SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities and Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
IDS Global Series, Inc.
_________________________________________________________
(Name of Registrant as Specified In Its Charter)
_________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
______________________________________________________________
/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
______________________________________________________________
(2) Form, Schedule or Registration Statement No.:
______________________________________________________________
(3) Filing Party:
______________________________________________________________
(4) Date Filed:
______________________________________________________________
<PAGE>
IDS INNOVATIONS FUND
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
- --------------------------------------------------------------------------------
NOTICE OF REGULAR MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
To be held June 16 , 1999
The Fund will hold a shareholders' meeting at 3:00 p.m. on June 16, 1999, at the
IDS Tower, 80 S. Eighth Street, Minneapolis, MN on the 50th floor. You were a
shareholder on April 18, 1999 and should vote on each proposal. Please read the
proxy statement. Board members recommend that you vote FOR each proposal.
Please vote immediately, even if you plan to attend the meeting. Just follow the
instructions on the enclosed proxy card.
April 18, 1999
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
There are four sections to this proxy statement:
Section Page
A - Overview __
B - Fund Proposals __
C - Proxy Voting and Shareholder Meeting Information __
D - Fund Information __
Please be sure to read the proxy statement before you vote. This proxy statement
was first mailed to shareholders the week of April 18, 1999.
- --------------------------------------------------------------------------------
SECTION A - OVERVIEW
- --------------------------------------------------------------------------------
The Board of Directors (the "Board") of the Funds in the IDS MUTUAL FUND GROUP
(the "Group") is asking you to vote on the following proposals. The proposals
are described in detail in Section B.
- --------------------------------------------------------------------------------
Proposal
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Elect Board members
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(2) Ratify the selection of independent auditors
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(3) Change the Fund name from "IDS" to "AXP"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(4) Approve a new shareholder service and distribution plan
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(5) Change investment policy regarding senior securities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(6) Transact other business
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION B - FUND PROPOSALS
- --------------------------------------------------------------------------------
PROPOSAL 1: ELECTION OF BOARD MEMBERS
Who Are the Nominees for the Board? Nominees are listed below. Each person is a
nominee for each of the 47 funds within the Group. Each nominee was elected a
member of the Board at the last shareholders' meeting except for Mr. Atwater,
Mr. Carlson and Mr. Simpson.
Each Board member will serve until the next regular shareholders' meeting or
until he or she reaches the mandatory retirement age established by the Board.
Under the current Board policy, members may serve until the meeting following
their 72nd birthday. This policy does not apply to Ms. Jones or Mr. Pearce who
may serve until the end of the Board meeting following their 75th birthday.
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 on each nominee follows. Election requires a
vote by a majority of the Fund's shares voted at the meeting.
H. Brewster Atwater, Jr. Board member since 1996 Born in 1931
Retired chairman and chief executive officer, General Mills, Inc. Director:
Merck & Co., Inc. and Darden Restaurants, Inc.
Committee assignments: Audit, Contracts, Investment Review
Arne H. Carlson* Board member since 1999 Born in 1934
Chairman and Chief Executive Officer of the Funds. Governor of Minnesota, 1991
to 1999.
Chair: Board Services Corporation (provides administrative services to boards).
Committee assignments: Audit, Contracts, Executive, Investment Review,
Nominating
Lynne V. Cheney Board member since 1994 Born in 1941
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-Martin and Union Pacific Resources.
Committee assignments: Audit, Nominating
William H. Dudley** Board member since 1991 Born in 1932
Senior adviser to the chief executive officer of American Express Financial
Corporation ("AEFC").
Committee assignment: Investment Review
David R. Hubers** Board member since 1993 Born in 1943
President, chief executive officer and director of AEFC.
Heinz F. Hutter Board member since 1994 Born in 1929
Retired president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).
Committee assignments: Executive, Investment Review
Anne P. Jones Board member since 1985 Born in 1935
Attorney and telecommunications consultant. Former partner, law firm of
Sutherland, Asbill & Brennan. Director: Motorola, Inc. (electronics), C-Cor
Electronics, Inc. and Amnex, Inc.
(communications).
Committee assignments: Audit, Contracts, Executive
William R. Pearce Board member since 1980 Born in 1927
RII Weyerhaeuser World Timberfund, L.P. (develops timber resources)-management
committee. Retired vice chairman of the board, Cargill, Incorporated (commodity
merchants and processors). Former chairman of Board Services Corporation.
Committee assignments: Contracts, Investment Review, Nominating
Alan K. Simpson Board member since 1997 Born in 1931
Director of The Institute of Politics, Harvard University. Former three-term
United States Senator for Wyoming. Director: PacifiCorp (electric power) and
Biogen (bio-pharmaceuticals).
Committee assignments: Audit, Executive, Nominating
John R. Thomas** Board member since 1987 Born in 1937
President of all Funds in the Group. Senior vice president of AEFC.
Committee assignments: Audit, Executive, Investment Review, Nominating
C. Angus Wurtele Board member since 1994 Born in 1934
Retired chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director: Valspar, Bemis Corporation (packaging) and
General Mills, Inc. (consumer foods).
Committee assignments: Contracts, Executive, Investment Review, Nominating
*Interested person by reason of being an officer of the Fund.
**Interested person by reason of being an officer, director, securityholder
and/or employee of AEFC or American Express Company ("American Express").
Does the Board Have Committees? The Board has several committees that facilitate
the work of the Board. The Executive Committee has authority to act for the full
Board between meetings. The Joint Audit Committee considers the scope of annual
audits, reviews the results of those audits, receives reports from American
Express Corporate Audit about the Fund's operations, and addresses areas of
special concern. The Contracts Committee negotiates contracts under the full
Board's direction and monitors the performance under those contracts. The
Investment Review Committee addresses investment issues and receives reports on
the structure and processes used by AEFC to make investment decisions and assure
compliance with applicable requirements. The Nominating Committee makes
recommendations about Board composition and compensation. Shareholders who want
to suggest Board candidates should write to Nominating Committee, IDS MUTUAL
FUND GROUP, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268.
Candidates must have a background that gives promise of making a significant
contribution to furthering the interests of all shareholders.
During 1998, the Board met six times, Joint Audit three times, Contracts six
times, Investment Review four times and Nominating three times. The Executive
Committee did not meet during that period. Average attendance at the Board was
91% and no nominee attended less than 75% of the meetings.
How Much are Board Members Paid? The following table shows the total
compensation received by each Board member from all of the Funds in the Group
for the year ended Dec. 31, 1998. The Funds do not pay retirement benefits to
Board members. No compensation was paid to Board members by the Fund. Board
members do not own any shares of the Fund.
Board Member Compensation from All IDS Funds*
----------------------------- --------------------------------------
Nominee Aggregate Compensation
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Atwater $108,900
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Cheney 95,400
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Hutter 101,400
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Jones 111,400
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Simpson 92,400
----------------------------- --------------------------------------
----------------------------- --------------------------------------
Wurtele 121,900
----------------------------- --------------------------------------
*Directors affiliated with AEFC or Board Services Corporation,
a company providing administrative services to the Funds, are
not paid by the Funds.
Who are the Fund Officers? Besides Mr. Carlson and Mr. Thomas, the Fund's
other officers are:
Leslie L. Ogg, born in 1938. Vice president and general counsel since 1978.
President of Board Services Corporation.
Peter J. Anderson, born in 1942. Vice president-investments since 1995.
Director and senior vice president-investments of AEFC.
Frederick C. Quirsfeld, born in 1947. Vice president-fixed income investments
since 1998. Vice president-taxable mutual fund investments of AEFC.
John M. Knight, born in 1952. Treasurer since 1999. Vice president -
Investment Accounting of AEFC.
Officers serve at the pleasure of the Board. Officers are paid by AEFC or Board
Services Corporation. During the last fiscal year, no officer earned more than
$60,000 from any Fund.
PROPOSAL 2: RATIFY OR REJECT THE SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
KPMG Peat Marwick LLP is the independent auditor for the Fund. KPMG has provided
audit, tax and consulting services to the Fund for many years. It meets at least
twice each year with the Fund's Joint Audit Committee. Based on that Committee's
recommendation, the independent members of the Board selected KPMG to provide
these services again this year. A representative of KPMG will be at the meeting
to answer questions or make a statement. The independent members of the Board
recommend that you vote to ratify their action. This requires an affirmative
vote by a majority of the shares voting at the meeting. If the selection is not
ratified, the independent members will decide what further action must be taken.
PROPOSAL 3: APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE FUND
Why Should the Name of the Fund be Changed? Historically the name of the Fund
has reflected the name of the investment manager. For many years, the Fund name
has been IDS. In 1995, the investment manager changed its name from IDS
Financial Corporation to American Express Financial Corporation to reflect that
it is wholly owned by American Express and because American Express has high
name recognition and a strong reputation for quality. This is the first
shareholder meeting since AEFC changed its name and the first opportunity for
shareholders to consider this name change. Consistent with a common industry
practice, AEFC recommends that the Fund use AXP, an abbreviated form of the
investment manager's name. The family of funds will be referred to as the
American Express Funds.
What Steps are Required? Shareholders will vote to change the name of the legal
entity and the Board will change the name of the underlying series of shares.
The change will be to replace "IDS" with "AXP" in the name of the Fund.
What Does the Board Recommend and How Many Votes are Needed? The Board
recommends that you vote to approve the necessary amendments to the Articles of
Incorporation to change the name of the Fund. The name change requires the
approval of a majority of the Fund's shares voted at the meeting. The change
will be effective when the amendments are filed with the appropriate state
office. This filing is expected to occur shortly after the shareholder meeting.
If the name change is not approved, the Fund will continue to operate under its
current name.
PROPOSAL 4: APPROVE OR REJECT
A SHAREHOLDER SERVICE AND DISTRIBUTION PLAN
American Express Financial Advisors Inc. ("AEFA") is the distributor for the
Fund. The Fund currently pays AEFA for providing ongoing services to
shareholders but AEFA legally may not use any of this money to pay for
distribution costs. AEFA met with the Board on several occasions to discuss
changes in the financial services industry. It recommends that the Fund pay some
of its distribution costs in addition to paying for ongoing shareholder
services. A Fund is permitted to pay distribution costs by Securities and
Exchange Commission ("SEC") Rule 12b-1.
In support of its recommendation, AEFA made the following observations:
o growth of the Fund's assets is crucial to long term success
o the industry has evolved over the years toward a fee-based means of
compensating financial advisors and other financial intermediaries
o the Fund's current pricing structure leaves it at a competitive
disadvantage to other funds that generally have distribution/shareholder
service fees of 0.25% or more based on reports by Lipper
o while AEFA has been very successful selling shares through its financial
advisors and institutional retirement plans, in order to gain market share
the Fund must be sold in other ways as well
In light of these observations, AEFA recommended:
A. That Class A shareholders convert the existing Shareholder Service
Agreement to a distribution plan (also known as a 12b-1 plan) and increase
the fee from 0.175% to 0.25% of average daily net assets. Because Class B
shares convert to Class A shares in the ninth year of ownership, Class B
shareholders also will vote on the Class A distribution plan. For Class B
shareholders, a vote in favor of this proposal is a vote in favor of both
the Class A and Class B plans.
B. That Class B shareholders convert the existing Shareholder Service
Agreement to the distribution plan. In combination with the existing
distribution plan of 0.75%, this will increase the combined fee from 0.925%
to 1.0% of average daily net assets. Since Class B investors do not pay a
sales load at the time shares are purchased, AEFA must use its own money to
pay for distribution costs. AEFA uses the fees paid under the existing
distribution plan to recover its distribution costs over several years.
Class B shares convert to Class A shares in the ninth year of ownership.
Shareholder Service. Services provided under the existing Shareholder Service
Agreement are intended to help shareholders thoughtfully consider their
investment goals and monitor the progress they are making in achieving those
goals. Shareholder service-related activities include, among other things,
ongoing interactions between financial advisors and shareholders, shareholder
communications and shareholder seminars.
Distribution Plan. Under the distribution plan, AEFA will distribute Fund shares
and service shareholder accounts either directly through its financial advisors
or through broker-dealers and other financial intermediaries. AEFA will use
distribution plan fees to pay for distribution activities. Distribution
activities are primarily intended to result in sales of Fund shares and include
advertising, compensation and expenses of financial advisors or other sales and
marketing personnel, printing and mailing of prospectuses to prospective
investors, and printing and mailing of sales literature. In addition, AEFA will
provide the shareholder services described in the previous paragraph.
How Will the Proposed Change Affect Fund Expenses? Fees and expenses the Fund
actually paid as well as fees and expenses the Fund would have paid if the
proposed Plan had been in effect for the last fiscal year are shown in Section
D.
The Proposed Distribution Plan. Under the proposed plan, the Fund will pay AEFA
each month for distribution and shareholder servicing activities. AEFA will pay
financial advisors, broker-dealers and other financial intermediaries who
provide distribution or shareholder services to the Fund's shareholders. AEFA
will provide the Board with quarterly reports specifying how the money was
spent.
What Factors Did the Board Consider? In considering the adoption of the
distribution plan, the Board considered the potential costs and benefits of the
plan, including:
o the increase in expenses
o the competitive situation in the industry involving the adoption of
distribution plans by an increasing number of funds
o AEFA's need to compensate financial advisors, broker-dealers and other
financial intermediaries for distribution and service-related activities at
competitive levels to assure the scope and quality of services expected by
shareholders
o the impact on investment management of positive cash flow and increased
asset size
The Board also recognized and considered that possible benefits may be realized
by AEFC as a result of the adoption of the plan. If Fund assets grow more
rapidly as a result of the implementation of the plan, the investment management
and administrative services fees payable to AEFC by the Fund (which are
calculated as a percent of net assets) will increase.
The Board reviewed the Fund's expense ratios, the level to which the expense
ratios will increase as a result of adopting the plan, the relationship of the
fee to the overall expense ratio of the Fund and how the overall expense ratio
compares to expense ratios of comparable funds with which the Fund competes. The
Board concluded that the proposed plan and fees are consistent with those in the
industry.
If approved, the plan will continue in effect for one year from the date of
approval, and then from year to year so long as it is approved by a majority of
the Board, including a majority of the independent members. The plan may be
terminated at any time by the Board or the shareholders and will terminate
automatically if it is assigned. The plan may not be amended to materially
increase the amount of the fee unless the change is approved by the
shareholders.
What Does the Board Recommend and How Many Votes are Needed? The Board
recommends that shareholders approve the proposed plan. The Plan must be
approved by the lesser of (a) a majority of the Fund's outstanding shares or (b)
67% of the shares voted at the meeting, so long as more than 50% of the shares
actually vote. If the proposed plan is not approved, the Fund will continue to
operate under its current arrangements.
PROPOSAL 5: APPROVE OR REJECT A CHANGE IN INVESTMENT POLICY
The Fund has some investment policies that are fundamental. This means the
policies can be changed only with the approval of shareholders. The Board
recommends modifying the fundamental investment policy prohibiting issuance of
senior securities. The Fund has a fundamental policy that prohibits it from
issuing any senior security. The Board recommends that shareholders vote to
replace the current policy with the following limitation: "The Fund will not
issue senior securities, except as permitted under the Investment Company Act of
1940." The purpose of this change is to develop a standardized policy for all
Funds in the Group. Generally a senior security is an obligation of the Fund
that takes priority over the claims of the Fund's shareholders. The law
prohibits the Fund from issuing most types of senior securities, but permits
doing so if certain conditions are met. For example, the Fund may enter into a
transaction that obligates it to pay money at a future date if cash is set aside
to cover the obligation. This type of transaction may be considered a senior
security. It is desirable in this situation for the Group to have a standardized
policy and the revised policy will not change the way the Fund's assets are
invested.
- --------------------------------------------------------------------------------
SECTION C - PROXY VOTING AND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHAREHOLDER MEETING INFORMATION
- --------------------------------------------------------------------------------
This section includes information about proxy voting and the shareholder
meetings.
Voting. Each share is entitled to one vote. For those of you who cannot come to
the meeting, the Board is asking permission to vote for you. The shares will be
voted as you instruct either by mail, telephone or internet. Signed proxy cards
returned without instructions will be voted in favor of all proposals.
Shares issued by the Fund vote together with shares of other Funds issued by the
same corporation on the election of board members, ratification of independent
auditors and the change of name. Shares vote by Fund on the changes of
fundamental investment policies. Shares vote by class on the distribution plan.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Abstentions are treated as a vote against a proposal. Broker
non-votes (shares for which the underlying owner has not voted and the broker
holding the shares does not have authority to vote) will be counted toward a
quorum. In determining whether a proposal received the affirmative vote of 67%
of the shares voted at the meeting, broker non-votes will be disregarded in the
calculation. In determining whether a proposal received the affirmative vote of
50% of the outstanding shares, broker non-votes will be treated as a vote
against the proposal.
In voting for Board members, you may vote all of your 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. 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.
Master/Feeder Funds. The Fund is part of a master/feeder structure. A feeder
fund seeks its investment objectives by investing its assets in a master fund
with the same policies. The master fund invests in and manages the securities.
Proposal 5 affects the master fund. The Fund, as a shareholder of the master
fund, will vote for or against the proposal in proportion to the vote received
from its feeder fund shareholders.
Revoking Your Proxy. If your plans change and you can attend the meeting, simply
inform the Secretary at the meeting that you will be voting your shares in
person. Also, if you change your mind after you vote, you may change your vote
or revoke it by mail, telephone or internet.
Solicitation of Proxies. The Board is asking for your vote as promptly as
possible. The Fund will pay the expenses for the proxy material and the postage.
Supplementary solicitations may be made by mail, telephone, electronic means or
personal contact by financial advisors. The expenses of supplementary
solicitation will be paid by the Fund and AEFC.
Shareholder Proposals. No proposals were received from shareholders. The Fund
does not hold regular meetings of shareholders on an annual basis. Therefore, no
anticipated date of the next regular meeting can be provided. If you have a
proposal you believe should be presented to all shareholders, send the proposal
to the Chairman. The proposal will be considered at a meeting of the Board as
soon as practicable.
Other Business. The Board does not know at this time of any other business to
come before the meetings. If something does come up, the proxies will use their
best judgment to vote for you on the matter.
Adjournment. In the event that not enough votes in favor of any of the proposals
are received by the time scheduled for the meeting, the persons named as proxies
may move for one or more adjournments of the meeting for a period of not more
than 60 days in the aggregate to allow further solicitation of shareholders on
the proposals. Any adjournment requires the affirmative vote of a majority of
the shares present at the meeting. The persons named as proxies will vote in
favor of adjournment those shares they are entitled to vote that have voted in
favor of the proposals. They will vote against any adjournment those shares that
have voted against any of the proposals. The Fund will pay the costs of any
additional solicitation and of any adjourned meeting.
Annual Report. The latest annual report was previously mailed to you. If you
would like another copy of the annual report and any subsequent semi-annual
report, without charge, please write Bob Severson at American Express
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534 or call
1-800-862-7919.
- --------------------------------------------------------------------------------
SECTION D - FUND INFORMATION
- --------------------------------------------------------------------------------
This section contains additional information about your Fund and its adviser.
The Fund's Adviser and Distributor. AEFC is the adviser for the Fund. AEFA, a
wholly-owned subsidiary of AEFC, is the distributor for the Fund. The address
for AEFC and AEFA is IDS Tower 10, Minneapolis, MN 55440-0010. AEFC is a
wholly-owned subsidiary of American Express, World Financial Center, New York,
NY 10285.
<TABLE>
<CAPTION>
Table D-1. Actual and Pro Forma Fund Expenses
(for the last fiscal year as a % of average daily net assets)
- -----------------------------------------------------------------------------------------------------------------
Total Fund
Annual Operating Expenses Management Other Expenses* Operating Expenses
Agreement Distribution
- -----------------------------------------------------------------------------------------------------------------
- ----------------------------- ------------------- --------------------- ------------------- ---------------------
Pro Pro Pro Pro
Actual Forma Actual Forma Actual Forma Actual Forma
- ----------------------------- ------------------- --------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Class A 0.72% 0.72% 0.00% 0.25% 0.91% 0.74% 1.63% 1.71%
- ----------------------------- ------------------- --------------------- ------------------- ----------------------
Class B 0.72 0.72 0.75 1.00 0.91 0.74 2.38 2.46
- ----------------------------- ------------------- --------------------- ------------------- ----------------------
Class Y 0.72 0.72 0.00 0.00 0.91 0.91 1.63 1.63
- ----------------------------- ------------------- --------------------- ------------------- ----------------------
</TABLE>
*Other expenses include an administrative services fee, a shareholder services
fee, a transfer agency fee and other nonadvisory expenses. Pro forma numbers
reflect a $4 per account increase in the transfer agency fee for Class A
effective Feb. 1, 1999 and a $2 per account increase for Class Y effective April
1, 1999.
Example: This example is intended to help you compare the cost of investing in
the Fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the Fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed Plan had been in effect:
<TABLE>
<CAPTION>
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
1 year 3 years 5 years 10 years
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
Pro Pro Pro Pro
Actual Forma Actual Forma Actual Forma Actual Forma
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Class A $657 $665 $989 $1,012 $1,343 $1,383 $2,341 $2,423
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
Class B 741 749 1,143 1,167 1,471 1,511 2,534 2,615
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
Class Y 166 166 514 514 888 888 1,938 1,938
- ----------------------- ------------------- ----------------------- ---------------------- -----------------------
</TABLE>
<TABLE>
<CAPTION>
Table D-2. Fund Size And 5% Owners
as of Jan. 31, 1999
- --------------- ------------------------ ------------------------------ ------------------------------------------
Net Assets Outstanding Shares 5% Owners
- --------------- ------------------------ ------------------------------ ------------------------------------------
- --------------- ------------------------ ------------------------------ ------------------------------------------
<S> <C> <C. <C>
Class A $5,679,560 660,000 *
- --------------- ------------------------ ------------------------------ ------------------------------------------
- --------------- ------------------------ ------------------------------ ------------------------------------------
Class B 169,282 20,000 *
- --------------- ------------------------ ------------------------------ ------------------------------------------
- --------------- ------------------------ ------------------------------ ------------------------------------------
Class Y 172,099 20,000 *
- --------------- ------------------------ ------------------------------ ------------------------------------------
</TABLE>
*AEFC owns 100% of the shares of each class.
<TABLE>
<CAPTION>
Table D-3. Plan and Shareholder Service Fees*
(for the last fiscal year)
- ------------------------------------------------------ -----------------------------------------------------------
Class B
- ------------------------------------------------------ -----------------------------------------------------------
- ------------------------------------------------------ -----------------------------------------------------------
<S> <C>
Aggregate Fee (in dollars) $844
- ------------------------------------------------------ -----------------------------------------------------------
- ------------------------------------------------------ -----------------------------------------------------------
Aggregate Fee (as a % of average net assets) 0.75%
- ------------------------------------------------------ -----------------------------------------------------------
</TABLE>
* Class A did not pay any fees for shareholder service. Class B paid fees under
a distribution plan.
Table D-4. Board Member Information
This section shows the total number of shares of all the Funds owned by the
Board members as of March 1, 1999. None of the Board members own any of the
outstanding shares of the outstanding shares of the Fund.
Atwater: All IDS Funds -102,500 shares; Bond-42,357 shares; Minnesota
Tax-Exempt-60,143 shares.
Carlson: New Dimensions-204 shares.
Cheney: All IDS Funds -126,497 shares [30,408 shares]; Blue Chip
Advantage-22,869 shares [5,326 shares]; Cash Management-278 shares; Extra
Income-14,779 shares [3,993 shares]; Global Bond-17,666 shares [2,397 shares];
Global Growth-9,524 shares [2,253 shares]; Growth-6,955 shares [1,673 shares];
International-5,252 shares [1,407 shares]; Managed Allocation-11,422 shares; New
Dimensions-9,513 shares [2,230 shares]; Research Opportunities-20,220 shares
[6,748 shares]; Utilities Income-8,019 shares [4,381 shares].
Dudley: All IDS Funds -1,097,684 shares [899,248 shares]; Blue Chip
Advantage-29,203 shares [29,570 shares]; Bond-60,556 shares [10,140 shares];
Cash Management-3,853 shares [2,111 shares]; Discovery-31,528 shares; Federal
Income-266,713 shares; Global Bond-95,706 shares [95,110 shares]; High Yield
Tax-Exempt-159,931 shares [141,837 shares]; International-75,106 shares [36,043
shares]; New Dimensions-33,349 shares [15,552 shares]; Strategy Aggressive-[511
shares]; Tax-Free Money-341,739 shares [568,374 shares].
Hubers: All IDS Funds -255,683 shares; Cash Management-1,935 shares; Global
Growth-11,021 shares; Growth-12,490 shares; High Yield Tax-Exempt-3,444 shares;
New Dimensions-9,567 shares; Tax-Free Money-217,226 shares.
Hutter: All IDS Funds -115,050 shares; Growth-9,512 shares; High Yield
Tax-Exempt-45,086 shares; Minnesota Tax-Exempt-35,831 shares; New
Dimensions-24,621 shares.
Jones: All IDS Funds -117,612 shares [13,287 shares]; Blue Chip Advantage-5,970
shares; Bond-44,188 shares [11,958 shares]; Discovery-1,763 shares; Emerging
Markets-7,417 shares; Extra Income-15,068 shares; Federal Income-30,184 shares;
Global Bond-7,583 shares; Growth-1,262 shares [1,329 shares]; New
Dimensions-1,663 shares; Small Company Index-2,514 shares.
Pearce: All IDS Funds -400,738 shares; Blue Chip Advantage-25,755 shares;
Discovery-8,989 shares; Extra Income-50,064 shares; Global Bond-1,630 shares;
Growth-8,609 shares; Minnesota Tax-Exempt-173,403 shares; Mutual-179 shares; New
Dimensions-10,710 shares; Progressive-20,156 shares; Tax-Free Money-101,243
shares. shares; Fund - shares.
Simpson: All IDS Funds -13,187 shares; Bond-3,283 shares; Cash Management-6,740
shares; Extra Income-1,957 shares; New Dimensions-1,207 shares.
Thomas: All IDS Funds -628,924 shares; Diversified Equity Income-14,420 shares;
Extra Income-11,637 shares; Global Growth-10,375 shares; Minnesota
Tax-Exempt-109,653 shares; New Dimensions-13,401 shares; Progressive-14,498
shares; Strategy Aggressive-2,891 shares; Tax-Free Money-440,647 shares;
Utilities Income-11,402 shares.
Wurtele: Minnesota Tax-Exempt-193,090 shares.
Bracketed amounts represent shares owned by family members in which the nominee
disclaims ownership, control or voting power.
<PAGE>
PROXY CARD
IDS INNOVATIONS FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Arne H. Carlson, Leslie L. Ogg, and William R.
Pearce, or any of them, as proxies, with full power of substitutions, to
represent and to vote all of the shares of the undersigned at the regular
meeting to be held on June 16, 1999, 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.
Signature(s)
Date ___________________, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Board Members. FOR ALL WITHHOLD ALL EXCEPTION
(01) H. Brewster Atwater,Jr. (02) Arne H. Carlson (03) Lynne V.
Cheney (04) William H. Dudley (05) David R. Hubers (06) Heinz F. Hutter (07)
Anne P. Jones (08) William R. Pearce (09) Alan K. Simpson (10) John R. Thomas
(11) C. Angus Wurtele To withhold authority to vote for any individual nominee,
mark the "EXCEPTION" box and print the nominee's name on this
line.___________________________________
2. Ratify the selection of independent auditors FOR AGAINST ABSTAIN
3. Change the Fund name from "IDS" to "AXP" FOR AGAINST ABSTAIN
4. Approve a new shareholder service and distribution plan FOR AGAINST ABSTAIN
5. Change investment policy regarding senior securities FOR AGAINST ABSTAIN
</TABLE>
