-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Id5nW4V9dyMKysck4kRFqUH+hFG1AqmuK+Ac6pdpozzZvgNzotdYY1TTcziqaNS+ U2JqDTi9uDQdC0aZ+Z2xow== 0000820027-95-000590.txt : 19951202 0000820027-95-000590.hdr.sgml : 19951202 ACCESSION NUMBER: 0000820027-95-000590 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951130 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS PROGRESSIVE FUND INC CENTRAL INDEX KEY: 0000049722 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410940847 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01714 FILM NUMBER: 95597773 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 N-30D 1 IDS PROGRESSIVE FUND, INC. PAGE 1 IDS Progressive Fund 1995 annual report (prospectus enclosed) (Icon of) shooting star The goal of IDS Progressive Fund, Inc. is long-term growth of capital. The Fund invests primarily in undervalued common stocks. (This annual report includes a prospectus that describes in detail the Fund's objective, investment policies, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) Distributed by American Express Financial Advisors Inc. PAGE 2 (icon of) shooting star The power of patience Everyone likes to get a bargain. In the investment world, bargains are known as "value" stocks -- stocks whose low prices don't reflect the true worth of their respective companies. In the case of Progressive Fund, the focus is on small-company value stocks, which can get overlooked as investors try to find a new "highflier." Many of these companies have already proved themselves in the marketplace and are financially sound, but their stocks are currently bargain-priced. Patient investors may benefit, however, when such stocks get rediscovered and eventually rise to their fair values. PAGE 3 Contents (Icon of) One open book inside of another. The purpose of this annual report is to tell investors how the Fund performed. The prospectus, which is bound into the middle of this annual report, describes the Fund in detail. 1995 annual report From the president 4 From the portfolio manager 4 Ten largest holdings 6 Making the most of your fund 7 Long-term performance 8 Independent auditors' report 9 Financial statements 10 Notes to financial statements 13 Investments in securities 21 IDS mutual funds 24 Federal income tax information 27 1995 prospectus The Fund in brief Goal 3p Types of Fund investments and their risks 3p Manager and distributor 3p Portfolio manager 3p Alternative purchase arrangements 3p Sales charge and Fund expenses 4p Performance Financial highlights 6p Total returns 8p Investment policies and risks Facts about investments and their risks 10p Alternative investment option 13p Valuing Fund shares 13p How to purchase, exchange or redeem shares Alternative purchase arrangements 14p How to purchase shares 17p How to exchange shares 20p How to redeem shares 20p Reductions and waivers of the sales charge 24p Special shareholder services Services 28p Quick telephone reference 28p PAGE 4 Distributions and taxes Dividend and capital gain distributions 29p Reinvestments 30p Taxes 31p How to determine the correct TIN 32p How the Fund is organized Shares 33p Voting rights 33p Shareholder meetings 33p Directors and officers 33p Investment manager and transfer agent 35p Distributor 36p About American Express Financial Corporation General information 38p Appendix Descriptions of derivative instruments 39p (This annual report is not part of the prospectus.) PAGE 5 To our shareholders (Picture of William Pearce) William R. Pearce President of the Fund (Picture of Michael Garbisch) Michael Garbisch Portfolio manager From the president As I indicated in the Fund's previous reports, new agreements between the Fund and American Express Financial Corporation (AEFC) were approved by shareholders in November 1994. The new agreements became effective when the Fund began offering multiple classes of shares on March 20, 1995. The advantage of offering more than a single class of shares is that investors may choose how they wish to pay sales charges. A portion of these charges compensates your American Express financial advisor (formerly called your IDS planner), who is committed to providing you with outstanding services. Adding new classes of mutual fund shares does make the presentation of financial information in this report more complex. However, we will continue our effort to make the reports easier to read and understand. Meanwhile, your American Express financial advisor is available to answer your questions. (signature) William R. Pearce From the portfolio manager A very positive investment environment developed during the past 12 months, propelling the stock market to its best sustained advance in recent years. Although it was unable to keep up with the often- breakneck pace of the market as a whole, IDS Progressive Fund did provide shareholders with a total return well into double digits for the fiscal year (October 1994 through September 1995). Unlike last year, stocks found conditions much to their liking in 1995. After stumbling in the opening months of the Fund's fiscal year, the market soon found itself facing an onslaught of good news: surprisingly strong corporate profits, an ongoing low inflation rate and falling long-term interest rates -- a winning formula for stocks if ever there was one. Technology leads the way During most of the ensuing months, growth stocks -- those of companies boasting above-average profit patterns -- exhibited the greatest gains. Within the growth group, technology stocks, buoyed by often-outstanding profit reports and investor enthusiasm related to growth opportunities within that industry, led the advance. And, with the exception of a late-summer slump, that trend powered the market through the end of the Fund's fiscal year. PAGE 6 To the disadvantage of this Fund in the past year, few technology stocks fit with our value-oriented investment style, which focuses on buying stocks of well-established, high-quality companies at bargain prices. (To be sure, there are a number of top-quality technology companies, but their stocks typically trade at premium prices and are subject to greater risk if the market changes course.) In addition, our higher-than-average cash reserve and poor-performing foreign stocks tempered the fund's return for the 12 months. At times, our more-conservative approach meant lagging behind the market's pace, but on other occasions it meant holding up better during slumps. But, all in all, it resulted in relatively consistent progress. Biggest benefits As for the positive factors influencing the Fund's performance, two stand out. First, we maintained a well-above-average exposure to stocks of financial services firms, particularly banks, savings and loans, and insurance companies. Thanks to falling long-term interest rates and a takeover trend in that industry, those stocks enjoyed generally excellent gains and provided the biggest boost to our portfolio. Also benefitting performance, but to a lesser degree, were our health-care holdings. As for portfolio shifts, we sharply reduced our holdings among retailers, which proved to be a disappointment during the past year. Looking to the current fiscal year, although the environment appears to remain largely favorable, we don't expect the market, especially technology-related growth stocks, to repeat their recent exceptional performance. If that proves true, we think there's a good chance that the market's long-term trend of rewarding consistent, good-quality companies in a broad range of less-risky industries will reassert itself -- to the benefit of this Fund and its shareholders. (signature) Michael Garbisch Class A 12-month performance (All figures per share) Net asset value (NAV) Sept. 30, 1995 $7.66 Sept. 30, 1994 $6.94 Increase $0.72 Distributions Oct. 1, 1994 - Sept. 30, 1995 From income $0.32 From capital gains $0.10 Total distributions $0.42 Total return** +17.6%*** PAGE 7 Class B March 20, 1995 - Sept. 30, 1995 (All figures per share) Net asset value (NAV) Sept. 30, 1995 $7.63 March 20, 1995* $6.88 Increase $0.75 Distributions March 20, 1995* - Sept. 30, 1995 From income $ -- From capital gains $ -- Total distributions $ -- Total return** +10.9%*** Class Y March 20, 1995 - Sept. 30, 1995 (All figures per share) Net asset value (NAV) Sept. 30, 1995 $7.67 March 20, 1995* $6.88 Increase $0.79 Distributions March 20, 1995* - Sept. 30, 1995 From income $ -- From capital gains $ -- Total distributions $ -- Total return** +11.5%*** * Inception date. ** The prospectus discusses the effect of sales charges, if any, on the various classes. *** The total return is a hypothetical investment in the Fund with all distributions reinvested. PAGE 8 IDS Progressive Fund, Inc. Your Fund's ten largest holdings (Pie chart) The ten holdings listed here make up 19.14% of the Fund's net assets
__________________________________________________________________________________ Percent Value (of fund's net assets) (as of Sept. 30, 1995) __________________________________________________________________________________ Allied Group 2.18% $7,532,500 A holding company, Allied provides property-casualty insurance, excess and surplus insurance, investment services and data-processing. Hormel Foods 2.13 7,385,000 This leading meat packer specializes in branded meat products for the consumer market. Ecolab 2.08 7,182,500 Supplies cleansing agents and related products to nonresidential markets. Collective Bancorp 1.95 6,727,500 The largest publicly traded thrift institution in New Jersey, operating more than 75 full-service banking offices through its Collective Bank Subsidiary. American President 1.86 6,435,000 A leading operator of container ships deployed in the trans-Pacific and intra-Asia markets. Boston Scientific 1.85 6,393,750 Develops, manufactures, and markets medical devices. Enhance Financial Services Group 1.83 6,336,550 Engages primarily in the reinsurance of financial guaranties of municipal and asset-backed debt obligations issued by monoline financial guaranty insurers. First American of Tennessee 1.81 6,253,125 A bank holding company headquartered in Nashville, Tennessee. Miller (Herman) Inc. 1.73 5,995,000 A leader in the design and development of furniture and furniture systems. Lancaster Colony 1.72 5,950,000 Manufactures and markets specialty foods, automotive products, glassware and candles.
PAGE 9 Making the most of your fund Average annual total return (as of Sept. 30, 1995) Class A 1 year 5 years 10 years +11.74% +13.43% +10.56% Total returns for Class A, Class B and Class Y for the period from March 20, 1995 to Sept. 30, 1995 were 5.80%, 5.98% and 11.53%, respectively. March 20, 1995 was the inception date for Class B and Class Y. Total return for Class A is shown for comparative purposes. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. figures for Class A and Class B reflect the effect of the maximum 5% sales charge. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. Build your assets systematically One of the best ways to invest in the Fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when the Fund's share price is low, fewer shares when it is high. This does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Month Amount Per-share Number of shares purchased invested market price Jan $100 $20 5.00 Feb 100 18 5.56 Mar 100 17 5.88 Apr 100 15 6.67 May 100 16 6.25 June 100 18 5.56 July 100 17 5.88 Aug 100 19 5.26 Sept 100 21 4.76 Oct 100 20 5.00 (footnotes to table) By investing an equal number of dollars each month... (arrow in table pointing to April) you automatically buy more shares when the per share market price is low (arrow in table pointing to September) and fewer shares when the per share market price is high. PAGE 10 You have paid an average price of only $17.91 per share over the 10 months, while the average market price actually was $18.10. Your Fund's long-term performance Three ways to benefit from a mutual fund: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's stock dividends, interest and short-term gains exceed its expenses. All three make up your total return. And you potentially can increase your investment if, like most investors, you reinvest your dividends and capital gain distributions to buy additional shares of the fund or another fund. Class A* How your $10,000 has grown in IDS Progressive Fund Average annual total return (as of Sept. 30, 1995) S&P 500 1 year 5 years 10 years Stock Index +11.74% +13.43% +10.56% $27,305 Progressive Fund $20,000 Lipper Capital Appreciation Fund $9,500 [graph plotting the relative performance of $9500 invested in each of the above] '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 (The following three paragraphs appear in the margin next to the graph:) Assumes: -Holding period from 9/30/85 to 9/30/95. -Returns do not reflect taxes payable on distributions. -Reinvestment of all income and capital gain distributions for the Fund, with a value of $15,528. Also see "Performance" in the Fund's current prospectus. Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of common stocks, is frequently used as a general measure of market performance. However, the S&P companies are generally larger than those in which the Fund invests. Lipper Capital Appreciation Fund Index, published by Lipper Analytical Services, Inc., includes 30 funds that are generally similar to this Fund, although some funds in the index may have somewhat different investment policies or objectives. * The graph above is for Class A only. Class B and Class Y are not shown. Total returns for Class A, Class B and Class Y for the PAGE 11 period from March 20, 1995 to Sept. 30, 1995 were +5.80%, +5.98% and +11.53%, respectively. March 20, 1995 was the inception date for Class B and Class Y. Total return for Class A is shown for comparative purposes. The performance of Class B and Class Y will vary from the performance of Class A based on differences in sales charges and fees. On the graph above you can see how the Fund's total return compared to two widely cited performance indexes, the S&P 500 and the Lipper Capital Appreciation Fund Index. In comparing Progressive Fund to the two indexes, you should take into account the fact that the Fund's performance reflects the maximum sales charge of 5%, while such charges are not reflected in the performance of the indexes. If you were actually to buy either individual stocks or growth mutual funds, any sales charges that you pay would reduce your total return as well. Your investment and return values fluctuate so that your shares, when redeemed, may be worth more or less than the original cost. This was a period of widely fluctuating security prices. Past performance is no guarantee of future results. PAGE 12 Independent auditors' report The board of directors and shareholders IDS Progressive Fund, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of IDS Progressive Fund, Inc. as of September 30, 1995, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the years in the two-year period ended September 30, 1995, and the financial highlights for each of the years in the ten-year period ended September 30, 1995. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody are confirmed to us by the custodian. As to securities purchased and sold but not received or delivered, we request confirmations from brokers, and where replies are not received, we carry out other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS Progressive Fund, Inc. at September 30, 1995, and the results of its operations for the year then ended and the changes in its net assets for each of the years in the two-year period ended September 30, 1995, and the financial highlights for the periods stated in the first paragraph above, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota November 3, 1995 PAGE 13 Financial statements Statement of assets and liabilities IDS Progressive Fund, Inc. Sept. 30, 1995
_____________________________________________________________________________________________________________ Assets ______________________________________________________________________________________________________________ Investments in securities, at value (Note 1) (identified cost $315,068,508) $352,155,670 Dividends and accrued interest receivable 738,322 Receivable for investment securities sold 157,794 ______________________________________________________________________________________________________________ Total assets 353,051,786 _____________________________________________________________________________________________________________ Liabilities _____________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit 2,656,874 Payable for investment securities purchased 4,383,627 Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 163,618 Accrued investment management services fee 11,919 Accrued distribution fee 297 Accrued service fee 3,276 Accrued transfer agency fee 3,029 Accrued administrative services fee 1,104 Other accrued expenses 57,476 _____________________________________________________________________________________________________________ Total liabilities 7,281,220 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $345,770,566 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- authorized 10,000,000,000 shares of $.01 par value; $ 451,447 Additional paid-in capital 287,809,140 Undistributed net investment income 4,462,680 Accumulated net realized gain (Note 1) 16,121,424 Unrealized appreciation of investments and on translation of assets and liabilities in foreign currencies (Note 5) 36,925,875 _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $345,770,566 _____________________________________________________________________________________________________________ Net assets applicable to outstanding shares: Class A $336,517,780 Class B $ 7,426,638 Class Y $ 1,826,148 Net asset value per share of outstanding capital stock: Class A shares 43,933,173 $ 7.66 Class B shares 973,319 $ 7.63 Class Y shares 238,188 $ 7.67 See accompanying notes to financial statements. PAGE 14 Financial statements Statement of operations IDS Progressive Fund, Inc. Year ended Sept. 30, 1995 _____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ Income: Dividends (net of foreign taxes withheld of $60,294) $ 5,267,637 Interest 3,408,224 _____________________________________________________________________________________________________________ Total income 8,675,861 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 1,851,169 Distribution fee Class A 99,784 Class B 13,312 Transfer agency fee 555,996 Incremental transfer agency fee - Class B 452 Service fee Class A 295,036 Class B 3,106 Administrative services fee 100,807 Compensation of directors 5,405 Compensation of officers 2,649 Custodian fees 85,171 Postage 17,667 Registration fees 62,069 Reports to shareholders 23,000 Audit fees 20,940 Administrative 3,854 Other 3,976 _____________________________________________________________________________________________________________ Total expenses 3,144,393 Earnings credits on cash balances (Note 2) (17,268) _____________________________________________________________________________________________________________ Total net expenses 3,127,125 _____________________________________________________________________________________________________________ Investment income -- net 5,548,736 _____________________________________________________________________________________________________________ Realized and unrealized gain -- net _____________________________________________________________________________________________________________ Net realized gain on security and foreign currency transactions (including loss of $23,639 from foreign currency transactions) (Note 3) 15,946,887 Net realized gain on expired option contracts written (Note 7) 151,395 _____________________________________________________________________________________________________________ Net realized gain on investments and foreign currency 16,098,282 Net change in unrealized appreciation or depreciation of investments and on translation of assets and liabilities in foreign currencies 29,110,171 _____________________________________________________________________________________________________________ Net gain on investments and foreign currency 45,208,453 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $50,757,189 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE 15
Financial statements Statements of changes in net assets IDS Progressive Fund, Inc. Year ended Sept. 30, _____________________________________________________________________________________________________________ Operations and distributions 1995 1994 _____________________________________________________________________________________________________________ Investment income -- net $ 5,548,736 $ 4,374,018 Net realized gain on investments and foreign currency 16,098,282 13,141,048 Net change in unrealized appreciation or depreciation of investments and on translation of assets and liabilities in foreign currencies 29,110,171 2,581,623 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations 50,757,189 20,096,689 _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (5,046,235) (3,704,818) Net realized gain Class A (12,036,462) (21,846,006) _____________________________________________________________________________________________________________ Total distributions (17,082,697) (25,550,824) _____________________________________________________________________________________________________________ Capital share transactions (Note 4) _____________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 51,297,752 53,896,886 Class B shares 7,175,301 -- Class Y shares 1,700,674 -- Reinvestment of distributions at net asset value Class A shares 16,744,777 25,069,312 Payments for redemptions Class A shares (41,167,059) (52,090,892) Class B shares (Note 2) (127,637) -- Class Y shares (27,749) -- _____________________________________________________________________________________________________________ Increase in net assets from capital share transactions 35,596,059 26,875,306 _____________________________________________________________________________________________________________ Total increase in net assets 69,270,551 21,421,171 Net assets at beginning of year 276,500,015 255,078,844 _____________________________________________________________________________________________________________ Net assets at end of year (including undistributed net investment income of $4,462,680 and $3,980,173) $345,770,566 $276,500,015 _____________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE 16 Notes to financial statements IDS Progressive Fund, Inc. ___________________________________________________________________ 1. Summary of significant accounting policies The Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The Fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares, which the Fund began offering on March 20, 1995, may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. Class Y shares, which the Fund also began offering on March 20, 1995, have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differs among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Significant accounting policies followed by the Fund are summarized below: Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price; securities for which market quotations are not readily available, including illiquid securities, are valued at fair value according to methods selected in good faith by the board of directors. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions In order to produce incremental earnings, protect gains, and facilitate buying and selling of securities for investment purposes, the Fund may buy or write options traded on any U.S. or foreign exchange or in the over-the-counter market where the completion of the obligation is dependent upon the credit standing of the other party. The Fund also may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity of profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying PAGE 17 an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss upon expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions In order to gain exposure to or protect itself from changes in the market, the Fund may buy and sell stock index or interest rate futures contracts traded on any U.S. or foreign exchange. The Fund also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing PAGE 18 service. The Fund is subject to the credit risk that the other party will not complete the obligations of the contract. Federal taxes Since the Fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. The effect on dividend distributions of certain book-to- tax differences is presented as "excess distributions" in the statement of changes in net assets. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been decreased by $19,994 and accumulated net realized gain has been increased by $23,639 resulting in a net reclassification adjustment to decrease additional paid-in capital by $3,645. Dividends to shareholders An annual dividend declared and paid at the end of the calendar year from net investment income is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount, is accrued daily. ___________________________________________________________________ 2. Expenses and sales charges Under terms of a prior agreement that ended March 19, 1995, the Fund paid AEFC a fee for managing its investments, recordkeeping and other specified services. The fee was a percentage of the Fund's average daily net assets consisting of a group asset charge in reducing percentages from 0.46% to 0.32% annually on the combined net assets of all non-money market Funds in the IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.23% of average daily net assets. The fee was adjusted upward or downward PAGE 19 by a performance incentive adjustment based on the Fund's average daily net assets over a rolling 12-month period as measured against the change in the Lipper Capital Appreciation Fund Index. The maximum adjustment is 0.12% of the Fund's average daily net assets after deducting 1% from the performance difference. If the performance difference was less than 1%, the adjustment would have been zero. The adjustment decreased the fee by $46,276 for the year ended Sept. 30, 1995. Also under the terms of a prior agreement, the Fund paid AEFC a distribution fee at an annual rate of $6 per shareholder account and a transfer agency fee at an annual rate of $15 per shareholder account. During the year ended Sept. 30, 1995, the Fund's custodian and transfer agency fees were reduced by $17,268 as a result of earnings credits from overnight cash balances. Effective March 20, 1995, when the Fund began offering multiple classes of shares, the Fund entered into agreements with AEFC for managing its portfolio, providing administrative services and serving as transfer agent as follows: Under its Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets in reducing percentages from 0.64% to 0.515% annually. The performance incentive adjustment remains unchanged from the prior agreement. Under an Administrative Services Agreement, the Fund pays AEFC for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.06% to 0.035% annually. Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts and records. The Fund pays AEFC an annual fee per shareholder account for this service as follows: o Class A $15 o Class B $16 o Class Y $15 Also effective March 20, 1995, the Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing-related services as follows: Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, the Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the Fund's average daily net assets attributable to Class A and Class B shares. AEFC will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. PAGE 20 Sales charges received by American Express Financial Advisors Inc. for distributing Fund shares were $865,475 for Class A and $721 for Class B for the year ended Sept. 30, 1995. The Fund also pays custodian fees to American Express Trust Company, an affiliate of AEFC. The Fund has a retirement plan for its independent directors. Upon retirement, directors receive monthly payments equal to one-half of the retainer fee for as many months as they served as directors up to 120 months. There are no death benefits. The plan is not funded, but the Fund recognizes the cost of payments during the time the directors serve on the board. The retirement plan expense amounted to $2,586 for the year ended Sept. 30, 1995. ___________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $156,256,104 and $155,968,494, respectively, for the year ended Sept. 30, 1995. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $11,600 for the year ended Sept. 30, 1995. Income from securities lending amounted to $14,414 for the year ended Sept. 30, 1995. The risks to the Fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. ___________________________________________________________________ 4. Capital share transactions Transactions in shares of capital stock for the period indicated are as follows:
__________________________________________________________________________________________________ Year ended Sept. 30, 1995 Year ended 9/30/94 Class A Class B* Class Y* Class A __________________________________________________________________________________________________ Sold 7,377,210 990,962 241,975 7,826,363 Issued for reinvested 2,586,065 -- -- 3,694,811 distributions Redeemed (5,882,611) (17,643) (3,787) (7,533,933) __________________________________________________________________________________________________ Net increase 4,080,664 973,319 238,188 3,987,241 __________________________________________________________________________________________________ *Inception date was March 20,1995.
___________________________________________________________________ 5. Foreign currency contracts At Sept. 30, 1995, the Fund had entered into two foreign currency exchange contracts that obligate the Fund to deliver currency at a specified future date. The unrealized depreciation of $163,618 on these contracts is included in the accompanying financial statements. The terms of the open contracts are as follows: PAGE 21 Exchange date Currency to be Currency to be Unrealized delivered received depreciation ___________________________________________________________________ Dec. 5, 1995 5,700,000 3,483,256 $ 91,174 Dutch Guilder U.S. Dollar Dec. 14, 1995 2,980,000 4,629,430 72,444 British Pound U.S. Dollar ________ $163,618 ___________________________________________________________________ 6. Illiquid securities At Sept. 30, 1995, investments in securities included issues that are illiquid. The Fund currently limits investments in illiquid securities to 10% of the Fund's net assets, at market value, at the time of purchase. The aggregate value of such securities at Sept. 30, 1995, was $3,826,200 which represents 1.1% of net assets. Pursuant to guidelines adopted by the Fund's board of directors, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. ___________________________________________________________________ 7. Option contracts written The number of contracts and premium amounts associated with option contracts written is as follows: Year ended Sept. 30, 1995 ________________________ Calls Contracts Premium ________________________________________________ Balance Sept. 30, 1994 -- $ -- Opened 1,250 151,395 Expired (1,250) (151,395) ________________________________________________ Balance Sept. 30, 1995 -- $ -- ________________________________________________ ___________________________________________________________________ 8. Financial highlights "Financial highlights" showing per share data and selected ratio information is presented on pages 6 and 7 of the prospectus. PAGE 22
Investments in securities IDS Progressive Fund, Inc. (Percentages represent value of Sept. 30, 1995 investments compared to net assets) ____________________________________________________________________________________________________________________________ Common stocks (81.9%) ____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ Automotive & related (0.1%) Tower Automotive 30,000 (b) $ 412,500 _____________________________________________________________________________________________________________________________ Banks and savings & loans (8.5%) Collective Bancorp 260,000 6,727,500 F&M Bancorp 37,100 918,225 First Amer of Tennessee 145,000 6,253,125 Mercantile Bancorp 90,000 4,027,500 Southern Natl 217,500 5,709,375 Standard Federal Bancorp 150,000 5,850,000 ____________ Total 29,485,725 _____________________________________________________________________________________________________________________________ Building materials (2.2%) Cameron Ashley 250,000 (b) 2,375,000 Martin Marietta Materials 270,700 5,312,488 ____________ Total 7,687,488 _____________________________________________________________________________________________________________________________ Chemicals (3.0%) Ecolab 260,000 7,182,500 Ethyl 275,000 3,059,375 ____________ Total 10,241,875 _____________________________________________________________________________________________________________________________ Computers & office equipment (4.4%) Diebold 63,500 2,944,813 Exabyte 275,000 (b) 3,712,500 Solectron 125,000 (b) 4,937,500 VMARK 250,000 (b) 3,781,250 _____________ Total 15,376,063 _____________________________________________________________________________________________________________________________ Energy (1.2%) Murphy Oil 100,000 4,000,000 _____________________________________________________________________________________________________________________________ See accompanying notes to investments in securities. PAGE 23 Energy equipment & services (1.6%) Production Operators 180,000 5,535,000 _____________________________________________________________________________________________________________________________ Financial services (1.4%) Sun Communities 180,000 4,680,000 _____________________________________________________________________________________________________________________________ Food (3.7%) Dean Foods 185,000 5,272,500 Hormel Foods 280,000 7,385,000 ____________ Total 12,657,500 _____________________________________________________________________________________________________________________________ Furniture & appliances (4.6%) Ethan Allen Interiors 250,000 (b) 5,375,000 Miller (Herman) 220,000 5,995,000 Natl Presto Inds 103,000 4,622,125 ____________ Total 15,992,125 _____________________________________________________________________________________________________________________________ Health care (4.2%) Beckman Instruments 125,000 3,781,250 Boston Scientific 150,000 (b) 6,393,750 Cordis 50,000 (b) 4,237,500 ____________ Total 14,412,500 _____________________________________________________________________________________________________________________________ Health care services (0.5%) United Wisconsin Services 72,600 1,733,325 _____________________________________________________________________________________________________________________________ Industrial equipment & services (4.0%) Alamo Group 200,000 3,600,000 CLARCOR 205,500 4,829,250 Kaydon 185,000 5,457,500 ____________ Total 13,886,750 _____________________________________________________________________________________________________________________________ Industrial transportation (3.2%) Amer President 220,000 6,435,000 Kansas City Southern Inds 100,500 4,572,750 ____________ Total 11,007,750 _____________________________________________________________________________________________________________________________ Insurance (6.8%) Allied Group 230,000 7,532,500 Enhance Financial Services Group 309,100 6,336,550 Horace Mann Educators 180,000 4,950,000 PennCorp Financial Group 200,000 4,775,000 _____________ Total 23,594,050 _____________________________________________________________________________________________________________________________ Leisure time & entertainment (2.9%) Carmike Cinemas 240,000 (b) 5,280,000 Polaris Inds 35,000 1,544,375 ShoLodge 235,000 (b) 3,172,500 _____________ Total 9,996,875 _____________________________________________________________________________________________________________________________ Metals (1.5%) Cleveland-Cliffs 125,000 5,140,625 _____________________________________________________________________________________________________________________________ Multi-industry conglomerates (4.3%) Griffon 600,000 (b) 5,175,000 Lancaster Colony 175,000 5,950,000 Zero 222,400 3,614,000 ____________ Total 14,739,000 _____________________________________________________________________________________________________________________________ Paper & packaging (4.0%) Longview Fibre 240,000 3,660,000 Rayonier 150,000 5,868,750 Shorewood Packaging 250,000 (b) 4,343,750 ____________ Total 13,872,500 _____________________________________________________________________________________________________________________________ Restaurants & lodging (1.0%) Buffets 290,000 (b) 3,625,000 _____________________________________________________________________________________________________________________________ PAGE 24 Retail (3.0%) Meyer (Fred) 200,000 (b) 4,900,000 Rite Aid 200,000 5,600,000 ____________ Total 10,500,000 _____________________________________________________________________________________________________________________________ Utilities-electric (1.0%) Sierra Pacific Resources 150,000 3,431,250 _____________________________________________________________________________________________________________________________ Utilities-gas (2.6%) Equitable Resources 170,000 5,015,000 New Jersey Resources 153,900 3,982,163 ____________ Total 8,997,163 _____________________________________________________________________________________________________________________________ Utilities-telephone (1.5%) Century Telephone 175,000 5,315,625 _____________________________________________________________________________________________________________________________ Foreign (10.7%)(c) Boskalis 128,347 1,676,340 Charter Consolidated 116,949 1,594,716 Concordia Paper Holdings 110,000 (b) 1,388,750 Davis Service 390,000 1,528,020 DeBeers Consolidated Mines ADR 200,000 5,450,000 Empresas ICA 150,000 1,725,000 Kondor Wessels 47,500 1,525,795 Kwik-Fit Holdings 600,000 1,725,000 Leigh Interest 720,000 1,797,120 Panamerican Beverages 66,000 1,773,750 Polynorm 13,020 1,375,146 Powerscreen Intl 600,000 3,412,800 Ranger Oil 700,000 4,102,322 Renaissance Energy 100,000 (b) 2,251,162 South China Morning Post 3,000,000 1,773,000 Tempest Reinsurance 30,000 (b,d) 3,826,200 _____________ Total 36,925,121 _____________________________________________________________________________________________________________________________ Total common stocks (Cost: $246,860,096) $283,245,810 _____________________________________________________________________________________________________________________________ Bond (1.0%) ______________________________________________________________________________________________________________________________ Issuer and coupon rate Principal Value(a) amount _____________________________________________________________________________________________________________________________ Foreign (c) Escom (South African Rand) 11% 2008 16,250,000 $ 3,434,275 _____________________________________________________________________________________________________________________________ Total bond (Cost: $2,732,827) $ 3,434,275 _____________________________________________________________________________________________________________________________
Short-term securities (18.9%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity ____________________________________________________________________________________________________________________________ U.S. government agencies (1.7%) Federal Home Loan Mtge Corp Disc Note 10-02-95 5.66% $3,200,000 $ 3,198,995 Federal Natl Mtge Assn Disc Note 10-10-95 5.69 2,800,000 2,795,598 _____________ Total 5,994,593 _____________________________________________________________________________________________________________________________ Commercial paper (17.2%) Albertson's 10-31-95 5.76 3,500,000 3,482,730 PAGE 25 Anheuser-Busch 10-17-95 5.72 3,100,000 3,091,656 Bell Atlantic Network Funding 10-20-95 5.75 4,300,000 4,286,335 Campbell Soup 10-11-95 5.73 3,000,000 2,994,766 Ciesco 10-30-95 5.76 3,700,000 3,682,332 Corporate Asset Funding 10-03-95 5.76 5,300,000 5,297,474 Fleet Funding 11-10-95 5.84 3,356,000 (e) 3,333,832 General Electric Capital 10-24-95 5.73 2,300,000 2,291,260 Goldman Sachs 10-19-95 5.76 3,500,000 3,489,415 Metlife Funding 11-03-95 5.80 3,500,000 3,480,927 PACCAR Financial 10-30-95 5.76 3,200,000 3,184,720 Penney (JC) Funding 10-27-95 5.73 3,500,000 3,485,038 PepsiCo 10-25-95 5.77 3,440,000 3,426,264 SAFECO Credit 10-25-95 5.75 3,100,000 3,087,686 Sandoz 10-26-95 5.73 3,000,000 2,987,650 Sara Lee 11-06-95 5.84 2,300,000 2,286,289 Siemens 10-04-95 5.75 2,600,000 2,598,348 USL Capital 10-12-95 5.77 3,000,000 2,994,270 _____________ Total 59,480,992 _____________________________________________________________________________________________________________________________ Total short-term securities (Cost: $65,475,585) $ 65,475,585 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $315,068,508)(f) $352,155,670 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Presently non-income producing. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amount is denominated in the currency indicated. (d) Identifies issues considered to illiquid (see Note 6 to the financial statements). Information concerning such holdings at Sept. 30, 1995, is as follows: Acquisition Security date Cost ___________________________________________________________________________________ Tempest Reinsurance 09-13-93 $3,000,000 (e) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board of directors. (f) At Sept. 30, 1995, the cost of securities for federal income tax purposes was $315,068,508 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $44,815,259 Unrealized depreciation (7,728,097) ____________________________________________________________________________________ Net unrealized appreciation $37,087,162 ____________________________________________________________________________________
PAGE 26 IDS mutual funds Cash equivalent investments These money market funds have three main goals: conservation of capital, constant liquidity and the highest possible current income consistent with these objectives. Very limited risk. IDS Cash Management Fund Invests in such money market securities as high quality commercial paper, bankers' acceptances, certificates of deposits (CDs) and other bank securities. (icon of) piggy bank IDS Tax-Free Money Fund Invests primarily in short-term bonds and notes issued by state and local governments to seek high current income exempt from federal income taxes. (icon of) shield with piggy bank enclosed Income investments The funds in this group invest their assets primarily in corporate bonds or government securities to seek interest income. Secondary objective is capital growth. Risk varies by bond quality. IDS Global Bond Fund Invests primarily in debt securities of U.S. and foreign issuers to seek high total return through income and growth of capital. (icon of) globe IDS Extra Income Fund Invests mainly in long-term, high-yielding corporate fixed-income securities in the lower rated, higher risk bond categories to seek high current income. Secondary objective is capital growth. (icon of) cornucopia IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column PAGE 27 IDS Selective Fund Invests in high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests primarily in securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) federal building Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed IDS State Tax-Exempt Funds (CA, MA, MI, MN, NY, OH) Invests primarily in high- and medium-grade municipal securities to provide income to residents of each respective state that is exempt from federal, state and local income taxes. (New York is the only state that is exempt at the local level.) (icon of) shield with U.S. enclosed IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column IDS Insured Tax-Exempt Fund Invests primarily in municipal securities that are insured as to the timely payment of principal and interest. The insurance feature minimizes credit risk of the fund but does not guarantee the market value of the fund's shares. (icon of) shield with eagle head PAGE 28 Growth and income investments These funds focus on securities of medium to large, well- established companies that offer long-term growth of capital and reasonable income from dividends and interest. Moderate risk. IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Managed Retirement Fund Invests in a combination of common stocks, fixed-income investments and money market securities to seek a maximum total return through a combination of growth of capital and current income. (icon of) bird in a nest IDS Equity Select Fund Invests primarily in a combination of moderate growth stocks, higher-yielding equities and bonds. Seeks growth of capital and income. (icon of) three apple trees IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by our research analysts as the best from each industry represented on the index. Offers potential for long-term growth as well as dividend income. (icon of) ribbon IDS Stock Fund Invests in common stock of companies representing many sectors of the economy. Seeks current income and growth of capital. (icon of) building with columns IDS Equity Value Fund Invests primarily in undervalued common stocks that offer potential for growth of capital and income. (icon of) three growing flowers PAGE 29 IDS Utilities Income Fund Invests primarily in the stocks of public utility companies to seek high current income and growth of income and capital with reduced volatility. (icon of) electrical cord IDS Diversified Equity Income Fund Invests primarily in high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) four puzzle pieces IDS Mutual Invests in a balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Strategy Aggressive Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) flower PAGE 30 IDS Global Growth Fund Invests in stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The fund frequently changes its industry mix. (icon of) dimension IDS Progressive Fund Invests primarily in undervalued common stocks. The fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial advisor or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. PAGE 31 Federal income tax information IDS Progressive Fund, Inc. The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below were reported to you on a Form 1099-DIV, Dividends and Distributions, last January. Shareholders should consult a tax advisor on how to report distributions for state and local purposes. IDS Progressive Fund, Inc. Fiscal year ended Sept. 30, 1995 Class A Income distribution taxable as dividend income, 56.90% qualifying for deduction by corporations. Payable date Per share Dec. 30, 1994 $0.31771 Capital gain distribution taxable as long-term capital gain. Payable date Per share Dec. 30, 1994 $0.10566 Total distributions $0.42337 The distribution of $0.42337 per share, payable Dec. 30, 1994, consisted of $0.12500 derived from net investment income, $0.19271 from net short-term capital gains (a total of $0.31771 taxable as dividend income) and $0.10566 from net long-term capital gains. PAGE 32 Quick telephone reference American Express Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchToneR phones only), including current fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 AMERICAN EXPRESS FINANCIAL ADVISORS IDS Progressive Fund, Inc. IDS Tower 10 Minneapolis, MN 55440-0010 PAGE 33 STATEMENT OF DIFFERENCES Difference Description 1) The layout is different 1) Some of the layout in the throughout the annual report. annual report to shareholders is in two columns. 2) Headings. 2) The headings in the annual report and prospectus are placed in a blue strip at the top of the page. 3) There are pictures, icons 3) Each picture, icon and and graphs throughout the graph is described in annual report and prospectus. parentheses. 4) Footnotes for charts and 4) The footnotes for each graphs are described at chart or graph are typed the left margin. below the description of the chart or graph. -----END PRIVACY-ENHANCED MESSAGE-----