<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. _
TAX-FREE INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
IDS Tower 10, Minneapolis, MN 55440-0010
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 612-671-2772
Eileen J. Newhouse
IDS Tower 10, Minneapolis, MN 55440-0010
(Name and Address of Agent for Service)
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PART A
Item 1-3. Responses to Items 1 through 3 have been omitted
pursuant to Paragraph 4 of Instruction F of the
General Instructions to Form N-1A.
Item 4. General Description of Registrant.
Tax-Free Income Trust (the Trust) is an open-end management
investment company organized as a Massachusetts business trust on
Oct. 2, 1995. The Trust consists of one series: Aggressive Tax-
Free Income Portfolio (the Portfolio). The Portfolio issues units
of beneficial interest without any sales charge. Units in the
Portfolio are issued solely in private placement transactions that
do not involve any public offering within the meaning of Section
4(2) of the Securities Act of 1933, as amended (the 1933 Act).
Investments in the Portfolio may be made only by investment
companies, common or commingled trust funds or similar
organizations or entities that are accredited investors within the
meaning of Regulation D under the 1933 Act. This Registration
Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any security within the meaning of the 1933
Act. Organizations or entities that become holders of units of
beneficial interest of the Trust are referred to herein as
unitholders.
Goals and types of Portfolio investments and their risks
The Portfolio seeks to provide unitholders with a high yield
generally exempt from federal income taxes. The Portfolio is a
diversified mutual fund that usually invests in medium- and lower-
quality bonds and notes issued by or on behalf of state and local
governmental units whose interest generally is exempt from federal
income tax. The Portfolio also may invest in derivative
instruments and money market instruments.
Because investments involve risk, the Portfolio cannot guarantee
achieving its goal. Some of the Portfolio's investments may be
considered speculative and involve additional investment risks.
The foregoing investment goal is a fundamental policy of the
Portfolio, which may not be changed unless authorized by a majority
of the outstanding voting securities.
Investment policies and risks
Under normal market conditions, the Portfolio will invest at least
80% of its net assets in bonds and notes issued by or on behalf of
state and local governmental units whose interest is exempt from
federal income tax (according to the opinion of counsel for the
issuer) and is not subject to the alternative minimum tax. This
policy cannot be changed without approval of a majority of the
outstanding voting securities. Other investments include
derivative instruments, money market instruments and bonds subject
to the alternative minimum tax computation.
The various types of investments described above that the portfolio
manager uses to achieve investment performance are explained in
more detail in the next section and in Part B of this Registration
Statement.<PAGE>
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Facts about investments and their risks
Bonds and notes exempt from federal income taxes: The price of
bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of bonds or notes also
fluctuates if the credit rating is upgraded or downgraded. The
price of bonds or notes below investment grade may react more to
the ability of a company to pay interest or principal when due than
to changes in interest rates. They have greater price
fluctuations, are more likely to experience a default, and
sometimes are referred to as junk bonds. Reduced market liquidity
for these bonds may occasionally make it more difficult to value
them.
The Portfolio usually invests in medium- and lower-quality notes
rated A, BBB or BB by Standard & Poor's Corporation, Moody's
Investors Service, Inc. or Fitch Investors Services, Inc., or in
securities the portfolio manager believes have similar qualities
even though they are not rated or have been given a lower rating by
a rating agency. The Portfolio invests in higher-quality bonds and
notes when the difference in yield between higher- and lower-
quality securities does not warrant the increase in risk or there
is not an adequate supply of lower-quality securities. Securities
that are subsequently downgraded in quality may continue to be held
by the Portfolio and will be sold only when the investment manager
believes it is advantageous to do so.
<TABLE><CAPTION>
Aggressive Tax-Free Income Portfolio
Bond ratings and holdings
for the calendar year ending Dec. 31, 1995
Percent of
net assets
in unrated
S&P Rating Protection of securities
Percent of(or Moody's principal and assessed by
net assetsequivalent) interest the Advisor
<S> <C> <C> <C>
AAA Highest quality
AA High quality
A Upper medium grade
BBB Medium grade
BB Moderately speculative
B Speculative
CCC Highly speculative
CC Poor quality
C Lowest quality
D In default
Unrated Unrated securities
</TABLE>
(The information in the table above relates to IDS High Yield Tax-
Exempt Fund, a fund that transferred its assets to Aggressive Tax-
Free Income Portfolio on _______, 1996. See Description of bond
ratings for further information.)
Bonds sold at a deep discount: Some bonds are sold at deep
discounts because they do not pay interest until maturity. They
include zero coupon bonds and PIK (pay-in-kind) bonds. To comply
with tax laws, the Portfolio has to recognize a computed amount of
interest income and pay dividends to unitholders even though no
cash has been received. In some instances, the Portfolio may have
to sell securities to have sufficient cash to pay the dividends.
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Concentration: The Portfolio may invest more than 25% of its total
assets in industrial revenue bonds, but it does not intend to
invest more than 25% of its total assets in industrial revenue
bonds issued for companies in the same industry or state. As the
similarity in issuers increases, the potential for fluctuation in
the net asset value also increases.
Derivative instruments: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies,
or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties, and inability to close such instruments. The Portfolio
will use derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The Portfolio will designate cash or appropriate liquid
assets to cover its portfolio obligations. The use of derivative
instruments may produce taxable income. No more than 5% of the
Portfolio's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. The Portfolio is not limited
as to the percentage of its assets that may be invested in
permissible investments, including derivatives, except as otherwise
explicitly provided in Part A or Part B of this Registration
Statement. For descriptions of these and any other types of
derivative instruments, see "Descriptions of derivative
instruments" and Part B of this Registration Statement.
Securities and derivative instruments that are illiquid: A
security or derivative instrument is illiquid if it cannot be sold
quickly in the normal course of business. Some investments cannot
be resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
and consider relevant factors such as the nature of the security
and the number of likely buyers when determining whether a security
is illiquid.
No more than 10% of the Portfolio's net assets will be held in
securities and derivative instruments that are illiquid.
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Money market instruments: Short-term tax-exempt debt securities
rated in the top two grades or the equivalent are used to meet
daily cash needs and at various times to hold assets until better
investment opportunities arise. Under extraordinary conditions
where, in the opinion of the portfolio manager, appropriate short-
term tax-exempt securities are not available, the Portfolio is
authorized to make certain taxable investments as described in Part
B of this Registration Statement.
The investment policies described above may be changed by the
board.
Lending portfolio securities: The Portfolio may lend its
securities to earn income so long as borrowers provide collateral
equal to the market value of the loans. The risks are that
borrowers will not provide collateral when required or return
securities when due. Unless holders of a majority of the
outstanding voting securities approve otherwise, loans may not
exceed 30% of the Portfolio's net assets.
Description of bond ratings
Bond ratings concern the quality of the issuing state or local
governmental unit. They are not an opinion of the market value of
the security. Such ratings are opinions on whether the principal
and interest will be repaid when due. A security's rating may
change, which could affect its price. Ratings by Moody's Investors
Service, Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C. Ratings
by Standard & Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC,
CC, C and D. The following is a compilation of the two agencies'
rating descriptions. For further information, see Part B of this
Registration Statement.
Aaa/AAA - Judged to be of the best quality and carry the smallest
degree of investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for
interest and principal may not be quite as good as Aaa or AAA rated
securities.
A - Considered upper-medium grade. Protection for interest and
principal is deemed adequate but may be susceptible to future
impairment.
Baa/BBB - Considered medium-grade obligations. Protection for
interest and principal is adequate over the short-term; however,
these obligations may have certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of
interest and principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may
be small assurance over any long period of time of the payment of
interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or
there may be risk with respect to principal or interest.
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Ca/CC - Represent obligations that are highly speculative. Such
issues are often in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These
securities have major risk exposures to default.
D - Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
Non-rated securities will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the Portfolio's objectives and policies. When assessing the
risk involved in each non-rated security, the Portfolio will
consider the financial condition of the issuer or the protection
afforded by the terms of the security.
Definitions of zero-coupon and pay-in-kind securities
A zero-coupon security is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at face
value on the maturity date.
A pay-in-kind security is a security in which the issuer has the
option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the
same terms, including maturity date, as the pay-in-kind securities.
Descriptions of derivative instruments
What follows are brief descriptions of derivative instruments the
Portfolio may use. At various times the Portfolio may use some or
all of these instruments and is not limited to these instruments.
It may use other similar types of instruments if they are
consistent with the Portfolio's investment goal and policies. For
more information on these instruments, see Part B of this
Registration Statement.
Options and futures contracts. An option is an agreement to buy or
sell an instrument at a set price during a certain period of time.
A futures contract is an agreement to buy and sell an instrument
for a set price on a future date. The Portfolio may buy and sell
options and futures contracts to manage its exposure to changing
interest rates, security prices and currency exchange rates.
Options and futures may be used to hedge the Portfolio's
investments against price fluctuations or to increase market
exposure.
Asset-backed and mortgage-backed securities. Asset-backed
securities include interests in pools of assets such as motor
vehicle installment sale contracts, installment loan contracts,
leases on various types of real and personal property, receivables
from revolving credit (credit card) agreements or other categories
of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities.
Interest and principal payments depend on payment of the underlying
loans or mortgages. The value of these securities may also be<PAGE>
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affected by changes in interest rates, the market's perception of
the issuers and the creditworthiness of the parties involved. The
non-mortgage related asset-backed securities do not have the
benefit of a security interest in the related collateral. Stripped
mortgage-backed securities include interest only (IO) and principal
only (PO) securities. Cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments on the
underlying mortgage loans or mortgage-backed securities.
Indexed securities. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Most indexed securities are short- to intermediate-
term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.
Inverse floaters. Inverse floaters are created by underwriters
using the interest payment on securities. A portion of the
interest received is paid to holders of instruments based on
current interest rates for short-term securities. The remainder,
minus a servicing fee, is paid to holders of inverse floaters. As
interest rates go down, the holders of the inverse floaters receive
more income and an increase in the price for the inverse floaters.
As interest rates go up, the holders of the inverse floaters
receive less income and a decrease in the price for the inverse
floaters.
Structured products. Structured products are over-the-counter
financial instruments created specifically to meet the needs of one
or a small number of investors. The instrument may consist of a
warrant, an option or a forward contract embedded in a note or any
of a wide variety of debt, equity and/or currency combinations.
Risks of structured products include the inability to close such
instruments, rapid changes in the market and defaults by other
parties.
Item 5. Management of the Fund.
The Advisor
The Trust has a board of trustees, which has the primary
responsibility for the overall management of the Portfolio and for
electing its officers who are responsible for administering day-to-
day operations.
American Express Financial Corporation, a provider of financial
services since 1894 (the Advisor), serves as the investment manager
for the Portfolio. The Advisor, located at IDS Tower 10,
Minneapolis, MN 55440-0010, is a wholly owned subsidiary of
American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center, New
York, NY 10285. The Portfolio may pay brokerage commissions to
broker-dealer affiliates of the Advisor.
The Trust, on behalf of the Portfolio, pays the Advisor for
managing the assets of the Portfolio. Under its Investment
Management Services Agreement, the Advisor determines which<PAGE>
PAGE 8
securities will be purchased, held or sold by the Portfolio
(subject to the direction and control of the board of trustees).
The Advisor is paid a fee for these services based on the average
daily net assets of the Portfolio, as follows:
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over 9.0 0.360
Under the agreement, the Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses.
Under a Transfer Agency and Administration Agreement, the Advisor
provides transfer agent services (handling unitholder accounts) and
administrative services.
Portfolio manager
Kurt Larson joined the Advisor in 1961 and serves as vice president
and senior portfolio manager. He has managed the assets of
Aggressive Tax-Free Income Portfolio since 1979.
Item 5A. Response to Item 5A has been omitted pursuant to
Paragraph 4 of Instruction F of the General Instructions
to Form N-1A.
Item 6. Capital Stock and Other Securities.
The Trust is an open-end, management investment company organized
as a Massachusetts business trust on Oct. 2, 1995 and is registered
under the Investment Company Act of 1940, as amended (the 1940
Act). The Trust is authorized to issue an unlimited number of
units of beneficial interest. Currently, the Trust has one series,
the Portfolio. All units of the Trust have one vote, and, when
issued, are fully paid, non-assessable, and redeemable. The units
have cumulative voting rights. Additional series may be added in
the future by the board of trustees, the assets and liabilities of
which will be separate and distinct from any other series.
Unitholder investments in the Trust may not be transferred, but a
unitholder may withdraw all or any portion of its investment at any
time at net asset value. Unitholders in the Trust will each be
liable for all obligations of the Trust. However, the risk of a
unitholder in the Trust incurring financial loss on account of such
liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its
obligations.
Under the anticipated method of operation of the Trust, the
Portfolio will be a partnership that is not subject to any federal
income tax. However, each unitholder in the Portfolio will be
taxable on its share (as determined in accordance with the
governing instruments of the Trust) of the Portfolio's ordinary
income and capital gain pursuant to the rules governing the<PAGE>
PAGE 9
unitholders. The determination of the unitholder's share will be
made in accordance with the Internal Revenue Code of 1986, as
amended (the Code), regulations promulgated thereunder and the
Declaration of Trust.
The Portfolio's taxable year-end will be Nov. 30. It is intended
that the Portfolio's assets, income and distributions will be
managed in such a way that a unitholder in the Portfolio will be
able to satisfy the requirements of Subchapter M of the Code
assuming that the unitholder invested all of its assets in the
Portfolio.
There are certain tax issues that will be relevant to only certain
of the unitholders, specifically, unitholders who contribute assets
rather than cash to the Portfolio. It is intended that
contributions of assets will not be taxable provided certain
requirements are met. Such unitholders are advised to consult
their own tax advisors as to the tax consequences of an investment
in the Portfolio.
Item 7. Purchase of Securities Being Offered.
The Portfolio's units have not been registered under the 1933 Act,
which means that its units may not be sold publicly. However, the
Portfolio may sell its units through private placements pursuant to
available exemptions from that Act.
Units of the Portfolio are sold only to other investment companies
and certain institutional investors. All units are sold without a
sales charge. Units are purchased at the net asset value next
determined after the Portfolio receives the order in proper form.
All investments in the Portfolio are credited to the unitholder's
account in the form of full and fractional units of the Portfolio
(rounded to the nearest 1/1000 of a unit). The Portfolio does not
issue stock certificates.
Units of the Portfolio may be purchased (minimum investment of
$5,000,000 initially with no minimum on subsequent investments) at
their current net asset value, without a sales charge.
Net asset value (NAV) is the total value of the Portfolio's
investments and other assets, less any liabilities, divided by the
number of units outstanding. The NAV is the price at which
Portfolio units are purchased and the price received when units are
redeemed. The number of units outstanding is equal to the net
value, in dollars, of the Portfolio. Accordingly, the net asset
value of a single unit will always be $1.00. The Portfolio's net
asset value (assets less liabilities) is calculated at the close of
business, normally 3 p.m. Central time, each business day (any day
the New York Stock Exchange is open). The value of the Portfolio's
assets generally declines as interest rates increase and rises as
interest rates decline.
American Express Financial Advisors Inc. (the Placement Agent), a
wholly owned subsidiary of the Advisor, serves as the Placement
Agent for the Trust. The Placement Agent is located at IDS Tower
10, Minneapolis, MN 55440-0010.
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Item 8. Redemption or Repurchase.
As stated above in response to Item 7, the Portfolio's units have
not been registered under the 1933 Act, which means that its units
are restricted securities that may not be sold unless registered or
pursuant to an available exemption from that Act.
Redemptions are processed on any date on which the Portfolio is
open for business and are effected at the Portfolio's net asset
value next determined after the Portfolio receives a redemption
request in good form.
Payment for redeemed units will be made promptly, but in no event
later than seven days after receipt of the redemption request in
good form. However, the right of redemption may be suspended or
the date of payment postponed in accordance with the rules under
the 1940 Act. The Portfolio reserves the right upon 30-days'
written notice to redeem, at net asset value, the units of any
unitholder whose account has a value of less than $1,000,000 as a
result of voluntary redemptions. Redemptions are taxable events,
and the amount received upon redemption may be more or less than
the amount paid for the units depending upon the fluctuations in
the market value of the assets owned by the Portfolio.
Item 9. Pending Legal Proceedings.
Not Applicable.<PAGE>
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PART B
Item 10: Cover Page
Not applicable.
Item 11: Table of Contents
Not applicable.
Item 12: General Information and History
Not applicable.
Item 13: Investment Objectives and Policies
Please refer to Item 4 of Part A for the objectives of the
Portfolio.
Investment Policies applicable to the Portfolio:
These are investment policies in addition to those presented in
Part A. The policies below are fundamental policies of the
Portfolio and may be changed only with unitholder approval. Unless
holders of a majority of the outstanding units agree to make the
change, the Portfolio will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the Portfolio may be deemed to be an
underwriter when it purchases restricted securities directly from
the issuer and later resells them.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The Portfolio has not borrowed in the past
and has no present intention to borrow.
'Make cash loans, if the total commitment amount exceeds 5% of the
Portfolio's total assets.
'Invest more than 5% of its total assets in securities of any one
company, government or political subdivision thereof, except the
limitation will not apply to investments in securities issued by
the U.S. Government, its agencies or instrumentalities, and except
that up to 25% of the Portfolio's total assets may be invested
without regard to this 5% limitation. For purposes of this policy,
the terms of a municipal security determine the issuer.
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the Portfolio from investing in securities or other instruments
backed by real estate or securities of companies engaged in the
real estate business or real estate investment trusts. For
purposes of this policy, real estate includes real estate limited
partnerships.
'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the Portfolio from buying or selling options and futures<PAGE>
PAGE 12
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.
'Lend portfolio securities in excess of 30% of its net assets. The
current policy of the board is to make these loans, either long- or
short-term, to broker-dealers. In making such loans the Portfolio
gets the market price in cash, U.S. government securities, letters
of credit or such other collateral as may be permitted by
regulatory agencies and approved by the board of trustees. If the
market price of the loaned securities goes up, the Portfolio will
get additional collateral on a daily basis. The risks are that the
borrower may not provide additional collateral when required or
return the securities when due. During the existence of the loan,
the Portfolio receives cash payments equivalent to all interest or
other distributions paid on the loaned securities. A loan will not
be made unless the investment manager believes the opportunity for
additional income outweighs the risks.
The following policies are non-fundamental and may be changed
without unitholder approval. Unless changed by the board, the
Portfolio will not:
'Buy on margin or sell short, but it may enter into interest rate
future contracts.
'Pledge or mortgage its assets beyond 15% of total assets. If the
Portfolio were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
restriction, collateral arrangements for margin deposits on a
futures contract are not deemed to be a pledge of assets.
'Invest more than 5% of its total assets in securities whose issuer
or guarantor of principal and interest has been in operation for
less than three years.
'Invest in voting securities, securities of investment companies or
exploration or development programs, such as oil, gas or mineral
leases.
'Invest more than 5% of its net assets in warrants. Under one
state's law, no more than 2% of the Portfolio's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.
'Invest more than 10% of the Portfolio's net assets in securities
and derivative instruments that are illiquid. In determining the
liquidity of municipal lease obligations, the Advisor, under
guidelines established by the board, will consider the essential
nature of the leased property, the likelihood that the municipality
will continue appropriating funding for the leased property, and
other relevant factors related to the general credit quality of the
municipality and the marketability of the municipal lease
obligation. For purposes of complying with Ohio law, the Portfolio
will not invest more than 15% of its total assets in a combination
of illiquid securities, 144A securities and securities of
companies, including any predecessor, that has a record of less
than three years continuous operations.<PAGE>
PAGE 13
The Portfolio may invest up to 20% of its net assets in certain
taxable investments for temporary defensive purposes. It may
purchase short-term U.S. and Canadian government securities. It
may invest in bank obligations including negotiable certificates of
deposit, non-negotiable fixed time deposits, bankers' acceptances
and letters of credit. The issuing bank or savings and loan
generally must have capital, surplus and undivided profits (as of
the date of its most recently published annual financial
statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of
investment.
The Portfolio may purchase short-term corporate notes and
obligations rated in the top two classifications by Moody's or S&P
or the equivalent. It also may use repurchase agreements with
broker-dealers registered under the Securities Exchange Act of 1934
and with commercial banks. Repurchase agreements involve
investments in debt securities where the seller (broker-dealer or
bank) agrees to repurchase the securities from the Portfolio at
cost plus an agreed-to interest rate within a specified time. A
risk of a repurchase agreement is that if the seller seeks the
protection of the bankruptcy laws, the Portfolio's ability to
liquidate the security involved could be impaired, and it might
subsequently incur a loss if the value of the security declines or
if the other party to a repurchase agreement defaults on its
obligation.
The Portfolio may invest in commercial paper issued in transactions
not involving a public offering under Section 4(2) of the
Securities Act of 1933 (4(2) paper). In determining the liquidity
of 4(2) paper, the Advisor, under guidelines established by the
board, will evaluate relevant factors such as the issuer and the
size and nature of its commercial paper programs, the willingness
and ability of the issuer or dealer to repurchase the paper, and
the nature of the clearance and settlement procedures for the
paper.
For a description of short-term securities and options and interest
rate futures contracts, see descriptions below.
DESCRIPTION OF SHORT-TERM SECURITIES
Short-term Tax-exempt Securities
A portion of the Portfolio's assets are in cash and short-term
securities for day-to-day operating purposes. The investments will
usually be in short-term municipal bonds and notes. These include:
(1) Tax anticipation notes sold to finance working capital needs
of municipalities in anticipation of receiving taxes on a future
date.
(2) Bond anticipation notes sold on an interim basis in
anticipation of a municipality issuing a longer term bond in the
future.
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PAGE 14
(3) Revenue anticipation notes issued in anticipation of revenues
from sources other than taxes, such as federal revenues available
under the Federal Revenue Sharing Program.
(4) Tax and revenue anticipation notes issued in anticipation of
revenues from taxes and other sources of revenue, except bond
placements.
(5) Construction loan notes insured by the Federal Housing
Administration which remain outstanding until permanent financing
by the Federal National Mortgage Association (FNMA) or the
Government National Mortgage Association (GNMA) at the end of the
project construction period.
(6) Tax-exempt commercial paper with a stated maturity of 365 days
or less issued by agencies of state and local governments to
finance seasonal working capital needs or as short-term financing
in anticipation of longer-term financing.
(7) Project notes issued by local housing authorities to finance
urban renewal and public housing projects. These notes are
guaranteed by the full faith and credit of the U.S. government.
(8) Variable rate demand notes, on which the yield is adjusted at
periodic intervals not exceeding 31 days and on which the principal
may be repaid after not more than seven days' notice, are
considered short-term regardless of the stated maturity.
Short-term Taxable Securities and Repurchase Agreements
Depending on market conditions, a portion of the Portfolio's
investments may be in short-term taxable securities. These
include:
(1) Obligations of the U.S. government, its agencies and
instrumentalities resulting principally from lending programs of
the U.S. government;
(2) U.S. Treasury bills with maturities up to one year. The
difference between the purchase price and the maturity value or
resale price is the interest income to the Portfolio;
(3) Certificates of deposit or receipts with fixed interest rates
issued by banks in exchange for deposit of funds;
(4) Bankers' acceptances arising from short-term credit
arrangements designed to enable business to obtain funds to finance
commercial transactions;
(5) Letters of credit which are short-term notes issued in bearer
form with a bank letter of credit obligating the bank to pay the
bearer the amount of the note;
(6) Commercial paper rated in the two highest grades by Standard &
Poor's or Moody's. Commercial paper is generally defined as
unsecured short-term notes issued in bearer form by large well-
known corporations and finance companies. These ratings reflect a
review of management, economic evaluation of the industry
competition, liquidity, long-term debt and ten-year earning trends;<PAGE>
PAGE 15
Standard & Poor's rating A-1 indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Standard & Poor's ratings A-2 indicates that capacity for timely
payment on issues with this designation is strong.
Moody's rating Prime-1 (P-1) indicates a superior capacity for
repayment of short-term promissory obligations.
Moody's rating Prime-2 (P-2) indicates a strong capacity for
repayment of short-term promissory obligations.
(7) Repurchase agreements involving acquisition of securities by
the Portfolio with a concurrent agreement by the seller, usually a
bank or securities dealer, to reacquire the securities at cost plus
interest within a specified time. From this investment, the
Portfolio receives a fixed rate of return that is insulated from
market rate changes while it holds the security.
OPTIONS AND INTEREST RATE FUTURES CONTRACTS
The Portfolio may buy or write options traded on any U.S. or
foreign exchange or in the over-the-counter market. The Portfolio
may enter into interest rate futures contracts traded on any U.S.
or foreign exchange. The Portfolio also may buy or write put and
call options on these futures. Options in the over-the-counter
market will be purchased only when the investment manager believes
a liquid secondary market exists for the options and only from
dealers and institutions the investment manager believes present a
minimal credit risk. Some options are exercisable only on a
specific date. In that case, or if a liquid secondary market does
not exist, the Portfolio could be required to buy or sell
securities at disadvantageous prices, thereby incurring losses.
OPTIONS. An option is a contract. A person who buys a call option
for a security has the right to buy the security at a set price for
the length of the contract. A person who sells a call option is
called a writer. The writer of a call option agrees to sell the
security at the set price when the buyer wants to exercise the
option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person
who writes a put option agrees to buy the security at the set price
if the purchaser wants to exercise the option, no matter what the
market price of the security is at that time. An option is covered
if the writer owns the security (in the case of a call) or sets
aside the cash (in the case of a put) that would be required upon
exercise.
The price paid by the buyer for an option is called a premium. In
addition the buyer generally pays a broker a commission. The
writer receives a premium, less a commission, at the time the
option is written. The cash received is retained by the writer
whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
market price rises above the exercise price. A writer of a put
option may have to pay an above-market price for the security if
its market price decreases below the exercise price.<PAGE>
PAGE 16
Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options and futures contracts may benefit the
Portfolio and its unitholders by improving the Portfolio's
liquidity and by helping to stabilize the value of its net assets.
Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. Options are used as a trading technique to
take advantage of any disparity between the price of the underlying
security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized
only to effect a transaction when the price of the security plus
the option price will be as good or better than the price at which
the security could be bought or sold directly. When the option is
purchased, the Portfolio pays a premium and a commission. It then
pays a second commission on the purchase or sale of the underlying
security when the option is exercised. For record-keeping and tax
purposes, the price obtained on the purchase of the underlying
security will be the combination of the exercise price, the premium
and both commissions. When using options as a trading technique,
commissions on the option will be set as if only the underlying
securities were traded.
Put and call options also may be held by the Portfolio for
investment purposes. Options permit the Portfolio to experience
the change in the value of a security with a relatively small
initial cash investment. The risk the Portfolio assumes when it
buys an option is the loss of the premium. To be beneficial to the
Portfolio, the price of the underlying security must change within
the time set by the option contract. Furthermore, the change must
be sufficient to cover the premium paid, the commissions paid both
in the acquisition of the option and in a closing transaction or in
the exercise of the option and subsequent sale (in the case of a
call) or purchase (in the case of a put) of the underlying
security. Even then the price change in the underlying security
does not ensure a profit since prices in the option market may not
reflect such a change.
Writing covered options. The Portfolio will write covered options
when it feels it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the
Portfolio's goal.
'All options written by the Portfolio will be covered. For covered
call options if a decision is made to sell the security, the
Portfolio will attempt to terminate the option contract through a
closing purchase transaction.
'The Portfolio will write options only as permitted under federal
or state laws or regulations, such as those that limit the amount
of total assets subject to the options. While no limit has been
set by the Portfolio, it will conform to the requirements of
certain states. For example, California limits the writing of
options to 50% of the assets of a portfolio.
<PAGE>
PAGE 17
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the
Portfolio is taxed as a regulated investment company under the
Internal Revenue Code, any gains on options and other securities
held less than three months must be limited to less than 30% of its
annual gross income.
If a covered call option is exercised, the security is sold by the
Portfolio. The Portfolio will recognize a capital gain or loss
based upon the difference between the proceeds and the security's
basis.
Options on many securities are listed on options exchanges. If the
Portfolio writes listed options, it will follow the rules of the
options exchange. Options are valued at the close of the New York
Stock Exchange. An option listed on a national exchange, CBOE or
NASDAQ will be valued at the last quoted sales price or, if such a
price is not readily available, at the mean of the last bid and
asked prices.
FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. They have been established by boards of trade which have
been designated contracts markets by the Commodity Futures Trading
Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and
the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures
contracts based on such debt securities as long-term U.S. Treasury
bonds, Treasury notes, GNMA modified pass-through mortgage-backed
securities, three-month U.S. Treasury bills and bank certificates
of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the
futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale
is effected by the Portfolio entering into a futures contract
purchase for the same aggregate amount of the specific type of
financial instrument and same delivery date. If the price in the
sale exceeds the price in the offsetting purchase, the Portfolio
immediately is paid the difference and realizes a gain. If the
offsetting purchase price exceeds the sale price, the Portfolio
pays the difference and realizes a loss. Similarly, closing out a
futures contract purchase is effected by the Portfolio entering
into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Portfolio realizes a gain, and if
the offsetting sale price is less than the purchase price, the
Portfolio realizes a loss. At the time a futures contract is made,
a good-faith deposit called initial margin is set up within a
segregated account at the Portfolio's custodian bank. The initial
margin deposit is approximately 1.5% of a contract's face value.
Daily thereafter, the futures contract is valued and the payment of
variation margin is required so that each day the Portfolio would
pay out cash in an amount equal to any decline in the contract's
value or receive cash equal to any increase. At the time a futures
contract is closed out, a nominal commission is paid, which is
generally lower than the commission on a comparable transaction in
the cash markets.<PAGE>
PAGE 18
The purpose of a futures contract, in the case of a portfolio
holding long-term debt securities, is to gain the benefit of
changes in interest rates without actually buying or selling long-
term debt securities. For example, if the Portfolio owned long-
term bonds and interest rates were expected to increase, it might
enter into futures contracts to sell securities which would have
much the same effect as selling some of the long-term bonds it
owned.
Futures contracts are based on types of debt securities referred to
above, which have historically reacted to an increase or decline in
interest rates in a fashion similar to the debt securities the
Portfolio owns. If interest rates did increase, the value of the
debt securities in the portfolio would decline, but the value of
the Portfolio's futures contracts would increase at approximately
the same rate, thereby keeping the net asset value of the Portfolio
from declining as much as it otherwise would have. If, on the
other hand, the Portfolio held cash reserves and interest rates
were expected to decline, the Portfolio might enter into interest
rate futures contracts for the purchase of securities. If short-
term rates were higher than long-term rates, the ability to
continue holding these cash reserves would have a very beneficial
impact on the Portfolio's earnings. Even if short-term rates were
not higher, the Portfolio would still benefit from the income
earned by holding these short-term investments. At the same time,
by entering into futures contracts for the purchase of securities,
the Portfolio could take advantage of the anticipated rise in the
value of long-term bonds without actually buying them until the
market had stabilized. At that time, the futures contracts could
be liquidated and the Portfolio's cash reserves could then be used
to buy long-term bonds on the cash market. The Portfolio could
accomplish similar results by selling bonds with long maturities
and investing in bonds with short maturities when interest rates
are expected to increase or by buying bonds with long maturities
and selling bonds with short maturities when interest rates are
expected to decline. But by using futures contracts as an
investment tool, given the greater liquidity in the futures market
than in the cash market, it might be possible to accomplish the
same result more easily and more quickly. Successful use of
futures contracts depends on the investment manager's ability to
predict the future direction of interest rates. If the investment
manager's prediction is incorrect, the Portfolio would have been
better off had it not entered into futures contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell futures contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are no daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily<PAGE>
PAGE 19
and that change is reflected in the net asset value of the
Portfolio.
RISKS. There are risks in engaging in each of the management tools
described above. The risk the Portfolio assumes when it buys an
option is the loss of the premium paid for the option. Purchasing
options also limits the use of monies that might otherwise be
available for long-term investments.
The risk involved in writing options on futures contracts the
Portfolio owns, or on securities held in its portfolio, is that
there could be an increase in the market value of such contracts or
securities. If that occurred, the option would be exercised and
the asset sold at a lower price than the cash market price. To
some extent, the risk of not realizing a gain could be reduced by
entering into a closing transaction. The Portfolio could enter
into a closing transaction by purchasing an option with the same
terms as the one it had previously sold. The cost to close the
option and terminate the Portfolio's obligation, however, might be
more or less than the premium received when it originally wrote the
option. Furthermore, the Portfolio might not be able to close the
option because of insufficient activity in the options market.
A risk in employing futures contracts to protect against the price
volatility of portfolio securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the securities. The correlation may
be distorted because the futures market is dominated by short-term
traders seeking to profit from the difference between a contract or
security price and their cost of borrowed funds. Such distortions
are generally minor and would diminish as the contract approached
maturity.
Another risk is that the Portfolio's investment manager could be
incorrect in anticipating as to the direction or extent of various
interest rate movements or the time span within which the movements
take place. For example, if the Portfolio sold futures contracts
for the sale of securities in anticipation of an increase in
interest rates, and interest rates declined instead, the Portfolio
would lose money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, the
Portfolio intends to identify futures contracts as mixed straddles
and not mark them to market, that is, not treat them as having been
sold at the end of the year at market value. Such an election may
result in the Portfolio being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
Federal income-tax treatment of gains or losses from transactions
in options on futures contracts and indexes will depend on whether
such option is a section 1256 contract. If the option is a non-
equity option, the Portfolio will either make a 1256(d) election
and treat the option as a mixed straddle or mark to market the
option at fiscal year end and treat the gain/loss as 40% short-term
and 60% long-term. Certain provisions of the Internal Revenue Code
may also limit the Portfolio's ability to engage in futures
contracts and related options transactions. For example, at the<PAGE>
PAGE 20
close of each quarter of the Portfolio's taxable year, at least 50%
of the value of its assets must consist of cash, government
securities and other securities, subject to certain diversification
requirements. Less than 30% of its gross income must be derived
from sales of securities held less than three months.
The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, the
Portfolio may be required to defer closing out a contract beyond
the time when it might otherwise be advantageous to do so. The
Portfolio also may be restricted in purchasing put options for the
purpose of hedging underlying securities because of applying the
short sale holding period rules with respect to such underlying
securities.
Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the Portfolio's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.
The portfolio turnover rate for the following calendar years was:
199_ 199_
% %
Turnover rates are based on the turnover rates of IDS High Yield
Tax-Exempt Fund, which transferred all of its assets to the
Portfolio on ____________, for periods prior to ____ (the
Portfolio's commencement of operations). A higher turnover rate
(in excess of 100%) results in higher fees and expenses.
Item 14: Management of the Fund
BOARD MEMBERS AND OFFICERS
The following is a list of the Trust's board members and officers,
who are also board members and officers of all other Trusts in the
Trust Group of Funds and all funds in the IDS MUTUAL FUND GROUP.
All units have cumulative voting rights with respect to the
election of board members.
Trustees and Officers
Lynne V. Cheney+'
Born in 1941.
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.<PAGE>
PAGE 21
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, and FPL Group, Inc. (holding company for Florida
Power and Light), and the Interpublic Group of Companies, Inc.
(advertising).
William H. Dudley+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of AEFC.
Robert F. Froehlke+
Born in 1922.
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
David R. Hubers**
Born in 1943.
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of AEFC.
Previously, senior vice president, finance and chief financial
officer of AEFC.
Heinz F. Hutter+
Born in 1929.
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.
Anne P. Jones+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
Donald M. Kendall'
Born in 1921.
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
<PAGE>
PAGE 22
Melvin R. Laird+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
Lewis W. Lehr'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
William R. Pearce+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN
President of all the Trusts in the Trust Group of Funds since
__________ and President of all funds in the IDS MUTUAL FUND GROUP
since June 1993. Former vice chairman of the board, Cargill,
Incorporated (commodity merchants and processors).
Edson W. Spencer
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
John R. Thomas**
Born in 1937.
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of AEFC.
<PAGE>
PAGE 23
Wheelock Whitney+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. Angus Wurtele
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person of the Trust by reason of being an officer and
employee of the Trust.
**Interested person of the Trust by reason of being an officer,
board member, employee and/or shareholder of AEFC or American
Express.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
In addition to Mr. Pearce, who is president, the Trust's other
officers are:
Leslie L. Ogg
Born in 1938.
901 S. Marquette Ave.
Minneapolis, MN
Vice president, general counsel and secretary of all Trusts in the
Trust Group of Funds and of all funds in the IDS MUTUAL FUND GROUP.
Officers who also are officers and/or employees of AEFC.
Peter J. Anderson
Born in 1942.
IDS Tower 10
Minneapolis, MN
Vice president-investments of all Trusts in the Trust Group of
Funds and of all funds in the IDS MUTUAL FUND GROUP. Director and
senior vice president-investments of AEFC.
Melinda S. Urion
Born in 1953.
IDS Tower 10
Minneapolis, MN
Treasurer of all Trusts in the Trust Group of Funds and of all
funds in the IDS MUTUAL FUND GROUP. Vice president and corporate<PAGE>
PAGE 24
controller of AEFC. Director and executive vice president and
controller of IDS Life Insurance Company.
<TABLE><CAPTION>
The following is an estimate of compensation expected to be paid to the Trust's board members for the
fiscal year ending _______________, 1996:
Compensation Table
Pension or
Retirement
Aggregate Benefits Accrued Estimated Annual Total Compensation
Compensation as Part of Benefits Open from the Trust Group
Board Members from the Trust Portfolio Expenses Retirement of Funds ?
<S> <C> <C> <C> <C>
</TABLE>
On _________________, the Trust's board members and officers as a
group owned less than 1% of the outstanding units.
Item 15: Control Persons and Principal Holder of Securities
Not applicable.
Item 16: Investment Advisory and Other Services
AGREEMENTS
Investment Management Services Agreement
The Trust, on behalf of the Portfolio, has an Investment Management
Services Agreement with the Advisor. For its services, the Advisor
is paid a fee from the assets of the Portfolio, based upon the
following schedule:
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over $9.0 0.360
The fee is calculated for each calendar day on the basis of net
assets as the close of business two days prior to the day for which
the calculation is made. The management fee is paid monthly.
Under the Agreement, the Portfolio also pays taxes, brokerage
commissions and nonadvisory expenses, including custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for units; Portfolio office expenses; consultants' fees;
compensation of board members, officers and employees; corporate
filing fees; organizational expenses; expenses incurred in
connection with lending portfolio securities; and expenses properly
payable by the Portfolios, approved by the board.
Transfer Agency and Administration Agreement
The Company, on behalf of the Fund, has a Transfer Agency and
Administration Agreement with the Advisor. This agreement governs
the responsibility for administering and/or performing transfer
agent functions, for acting as service agent in connection with
dividend and distribution functions and for performing unitholder<PAGE>
PAGE 25
account administration agent functions in connection with the
issuance, exchange and redemption or repurchase of the Portfolio's
units. The fee is determined by multiplying the number of
unitholder accounts at the end of the day by a rate of _______ per
year and dividing by the number of days in the year.
Placement Agency Agreement
Pursuant to a Placement Agency Agreement, the Distributor acts as
placement agent of the units of the Trust.
Custodian
The Trust's securities and cash are held by American Express Trust
Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307, through a custodian agreement. The
custodian is permitted to deposit some or all of its securities in
central depository systems as allowed by federal law. For its
services, the Portfolio pays the custodian a maintenance charge and
a charge per transaction in addition to reimbursing the custodian's
out-of-pocket expenses.
Item 17: Brokerage Allocations and Other Practices
PORTFOLIO TRANSACTIONS
Subject to policies set by the board, the Advisor is authorized to
determine, consistent with each Portfolio's investment goal and
policies, which securities will be purchased, held or sold. In
determining where the buy and sell orders are to be placed, the
Advisor has been directed to use its best efforts to obtain the
best available price and most favorable execution except where
otherwise authorized by the board.
The Advisor has a strict Code of Ethics that prohibits its
affiliated personnel from engaging in personal investment
activities that compete with or attempt to take advantage of
planned portfolio transactions for any of the Trusts in the Trust
Group of Funds. The Advisor carefully monitors compliance with its
Code of Ethics.
Normally, the Portfolio's securities are traded on a principal
rather than an agency basis. In other words, the Advisor will
trade directly with the issuer or with a dealer who buys or sells
for its own account, rather than acting on behalf of another
client. The Advisor does not pay the dealer commissions. Instead,
the dealer's profit, if any, is the difference, or spread, between
the dealer's purchase and sale price for the security.
On occasion, it may be desirable to compensate a broker for
research services or for brokerage services by paying a commission
that might not otherwise be charged or a commission in excess of
the amount another broker might charge. The board has adopted a
policy authorizing the Advisor to do so to the extent authorized by
law, if the Advisor determines, in good faith, that such commission
is reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light
of that transaction or the Advisor's overall responsibilities to
the Portfolios advised by the Advisor.<PAGE>
PAGE 26
Research provided by brokers supplements the Advisor's own research
activities. Such services include economic data on, and analysis
of, U.S. and foreign economies; information on specific industries;
information about specific companies, including earnings estimates;
purchase recommendations for stocks and bonds; portfolio strategy
services; political, economic, business and industry trend
assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. The Advisor has obtained, and in
the future may obtain, computer hardware from brokers, including
but not limited to personal computers that will be used exclusively
for investment decision-making purposes, which include the
research, portfolio management and trading functions and other
services to the extent permitted under an interpretation by the
Securities and Exchange Commission.
When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, the
Advisor must follow procedures authorized by the board. To date,
three procedures have been authorized. One procedure permits the
Advisor to direct an order to buy or sell a security traded on a
national securities exchange to a specific broker for research
services it has provided. The second procedure permits the
Advisor, in order to obtain research, to direct an order on an
agency basis to buy or sell a security traded in the over-the-
counter market to a firm that does not make a market in that
security. The commission paid generally includes compensation for
research services. The third procedure permits the Advisor, in
order to obtain research and brokerage services, to cause the
Portfolio to pay a commission in excess of the amount another
broker might have charged. The Advisor has advised the Trust it is
necessary to do business with a number of brokerage firms on a
continuing basis to obtain such services as the handling of large
orders, the willingness of a broker to risk its own money by taking
a position in a security, and the specialized handling of a
particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some Portfolio
transactions may not be effected at the lowest commission, but the
Advisor believes it may obtain better overall execution. The
Advisor has assured the Trust that under all three procedures the
amount of commission paid will be reasonable and competitive in
relation to the value of the brokerage services performed or
research provided.
All other transactions shall be placed on the basis of obtaining
the best available price and the most favorable execution. In so
doing, if, in the professional opinion of the person responsible
for selecting the broker or dealer, several firms can execute the
transaction on the same basis, consideration will be given by such
person to those firms offering research services. Such services
may be used by the Advisor in providing advice to the Trusts in the
Trust Group of Funds, their corresponding Funds and other accounts
advised by the Advisor, even though it is not possible to relate
the benefits to any particular fund, portfolio or account.
<PAGE>
PAGE 27
Each investment decision made for a Portfolio is made independently
from any decision made for the other Portfolios or accounts advised
by the Advisor or any of its subsidiaries. When a Portfolio buys
or sells the same security as another Portfolio or account, the
Advisor carries out the purchase or sale in a way the Trust agrees
in advance is fair. Although sharing in large transactions may
adversely affect the price or volume purchased or sold by the
Portfolio, the Portfolio hopes to gain an overall advantage in
execution. The Advisor has assured the Trust it will continue to
seek ways to reduce brokerage costs.
On a periodic basis, the Advisor makes a comprehensive review of
the broker-dealers and the overall reasonableness of their
commissions. The review evaluates execution, operational
efficiency and research services.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE ADVISOR
Affiliates of American Express Company (American Express) (of which
the Advisor is a wholly owned subsidiary) may engage in brokerage
and other securities transactions on behalf of the Portfolio
according to procedures adopted by the Trust's board and to the
extent consistent with applicable provisions of the federal
securities laws. The Advisor will use an American Express
affiliate only if (i) the Advisor determines that the Portfolio
will receive prices and executions at least as favorable as those
offered by qualified independent brokers performing similar
brokerage and other services for the Portfolio and (ii) the
affiliate charges the Portfolio commission rates consistent with
those the affiliate charges comparable unaffiliated customers in
similar transactions and if such use is consistent with terms of
the Investment Management Services Agreement.
The Advisor may direct brokerage to compensate an affiliate. The
Advisor will receive research on South Africa from New Africa
Advisors, a wholly-owned subsidiary of Sloan Financial Group. The
Advisor owns 100% of IDS Capital Holdings Inc. which in turn owns
40% of Sloan Financial Group. New Africa Advisors will send
research to the Advisor and in turn the Advisor will direct trades
to a particular broker. The broker will have an agreement to pay
New Africa Advisors. All transactions will be on a best execution
basis. Compensation received will be reasonable for the services
rendered.
Item 18: Capital Stock and Other Securities
The information in response to this item is provided in addition to
information provided in Item 6 of Part A.
The Declaration of Trust dated October 2, 1995, a copy of which is
on file in the office of the Secretary of the Commonwealth of
Massachusetts, authorizes the issuance of units of beneficial
interest in the Trust without par value. Each unit of the
Portfolio has one vote and shares equally in dividends and
distributions, when and if declared by the board, and in the
Portfolio's net assets upon liquidation. All units, when issued,
are fully paid and non-assessable. There are no preemptive,
conversion or exchange rights.
<PAGE>
PAGE 28
The board may classify or reclassify any unissued units of the
Trust into units of any series by setting or changing in any one or
more respect, from time to time, prior to the issuance of such
units, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, or qualifications, of
such units. Any such classification or reclassification will
comply with the provisions of the 1940 Act.
The overall management of the business of the Portfolio is vested
with the board members. The board members approve all significant
agreements between the Portfolio and persons or companies
furnishing services to the Portfolio. The day-to-day operations of
the Portfolio are delegated to the officers of the Trust subject to
the investment objective and policies of the Portfolio, the general
supervision of the board members and the applicable laws of The
Commonwealth of Massachusetts.
Generally, there will not be annual meetings of unitholders.
Unitholders may remove board members from office by votes cast at a
meeting of unitholders or by written consent.
Under Massachusetts law, unitholders could, under certain
circumstances, be held liable for the obligations of the Trust.
However, the Declaration of Trust disclaims unitholder liability
for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust. The Declaration
of Trust provides for indemnification out of the Trust property for
all loss and expense of any unitholder of the Trust held liable on
account of being or having been a unitholder. Thus, the risk of a
unitholder incurring financial loss on account of unitholder
liability is limited to circumstances in which the Trust would be
unable to meet its obligations wherein the complaining party was
held not to be bound by the disclaimer.
The Declaration of Trust further provides that the board members
will not be liable for errors of judgment or mistakes of fact or
law. However, nothing in the Declaration of Trust protects a board
member against any liability to which the board member would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involving the
conduct of his or her office. The Declaration of Trust provides
for indemnification by the Trust of the board members and officers
of the Trust except with respect to any matter as to which any such
person did not act in good faith in the reasonable belief that his
action was in or not opposed to the best interests of the Trust.
Such person may not be indemnified against any liability to the
Trust or the Trust unitholders to which he or she would otherwise
be subjected by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office. The Declaration of Trust also authorizes
the purchase of liability insurance on behalf of board members and
officers.
Item 19: Purchase, Redemption and Pricing of Securities Being
Offered
The information provided in response to this item is in addition to
the information provided in response to Items 7 and 8 in Part A.<PAGE>
PAGE 29
REDEEMING UNITS
Unitholders have a right to redeem units at any time. For an
explanation of redemption procedures, please see Item 8 in Part A.
During an emergency, the board can suspend the computation of net
asset value, stop accepting payments for purchase of units or
suspend the duty of the Portfolios to redeem units for more than
seven days. Such emergency situations would occur if:
'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or
'Disposal of the Portfolio's securities is not reasonably
practicable or it is not reasonably practicable for a Portfolio to
determine the fair value of its net assets, or
'The SEC, under the provisions of the Investment Company Act of
1940 (the 1940 Act), as amended, declares a period of emergency to
exist.
Should a Portfolio stop selling units, the board members may make a
deduction from the value of the assets held by the Portfolio to
cover the cost of future liquidations of the assets so as to
distribute fairly these costs among all unitholders.
REDEMPTIONS BY THE PORTFOLIO
The Portfolio reserves the right to redeem, involuntarily, the
units of any unitholder whose account has a value of less than a
minimum amount but only where the value of such account has been
reduced by voluntary redemption of units. Until further notice, it
is the policy of the Portfolio not to exercise this right with
respect to any unitholder whose account has a value of $1,000,000
or more. In any event, before the Portfolio redeems such units and
sends the proceeds to the unitholder, it will notify the unitholder
that the value of the units in the account is less than the minimum
amount and allow the unitholder 30 days to make an additional
investment to an amount which will increase the value of the
accounts to at least $1,000,000.
REDEMPTIONS IN KIND
The Trust has elected to be governed by Rule 18f-1 under the 1940
Act, which obligates the Portfolio to redeem units in cash, with
respect to any one unitholder during any 90-day period, up to the
lesser of $250,000 or 1% of the net assets of the Portfolio at the
beginning of such period. Although redemptions in excess of this
limitation would normally be paid in cash, the Portfolio reserves
the right to make payments in whole or in part in securities or
other assets in case of an emergency, or if the payment of
redemption in cash would be detrimental to the existing unitholders
of the Trust as determined by the board. In such circumstances,
the securities distributed would be valued as set forth in Item 8
of Part A. Should the Portfolio distribute securities, a
unitholder may incur brokerage fees or other transaction costs in
converting the securities to cash.
<PAGE>
PAGE 30
Despite its right to redeem units through a redemption-in-kind, the
Portfolio does not expect to exercise this option unless the
Portfolio has an unusually low level of cash to meet redemptions
and/or is experiencing unusually strong demands for cash.
VALUING PORTFOLIO INTERESTS
The number of units held by each unitholder is equal to the value
in dollars of that unitholder's interest in the Portfolio. The
dollar value of a unitholder's interest in the Portfolio is
determined by multiplying the unitholder's proportionate interest
in the Portfolio by the net asset value of the Portfolio.
In determining net assets, the securities held by the Portfolio are
valued as follows as of the close of business of the New York Stock
Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange. Foreign
securities quoted in foreign currencies are translated into U.S.
dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times
and the close of the New York Stock Exchange that will not be
reflected in the computation of the Portfolio's net asset value.
If events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
board.
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at<PAGE>
PAGE 31
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.
'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When
possible, bonds are valued by a pricing service independent from
the Trust. If a valuation of a bond is not available from a
pricing service, the bond will be valued by a dealer knowledgeable
about the bond if such a dealer is available.
The New York Stock Exchange, the Advisor and the Portfolio will be
closed on the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Item 20: Tax Status
The information in response to this item is provided in Item 6 of
Part A.
Item 21: Underwriters
The information in response to this item is provided in Item 7 of
Part A and Item 16 of Part B.
Item 22: Calculation of Performance Data
Not Applicable.
Item 23: Financial Statements
Not Applicable.<PAGE>
PAGE 32
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
Not Applicable.
(b) EXHIBITS:
1. Declaration of Trust is filed electronically herewith as
Exhibit 1.
2. Form of By-laws is filed electronically herewith as Exhibit 2.
3. Not Applicable.
4. Not Applicable.
5. Form of Investment Management Services Agreement is filed
electronically herewith as Exhibit 5.
6. Form of Placement Agency Agreement is filed electronically
herewith as Exhibit 6.
7. Not Applicable.
8. Form of Custody Agreement is filed electronically herewith as
Exhibit 8.
9. Form of Transfer Agency and Administration Agreement to be
filed by amendment.
10. Not Applicable.
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Not Applicable.
16. Not Applicable.
17. Not Applicable.
18. Not Applicable.<PAGE>
PAGE 33
Item 25. Persons Controlled by or Under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
(1) (2)
Title of Class Number of Record Holders
Units of as of Oct. 31, 1995
Beneficial Interest 0
Item 27. Indemnification
Reference is hereby made to Article 8 of Registrant's Declaration
of Trust filed electronically herewith as Exhibit 1.
<PAGE>
PAGE 34
<PAGE>
PAGE 1
American Express Financial Corporation is the investment advisor of
the Portfolios of the Trust.
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering
American Express Service Corporation Vice President
Douglas A. Alger, Vice President--Total Compensation
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Accounting
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Risk Management Products
American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products
Carl E. Beihl, Vice President--Strategic Technology Planning
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Financial Planning
Systems
American Express Service Corporation Vice President
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director and Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Harold E. Burke, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Alan R. Dakay, Vice President--Institutional Products Group
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President -
Institutional Products
Group
American Partners Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
William H. Dudley, Director and Executive Vice President--Investment Operations
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director, Senior Vice President and Technology Advisor
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Technology Advisor
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Vice President and
Portfolio Manager
<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Tax & Business Director
Services Inc.
American Express Trust Company Director
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
Investors Syndicate Development Corp. Vice President
Robert G. Gilbert, Vice President--Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
<PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Vice President-Investments
<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Services
American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and President
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas R. Jordal, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
James E. Kaarre, Vice President--Marketing Information
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Chairman of the Board of
Managers and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
American Express Service Corporation Vice President
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edward Labenski, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Service Corporation Director
American Express Trust Company Director
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
American Express Service Corporation Vice President
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International, Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Tax and Business Director
Services Inc.
IDS Certificate Company Director and Chairman of
the Board
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Communications
American Express Minnesota Foundation Director and President
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert J. Neis, Vice President--Information Systems Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
James R. Palmer, Vice President--Insurance Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
George M. Perry, Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James M. Punch, Vice President--TransAction Services
American Express Financial Advisors IDS Tower 10 Vice President-Trans
Minneapolis, MN 55440 Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
ReBecca K. Roloff, Vice President--1994 Program Director
American Express Financial Advisors IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
Robert A. Rudell, Vice President--American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director and Chairman of
the Board
IDS Sales Support Inc. Director and President
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
<PAGE>
PAGE 18
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 19
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
<PAGE>
PAGE 20
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Select Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Vice President and
Corporate Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 21
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Michael L. Weiner, Vice President--Corporate Tax Operations
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
<PAGE>
PAGE 22
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 23
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 American Express
Institutional Services
Alvan D. Arthur Group Vice President- None
IDS Tower 10 Central California/
Minneapolis, MN 55440 Western Nevada
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
<PAGE>
PAGE 24
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440
John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Group Vice President- None
Ste 900 e Westside Tower Los Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001
Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel
<PAGE>
PAGE 25
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108
John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211
Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group
Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
<PAGE>
PAGE 26
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Scott M. Digiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156
William H. Dudley Director and Executive Director
IDS Tower 10 Vice President-
Minneapolis MN 55440 Investment Operations
Roger S. Edgar Senior Vice President None
IDS Tower 10 and Technology Advisor
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154
Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
<PAGE>
PAGE 27
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Douglas L. Forsberg Group Vice President- None
Suite 100 Portland/Eugene
7931 N. E. Halsey
Portland, OR 97213
William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131
Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110
John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154
<PAGE>
PAGE 28
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
Suite 250 North Texas
801 E. Campbell Road
Richardson, TX 75081
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief Director
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
Ste 108 Trestle Bridge V Greater Michigan
5136 Lovers Lane
Kalamazoo, MI 49002
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
<PAGE>
PAGE 30
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
MInneapolis, MN 55440 Manager
Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
<PAGE>
PAGE 31
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
Ronald E. Newton Group Vice President- None
319 Southbridge St. Rhode Island/Central
Auburn, MA 01501 Massachusetts
Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaronick Avenue
Harrison, NY 10528
James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428
<PAGE>
PAGE 32
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759
Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304
Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
<PAGE>
PAGE 33
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Russell L. Scalfano Group Vice President- None
Suite 201 Exec Pk East Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715
William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
Julian W. Sloter Group Vice Presidnet- None
Ste 1700 Orlando FinCtr Orlando/Jacksonville
800 North Magnolia Ave.
Orlando, FL 32803
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
IDS Tower 10 Eastern Iowa Area
Minneapolis, MN 55440
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
<PAGE>
PAGE 34
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714
Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Brn Road North Dakota/Western Wisconsin
Minnetonka, MN 55343
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119
John R. Thomas Senior Vice President- Director
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and Treasurer
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440
Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338
Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
PAGE 35
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648
Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations
Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer
Thomas L. White Group Vice President- None
Suite 200 Cambridge Ct Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122
Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
32 Ellicott St Ste 100 Field Management
Batavia, NY 14020
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
IDS Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
<PAGE>
PAGE 36
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
<PAGE>
PAGE 35
SIGNATURE
Pursuant to the requirement of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Minneapolis and State of Minnesota, on the 1st day
of November, 1995.
TAX-FREE INCOME TRUST
By
William H. Dudley
President
Pursuant to the requirements of the Investment Company Act of 1940,
this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
By Trustee, Treasurer November 1, 1995
William H. Dudley
By Trustee November 1, 1995
David R. Hubers
EXHIBIT INDEX
Tax-Free Income Trust
1. Declaration of Trust.
2. Form of By-laws.
5. Form of Investment Management Services Agreement.
6. Form of Placement Agency Agreement.
8. Form of Custody Agreement.
<PAGE>
PAGE 1
TAX-FREE INCOME TRUST
DECLARATION OF TRUST
This DECLARATION OF TRUST made at Boston, Massachusetts, this
2nd day of October, 1995 by the Trustees hereunder and by the
Unitholders of Units to be issued hereunder as hereinafter
provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage, in accordance
with the provisions hereinafter set forth, all property coming into
their hands as trustees of a business trust formed under the laws
of The Commonwealth of Massachusetts;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets, which they may from
time to time acquire in any manner as Trustees hereunder, IN TRUST,
to manage and dispose of the same upon the following terms and
conditions for the benefit of the Unitholders from time to time of
Units in this Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Name
Section I. This Trust shall be known as "Tax-Free Income
Trust," and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time
determine.
Definitions
Section I. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "Trust" refers to the trust established by this
Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV;
(c) "Units" means the equal proportionate transferable units
of ownership into which the beneficial interest in the Trust
shall be divided from time to time or, if more than one series
or class of Units is authorized by the Trustees, the equal
proportionate units into which each series or class of Units
shall be divided from time to time;
(d) "Unitholder" means a record owner of Units;
<PAGE>
PAGE 2
(e) "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from
time to time;
(f) "Affiliated Person", "Assignment", "Commission",
"Interested Person", and "Principal Underwriter" shall have
the meanings given them in the 1940 Act;
(g) "Majority Unitholder Vote" shall have the same meaning as
"vote of a majority of the outstanding voting securities" as
defined in the third sentence of Section 2(a)(42) of the 1940
Act.
(h) "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time;
(j) "Series" or "series of Units" refers to the one or more
separate investment portfolios of the Trust into which the
assets and liabilities of the Trust may be divided and the
Units of the Trust representing the beneficial interest of
Unitholders in such respective portfolios;
(k) "Class" or "class of Units" refers to the division of
Units representing any series into two or more classes as
provided in Article III, Section 1 hereof; and
(l) "Bankruptcy" shall mean, with respect to any Unitholder,
any of the following:
(i) filing a voluntary petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the
Bankruptcy Code (as now or in the future amended) or an
admission seeking the relief therein provided;
(ii) making a general assignment for the benefit of
creditors;
(iii) consenting to the appointment of a receiver for
all or a substantial part of such Unitholder's property;
(iv) in the case of the filing of an involuntary
petition in bankruptcy, an entry of an order for relief;
(v) the entry of a court order appointing a receiver or
trustee for all or a substantial part of such Unitholder's
property without its consent; or
(vi) the assumption of custody or sequestration by a
court of competent jurisdiction of all or substantially all of
such Unitholder's property.
<PAGE>
PAGE 3
ARTICLE II
Purpose of Trust
The purpose of the Trust shall be to engage in the business of
being an investment company, and, as such, to manage investments
primarily in securities, debt instruments, commodities, commodity
contracts and options thereon and other instruments and rights of a
financial character.
ARTICLE III
Units
Division of Beneficial Unit
Section I. The Units of the Trust shall be issued in one or
more series as the Trustees may, without Unitholder approval,
authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series within the meaning
of the 1940 Act and shall represent a separate investment portfolio
of the Trust. The beneficial interest in each series shall at all
times be divided into Units each of which shall, except as provided
in the following sentence, represent an equal proportionate
interest in the series with each other Unit of the same series,
none having priority or preference over another. The Trustees may,
without Unitholder approval, divide the Units of any series into
two or more classes, Units of each such class having such
preferences and special or relative rights and privileges
(including conversion rights, if any) as the Trustees may determine
and as shall be set forth in the Bylaws. The number of Units
authorized shall be unlimited. The Trustees may from time to time
divide or combine the Units of any series or class into a greater
or lesser number without thereby changing the proportionate
beneficial interest in the series or class.
Ownership of Units
Section I. The ownership of Units shall be recorded on the
books of the Trust or a transfer or similar agent. No certificates
certifying the ownership of Units shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees
may make such rules, not inconsistent with this Declaration of
Trust or the Bylaws, as they consider appropriate for the issuance
of Unit certificates, the transfer of Units and similar matters.
The record books of the Trust as kept by the Trust or any transfer
or similar agent, as the case may be, shall be conclusive as to who
are the Unitholders of each series and class and as to the number
of Units of each series and class held from time to time by each
Unitholder.
Investment in the Trust
Section I. No person may become a Unitholder of the Trust
unless approved in advance by the Trustees. Thereafter, the
Trustees shall accept investments in the Trust from persons so
approved on such terms and for such consideration, which may
consist of cash or tangible or intangible property or a combination
thereof, as they or the Bylaws from time to time authorize.
<PAGE>
PAGE 4
All consideration received by the Trust from the issue or sale
of Units of each series, together with all income, earnings,
profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any monies or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to the series of
Units with respect to which the same were received by the Trust for
all purposes, subject only to the rights of creditors, and shall be
so handled upon the books of account of the Trust and are herein
referred to as "assets of" such series.
No Preemptive Rights
Section I. Unitholders shall have no preemptive or other
right to subscribe to any additional Units or other securities
issued by the Trust.
Status of Units and Limitation of Personal Liability
Section I. Units shall be deemed to be personal property and
shall have only the rights provided in this Declaration of Trust or
the Bylaws. Every Unitholder by virtue of having become a
Unitholder shall be held to have expressly assented and agreed to
the terms of this Declaration of Trust and the Bylaws. No
Unitholder as such shall have any power to act as agent or
otherwise bind the Trust except as specifically authorized by the
Trustees. Ownership of Units shall not entitle the Unitholder to
any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an
accounting. No Unitholder shall, solely by reason of owning Units
or exercising the rights of a Unitholder, be treated as a partner
for purposes of any law imposing liability on parties for the
obligations of a partnership's enterprise or for the actions of any
partner of a partnership. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust, shall have any power
to bind personally any Unitholder, nor except as specifically
provided herein to call upon any Unitholder for the payment of any
sum of money or assessment whatsoever other than such as the
Unitholder may at any time personally agree to pay.
ARTICLE IV
The Trustees
Election
Section I. A Trustee may be elected either by the Trustees or
by the Unitholders. The number of Trustees shall be fixed from
time to time by the Trustees and, at or after the commencement of
the business of the Trust, shall be not less than three. Each
Trustee elected by the Trustees or the Unitholders shall serve
until he or she retires, resigns, is removed or dies or until the
next meeting of Unitholders called for the purpose of electing
Trustees and until the election and qualification of his or her
successor. At any meeting called for the purpose, a Trustee may be
removed by vote of the Unitholders holding two-thirds of the
outstanding Units. The initial Trustees, each of whom shall serve
until the first meeting of Unitholders at which Trustees are
elected and until his or her successor is elected and qualified, or
until he or she sooner dies, resigns or is removed, shall be John<PAGE>
PAGE 5
M. Loder and such other persons as the Trustee or Trustees then in
office shall, prior to any sale of Units, appoint.
Effect of Death, Resignation, etc. of a Trustee
Section I. The death, declination, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
Powers
Section I. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees,
and they shall have all powers necessary or convenient to carry out
that responsibility. Without limiting the foregoing, the Trustees
may adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and may
amend and repeal them to the extent that such Bylaws do not reserve
that right to the Unitholders; they may fill vacancies in or add to
their number, and may elect and remove such officers and appoint
and terminate such agents as they consider appropriate; they may
appoint, and terminate, any one or more committees consisting of
one or more Trustees or such other persons as they may designate,
including an executive committee which may, when the Trustees are
not in session, exercise some or all of the power and authority of
the Trustees as the Trustees may determine; they may employ one or
more custodians of the assets of the Trust and may authorize such
custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of
securities, retain one or more transfer agents or one or more
unitholder servicing agents, or both, provide for the distribution
of Units by the Trust, through one or more principal underwriters
or otherwise, set record dates for the determination of Unitholders
with respect to various matters, and in general delegate such
authority as they consider desirable to any officer of the Trust,
to any committee and to any agent or employee of the Trust or to
any such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power
and authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the
Trust;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and
discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;<PAGE>
PAGE 6
(e) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust or in the
name of a custodian, subcustodian or other depositary or a
nominee or nominees or otherwise;
(f) Subject to the provisions of Article III, Section 3, to
allocate assets, liabilities, income and expenses of the Trust
to a particular series of Units or to apportion the same among
two or more series, provided that any liabilities or expenses
incurred by or arising in connection with a particular series
of Units shall be payable solely out of the assets of that
series;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer, any security of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(h) To join other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem
proper;
(i) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof;
and to mortgage and pledge the Trust property or any part
thereof to secure any of or all such obligations;
(m) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Unitholders,
Trustees, officers, employees, agents, investment advisers or
managers, principal underwriters or independent contractors of
the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having
held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person as<PAGE>
PAGE 7
Unitholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter or independent
contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust
would have the power to indemnify such person against such
liability; and
(n) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. Except as otherwise provided herein or from time to
time in the Bylaws, any action to be taken by the Trustees may
be taken by a majority of the Trustees present at a meeting of
the Trustees (a quorum being present), within or without
Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by
means of which all persons participating in the meeting can
hear each other at the same time and participation by such
means shall constitute presence in person at a meeting, or by
written consents of a majority of the Trustees then in office.
Payment of Expenses by Trust
Section I. The Trustees are authorized to pay or to cause to
be paid, out of the assets of the Trust, all expenses, fees,
charges, taxes and liabilities incurred or arising in connection
with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers,
employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, unitholder servicing
agent, and such other agents or independent contractors and such
other expenses and charges as the Trustees may deem necessary or
proper to incur, provided, however, that all expenses, fees,
charges, taxes and liabilities incurred by or arising in connection
with a particular series of Units shall be payable solely out of
the assets of that series.
Ownership of Assets of the Trust
Section I. Title to all of the assets of each series of Units
and of the Trust shall at all times be considered as vested in the
Trustees.
Advisory, Management and Distribution
Section I. Subject to a favorable Majority Unitholder Vote,
the Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive investment advisory and/or investment
management services with any corporation, trust, association or
other organization (the "Manager"), every such contract to comply<PAGE>
PAGE 8
with such requirements and restrictions as may be set forth in the
Bylaws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The
Trustees may also, at any time and from time to time, contract with
the Manager or any other corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor
or principal underwriter for the Trust, administrator of the non-
investment affairs of the Trust, custodian for any or all of the
assets of the Trust, transfer or Unitholder servicing agent for the
Unitholders, or agent for other affairs of the Trust, every such
contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain such
other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(i) any Unitholder, Trustee or officer of the Trust is a
Unitholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or
agent of or for any corporation, trust, association or other
organization, or of or for any parent or affiliate of any
organization, with which an advisory or management contract,
or principal underwriter's or distributor's contract, or
administrator's contract, or custodian's contract, or
transfer, Unitholder servicing or other agency contract may
have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
Unitholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization
with which an investment advisory or investment management
contract or principal underwriter's or distributor's contract,
or administrator's contract, or custodian's contract or
transfer, Unitholder servicing or other agency contract may
have been or may hereafter be made also has an investment
advisory or investment management contract, or administrator's
contract, or custodian's contract or transfer, Unitholder
servicing or other agency contract with one or more other
corporations, trusts, associations, or other organizations, or
has other business or interests shall not affect the validity
of any such contract or disqualify any Unitholder, Trustee or
officer of the Trust from voting upon or executing the same or
create any liability or accountability to the Trust or its
Unitholders.
ARTICLE V
Unitholders' Voting Powers and Meetings
Voting Powers
Section I. Subject to the voting powers of one or more
classes of Units as set forth elsewhere in this Declaration of
Trust or in the Bylaws, the Unitholders shall have power to vote<PAGE>
PAGE 9
only (i) for the election of Trustees as provided in Article IV,
Section 1, (ii) for the removal of Trustees as provided in Article
IV, Section 1, (iii) with respect to any Manager as provided in
Article IV, Section 6, (iv) with respect to any termination or
continuation of this Trust to the extent and as provided in Article
IX, Section 4, (v) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article IX,
Section 7, (vi) to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust
or the Unitholders, and (vii) with respect to such additional
matters relating to the Trust as may be required by this
Declaration of Trust, the Bylaws or any registration of the Trust
with the Securities and Exchange Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole or fractional Unit shall be entitled to one
vote for each dollar of net asset value thereof as to any matter on
which it is entitled to vote and to a proportionate fractional vote
for each fraction of a dollar of net asset value thereof. On any
matter submitted to a vote of Unitholders, all Units of the Trust
then entitled to vote shall, except as otherwise provided in the
Bylaws, be voted in the aggregate as a single class without regard
to series or classes of Units, except (1) when required by the 1940
Act or when the Trustees shall have determined that the matter
affects one or more series or classes of Units materially
differently, Units shall be voted by individual series or class;
and (2) when the Trustees have determined that the matter affects
only the interests of one or more series or classes, then only
Unitholders of such series or classes shall be entitled to vote
thereon. Unitholders shall be entitled to vote cumulatively in the
election of Trustees. Units may be voted in person or by proxy. A
proxy with respect to Units held in the name of two or more persons
shall be valid if executed by or on behalf of any one of them
unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. Any
proxy purporting to be executed by or on behalf of a Unitholder
shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Until Units of any series or class are issued, the Trustees may
exercise all rights of Unitholders and may take any action required
by law, this Declaration of Trust or the Bylaws to be taken by
Unitholders as to such series or class.
Voting Power and Meetings
Section I. Meetings of Unitholders of any or all series or
classes may be called by the Trustees from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Unitholders of such series or classes as herein
provided or upon any other matter deemed by the Trustees to be
necessary or desirable. Written notice of any meeting of
Unitholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the
meeting, to each Unitholder entitled to vote at such meeting at the
Unitholder's address as it appears on the records of the Trust. If
the Trustees shall fail to call or give notice of any meeting of
Unitholders for a period of 30 days after written application by<PAGE>
PAGE 10
Unitholders holding Units representing at least 10% of the
aggregate net asset value of the then outstanding Units of all
series and classes entitled to vote at such meeting requesting a
meeting to be called for a purpose requiring action by the
Unitholders as provided herein or in the Bylaws, then Unitholders
holding Units representing at least 10% of the aggregate net asset
value of the then outstanding Units of all series and classes
entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Trustees.
Notice of a meeting need not be given to any Unitholder if a
written waiver of notice, executed by him or her before or after
the meeting, is filed with the records of the meeting, or to any
Unitholder who attends the meeting without protesting prior thereto
or at its commencement the lack of notice to him or her.
Quorum and Required Vote
Section I. Units entitled to cast thirty percent of the total
number of votes entitled to be cast on a particular matter shall be
a quorum for the transaction of business on that matter at a
Unitholders' meeting, except that where any provision of law or of
this Declaration of Trust or the Bylaws requires that Unitholders
of any series or class shall vote as an individual series or class,
then Units entitled to cast thirty percent of the total number of
votes entitled to be cast by Unitholders of that series or class as
such entitled to vote shall be necessary to constitute a quorum for
the transaction of business by that series or class. Any lesser
number shall be sufficient for adjournments. Any adjourned session
or sessions may be held, within a reasonable time after the date
set for the original meeting, without the necessity of further
notice. Except when a larger vote is required by any provision of
law or of this Declaration of Trust or the Bylaws, a majority of
the votes cast shall decide any questions and a plurality shall
elect a Trustee, provided that where any provision of law or of
this Declaration of Trust or the Bylaws requires that the
Unitholders of any series or class shall vote as an individual
series or class then a majority of votes of that series or class
cast on the matter (or a plurality with respect to the election of
a Trustee) shall decide that matter insofar as that series or class
is concerned.
Action by Written Consent
Section I. Any action taken by Unitholders may be taken
without a meeting if Unitholders entitled to cast a majority of the
total number of votes entitled to be cast on the matter (or such
larger proportion thereof as shall be required by any express
provision of this Declaration of Trust or the Bylaws) consent to
the action in writing and such written consents are filed with the
records of the meetings of Unitholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of
Unitholders.
Additional Provisions
Section I. The Bylaws may include further provisions, not
inconsistent with this Declaration of Trust, regarding Unitholders'
voting powers, the conduct of meetings and related matters.<PAGE>
PAGE 11
ARTICLE VI
Allocations, Distributions, Redemptions and Repurchases
Allocations
Section I. The Trustees shall allocate each item of income,
gain, loss, deduction and credit of the Trust, or if the Trust has
more than one series, of each series, among the Unitholders of the
Trust or the particular series, as the case may be, in accordance
with the following procedures.
I. Ordinary income (other than income realized from the sale
or exchange, or deemed sale or exchange, of property), tax-exempt
income, deductions and credits shall be allocated each business day
among the Unitholders in proportion to their relative percentage
record ownership of the outstanding Units of the Trust or series,
as the case may be, measured as of the close of business on such
day (before taking into account any purchases or redemptions of
Units on such day).
I. For purposes of allocating gains and losses, an Unrealized
Gain/Loss Account shall be maintained with respect to each
Unitholder. The initial balance of a Unitholder's Unrealized
Gain/Loss Account shall be zero and shall thereafter be increased
or decreased on each business day (an adjustment date) by the
following amount:
(i) the positive or negative difference between (a) the
fair market value of any property contributed to the Trust or
series, as the case may be, on the adjustment date and (b) the
adjusted tax basis of such property in the hands of the Trust
or series immediately after such contribution; plus
(ii) the product of (a) the Unitholder's percentage
record ownership of the outstanding Units of the Trust or
series as measured as of the close of business on the
immediately preceding adjustment date, after taking into
account any purchases or redemptions of Units on such
preceding date, and (b) the positive or negative difference
between (x) the net asset value of the Trust or series at the
close of business on the adjustment date, before taking into
account purchases and redemptions of Unit on such date, and
(y) the sum of the net asset value of the Trust or series at
the close of business on the prior adjustment date, after
taking into account purchases and redemptions of Units on such
prior date and the ordinary income and tax-exempt income
allocated the Unitholders under paragraph (a) above on the
adjustment date; plus
(iii) losses allocated to such Unitholder's Unrealized
Gain/Loss Account on the prior adjustment date; minus
(iv) gains allocated to such Unitholder's Unrealized
Gain/Loss Account on the prior adjustment date; and minus
<PAGE>
PAGE 12
(v) the positive or negative difference between (a) the
fair market value of any property distributed (whether or not
in redemption of any Unit) to such Unitholder on the
adjustment date and (b) the adjusted tax basis of such
property in the hands of the Trust or series immediately
before such distribution.
In the event that a Unitholder withdraws from the Trust or
series and after such withdrawal there remains a positive or
negative balance in such Unitholder's Unrealized Gain/Loss Account,
as adjusted to take account of the allocation of gain and loss for
such day, such positive or negative amount will be added to the
Unrealized Gain/Loss Account of the remaining Unitholders in
proportion to their relative percentage ownership of the
outstanding Units of the Trust or series, measured at the close of
business on such day after taking into account any purchases or
redemptions of Units on such day.
Gains and losses shall be allocated on each business day, to
the extent practical, in accordance with the Unitholders'
Unrealized Gain/Loss Accounts, as determined after the adjustments
to such account for the date of such allocation:
(i) Gains, which include all taxable income realized
from the sale or exchange or deemed sale or exchange of
property, shall be allocated to each Unitholder with a
positive Unrealized Gain/Loss Account, to the extent of such
account and in the ratio that such account bears to the
positive Unrealized Gain/Loss Accounts of all Unitholders, and
thereafter to all Unitholders in proportion to their interest
in the Trust or series, as the case may be.
(ii) Losses shall be allocated to each Unitholder with a
negative Unrealized Gain/Loss Account to the extent of such
account and in the ratio that such account bears to the
negative Unrealized Gain/Loss Accounts of all Unitholders, and
thereafter to all Unitholders in proportion to their interest
in the Trust or series, as the case may be.
I. It is intended that the allocations of taxable income and
loss set forth in this section be recognized as having "substantial
economic effect" for federal income tax purposes within the meaning
of that term in Section 704(b) of the Internal Revenue Code and
applicable Treasury Regulations. In furtherance of the foregoing,
the Trustees, in consultation with the Trust's tax adviser, is
authorized to interpret and apply the tax allocation provisions
hereof as providing for a qualified income offset, minimum gain
chargeback and such other allocation principles as may be required
under Section 704 of the Internal Revenue Code and applicable
regulations; provided, however, that no such interpretation or
application shall affect the relative percentage record ownership
of any Unitholder or the amount a Unitholder is entitled to receive
upon any redemption of Units or upon the liquidation of the Trust
or series.
Distributions
Section I. The Trustees may each year, or more frequently if
they so determine, distribute to the Unitholders out of the assets<PAGE>
PAGE 13
of the Trust or, if the Trust has more than one series, out of the
assets of the particular series, such amounts as the Trustees may
determine. Any such distribution shall be made to the Unitholders
pro rata in proportion to the number of Units of the Trust or of
the relevant series, as the case may be, held by each of them.
Such distributions shall be made in cash, Units or other property,
or a combination thereof, as determined by the Trustees. Any such
distribution paid in Units will be paid at the net asset value
thereof as determined in accordance with the Bylaws.
Redemptions and Repurchases
Section I. The Trust shall purchase such Units as are offered
by any Unitholder for redemption, in accordance with such
procedures for redemption as the Trustees may from time to time
authorize; and the Trust will pay therefor the net asset value
thereof, as next determined in accordance with the Bylaws, less any
redemption charge fixed by the Trustees. Payment for said Units
shall be made by the Trust to the Unitholder within seven days
after the date on which such redemption request is made. The
obligation set forth in this Section 3 is subject to the provision
that, during any period when the New York Stock Exchange is closed
for other than customary weekends or holidays, or, if permitted by
rules of the Securities and Exchange Commission, during periods
when trading on such Exchange is restricted or during any emergency
which makes it impractical for the Trust to dispose of its
investments or to determine fairly the value of its net assets, or
during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors, such
obligation may be suspended or postponed by the Trustees. The
Trust may also purchase or repurchase Units at a price not
exceeding the net asset value of such Units in effect when the
purchase or repurchase or any contract to purchase or repurchase is
made.
Redemption at the Option of the Trust
Section I. The Trust shall have the right at its option and
at any time to redeem Units of any Unitholder at the net asset
value thereof as determined in accordance with the Bylaws: (i) if
at such time such Unitholder owns fewer Units than, or Units having
an aggregate net asset value of less than, an amount determined
from time to time by the Trustees; or (ii) to the extent that such
Unitholder owns Units of a particular series of Units representing
a percentage equal to or in excess of such percentage of the
outstanding Units of that series as the Trustees may from time to
time establish, or of such aggregate net asset value as the
Trustees may from time to time establish; or (iii) to the extent
that such Unitholder owns Units of the Trust representing a
percentage equal to or in excess of such percentage of the
aggregate number of outstanding Units of the Trust as the Trustees
may from time to time establish, or of such aggregate net asset
value as the Trustees may from time to time establish.
<PAGE>
PAGE 14
ARTICLE VII
Compensation and Limitation of Liability of Trustees
Compensation
Section I. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount of
their compensation. Nothing herein shall in any way prevent the
employment of any Trustee for advisory, management, legal,
accounting, investment banking or other services and payment for
the same by the Trust.
Limitation of Liability
Section I. The Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent,
employee, investment manager, investment adviser, administrator,
custodian, transfer or Unitholder servicing agent or principal
underwriter of the Trust, nor shall any Trustee be responsible for
the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability to which
he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been
executed or done only in or with respect to their or his or her
capacity as Trustees or Trustee, and such Trustees or Trustee shall
not be personally liable thereon.
ARTICLE VIII
Indemnification
Trustees, Officers, etc.
Section I. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which
the Trust has any interest as a shareholder, creditor or otherwise)
(each such person being hereinafter referred to as a "Covered
Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and counsel fees reasonably incurred by
any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Covered Person except with respect to any matter
as to which such Covered Person shall have been finally adjudicated
in any such action, suit or other proceeding (a) not to have acted
in good faith in the reasonable belief that such Covered Person's
action was in the best interest of the Trust or (b) to be liable to
the Trust or its Unitholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties<PAGE>
PAGE 15
involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in compromise
or as fines or penalties), shall be paid from time to time by the
Trust in advance of the final disposition of any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of
such Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article, provided, however, that either (a)
such Covered Person shall have provided appropriate security for
such undertaking, (b) the Trust shall be insured against losses
arising from any such advance payments or (c) either a majority of
the disinterested Trustees acting on the matter (provided that a
majority of the disinterested Trustees then in office act on the
matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that there is reason to
believe that such Covered Person would be found entitled to
indemnification under this Article.
Compromise Payment
Section I. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body before
which the proceeding was brought, that such Covered Person either
(a) did not act in good faith in the reasonable belief that his or
her action was in the best interests of the Trust or (b) is liable
to the Trust or its Unitholders by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, indemnification shall
be provided if (a) approved as in the best interests of the Trust,
after notice that it involves such indemnification, by at least a
majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then in
office act on the matter) upon a determination, based upon a review
of readily available facts (as opposed to a full trial type
inquiry) that such Covered Person acted in good faith in the
reasonable belief that his or her action was in the best interests
of the Trust and is not liable to the Trust or its Unitholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or
her office, or (b) there has been obtained an opinion in writing of
independent legal counsel, based upon a review of readily available
facts (as opposed to a full trial type inquiry) to the effect that
such Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best interests
of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which he or
she would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Any approval
pursuant to this Section shall not prevent the recovery from any
Covered Person of any amount paid to such Covered Person in
accordance with this Section as indemnification if such Covered
Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable
belief that such Covered Person's action was in the best interests
of the Trust or to have been liable to the Trust or its Unitholders<PAGE>
PAGE 16
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office.
Indemnification Not Exclusive
Section I. The right of indemnification hereby provided shall
not be exclusive of or affect any other rights to which such
Covered Person may be entitled. As used in this Article VIII, the
term "Covered Person" shall include such person's heirs, executors
and administrators and a "disinterested Trustee" is a Trustee who
is not an "interested person" of the Trust as defined in Section
2(a)(19) of the 1940 Act (or who has been exempted from being an
"interested person" by any rule, regulation or order of the
Securities and Exchange Commission) and against whom none of such
actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has been
pending. Nothing contained in this Article shall affect any rights
to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
Unitholders
Section I. In case any Unitholder or former Unitholder shall
be held to be personally liable solely by reason of his or her
being or having been a Unitholder or having exercised any rights of
a Unitholder provided for in this Declaration of Trust and not
because of his or her other acts or omissions or for some other
reason, the Unitholder or former Unitholder (or his or her heirs,
executors, administrators or other legal representative or, in the
case of a corporation or other entity, its corporate or other
general successor) shall be entitled to be held harmless from and
indemnified against all loss and expense arising from such
liability, but, if the Trust has more than one series, only out of
the assets of the particular series of which he or she is or was a
Unitholder.
ARTICLE IX
Miscellaneous
Trustees, Unitholders, etc. Not Personally Liable; Notice
Section I. All persons extending credit to, contracting with
or having any claim against the Trust or a particular series of
Units shall look only to the assets of the Trust or the assets of
that particular series of Units for payment under such credit,
contract or claim, and neither the Unitholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Nothing in
this Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee.
<PAGE>
PAGE 17
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer or
officers shall give notice that this Declaration of Trust is on
file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or made
by or on behalf of the Trust or by them as Trustee or Trustees or
as officer or officers and not individually and that the
obligations of such instrument are not binding upon any of them or
the Unitholders individually but are binding only upon the assets
and property of the Trust, and may contain such further recital as
he or she or they may deem appropriate, but the omission thereof
shall not operate to bind any Trustee or Trustees or officer or
officers or Unitholder or Unitholders individually.
Trustee's Good Faith Action, Expert Advice, No Bond or Surety
Section I. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested. A
Trustee shall be liable for his or her own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else. The Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of
Trust, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.
Liability of Third Persons Dealing with Trustee
Section I. No person dealing with the Trustees shall be bound
to make any inquiry concerning the validity of any transaction made
or to be made by the Trustees or to see to the application of any
payments made or property transferred to the Trust or upon its
order.
Duration and Termination of Trust
Section I. The Trust and each series shall continue without
limitation of time, except that: (i) the Trust may be terminated by
vote of Unitholders holding Units entitled to cast at least two-
thirds of the total number of votes entitled to be cast by all
Unitholders of the Trust, (ii) any series may be terminated by vote
of Unitholders holding Units entitled to cast at least two-thirds
of the total number of votes entitled to be cast by all Unitholders
of that series, as such, (iii) the Trust or any series may be
terminated by the Trustees by written notice to the Unitholders and
(iv) the Trust shall be terminated by the Bankruptcy or death of a
Unitholder of the Trust (if there is only one series), or any
series shall be terminated by the Bankruptcy or death of any
Unitholder of that series (if there is more than one series), in
either case effective 90 days after such death or Bankruptcy,
unless the Trustees and Unitholders, by vote of Unitholders holding
Units entitled to be cast at least two-thirds of the total number
of votes entitled to be cast by all Unitholders of the Trust or the
relevant series, as the case may be, approve the continuance of the
Trust or such series, as the case may be. The Units of a
Unitholder whose Bankruptcy or death requires the Trustees and
Unitholders to vote to continue the Trust or the series, as the<PAGE>
PAGE 18
case may be, shall be deemed not to be outstanding for the purposes
of such vote. Upon termination of the Trust or of any one or more
series of Units, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular series as may be
determined by the Trustees, the Trust shall, in accordance with
such procedures as the Trustees consider appropriate, reduce the
remaining assets to distributable form in cash or Units or other
property, or any combination thereof, and distribute the proceeds
to the Unitholders of the Trust or of the relevant series, as the
case may be, ratably according to the number of Units of the Trust
or of the relevant series, as the case may be, held by the several
Unitholders thereof on the date of termination, except to the
extent otherwise required or permitted by the preferences and
special or relative rights and privileges of any classes of Units,
provided that any distribution to the Unitholders of a particular
class of Units shall be made to such Unitholders pro rata in
proportion to the number of Units of such class held by each of
them.
Filing and Copies, References, Headings
Section I. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust
where it may be inspected by any Unitholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust
with the Secretary of State of The Commonwealth of Massachusetts
and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an officer of
the Trust as to whether or not any such amendments have been made
and as to any matters in connection with the Trust hereunder, and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument and all
expressions like "herein", "hereof" and "hereunder" shall be deemed
to refer to this instrument as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument.
This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Applicable Law
Section I. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of
said Commonwealth.
Amendments
Section I. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then
Trustees when authorized to do so by vote of Unitholders holding
Units entitled to cast a majority of the votes entitled to be cast
by all Unitholders of the Trust, except that an amendment which in
the determination of the Trustees shall affect the Unitholders of<PAGE>
PAGE 19
one or more series or classes of Units but not the Unitholders of
all outstanding series and classes shall be authorized by vote of
the Unitholders holding Units entitled to cast a majority of the
votes entitled to be cast by all Unitholders of each series and
class affected and no vote of Unitholders of a series or class not
affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission, curing
any ambiguity or curing, correcting or supplementing any defective
or inconsistent provision contained herein shall not require
authorization by Unitholder vote.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
and seal for himself and his assigns, as of the day and year first
above written.
_________________________________
John M. Loder
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston,
Then personally appeared the above named trustees and
acknowledged the foregoing instrument to be their free act and
deed, before me,
_______________________________
Notary Public
My Commission Expires:
<PAGE>
PAGE 1
BYLAWS FOR TAX-FREE TRUST
ARTICLE 1
Declaration of Trust and Principal Office
1.1. Declaration of Trust. These Bylaws are subject to the
Declaration of Trust (the "Declaration") for Tax-Free Trust (the
"Trust"), as from time to time in effect.
1.2. Principal Office of the Trust. The principal office of
the Trust shall be located in Minneapolis, Minnesota.
ARTICLE 2
Meetings of Trustees
2.1. Regular Meetings. Regular meetings of the Trustees may
be held without call or notice at such places and at such times as
the Trustees may determine, provided that notice of the first
regular meeting following any such determination shall be given to
absent Trustees.
2.2. Special Meetings. Special meetings of the Trustees may
be held at any time and at any place designated in the call of the
meeting when called by the President or the Treasurer or by two or
more Trustees, sufficient notice being given to each Trustee by the
Secretary or by the officer or the Trustees calling the meeting.
2.3. Notice of Special Meetings. It will be sufficient
notice to a Trustee of a special meeting to send notice by mail at
least forty-eight hours or by telegram at least twenty-four hours
before the meeting, addressed to the Trustee at his or her last
known business or residence address or to give notice to him or her
in person or by telephone at least twenty-four hours before the
meeting. Notice of a special meeting need not be given to any
Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the
meeting, or to any Trustee who attends the meeting without
protesting prior to or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice
need specify the purposes of the meeting.
2.4. Quorum. At any meeting of the Trustees a majority of
the Trustees then in office constitutes a quorum. Any meeting may
be adjourned from time to time by a majority of the votes cast upon
the question, whether or not a quorum is present, and the meeting
may be held as adjourned without further notice. Trustees may
participate in a meeting by means of a conference telephone or
other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time
and participation by such means shall constitute presence in person
at a meeting.
2.5. Notice of Certain Actions by Consent. If, in accordance
with the provisions of the Declaration, any action is taken by the
Trustees by a written consent of less than all of the<PAGE>
PAGE 2
Trustees, then prompt notice of the action shall be furnished to
each Trustee who did not execute a written consent, provided that
the effectiveness of the action shall not be impaired by any delay
or failure to furnish notice.
ARTICLE 3
Officers
3.1. Enumeration; Qualification. The officers of the Trust
shall be a President, a Treasurer, a Secretary and such other
officers as the Trustees may in their discretion elect. The Trust
also may have such agents as the Trustees may in their discretion
appoint. The President shall be a Trustee and may but need not be
a Unitholder; and any other officer may but need not be a Trustee
or a Unitholder. Any two or more offices may be held by the same
person. A Trustee may but need not be a Unitholder.
3.2. Election. The President, the Treasurer and the
Secretary shall be elected by the Trustees upon the occurrence of
any vacancy in any office. Other officers may be elected or
appointed by the Trustees at any time. Vacancies in any other
office may be filled at any time.
3.3. Tenure. The President, the Treasurer and the Secretary
will hold office until he or she dies, resigns, is removed or
becomes disqualified. Each other officer shall hold office and
each agent shall retain authority at the pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration, such duties and powers as are
commonly incident to the office occupied by him or her as if the
Trust were organized as a Massachusetts business corporation and
such other duties and powers as the Trustees may from time to time
designate.
3.5. President. Unless the Trustees otherwise provide, the
President shall preside at all meetings of the Unitholders and of
the Trustees. Unless the Trustees otherwise provide, the President
shall be the chief executive officer.
3.6. Treasurer. Unless the Trustees provide otherwise, the
Treasurer shall be the chief financial and accounting officer of
the Trust, and shall, subject to the provisions of the Declaration
and to any arrangement made by the Trustees with a custodian,
investment adviser or manager, or transfer, Unitholder servicing or
similar agent, be in charge of the valuable papers, books of
account and accounting records of the Trust, and shall have such
other duties and powers as may be designated from time to time by
the Trustees or by the President.
3.7. Secretary. The Secretary shall record all proceedings
of the Unitholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office<PAGE>
PAGE 3
of the Trust. In the absence of the Secretary from any meeting of
the Unitholders or Trustees, a temporary Secretary chosen at the
meeting shall record the proceedings.
3.8. Resignations and Removals. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the President or the Secretary or to a meeting of the
Trustees. A resignation shall be effective upon receipt unless
specified to be effective at some other time. The Trustees may re
move any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the
Trust, no Trustee or officer resigning and no officer removed shall
have any right to any compensation for any period following his or
her resignation or removal, or any right to damages on account of
such removal.
ARTICLE 4
Committees
4.1. Quorum; Voting. A majority of the members of any
Committee appointed by the Trustees shall constitute a quorum for
the transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by a majority. Trustees may participate in a
meeting by means of a conference telephone or other communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by
such means shall constitute presence in person at a meeting.
ARTICLE 5
Reports
The Trustees and officers shall give reports at the time and
in the manner required by the Declaration or any applicable law.
Officers and Committees shall give additional reports as they may
deem desirable or as may be required by the Trustees.
ARTICLE 6
Fiscal year
The fiscal year of the Trust shall begin on the first day of
June in each year and end on the thirty-first day of May following.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts", together with the name of the Trust and
the year of its organization cut or engraved thereon but, unless
otherwise required by the Trustees, the seal shall not be necessary
to be placed on and its absence shall not impair the validity of,
any document, instrument or other paper executed and delivered by
or on behalf of the Trust.
<PAGE>
PAGE 4
ARTICLE 8
Execution of Papers
Except as the Trustees may generally or in particular cases
authorize the execution in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall
be signed by the President, a Vice President or the Treasurer and
need not bear the seal of the Trust.
ARTICLE 9
Issuance of Units and Unit Certificates
9.1. Sale of Units. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities from
time to time, full shares of its Units of beneficial interest. In
the case of Units sold for securities, such securities shall be
valued in accordance with the provisions for determining the value
of the assets of the Trust as stated in the Declaration and these
Bylaws. The officers of the Trust are severally authorized to take
all such actions as may be necessary or desirable to carry out this
section.
9.2. Unit Certificates. In lieu of issuing certificates for
Units, the Trustees or the transfer agent may either issue receipts
therefor or may keep accounts upon the books of the Trust for the
record holders of such Units.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1. Certain definitions. When used herein the following
word shall have the following meanings: "Distributor" shall mean
any one or more corporations, firms or associations which have
distributor's or principal underwriter's contracts in effect with
the Trust providing that redeemable Units issued by the Trust shall
be offered and sold by such Distributor. "Manager" shall mean any
corporation, firm or association which may at the time have an
advisory or management contract with the Trust.
10.2. Limitations on Dealings with Officers or Trustees. The
Trust will not lend any of its assets to the Distributor or Manager
or to any officer or director of the Distributor or Manager or any
officer or Trustee of the Trust, and shall not permit any officer
or Trustee or any officer or director of the Distributor or Manager
to deal for or on behalf of the Trust with himself or herself as
principal or agent, or with any partnership, association or
corporation in which he or she has a financial interest; provided
that the foregoing provisions shall not prevent (a) officers and
Trustees of the Trust or officers and directors of the Distributor
or Manager from buying, holding or selling Units in the Trust or
from being partners, officers or directors of or otherwise
financially interested in the Distributor or the Manager; (b)
purchase or sale of securities or other property if such
transaction is permitted by or is exempt or exempted from the
provisions of the Investment Company Act of 1940 or any rule or<PAGE>
PAGE 5
regulation thereunder and if such transaction does not involve any
commission or profit to any security dealer who is, or one or more
of whose partners, shareholders, officers or directors is, an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager; (c) employment of legal counsel, registrar,
transfer agent, unitholder servicing agent, dividend disbursing
agent or custodian who is, or has a partner, shareholder, officer
or director who is, an officer or Trustee of the Trust or an
officer or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3. Securities and Cash of the Trust to Be Held by
Custodian Subject to Certain Terms and Conditions. All securities
and cash owned by the Trust shall be held by or deposited with one
or more banks or trust companies having (according to its last
published report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust company being
hereby designated as "Custodian"), provided such a Custodian can be
found ready and willing to act; subject to such rules, regulations
and orders as the Securities and Exchange Commission may adopt, the
Trust may, or may permit any Custodian to, deposit all or any part
of the securities owned by the Trust in a system for the central
handling of securities pursuant to which all securities of any
particular class or series of any issue deposited within the system
may be transferred or pledged by bookkeeping entry, without
physical delivery. The Custodian may appoint, subject to the
approval of the Trustees, one or more subcustodians.
10.4. Reports to Unitholders. The Trust shall send to each
Unitholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5. Determination of Net Asset Value Per Unit. Net asset
value per Unit of each class or series of units of the Trust shall
mean: (i) the value of all the assets properly allocable to such
class or series; (ii) less total liabilities properly allocable to
such class or series; (iii) divided by a number of units of such
class or series deemed to be outstanding, in each case at the time
of each determination. Except as otherwise determined by the
Trustees, the net asset value per share of each class or series
shall be determined no less frequently than once daily, Monday
through Friday, on days on which the New York Stock Exchange is
open for trading, at such time or times that the Trustees set at
least annually.
10.6. Discontinuation of Sale of Units. If the sale of units
is discontinued, the Trustees may, pursuant to resolution, deduct
from the value of the assets an amount equal to the brokerage
commissions, transfer taxes and charges, if any, which would be
possible on the sale of securities if they were then being sold.<PAGE>
PAGE 6
ARTICLE 11
Unitholders
11.1. Meetings. A meeting of the Unitholders shall be called
by the Secretary whenever ordered by the Trustees or requested in
writing by the holder or holders of at least ten percent (10%) of
the outstanding units entitled to vote at such meeting. If the
Secretary, when so ordered or requested, refuses or neglects for
more than two days to call such meeting, the Trustees or the
Unitholders so requesting may, in the name of the Secretary, call
the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2. Access to Unitholder List. Unitholders of record may
apply to the Trustees for assistance in communicating with other
Unitholders for the purpose of calling a meeting in order to vote
upon the question of removal of a Trustee. When ten or more
Unitholders of record who have been such for at least six months
preceding the date of application and who hold in the aggregate
units having a net asset value of at least $25,000 so apply, the
Trustees shall within five business days either:
(i) afford to applicants access to a list of names and
addresses of all Unitholders as recorded on the books of the
Trust; or
(ii) inform applicants of the approximate number of
Unitholders of record and the approximate cost of mailing
material to them, and, within a reasonable time thereafter,
mail, at the applicants' expense, materials submitted by the
applicants, to all such Unitholders of record. The Trustees
shall not be obligated to mail materials which they believe to
be misleading or in violation of applicable law.
11.3. Record Dates. For the purpose of determining the
Unitholders of any class or series of Units of the Trust who are
entitled to vote or act at any meeting or any adjournment thereof,
or who are entitled to receive payment of any dividend or of any
other distribution, the Trustees may from time to time fix a time,
which shall be not more than 90 days before the date of any meeting
of Unitholders or more than 60 days before the date of payment of
any dividend or of any other distribution, as the record date for
determining the Unitholders of such class or series having the
right to notice of and to vote at such meeting and any adjournment
thereof or the right to receive such dividend or distribution, and
in such case only Unitholders of record on such record date shall
have such right notwithstanding any transfer of Units on the books
of the Trust after the record date; or without fixing such record
date the Trustees may for any such purposes close the register or
transfer books for all or part of such period.
11.4. Proxies. The placing of a Unitholder's name on a proxy
pursuant to telephone or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify that
such instructions have been authorized by such Unitholder shall
constitute execution of such proxy by or on behalf of such
Unitholder.<PAGE>
PAGE 7
ARTICLE 12
Preferences, Rights and Privileges of the
Trust's Classes of Units
Each class of Units of the Trust or of a particular series of
the Trust, as the case may be, will represent interests in the same
portfolio of investments of the Trust (or that series) and be
identical in all respects, except as set forth below: (a) each
class of Units will be charged with any incremental Unitholder
servicing expense attributable solely to such class, as determined
by the Trustees, (b) each class of Units shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (c) each class of Units will have only such exchange
privileges as may from time to time be described in the Trust's
prospectus with respect to such class, (d) each class of Units
shall bear such designation as may be approved from time to time by
the Trustees and (e) reinvestments of distributions from the Trust
paid with respect to the Units of a particular class will be paid
in additional shares of such class.
ARTICLE 13
Amendment to the Bylaws
These Bylaws may be amended or repealed, in whole or in part,
by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
<PAGE>
PAGE 1
INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the ____ day of _____, 1995, by and between
Tax-Free Income Trust (the "Trust"), a Massachusetts business
trust, on behalf of its underlying series portfolio, Aggressive
Tax-Free Income Portfolio, and American Express Financial
Corporation (the "Advisor"), a Delaware corporation.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Trust hereby retains the Advisor, and the Advisor
hereby agrees, for the period of this Agreement and under the terms
and conditions hereinafter set forth, to furnish the Portfolios
continuously with suggested investment planning; to determine,
consistent with the Portfolios' investment objectives and policies,
which securities in the Advisor's discretion shall be purchased,
held or sold and to execute or cause the execution of purchase or
sell orders; to prepare and make available to the Portfolios all
necessary research and statistical data in connection therewith; to
furnish all services of whatever nature required in connection with
the management of the Portfolios as provided under this Agreement;
and to pay such expenses as may be provided for in Part Three;
subject always to the direction and control of the Board of
Trustees (the "Board"), the Executive Committee and the authorized
officers of the Trust. The Advisor agrees to maintain an adequate
organization of competent persons to provide the services and to
perform the functions herein mentioned. The Advisor agrees to meet
with any persons at such times as the Board deems appropriate for
the purpose of reviewing the Advisor's performance under this
Agreement.
(2) The Advisor agrees that the investment planning and
investment decisions will be in accordance with general investment
policies of the Portfolios as disclosed to the Advisor from time to
time by the Portfolios and as set forth in their prospectuses and
registration statements filed with the United States Securities and
Exchange Commission (the "SEC").
(3) The Advisor agrees that it will maintain all required
records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for the Portfolios.
(4) The Trust agrees that it will furnish to the Advisor any
information that the latter may reasonably request with respect to
the services performed or to be performed by the Advisor under this
Agreement.
(5) The Advisor is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio
securities for the Portfolios and is directed to use its best
efforts to obtain the best available price and most favorable
execution, except as prescribed herein. Subject to prior
authorization by the Board of appropriate policies and procedures,
and subject to termination at any time by the Board, the Advisor
may also be authorized to effect individual securities transactions
at commission rates in excess of the minimum commission rates<PAGE>
PAGE 2
available, to the extent authorized by law, if the Advisor
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Advisor's overall
responsibilities with respect to the Portfolios and other funds for
which it acts as investment advisor.
(6) It is understood and agreed that in furnishing the
Portfolios with the services as herein provided, neither the
Advisor nor any officer, director or agent thereof shall be held
liable to the Trust, a Portfolio or its creditors or unitholders
for errors of judgment or for anything except willful misfeasance,
bad faith, or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of
this Agreement. It is further understood and agreed that the
Advisor may rely upon information furnished to it reasonably
believed to be accurate and reliable.
Part Two: COMPENSATION TO INVESTMENT MANAGER
(1) The Trust agrees to pay to the Advisor, and the Advisor
covenants and agrees to accept from each Portfolio in full payment
for the services furnished, a fee for each calendar day of each
year equal to the total of 1/365th (1/366th in each leap year) of
the amount computed as shown below. The computation shall be made
for each day on the basis of net assets as of the close of business
of the full business day two (2) business days prior to the day for
which the computation is being made. In the case of the suspension
of the computation of net asset value, the asset charge for each
day during such suspension shall be computed as of the close of
business on the last full business day on which the net assets were
computed. Net assets as of the close of a full business day shall
include all transactions in shares of the Portfolio recorded on the
books of the Portfolio for that day.
The asset charge shall be based on the net assets of each Fund
as set forth in the following table.
Aggressive Tax-Free Income Portfolio
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465%
Next 1.0 0.440%
Next 3.0 0.415%
Next 3.0 0.390%
Over 9.0 0.360%
(2) The fee shall be paid on a monthly basis and, in the
event of the termination of this Agreement, the fee accrued shall
be prorated on the basis of the number of days that this Agreement
is in effect during the month with respect to which such payment is
made.
(3) The fee provided for hereunder shall be paid in cash by
the Portfolios to the Advisor within five business days after the
last day of each month.<PAGE>
PAGE 3
Part Three: ALLOCATION OF EXPENSES
(1) The Trust agrees to pay:
(a) Fees payable to the Advisor for its services under the
terms of this Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection with the
purchase and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified public
accountants for services the Trust or Portfolios request.
(f) Premium on the bond required by Rule 17g-1 under the
Investment Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in matters
not involving the assertion of a claim by a third party against the
Trust, its trustees and officers, (ii) it employs in conjunction
with a claim asserted by the Board against the Advisor except that
the Advisor shall reimburse the Trust for such fees and expenses if
it is ultimately determined by a court of competent jurisdiction,
or the Advisor agrees, that it is liable in whole or in part to the
Trust, and (iii) it employs to assert a claim against a third
party.
(h) Fees paid for the qualification and registration for
public sale of the securities of the Portfolios under the laws of
the United States and of the several states in which such
securities shall be offered for sale.
(i) Fees of consultants employed by the Trust or Portfolios.
(j) Trustees, officers and employees expenses which shall
include fees, salaries, memberships, dues, travel, seminars,
pension, profit sharing, and all other benefits paid to or provided
for trustees, officers and employees, trustees and officers
liability insurance, errors and omissions liability insurance,
worker's compensation insurance and other expenses applicable to
the trustees, officers and employees, except the Trust will not pay
any fees or expenses of any person who is an officer or employee of
the Advisor or its affiliates.
(k) Filing fees and charges incurred by the Trust in
connection with filing any amendment to its agreement or
declaration of Trust, or incurred in filing any other document with
the State of Massachusetts or its political subdivisions.
(l) Organizational expenses of the Trust.
(m) Expenses incurred in connection with lending portfolio
securities of the Portfolios.
<PAGE>
PAGE 4
(n) Expenses properly payable by the Trust or Portfolios,
approved by the Board.
(2) The Advisor agrees to pay all expenses associated with
the services it provides under the terms of this Agreement.
Part Four: MISCELLANEOUS
(1) The Advisor shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the
Trust or Portfolios.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Trust and each Portfolio recognize that the Advisor
now renders and may continue to render investment advice and other
services to other investment companies and persons which may or may
not have investment policies and investments similar to those of
the Portfolios and that the Advisor manages its own investments
and/or those of its subsidiaries. The Advisor shall be free to
render such investment advice and other services and the Trust and
each Portfolio hereby consent thereto.
(4) Neither this Agreement nor any transaction made pursuant
hereto shall be invalidated or in any way affected by the fact that
trustees, officers, agents and/or unitholders of the Trust are or
may be interested in the Advisor or any successor or assignee
thereof, as directors, officers, stockholders or otherwise; that
directors, officers, stockholders or agents of the Advisor are or
may be interested in the Trust or Portfolios as trustees, officers,
unitholders, or otherwise; or that the Advisor or any successor or
assignee, is or may be interested in the Portfolios as unitholder
or otherwise, provided, however, that neither the Advisor nor any
officer, trustee or employee thereof or of the Trust, shall sell to
or buy from the Portfolios any property or security other than
units issued by the Portfolios, except in accordance with
applicable regulations or orders of the SEC.
(5) Any notice under this Agreement shall be given in
writing, addressed, and delivered, or mailed postpaid, to the party
to this Agreement entitled to receive such, at such party's
principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to
the other.
(6) The Advisor agrees that no officer, director or employee
of the Advisor will deal for or on behalf of the Trust or
Portfolios with himself as principal or agent, or with any
corporation or partnership in which he may have a financial
interest, except that this shall not prohibit:
(a) Officers, directors or employees of the Advisor from
having a financial interest in the Portfolios or in the Advisor.
(b) The purchase of securities for the Portfolios, or the
sale of securities owned by the Portfolios, through a security<PAGE>
PAGE 5
broker or dealer, one or more of whose partners, officers,
directors or employees is an officer, director or employee of the
Advisor provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed
customary brokerage charges for such services.
(c) Transactions with the Portfolios by a broker-dealer
affiliate of the Advisor as may be allowed by rule or order of the
SEC, and if made pursuant to procedures adopted by the Board.
(7) The Advisor agrees that, except as herein otherwise
expressly provided or as may be permitted consistent with the use
of a broker-dealer affiliate of the Advisor under applicable
provisions of the federal securities laws, neither it nor any of
its officers, directors or employees shall at any time during the
period of this Agreement, make, accept or receive, directly or
indirectly, any fees, profits or emoluments of any character in
connection with the purchase or sale of securities (except shares
issued by the Portfolios) or other assets by or for the Trust or
Portfolios.
Part Five: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect for each
Portfolio until ______, ____, or until a new agreement is approved
by a vote of the majority of the outstanding units of each
Portfolio and by vote of the Trust's Board, including the vote
required by (b) of this paragraph, and if no new agreement is so
approved, this Agreement shall continue from year to year
thereafter unless and until terminated by either party as
hereinafter provided, except that such continuance shall be
specifically approved at least annually (a) by the Board or by a
vote of the majority of the outstanding units of the relevant
Portfolios and (b) by the vote of a majority of the trustees who
are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting
on such approval. As used in this paragraph, the term "interested
person" shall have the same meaning as set forth in the Investment
Company Act of 1940, as amended (the "1940 Act").
(2) This Agreement may be terminated by either the Trust on
behalf of a Portfolio or the Advisor at any time by giving the
other party 60 days' written notice of such intention to terminate,
provided that any termination shall be made without the payment of
any penalty, and provided further that termination may be effected
either by the Board or by a vote of the majority of the outstanding
voting units of the Portfolio. The vote of the majority of the
outstanding voting units of a Portfolio for the purpose of this
Part Five shall be the vote at a unitholders' regular meeting, or a
special meeting duly called for the purpose, of 67% or more of the
Portfolio's shares present at such meeting if the holders of more
than 50% of the outstanding voting units are present or represented
by proxy, or more than 50% of the outstanding voting units of the
Portfolio, whichever is less.
(3) This Agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the 1940 Act.<PAGE>
PAGE 6
IN WITNESS THEREOF, the parties hereto have executed the
foregoing Agreement as of the day and year first above written.
TAX-FREE INCOME TRUST
Aggressive Tax-Free Income Portfolio
By
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By
Vice President
<PAGE>
PAGE 1
PLACEMENT AGENT AGREEMENT
THIS AGREEMENT dated , 1995 between Tax-Free Income
Trust, a Massachusetts business trust (the "Trust"), on behalf of
its underlying series portfolios and American Express Financial
Advisors Inc., a Delaware Corporation, the placement agent (the
"Placement Agent") of units in the Trust ("Trust Units").
Part One: Services as Placement Agent
(1) Placement Agent will act as placement agent of the Trust
Units covered by the Trust's registration statement then in effect
under the Investment Company Act of 1940 (the "1940 Act"). Under
this Agreement, neither the Placement Agent nor its employees or
any of its agents will make any offer or sale of Trust Units in a
manner which would require the Trust Units to be registered under
the Securities Act of 1933, as amended (the "1933 Act").
(2) The Placement Agent will act as placement agent for each
class of units issued and to be issued by the Trust during the
period of this agreement and agrees to offer for sale those units
as long as those units remain available for sale, unless the
Placement Agent is unable or unwilling to make such offer for sale
or sales or solicitations therefor legally because of any federal,
state, provincial or governmental law, rule or agency or for any
financial reason.
(3) Nothing in this Agreement requires the Trust to accept any
offer to purchase any Trust units; all offers are subject to
approval by the Board of Trustees (the "Board").
(4) The Trust represents to the Placement Agent that all
registration statements filed by the Trust with the Commission
under the Investment Company Act of 1940 with respect to Trust
units have been and will be prepared in conformity with the
requirements of the Investment Company Act of 1940 and the rules
and regulations of the Commission.
(5) The Trust agrees to make prompt and reasonable effort to
do any and all things necessary, in the opinion of the Placement
Agent, to have and to keep the Trust and the units properly
registered or qualified in all appropriate jurisdictions.
(6) The Trust agrees that it will furnish the Placement Agent
with information with respect to the affairs and accounts of the
Trust, and in such form, as the Placement Agent may from time to
time reasonably require and further agrees that the Placement
Agent, at all reasonable times, shall be permitted to inspect the
books and records of the Trust.
(7) The Placement Agent and the Trust agree to use their best
efforts to conform with all applicable state and federal laws and
regulations relating to any rights or obligations under the terms
of this agreement.
<PAGE>
PAGE 2
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties, the
Placement Agent covenants and agrees that during the period of this
agreement it will pay or cause or be paid all expenses incurred by
the Placement Agent or any of its affiliates, in the offering for
sale or sale of each class of the Trust's units.
Part Three: MISCELLANEOUS
(1) The Placement Agent shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
agreement, shall have no authority to act for or represent the
Trust.
(2) The Placement Agent shall be free to render to others
services similar to those rendered under this agreement.
(3) Neither this agreement nor any transaction pursuant hereto
shall be invalidated or in any way affected by the fact that
trustees, officers, agents and/or unitholders of the Trust are or
may be interested in the Placement Agent as trustees, officers,
unitholders or otherwise; that directors, officers, shareholders or
agents of the Placement Agent are or may be interested in the Trust
as trustees, officers, or otherwise; or that the Placement Agent is
or may be interested in the Trust as unitholder or otherwise;
provided, however, that neither the Placement Agent nor any officer
or director of the Placement Agent or any officers or trustees of
the Trust shall sell to or buy from the Trust any property or
security other than a security issued by the Trust, except in
accordance with a rule, regulation or order of the Securities and
Exchange Commission.
(4) Any notice under this agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the parties to this
agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party
may designate in writing mailed to the other.
(5) The Placement Agent agrees that no officer, director or
employee of the Placement Agent will deal for or on behalf of the
Trust with himself or herself as principal or agent, or with any
corporation or partnership in which he or she may have a financial
interest, except that this shall not prohibit:
(a) Officers, directors and employees of the Placement Agent
from having a financial interest in the Trust or in the Placement
Agent.
(b) The purchase of securities for the Trust, or the sale of
securities owned by the Trust, through a security broker or dealer,
one or more of whose partners, officers, directors or employees is
an officer, director or employee of the Placement Agent provided
such transactions are handled in the capacity of broker only and
provided commissions charged do not exceed customary brokerage
charges for such services.
<PAGE>
PAGE 3
(c) Transactions with the Trust by a broker-dealer affiliate of
the Placement Agent if allowed by rule or order of the Securities
and Exchange Commission and if made pursuant to procedures adopted
by the Trust's Board of Trustees (the "Board").
(7) The Placement Agent agrees that, except as otherwise provided
in this agreement, or as may be permitted consistent with the use
of a broker-dealer affiliate of the Placement Agent under
applicable provisions of the federal securities laws, neither it
nor any of its officers, directors or employees shall at any time
during the period of this agreement make, accept or receive,
directly or indirectly, any fees, profits or emoluments of any
character in connection with the purchase or sale of securities
(except securities issued by the Trust) or other assets by or for
the Trust.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and
until terminated by the Placement Agent or the Trust, except that
such continuance shall be specifically approved at least annually
by a vote of a majority of the Board of Trustees who are not
parties to this agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on
such approval, and by a majority of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the
Trust. As used in this paragraph, the terms "interested person"
and "vote of a majority of the outstanding voting securities" shall
have the meaning as set forth in the Investment Company Act of
1940, as amended.
(2) This agreement may be terminated by either party at any time
by giving the other party sixty (60) days written notice of such
intention to terminate.
(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the Investment Company Act of 1940, as
amended.
<PAGE>
PAGE 4
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
TAX-FREE INCOME TRUST
Aggressive Tax-Free Income Portfolio
By _____________________________________
[Title]
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By _____________________________________
[Title]
<PAGE>
PAGE 1
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated ________, 1995, between Tax-Free
Income Trust, a Massachusetts business trust, (the "Trust"), on
behalf of its underlying portfolios, and American Express Trust
Company, a corporation organized under the laws of the State of
Minnesota with its principal place of business at Minneapolis,
Minnesota (the "Custodian").
WHEREAS, the Trust desires that its securities and cash be
hereafter held and administered by Custodian pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Trust and the Custodian agree as follows:
Section 1. Definitions
The word "securities" as used herein shall be construed to include,
without being limited to, units, stocks, treasury stocks, including
any stocks of this Trust, notes, bonds, debentures, evidences of
indebtedness, options to buy or sell stocks or stock indexes,
certificates of interest or participation in any profit-sharing
agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable units, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Custodian Agreement, the word "securities"
also shall include other instruments in which the Trust may invest
including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name of the Trust by any two individuals designated in the
current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
Section 2. Names, Titles and Signatures of Authorized Persons
The Trust will certify to the Custodian the names and signatures of
its present officers and other designated persons authorized on
behalf of the Trust to direct the Custodian by custodian order as
herein before defined. The Trust agrees that whenever any change
occurs in this list it will file with the Custodian a copy of a<PAGE>
PAGE 2
resolution certified by the Secretary or an Assistant Secretary of
the Trust as having been duly adopted by the Board of Trustees (the
"Board") or the Executive Committee of the Board designating those
persons currently authorized on behalf of the Trust to direct the
Custodian by custodian order, as herein before defined, and upon
such filing (to be accompanied by the filing of specimen signatures
of the designated persons) the persons so designated in said
resolution shall constitute the current certified list. The
Custodian is authorized to rely and act upon the names and
signatures of the individuals as they appear in the most recent
certified list from the Trust which has been delivered to the
Custodian as herein above provided.
Section 3. Use of Subcustodians
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be
deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of United
States banks; through foreign banks, banking institutions or trust
companies; through foreign subsidiaries of United States banks or
bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the
"Foreign Subcustodian" or indirectly through an agent, established
under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940
and the rules promulgated by the Securities and Exchange Commission
thereunder, any order issued by the Securities and Exchange
Commission, or any "no-action" letter received from the staff of
the Securities and Exchange Commission. To the extent the existing
provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter,
they shall apply to all such foreign custodianships. To the extent
such provisions are inconsistent with or additional requirements
are established by such Section, rules, order or no-action letter,
the requirements of such Section, rules, order or no-action letter
will prevail and the parties will adhere to such requirements;
provided, however, in the absence of notification from the Trust of
any changes or additions to such requirements, the Custodian shall
have no duty or responsibility to inquire as to any such changes or
additions.
Section 4. Receipt and Disbursement of Money
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Trust or cause its agent to open and
maintain such account or accounts subject only to checks, drafts or
directives by the Custodian pursuant to the terms of this
Agreement. The Custodian or its agent shall hold in such account
or accounts, subject to the provisions hereof, all cash received by<PAGE>
PAGE 3
it from or for the account of the Trust. The Custodian or its
agent shall make payments of cash to or for the account of the
Trust from such cash only:
(a) for the purchase of securities for the portfolio of the Trust
upon the receipt of such securities by the Custodian or its
agent unless otherwise instructed on behalf of the Trust;
(b) for the purchase or redemption of units of capital stock of
the Trust;
(c) for the payment of interest, dividends, taxes, management
fees, or operating expenses (including, without limitation
thereto, fees for legal, accounting and auditing services);
(d) for payment of distribution fees, commissions, or redemption
fees, if any;
(e) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Trust
held by or to be delivered to the Custodian;
(f) for payments in connection with the return of securities
loaned by the Trust upon receipt of such securities or the
reduction of collateral upon receipt of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the Board or of the Executive Committee of the Board
signed by an officer of the Trust and certified by its Secretary or
an Assistant Secretary, specifying the amount of such payment,
setting forth the purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is made.
Notwithstanding the above, for the purposes permitted under items
(a) or (f) of paragraph (1) of this section, the Custodian may rely
upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the
Trust to endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the account of
the Trust and drawn on or to the order of the Trust and to deposit
same to the account of the Trust pursuant to this Agreement.
<PAGE>
PAGE 4
Section 5. Receipt of Securities
Except as permitted by the second paragraph of this section, the
Custodian or its agent shall hold in a separate account or
accounts, and physically segregated at all times from those of any
other persons, firms or corporations, pursuant to the provisions
hereof, all securities received by it for the account of the Trust.
The Custodian shall record and maintain a record of all certificate
numbers. Securities so received shall be held in the name of the
Trust, in the name of an exclusive nominee duly appointed by the
Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the Securities
and Exchange Commission may adopt, the Custodian may deposit all or
any part of the securities owned by the Trust in a securities
depository which includes any system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant
to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Trust pursuant
to the terms of this Agreement. The Custodian shall have no power
or authority to assign, hypothecate, pledge or otherwise dispose of
any such securities, except pursuant to the directive of the Trust
and only for the account of the Trust as set forth in Section 6 of
this Agreement.
Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver securities held
by it or its agent hereunder only:
(a) for sales of such securities for the account of the Trust,
upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would include
delivery against interim receipts or other proper delivery
receipts;
(d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any
plan of
(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;<PAGE>
PAGE 5
(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their terms
into other securities;
(h) upon exercise of subscription, purchase or other similar
rights represented by such securities; for loans of such
securities by the Trust receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, its
agent, or to a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Trust requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under Section 6 (whenever a facsimile is utilized, the
Trust will also deliver an original signed custodian order) and, in
respect to item (i), a copy of a resolution of the Board or of the
Executive Committee of the Board signed by an officer of the Trust
and certified by its Secretary or an Assistant Secretary,
specifying the securities, setting forth the purpose for which such
payment, transfer, exchange or delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom such transfer, exchange or delivery of
such securities shall be made.
Section 7. Custodian's Acts Without Instructions
Unless and until the Custodian receives a contrary custodian order
from the Trust, the Custodian shall or shall cause its agent to:
(a) present for payment all coupons and other income items held
by the Custodian or its agent for the account of the Trust
which call for payment upon presentation and hold all cash
received by it upon such payment for the account of the
Trust;
(b) present for payment all securities held by it or its agent
which mature or when called, redeemed, retired or otherwise
become payable;
(c) ascertain all stock dividends, rights and similar securities
to be issued with respect to any securities held by the
Custodian or its agent hereunder, and to collect and hold for
the account of the Trust all such securities; and
(d) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities held by the
Custodian or its agent, and to collect and hold such interest
and cash dividends for the account of the Trust.
<PAGE>
PAGE 6
Section 8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote
any of the securities held hereunder by or for the account of the
Trust. The Custodian shall promptly deliver to the Trust all
notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered
holder of such securities (if registered otherwise than in the name
of the Trust), but without indicating the manner in which such
proxies are to be voted.
Custodian shall transmit promptly to the Trust all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Trust. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Trust all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer.
Section 9. Transfer Taxes
The Trust shall pay or reimburse the Custodian for any transfer
taxes payable upon transfers of securities made hereunder,
including transfers resulting from the termination of this
Agreement. The Custodian shall execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
Section 10. Custodian's Reports
The Custodian shall furnish the Trust as of the close of business
each day a statement showing all transactions and entries for the
account of the Trust. The books and records of the Custodian
pertaining to its actions as Custodian under this Agreement and
securities held hereunder by the Custodian shall be open to
inspection and audit by officers of the Trust, internal auditors
employed by the Trust's investment advisor, and independent
auditors employed by the Trust. The Custodian shall furnish the
Trust in such form as may reasonably be requested by the Trust a
report, including a list of the securities held by it in custody
for the account of the Trust, identification of any subcustodian,
and identification of such securities held by such subcustodian, as
of the close of business of the last business day of each month,
which shall be certified by a duly authorized officer of the
Custodian. It is further understood that additional reports may
from time to time be requested by the Trust. Should any report
ever be filed with any governmental authority pertaining to lost or
stolen securities, the Custodian will concurrently provide the
Trust with a copy of that report.
<PAGE>
PAGE 7
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Trust may reasonably request
from time to time.
Section 11. Concerning Custodian
For its services hereunder the Custodian shall be paid such
compensation at such times as may from time to time be agreed on in
writing by the parties hereto in a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board or of the Executive
Committee of the Board, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly
executed.
The Trust agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against
it or its nominee in connection with the performance of this
Agreement, except such as may arise from the Custodian's or its
nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the
Trust for such items. In the event of any advance of cash for any
purpose made by Custodian resulting from orders or instructions of
the Trust, or in the event that Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Trust shall be
security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Trust resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of an agent, unless such loss
or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or
from its failure to enforce effectively such rights as it may have
against any agent.
Section 12. Termination and Amendment of Agreement
The Trust and the Custodian mutually may agree from time to time in
writing to amend, to add to, or to delete from any provision of
this Agreement.
<PAGE>
PAGE 8
The Custodian may terminate this Agreement by giving the Trust
ninety days' written notice of such termination by registered mail
addressed to the Trust at its principal place of business.
The Trust may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the Board authorizing such termination and certified by the
Secretary of the Trust, by registered mail to the Custodian.
Upon such termination of this Agreement, assets of the Trust held
by the Custodian shall be delivered by the Custodian to a successor
custodian, if one has been appointed by the Trust, upon receipt by
the Custodian of a copy of the resolution of the Board certified by
the Secretary, showing appointment of the successor custodian, and
provided that such successor custodian is a bank or trust company,
organized under the laws of the United States or of any State of
the United States, having not less than two million dollars
aggregate capital, surplus and undivided profits. Upon the
termination of this Agreement as a part of the transfer of assets,
either to a successor custodian or otherwise, the Custodian will
deliver securities held by it hereunder, when so authorized and
directed by resolution of the Board, to a duly appointed agent of
the successor custodian or to the appropriate transfer agents for
transfer of registration and delivery as directed. Delivery of
assets on termination of this Agreement shall be effected in a
reasonable, expeditious and orderly manner; and in order to
accomplish an orderly transition from the Custodian to the
successor custodian, the Custodian shall continue to act as such
under this Agreement as to assets in its possession or control.
Termination as to each security shall become effective upon
delivery to the successor custodian, its agent, or to a transfer
agent for a specific security for the account of the successor
custodian, and such delivery shall constitute effective delivery by
the Custodian to the successor under this Agreement.
In addition to the means of termination herein before authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding units of the Trust and after written
notice of such action to the Custodian.
Section 13. General
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and their respective
successors and assigns.
<PAGE>
PAGE 9
This Agreement shall be governed by the laws of the State of
Minnesota.
This Agreement supersedes all prior agreements between the parties.
TAX-FREE INCOME TRUST
Aggressive Tax-Free Income Portfolio
By:
Vice President
AMERICAN EXPRESS TRUST COMPANY
By:
Vice President
