of the assets of Class A shares determined by
multiplying the number of Class A shareholder accounts by $ and, from the
assets of Class B shares, by multiplying the number of Class B accounts by $
and, from the assets of class Y shares, by multiplying the number of class Y
accounts by $ . The fees assessed each class of shares for these services
reflect the different costs and expenses allocated to each. The members of the
Board will approve the proposed TA Agreement if shareholders approve the
proposed IMS Agreement.
The TA Agreement is reviewed annually. It may be changed at any time by
agreement between the IDS and the Fund.
- OTHER CONTRACTS WITH AND BENEFITS TO IDS. The distribution contract
between IDS and the Fund provides that IDS shall have the exclusive right to act
as principal underwriter for the Fund. The contract will be modified to reflect
the changes that result from implementation of the multiple class structure.
B-6
<PAGE>
The Fund executes portfolio transactions through American Enterprise
Investment Services, Inc., a wholly owned subsidiary of IDS. Execution of the
Fund's portfolio transactions through other brokerage firms enables IDS to
receive services, such as market research, that benefit the Fund.
IDS Trust Company serves as custodian for the assets of the Fund. The
contract is reviewed annually to determine that IDS Trust Company provides
required custodial services at least equal in scope and quality to those
provided by others at rates that are fair and reasonable in light of the usual
and customary charges made by others.
CURRENT AND PRO FORMA DATA. For the last calendar year, fees and expenses
the Fund actually paid as well as fees and expenses the Fund would have paid if
the proposed IMS Agreement, proposed shareholder service agreement and proposed
TA Agreement had been in effect are shown below:
FUND EXPENSES
(AS A PERCENT OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
Pro Forma for
International International
1993 1993
--------------- ---------------
<S> <C> <C>
IMS Agreement
Group Fee $ 1,317,506.19 $ 0.00
Investment Fee 1,435,695.90 2,792,720.99
TA Agreement 858,743.54 858,743.54
12b-1 Plan 344,800.99 0.00
Service Fee 0.00 531,171.81
Nonadvisory Expenses 717,161.17 717,161.17
Expense Ratio 1.43 1.50
</TABLE>
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>
International $984 $1,055 $1,132 $1,348
</TABLE>
For the calendar year ended December 31, 199 , IDS received $ from the
Fund under the IMS Agreement, $ under the 12b-1 Plan and $ under the
TA Agreement. In addition, IDS Financial Services Inc., a wholly owned
subsidiary of IDS, received $ in sales charges from sales of shares of the
Fund. If the proposed IMS Agreement had been in effect, in the last fiscal year
the Fund would have paid $ to IDS under that agreement, an
increase/decrease of %.
BASIS OF RECOMMENDATION BY THE BOARD ON THE PROPOSED AGREEMENT. In reaching
its recommendation to shareholders, the members of the Board considered the
scope and quality of all services IDS has provided and expects
B-7
<PAGE>
to provide under the proposed contracts. They considered IDS' present
distribution strategies, its past success and its willingness to invest
additional resources in developing new markets for the Fund. They noted IDS'
commitment to compliance with all applicable laws and regulations and the
benefits IDS receives from its relationships with the Fund. The members
considered IDS' investment performance; the Fund's expense ratio; the
profitability IDS realizes from its investment company operations; and the trend
of IDS profitability from fund operations as well as that of other investment
managers. The members of the Board concluded the services provided, measured in
both scope and quality, have been above average in the industry; investment
performance in most years has been consistent and generally above the median of
a group of competitive funds; the expense ratio remains in line with other
funds; and IDS' profitability is not unreasonable. Based on its conclusions, the
members of the Board have approved the proposed IMS Agreement and recommend
unanimously that the shareholders approve it.
At a meeting held on May 12, 1994, called for the purpose of considering the
proposed IMS Agreement for the Fund, the independent members first and then the
Board as a whole, by vote, cast in person, approved the terms of the proposed
IMS Agreement for the Fund. The shareholders of the Fund must accept or reject
the Fund's Agreement. The proposed IMS Agreement will continue from year to year
after the second year, provided continuance is approved at least annually. The
proposed IMS Agreement may be terminated without penalty either by the Board, by
IDS or by a vote of a majority of the outstanding shares of the Fund.
RECOMMENDATION AND VOTE REQUIRED. The Board recommends that shareholders
approve the proposed IMS Agreement. Approval requires the affirmative vote of
the majority of the outstanding shares of the Fund which the Investment Company
Act defines as 67% or more of the shares represented at the meeting held to
consider the issue if more than 50% are represented or more than 50% of the
shares entitled to vote, whichever is less.
(4) APPROVE OR DISAPPROVE A NEW INVESTMENT POLICY
OF THE FUND TO PERMIT THE FUND TO INVEST ALL OF ITS
ASSETS IN AN INVESTMENT COMPANY WITH SUBSTANTIALLY
THE SAME INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS AS THE FUND.
As discussed in Proposal 3 above, at some future time the Board may
determine that it is in the best interests of the Fund and its shareholders to
create what is known as a master/feeder fund structure. Such a structure allows
several investment companies and other investment groups, including
B-8
<PAGE>
pensions plans and trust accounts, to have their investment portfolios managed
as a combined pool called the master fund. The purpose of the structure is to
achieve operational efficiencies.
Currently, the Fund's investment policies, including those pertaining to
investing all of its assets in one company, would prohibit the master/feeder
structure. The Board recommends shareholders adopt the following investment
policy:
"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."
Adoption of this policy will permit the Fund to invest its assets in a
master fund, without any additional vote of shareholders. The Fund's operations
and shareholder services will not be affected. Even though the assets are
invested in securities of the master fund, you will continue to receive
information about the underlying investments the same as you now receive in your
annual and semi-annual reports. Proposal 3 discusses that the Investment
Management and Services Agreement will become two agreements, the Investment
Advisory Agreement and the Administration Agreement, if the Board determines to
create the master/feeder structure. Fees and expenses will not increase as a
result of that split.
RECOMMENDATION AND VOTE REQUIRED. The Board recommends that shareholders
approve the new investment policy. Approval requires the affirmative vote of 67%
or more of the shares represented at the meeting if more than 50% are
represented or more than 50% of the shares entitled to vote, whichever is less.
If the change is not approved, the Fund will continue to operate in the same
fashion as it is now operating.
(5) APPROVE OR REJECT CHANGES TO FUNDAMENTAL POLICIES
The Fund has a number of investment policies that can be changed only with
approval of shareholders. These policies are referred to as "fundamental"
policies. Policies that can be changed by the Board are called "non-
fundamental". The Board recommends changing the fundamental policies described
below to non-fundamental. Some policies were established a number of years ago.
New investment strategies and new investment instruments continue to be created
and developed. If the policies are changed to non-fundamental, the Fund will
have flexibility to use those strategies and instruments promptly without
incurring the cost of shareholder meetings. Other policies were established to
conform to the requirements of federal or state law that existed at the time.
The policies do not need to be fundamental under those laws and, if changed to
non-fundamental, the Board could react to changes in the laws.
B-9
<PAGE>
A. PERMIT THE FUND TO BUY ON MARGIN OR SELL SHORT TO THE EXTENT PERMITTED
BY THE BOARD. Currently, the Fund is prohibited from buying on margin or
selling short. Buying on margin is borrowing money to buy securities and selling
short is selling securities the Fund does not own. Both strategies are cash
market transactions that create leverage but are appropriate if properly used.
Leveraging occurs when the market value of an investment changes significantly
more than the amount of cash invested. Under existing investment policies, the
Fund can implement the same type of strategies using derivative instruments.
Depending on market conditions, however, it may be preferable to pursue a
strategy in the cash market instead of the derivatives market. To assure the
proper use of leverage transactions, the Fund imposes limitations. One
limitation is that its investment portfolio must have investment performance
characteristics similar to those it would have if all of its assets were
invested in the cash market. Accordingly, its investment portfolio overall will
not be leveraged. If the policies pertaining to use of margin and short-selling
are non-fundamental, as market conditions change, the Board can consider
requests of the portfolio manager to employ investment strategies using these
techniques.
B. PERMIT THE FUND TO PLEDGE ASSETS AS COLLATERAL TO THE EXTENT PERMITTED
BY THE BOARD. The Fund is prohibited from pledging more than % of its assets
as collateral for loans or other purposes. If the policy is changed to
non-fundamental, when appropriate, the Board would be able to raise or lower the
maximum percentage in order to implement some of the strategies described above
and to meet other possible needs.
C. PERMIT THE BOARD TO CHANGE THE LIMIT ON INVESTMENTS IN ISSUERS WITH LESS
THAN 3 YEARS OF OPERATING HISTORY. The Fund may not invest more than 5% of its
assets in companies that have less than 3 years of operating history. This
percentage currently is set by a state law which may change in the future. If
the policy is made non-fundamental and the state changes its law, the Board
could take such action as appropriate.
D. PERMIT THE BOARD TO ESTABLISH POLICIES WHEN THE FUND COULD MAKE AN
INVESTMENT FOR THE PURPOSE OF EXERCISING CONTROL OR MANAGING THE COMPANY. The
Fund is prohibited from making investments to control or manage a company. While
it is not the intent of the Fund to control or manage a company and it generally
is precluded from doing so by various laws, from time to time one of its
investments may experience financial difficulties. It may be in the interest of
the Fund to make an additional investment while at the same time asserting some
influence regarding management.
E. PERMIT THE BOARD TO ESTABLISH POLICIES FOR INVESTING IN OIL, GAS OR
OTHER MINERAL EXPLORATION OR DEVELOPMENT PROGRAMS. Currently, a state law
limits investments by the Fund in oil, gas or other mineral exploration or
development programs. Should the law change, the Board could establish
appropriate guidelines.
B-10
<PAGE>
F. PERMIT THE BOARD TO ESTABLISH RESTRICTIONS ON OWNERSHIP OF SECURITIES OF
COMPANIES WHOSE SECURITIES ARE OWNED OR MAY BE PURCHASED BY THE FUND. Under a
state law, the Fund may not purchase the securities of a company if officers,
members of the Board and IDS together own more than 5% of the securities of that
company. If the law should change, the Board could establish appropriate new
limits.
G. REVISE THE FUNDAMENTAL POLICY ON MAKING LOANS. Currently, the Fund has
a fundamental policy prohibiting it from making cash loans. It is proposed to
revise the policy to state that "THE FUND MAY MAKE CASH LOANS, PROVIDED THAT THE
TOTAL COMMITMENT AMOUNT DOES NOT EXCEED 5% OF THE FUND'S TOTAL ASSETS." In
certain circumstances the Fund may choose to make cash loans as an alternative
to investing in low rated corporate debt securities. The Fund will not make
loans to affiliated companies or to any individuals.
RECOMMENDATION AND VOTE REQUIRED. The Board recommends that shareholders
approve the proposed changes in the Fund's fundamental policies. Approval
requires the affirmative vote of 67% or more of the shares represented at the
meeting if more than 50% are represented or more than 50% of the shares entitled
to vote, whichever is less. If the changes are not approved, the Fund will
continue to operate in accordance with its current investment policies.
B-11
<PAGE>
PART C: OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The Articles of Incorporation of the Registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the Registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-Laws filed as an
exhibit to this registration statement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
ITEM 16. EXHIBITS
1. Articles of Incorporation, as amended June 12, 1987, filed as Exhibit
No. 1 to Registrant's Post-Effective Amendment No. 5 to Registration Statement
No. 2-92309, is incorporated herein by reference.
2. By-laws, as amended January 12, 1989, filed as Exhibit No. 2 to
Registrant's Post-Effective Amendment No. 9 to Registration Statement No.
2-92309, is incorporated herein by reference.
3. Not Applicable.
4. Agreement and Plan of Reorganization filed electronically herewith.
5. Stock certificate, filed as Exhibit 4 to Registration Statement No.
2-92309, is incorporated herein by reference.
6. (a) Investment Management and Services Agreement between Registrant and
IDS Financial Corporation, dated November 14, 1991, filed as Exhibit 5(a) to
Registrant's Post-Effective Amendment No. 13 to Registration Statement No.
2-92309, is incorporated herein by reference.
6. (b) Investment Advisory Agreement between IDS Financial Corporation and
IDS International, Inc., filed as Exhibit 5(b) to Registrant's Post-Effective
Amendment No. 2 to Registration Statement No. 2-92309, is incorporated herein by
reference.
6. (c) Attachment to Investment Advisory Agreement, dated October 27,
1989, filed electronically, as attached to Exhibit 5(b) to Registrant's Post-
Effective Amendment No. 9 to Registration Statement 2-92309.
7. Distribution Agreement between Registrant and IDS Financial Services
Inc., dated January 1, 1987, filed as Exhibit No. 6 to Registrant's
Post-Effective Amendment No. 6 to Registration Statement No. 2-92309, is
incorporated herein by reference.
8. All employees are eligible to participate in a profit sharing plan.
Entry into the plan is Jan. 1 or July 1. The Registrant contributes each year
an amount up to 15 percent of their annual salaries, the maximum deductible
amount permitted under Section 404(a) of the Internal Revenue Code.
<PAGE>
9. (a) Custodian Agreement between Registrant and IDS Bank & Trust, dated
November 7, 1984, filed electronically as Exhibit No. 8 to Registration
Statement No. 2-92309, is incorporated herein by reference.
9. (b) Sub-Custodian Agreement between IDS Bank & Trust and Morgan Stanley
Trust Company, filed electronically as Exhibit No. 8(b) to Registrant's Post-
Effective Amendment No. 17 to Registration Statement No. 2-92309 is incorporated
herein by reference.
10. Plan and Supplemental Agreement of Distribution between Registrant and
IDS Financial Corporation, dated January 1, 1987, filed as Exhibit No. 15 to
Registrant's Post-Effective Amendment No. 5 to Registration Statement No.
2-92309, is incorporated herein by reference.
11. To be filed by amendment.
12. To be filed by amendment.
13. (a) Transfer Agency Agreement between Registrant and IDS Financial
Corporation, dated November 14, 1991, filed as Exhibit 9(a) to Registrant's
Post-Effective Amendment No. 13 to Registration Statement No. 2-92309, is
incorporated herein by reference.
13. (b) License Agreement between the Registrant and IDS Financial
Corporation, dated January 25, 1988, filed electronically as Exhibit 9(b) to
Registrant's Post-Effective Amendment No. 9 to Registration Statement No.
2-92309, is incorporated herein by reference.
14. To be filed by amendment.
15. Not applicable.
16. (a) Directors' power of attorney, dated Oct. 14, 1993, to sign this
Registration Statement and amendments thereto filed as Exhibit 17(a) to
Registrant's Post-Effective Amendment No. 17 to Registration Statement
No. 2-92309 is incorporated herein by reference.
16 (b) Officers' power of attorney, dated June 1, 1993, to sign this
Registration Statement and amendments thereto filed as Exhibit 17(b) to
Registrant's Post-Effective Amendment No. 17 to Registration Statement
No. 2-92309 is incorporated herein by reference.
17. (a) Rule 24f-2 Election of Registrant filed electronically herewith.
17. (b) Form of Proxy Card filed electronically herewith.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed on behalf of the Registrant, in the City of Minneapolis, State of
Minnesota on the 15th of July, 1994.
IDS INTERNATIONAL FUND, INC.
By /s/ WILLIAM R. PEARCE**
--------------------------------------
William R. Pearce,
PRESIDENT
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the 15th of July,
1994.
<TABLE>
<CAPTION>
Signatures Title
- - - --------------------------------------------------------- --------------------------------
<C> <S>
/s/ WILLIAM R. PEARCE** President, Principal Executive
--------------------------------------------- Officer and Director
William R. Pearce
Treasurer and Secretary,
/s/ LESLIE L. OGG** Principal Financial Officer
--------------------------------------------- and Principal Accounting
Leslie L. Ogg Officer
--------------------------------------------- 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/ 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Signatures Title
- - - --------------------------------------------------------- --------------------------------
<C> <S>
/s/ EDSON W. SPENCER*
--------------------------------------------- Director
Edson W. Spencer
/s/ JOHN R. THOMAS*
--------------------------------------------- Director
John R. Thomas
/s/ WHEELOCK WHITNEY*
--------------------------------------------- Director
Wheelock Whitney
*Signed pursuant to Directors' Power of Attorney, dated Oct. 14, 1993, filed
electronically as Exhibit 17(a) to Registrant's Post-Effective Amendment
No. 17 to Registration Statement No. 2-92309.
---------------------------------------------
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney, dated June 1, 1993, filed
electronically as Exhibit 17(b) to Registrant's Post-Effective Amendment
No. 17 to Registration Statement No. 2-92309.
---------------------------------------------
Leslie L. Ogg
</TABLE>
<PAGE>
EXHIBIT INDEX TO FORM N-14
IDS INTERNATIONAL FUND, INC.
<TABLE>
<CAPTION>
Exhibit Page
- - - ------------- -----
<C> <S> <C>
(4) Agreement and Plan of Reorganization . . . . . . . . . . . . .
(17)(a) Rule 24f-2 election of Registrant. . . . . . . . . . . . . . .
(17)(b) Form of Proxy Card . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of [ ], 1994,
between IDS Strategy Fund, Inc., a Minnesota corporation ("the Corporation"), on
behalf of its Worldwide Growth Fund ("Worldwide Growth") and IDS International
Fund, Inc., a Minnesota corporation ("International").
In consideration of the mutual promises herein contained, the Parties hereto
agree as follows:
1. SHAREHOLDER APPROVAL
APPROVAL BY THE SHAREHOLDERS. A meeting of the shareholders of Worldwide
Growth shall be called and held for the purpose of acting upon this Agreement
and the transactions contemplated herein. International shall furnish to the
Corporation such data and information as shall be reasonably requested by the
Corporation for inclusion in the information to be furnished to its Worldwide
Growth shareholders in connection with the meeting for the purpose of acting
upon this Agreement and the transactions contemplated herein.
2. REORGANIZATION
(a) PLAN OF REORGANIZATION. The Corporation will convey, transfer and
deliver to International all of the then existing assets of Worldwide Growth at
the closing provided for in Section 2(b) (hereinafter called the "Closing").
International shall assume all liabilities, expenses, costs, charges and
reserves reflected on an unaudited statement of assets and liabilities of
Worldwide Growth as of the Valuation Date (as defined in paragraph 3(a)), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period. International shall assume only those liabilities
of Worldwide Growth reflected in such unaudited statement of assets and
liabilities and shall not assume any other liabilities, whether absolute or
contingent, known or unknown, accrued or unaccrued. International agrees to
deliver at the Closing to the Corporation the number of shares of common stock
of International (the "Shares") including fractional Shares, determined by
dividing the value of the net assets of Worldwide Growth, computed in the manner
and as of the time and date set forth in paragraph 3(a), by the net asset value
of one Share computed in the manner and as of the time and date set forth in
paragraph 3(b). It is expressly agreed that there will be no sales charge on the
sale of International's Shares to Worldwide Growth in exchange for the assets of
Worldwide Growth, or to any of the shareholders of Worldwide Growth upon
distribution of the Shares to
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them. Shareholders of Worldwide Growth subject to a CDSC will receive Class B
Shares of International in exchange for their Shares of Worldwide Growth.
Shareholders of Worldwide Growth not subject
(b) CLOSING AND EFFECTIVE TIME OF THE REORGANIZATION. The Closing shall
occur on (a) the later of (i) receipt of all necessary regulatory approvals,
(ii) the final adjournment of the meeting of shareholders of Worldwide Growth at
which this Agreement will be considered and (iii) implementation of a multiple
class share structure by International pursuant to an Exemptive Order (the
"Exemptive Order") obtained on behalf of International and other funds managed
by IDS Financial Corporation and, in connection therewith, creation of the Class
B Shares to be delivered to Worldwide Growth shareholders in accordance with the
terms thereof, or (b) such later date as the Parties may mutually agree (the
"Effective Time of the Reorganization").
3. VALUATION OF NET ASSETS
(a) The value of the net assets of Worldwide Growth to be transferred to
International hereunder shall be computed as of the close of regular trading on
the New York Stock Exchange, Inc. (the "NYSE"), currently 4:00 p.m. New York
time, on the day of the Closing (hereinafter the "Valuation Date") using the
valuation procedures as set forth in the International Prospectus.
(b) The net asset value per share of International's Shares for purposes of
Section 2(a) hereof shall be determined as of the close of regular trading on
the NYSE, currently 4:00 p.m. New York time, on the Valuation Date by
International using the same valuation procedures as set forth in the
International Prospectus.
(c) A copy of the computations showing in reasonable detail the valuation of
Worldwide Growth's net assets on the Valuation Date pursuant to Section 3(a)
above, certified by an officer of the Corporation, shall be furnished by the
Corporation to International at the Closing. A copy of the computations showing
in reasonable detail the determination of the net asset value per share of
International's Shares on the Valuation Date pursuant to Section 3(b) above,
certified by an officer of International, shall be furnished by International to
the Corporation at the Closing.
4. LIQUIDATION AND DISSOLUTION OF WORLDWIDE GROWTH
(a) As soon as practicable after the Valuation Date, the Corporation will
liquidate and distribute pro rata to its Worldwide Growth shareholders of record
as of the close of regular trading on the NYSE, currently 4:00 p.m. New York
time, the International Shares received by the Corporation pursuant to this
Section. Such liquidation and distribution will be accomplished by the
establishment of shareholder accounts on the share records of International in
the names of each such shareholder of Worldwide Growth, representing the
respective pro rata number of full and fractional Shares of
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International due to each. All issued and outstanding shares of Worldwide Growth
will simultaneously be cancelled on the books of the Corporation, although stock
certificates representing interests in Worldwide Growth will represent a number
of Shares of International after the Valuation Date determined in accordance
with Section 2(a). No such shareholder accounts shall be established by
International or its transfer agent except pursuant to written instructions from
the Corporation, and the Corporation agrees to provide on the Valuation Date
instructions to transfer to a shareholder account for each such former
shareholder of Worldwide Growth a pro rata share of the number of Shares of
International received pursuant to Section 2(a) hereof.
(b) Promptly after the distribution described in Section 4(a) above,
appropriate notification will be mailed by International or its transfer agent
to each shareholder of Worldwide Growth receiving such distribution of the
Shares informing such shareholder of the number of such shares distributed to
such shareholder and confirming the registration thereof in such shareholder's
name.
(c) As promptly as practicable after the liquidation of Worldwide Growth,
and in no event later than twelve months from the date hereof, Worldwide Growth
shall be dissolved.
(d) Immediately after the Valuation Date, the share transfer books of the
Corporation relating to Worldwide Growth shall be closed and no transfer of
shares shall thereafter be made on such books.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INTERNATIONAL
International represents and warrants to the Corporation as follows:
(a) ORGANIZATION, EXISTENCE, ETC. International is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the power to carry on its business as it is now being
conducted. International has all necessary federal, state and local
authorization to own all of its properties and assets and to carry on its
business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. International is a corporation
registered under the Investment Company Act of 1940 (the "1940 Act") as an
open-end, management investment company; such registration has not been revoked
or rescinded and is in full force and effect.
(c) CAPITALIZATION. International has an authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share, of which as of
, 1994, shares of common stock of International were outstanding
and no shares were held in the treasury of International. All of the outstanding
shares have been duly authorized and are validly issued, fully paid and
non-assessable. Since International is engaged in the continuous offering and
redemption of its shares, the number of outstanding
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shares may change prior to the Effective Time of the Reorganization.
International has the authority, pursuant to the Exemptive Order, to implement a
multiple class share structure and to create multiple classes of Common Stock,
including the Class B Shares. International hereby agrees that, prior to the
Closing, it shall implement a multiple class structure in accordance with the
Exemptive Order and create the Class B Shares to be issued to Worldwide Growth
shareholders in accordance with the terms hereof.
(d) FINANCIAL STATEMENTS. The audited financial statements as of October
30, 1993 and the unaudited semi-annual financial statements as of April 30, 1994
of International (the "International Financial Statements"), previously
delivered to the Corporation, fairly present the financial position of
International as of such respective dates, and the results of its operations and
changes in its net assets for the periods then ended.
(e) SHARES TO BE ISSUED UPON REORGANIZATION. The Shares to be issued in
connection with the Reorganization will have been duly authorized and upon
consummation of the Reorganization will be validly issued, fully paid and
non-assessable.
(f) AUTHORITY RELATIVE TO THIS AGREEMENT. International has the power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and no other proceedings by International are necessary to authorize
its officers to effectuate this Agreement and the transactions contemplated
hereby.
(g) NO VIOLATION. International is not in violation of its Articles of
Incorporation or By-Laws (the "Charter") or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it or its
properties may be bound; and the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein will not conflict with
or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
International pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which International is subject,
nor will such action result in any violation of the provisions of the Charter or
any law, administrative regulation or administrative or court decree applicable
to International; and no consent, approval, authorization or order of any court
or governmental authority or agency is required for the consummation by
International of the transactions contemplated by this Agreement other than the
effectiveness of the Registration Statement described below in Section 5(1).
(h) LIABILITIES. There are no liabilities of International, whether or not
determined or determinable, other than liabilities disclosed or provided
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for in International's Financial Statements and liabilities incurred in the
ordinary course of business subsequent to October 31, 1993, or otherwise
previously disclosed to the Corporation, none of which has been materially
adverse to the business, assets or results of operations of International.
(i) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of International, threatened which would adversely affect
International or its assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby.
(j) CONTRACTS. Except for contracts and agreements previously disclosed to
the Corporation under which no default exists, International is not a party to
or subject to any material contract, debt instrument, plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(k) TAXES. The federal income tax returns of International have been filed
for all taxable years to and including the taxable year ended December 31, 1993.
International has qualified and will qualify as a regulated investment company
under the Internal Revenue Code with respect to each taxable year of
International since commencement of its operations.
(l) REGISTRATION STATEMENT. International shall cause to be filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form N-14 (the "Registration Statement") under the Securities Act of 1933
("Securities Act") relating to the Shares issuable hereunder. At the time the
Registration Statement becomes effective, the Registration Statement (i) will
comply in all material respects with the provisions of the Securities Act and
the rules and regulations of the Commission thereunder (the "Regulations") and
(ii) will not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to in Section 1,
and at the Effective Time of the Reorganization, the prospectus and statement of
additional information included therein, as amended or supplemented by any
amendments or supplements filed by International, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties in this subsection shall apply to statements in or omissions from the
Registration Statement or Prospectus and Statement of Additional Information
made in reliance upon and in conformity with information furnished by the
Corporation for use in the Registration Statement or Prospectus and Statement of
Additional Information as provided in Section 6(1).
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6. REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE CORPORATION
The Corporation represents and warrants to International as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has power to carry on its business as it is now being conducted.
The Corporation has all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Corporation is a corporation
registered under the 1940 Act as a open-end diversified management investment
company; such registration has not been revoked or rescinded and is in full
force and effect.
(c) CAPITALIZATION. The Corporation has an authorized capital of [ ]
shares of common stock, par value $0.01 per share, of which as of [ ],
1994, shares of Worldwide Growth were outstanding and no shares were held in
the treasury of the Corporation. All of the outstanding shares of Worldwide
Growth have been duly authorized and are validly issued, fully paid and
non-assessable. Since the Corporation is engaged in the continuous offering and
redemption if its shares, the number of outstanding shares of Worldwide Growth
may change prior to the Effective Time of the Reorganization.
(d) FINANCIAL STATEMENTS. The audited financial statements as of March 31,
1994 of Worldwide Growth (the "Worldwide Growth Financial Statements"),
previously delivered to International, fairly present the financial position of
Worldwide Growth as of such date, and the results of its operations and changes
in its net assets for the period then ended.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Corporation has the power to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated have been duly authorized by its Board of Directors,
and except for obtaining approval by the holders of shares of Worldwide Growth
common stock, no other proceedings by the Corporation are necessary to authorize
its officers to effectuate this Agreement and the transactions contemplated
hereby.
(f) NO VIOLATION. The Corporation is not in violation of its Articles of
Incorporation or By-Laws (the "Charter") or in default in the performance or
observance of any material obligation, agreement, lease or other instrument to
which it is a party or by which it or its properties may be bound; and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of Worldwide Growth pursuant
to any material contract, indenture, mortgage, loan agreement, note, lease or
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other instrument to which the law, administrative regulation or administrative
or court decree applicable to the Corporation; and no consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Corporation of the transactions
contemplated by this Agreement.
(g) LIABILITIES. There are no liabilities of Worldwide Growth, whether or
not determined or determinable, other than liabilities disclosed or provided for
in the Worldwide Growth Financial Statements and liabilities incurred in the
ordinary course of business subsequent to March 31, 1994, or otherwise
previously disclosed to International, none of which has been materially adverse
to the business, assets or results of operations of Worldwide Growth.
(h) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Corporation, threatened which would adversely affect
Worldwide Growth or its assets or business or which would prevent or hinder
consummation of the transactions contemplated hereby.
(i) CONTRACTS. Except for contracts and agreements previously disclosed to
International under which no default exists, the Corporation is not a party to
or subject to any material contract, debt instrument, plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(j) TAXES. The federal income tax returns of the Corporation have been
filed for all taxable years to and including the taxable year ended December 31,
1993, and all taxes payable pursuant to such returns have been paid. Worldwide
Growth has qualified, and will qualify, as a regulated investment company under
the Internal Revenue Code with respect to each taxable year of the Corporation
since commencement of its operations.
(k) FUND SECURITIES. All securities to be listed in the schedule of
investments of Worldwide Growth as of the Effective Time of the Reorganization
will be owned by the Corporation on behalf of Worldwide Growth free and clear of
any liens, claims, charges, options and encumbrances, except as indicated in
said schedule, and, except as so indicated, none of such securities is or, after
the Reorganization as contemplated hereby, will be subject to any restrictions,
legal or contractual, on the disposition thereof (including restrictions as to
the public offering or sale thereof under the Securities Act), and all such
securities are or will be readily marketable.
(l) REGISTRATION STATEMENT. In connection with the Registration Statement,
the Corporation will cooperate with International and will furnish to
International the information relating to the Corporation or Worldwide Growth
required by the Securities Act and the Regulations to be set forth in the
Registration Statement (including the Prospectus and Statement of Additional
Information). At the time the Registration Statement becomes effective, the
Registration Statement, insofar as it related to the Corporation and Worldwide
Growth, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue
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statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
at the time the Registration Statement becomes effective, at the time of the
shareholders' meeting referred to in Section 1 and at the Effective Time of the
Reorganization, the Prospectus and Statement of Additional Information, as
amended or supplemented by any amendments or supplements filed by International,
insofar as it related to the Corporation or Worldwide Growth, will not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall apply only to statements
in or omissions from the Registration Statement or Prospectus and Statement of
Additional Information made in reliance upon and in conformity with information
furnished by the Corporation for use in the Registration Statement or Prospectus
and Statement of Additional Information as provided in this Section 6(1).
7. CONDITIONS TO OBLIGATIONS OF THE CORPORATION.
The obligations of the Corporation hereunder with respect to the
consummation of the Reorganization are subject to the satisfaction of the
following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
affirmative vote of the holders of the majority, as such term is defined in the
1940 Act, of the outstanding shares of common stock of Worldwide Growth.
(b) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. International shall have
complied with each of its agreements contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization, and except as otherwise
indicated in any financial statements of International audited or certified by
an officer of International, which may be delivered to the Corporation on or
prior to the last business day preceding the Effective Time of the
Reorganization, as of the Effective Time of the Reorganization there shall have
been no material adverse change in the financial condition, results of
operations, business, properties or assets of International since October 31,
1993, and the Corporation shall have received a certificate of the Chairman or
President of International satisfactory in form and substance to the Corporation
so stating.
(c) CREATION OF CLASS B SHARES. International shall have implemented the
multiple class share structure contemplated by the Exemptive Order and shall
have created and authorized the issuance of the Class B Shares to be issued to
Worldwide Growth shareholders in accordance with the terms hereof.
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(d) REGULATORY APPROVAL. The Registration Statement referred to in Section
5(1) shall have become effective and no stop orders under the Securities Act
pertaining thereto shall have been issued; and all approvals, registrations, and
exemptions under federal and state securities laws considered to be necessary
shall have been obtained.
(e) TAX OPINION. The Corporation shall have received the opinion of Ropes
& Gray, dated the Effective Time of the Reorganization, addressed to and in form
and substance satisfactory to the Corporation, as to certain of the Federal
income tax consequences of the Reorganization under the Internal Revenue Code of
1986 to Worldwide Growth and International and the shareholders of Worldwide
Growth and International. For purposes of rendering their opinion Ropes & Gray
may rely exclusively and without independent verification, as to factual
matters, upon the statements made in this Agreement, the proxy statement which
will be distributed to the shareholders of Worldwide Growth in connection with
the Reorganization, and upon such other written representations as the President
or Vice President of the Corporation and International, respectively, will have
verified as of the Effective Time of the Reorganization. The opinion of Ropes &
Gray will be to the effect that, based on the facts and assumptions stated
therein, for federal income tax purposes: (i) neither Worldwide Growth nor
International will recognize any gain or loss upon the transfer of the assets of
Worldwide Growth to, and the assumption of its liabilities by, International in
exchange for the Shares and upon the distribution (whether actual or
constructive) of the Shares to its shareholders in exchange for their shares of
common stock of Worldwide Growth; (ii) the shareholders of Worldwide Growth who
receive the Shares pursuant to the Reorganization will not recognize any gain or
loss upon the exchange (whether actual or constructive) of their shares of
common stock of Worldwide Growth for the Shares (including any fractional share
interests they are deemed to have received) pursuant to the Reorganization;
(iii) the holding period and the basis of the Shares received by the Worldwide
Growth shareholders will be the same as the holding period and the basis of the
shares of common stock of Worldwide Growth surrendered in the exchange; and (iv)
the holding period and the basis of the assets acquired by International will be
the same as the holding period and the basis of such assets to Worldwide Growth
immediately prior to the Reorganization.
(f) OPINION OF COUNSEL. The Corporation shall have received the opinion of
[ ], counsel for International, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to the
Corporation, to the effect that: (i) International is a corporation duly
organized and validly existing under the laws of the State of Minnesota; (ii)
International is an open-end investment company of the management type
registered under the 1940 Act; (iii) this Agreement and the Reorganization
provided for herein and the execution of this Agreement have been duly
authorized and approved by all requisite action of International and this
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Agreement has been duly executed and delivered by International and is a valid
and binding obligation of International; and (iv) the Shares to be issued in the
Reorganization are, to the extent of the number of shares of common stock
authorized to be issued by International in its Charter less the number of the
then outstanding shares of common stock, duly authorized and upon issuance
thereof in accordance with this Agreement will be validly issued, fully paid and
non-assessable shares of common stock of International.
8. CONDITIONS TO OBLIGATIONS OF INTERNATIONAL
The obligations of International hereunder with respect to the consummation
of the Reorganization are subject to the satisfaction of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved by the
affirmative vote of the holders of a majority of the outstanding shares of
common stock of Worldwide Growth.
(b) REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Corporation shall have
complied with each of its agreements contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization, and except as otherwise
indicated in any financial statements of the Corporation or Worldwide Growth,
audited or certified by an officer of the Corporation, which may be delivered to
International on or prior to the last business day preceding the Effective Time
of the Reorganization, as of the Effective Time of the Reorganization there
shall have been no material adverse change in the financial condition, results
of operations, business, properties or assets of Worldwide Growth since May 31,
1994 and International shall have received a certificate of the President of the
Corporation satisfactory in form and substance to International so stating.
(c) REGULATORY APPROVAL. All approvals, registrations, and exemptions
under federal and state securities laws considered to be necessary shall have
been obtained.
(d) OPINION OF COUNSEL. International shall have received the opinion of
[ ], counsel for the Corporation, dated the Effective Time of the
Reorganization, addressed to and in form and substance satisfactory to
International, to the effect that (a) the Corporation is a corporation duly
organized and validly existing under the laws of the State of Minnesota; (b) the
Corporation is an open-end investment company of the management type registered
under the 1940 Act; (c) this Agreement and the Reorganization provided for
herein and the execution and filing of this Agreement have been duly authorized
and approved by all requisite action of the Corporation and this Agreement has
been duly executed and delivered by the Corporation and is a valid and binding
obligation of the Corporation with respect to Worldwide Growth.
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(e) DECLARATION OF DIVIDEND. The Corporation shall have declared a
dividend with respect to Worldwide Growth which, together with all previous such
dividends, shall have the effect of distributing to Worldwide Growth's
shareholders all of Worldwide Growth's investment company taxable income for all
taxable years ending on or prior to the Closing (computed without regard to
deduction for dividends paid) and all of its net capital gain realized in
taxable years ending on or prior to the Closing (after reduction for capital
loss carryforward).
9. AMENDMENT; TERMINATIONS; NON-SURVIVAL OF
COVENANTS, WARRANTIES AND REPRESENTATIONS.
(a) The Parties hereto may, by agreement in writing authorized by their
respective Boards of Directors, amend this agreement at any time before or after
approval by the shareholders of Worldwide Growth but after such approval, no
amendment shall be made which substantially changes the terms of Paragraphs 2
and 3.
(b) At any time prior to the Effective Time of the Reorganization, any of
the Parties may by written instrument signed by it (i) waive any inaccuracies in
the representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
(c) The Corporation may terminate this Agreement at any time prior to the
Effective Time of the Reorganization by notice to International if (i) a
material condition to its performance or a material covenant of International
shall not be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this Agreement shall be
made by International that is not cured.
(d) International may terminate this Agreement at any time prior to the
Effective Time of the Reorganization by notice to the Corporation if (i) a
material condition to its performance or a material covenant of the Corporation
shall not be fulfilled on or before the date specified for the fulfillment
thereof or (ii) a material default or material breach of this Agreement shall be
made by the Corporation that is not cured.
(e) This Agreement may be terminated at any time prior to the Effective Time
of the Reorganization, whether before or after approval by the shareholders of
Worldwide Growth, without any liability on the part of either Party hereto or
its respective directors, officers or shareholders, by any Party on written
notice to the other Party, and shall be terminated without liability as of the
close of business on [ , 1995], or such later date as agreed upon by the
Parties, if the Effective Time of the Reorganization is not on or prior to such
date.
(f) No representation, warranty or covenant in or pursuant to this Agreement
(including certificates of officers) shall survive the Reorganization.
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10. EXPENSES
Each Party shall bear its respective expenses of entering into and carrying
out the provisions of this Agreement as has been separately incurred by each
whether or not the Reorganization is consummated although such expenses may be
subject to expense limitation undertakings by the respective investment advisers
to the Parties hereto.
11. GENERAL
This Agreement supersedes all prior agreements between the Parties (written
or oral), is intended as a complete and exclusive statement of the terms of the
Agreement between the Parties and may not be changed or terminated orally. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more counterparts have been executed by the Corporation and International and
delivered to each of the Parties hereto. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any other person any rights or
remedies under or by reason of this Agreement.
12. INDEMNIFICATION
Each Party shall indemnify and hold the other and their officers, directors,
agents and persons controlled or controlling any of them (each an "indemnitee")
harmless from and against any liability, damage, deficiency, tax, assessment,
charge or other cost and expense, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable corporate law) reasonably incurred by
such indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which he may be or may have been
involved as a party or otherwise or with which he may be or may have been
threatened, with respect to actions taken hereunder or thereafter by reason of
his having so acted in any such capacity, provided, however, that no indemnitee
shall be indemnified hereunder against any liability or any expense of such
indemnitee arising by reason of (i) willful misfeasance, (ii) bad faith, (iii)
gross negligence or (iv) reckless disregard of the duties involved in the
conduct of his position.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement and Plan
of Reorganization to be executed on its behalf by its President or a Vice
President and its seal to be affixed hereto and attested by its Secretary or
Assistant Secretary, all of the day and year first above written.
(SEAL)
Attest: IDS International Fund, Inc.
By -------------------------- By --------------------------
Secretary Name:
Title:
(SEAL)
IDS Strategy Fund, Inc.
on behalf of the
Worldwide Growth Fund
By -------------------------- By --------------------------
Secretary Name:
Title:
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Exhibit 17(a)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _____
Post-Effective Amendment No. __17__ (File No. 2-92309)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. __19__ (File No. 811-4075)
IDS INTERNATIONAL FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010
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)
- - - -----
X on Dec. 30, 1993 pursuant to paragraph (b) of rule 485 or 486
- - - -----
60 days after filing pursuant to paragraph (a) of rule 485 or 486
- - - -----
on (date), pursuant to paragraph (a) of rule 485 or 486
- - - -----
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 October 31, 1993, will be filed on or about December 30, 1993.
<PAGE>
Exhibit 17(b)
FORM OF PROXY CARD
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE EXPENSE OF ADDITIONAL MAILINGS
WORLDWIDE GROWTH FUND, A SERIES OF IDS STRATEGY FUND, INC.
PROXY/VOTING INSTRUCTION CARD
________________________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Leslie L. Ogg and ___________________, or either
of them, as proxies, with full power of substitution, to represent and to vote
all of the shares of the undersigned at the regular meeting to be held on
November 9, 1994 and any adjournment thereof.
TO HAVE YOUR VOTE COUNTED, YOU MUST SIGN, DATE AND RETURN THIS PROXY. IT WILL
BE VOTED AS MARKED, OR IF NOT MARKED, WILL BE VOTED "FOR" EACH PROPOSAL.
THE BOARD RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
(client name and address)
X___________________________________
X___________________________________ Date_________________, 1994
Owners please sign as names appear at left. Executors, administrators,
trustees, etc., should indicate position when signing.
<PAGE>
For Against Abstain
1. Approve a Reorganization ( ) ( ) ( )
providing for the
acquisition of Fund assets by
IDS International Fund, Inc.
in exchange for shares of
International
For Withheld Exception
2. Election of Board Members ( ) ( ) ( )
TO VOTE FOR ALL NOMINEES, MARK THE "FOR" BOX IN ITEM 2. TO WITHHOLD AUTHORITY
TO VOTE FOR ALL NOMINEES, MARK THE "WITHHELD" BOX. TO WITHHOLD AUTHORITY TO
VOTE FOR ANY NOMINEE, MARK THE "EXCEPTION" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME.
Twelve board members are to be elected at the meeting. The nominees are LYNNE
V. CHENEY, WILLIAM H. DUDLEY, ROBERT F. FROEHLKE, DAVID R. HUBERS, ANNE P.
JONES, DONALD M. KENDALL, MELVIN R. LAIRD, LEWIS W. LEHR, WILLIAM R. PEARCE,
EDSON W. SPENCER, JOHN R. THOMAS, WHEELOCK WHITNEY.
For Against Abstain
3. Ratification of ( ) ( ) ( )
Independent Auditors
