<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities 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
Strategist Growth Fund, Inc.
Strategist Growth and Income Fund, Inc.
Strategist Income Fund, Inc.
Strategist Tax-Free Income Fund, Inc.
Strategist World Fund, 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:
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(4) Date Filed:
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<PAGE>
STRATEGIST
FUND GROUP
Proxy
Statement
Summary
APRIL 18, 1999
HERE'S A BRIEF OVERVIEW OF SOME OF THE ISSUES AFFECTING YOUR FUND. WE
ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT.
WHY AM I BEING
ASKED TO VOTE?
Funds are required to get shareholders' votes for certain kinds of changes, like
the ones included in this proxy statement. You have a right to vote on these
changes either by mailing your proxy card, calling a toll-free number, or
responding by internet.
IS MY VOTE IMPORTANT?
Absolutely! While the Board has reviewed these changes and recommends you
approve them, you have the right to voice your opinion. And, your Fund pays for
the cost of holding a shareholder meeting. Until the Fund is sure that at least
half of the shares will vote at the meeting, it will continue to contact
shareholders asking them to vote. These efforts cost your Fund money -- so
please vote immediately.
WHAT IS BEING VOTED ON?
At all regular meetings, shareholders elect Board members and ratify the
selection of independent auditors. In addition, shareholders at this meeting
will vote on the following proposals:
/ / Adding a performance incentive adjustment under the Investment Management
Services Agreement
/ / Changing some of the investment policies
<PAGE>
/ / Adding a subadvisory agreement
Some of these changes affect all Funds, while others affect only certain Funds.
Please refer to page 3 of the proxy statement to see what proposals apply to
your Fund.
WHAT DO BOARD MEMBERS AND INDEPENDENT AUDITORS DO?
Board members represent the interests of the shareholders and oversee the
management of the Fund. Independent auditors review the financial statements
prepared for the Fund and review regulatory filings.
WHAT CHANGES ARE
PROPOSED TO THE INVESTMENT MANAGEMENT
SERVICES AGREEMENT?
Shareholders of some funds are being asked to vote on adding a performance
incentive adjustment (PIA) to the investment management agreement. Under a PIA,
the investment manager is paid more if the Fund outperforms its competitors and
is paid less if the Fund underperforms its competitors.
WHAT CHANGES ARE PROPOSED TO FUND POLICIES?
The Fund has some policies that no longer apply because of changes in the law.
Others are being standardized to match the other Funds in the Group. You are
being asked for approval to eliminate or modify these policies. This will not
change the way the Fund is managed.
WHY IS A SUBADVISORY AGREEMENT BEING ADDED?
For Total Return Fund, the investment manager plans to hire a subadviser with
expertise in small capitalization companies to manage part of the Fund's assets.
There will be no change in the fee.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR each
proposal.
HOW DO I VOTE?
You can vote in one of four ways:
/1/ BY MAIL with the enclosed proxy
card
/2/ BY TELEPHONE
/3/ THROUGH THE INTERNET
/4/ IN PERSON at the meeting
Please refer to the enclosed voting instruction card for the telephone number
and internet address. If you own more than one Fund, it is important that you
vote for each Fund.
WHO SHOULD I CALL
IF I HAVE QUESTIONS?
If you have questions about any of the issues described in the proxy statement
or about voting procedures, please call 1-800-297-7378.
<PAGE>
STRATEGIST FUND GROUP
NOTICE OF REGULAR MEETING OF SHAREHOLDERS
TO BE HELD JUNE 16, 1999
Strategist Growth Fund, Inc.
-Strategist Growth Fund
-Strategist Growth Trends Fund
-Strategist Special Growth Fund
Strategist Growth and Income Fund, Inc.
-Strategist Balanced Fund
-Strategist Equity Fund
-Strategist Equity Income Fund
-Strategist Total Return Fund
Strategist Income Fund, Inc.
-Strategist Government Income Fund
-Strategist High Yield Fund
-Strategist Quality Income Fund
Strategist Tax-Free Income Fund, Inc.
-Strategist Tax-Free High Yield Fund
Strategist World Fund, Inc.
-Strategist Emerging Markets Fund
-Strategist World Growth Fund
-Strategist World Income Fund
-Strategist World Technologies Fund
Your Fund will hold a shareholders' meeting at 9:00 a.m. on June 16, 1999, at
the First Bank Building, 650 South 3rd Avenue, Minneapolis, MN in Conference
Room B on the 11th floor. This will be a joint meeting for all of the Funds
listed above. Please take a few minutes to read the proxy statement. It
discusses each agenda item. The Board of Directors recommends that you vote FOR
each proposal.
If you were a shareholder on April 18, 1999, you may vote at the meeting or any
adjournment of the meeting. We hope you can attend the meeting. For those of you
who cannot attend, you can vote easily and quickly by mail, telephone or
internet. Just follow the instructions on the enclosed proxy card. You will
receive a separate card for each Fund you own. The mailing address for the
principal executive offices of the Fund is IDS Tower 10, Minneapolis, Minnesota
55440-0010.
April 18, 1999
<PAGE>
PROXY STATEMENT
This is a combined proxy statement for all of the Funds listed on the previous
page. There are four sections to this proxy statement:
<TABLE>
<CAPTION>
SECTION PAGE
- ------------------------------------------------------------ ----
<S> <C>
A - Overview................................................ 3
B - Fund Proposals.......................................... 4
C - Proxy Voting and Shareholder Meeting Information........ 13
D - Fund Information........................................ 15
</TABLE>
Please be sure to read the proxy statement before you vote. You will receive a
separate proxy card for each Fund you own. It is important that you return your
vote for each Fund. This proxy statement was first mailed to shareholders the
week of April 18, 1999.
PLEASE VOTE IMMEDIATELY.
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND THE COST OF ADDITIONAL MAILINGS.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
2
<PAGE>
SECTION A - OVERVIEW
The Board of Directors (the "Board") of the Funds in the Strategist Fund Group
(the "Group") is asking for your vote on the following proposals. The proposals
are described in detail in Section B.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PROPOSAL FUNDS AFFECTED
<S> <C>
- ----------------------------------------------------------------
(1) Elect Board All Funds
members
- ----------------------------------------------------------------
(2) Ratify the All Funds
selection of
independent
auditors
- ----------------------------------------------------------------
(3) Approve a change Emerging Markets, Equity Income, Special
to the Investment Growth, World Growth
Management
Services Agreement
- ----------------------------------------------------------------
(4) Approve changes in
investment
policies
A: Prohibited A: Balanced, Equity, Government Income,
conflict of Growth, Growth Trends, Total Return,
interest Quality Income, World Growth, World
Income
B: Senior securities B: Emerging Markets, Government Income,
High Yield, Quality Income, Total
Return, World Growth, World Income,
World Technologies
C: Transactions with C: Government Income
affiliates
D: Other investment D: Equity
companies
- ----------------------------------------------------------------
(5) Approve a new Total Return
Subadvisory
Agreement
- ----------------------------------------------------------------
(6) Transact other All Funds
business
- ----------------------------------------------------------------
</TABLE>
3
<PAGE>
SECTION B - FUND PROPOSALS
PROPOSAL 1: ELECTION OF BOARD MEMBERS
(Applies to: ALL FUNDS)
WHO ARE THE NOMINEES FOR THE BOARD? The persons nominated to serve on the Board
are listed below. Each person is a nominee for each of the 15 Funds in the
Group. 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.
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.
<TABLE>
<S> <C> <C>
RODNEY P. BURWELL* Board member since 1996 Born in 1939
Chairman, Xerxes Corporation (fiberglass storage tanks). Director,
Fairview Corporation.
JEAN B. KEFFELER* Board member since 1996 Born in 1945
Independent management consultant. Director, National Computer
Systems.
THOMAS R. MCBURNEY* Board member since 1996 Born in 1938
President, McBurney Management Advisors. Director, The Valspar
Corporation, (paints), Wenger Corporation, Allina, Space Center
Enterprises, Greenspring Corporation.
JAMES A. MITCHELL** Board member since 1996 Born in 1941
President of all Funds in the Group. Chairman of the Board, IDS
Life Insurance Company.
JOHN R. THOMAS** Board member since 1999 Born in 1937
Vice president of all Funds in the Group. President and board
member of 47 funds in the IDS MUTUAL FUND GROUP. Senior vice
president of American Express Financial Corporation ("AEFC").
</TABLE>
* Member of Audit and Nominating Committees.
**Interested person by reason of being an officer or director of AEFC or its
subsidiaries.
4
<PAGE>
For the year ended Jan. 31, 1999, the Board held 4 meetings. Average attendance
at the Board was 92% and no nominee attended less than 75% of the meetings of
the Board. The Audit and Nominating Committees did not meet separately during
that period.
HOW MUCH ARE BOARD MEMBERS PAID? The following table shows the total
compensation received by each Board member from all of the Funds for the year
ended Jan. 31, 1999. The Funds do not pay retirement benefits to Board members.
BOARD MEMBER COMPENSATION FROM ALL STRATEGIST FUNDS*
<TABLE>
<CAPTION>
NOMINEE AGGREGATE COMPENSATION
- ------------------------------------------------- -----------------------
<S> <C>
Burwell.......................................... $ 3,000
Keffeler......................................... 3,000
McBurney......................................... 3,000
</TABLE>
*Board members affiliated with AEFC are not paid by the Funds.
Each director was paid $1,067 by Growth Fund and Growth Trends Fund. Each
director was paid $67 by each of the other Funds.
The number of Fund shares beneficially owned by each Board member is shown in
Section D.
FUND OFFICERS. Besides Mr. Mitchell, who is President, and Mr. Thomas, who is
Vice President, the Fund's other officers are:
JOHN M. KNIGHT, born in 1952. Treasurer of all Funds in the Group since 1999.
Vice president--Investment Accounting of AEFC.
EILEEN J. NEWHOUSE, born in 1955. Secretary of all Funds in the Group since
1996. Vice President and Group Counsel of AEFC.
Officers serve at the pleasure of the Board. Officers affiliated with AEFC are
not paid by the Funds.
PROPOSAL 2: RATIFY OR REJECT THE SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
(Applies to: ALL FUNDS)
The Board has selected KPMG Peat Marwick LLP to serve as the independent
auditors for the Fund. This selection was made by the Board members who are not
officers of the Fund or associated with AEFC. The audit services provided to the
Fund include the examination of the annual financial statements and assistance
in connection with filings with the
5
<PAGE>
Securities and Exchange Commission (the "SEC"). A representative of KPMG Peat
Marwick is expected to be at the meeting and will have the opportunity to make a
statement and answer questions. 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 Board will decide what further action must be taken.
PROPOSAL 3: APPROVE OR REJECT A CHANGE
TO THE INVESTMENT MANAGEMENT SERVICES AGREEMENT
(Applies to: EMERGING MARKETS, EQUITY INCOME, SPECIAL GROWTH,
WORLD GROWTH)
The Fund is part of a master/feeder structure. In this structure, the Fund
invests all of its assets in a master fund (the "Portfolio") with the same
policies as the Fund. For purposes of this discussion, a Portfolio is referred
to as a "Fund". The Fund pays fees to AEFC under an Investment Management
Services Agreement (the "Agreement") for conducting day-to-day investment
management services for the Fund. The services performed by AEFC include
providing the personnel, equipment and office facilities necessary for the
management of the Fund's investment portfolio. Subject to the direction of the
Board and consistent with the Fund's investment policies, AEFC decides what
securities to buy, hold or sell. AEFC also executes buy and sell orders and
provides research and statistical data to support investment management
activities.
WHAT ARE THE TERMS OF THE CURRENT AGREEMENT? The fee the Fund pays to AEFC for
its services under the Agreement is based on the net assets of the Fund and
decreases as the size of the Fund increases. The complete fee schedule for all
Funds in the Group is found in Section D. The Fund also pays its taxes,
brokerage commission and nonadvisory expenses, which include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration fees for
shares; consultant fees; Board compensation; corporate filing fees;
organizational expenses; a portion of the Investment Company Institute dues;
expenses incurred in connection with lending portfolio securities; and other
expenses properly payable by the Fund, approved by the Board. Section D includes
information on the date of the current Agreement, the date it was last approved
by shareholders and the reason why it was submitted to shareholders at that
time.
HOW DOES THE PROPOSED AGREEMENT DIFFER FROM THE CURRENT AGREEMENT? The terms of
the proposed Agreement are the same as the current Agreement except for the
addition of a performance incentive adjustment.
6
<PAGE>
WHAT IS A PERFORMANCE INCENTIVE ADJUSTMENT? Under the proposed performance
incentive adjustment, the fee will be adjusted based on the Fund's performance
compared to an index of similar funds. The performance incentive adjustment is
calculated by measuring the percentage difference over a rolling 12-month period
between:
- - the performance of the Fund and
- - the change in a designated Lipper Index (the "Index") of funds with similar
investment objectives.
As described in more detail below, if the Fund's performance is better than the
Index, the fee paid to AEFC will increase. If the Fund's performance is worse
than the Index, the fee paid to AEFC will decrease. The following table shows
the proposed Index for each Fund and the maximum adjustment.
TABLE 5-1. PROPOSED INDEXES
<TABLE>
<CAPTION>
MAXIMUM
FUND INDEX ADJUSTMENT
- ------------------------- ------------------------------------------ ---------------
<S> <C> <C>
Emerging Markets......... Lipper Emerging Markets Fund Index .12%
Equity Income............ Lipper Equity Income Fund Index .08%
Special Growth........... Lipper Growth Fund Index .12%
World Growth............. Lipper Global Fund Index .12%
</TABLE>
- - HOW IS THE ADJUSTMENT CALCULATED? The management fee is calculated as shown
in Table D-2. The fee is then adjusted for performance. Solely for purposes of
calculating the performance incentive adjustment, the Index is compared to the
performance of Class A shares of another fund that invests in the Portfolio. One
percentage point is subtracted from the calculation to help assure that
incentive adjustments are attributable to AEFC's investment decisions rather
than random fluctuations and the result is multiplied by .01. For example, if
the difference between the change in the Fund's net asset value and the change
in the Index for a comparison period is 2.55 percent, the adjustment would be
.000155 (.0255 - .01 = .0155 X .01 = .000155) times the Fund's average net
assets for the comparison period divided by 12. The first adjustment will be
made on January 1, 2000 and will cover the six-month period beginning July 1,
1999. The comparison period will increase by one month each month until it
reaches 12 months.
- - WHAT ARE LIPPER INDEXES? Lipper, Inc. is an unaffiliated company that
collects data from company reports, financial reporting services, periodicals
and other sources deemed to be reliable. It then analyzes the data and publishes
a number of indexes based on the performance of the largest
7
<PAGE>
mutual funds in various categories. Categories are based on investment
objectives. Lipper indexes are published by newspapers and periodicals
throughout the country and are generally recognized by the mutual fund industry
as being an accurate and reliable source of comparative information. If an Index
ceases to be published for a period of more than 90 days, changes in any
material respect or otherwise becomes impracticable to use for purposes of a
performance incentive adjustment, the Fund will pay the advisory fee without any
adjustment for performance until the Board decides what further action to take.
Lipper is currently in the process of modifying and expanding its indexes. After
those changes are completed, some of the current indexes may be significantly
changed. However, comparisons will continue to be made based on Lipper's
characterization of the Fund. The Fund's performance will be compared to the
performance of funds in the same investment category as defined by Lipper. For
example, if Lipper categorizes a fund as a small cap growth fund, the fund's
performance would be compared to the Lipper small cap growth index.
HOW WILL THE PROPOSED CHANGE IN FEE STRUCTURE AFFECT FUND EXPENSES? Fees and
expenses the Fund actually paid as well as fees and expenses the Fund would have
paid if the proposed Agreement had been in effect for the last fiscal year are
shown in Section D.
WHAT INFORMATION DID THE PORTFOLIO BOARD REVIEW AND CONSIDER? The Contracts
Committee, as well as the full Board, received information on:
- - current trends in the financial services industry, including market share
data
- - information on investment performance over various time periods for the Fund,
a group of comparable funds and an appropriate comparative index
- - the proposed management fee compared to management fees of comparable funds
- - the impact of the proposed change on the Fund's expense ratio
- - the Fund's expense ratio compared to a group of comparable funds
- - the impact of performance incentive adjustments
- - AEFC's overall profitability from its mutual fund operations in light of
available industry data, both including and excluding distribution costs
- - the benefits to AEFC as assets increase in size and the extent economies of
scale are shared with the Fund
8
<PAGE>
- - the character and amount of fees paid by the Fund for the other services
provided by AEFC and its affiliates, and the revenues it generates from
retirement custodial accounts, fees paid for custodial services to an
affiliate of AEFC and the allocation of brokerage to an affiliate of AEFC
As part of the process of reviewing the information, the Board retained
PricewaterhouseCoopers to review the allocation of fees and expenses.
WHAT WERE THE PORTFOLIO BOARD'S CONCLUSIONS? The Board and the Contracts
Committee for each Fund acted separately in considering the information provided
to assure that the Fund's fees as compared to AEFC's costs in providing services
to the Fund are equitable and appropriate in relation to that of each of the
other Funds. The Board concluded that a competitive fee:
- - will help AEFC remain competitive in attracting, retaining and motivating the
high quality investment personnel necessary to manage the Fund
- - will help to address the expectations regarding the performance of the Fund
- - will allow AEFC to continue to improve the technology and other systems
necessary to keep the Fund operating at a high level of service
At a meeting held on January 13-14, 1999, called for the purpose of considering
the proposed Agreement, the independent members first and then the Portfolio
Board as a whole, by vote, cast in person, approved the terms of the proposed
Agreement. If approved, the proposed Agreement will continue from year to year
after the second year, so long as it is approved at least annually by a majority
of the Portfolio Board, including a majority of the independent members. The
proposed Agreement may be terminated at any time by the Portfolio Board, AEFC or
the shareholders and will terminate automatically if it is assigned.
WHAT DOES THE BOARD RECOMMEND AND HOW MANY VOTES ARE NEEDED? The Board
recommends that shareholders approve the proposed Agreement. The Agreement 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 Agreement is not approved, the Fund will
continue to operate under the current Agreement.
9
<PAGE>
PROPOSAL 4: APPROVE OR REJECT
CHANGES IN INVESTMENT POLICIES
(Applies to: ALL FUNDS)
The Fund has some investment policies that are fundamental. This means the
policies can be changed only with the approval of shareholders. A few of these
policies are no longer required to be fundamental, some need changes and others
are no longer required at all. The Board recommends making the following changes
in the Fund's fundamental investment policies:
A. ELIMINATE THE POLICY ADDRESSING A POTENTIAL CONFLICT OF INTEREST. (Applies
to: BALANCED, EQUITY, GOVERNMENT INCOME, GROWTH, GROWTH TRENDS, QUALITY INCOME,
TOTAL RETURN, WORLD GROWTH, WORLD INCOME) The Fund has a fundamental policy that
prohibits it from buying securities of any company if an officer or board member
of the Fund or of the Fund's investment adviser individually owns more than 1/2
of 1% of the securities of that company and together they own more than 5% of
those securities. This policy originated with state securities laws designed to
avoid conflicts of interest. These laws no longer apply to the Fund. Both the
Fund and AEFC have Codes of Ethics that address conflicts of interest. Under
these Codes, procedures are in place to keep individuals who would stand to gain
from the Fund's investments in an inappropriate way from doing so. The Board
believes that Codes of Ethics are a better way to address these types of
conflicts of interest because they can be tailored to the specific operating
structures of an organization and to provide appropriate flexibility. The
elimination of this policy will not change the way the Fund's assets are
invested.
B. MODIFY THE POLICY PROHIBITING INVESTMENT IN SENIOR SECURITIES. (Applies to:
EMERGING MARKETS, GOVERNMENT INCOME, HIGH YIELD, QUALITY INCOME, TOTAL RETURN,
WORLD GROWTH, WORLD INCOME, WORLD TECHNOLOGIES) 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
10
<PAGE>
security. The revised policy will not change the way the Fund's assets are
invested.
C. ELIMINATE THE POLICY PROHIBITING TRANSACTIONS WITH AFFILIATES. (Applies to:
GOVERNMENT INCOME) The Fund has a fundamental policy limiting its ability to
purchase securities from, or sell securities to, the Fund's advisor or any
officer or board member of the Fund or the advisor. These transactions are
prohibited by law and therefore the policy is not necessary.
D. RECLASSIFY AS NONFUNDAMENTAL THE FUND'S POLICY ON INVESTING IN OTHER
INVESTMENT COMPANIES. (Applies to: EQUITY) The Fund has a fundamental policy
prohibiting it from investing in other investment companies, such as
country-specific funds, except by purchases in the open market where the
dealer's or sponsor's profit is the regular commission. The Board recommends
that this policy be changed to non-fundamental to conform with the standard
policy used by the other Funds in the Group. Changing this policy to
non-fundamental will not have any impact on the Fund's investment practices.
WHAT DOES THE BOARD RECOMMEND AND HOW MANY VOTES ARE NEEDED? The Board
recommends that shareholders approve the proposed changes in the fundamental
policies. The changes 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 changes are not approved,
the Fund will continue to operate in accordance with its current investment
policies.
PROPOSAL 5: APPROVE OR REJECT A NEW SUBADVISORY
AGREEMENT WITH KENWOOD CAPITAL MANAGEMENT LLC
(Applies to: TOTAL RETURN)
Kenwood Capital Management LLC ("Kenwood") is a registered investment adviser
with particular expertise on investments in small capitalization companies.
Kenwood is a subsidiary of AEFC. AEFC plans to enter into a Subadvisory
Agreement with Kenwood. Under the proposed Subadvisory Agreement, AEFC will
grant investment management authority to Kenwood with respect to all or a part
of the Fund's assets. Kenwood will be authorized to buy or sell stocks, bonds
and other securities for the Fund subject to the overall supervision of AEFC.
WILL THE PROPOSED SUBADVISORY AGREEMENT CHANGE THE FEES PAID BY THE FUND? There
will be no change in the fees paid by the Fund. If the proposed Subadvisory
Agreement is approved, the fees paid by the Fund
11
<PAGE>
to AEFC will remain the same. AEFC, not the Fund, will pay Kenwood. Compensation
will be based on the assets allocated to Kenwood by AEFC and will be paid at a
rate of 0.35% of average daily net assets.
PRINCIPALS AND MANAGEMENT BOARD OF KENWOOD. Jacob E. Hurwitz and Kent A. Kelley
are the principals of Kenwood. The following individuals are directors of
Kenwood: Peter J. Anderson, Jacob E. Hurwitz, Kent A. Kelley, Gabrielle F.
Parish, Stephen W. Roszell. Mr. Anderson and Mr. Roszell are officers of AEFC.
Ms. Parish is an officer of American Express Asset Management Group, ("AEAMG"),
a wholly-owned subsidiary of AEFC. All of the directors are located at IDS
Tower, Minneapolis, MN 55440-0010. AEAMG owns 50.1% of Kenwood. Mr. Hurwitz and
Mr. Kelley each owns a minority interest. Kenwood's address is IDS Tower 10,
Minneapolis, MN 55440-0010.
WHEN WILL THE PROPOSED SUBADVISORY AGREEMENT START? If approved by
shareholders, the proposed Subadvisory Agreement will take effect shortly after
the shareholder meeting. The proposed Subadvisory Agreement will continue from
year to year, provided continuance is approved at least annually. The proposed
Subadvisory Agreement may be terminated without penalty either by the Portfolio
Board, by AEFC or by a vote of a majority of the outstanding shares of the Fund.
WHAT FACTORS DID THE PORTFOLIO BOARD CONSIDER? Subadvisory agreements must be
approved by shareholders when the subadviser is partially owned by the
investment manager. The Subadvisory Agreement meets appropriate operational
objectives of AEFC and Kenwood. AEFC has committed to be fully accountable for
the investment performance of the Fund and for all duties and responsibilities
under the Investment Management Services Agreement. AEFC will manage the
arrangement with Kenwood in the same way it oversees portfolio managers directly
employed by AEFC.
WHAT DOES THE BOARD RECOMMEND AND HOW MANY VOTES ARE NEEDED? The Board
recommends that shareholders approve the proposed Subadvisory Agreement. The
Subadvisory Agreement 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 Subadvisory
Agreement is not approved, the Fund will continue to operate under its current
investment management agreement with AEFC.
12
<PAGE>
SECTION C--PROXY VOTING AND
SHAREHOLDER MEETING INFORMATION
This section includes information about proxy voting and 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.
On the election of directors and ratification of independent auditors you vote
together with the owners of shares of other Funds that are part of the same
corporation. You vote by Fund on the investment management agreement, changes of
fundamental investment policies and subadvisory agreement. 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, 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.
Proposals 3, 4 and 5 affect the master fund. Feeder funds, as the sole
shareholders of the master fund, will vote for or against each of those
proposals in proportion to the vote received from 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.
13
<PAGE>
JOINT PROXY STATEMENT/SIMULTANEOUS MEETINGS. This joint proxy statement reduces
the preparation, printing and mailing costs of sending separate proxy statements
for each Fund. The meetings will be held simultaneously. If any shareholder
objects to the holding of simultaneous meetings, the shareholder may move for an
adjournment of his or her Fund's meeting to a time immediately after the
simultaneous meetings so that a meeting of that Fund may be held separately. If
a shareholder makes this motion, the persons named as proxies will consider the
reasons for the objection in deciding whether to vote in favor of the
adjournment.
SOLICITATION OF PROXIES. The Board is asking for your vote 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. The expenses of supplementary solicitation will be paid by the
Fund.
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 President. 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 American Express Financial Direct at P.O.
Box 59196, Minneapolis, MN 55459-0196 or call 1-800-297-7378.
14
<PAGE>
SECTION D - FUND INFORMATION
This section contains the following information about your Fund:
<TABLE>
<CAPTION>
CONTENT
(all information is shown for the last fiscal year unless noted
TABLE otherwise)
- --------- ------------------------------------------------------------------
<S> <C>
D-1 The Fund's size, number of outstanding shares and 5% owners
D-2 The Fund's fee schedule under its management agreement
D-3 Actual and pro forma expenses assuming all of the changes had been
in effect during the year
D-4 Actual and pro forma Investment Management Services Agreement fees
D-5 Payments the Fund made to AEFC and its affiliates
D-6 Brokerage commissions the Fund paid to an AEFC affiliate
D-7 Information about shareholder approval of current agreements
</TABLE>
THE FUND'S ADVISER AND DISTRIBUTOR. AEFC, IDS Tower 10, Minneapolis, MN
55440-0010, is the adviser for each of the Funds. American Express Service
Corporation ("AESC"), P.O. Box 59196, Minneapolis, MN 55459-1096, is the
distributor for each of the Funds. AESC is a wholly-owned subsidiary of Travel
Related Services, Inc. ("TRS"). AEFC and TRS are both wholly-owned subsidiaries
of American Express Company ("American Express"), World Financial Center, New
York, NY 10285.
PRESIDENT AND BOARD OF DIRECTORS OF AEFC. David R. Hubers is President and
Chief Executive Officer of AEFC. The following individuals are directors of
AEFC. Except as otherwise noted, each director is an officer of AEFC located at
IDS Tower 10, Minneapolis, MN 55440-0010. Directors: Peter J. Anderson, Karl J.
Breyer, James E. Choat, Gordon L. Eid, Harvey Golub (Chairman, American Express,
New York, NY), David R. Hubers, Marietta L. Johns, Susan D. Kinder, Richard W.
Kling, Steven C. Kumagai, Peter A. Lefferts, Douglas A. Lennick, Jonathan S.
Linen (Vice Chairman, American Express, New York, NY), Barry J. Murphy, Erven A.
Samsel, Norman Weaver, Jr., Michael R. Woodward.
BOARD MEMBER SHARE OWNERSHIP. The number of shares beneficially owned by each
Board member on Mar. 10, 1999 is shown below. As of that date, the Board members
and officers as a group owned less than 1% of each Fund's outstanding shares.
BURWELL: Tax-Free High Yield - 21,367 shares.
KEFFELER: Growth - 588 shares.
MCBURNEY: Growth - 218 shares.
MITCHELL: All Strategist Funds - 4,147 shares. Balanced - 130 shares, Emerging
Markets - 962 shares, Equity - 64 shares,
15
<PAGE>
Equity Income - 198 shares, Government Income - 409 shares, Growth -
47 shares, Growth Trends - 63 shares, High Yield - 502 shares, Quality
Income - 215 shares, Special Growth - 328 shares, Tax-Free High Yield
- 429 shares, Total Return - 158 shares, World Growth - 318 shares,
World Income - 324 shares.
THOMAS: All Strategist Funds - 2,454 shares. Growth - 113 shares, High Yield -
1,263 shares, Tax-Free High Yield - 1,078 shares.
TABLE D-1. FUND SIZE AND 5% OWNERS
AS OF JAN. 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------
5%
FUND NET ASSETS OUTSTANDING SHARES OWNERS
<S> <C> <C> <C>
- -----------------------------------------------
Balanced.......................... $ 1,205,282 76,589 (1)
Equity............................ 1,139,432 34,813 (2)
Equity Income..................... 988,815 95,203 (3)
Emerging Markets.................. 450,795 147,785 (4)
Government Income................. 805,082 162,768 (5)
Growth............................ 24,861,601 553,075 (6)
Growth Trends..................... 23,859,747 730,513 (7)
High Yield........................ 1,774,112 447,508 (8)
Quality Income.................... 769,480 81,122 (9)
Special Growth.................... 1,750,358 273,852 (10)
Tax-Free High Yield............... 873,663 186,278 (11)
Total Return...................... 790,811 60,374 (12)
World Growth...................... 847,909 86,319 (13)
World Income...................... 658,173 105,310 (14)
World Technologies................ 858,666 100,000 (15)
- -----------------------------------------------
</TABLE>
(1) AEFC owns 45,087 shares (58.87%).
(2) AEFC owns 25,123 shares (72.89%).
(3) AEFC owns 70,729 shares (74.29%).
(4) AEFC owns 120,014 shares (81.21%).
(5) AEFC owns 114,589 shares (76.50%).
Nadia Hamidian, 22 68th Street, Guttenberg, NJ 070934, owns 10,161 shares
(6.24%).
(6) American Express owns 433,233 shares (78.35%).
(7) American Express owns 591,139 shares (80.91%).
(8) AEFC owns 139,626 shares (31.20%).
American Latvian Association in the US Inc., 400 Hurley Avenue, Rockville,
MD 20850, owns 123,529 shares (27.60%).
Latvizas Brivibas Fonds LTD, 400 Hurley Avenue, Rockville, MD 20850, owns
16
<PAGE>
94,028 shares (21.01%).
Donald E. Maddox, 54-587 Shoal Creek, La Quinta, CA 92253, owns 26,356
shares (5.69%).
(9) AEFC owns 62,455 shares (76.99%).
(10) AEFC owns 139,449 shares (50.92%).
(11) AEFC owns 131,972 shares (70.84%).
John L. & Rosana L. Warren, 4971 Little Cub Creek Road, Evergreen, CO
80439, own 15,632 shares (8.39%).
(12) AEFC owns 51,045 shares (84.55%).
(13) AEFC owns 71,944 shares (83.34%).
William J. & Frances M. Russell, 1443 Creekside Ct., Vienna, VA 22182, own
5,550 shares (6.43%).
(14) AEFC owns 96,612 shares (91.74%).
(15) AEFC owns 100,000 shares (100.00%).
17
<PAGE>
TABLE D-2. FUND MANAGEMENT FEES(1)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
MAXIMUM
FEES
MANAGEMENT FEE AND
FUND ANNUAL RATE; IN BILLIONS EXPENSES(6)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Balanced(2)........... First $1 - .53%; next $1 - .505%; next $1 - .48%; next $3 - .455%;
over $6 - .43% 1.25%
- --------------------------------------------------------------------------------------------
Equity Income......... First $.5 - .53%; next $.5 - .505%; next $1 - .48%; next $1 - .455%; 1.25%
Total Return(2, 3) next $3 - .43%; over $6 - .40% 1.30%
Equity(2) 1.25%
- --------------------------------------------------------------------------------------------
Emerging Markets(5)... First $.25 - 1.10%; next $.25 - 1.08%; next $.25 - 1.06%; next $.25 -
1.04%; next $1 - 1.02%; over $2 - 1.0% 2.20%
- --------------------------------------------------------------------------------------------
Government Income..... First $1 - .52%; next $1 - .495%; next $1 - .47%; next $3 - .445%; 1.10%
Quality Income next $3 - .42%; over $9 - .395% 1.10%
- --------------------------------------------------------------------------------------------
Growth(2)............. First $1 - .60%; next $1 - .575%; next $1 - .55%; next 1.3 $3 - .525%;
over $6 - .50% 1.30%
- --------------------------------------------------------------------------------------------
Growth Trends(2)...... First $1 - .60%; next $1 - .575%; next $1 - .55%; next $3 - .525%;
next $6 - .50%; over $12 - .49% 1.30%
- --------------------------------------------------------------------------------------------
High Yield............ First $1 - .59%; next $1 - .565%; next $1 - .54%; next $3 - .515%;
next $3 - .49%; over $9 - .465% 1.20%
- --------------------------------------------------------------------------------------------
Special Growth........ First $.25 - .65%; next $.25 - .625%; next $.50 - .60%; next $1 -
.575%; next $1 - .55%; next $3 - .525%; over $6 - .50% 1.40%
- --------------------------------------------------------------------------------------------
Tax-Free High Yield... First $1 - .49%; next $1 - .465%; next $1 - .44%; next $3 - .415%;
next $3 - .39%; over $9 - .36% 0.95%
- --------------------------------------------------------------------------------------------
World Growth(4)....... First $.25 - .80%; next $.25 - .775%; next $.25 - .75%; next $.25 -
.725%; next $1 - .70%; over $2 - .675% 1.75%
- --------------------------------------------------------------------------------------------
World Income.......... First $.25 - .77%; next $.25 - .745%; next $.25 - .72%; next $.25 -
.695%; over $1 - .67% 1.35%
- --------------------------------------------------------------------------------------------
World Technologies.... First $.25 - .72%; next $.25 - .695%; next $.25 - .67%; next $.25 -
.645%; next $1 - .62%; over $2 - .595% 1.35%
- --------------------------------------------------------------------------------------------
</TABLE>
(1)The Funds are part of a master/feeder structure. Management fees are paid by
the Portfolio on behalf of the Fund.
(2)The Fund has a performance incentive adjustment based on its performance
compared to a Lipper index of comparable funds over a rolling 12-month
period.
(3)Under a subadvisory agreement with American Express Asset Management Group
("AEAMG"), AEFC pays AEAMG a fee equal on an annual basis to 0.35% of average
daily net assets.
(4)Under a subadvisory agreement with American Express Asset Management
International Inc. ("AEAMI"), AEFC pays AEAMI a fee equal on an annual basis
to 0.35% of average daily net assets.
(5)Under a subadvisory agreement with AEAMI, AEFC pays AEAMI a fee equal on an
annual basis to 0.50% of average daily net assets.
(6)Total fees and expenses have been capped at this level through the end of the
Fund's 1999 fiscal year.
18
<PAGE>
TABLE D-3. ACTUAL AND PRO FORMA FUND EXPENSES
(as a % of average daily net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
ANNUAL OPERATING EXPENSES AGREEMENT DISTRIBUTION EXPENSES* EXPENSES
- -------------------------------------------------- -------------- -------------- -------------- --------------
Pro Pro Pro Pro
Actual Forma Actual Forma Actual Forma Actual Forma
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Emerging Markets.................................. 1.13% 1.19% 0.25% 0.25% 3.28% 3.28% 4.66% 4.72%
Equity Income..................................... 0.51 0.47 0.25 0.25 0.49 0.49 1.25 1.21
Special Growth.................................... 0.65 0.62 0.25 0.25 0.13 0.13 1.03 1.00
World Growth...................................... 0.77 0.77 0.25 0.25 1.77 1.77 2.79 2.79
</TABLE>
*Other expenses include an administrative services fee, a transfer agency fee
and other nonadvisory expenses.
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 changes 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> <C> <C> <C> <C>
Emerging Markets........... $ 467 $ 473 $ 1,405 $ 1,422 $ 2,350 $ 2,377 $ 4,750 $ 4,787
Equity Income.............. 127 123 397 384 687 666 1,516 1,471
Special Growth............. 105 102 328 319 570 553 1,264 1,229
World Growth............... 282 282 865 865 1,475 1,475 3,122 3,122
</TABLE>
TABLE D-4. ACTUAL AND PRO FORMA
INVESTMENT MANAGEMENT SERVICES AGREEMENT FEES
<TABLE>
<CAPTION>
FUND ACTUAL FEE PRO FORMA FEE % CHANGE
- ------------------------------------------- ----------- --------------- ------------
<S> <C> <C> <C>
Emerging Markets........................... $ 6,469 $ 6,806 5.2%
Equity Income.............................. 4,563 4,194 -8.1
Special Growth............................. 9,908 9,417 -5.0
World Growth............................... 5,437 5,433 -0.1
</TABLE>
19
<PAGE>
TABLE D-5. FUND PAYMENTS TO AEFC AND ITS AFFILIATES*
<TABLE>
<CAPTION>
FUND ADMIN PLAN TA CUSTODY
- ---------------------------------------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Emerging Markets.............................. $ 574 $ 1,435 $ 622 $ 1,827
Equity Income................................. 361 2,258 799 90
Special Growth................................ 915 3,814 2,715 0
World Growth.................................. 425 1,769 398 986
</TABLE>
*The Administrative Services Agreement ("Admin") is between the Fund and AEFC.
The Plan and Agreement of Distribution ("Plan") is between the Fund and AESC.
The Transfer Agency Agreement ("TA") is between the Fund and American Express
Client Service Corporation. The Custodian Agreement ("Custody") is between the
Fund and American Express Trust Company. Services under these agreements will
continue to be provided after the Agreement is approved.
TABLE D-6. BROKERAGE COMMISSIONS PAID TO
AMERICAN ENTERPRISE INVESTMENT SERVICES INC.*
<TABLE>
<CAPTION>
FUND AMOUNT OF COMMISSIONS % OF ALL COMMISSIONS
- ------------------------------------ ----------------------- -----------------------
<S> <C> <C>
Emerging Markets.................... $ 0 0.00%
Equity Income....................... 49,994 0.99
Special Growth...................... 81,111 7.05
World Growth........................ 0 0.00
</TABLE>
*A wholly-owned subsidiary of AEFC. These transactions were executed at rates
determined to be reasonable and fair as compared to the rates another broker
would charge.
TABLE D-7. DATES RELATING TO APPROVAL OF AGREEMENTS
<TABLE>
<CAPTION>
DATE LAST DATE
APPROVED ENTERED REASON SUBMITTED TO
FUND BY SHAREHOLDERS INTO SHAREHOLDERS
- ---------------------------------- --------------- --------- -------------------
<S> <C> <C> <C>
Special Growth.................... 8/19/96 8/19/96 Initial approval
Emerging Markets.................. 11/13/96 11/13/96 Initial approval
World Technologies................ 11/13/96 11/13/96 Initial approval
All other Funds................... 9/9/94 3/20/95 *
</TABLE>
*In 1996 the Portfolio adopted the investment management agreement of the IDS
feeder fund. In anticipation of the establishment of the master/feeder
structure, shareholders of the IDS feeder fund approved (1) basing the fee
solely on the assets of the Fund, not on the assets of all of the funds in the
IDS Mutual Fund Group and (2) eliminating provisions regarding administration
and accounting services. The Fund and AEFC then entered into a separate
Administrative Services Agreement.
20
<PAGE>
Strategist
<PAGE>
- --------------------------------------------------------------------------------
VOTE TODAY BY MAIL, TOUCH-TONE PHONE, OR THE INTERNET
CALL TOLL-FREE: 1-800-597-7014 OR BY ACCESSING WWW.PROXYWEB.COM
- --------------------------------------------------------------------------------
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET
*** CONTROL NUMBER: 999 999 999 999 99 *** V Please fold and detach card at
perforation before mailing V
FUND NAME
PRINTS HERE PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Heidi S. Brommer, James A. Mitchell and Eileen
J. Newhouse, or any one of them, as proxies, with full power of substitution,
to represent and to vote all of the shares of the undersigned at the 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
Owners please sign as names
appear at left. Executors,
administrators, trustees, etc.,
should indicate position when
signing.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE REFER TO SECTION A - OVERVIEW (PAGE 3) OF THE PROXY STATEMENT
TO DETERMINE WHICH PROPOSALS ARE APPLICABLE TO YOUR FUND.
- --------------------------------------------------------------------------------
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW.
V Please fold and detach card at perforation before mailing V
<TABLE>
<CAPTION>
<S><C>
1. Election of Board members. (ALL FUNDS) FOR WITHHOLD EXCEPTION
ALL ALL
(01) Rodney P. Burwell (02) Jean B. Keffeler (03) Thomas R. McBurney / / / / / / 1.
(04) James A. Mitchell (05) John R. Thomas
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
"EXCEPTION" BOX AND PRINT THE NOMINEE'S NAME ON THIS LINE.________________
FOR AGAINST ABSTAIN
2. Ratify the selection of independent auditors (ALL FUNDS) / / / / / / 2.
3. Approve changes to the Investment Management Services Agreement
(SEE OVERVIEW-PAGE 3) / / / / / / 3.
4. Changes to investment policies (SEE OVERVIEW-PAGE 3) FOR AGAINST ABSTAIN
ALL ALL ALL
4.1 Prohibited conflict of interest 4.3 Transactions with affiliates / / / / / / 4.
4.2 Senior securities 4.4 Other investment companies
IF YOU WISH TO VOTE AGAINST OR ABSTAIN ON A PARTICULAR INVESTMENT
POLICY CHANGE, APPLICABLE TO YOUR FUND, WRITE THE NUMBER OF THE SUB-PROPOSAL
ON THE LINE BELOW.
__________________________________________________________________________
FOR AGAINST ABSTAIN
5. Approve a Subadvisory Agreement (TOTAL RETURN FUND ONLY) / / / / / / 5.
</TABLE>
<PAGE>
PLEASE VOTE YOUR PROXY TODAY
PROMPT RESPONSE WILL SAVE THE EXPENSE OF ADDITIONAL SOLICITATIONS.
CHOOSE THE VOTING METHOD THAT'S MOST CONVENIENT FOR YOU.
1. VOTE BY MAIL: Sign and date your proxy card(s) and return them in the
enclosed postage-paid envelope. NOTE: YOUR PROXY IS NOT VALID UNLESS IT
IS SIGNED.
2. VOTE BY PHONE: Dial 1-800-597-7014, enter the CONTROL NUMBER printed on
the upper portion of your proxy card and follow the simple instructions.
Telephone voting is available 24 hours a day, 7 days a week. THE CALL IS
TOLL-FREE. If you have received more than one proxy card, you can vote
each card during the call. Each card has a different control number.
3. VOTE VIA THE INTERNET: Log on to www.proxyweb.com, enter your CONTROL
NUMBER and follow the instructions on the screen. If you received more
than one proxy card, you may vote them all during the same session. Each
card has a different control number.
IF YOU VOTE BY PHONE OR THE INTERNET,
PLEASE DO NOT RETURN YOUR PROXY CARD(S).
