<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 22 (File No. 2-89288) X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24 (File No. 811-3956) X
IDS STRATEGY FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
X on May 27, 1994, pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24f-2 of the Investment Company Act of 1940. Registrant will file
its 24f-2 Notice for the fiscal year ended March 31, 1993, on or
about May 27, 1994.
<PAGE>
PAGE 2
Cross reference sheet showing location in the prospectus and
Statement of Additional Information of the information called for
by the items enumerated in Part A and B of Form N-1A.
Negative answers omitted from prospectus are so indicated.
<TABLE>
<CAPTION>
PART A PART B
Page Number Page Number in Statement
Item No. in Prospectus Item No. of Additional Information
<C> <C> <C> <C>
1 3 10 35
2 4-7 11 36
3(a) 7-11 12 NA
(b) NA
(c) 7-13 13(a) 37-40;61-84
(b) 37-40
4(a) 4-7;23-28;28-32 (c) 39
(b) 23-28 (d) 43
(c) 23-28
14(a) 29-30*
5(a) 29-30 (b) 29-30*
(b) 32-33 (c) 30*
(c) NA
(d) 30-31 15(a) NA
(e) 31-32 (b) NA
(f) 32-33 (c) 30*
5A(a) 7-11 16(a) 32-33*
(b) 7-11 (b) 53-54
(c) NA
6(a) 28-29 (d) None
(b) NA (e) NA
(c) NA (f) NA
(d) NA (g) NA
(e) 3 (h) 59;59
(f) 21 (i) 54;59
(g) 21-23
17(a) 40-43
7(a) 31-32 (b) 43-44
(b) 12-13 (c) 40-43
(c) 19 (d) 42
(d) 14-15 (e) 42
(e) NA
(f) 31-32 18(a) 28-29*
(b) NA
8(a) 15-16
(b) NA 19(a) 48-49
(c) 15 (b) 46-48
(d) 13;17 (c) NA
9 None 20 51-52
21(a) 55
(b) 55
(c) NA
22(a) NA
(b) 44-46
23 60
</TABLE>
*Designates page number in prospectus, which is hereby incorporated
in this Statement of Additional Information.
<PAGE>
PAGE 3
IDS Strategy Fund
Prospectus
May 27, 1994
IDS Strategy Fund, Inc. (Strategy) is a series mutual fund with
five series of captial stock. Each series is a diversified mutual
fund with its own goals and investment policies.
Aggressive Equity Fund's goal is long-term growth of capital. The
securities this fund invests in may be considered speculative.
Equity Fund's goals are growth of capital and income.
Income Fund's primary goals are to provide a high level of current
income while attempting to maintain the value of the investment.
The fund also will seek capital appreciation when consistent with
its primary goals.
Short-Term Income Fund's goal is high current income consistent
with conservation of capital.
Worldwide Growth Fund's goal is long-term growth of capital. Since
this fund invests in foreign issuers, its investments may be
considered speculative.
This prospectus contains facts that can help you decide if one or
more of the funds is the right investment for you. Read it before
you invest and keep it for future reference.
Additional facts about the funds are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated May 27, 1994, is incorporated here by
reference. For a free copy contact IDS Shareholder Service.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
IDS Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
<PAGE>
PAGE 4
Table of contents
The funds in brief
Goals and types of fund investments
Manager and distributor
Portfolio managers
Deferred sales charge and fund expenses
Deferred sales charge
Operating expenses
Performance
Financial highlights
Total returns
Yield
Key terms
How to buy, exchange or sell shares
How to buy shares
How to exchange shares
How to sell shares
The contingent deferred sales charge
Waivers of the contingent deferred sales charge
Special shareholder services
Services
Quick telephone reference
Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
Investment policies
Facts about investments and their risks
Valuing assets
How the funds are organized
Shares
Voting rights
Shareholder meetings
Directors and officers
Investment manager and transfer agent
Distributor
About IDS
General information
Appendix
Description of corporate bond ratings
<PAGE>
PAGE 5
The funds in brief
Goals and types of investments
IDS Strategy - Aggressive Equity Fund is a diversified mutual fund
that invests primarily in common stocks that are selected for their
above-average growth potential. Its goal is long-term growth of
capital.
IDS Strategy - Equity Fund is a diversified mutual fund that
invests in equity securities that the investment manager believes
are undervalued and therefore have intrinsic investment value. Its
goals are growth of capital and income.
IDS Strategy - Income Fund is a diversified mutual fund that
invests primarily in bonds and other debt securities issued by U.S.
and foreign corporations and governments. At least half of the
fund's assets must be bonds rated "investment grade". Its goals
are to provide a high level of current income while attempting to
maintain the value of the investment and to seek capital
appreciation when consistent with its primary goals.
IDS Strategy - Short-Term Income Fund is a diversified mutual fund
that invests principally in U.S. governments and government agency
securities with most investments in mortgage-backed obligations.
Its goals are high current income consistent with conservation of
capital.
IDS Strategy - Worldwide Growth Fund is a diversified mutual fund
that invests primarily in common stocks and securities convertible
into common stocks of foreign issuers. Its goal is long-term
growth of capital.
Because investments involve risk, a fund cannot guarantee achieving
its goals. Only shareholders can change the goals.
Manager and distributor
The funds are managed by IDS Financial Corporation (IDS), a
provider of financial services since 1894. IDS currently manages
more than $__ billion in assets for the IDS MUTUAL FUND GROUP.
Shares of the funds are sold through IDS Financial Services Inc., a
wholly owned subsidiary of IDS.
Portfolio managers
Aggressive Equity
Ray Hirsch joined IDS in 1986 and serves as senior portfolio
manager. He has managed this fund since 1988. He also serves as
portfolio manager for IDS Discovery Fund and IDS Life Aggressive
Growth Fund. He also manages investments for IDS Growth Spectrum
Advisors, a division of IDS Advisory Group, Inc.
<PAGE>
PAGE 6
Equity
Tom Medcalf joined IDS in 1977 and serves as vice president and
senior portfolio manager. He was appointed portfolio manager of
this fund in 1989. He also manages the equity portfolio of IDS
Mutual.
Income
Jack Utter joined IDS in 1962 and serves as senior portfolio
manager. He has managed this fund since 1991. He also is
portfolio manager of IDS Extra Income Fund.
Short-Term Income
Jim Snyder joined IDS in 1989 and serves as portfolio manager. He
was appointed portfolio manager of this fund in 1993. He also
serves as portfolio manager of IDS Federal Income Fund. Prior to
joining IDS, he had been a Quantitative Investment Analyst at
Harris Trust.
Worldwide Growth
Peter Lamaison joined IDS in 1981. He serves as president and
chief executive officer of IDS International Inc. and senior
portfolio manager for this fund. He has managed this fund since
1986.
Paul Hopkins joined Bankers Trust in 1986 as a European fund
manager. He joined IDS in 1992 and serves as chief investment
officer and executive vice president of IDS International Inc. He
became portfolio manager of this fund on January 1, 1994. He also
serves as portfolio manager of IDS Life International Equity Fund
and IDS International Fund.
Deferred sales charge and fund expenses
Deferred sales charge
There is no initial sales charge when you buy shares but there may
be a contingent deferred sales charge of not more than 5% on
redemptions. The deferred sales charge is based on the value of
the shares redeemed and the number of years since the redeemed
shares were purchased. See "The contingent deferred sales charge."
Shareholder transaction expenses
<TABLE>
<CAPTION>
Deferred sales charge Aggressive Equity Equity Income Short-Term Worldwide
(as a percentage of Fund Fund Fund Fund Growth Fund
offering price)
<S> <C> <C> <C> <C> <C>
5% 5% 5% 5% 5%
</TABLE>
<PAGE>
PAGE 7
Operating expenses
Each fund pays certain expenses out of its assets; the expenses
are reflected in the fund's daily share price and dividends, and
are not charged directly to shareholder accounts. The following
chart gives a projection of these expenses -- based on historical
expenses.
Annual fund operating expenses
(% of average daily net assets):
<TABLE>
<CAPTION>
Agressive Equity Equity Income Short-Term Worldwide
Fund Fund Fund Income Fund Growth Fund
<S> <C> <C> <C> <C> <C>
Management fee 0.__% 0.__% 0.__% 0.__% 0.__%
12b-1 fee 0.__% 0.__% 0.__% 0.__% 0.__%
Other expenses 0.__% 0.__% 0.__% 0.__% 0.__%
Total 0.__% 0.__% 0.__% 0.__% 0.__%
*12b-1 fees include a service fee of up to 0.25% paid by the fund as compensation for ongoing service to shareholders.
</TABLE>
Example: Suppose for each year for the next ten years, fund
expenses are as above and annual return is 5%.
If you sold your shares at the end of the following years, for each
$1,000 invested, you would pay total expenses of:
<TABLE>
<CAPTION>
Agressive Equity Equity Income Short-Term Worldwide
Fund Fund Fund Income Fund Growth Fund
<S> <C> <C> <C> <C> <C>
1 year $ $ $ $ $
3 years $ $ $ $ $
5 years $ $ $ $ $
10 years $ $ $ $ $
</TABLE>
This example does not represent actual expenses, past or future.
Actual expenses may be higher or lower than those shown. Because a
fund pays annual distribution fees, shareholders who stay in a fund
for more than 10 years may indirectly pay an equivalent of more
than a 7.25% sales charge, the maximum permitted by the National
Association of Securities Dealers (NASD).
Fund expenses include fees paid to IDS for:
o managing its portfolio, providing investment research and
administrative services
o distribution (known as 12b-1 fees, after the federal rule that
authorizes them)
o transfer agent services, including handling shareholder
accounts and records.
Performance
Financial highlights
The information in these tables has been audited by KPMG Peat
Marwick, independent auditors. The independent auditors' report <PAGE>
PAGE 8
and additional information about the performance of each fund are
contained in the funds' annual report which, if not included with
this prospectus, may be obtained without charge.
Total returns
Average annual total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Aggressive
Equity Fund
S&P 500
Lipper Small
Co. Growth
Fund Index
*May 14, 1984
Cumulative total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Aggressive
Equity Fund
S&P 500
Lipper Small
Co. Growth
Fund Index
*May 14, 1984
Average annual total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Equity
Fund
S&P 500
Lipper Growth
and Income
Fund Index
*May 14, 1984
<PAGE>
PAGE 9
Cumulative total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Equity
Fund
S&P 500
Lipper Growth
and Income
Fund Index
*May 14, 1984
Average annual total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Income
Fund
Lehman
Aggregate
Bond
Index
*May 14, 1984
Cumulative total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Income
Fund
Lehman
Aggregate
Bond
Index
*May 14, 1984
<PAGE>
PAGE 10
Average annual total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Short-Term
Income
Fund
Lehman
Aggregate
Bond
Index
Lehman Treasury
Bond Index
*May 14, 1984
Cumulative total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Short-Term
Income
Fund
Lehman
Aggregate
Bond
Index
Lehman Treasury
Bond Index
*May 14, 1984
Average annual total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Worldwide
Growth
Fund
EAFE Index
Lipper
International
Fund Index
*April 1, 1987
<PAGE>
PAGE 11
Cumulative total returns as of March 31, 1994
Purchase 1 year 5 years Since
made ago ago inception*
Worldwide
Growth
Fund
EAFE Index
Lipper
International
Fund Index
*April 1, 1987
These examples show total returns from hypothetical investments in
each fund. These returns are compared to those of popular indexes
for the same periods.
For purposes of calculation, information about each fund reflects
the waiver of fees and reimbursement of expenses by the funds'
manager and distributor during certain periods (see footnotes to
the tables in "Financial highlights"), makes no adjustments for
taxes an investor may have paid on the reinvested income and
capital gains, and covers a period of widely fluctuating securities
prices. Returns shown should not be considered a representation of
a fund's future performance.
The funds' investments may be different from those in the indexes.
The indexes reflect reinvestment of all distributions and changes
in market prices, but exclude brokerage commissions or other fees.
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 500 companies are generally larger
than those in which a fund invests.
Lipper Small Company Growth Fund Index, published by Lipper
Analytical Services, Inc., includes 30 funds that are generally
similar to Aggressive Equity Fund, although some funds in the index
may have somewhat different investment policies or objectives.
Lipper Growth and Income Fund Index, published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to
Equity Fund, although some funds in the index may have somewhat
different investment policies or objectives.
Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed securities
and mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in Income or Short-Term Income Funds.
<PAGE>
PAGE 12
Lehman Treasury Bond Index is made up of a representative list of
government bonds which include all publicly issued obligations of
the U.S. Treasury. The index is frequently used as a general
measure of bond market performance. However, the securities used
to create the index may not be representative of the debt
securities held in Short-Term Income Fund.
The Morgan Stanley Capital International EAFE Index (EAFE Index),
compiled from a composite of securities markets of Europe,
Australia and the Far East, is widely recognized by investors in
foreign markets as the measurement index for portfolios of non-
North American securities.
Lipper International Fund Index, published by Lipper Analytical
Services, Inc., includes 10 funds that are generally similar to
Worldwide Growth Fund, although some funds in the index may have
somewhat different investment policies or objectives.
Yield
The annualized yield for the 30-day period ended March 31, 1994,
was ____% for Income Fund and ____% for Short-Term Income Fund.
Income and Short-Term Funds calculate this 30-day annualized yield
by dividing:
o net investment income per share deemed earned during a 30-day
period by
o the public offering price per share on the last day of the
period, and
o converting the result to a yearly equivalent figure.
This yield calculation does not include any contingent deferred
sales charge, ranging from 5% to 0%, which would reduce the yield
quoted.
A fund's yield varies from day to day, mainly because share values
and offering prices (which are calculated daily) vary in response
to changes in interest rates. Net investment income normally
changes much less in the short run. Thus, when interest rates rise
and share values fall, yield tends to rise. When interest rates
fall, yield tends to follow.
Past yields should not be considered an indicator of future yields.
Key terms
Net asset value (NAV) - Value of a single fund share. It is the
total market value of all of a fund's investments and other assets,
less any liabilities, divided by the number of shares outstanding.
<PAGE>
PAGE 13
The NAV is the price at which you buy shares. When you sell
shares, the price you receive is the NAV minus the applicable sales
charge. NAV usually changes from day to day, and 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). It generally
declines as interest rates increase and rises as interest rates
decline. NAVs of IDS funds are listed each day in major newspapers
and financial publications.
Investment income - Dividends and interest earned on securities
held by the fund.
Capital gains or losses - Increase or decrease in value of the
securities the fund holds. Gains are realized when securities that
have increased in value are sold. A fund also may have unrealized
gains or losses when securities increase or decrease in value but
are not sold.
Distributions - Payments to shareholders of two types: investment
income (dividends) and realized net long-term capital gains
(capital gains distributions).
Total return - Sum of all of your returns for a given period,
assuming you reinvest all distributions. Calculated by taking the
total value of shares you own at the end of the period (including
shares acquired by reinvestment), less the price of shares you
purchased at the beginning of the period.
Average annual total return - The annually compounded rate of
return over a given time period (usually two or more years) --
total return for the period converted to an equivalent annual
figure.
Yield - Net investment income earned per share for a specified time
period, divided by the offering price at the end of the period.
How to buy, exchange or sell shares
How to buy shares
If you're investing in one of the funds for the first time, you'll
need to set up an account. Your financial planner will help you
fill out and submit an application. Once your account is set up,
you can choose among several convenient ways to invest.
Important: When opening an account, you must provide IDS with your
correct Taxpayer Identification Number (Social Security or Employer
Identification number). See "Distributions and taxes."
When you buy shares for a new or existing account, the price you
pay per share is determined at the close of business on the day
your investment is received and accepted at the Minneapolis
headquarters.
<PAGE>
PAGE 14
Purchase policies:
o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day and to receive that day's
share price. Otherwise your purchase will be processed the
next business day and you will pay the next day's share price.
o The minimums allowed for investment may change from time to
time.
o Wire orders can be accepted only on days when your bank, IDS,
the funds and Norwest Bank Minneapolis are open for business.
o Wire purchases are completed when wired payment is received
and the fund accepts the purchase.
o IDS and the funds are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.
o You must pay any fee the bank charges for wiring.
o Each fund reserves the right to reject any application for any
reason.
<TABLE>
<CAPTION>
Three ways to invest
<S> <C> <C>
1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Minimum per fund: $1,000
to: IDS Financial Services Inc. Additional
P.O. Box 74 investments per fund: $ 100
Minneapolis, MN 55440-0074 Account balance per fund: $ 300*
Your financial planner will help you Qualified retirement
with this process. accounts: none.
IRA minimum: $ 50, $25 per fund
Uniform gift to
minors: $ 500
2
By scheduled Contact your financial planner Minimum amounts
investment plan to set up one of the following Initial investment: $ 100
scheduled plans: Additional
investments: $100/mo
o automatic payroll deduction Account balances: none
(on active plans of
o bank authorization monthly payments)
o direct deposit of
Social Security check
o other plan approved by the fund
3
By wire If you have an established account, If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the fund, less
Routing No. 091000019 any costs the fund or IDS
Minneapolis, MN incurs, will be returned
Attn: Domestic Wire Dept. promptly.
<PAGE>
PAGE 15
Give these instructions: Minimum amounts:
Credit IDS Account #00-30-015 Each wire investment:
for personal account # (your $1,000**
account number) for (your name).
*If your fund account balance falls below $300, IDS will ask you in writing to bring it up to $300 or establish a scheduled
investment plan. If you don't do so within 30 days, your shares can be redeemed and the proceeds mailed to you.
**The money sent by a single wire can be invested only in one fund.
</TABLE>
How to exchange shares
Strategy consists of five diversified mutual funds, each with a
different investment goal as well as different fees and expense
ratios, discussed elsewhere in this prospectus. If your investment
needs change, you can exchange shares into one of the other
Strategy funds. The contingent deferred sales charge does not
apply to an exchange between these funds. No exchanges are
permitted into other funds in the IDS MUTUAL FUND GROUP. You may
redeem your shares in this fund and then reinvest in another fund
in the IDS MUTUAL FUND GROUP as described in the section on "How to
sell shares."
If you wish to exchange shares into one of the Strategy funds from
one of the funds in the IDS MUTUAL FUND GROUP that charges a
maximum 5% sales charge, you do not have to pay any sales charge at
the time of exchange, nor do you have to pay a contingent deferred
sales charge if you subsequently redeem or exchange those shares.
Any shares exchanged into one of the Strategy funds from one of the
no-load funds, currently IDS Cash Management Fund and IDS Tax-Free
Money Fund, will be subject to the contingent deferred sales charge
upon subsequent redemption, based on the period of time they have
been in one or more of the Strategy funds. This does not apply to
shares previously charged a sales charge by one of the funds in the
IDS MUTUAL FUND GROUP as described above.
If your exchange request arrives at the Minneapolis headquarters
before the close of business, your shares will be redeemed at the
net asset value set for that day. The proceeds will be used to
purchase new fund shares the same day. Otherwise, your exchange
will take place the next business day at that day's net asset
value.
For tax purposes, an exchange represents a sale and purchase and
may result in a gain or loss. However, you cannot create a tax
loss (or reduce a taxable gain) by exchanging from a fund within 91
days of your purchase. For further explanation, see the SAI.
How to sell shares
You can sell (redeem) your shares at any time. IDS Shareholder
Service will mail payment within seven days after receiving your
request.
When you sell shares, the amount you receive may be more or less
than the amount you invested. Your shares will be redeemed at net
asset value at the close of business on the day your request is
<PAGE>
PAGE 16
accepted at the Minneapolis headquarters. If your request arrives
after the close of business, the price per share will be the net
asset value at the close of business on the next business day.
A redemption is a taxable transaction. If the fund's net asset
value when you sell shares is more or less than the cost of your
shares, you will have a gain or loss, which can affect your tax
liability. Redeeming shares held in an IRA or qualified retirement
account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax adviser.
Two ways to request an exchange or sale of shares
<TABLE>
<CAPTION>
<S> <C>
1
By letter Include in your letter:
o the name of the fund(s)
o your account number(s) (for exchanges, both funds must
Regular mail: be registered in the same ownership)
IDS Shareholder Service o your Taxpayer Identification Number (TIN)
Attn: Redemptions o the dollar amount or number of shares you want to
P.O. Box 534 exchange or sell
Minneapolis, MN o signature of all registered account owners
55440-0534 o for redemptions, indicate how you want your sales proceeds delivered to you
o any paper certificates of shares you hold
Express mail:
IDS Shareholder Service
Attn: Redemptions
10th Floor
733 Marquette Ave.
Minneapolis, MN 55402
2
By phone
IDS Telephone Transaction o The fund and IDS will honor any telephone exchange
Service: or redemption request believed to be authentic and will
800-437-3133 or use reasonable procedures to confirm that they are. This
612-671-3800 includes asking identifying questions and tape recording calls. So long as reasonable
procedures are followed, neither the fund nor IDS will be liable for any loss resulting from
fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges NOT
apply by writing IDS Shareholder Service. Each registered owner must sign the request.
o IDS answers phone requests promptly, but you may experience delays when call volume is high.
If you are unable to get through, use mail procedure as an alternative.
o Phone privileges may be modified or discontinued at any time.
Minimum amount
Redemption: $100
Maximum amount
Redemption: $50,000
</TABLE>
Exchange policies:
o You may make up to three exchanges within any 30-day period,
with each limited to $300,000. These limits do not apply to
scheduled exchange programs and certain employee benefit plans or
other arrangements through which one shareholder represents the
interests of several. Exceptions may be allowed with pre-approval
of the fund.
o If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.
<PAGE>
PAGE 17
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new Strategy fund may not be used on the same day
for another exchange.
o If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured party.
o IDS and the funds reserve the right to reject any exchange,
limit the amount, or modify or discontinue the exchange privilege,
to prevent abuse or adverse effects on a fund and its shareholders.
For example, if exchanges are too numerous or too large, they may
disrupt a fund's investment strategies or increase its costs.
o If you are opening a new account in another Strategy fund, you
may transfer less than $1,000 if you transfer all of your
investment in one Strategy fund to another Strategy fund.
Redemption policies:
o A "change of mind" option allows you to change your mind after
requesting a redemption and to use all or part of the proceeds to
buy new shares in the same account at the net asset value, rather
than the offering price on the date of a new purchase. If you do
reinvest in this manner, any contingent deferred sales charge you
paid on the amount you are reinvesting also will be reinvested in
the fund. The reinvestment must be in the same fund account from
which shares were redeemed. You may, however, exchange to another
individual fund upon reinvesting. If you choose to reinvest less
than the entire amount you redeemed, the purchase payments
reinvested in the fund will be the most recent ones, so that the
sales charge you pay on the remaining amount is the lower sales
charge applicable to older purchase payments. To do so, send a
written request within 30 days of the date your redemption request
was received. Include your account number and mention this option.
This privilege may be limited or withdrawn at any time, and it may
have tax consequences.
o A telephone redemption request will not be allowed within 30
days of a phoned-in address change.
Important: If you request a redemption of shares you recently
purchased by a check or money order that is not guaranteed, the
fund will wait for your check to clear. Please expect a minimum of
10 days from date of purchase before IDS mails a check to you. (A
check may be mailed earlier of your bank provides evidence
satisfactory to the fund and IDS that your check has cleared.)
Three ways to receive payment when you sell shares
<TABLE>
<CAPTION>
<S> <C>
1
By regular or express mail o Mailed to the address on record.
o Payable to names listed on the account.
NOTE: The express mail delivery charges you pay
will vary depending on the courier you select.
<PAGE>
PAGE 18
2
By wire o Minimum wire redemption: $1,000
o Request that money be wired to your bank.
o Bank account must be in the same ownership as
the IDS account.
NOTE: Pre-authorization required. For
instructions, contact your financial planner
or IDS Shareholder Service.
3
By scheduled payout plan o Minimum payment: $50
o Contact your financial planner or IDS
Shareholder Service to set up regular payments
to you on a monthly, bimonthly, quarterly,
semiannual or annual basis.
o Buying new shares while under a payout plan
may be disadvantageous because of the
contingent deferred sales charges.
</TABLE>
The contingent deferred sales charge
Where a sales charge is imposed on a redemption, it is based on the
amount of the redemption and the number of calendar years that have
elapsed, including the year of purchase, between purchase and
redemption. The following table shows the declining scale of
percentages that applies to redemptions during each year after a
purchase payment is made:
The
percentage
rate for the
contingent
If a redemption is deferred sales
made during the charge is:
First year . . . . . . . . . . 5%
Second year. . . . . . . . . . 4
Third year . . . . . . . . . . 4
Fourth year. . . . . . . . . . 3
Fifth year . . . . . . . . . . 2
Sixth year . . . . . . . . . . 1
Seventh year . . . . . . . . . 0
The amount of any sales charge will be calculated on a fund-by-fund
basis taking into account only those Strategy funds from which you
are redeeming shares. If the amount you are redeeming causes the
current net asset value of your investment in a fund to fall below
the total dollar amount of all your purchase payments in that fund
during the last six years (including the year in which your
redemption is made), the sales charge is based on the amount of the
redeemed purchase payments or market value if lower (multiplied by
the appropriate percentage in the table above). For purposes of
making this calculation, when exchanging shares between individual
funds, any exchanges of shares you have made into the individual
fund from which you are redeeming shares will be dated as of their
original purchase in Strategy and not as of the date of their
exchange.
<PAGE>
PAGE 19
The following example illustrates how the sales charge is applied.
Assume you had invested $10,000 in Aggressive Equity Fund and that
your investment had appreciated in value to $12,000 after 15
months, including reinvested dividend and capital gain
distributions. You could then redeem any amount up to $2,000
without paying a sales charge ($12,000 current value less the
$10,000 purchase amount). If you redeemed $2,500, the sales charge
would apply only to the $500 that represented part of your original
purchase price. The sales charge rate would be 4% because a
redemption after 15 months would take place during the second year
after purchase. Four percent of $500 is $20.
Because the sales charge is imposed only on redemptions that
constitute a reduction in the total of your purchase payments over
the last six years, you never have to pay a sales charge on any
amount you redeem that represents a net increase in the value of
your investment in any Strategy fund arising from appreciation in
the value of your shares, from income earned by your shares or from
capital gains. In addition, when determining whether a redemption
results in a sales charge, and the rate of any sales charge, your
redemption will be made from the oldest purchase payment you made
in the fund from which you are redeeming shares. Of course, once a
purchase payment is considered to have been redeemed in this
manner, the next amount redeemed is the next oldest purchase
payment. By redeeming the oldest purchase payments first, lower
sales charges can be imposed than would otherwise be the case.
Waivers of the contingent deferred sales charge
The contingent deferred sales charge will be waived on redemptions
of shares:
o in the event of the shareholder's death,
o purchased by any trustee, director, officer or employee of a
fund or IDS or its subsidiaries,
o purchased by any IDS planner,
o held in a pooled employee benefit plan qualified under Section
401 of the Internal Revenue Code,
o held in IRAs and certain qualified plans for which IDS acts as
custodian, such as Keogh plans, tax-sheltered custodial accounts
or corporate pension plans, provided that the shareholder:
- is at least 59 and 1/2 years old, and
- taking a retirement distribution.
(If the redemption is part of a transfer to an IRA or qualified
plan in an IDS product, or a custodian-to-custodian transfer to
a non-IDS product, the contingent deferred sales charge will not
be waived.)
Dividend and capital gain distributions paid by another fund in the
IDS MUTUAL FUND GROUP subject to a sales charge may be used to
automatically purchase shares of any of these funds without being
subject to a deferred sales charge.
<PAGE>
PAGE 20
Special shareholder services
Services
To help you track and evaluate the performance of your investments,
IDS provides these services:
Quarterly statements listing all of your holdings and transactions
during the previous three months.
Yearly tax statements featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information - which simplifies tax calculations.
A personalized mutual fund progress report detailing returns on
your initial investment and cash-flow activity in your account. It
calculates a total return to reflect your individual history in
owning fund shares. This report is available from your financial
planner.
Quick telephone reference
IDS 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
IDS Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
IDS 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
Distributions and taxes
The funds distribute to shareholders investment income and net
capital gains. They do so to qualify as regulated investment
companies and to avoid paying corporate income and excise taxes.
Dividend and capital gains distributions will have tax consequences
you should know about.
<PAGE>
PAGE 21
Dividend and capital gain distributions
Net investment income (dividends and interest earned on securities
held by the fund, less operating expenses) is distributed to
shareholders of record each calendar quarter for Equity, Income and
Short-Term Income Funds and by the end of the calendar year for
Aggressive Equity and Worldwide Growth Funds. If you redeem all
your shares from Income or Short-Term Income Funds before the end
of a quarter, your accumulated daily dividends will be included in
the redemption check. Short-term capital gains distributed are
included in net investment income. Net realized capital gains, if
any, from selling securities are distributed at the end of the
calendar year. Before they're distributed, both net investment
income and net capital gains are included in the value of each
share for Aggressive Equity, Equity and Worldwide Growth Funds.
For Income and Short-Term Income Funds, net capital gains are
included in the value of each share before they're distributed.
After they're distributed, the value of each share drops by the
per-share amount of the distribution. (If your distributions are
reinvested, the total value of your holdings will not change.)
Reinvestments
Dividends and capital gain distributions are automatically
reinvested in additional shares of the fund, unless:
o you request the fund in writing or by phone to pay
distributions to you in cash, or
o you direct the fund to invest your distributions in any
publicly available IDS fund for which you've previously opened
an account.
You pay no sales charge on shares purchased through reinvestment
from this fund into any IDS fund. The reinvestment price is the
net asset value at close of business on the day the distribution is
paid. (Your quarterly statement from IDS will confirm the amount
invested and the number of shares purchased.)
If you choose cash distributions, you will receive only those
declared after your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at the
then-current net asset value and make future distributions in the
form of additional shares.
Taxes
Distributions are subject to federal income tax and also may be
subject to state and local taxes. Distributions are taxable in the
year the fund pays them regardless of whether you take them in cash
or reinvest them.
<PAGE>
PAGE 22
Each January, IDS sends you a statement showing the kinds and total
amount of all distributions you received during the previous year.
You must report all distributions on your tax returns, even if they
are reinvested in additional shares.
Income received by Worldwide Growth Fund may be subject to foreign
tax and withholding. Tax conventions between certain countries and
the U.S. may reduce or eliminate such taxes. You may be entitled
to claim foreign tax credits or deductions subject to provisions
and limitations of the Internal Revenue Code. The fund will notify
you if such credit or deduction is available.
"Buying a dividend" creates a tax liability. This means buying
shares shortly before a net investment income or a capital gain
distribution. You pay the full pre-distribution price for the
shares, then receive a portion of your investment back as a
distribution, which is taxable.
Redemptions and exchanges subject you to a tax on any capital gain.
If you sell shares for more than their cost, the difference is a
capital gain. Your gain may be either short term (for shares held
for one year or less) or long term (for shares held for more than
one year).
Your Taxpayer Identification Number (TIN) is important. As with
any financial account you open, you must list your current and
correct Taxpayer Identification Number (TIN) -- either your Social
Security or Employer Identification number. The TIN must be
certified under penalties of perjury on your application when you
open an account at IDS.
If you don't provide the TIN to IDS, or the TIN you report is
incorrect, you could be subject to backup withholding of 31% of
taxable distributions and proceeds from certain sales and
exchanges. You also could be subject to further penalties, such
as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information.
You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.
How to determine the correct TIN:
Use the Social Security or
Employer Identification number
For this type of account: of:
Individual or joint account The individual or first person
listed on the account
<PAGE>
PAGE 23
Custodian account of a minor The minor
(Uniform Gift/Transfer to Minors
Act)
A living trust The grantor-trustee (the person
who puts the money into the
trust)
An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)
Sole proprietorship or The owner or partnership
partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, ask your financial planner or
local IDS office for federal Form W-9, "Request for Taxpayer
Identification Number and Certification."
Important: This information is a brief and selective summary of
certain federal tax rules that apply to each fund. Tax matters are
highly individual and complex, and you should consult a qualified
tax adviser about your personal situation.
Investment policies
IDS Strategy - Aggressive Equity Fund invests primarily in
securities of companies the investment manager expects to grow at a
rate faster than the average of the companies that make up the S&P
500 Stock Index.
IDS Strategy - Equity Fund invests primarily in securities that
provide income, offer the opportunity for long=term capital
appreciation, or both.
Both funds may invest in preferred stocks, convertible securities,
debt securities, foreign investments, derivative instruments and
money market instruments. Debt securities will be the equivalent
of a B rating. Foreign investments will be limited to 25% of total
assets, and under normal market conditions, 65% of total assets
will be invested in equity securities.
IDS Strategy - Income Fund invests in bonds and other debt
securities issued by U.S. and foreign corporations and governments.
At least 50% of the fund's net assets will be invested in
investment grade corporate bonds (bonds that independent rating
<PAGE>
PAGE 24
agencies rate as one of their top four grades) and unrated
corporate bonds the investment manager believes have investment
grade quality. The fund also invests in lower-rated debt
securities, preferred stocks. common stock, money market
instruments and derivative instruments with at least 65% of its
total assets in debt instruments under normal market conditions.
Common stocks are limited to 20% of total assets, and foreign
investments to 25% of such assets.
Short-Term Income Fund - The fund will be managed to earn the
highest income possible while limiting price volatility to that
comparable to an investment in a three-year or shorter government
or high-grade corporate note or bond. The dollar-weighted average
life of the fund will not exceed three years. The fund invests
principally in U.S. government and government agency securities
with most investments in mortgage-backed securities. It also
invests in non-government debt securities including short- and
intermediate-term corporate debt securities, and commercial paper.
Corporate debt securities are limited to the three highest ratings
and commercial paper is limited to the two highest ratings.
The fund may invest more than 25% of its total assets in
obligations of domestic banks when these obligations offer the most
advantageous combination of yield, maturity and creditworthiness of
the issuer. At times when more than 25% of its assets are invested
in obligations of banks, the fund would be particularly sensitive
to risk factors affecting the banking industry, such as financing
difficulties and changes in regulatory policies.
Foreign investments are limited to 15% of total assets.
Worldwide Growth Fund - Under normal market conditions, at least
65% of the fund's total assets will be invested in common stocks or
securities convertible into common stocks of foreign issuers that
have a potential for superior growth, that is growth that is better
than the Morgan Stanley Capital International EAFE Index.
The percentage of fund assets invested in particular countries or
regions of the world will change according to their political
stability and economic condition. Ordinarily the fund will invest
in companies domiciled in at least three foreign countries.
Investments in U.S. issuers generally will constitute less than 20%
of the fund's portfolio. If, however, investments in foreign
securities appear to be relatively unattractive in the judgment of
the fund's investment manager because of current or anticipated
adverse political or economic conditions, as a temporary defensive
strategy, the fund may invest any portion of its assets in
securities of U.S. issuers appearing to offer opportunities for
superior growth.
<PAGE>
PAGE 25
Facts about investments and their risks
Common stocks: Stock prices are subject to market fluctuations.
Stocks of smaller or foreign companies may be subject to abrupt or
erratic price movements. Also, small companies often have limited
product lines, smaller markets or fewer financial resources.
Therefore, some of the securities in which a fund invests involve
substantial risk and may be considered speculative.
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the convertible securities
trade more like common stock.
Investment grade bonds: The price of an investment grade bond
fluctuates as interest rates change or if its credit rating is
upgraded or downgraded.
Debt securities below investment grade: The price of these bonds
may react more to the ability of a company to pay interest and
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. In valuing bonds, a fund relies both on
independent rating agencies and the investment manager's credit
analysis. Securities that are subsequently downgraded in quality
may continue to be held and will be sold only when the fund's
investment manager believes it is advantageous to do so.
Bond ratings and holdings for fiscal 1993
For Income Fund
<TABLE>
<CAPTION>
IDS
S&P Rating Protection of Assessment
Percent of (or Moody's principal and of unrated
net assets equivalent) interest securities
<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>
(See Appendix to this prospectus for further information regarding
ratings.)
<PAGE>
PAGE 26
[For the fiscal year ended March 31, 1994, ________ Fund(s) held
less than 5% of its (their) average daily net assets in bonds rated
below investment grade.]
Debt securities 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, a fund has to recognize a computed amount of
interest income and pay dividends to shareholders even though no
cash has been received. In some instances, a fund may have to sell
securities to have sufficient cash to pay the dividends.
Mortgage-backed securities: A pool, or group, of mortgage loans
issued by such lenders as mortgage bankers, commercial banks and
savings and loan associations, is assembled and mortgage pass-
through certificates are offered to investors through securities
dealers. In pass-through certificates, both principal and interest
payments, including prepayments, are passed through to the holder
of the certificate. Prepayments on underlying mortgages result in
a loss of anticipated interest, and the actual yield (or total
return) to the fund, which is influenced by both stated interest
rates and market conditions, may be different than the quoted yield
on the certificates.
Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made including the possibility of seizure or nationalization of
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency must be purchased. This is done
by using a forward contract in which the price of the foreign
currency in U.S. dollars is established on the date the trade is
made, but delivery of the currency is not made until the securities
are received. As long as the fund holds foreign currencies or
securities valued in foreign currencies, the price of a fund share
will be affected by changes in the value of the currencies relative
to the U.S. dollar. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the
price of the security, and it may be difficult to complete the
transaction.
Derivative instruments: The portfolio managers 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
<PAGE>
PAGE 27
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 a 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. A fund 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. Each fund will designate cash or appropriate liquid
assets to cover its portfolio obligations. No more than 5% of each
fund'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. For further information, see
the options and futures appendixes in the SAI.
Securities and derivative instruments that are illiquid: Illiquid
means the security or derivative instrument 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. Each
portfolio manager will follow guidelines established by the board
of directors 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 each fund's
net assets will be held in securities and derivative instruments
that are illiquid.
Money market instruments: Short-term debt securities rated in the
top two grades are used to meet daily cash needs and at various
times to hold assets until better investment opportunities arise.
Generally less than 25% of each of Aggressive Equity, Equity,
Income and Worldwide Growth Fund's assets are in these money market
instruments. However, for temporary defensive purposes these
investments could exceed that amount for a limited period of time.
The investment policies described above may be changed by the board
of directors.
Lending portfolio securities: Each fund 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 shareholders approve otherwise, loans may not exceed 30% of
a fund's net assets.
<PAGE>
PAGE 28
Securities of other investment companies: Worldwide Growth Fund
may invest in securities of investment companies by purchase in the
open market where the dealer's or sponsor's profit is the regular
commission. This is a fundamental policy that may not be changed
without shareholder approval. The investment manager may wish to
invest in another investment company if, for example, that is the
only way to invest in a foreign market. If any such investment is
made, not more than 10% of the fund's net assets will be so
invested. To the extent the fund were to make such investments,
the shareholder may be subject to duplicate advisory,
administrative and distribution fees.
Valuing assets
o Securities (except bonds) and assets with available market
values are valued on that basis.
o Securities maturing in 60 days or less are valued at amortized
cost.
o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board of directors.
o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.
How the funds are organized
IDS Strategy Fund, Inc., of which Aggressive Equity Fund, Equity
Fund, Income Fund, Short-Term Income Fund and Worldwide Growth Fund
are a part, is an open-end management investment company, as
defined in the Investment Company Act of 1940. It was incorporated
on Jan. 24, 1984 in Minnesota. The fund headquarters are at 901 S.
Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268. Aggressive
Equity, Equity, Income and Short-Term Income Funds began operations
on May 14, 1984. Worldwide Growth Fund commenced operations on
April 1, 1987.
Shares
IDS Strategy Fund, Inc. is composed of five funds, each issuing its
own series of common stock: Aggressive Growth Fund, Equity Fund,
Income Fund, Short-Term Income Fund and Worldwide Growth Fund.
Each fund is owned by its shareholders. All shares issued by each
fund are of the same class--capital stock. Par value is 1 cent per
share. Both full and fractional shares can be issued.
The shares of each fund making up IDS Strategy Fund, Inc. represent
an interest in that fund's assets only (and profits or losses) and,
in the event of liquidation, each share of a fund would have the
same rights to dividends and assets as every other share of that
fund.
<PAGE>
PAGE 29
The funds no longer issue stock certificates.
Voting rights
As a shareholder, you have voting rights over the funds' management
and fundamental policies. You are entitled to one vote for each
share you own.
Shareholder meetings
The funds do not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors.
Directors and officers
Shareholders elect a board of directors who oversee the operations
of the fund and choose its officers. Its officers are responsible
for day-to-day business decisions based on policies set by the
board. The board has named an executive committee that has
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP, except for Mr. Dudley, who is a director of all
publicly offered funds.
Directors and officers of the funds
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer, Minnesota Mining and
Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
<PAGE>
PAGE 30
Wheelock Whitney
Chairman, Whitney Management Company.
Interested director who is a partner in a law firm that has
represented an IDS subsidiary
Anne P. Jones
Partner, law firm of Sutherland, Asbill & Brennan.
Interested directors who are officers and/or employees of IDS
William H. Dudley
Executive vice president, IDS.
David R. Hubers
President and chief executive officer, IDS.
John R. Thomas
Senior vice president, IDS.
Other officer
Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.
Refer to the SAI for the directors' and officers' biographies.
Investment manager and transfer agent
The funds pay IDS for managing their portfolios, providing
administrative services and serving as transfer agent (handling
shareholder accounts).
Under its Investment Management and Services Agreement, IDS
determines which securities will be purchased, held or sold
(subject to the direction and control of the fund's board of
directors). For this services the fund pays IDS a two-part fee.
The first part is based on the combined average daily net assets of
all funds in the IDS MUTUAL FUND GROUP, as follows:
Net assets of
IDS MUTUAL Annual
FUND GROUP* fee
First $5 billion 0.46%
Each additional Decreasing
$5 billion percentages
More than $50 billion 0.32%
*Includes all funds except the money market funds.
<PAGE>
PAGE 31
The second part is an individual asset charge based on each fund's
average daily net assets during the fiscal year as follows:
Aggressive Equity Fund .23%
Equity Fund .14
Income Fund .13
Short-Term Income Fund .13
Worldwide Growth Fund .46
With respect to the investments of Worldwide Growth Fund, IDS has a
sub-advisory agreement with IDS International, Inc. (International)
to provide investment advice. Under its sub-advisory agreement
with International, IDS pays International a fee equal on an annual
basis to 0.35% of Worldwide Growth Fund's daily net assets.
For the fiscal year ended March 31, 1994, the funds paid IDS total
investment management fees of 0.__% of its average daily net assets
for Aggressive Equity, 0.__% for Equity, 0.__% for Income, 0.__%
for Short-Term Income and 0.__% for Worldwide Growth Fund. Under
the Agreement, the funds also pay taxes, brokerage commissions and
nonadvisory expenses. These expenses are allocated to the funds in
an equitable manner determined by the funds' board of directors.
Expenses that relate exclusively to a particular fund, such as
custodian fees and registration fees for shares, are charged to
that fund.
In addition, under a separate Transfer Agency Agreement, IDS
maintains shareholder accounts and records. Aggressive Equity,
Equity and Worldwide Growth Funds pay IDS a fee at an annual rate
of $16 per shareholder account for these services. Income and
Short-Term Income Funds pay IDS a fee at an annual rate of $16.50
per shareholder account.
Distributor
The funds sell shares through IDS Financial Services Inc., a wholly
owned subsidiary of IDS, under a Distribution Agreement. Financial
planners representing IDS Financial Services Inc. provide
information to investors about individual investment programs, the
funds and their operations, new account applications, exchange and
redemption requests. The cost of these services is paid partially
by the funds' contingent deferred sales charge.
Portions of sales charges may be paid to securities dealers who
have sold the funds' shares, or to banks and other financial
institutions. The proceeds paid to others range from 0.8% to 4% of
each fund's offering price depending on the monthly sales volume.
To help defray costs not covered by contingent deferred sales
charges, including costs for marketing, sales administration,
training, overhead, direct marketing programs, advertising and
related functions, the funds pay IDS a 12b-1 fee. This fee is paid
under a Plan and Supplemental Agreement of Distribution that
follows the terms of Rule 12b-1 of the Investment Company Act of
1940 (and a Securities and Exchange Commission order). Under this
<PAGE>
PAGE 32
Agreement, each fund pays IDS a fee equal, on an annual basis, to
1% of the lesser of (i) aggregate purchase payments of shares sold
since inception, including purchase payments of shares exchanged
from another fund and the value of all shares exchanged from
another fund (excluding appreciation, reinvesting dividend and
capital gain distributions), less the aggregate amount of any
redemptions of purchase payments, or (ii) the fund's average daily
net assets. Of this fee, the first 0.75% is for distribution of
fund shares and the balance of the fee, up to 0.25%, represents
service fees for personal services rendered to shareholders of the
fund. The NASD limit on Rule 12b-1 fees paid by investors of a
fund that charges a service fee is 6.25% of new sales, plus
interest. If a fund ever reaches that limit, it will comply with
the regulatory accounting rules in effect at that time.
Total 12b-1 fees paid were 0.__% of average daily net assets for
Aggressive Equity Fund, 0.__% for Equity Fund, 0.__% for Income
Fund, 0.__% for Short-Term Income Fund and 0.__% for Worldwide
Growth Fund for the fiscal year ended March 31, 1994. These fees
will not cover all of the costs incurred by IDS.
Total management and distribution fees and expenses paid by each
fund amounted to ___% of average daily net assets for Aggressive
Equity Fund, ___% for Equity Fund, ___% for Income Fund, ___% for
Short-Term Income Fund and ___% for Worldwide Growth Fund for the
fiscal year ended March 31, 1994.
Total fees and expenses of each fund (excluding taxes, brokerage
commissions and distribution fees under the Plan discussed above)
cannot exceed the most restrictive applicable state expense
limitation.
The expense ratio of Worldwide Growth Fund may be higher than that
of a fund investing exclusively in domestic securities because the
expenses of the fund, such as the investment management fee and the
custodial costs, are higher.
About IDS
General information
The IDS family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.
Besides managing investments for all publicly offered funds in the
IDS MUTUAL FUND GROUP, IDS also manages investments for itself and
its subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on March 31, 1994 were more
than $__ billion.
IDS Financial Services Inc. serves individuals and businesses
through its nationwide network of more than ___ offices and more
than ____ planners.
<PAGE>
PAGE 33
Other IDS subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.
IDS is located at IDS Tower 10, Minneapolis, MN 55440-0010. It 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 fund may pay brokerage
commissions to broker-dealer affiliates of American Express and
IDS.
Appendix
Description of corporate bond ratings
Bond ratings concern the quality of the issuing corporation. 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, C and D. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
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 the 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.
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.
<PAGE>
PAGE 34
D - Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.
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.
Non-rated securities will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the Fund's objectives and policies. When assessing the risk
involved in each non-rated security, the Fund will consider the
financial condition of the issuer or the protection afforded by the
terms of the security.
<PAGE>
PAGE 35
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS STRATEGY FUND
May 27, 1994
This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the prospectus and the financial
statements contained in the Annual Report for IDS Strategy Fund
(Strategy) which may be obtained from your IDS personal financial
planner or by writing to IDS Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534.
This SAI is dated May 27, 1994, and it is to be used with
Strategy's prospectus dated May 27, 1994, and Strategy's Annual
Report for the fiscal year ended March 31, 1994.
<PAGE>
PAGE 36
TABLE OF CONTENTS
Goals and Investment Policies........................See Prospectus
Additional Investment Policies................................p.
Portfolio Transactions........................................p.
Brokerage Commissions Paid to Brokers Affiliated with IDS.....p.
Performance Information.......................................p.
Valuing Each Fund's Shares....................................p.
Investing in the Funds........................................p.
Redeeming Shares..............................................p.
Pay-out Plans.................................................p.
Capital Loss Carryover........................................p.
Taxes.........................................................p.
Agreements....................................................p.
Directors and Officers........................................p.
Principal Holders of Securities...............................p.
Custodian.....................................................p.
Independent Auditors..........................................p.
Financial Statements...........................See Annual Report
Prospectus....................................................p.
Appendix A: Mortgage-Backed Securities and Additional
Information on Investment Policies...............p.
Appendix B: Description of Money Market Securities...........p.
Appendix C: Foreign Currency Transactions....................p.
Appendix D: Options and Stock Index Futures Contracts........p.
Appendix E: Options and Interest Rate Futures Contracts......p.
Appendix F: Dollar-Cost Averaging............................p.
<PAGE>
PAGE 37
ADDITIONAL INVESTMENT POLICIES
IDS Strategy Fund is a series mutual fund. It has five series of
stock representing five diversified mutual funds (funds), each with
separate goals and investment policies.
These are investment policies in addition to those presented in the
prospectus. Unless holders of a majority of the outstanding shares
agree to make the change, each fund will not:
'Invest more than 5% of its total assets, at cost, in securities of
companies, including any predecessor, that have a record of less
than three years continuous operations.
'Buy or sell real estate, real estate mortgage loans or
commodities, except that Income and Short-Term Income Funds may
enter into interest rate futures contracts, and Aggressive Equity,
Equity and Worldwide Growth Funds may enter into stock index
futures contracts. When investing in futures contracts, these
funds may make deposits or have similar arrangements in connection
therewith.
'Invest in a company to control or manage it.
'Pledge or mortgage its assets beyond 30% of the total assets of
the fund taken at market. This policy does not apply to
investments in futures contracts whose purchase and sale is
regulated by a federal agency. For the purposes of this
restriction, collateral arrangements with respect to margin for a
futures contract are not deemed to be a pledge of assets.
'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. Each fund has not borrowed in the past and
has no present intention to borrow.
'Make cash loans. Each fund, however, does make short-term
investments where the seller has agreed to repurchase the security
at cost plus an agreed to interest rate within a specified period
of time. See Appendix B for further discussion regarding
repurchase agreements.
'Act as an underwriter (sell securities for others). However,
under the securities laws a fund may be deemed to be an underwriter
when it purchases securities directly from the issuer and later
resells them.
'Lend portfolio securities in excess of 30% of its net assets, at
market value. This policy may not be changed without shareholder
approval. The current policy of the board of directors is to make
these loans, either long- or short-term, to broker-dealers. In
making such loans a fund gets the market price in cash, U.S.
government securities, letters of credit or such other collateral
<PAGE>
PAGE 38
as may be permitted by regulatory agencies and approved by the
board of directors. If the market price of the loaned securities
goes up, a fund 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, a fund 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.
'Invest in exploration or development programs, such as oil, gas or
mineral programs.
'Purchase securities of an issuer if the directors and officers of
a fund and of IDS Financial Corporation (IDS) hold more than a
certain percentage of the issuer's outstanding securities. The
holdings of all officers and directors of a fund and of IDS who own
more than 0.5% of an issuer's securities are added together and if
in total they own more than 5%, none of the funds will purchase
securities of that issuer.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'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 a fund's total assets may be invested without
regard to this 5% limitation.
Investment Policy Applicable to Aggressive Equity, Equity, Income
and Short-Term Income Funds
Each fund will not:
Invest more than 10% of its net assets in the securities of other
investment companies. If a fund makes such an investment,
purchases will occur only on the open market where the dealer's or
sponsor's profit is limited to a regular commission. These funds
have not invested in securities of investment companies in the past
and have no present intention of investing in these securities. If
a fund were to do so, the investor may be subject to duplicate
advisory, administrative and distribution fees.
Investment Policy Applicable to Aggressive Equity, Equity, Income
and Worldwide Growth Funds
Each fund will not:
'Concentrate in any one industry. According to the present
interpretation by the staff of the Securities and Exchange
Commission (SEC), this means that not more than 25% of a fund's
total assets, based on current market value at time of purchase,
can be invested in any one industry.
<PAGE>
PAGE 39
Investment Policy Applicable to Short-Term Income Fund
Short-Term Income Fund will:
'Invest no more than 25% of its assets, in any particular industry,
except there are no limitations with respect to investing in
government or agency securities and bank obligations. The board of
directors currently permits this exception to the 25% limit for
bank obligations to apply only to domestic bank obligations.
'Invest less than 5% of its assets in negotiable certificates of
deposit (CDs) issued by small savings institutions (up to $100,000
per institution).
Restrictions Applicable to all funds
Unless changed by the board of directors, each fund will not:
'Buy on margin or sell securities short but each fund may make
margin payments in connection with transactions in futures
contracts.
'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the fund's net assets may be
invested in warrants not listed on an exchange.
'Invest more than 10% of its net assets in illiquid securities and
derivative instruments. For purposes of this policy illiquid
securities include some privately placed securities, public
securities and Rule 144A securities that for one reason or another
may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable
fixed-time deposits and over-the-counter options.
Each fund may invest in Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers,
and interest-only and principal-only fixed mortgage-backed
securities (IOs and POs) issued by the United States government or
its agencies and instrumentalities. In determining the liquidity
of Rule 144A securities, IOs and POs, the investment manager, under
guidelines established by the board of directors, will consider any
relevant factors including the frequency of trades, the number of
dealers willing to purchase or sell the security and the nature of
marketplace trades.
Each fund 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 investment manager, under guidelines established by the
board of directors, 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.
<PAGE>
PAGE 40
Each fund may purchase debt securities on a when-issued basis,
which means that it may take as long as 45 days after the purchase
before the securities are delivered to a fund. Payment and
interest terms, however, are fixed at the time the purchaser enters
into a commitment. [Under normal market conditions, each fund does
not intend to commit more than 5% of its total assets to these
practices.] A fund does not pay for the securities or start
earning interest on them until the contractual settlement date.
When-issued securities are subject to market fluctuations and they
may affect a fund's total assets the same as owned securities.
Each fund may maintain a portion of its assets in cash and cash-
equivalent investments. The cash-equivalent investments a fund may
use are short-term U.S. and Canadian government securities and
negotiable certificates of deposit, non-negotiable fixed-time
deposits, bankers' acceptances and letters of credit of banks or
savings and loan associations having 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. Any cash-equivalent investments in foreign securities
will be subject to the limitations on foreign investments described
in the prospectus. Each fund also may purchase short-term
corporate notes and obligations rated in the top two
classifications by Moody's or S&P or the equivalent and may use
repurchase agreements with broker-dealers registered under the
Securities Exchange Act of 1934 and with commercial banks. A risk
of a repurchase agreement is that if the seller seeks the
protection of the bankruptcy laws, a fund's ability to liquidate
the security involved could be impaired.
For a further discussion on mortgage-backed securities, money
market securities, foreign currency transactions, options and stock
index futures contracts, and options and interest rate futures
contracts, see the appendixes.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, IDS is
authorized to determine, consistent with each fund's investment
goals and policies, which securities will be purchased, held or
sold. In determining where the buy and sell orders are to be
placed, IDS has been directed to use its best efforts to obtain the
best available price and the most favorable execution except where
otherwise authorized by the board of directors. In selecting
broker-dealers to execute transactions, IDS may consider the price
of the security, including commission or mark-up, the size and
difficulty of the order, the reliability, integrity, financial
soundness and general operation and execution capabilities of the
broker, the broker's expertise in particular markets, and research
services provided by the broker.
<PAGE>
PAGE 41
Because Income and Short-Term Income Funds' investments are in
bonds traded in the over-the-counter market, IDS generally will
deal through a dealer acting as principal. The price usually
includes a dealer's mark-up without a separate brokerage charge.
When IDS believes that dealing through a broker as agent for a
commission will produce the best results, it will do so. The fund
also may buy securities directly from an issuing company that may
be resold only privately to other institutional investors.
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 of directors has
adopted a policy authorizing IDS to do so to the extent authorized
by law, if IDS 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 IDS' overall responsibilities to the funds
in the IDS MUTUAL FUND GROUP.
Research provided by brokers supplements IDS' 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. IDS 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 SEC.
When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, IDS
must follow procedures authorized by the board of directors. To
date, three procedures have been authorized. One procedure permits
IDS 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 IDS, 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 IDS, in order to obtain research and
brokerage services, to cause a fund to pay a commission in excess
of the amount another broker might have charged. IDS has advised
the funds that it is necessary to do business with a number of
brokerage firms on a continuing basis to obtain such services as
<PAGE>
PAGE 42
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 IDS believes it may obtain better overall
execution. IDS has assured the funds 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 to those
firms offering research services. Research services may be used by
IDS in providing advice to all the funds in the IDS MUTUAL FUND
GROUP and other accounts advised by IDS, even though it is not
possible to relate the benefits to any particular fund or account.
Each investment decision made for a fund is made independently from
any decision made for another fund in the IDS MUTUAL FUND GROUP or
other account advised by IDS or any IDS subsidiary. When a fund
buys or sells the same security as another fund or account, IDS
carries out the purchase or sale in a way the fund agrees in
advance is fair. Although sharing in large transactions may
adversely affect the price or volume purchased or sold by the fund,
the fund hopes to gain an overall advantage in execution. IDS has
assured the funds it will continue to seek ways to reduce brokerage
costs.
On a periodic basis, IDS makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions.
The review evaluates execution, operational efficiency and research
services.
Subject to policies set by the board of directors and to the
supervision and approval of IDS, for Worldwide Growth Fund, IDS
International, Inc. (International) is authorized to determine,
consistent with the fund's investment goals and policies, which
securities will be purchased, held or sold.
Strategy paid total brokerage commissions of $______ for the fiscal
year ended March 31, 1994, $2,050,880 for fiscal year 1993, and
$2,028,612 for fiscal year 1992. Substantially all firms through
whom transactions were executed provide research services.
Transactions amounting to $_________ on which $_______ in
commissions were imputed or paid, were specifically directed to
firms. [No transactions were directed to brokers because of
research services they provided to the fund.]
Strategy Fund acquired no securities of its regular brokers or
dealers or of the parents of those brokers or dealers that derived
more than 15% of gross revenue from securities-related activities
during the fiscal year ended March 31, 1994.
<PAGE>
PAGE 43
Strategy Fund's acquisition during the fiscal year ended March 31,
1994, of securities of its regular brokers or dealers or of the
parent of those brokers or dealers that derived more than 15% of
gross revenue from securities-related activities is presented
below:
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
The portfolio turnover rate for the fiscal year ended March 31,
1994, was __% for Aggressive Equity Fund, __% for Equity Fund, __%
for Income Fund, __% for Short-Term Income Fund and __% for
Worldwide Growth Fund. The portfolio turnover rate for fiscal year
1993, was 49% for Aggressive Equity Fund, 48% for Equity Fund, 36%
for Income Fund, 37% for Short-Term Income Fund, and 106% for
Worldwide Growth Fund. [The variation in turnover rates can be
attributed to:]
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH IDS
Affiliates of American Express Company (American Express) (of which
IDS is a wholly owned subsidiary) may engage in brokerage and other
securities transactions on behalf of the funds according to
procedures adopted by the funds' board of directors and to the
extent consistent with applicable provisions of the federal
securities laws. IDS will use an American Express affiliate only
if (i) IDS determines that a fund will receive prices and
executions at least as favorable as those offered by qualified
independent brokers performing similar brokerage and other services
for the fund and (ii) the affiliate charges the fund 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 and Services
Agreement.
No brokerage commissions were paid to brokers affiliated with IDS
for the three most recent fiscal years.
<PAGE>
PAGE 44
Information about brokerage commissions paid by Strategy for the
last three fiscal years to brokers affiliated with IDS is contained
in the following table:
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31,
1994 1993 1992
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
<S> <C> <C> <C> <C> <C> <C>
$ % % $ $
</TABLE>
(1) Under common control with IDS as a subsidiary of American
Express Company (American Express). [As of July 30, 1993 Shearson
Lehman Brothers Inc. became Lehman Brothers, Inc.]
(2) Under common control with IDS as an indirect subsidiary of
American Express.
(3) Wholly owned subsidiary of IDS.
(4) Under common control with IDS as an indirect subsidiary of
American Express until July 30, 1993.
(5) Under common control with IDS as a subsidiary of American
Express until July 30, 1993.
PERFORMANCE INFORMATION
Each fund may quote various performance figures to illustrate past
performance. Average annual total return and current yield
quotations used by a fund are based on standardized methods of
computing performance as required by the SEC. An explanation of
these and any other methods used by each fund to compute
performance follows below.
Average annual total return
Each fund may calculate average annual total return for certain
periods by finding the average annual compounded rates of return
over the period that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Aggregate total return
Each fund may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in
a fund over a specified period of time according to the following
formula:<PAGE>
PAGE 45
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)
Annualized yield
Income and Short-Term Income Funds - Income and Short-Term Income
Funds may calculate an annualized yield by dividing the net
investment income per share deemed earned during a period by the
net asset value per share on the last day of the period and
annualizing the results.
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the
last day of the period
Income and Short-Term Income Funds' annualized yields were ____ and
____, respectively for the 30-day period ended March 31, 1994.
Yield calculations assume a continuing investment in the funds and
do not include the contingent deferred sales charge, which ranges
from 5% to 0%.
Income and Short-term Income Funds - The funds' yield, calculated
as described above according to the formula prescribed by the SEC,
is a hypothetical return based on market value yield to maturity
for the funds' securities. It is not necessarily indicative of the
amount which was or may be paid to the funds' shareholders. Actual
amounts paid to fund shareholders are reflected in the distribution
yield.
Distribution yield
Distribution yield is calculated according to the following
formula:
D divided by POP F equals DY
31 31
<PAGE>
PAGE 46
where: D = sum of dividends for 31 day period
POP = sum of public offering price for 31 day period
F = annualizing factor
DY = distribution Yield
Income and Short-term Funds' distribution yields were ____% and
____%, respectively, for the 31-day period ended March 31, 1994.
Yield calculations assume a continuing investment in the funds and
do not include the contingent deferred sales charge, which ranges
from 5% to 0%.
In sales material and other communications, each fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.
VALUING EACH FUND'S SHARES
The value of an individual share is determined by using the net
asset value before shareholder transactions for the day. On April
1, 1994, the first business day following the end of the fiscal
year, the computation looked like this for Aggressive Equity,
Equity, Income, Short-Term Income and Worldwide Growth Funds:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<S> <C> <C> <C>
Aggressive Equity divided by equals $
Equity
Income
Short-Term Income
Worldwide Growth
</TABLE>
In determining net assets before shareholder transactions, each
fund's securities are valued as follows as of the close of the New
York Stock Exchange (NYSE):
'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 exists, to the over-the-counter market.
<PAGE>
PAGE 47
'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 NYSE. 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 NYSE
that will not be reflected in the computation of the fund'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 funds' board of directors.
'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
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 the maturity value on
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 of directors. The board of
directors is responsible for selecting methods it believes provide
fair value.
When possible, bonds are valued by a pricing service independent
from the fund. 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 by-laws provide that during any period in which the sale of
shares of any fund shall be discontinued, the board of directors,
in arriving at net asset value for such fund, may deduct from the
value of the net assets an amount equal to the brokerage
commissions, transfer taxes and charges, if any, that would be
payable on the sale of all securities in the portfolio if they were
<PAGE>
PAGE 48
then sold. The purpose of this provision is to distribute these
charges over all outstanding shares when no further sales are being
made.
The NYSE, IDS and each of the funds 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.
INVESTING IN THE FUNDS
Systematic Investment Programs
After you make your initial investment of $2,000 ($1,000 per fund)
or more, you can arrange to make additional payments of $100 or
more per fund on a regular basis. These minimums do not apply to
all systematic investment programs. You decide how often you want
to make payments - monthly, quarterly or semiannually. You are not
obligated to make any payments. You can omit payments or
discontinue the investment program altogether. The funds also can
change the program or end it any time. If there is no obligation,
why do it? Putting money aside is an important part of financial
planning. With a systematic investment program, you have a goal to
work for.
How does this work? When you send in your payment, your money is
invested at the net asset value in the funds that you designated.
Always specify the exact dollar amount to be invested in each fund.
Your regular investment amount will purchase more shares when the
net asset value per share decreases, and fewer shares when the net
asset value per share increases. Each purchase is a separate
transaction. After each purchase your new shares will be added to
your account. Shares bought through these programs are exactly the
same as any other fund shares. They can be bought and sold at any
time. A systematic investment program is not an option or an
absolute right to buy shares.
The systematic investment program itself cannot ensure a profit,
nor can it protect against a loss in a declining market. If you
decide to discontinue it and redeem your shares when their net
asset value is less than what you paid for them, you will incur a
loss.
For a discussion on dollar-cost averaging, see Appendix F.
Automatic Directed Dividends
Dividends, including capital gain distributions, paid by another
fund in the IDS MUTUAL FUND GROUP may be used to automatically
purchase shares of a fund without paying a sales charge. Dividends
paid by IDS Cash Management Fund, IDS Planned Investment Account or
IDS Tax-Free Money Fund will be subject to a contingent deferred
sales charge if later redeemed. Dividends may be directed to
existing accounts only. Dividends declared by a fund are exchanged
to this fund the following day. Dividends can be exchanged into
<PAGE>
PAGE 49
one fund but cannot be split to make purchases in two or more
funds. Automatic directed dividends are available between accounts
of any ownership except:
'Between a non-custodial account and an Individual Retirement
Account (IRA), or 401(k) plan account or other qualified retirement
account of which IDS Bank & Trust acts as custodian;
'Between two IDS Bank & Trust custodial accounts with different
owners (for example, you may not exchange dividends from your IRA
to the IRA of your spouse);
'Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange dividends from your
IRA to your 401(k) plan account, although you may exchange
dividends from one IRA to another IRA).
Moreover, dividends may be directed from accounts established under
the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to
Minors Act (UTMA) only into other UGMA or UTMA accounts with
identical ownership.
Each fund has a different investment goal described in its
prospectus along with other information, including fees and expense
ratios. Before exchanging dividends into another fund, you should
read its prospectus. You will receive a confirmation that the
automatic directed dividend service has been set up for your
account.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.
During an emergency, the board of directors can suspend the
computation of net asset value, stop accepting payments for the
purchase of shares or suspend the duty of the funds to redeem
shares for more than seven days. Such emergency situations would
occur if:
'The NYSE closes for reasons other than the usual weekend and
holiday closings or trading on the NYSE is restricted, or
'Disposal of a fund's securities is not reasonably practicable or
it is not reasonably practicable for the fund to determine the fair
value of its net assets, or
'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.
Should a fund stop selling shares, the directors may make a
deduction from the value of the assets held by the fund to cover
the cost of future liquidations of the assets so as to distribute
fairly these costs among all shareholders.
<PAGE>
PAGE 50
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in one or more of the funds in regular installments. The shares
redeemed may be subject to a contingent deferred sales charge as
discussed in the prospectus. While the plans differ on how the
pay-out is figured, they all are based on the redemption of your
investment. Net investment income dividends and any capital gain
distributions will automatically be reinvested, unless you elect to
receive them in cash. If you are redeeming a tax-qualified plan
account for which IDS Bank & Trust acts as custodian, you can elect
to receive your dividends and other distributions in cash when per-
mitted by law. If you redeem an IRA or a qualified retirement
account, certain restrictions, special federal income tax penalties
and reporting requirements may apply. You should consult your tax
adviser about this complex area of the tax law.
IDS normally will not accept an application for a systematic
investment in any fund in the IDS MUTUAL FUND GROUP subject to a
sales charge while a pay-out plan for any of those funds is in
effect. Occasional investments, however, may be accepted.
To start any of these plans, submit an authorization form supplied
by IDS Shareholder Service. For a copy, write or call IDS
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534,
612-671-3733. Your authorization must be received in the
Minneapolis headquarters at least five days before the date you
want your payments to begin. The initial payment must be at least
$50. Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you
change or cancel it.
The following pay-out plans are designed to take care of the needs
of most shareholders in a way IDS can handle efficiently and at a
reasonable cost. If you need a more irregular schedule of
payments, it may be necessary for you to make a series of
individual redemptions, in which case you will have to send in a
separate redemption request for each pay-out. The funds reserve
the right to change or stop any pay-out plan and to stop making
such plans available.
Plan #1: Pay-out for a fixed period of time
If you choose this plan, a varying number of shares will be
redeemed at net asset value at regular intervals during the time
period you choose. This plan is designed to end in complete re-
demption of all shares in your account by the end of the fixed
period.
Plan #2: Redemption of a fixed number of shares
If you choose this plan, a fixed number of shares will be redeemed
at net asset value for each payment at that amount will be sent to
you. The length of time these payments continue is based on the
number of shares in your account.
<PAGE>
PAGE 51
Plan #3: Redemption of a fixed dollar amount
If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until the account is closed.
Plan #4: Redemption of a percentage of net asset value
Payments are made based on a fixed percentage of the net asset
value of the shares in your account computed on the day of each
payment. Percentages range from 0.25% to 0.75%. For example, if
you are on this plan and arrange to take 0.5% each month you will
get $50 if the value of your account is $10,000 on the payment
date.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, ____________ Funds had capital
loss carryovers of $___________ and $___________, respectively, at
March 31, 1994, that will expire as follows:
199 199
It is unlikely that the board of directors will authorize a
distribution of any net realized capital gains until the available
capital loss carryover has been offset or has expired except as
required by Internal Revenue Service rules.
TAXES
Each fund is treated as a separate taxable entity. Net investment
income dividends received should be treated as dividend income for
federal income tax purposes. Corporate shareholders are generally
entitled to a deduction equal to 70% of that portion of a fund's
dividend that is attributable to dividends a fund received from
domestic (U.S.) securities.
For the fiscal year ended March 31, 1994, the percentage of the
dividends paid by the funds that qualify for the corporate
dividends deduction was: Aggressive Equity Fund, __%; Equity Fund,
__%; Income Fund, __%; Short-Term Income Fund, __%; and Worldwide
Growth Fund, __%;
If you receive income dividends or a capital gain distribution
after you buy your shares, they'll be treated as income or capital
gains to you for tax purposes even though the distribution may be a
return of part of your purchase price. The asset value of your
shares in Aggressive Equity, Equity or Worldwide Growth Funds is
reduced by the amount of the income dividend or capital gain
distribution. The asset value of your shares in either Income or
Short-Term Income Funds is reduced by the amount of the capital
gain distribution only.
<PAGE>
PAGE 52
Under the Internal Revenue Code of 1986 (the Code), gains or losses
attributable to fluctuations in exchange rates that occur between
the time a fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and
the time the fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in
the value of the foreign currency between the date of acquisition
of the security and the date of disposition also are treated as
ordinary gains or losses. These gains or losses, referred to under
the Code as "section 988" gains or losses, may increase or decrease
the amount of the fund's investment company taxable income to be
distributed to its shareholders as ordinary income. If a fund
incurs a loss, a portion of the dividends distributed to
shareholders may be considered a return of capital.
Under federal tax law, by the end of a calendar year each fund must
declare and pay dividends representing 98% of ordinary income for
that calendar year and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Oct. 31 of that calendar
year. The fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
amount actually distributed. The funds intend to comply with
federal tax law and avoid any excise tax.
The fund may be subject to U.S. taxes resulting from holdings in a
passive foreign investment company (PFIC). A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year
is passive income or if 50% or more of the average value of its
assets consists of assets that produce or could produce passive
income. The fund has no current intention to invest in PFICs.
Income earned by the fund may give rise to foreign taxes imposed
and withheld in foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes.
If more than 50% of the fund's total assets at the close of its
fiscal year consist of securities of foreign corporations, the fund
will be eligible to file an election with the Internal Revenue
Service under which shareholders of the fund would be required to
include their pro rata portions of foreign taxes withheld by
foreign countries as gross income in their federal income tax
returns. These pro rata portions of foreign taxes withheld may be
taken as a credit or deduction in computing federal income taxes.
If the election is filed, the fund will report to its shareholders
the amount per share of such foreign taxes withheld and the amount
of foreign tax credit or deduction available for federal income tax
purposes.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax adviser as to the
application of federal, state and local income tax laws to fund
distributions.
<PAGE>
PAGE 53
AGREEMENTS
Investment Management and Services Agreement
Each fund has an Investment Management and Services Agreement with
IDS. For its services, IDS is paid a fee composed of an asset
charge in two parts. The first part, the group asset charge, is
based on the combined daily net assets of all funds in the IDS
MUTUAL FUND GROUP, except the money market funds, including any new
fund that may be organized in the future. The daily rate of the
group asset charge is based upon the following schedule:
Group Asset Charge
Group assets Annual rate at Effective
(billions) each asset level annual rate
First $5 0.460% 0.460%
Next $5 0.440 0.450
Next $5 0.420 0.440
Next $5 0.400 0.430
Next $5 0.390 0.422
Next $5 0.380 0.415
Next $5 0.360 0.407
Next $5 0.350 0.400
Next $5 0.340 0.393
Next $5 0.330 0.387
Over $50 0.320
The aggregate net assets of all non-money market funds in the IDS
MUTUAL FUND GROUP were $______________ on March 31, 1994, and the
daily rate applied to each fund's assets was equal to approximately
0.__% on an annual basis.
The second part of the asset charge is calculated at an annual rate
and is based on the unique characteristics of each fund, including
each fund's use of services provided by IDS in the areas of
investment research, portfolio management, investment services and
fund accounting. The total fee is calculated for each calendar day
on the basis of net assets as of the close of business two business
days prior to the day for which the calculation is made. The
annual charge for each fund is as follows:
Aggressive Equity Fund: 0.23%
Equity Fund: 0.14%
Income Fund: 0.13%
Short-Term Income Fund: 0.13%
Worldwide Growth Fund: 0.46%
Both asset charges are calculated for each calendar day on the
basis of net assets as of the close of business on the full
business day which is two business days prior to the day for which
the calculation is made.
The management fee is paid monthly. The table below shows the
total amount paid by each fund over the past three years.
<PAGE>
PAGE 54
Fiscal Year Ended
March 31,
Fund 1994 1993 1992
Aggressive Equity $ $3,253,165 $2,797,494
Equity 3,317,937 2,690,959
Income 2,512,694 1,795,301
Short-Term Income 914,134 892,050
Worldwide Growth 380,169 371,576
Under the current Agreement, the fund also pays taxes, brokerage
commissions and nonadvisory expenses, that include custodian fees;
audit and certain legal fees; costs of printing and postage of
prospectuses; proxies and reports sent to shareholders; fidelity
bond premiums; registration fees for shares; fund office expenses;
postage of confirmations except purchase confirmations;
consultants' fees; compensation of directors, officers and
employees; corporate filing fees; Investment Company Institute
dues; organizational expenses; expenses incurred in connection with
lending portfolio securities of the fund; and expenses properly
payable by the fund, approved by the board of directors. The funds
paid nonadvisory expenses of $_______ for fiscal year ended March
31, 1994, $1,616,132 for fiscal year 1993, and $1,388,226 for
fiscal year 1992.
For Worldwide Growth Fund, IDS has a sub-advisory agreement with
International, a wholly owned subsidiary of IDS, to provide
investment advice for the fund.
Transfer Agency Agreement
The funds have a Transfer Agency Agreement with IDS. This
agreement governs IDS' responsibility for administering and/or
performing transfer agent functions, for acting as service agent in
connection with dividend and distribution functions and for
performing shareholder account administration agent functions in
connection with the issuance, exchange and redemption or repurchase
of each fund's shares. Under the agreement, IDS will earn a fee
from each fund determined by multiplying the number of shareholder
accounts at the end of the day by a rate of $16 for Aggressive
Equity, Equity, and Worldwide Growth Funds and $16.50 for Income
and Short-Term Income Funds per year and dividing by the number of
days in the year. The fees paid to IDS may be changed from time to
time upon agreement of the parties without shareholder approval.
The funds paid the following fees for the fiscal year ended
March 31, 1994:
Aggressive Equity Fund $________
Equity Fund ________
Income Fund ________
Short-Term Income Fund ________
Worldwide Growth Fund ________
<PAGE>
PAGE 55
Distribution Agreement
Under a Distribution Agreement, contingent deferred sales charges
deducted for distributing fund shares are paid to IDS Financial
Services Inc. daily. Sales charges for the fiscal year ended March
31, 1994, totaled $_______. Commissions paid to personal financial
planners totaled $_________. For fiscal year 1993, the amounts
were $1,439,140 and $10,911,187. For fiscal year 1992, the amounts
were $1,405,821 and $7,266,263.
Additional information about commissions and compensation for the
fiscal year ended March 31, 1994, is contained in the following
table:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
<S> <C> <C> <C> <C>
IDS None $__________ __________* $_________**
IDS Financial
Services Inc. $_________ None None None
</TABLE>
*For further information, see "Brokerage Commissions Paid to
Brokers Affiliated With IDS."
**Distribution fees paid pursuant to the Plan of Distribution.
Plan of Distribution
Under the Plan of Distribution (Plan), each fund pays IDS for
distribution services in addition to the contingent deferred sales
charge provided for by the Distribution Agreement in accordance
with the following terms and conditions: The amount of such
additional compensation is equal, on an annual basis, to 1% of the
lesser of (i) aggregate purchase payments of shares sold since
inception, including purchase payments of shares transferred from
another fund and the value of all shares transferred from another
fund (excluding appreciation, reinvested dividends and capital gain
distributions), less the aggregate amount of any redemptions of
purchase payments, or (ii) the fund's average daily net assets. Of
this fee, the first 0.75% is for distribution of fund shares and
the balance of the fee, up to 0.25%, represents services fees for
personal services rendered to shareholders of the fund. The fee is
calculated for each fund daily and paid to IDS monthly. If at the
end of any month the fee payable pursuant to the Plan exceeds 1% of
a fund's aggregate sales (as defined above) or net assets,
whichever is less, for the current fiscal period, the fund does not
pay any compensation pursuant to the Plan to the extent necessary
to keep its expenses from exceeding the 1% limitation set forth
above. IDS may carry over any unpaid compensation under the
distribution agreement entered into pursuant to the Plan from month
to month, but in no event can such carryover extend beyond the end
of the fund's fiscal year.
<PAGE>
PAGE 56
The Plan must be approved annually by the directors, including a
majority of the disinterested directors, if it is to continue for
more than a year. At least quarterly, the directors must review
written reports concerning amounts expended under the Plan and
purposes for which such expenditures were made. The Plan and any
agreement related to it may be terminated at any time by vote of a
majority of the directors who are not interested persons of the
funds and have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan, or
by vote of a majority of the outstanding voting securities of the
fund (or as to any fund, by vote of a majority of its outstanding
shares) or by IDS. The Plan (or any agreement related to it) shall
terminate in the event of its assignment, as that term is defined
in the Investment Company Act of 1940, as amended. The Plan may
not be amended to increase the amount to be spent for distribution
without shareholder approval, and all material amendments to the
Plan must be approved by a majority of the directors, including a
majority of the directors who are not interested persons of
Strategy Fund and who do not have a financial interest in the
operation of the Plan or any agreement related to it. The
selection and nomination of such disinterested directors is the
responsibility of such disinterested directors. No interested
person of Strategy Fund and no director who is not an interested
person has any direct or indirect financial interest in the
operation of the Plan or any related agreement.
Under the terms of the Agreement, total fees and nonadvisory
expenses (including the investment management fee but excluding
taxes, brokerage commissions and fees under the Plan of
Distribution) attributable to each fund, may not exceed the most
restrictive applicable state expense limitation. Presently the
most restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
each fund's average daily net assets, 2% of the next $70 million
and 1.5% of average daily net assets over $100 million, on an
annual basis.
DIRECTORS AND OFFICERS
The following is a list of the fund's directors who, except for Mr.
Dudley, also are directors of all other funds in the IDS MUTUAL
FUND GROUP. Mr. Dudley is a director of all publicly offered
funds. All shares have cumulative voting rights when voting on the
election of directors.
Lynne V. Cheney
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities (technology). Director, The Reader's Digest
Association Inc., Lockhead Corporation, and the Interpublic Group
of Companies, Inc.
<PAGE>
PAGE 57
William H. Dudley+**
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of IDS.
Robert F. Froehlke+
901 S. Marquette Ave.
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. (architectual
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
David R. Hubers**
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of IDS.
Previously, senior vice president, finance and chief financial
officer of IDS.
Anne P. Jones***
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, D.C.
Partner, law firm of Sutherland, Asbill & Brennan. Director,
Motorola, Inc. and C-Cor Electronics, Inc.
Donald M. Kendall
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
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).
<PAGE>
PAGE 58
Lewis W. Lehr'
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+*
901 S. Marquette Ave.
Minneapolis, MN
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+'
840 TCF Tower
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**
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of IDS.
Wheelock Whitney+
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of
the fund.
**Interested person by reason of being an officer, director,
employee and/or shareholder of IDS or American Express.
***Interested person by reason of being a partner in a law firm
that has represented IDS or its subsidiaries.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
<PAGE>
PAGE 59
Besides Mr. Pearce, who is president, the fund's other officer is:
Leslie L. Ogg
901 S. Marquette Ave.
Minneapolis, MN
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.
On March 31, 1994, the fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended March 31, 1994, no director or officer earned more than
$60,000 from this fund. All directors and officers as a group
earned $_______, including $______ of retirement plan expense, from
this fund.
PRINCIPAL HOLDERS OF SECURITIES
As of March 31,1994, ________ held ____ % of fund shares.
CUSTODIAN
The funds' securities and cash are held by IDS 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 Worldwide Growth Fund the custodian has entered into a sub-
custodian arrangement with the Morgan Stanley Trust Company (Morgan
Stanley), One Pierrepont Plaza, 8th Floor, Brooklyn, NY 11201-2775.
As part of this arrangement, portfolio securities purchased outside
the United States are maintained in the custody of various foreign
branches of First or in such other financial institutions as may be
permitted by law and by the fund's sub-custodian agreement.
For Aggressive Equity, Income and Equity Funds, the custodian has
entered into a sub-custodian arrangement with the Boston Safe
Deposit & Trust Company (Boston Safe), 31 St. James Avenue, Boston,
MA 02116-4114. As part of this arrangement, portfolio securities
purchased outside the United States are maintained in the custody
of various foreign branches of Boston Safe or in such other
financial institutions as may be permitted by law and by the funds'
sub-custodian agreement.
INDEPENDENT AUDITORS
Strategy Fund's financial statements contained in its Annual Report
to shareholders, for the fiscal year ended March 31, 1994, were
audited by independent auditors, KPMG Peat Marwick, 4200 Norwest
Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The
independent auditors also provide other accounting and tax-related
services as requested by Strategy fund.
<PAGE>
PAGE 60
FINANCIAL STATEMENTS
The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1994 Annual Report to
IDS Strategy Fund, shareholders, pursuant to Section 30(d) of the
Investment Company Act of 1940, as amended, are hereby incorporated
in this SAI by reference. No other portion of the Annual Report,
however, is incorporated by reference.
PROSPECTUS
The prospectus dated May 27, 1994, is hereby incorporated in this
SAI by reference.
<PAGE>
PAGE 61
APPENDIX A
MORTGAGE-BACKED SECURITIES AND ADDITIONAL INFORMATION ON INVESTMENT
POLICIES (SHORT-TERM INCOME AND INCOME FUNDS)
GNMA Certificates
The Government National Mortgage Association (GNMA) is a wholly
owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. GNMA certificates are
mortgage-backed securities of the modified pass-through type, which
means that both interest and principal payments (including
prepayments) are passed through monthly to the holder of the
certificate. Each certificate evidences an interest in a specific
pool of mortgage loans insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by
the Veterans Administration. The National Housing Act provides
that the full faith and credit of the United States is pledged to
the timely payment of principal and interest by GNMA of amounts due
on these certificates. GNMA is empowered to borrow without
limitation from the U.S. Treasury, if necessary, to make such
payments.
Underlying Mortgages of the Pool. Pools consist of whole mortgage
loans or participations in loans. The majority of these loans are
made to purchasers of 1-4 member family homes. The terms and
characteristics of the mortgage instruments generally are uniform
within a pool but may vary among pools. For example, in addition
to fixed-rate fixed-term mortgages, the fund may purchase pools of
variable rate mortgages, growing equity mortgages, graduated
payment mortgages and other types.
All servicers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Servicers
also establish credit standards and underwriting criteria for
individual mortgages included in the pools. In addition, many
mortgages included in pools are insured through private mortgage
insurance companies.
Average Life of GNMA Certificates. The average life of GNMA
certificates varies with the maturities of the underlying mortgage
instruments which have maximum maturities of 30 years. The average
life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of
prepayments or refinancing of such mortgages. Such prepayments are
passed through to the registered holder with the regular monthly
payments of principal and interest.
As prepayment rates vary widely, it is not possible to accurately
predict the average life of a particular pool. It is customary in
the mortgage industry in quoting yields on a pool of 30-year
mortgages to compute the yield as if the pool were a single loan
that is amortized according to a 30-year schedule and that is
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prepaid in full at the end of the 12th year. For this reason, it
is standard practice to treat GNMA certificates as 30-year
mortgage-backed securities which prepay fully in the 12th year.
Calculation of Yields. Yields on pass-through securities are
typically quoted based on the maturity of the underlying
instruments and the associated average life assumption.
Actual pre-payment experience may cause the yield to differ from
the assumed average life yield. When mortgage rates drop, pre-
payments will increase, thus reducing the yield. Reinvestment of
pre-payments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of a fund. The
compounding effect from reinvestments of monthly payments received
by the fund will increase the yield to shareholders compared to
bonds that pay interest semi-annually. The yield also may be
affected if the certificate was issued at a premium or discount,
rather than at par. This also applies after issuance to
certificates trading in the secondary market at a premium or
discount.
"When-Issued" GNMA Certificates. Some U.S. government securities
may be purchased on a "when-issued" basis, which means that it may
take as long as 45 days after the purchase before the securities
are delivered to the fund. Payment and interest terms, however,
are fixed at the time the purchaser enters into the commitment.
However, the yield on a comparable GNMA certificate when the
transaction is consummated may vary from the yield on the GNMA
certificate at the time that the when-issued transaction was made.
A fund does not pay for the securities or start earning interest on
them until the contractual settlement date. When-issued securities
are subject to market fluctuations and they may affect the fund's
gross assets the same as owned securities.
Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA
certificates outstanding has grown rapidly. The size of the market
and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA certificates a
highly liquid instrument. Prices of GNMA certificates are readily
available from securities dealers and depend on, among other
things, the level of market interest rates, the certificate's
coupon rate and the prepayment experience of the pool of mortgages
underlying each certificate.
Stripped mortgage-backed securities. Generally, there are two
classes of stripped mortgage-backed securities: Interest Only (IO)
and Principal Only (PO). IOs entitle the holder to receive
distributions consisting of all or a portion of the interest on the
underlying pool of mortgage loans or mortgage-backed securities.
POs entitle the holder to receive distributions consisting of all
or a portion of the principal of the underlying pool of mortgage
loans or mortgage-backed securities. The cash flows and yields on
IOs and POs are extremely sensitive to the rate of principal
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payments (including prepayments) on the underlying mortgage loans
or mortgage-backed securities. A rapid rate of principal payments
may adversely affect the yield to maturity of IOs. A slow rate of
principal payments may adversely affect the yield to maturity of
POs. If prepayments of principal are greater than anticipated, an
investor may incur substantial losses. If prepayments of principal
are slower than anticipated, the yield on a PO will be affected
more severely than would be the case with a traditional mortgage-
backed security.
Inverse Floaters
Each fund may invest in securities called "inverse floaters".
Inverse floaters are created by underwriters using the interest
payments on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. What is left over, less a servicing fee, is
paid to holders of the 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.
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APPENDIX B
DESCRIPTION OF MONEY MARKET SECURITIES (AGGRESSIVE EQUITY, EQUITY,
INCOME, AND WORLDWIDE GROWTH FUNDS)
The types of instruments that form the major part of the funds'
investments are described below.
Certificates of Deposit -- A certificate of deposit is a negotiable
receipt issued by a bank or savings and loan association in
exchange for the deposit of funds. The issuer agrees to pay the
amount deposited, plus interest, on the date specified on the
certificate.
Time Deposit -- A time deposit is a non-negotiable deposit in a
bank for a fixed period of time.
Bankers' Acceptances -- A bankers' acceptance arises from a short-
term credit arrangement designed to enable businesses to obtain
funds to finance commercial transactions. It is a time draft drawn
on a bank by an exporter or an importer to obtain a stated amount
of funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees to
pay the face value of the instrument on its maturity date.
Commercial Paper -- Commercial paper is generally defined as
unsecured short-term notes issued in bearer form by large well-
known corporations and finance companies. Maturities on commercial
paper range from one day to nine months.
Commercial paper rated A by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are better than the
industry average. Long-term senior debt rating is "A" or better.
The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with
allowances made for unusual circumstances. Typically, the issuer's
industry is well established, the issuer has a strong position
within its industry and the reliability and quality of management
is unquestioned. Issuers rated A are further rated by use of
numbers 1, 2 and 3 to denote relative strength within this highest
classification.
A Prime rating is the highest commercial paper rating assigned by
Moody's Investors Services Inc. Issuers rated Prime are further
rated by use of numbers 1, 2 and 3 to denote relative strength
within this highest classification. Among the factors considered
by Moody's in assigning ratings for an issuer are the following:
(1) management; (2) economic evaluation of the industry and an
appraisal of speculative type risks which may be inherent in
certain areas; (3) competition and customer acceptance of products;
(4) liquidity; (5) amount and quality of long-term debt; (6) ten
year earnings trends; (7) financial strength of a parent company
and the relationships which exist with the issuer; and (8)
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recognition by management of obligations which may be present or
may arise as a result of public interest questions and preparations
to meet such obligations.
Letters of Credit -- A letter of credit is a short-term note issued
in bearer form with a bank letter of credit which provides that the
bank pay to the bearer the amount of the note upon presentation.
U.S. Treasury Bills -- Treasury bills are issued with maturities of
any period up to one year. Three-month and six-month bills are
currently offered by the Treasury on 13-week and 26-week cycles
respectively and are auctioned each week by the Treasury. Treasury
bills are issued in book entry form and are sold only on a discount
basis, i.e. the difference between the purchase price and the
maturity value constitutes interest income for the investor. If
they are sold before maturity, a portion of the income received may
be a short-term capital gain.
U.S. Government Agency Securities -- Federal agency securities are
debt obligations which principally result from lending programs of
the U.S. government. Housing and agriculture have traditionally
been the principal beneficiaries of Federal credit programs, and
agencies involved in providing credit to agriculture and housing
account for the bulk of the outstanding agency securities.
Repurchase Agreements -- A repurchase agreement involves the
acquisition of securities by the fund, with the concurrent
agreement by a bank (or securities dealer if permitted by law or
regulation), to reacquire the securities at the fund's cost, plus
interest, within a specified time. The fund thereby receives a
fixed rate of return on this investment, one that is insulated from
market and rate fluctuations during the holding period. In these
transactions, the securities acquired by the fund have a total
value equal to or in excess of the value of the repurchase
agreement and are held by the fund's custodian until required.
If IDS becomes aware that a security owned by a fund is downgraded
below the second highest rating, IDS will either sell the security
or recommend to the fund's board of directors why it should not be
sold.
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APPENDIX C
FOREIGN CURRENCY TRANSACTIONS (AGGRESSIVE EQUITY, EQUITY, INCOME,
SHORT-TERM AND WORLDWIDE GROWTH FUNDS)
Since investments in foreign countries usually involve currencies
of foreign countries, and since each fund may hold cash and cash-
equivalent investments in foreign currencies, the value of a fund's
assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency exchange rates and exchange
control regulations. Also, the fund may incur costs in connection
with conversions between various currencies.
Spot Rates and Forward Contracts. Each fund conducts its foreign
currency exchange transactions either at the spot (cash) rate
prevailing in the foreign currency exchange market or by entering
into forward currency exchange contracts (forward contracts) as a
hedge against fluctuations in future foreign exchange rates. A
forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days
from the contract date, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit
requirements. No commissions are charged at any stage for trades.
Each fund may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When the
fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency or has been notified of a
dividend or interest payment, it may desire to lock in the price of
the security or the amount of the payment in dollars. By entering
into a forward contract, the fund will be able to protect itself
against a possible loss resulting from an adverse change in the
relationship between different currencies from the date the
security is purchased or sold to the date on which payment is made
or received or when the dividend or interest is actually received.
Each fund also may enter into forward contracts when management of
the fund believes the currency of a particular foreign country may
suffer a substantial decline against another currency. It may
enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of
some or all of the fund's portfolio securities denominated in such
foreign currency. The precise matching of forward contract amounts
and the value of securities involved generally will not be possible
since the future value of such securities in foreign currencies
more than likely will change between the date the forward contract
is entered into and the date it matures. The projection of short-
term currency market movements is extremely difficult and
successful execution of a short-term hedging strategy is highly
uncertain. The fund will not enter into such forward contracts or
maintain a net exposure to such contracts when consummating the
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contracts would obligate the fund to deliver an amount of foreign
currency in excess of the value of the fund's portfolio securities
or other assets denominated in that currency.
Each fund will designate cash or securities in an amount equal to
the value of the fund's total assets committed to consummating
forward contracts entered into under the second circumstance set
forth above. If the value of the securities declines, additional
cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the fund's
commitments on such contracts.
At maturity of a forward contract, the fund may either sell the
portfolio security and make delivery of the foreign currency or
retain the security and terminate its contractual obligation to
deliver the foreign currency by purchasing an offsetting contract
with the same currency trader obligating it to buy, on the same
maturity date, the same amount of foreign currency.
If the fund retains the portfolio security and engages in an
offsetting transaction, the fund will incur a gain or a loss (as
described below) to the extent there has been movement in forward
contract prices. If the fund engages in an offsetting transaction,
it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline between the date
the fund enters into a forward contract for selling foreign
currency and the date it enters into an offsetting contract for
purchasing the foreign currency, the fund will realize a gain to
the extent that the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to buy. Should
forward prices increase, the fund will suffer a loss to the extent
the price of the currency it has agreed to buy exceeds the price of
the currency it has agreed to sell.
It is impossible to forecast what the market value of portfolio
securities will be at the expiration of a contract. Accordingly,
it may be necessary for the fund to buy additional foreign currency
on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign
currency the fund is obligated to deliver and a decision is made to
sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received on the sale of the portfolio security
if its market value exceeds the amount of foreign currency the fund
is obligated to deliver.
Each fund's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the fund's portfolio securities against a decline in the value
of a currency does not eliminate fluctuations in the underlying
prices of the securities. It simply establishes a rate of exchange
that can be achieved at some point in time. Although such forward
contracts tend to minimize the risk of loss due to a decline in
value of hedged currency, they tend to limit any potential gain
that might result should the value of such currency increase.
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Although each fund values its assets each business day in terms of
U.S. dollars, it does not intend to convert its foreign currencies
into U.S. dollars on a daily basis. It will do so from time to
time, and shareholders should be aware of currency conversion
costs. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency to the fund at one rate, while offering a lesser rate of
exchange should the fund desire to resell that currency to the
dealer.
Options on Foreign Currencies. Each fund may buy put and write
covered call options on foreign currencies for hedging purposes.
For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar
value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, the fund may buy
put options on the foreign currency. If the value of the currency
does decline, the fund will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole or
in part, the adverse effect on its portfolio which otherwise would
have resulted.
As in the case of other types of options, however, the benefit to
the fund derived from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs.
In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the fund could sustain
losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of
advantageous changes in such rates.
Each fund may write options on foreign currencies for the same
types of hedging purposes. For example, when the fund anticipates
a decline in the dollar value of foreign-denominated securities due
to adverse fluctuations in exchange rates, it could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the diminution in value of portfolio
securities will be fully or partially offset by the amount of the
premium received.
As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to
the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and
the fund would be required to buy or sell the underlying currency
at a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the fund also
may be required to forego all or a portion of the benefits which
might otherwise have been obtained from favorable movements on
exchange rates.
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All options written on foreign currencies will be covered. An
option written on foreign currencies is covered if the fund holds
currency sufficient to cover the option or has an absolute and
immediate right to acquire that currency without additional cash
consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An
option writer could lose amounts substantially in excess of its
initial investments, due to the margin and collateral requirements
associated with such positions.
Options on foreign currencies are traded through financial
institutions acting as market-makers, although foreign currency
options also are traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market movements
could therefore continue to an unlimited extent over a period of
time. Although the purchaser of an option cannot lose more than
the amount of the premium plus related transaction costs, this
entire amount could be lost.
Foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the OCC, thereby
reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on a national securities
exchange may be more readily available than in the over-the-counter
market, potentially permitting the fund to liquidate open positions
at a profit prior to exercise or expiration, or to limit losses in
the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature
of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-
counter market. For example, exercise and settlement of such
options must be made exclusively through the OCC, which has
established banking relationships in certain foreign countries for
the purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.
Foreign Currency Futures and Related Options. Each fund may enter
into currency futures contracts to sell currencies. It also may
buy put and write covered call options on currency futures.
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Currency futures contracts are similar to currency forward
contracts, except that they are traded on exchanges (and have
margin requirements) and are standardized as to contract size and
delivery date. Most currency futures call for payment of delivery
in U.S. dollars. The fund may use currency futures for the same
purposes as currency forward contracts, subject to CFTC
limitations, including the limitation on the percentage of assets
that may be used, described in the prospectus. All futures
contracts are aggregated for purposes of the percentage
limitations.
Currency futures and options on futures values can be expected to
correlate with exchange rates, but will not reflect other factors
that may affect the values of the fund's investments. A currency
hedge, for example, should protect a Yen-denominated bond against a
decline in the Yen, but will not protect the fund against price
decline if the issuer's creditworthiness deteriorates. Because the
value of the fund's investments denominated in foreign currency
will change in response to many factors other than exchange rates,
it may not be possible to match the amount of a forward contract to
the value of the fund's investments denominated in that currency
over time.
Each fund will not use leverage in its options and futures
strategies. The fund will hold securities or other options or
futures positions whose values are expected to offset its
obligations. The fund will not enter into an option or futures
position that exposes the fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or
(ii) cash, receivables and short-term debt securities with a value
sufficient to cover its potential obligations.
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APPENDIX D
OPTIONS AND STOCK INDEX FUTURES CONTRACTS (AGGRESSIVE EQUITY,
EQUITY AND WORLDWIDE GROWTH FUNDS)
Each fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. Each fund may enter
into stock index futures contracts traded on any U.S. or foreign
exchange. Each fund also may buy or write put and call options on
these futures and on stock indexes. 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, a fund 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 or securities of equivalent value (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 another 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. The risk of
the writer is potentially unlimited, unless the option is covered.
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 a
fund and its shareholders by improving the fund'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. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
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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 fund 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 a fund for investment
purposes. Options permit a fund to experience the change in the
value of a security with a relatively small initial cash
investment.
The risk a fund assumes when it buys an option is the loss of the
premium. To be beneficial to a fund, 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. Each fund 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 each fund's
goal.
'All options written by a fund will be covered. For covered call
options, if a decision is made to sell the security, each fund will
attempt to terminate the option contract through a closing purchase
transaction.
'Each fund will deal only in standard option contracts traded on
national securities exchanges or those that may be quoted on NASDAQ
(a system of price quotations developed by the National Association
of Securities Dealers, Inc.)
'Each fund 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 funds, each will conform to the requirements of those
states. For example, California limits the writing of options to
50% of the assets of a fund. Some regulations also affect the
Custodian. When a covered option is written, the Custodian
segregates the underlying securities, and issues a receipt. There
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are certain rules regarding banks issuing such receipts that may
restrict the amount of covered call options written. Furthermore,
each fund is limited to pledging not more than 15% of the cost of
its total assets.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since each fund
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
fund. The premium received upon writing the option is added to the
proceeds received from the sale of the security. The fund will
recognize a capital gain or loss based upon the difference between
the proceeds and the security's basis. Premiums received from
writing outstanding options are included as a deferred credit in
the Statement of Assets and Liabilities and adjusted daily to the
current market value.
Options are valued at the close of the NYSE. 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.
STOCK INDEX FUTURES CONTRACTS. Stock index futures contracts are
commodity contracts listed on commodity exchanges. They currently
include contracts on the Standard & Poor's 500 Stock Index (S&P 500
Index) and other broad stock market indexes such as the New York
Stock Exchange Composite Stock Index and the Value Line Composite
Stock Index, as well as narrower sub-indexes such as the S&P 100
Energy Stock Index and the New York Stock Exchange Utilities Stock
Index. A stock index assigns relative values to common stocks
included in the index and the index fluctuates with the value of
the common stocks so included.
A futures contract is a legal agreement between a buyer or seller
and the clearinghouse of a futures exchange in which the parties
agree to make a cash settlement on a specified future date in an
amount determined by the stock index on the last trading day of the
contract. The amount is a specified dollar amount (usually $100 or
$500) multiplied the difference between the index value on the last
trading day and the value on the day the contract was struck.
For example, the S&P 500 Index consists of 500 selected common
stocks, most of which are listed on the NYSE. The S&P 500 Index
assigns relative weightings to the common stocks included in the
Index, and the Index fluctuates with changes in the market values
of those stocks. In the case of S&P 500 Index futures contracts,
the specified multiple is $500. Thus, if the value of the S&P 500
Index were 150, the value of one contract would be $75,000 (150 x
$500). Unlike other futures contracts, a stock index futures
contract specifies that no delivery of the actual stocks making up
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the index will take place. Instead, settlement in cash must occur
upon the termination of the contract. For example, excluding any
transaction costs, if a fund enters into one futures contract to
buy the S&P 500 Index at a specified future date at a contract
value of 150 and the S&P 500 Index is at 154 on that future date,
the fund will gain $500 x (154-150) or $2,000. If the fund enters
into one futures contract to sell the S&P 500 Index at a specified
future date at a contract value of 150 and the S&P 500 Index is at
152 on that future date, the fund will lose $500 x (152-150) or
$1,000.
Unlike the purchase or sale of an equity security, no price would
be paid or received by the fund upon entering into stock index
futures contracts. However, the fund would be required to deposit
with its custodian, in a segregated account in the name of the
futures broker, an amount of cash or U.S. Treasury bills equal to
approximately 5% of the contract value. This amount is known as
initial margin. The nature of initial margin in futures
transactions is different from that of margin in security
transactions in that futures contract margin does not involve
borrowing funds by the fund to finance the transactions. Rather,
the initial margin is in the nature of a performance bond or good-
faith deposit on the contract that is returned to the fund upon
termination of the contract, assuming all contractual obligations
have been satisfied.
Subsequent payments, called variation margin, to and from the
broker would be made on a daily basis as the price of the
underlying stock index fluctuates, making the long and short
positions in the contract more or less valuable, a process known as
marking to market. For example, when a fund enters into a contract
in which it benefits from a rise in the value of an index and the
price of the underlying stock index has risen, the fund will
receive from the broker a variation margin payment equal to that
increase in value. Conversely, if the price of the underlying
stock index declines, the fund would be required to make a
variation margin payment to the broker equal to the decline in
value.
How These Funds Would Use Stock Index Futures Contracts. The funds
intend to use stock index futures contracts and related options for
hedging and not for speculation. Hedging permits a fund to gain
rapid exposure to or protect itself from changes in the market.
For example, a fund may find itself with a high cash position at
the beginning of market rally. Conventional procedures of
purchasing a number of individual issues entail the lapse of time
and the possibility of missing a significant market movement. By
using futures contracts, the fund can obtain immediate exposure to
the market and benefit from the beginning stages of a rally. The
buying program can then proceed and once it is completed (or as it
proceeds), the contracts can be closed. Conversely, in the early
stages of a market decline, market exposure can be promptly offset
by entering into stock index futures contracts to sell units of an
index and individual stocks can be sold over a longer period under
cover of the resulting short contract position.
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A fund may enter into contracts with respect to any stock index or
sub-index. To hedge the fund's portfolio successfully, however,
the fund must enter into contracts with respect to indexes or sub-
indexes whose movements will have a significant correlation with
movements in the prices of the fund's individual portfolio
securities.
Special Risks of Transactions in Stock Index Futures Contracts.
1. Liquidity. Each fund may elect to close some or all of its
contracts prior to expiration. The purpose of making such a move
would be to reduce or eliminate the hedge position held by the
fund. The fund may close its positions by taking opposite
positions. Final determinations of variation margin are then made,
additional cash as required is paid by or to the fund, and the fund
realizes a gain or a loss.
Positions in stock index futures contracts may be closed only on an
exchange or board of trade providing a secondary market for such
futures contracts. For example, futures contracts transactions can
currently be entered into with respect to the S&P 500 Stock Index
on the Chicago Mercantile Exchange, the New York Stock Exchange
Composite Stock Index on the New York Futures Exchange and the
Value Line Composite Stock Index on the Kansas City Board of Trade.
Although the funds intend to enter into futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a liquid secondary
market will exist for any particular contract at any particular
time. In such event, it may not be possible to close a futures
contract position, and in the event of adverse price movements, the
fund would have to make daily cash payments of variation margin.
Such price movements, however, will be offset all or in part by the
price movements of the securities subject to the hedge. Of course,
there is no guarantee the price of the securities will correlate
with the price movements in the futures contract and thus provide
an offset to losses on a futures contract.
2. Hedging Risks. There are several risks in using stock index
futures contracts as a hedging device. One risk arises because the
prices of futures contracts may not correlate perfectly with
movements in the underlying stock index due to certain market
distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements.
Rather than making additional variation margin payments, investors
may close the contracts through offsetting transactions which could
distort the normal relationship between the index and futures
markets. Second, the margin requirements in the futures market are
lower than margin requirements in the securities market, and as a
result the futures market may attract more speculators than does
the securities market. Increased participation by speculators in
the futures market also may cause temporary price distortions.
Because of price distortion in the futures market and because of
imperfect correlation between movements in stock indexes and
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movements in prices of futures contracts, even a correct forecast
of general market trends may not result in a successful hedging
transaction over a short period.
Another risk arises because of imperfect correlation between
movements in the value of the stock index futures contracts and
movements in the value of securities subject to the hedge. If this
occurred, a fund could lose money on the contracts and also
experience a decline in the value of its portfolio securities.
While this could occur, IDS believes that over time the value of
the fund's portfolio will tend to move in the same direction as the
market indexes and will attempt to reduce this risk, to the extent
possible, by entering into futures contracts on indexes whose
movements it believes will have a significant correlation with
movements in the value of the fund's portfolio securities sought to
be hedged. It is also possible that if the fund has hedged against
a decline in the value of the stocks held in its portfolio and
stock prices increase instead, the fund will lose part or all of
the benefit of the increased value of its stock which it has hedged
because it will have offsetting losses in its futures positions.
In addition, in such situations, if the fund has insufficient cash,
it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising
market. The fund may have to sell securities at a time when it may
be disadvantageous to do so.
OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index
futures contracts are similar to options on stock except that
options on futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in a stock index
futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise
price at any time during the period of the option. If the option
is closed instead of exercised, the holder of the option receives
an amount that represents the amount by which the market price of
the contract exceeds (in the case of a call) or is less than (in
the case of a put) the exercise price of the option on the futures
contract. If the option does not appreciate in value prior to the
exercise date, the fund will suffer a loss of the premium paid.
OPTIONS ON STOCK INDEXES. Options on stock indexes are securities
traded on national securities exchanges. An option on a stock
index is similar to an option on a futures contract except all
settlements are in cash. A fund exercising a put, for example,
would receive the difference between the exercise price and the
current index level. Such options would be used in the same manner
as options on futures contracts.
SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES
CONTRACTS AND OPTIONS ON STOCK INDEXES. As with options on stocks,
the holder of an option on a stock index futures contract or on a
stock index may terminate a position by selling an option covering
the same contract or index and having the same exercise price and
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expiration date. The ability to establish and close out positions
on such options will be subject to the development and maintenance
of a liquid secondary market. The funds will not purchase options
unless the market for such options has developed sufficiently, so
that the risks in connection with options are not greater than the
risks in connection with stock index futures contracts transactions
themselves. Compared to using futures contracts, purchasing
options involves less risk to the funds because the maximum amount
at risk is the premium paid for the options (plus transaction
costs). There may be circumstances, however, when using an option
would result in a greater loss to a fund than using a futures
contract, such as when there is no movement in the level of the
stock index.
TAX TREATMENT. As permitted under federal income tax laws, each
fund 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 fund 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 stock indexes is currently
unclear, although the funds' tax advisers currently believe marking
to market is not required. Depending on developments, and although
no assurance is given, a fund may seek IRS rulings clarifying
questions concerning such treatment. Certain provisions of the
Code may also limit a fund's ability to engage in futures contracts
and related options transactions. For example, at the close of
each quarter of the fund'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, a
fund may be required to defer closing out a contract beyond the
time when it might otherwise be advantageous to do so. The fund
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 fund'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
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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.
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APPENDIX E
OPTIONS AND INTEREST RATE FUTURES CONTRACTS (INCOME AND SHORT-TERM
INCOME FUNDS)
Each fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. Each fund may enter
into interest rate futures contracts traded on any U.S. or foreign
exchange. Each fund 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, a
fund 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.
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 a
fund and its shareholders by improving the fund'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. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
between the price of the underlying security in the securities
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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 fund 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 a fund for investment
purposes. Options permit the fund to experience the change in the
value of a security with a relatively small initial cash
investment. The risk the fund assumes when it buys an option is
the loss of the premium. To be beneficial to the fund, 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 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. A fund 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 fund's
goal.
'All options written by the fund will be covered. For covered call
options if a decision is made to sell the security, the fund will
attempt to terminate the option contract through a closing purchase
transaction.
'The fund 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 Strategy, it will conform to the requirements of those states.
For example, California limits the writing of options to 50% of the
assets of a fund. Some regulations also affect the Custodian.
When a covered call option is written, the Custodian segregates the
underlying securities and issues a receipt. There are certain
rules regarding banks issuing such receipts that may restrict the
amount of covered call options written. Furthermore, a fund is
limited to pledging not more than 15% of the cost of its total
assets.
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PAGE 81
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since a fund is
taxed as a regulated investment company under the 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
fund. The fund 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 a
fund 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 mortgate-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 fund 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 fund immediately
is paid the difference and realizes a gain. If the offsetting
purchase price exceeds the sale price, the fund pays the difference
and realizes a loss. Similarly, closing out a futures contract
purchase is effected by the fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
fund realizes a gain, and if the offsetting sale price is less than
the purchase price, the fund 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 funds'
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 fund 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.
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The purpose of a futures contract, in the case of a fund 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 a fund 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 fund
owns. If interest rates did increase, the value of the debt
securities in the portfolio would decline, but the value of the
fund's futures contracts would increase at approximately the same
rate, thereby keeping the net asset value of the fund from
declining as much as it otherwise would have. If, on the other
hand, the fund held cash reserves and interest rates were expected
to decline, the fund 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 fund's
earnings. Even if short-term rates were not higher, the fund 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 fund 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 fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The fund 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
fund 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.
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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 and that change is reflected in the net asset value of
the fund.
RISKS. There are risks in engaging in each of the management tools
described above. The risk a fund 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 fund
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 fund 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 fund's obligation, however, might be more or less than the
premium received when it originally wrote the option. Furthermore,
the fund 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 securities is that the prices of securities subject
to futures contracts may not correlate perfectly with the behavior
of the cash prices of the fund's 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 fund'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 fund sold futures contracts for
the sale of securities in anticipation of an increase in interest
rates, and interest rates declined instead, the fund would lose
money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, each
fund 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 fund 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 is currently unclear,
although the funds' tax advisers currently believe marking to
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market is not required. Depending on developments, and although no
assurance is given, a fund may seek IRS rulings clarifying
questions concerning such treatment. Certain provisions of the
Code also may limit a fund's ability to engage in futures contracts
and related options transactions. For example, at the close of
each quarter of the fund'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-percent-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
fund may be required to defer closing out a contract beyond the
time when it might otherwise be advantageous to do so. The fund
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 fund'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.
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APPENDIX F
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.
While this does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many
shareholders who can continue investing through changing market
conditions to accumulate shares in a fund to meet long term goals.
Dollar-cost averaging
Regular Market Price Shares
Investment of a Share Acquired
$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
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PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS: To be filed by amendment.
(b) EXHIBITS:
1. Copy of Articles of Incorporation, as amended dated Nov. 14,
1991, filed as Exhibit 1 to Registrant's Post-Effective Amendment
No. 18 to Registration Statement No. 2-89288 is herein incorporated
by reference.
2. Copy of By-laws, as amended January 1, 1989, filed
electronically, as Exhibit 2 to Registrant's Post-Effective
Amendment No. 11 to Registration Statement No. 2-89288 is herein
incorporated by reference.
3. Not Applicable.
4. Form of Stock Certificate, filed as Exhibit 4 to Post-
Effective Amendment No. 3 to Registration Statement No. 2-89288, is
herein incorporated by reference.
5. (a) Copy of Investment Management and Services Agreement
between Registrant and IDS Financial Corporation, dated
November 14, 1991, filed electronically as Exhibit 5(a) to
Registrant's Post-Effective Amendment No. 18 to Registration
Statement No. 2-89288 is herein incorporated by reference.
(b) Copy of Investment Advisory Agreement between IDS
Financial Corporation and IDS International, Inc. dated
December 13, 1988, filed electronically as Exhibit 5(b) to
Registrant's Post-Effective Amendment No. 18 to Registration
Statement No. 2-89288 is herein incorporated by reference.
(c) Copy of Investment Advisory Agreement between IDS
International, Inc. and IDS Advisory Group Inc. dated
December 13, 1988, filed electronically as Exhibit 5(c) to
Registrant's Post-Effective Amendment No. 11 to Registration
Statement No. 2-89288 is herein incorporated by reference.
(d) Copy of Investment Advisory Agreement between IDS Advisory
Group Inc. and Daiwa Investment Trust and Management Co. Ltd. for
the management of IDS Pan Pacific Growth, filed electronically as
Exhibit 5(d) to Registrant's Post-Effective Amendment No. 6 to
Registration Statement No. 2-89299, is incorporated herein by
reference.
6. (a) Copy of Distribution Agreement between Registrant and IDS
Financial Services Inc. dated January 1, 1987, filed electronically
as Exhibit 6 to Registrant's Post-Effective Amendment No. 6 to
Registrant's Statement No. 2-89299, is incorporated herein by
reference.
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PAGE 87
(b) Copy of Plan of Distribution between Registrant and IDS
Financial Corporation on behalf of Pan Pacific Growth Portfolio,
filed electronically as Exhibit (6) to Registrant's Post-Effective
Amendment No. 11 to Registration Statement No. 2-89288 is herein
incorporated by reference.
7. All employees who have attained age 21 and completed one year
of service are eligible to participate in a thrift plan. Entry
into the plan is Jan. 1 or July 1 following completion of age and
service requirements. The Fund contributes each year an amount up
to 15 percent their annual salaries, the maximum amount permitted
under Section 404(a) of the Internal Revenue Code, or up to a
maximum of .08 of 1 percent of the Fund's net income before income
taxes and other adjustments. Employees of the Fund become eligible
to participate in a retirement plan on Jan. 1 or July 1 following
completion of one year of employment and attainment of age 21.
Contributions to the retirement plan cease no later than the time
at which the participant reaches the normal retirement age of 65.
8. (a) Copy of Custodian Agreement between Registrant and IDS
Trust Company dated April 16, 1986, filed as Exhibit 8 to Post-
Effective Amendment No. 1 to Registration Statement 2-89288, is
incorporated herein by reference.
(b) Copy of Foreign Custody and Subcustodial Agreement between
Registrant, IDS Bank & Trust and First Trust, N.A. and IDS Pan
Pacific Growth Fund, Inc., filed as exhibit 8(b) to Post-Effective
Amendment No. 18 to Registration Statement No. 2-89288 is
incorporated herein by reference.
(c) Copy of Global Custody Agreement (on behalf of Registrant)
between The Chase Manhatten Bank, N.A. and IDS Bank & Trust, dated
Feb. 19, 1992 filed electronically as Exhibit 8(c) to Post-
Effective Amendment No. 18 to Registration Statement No. 2-89288 is
incorporated herein by reference.
9. (a) Copy of Transfer Agency Agreement between Registrant and
IDS Financial Corporation dated November 14, 1991, filed
electronically to Post-Effective Amendment No. 18 to Registration
Statement No. 2-89288 is incorporated herein by reference.
(b) Copy of License Agreement between the Registrant and IDS
Financial Corporation dated January 25, 1988, filed electronically
as Exhibit 9(b) to Registrant's Post-Effective Amendment No. 11 to
Registration Statement No. 2-89288 is herein incorporated by
reference.
10. Not applicable.
11. Auditors' Consent to be filed by Amendment.
12. None.
13. Not Applicable.
14. Forms of Keogh, IRA and other retirement plans, filed as
Exhibits 14(a) through 14(n) to IDS Growth Fund, Inc., Post-
Effective Amendment No. 19 to Registration Statement 2-54516, are
herein incorporated by reference.<PAGE>
PAGE 88
15. Copy of Plan of Distribution, filed as Exhibit 15 to Post-
Effective Amendment No. 1 to Registration Statement No. 2-89288, is
herein incorporated by reference.
16. Copy of Schedule for computation of each performance quotation
provided in the Registration Statement in response to Item 22,
filed as Exhibit 16 to Post-Effective Amendment No. 19 to
Registration Statement No. 2-89288, is herein incorporated by
reference.
17a. Directors' Power of Attorney to sign Amendments to
Registration Statement No. 2-89288, dated Oct. 14, 1993, is
herewith filed electronically.
17b. Officers' Power of Attorney to sign Amendments to Registration
Statement No. 2-89288, dated June 1, 1993, is herewith filed
electronically.
Item 25. Persons Controlled by or under Common Control with
Registrant
Not Applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Holders as of
Class March 14, 1994
Common Stock IDS Strategy -
Aggressive Equity Fund - 116,698
Equity Fund - 145,852
Income Fund - 81,432
Short-Term Income Fund - 22,636
Worldwide Growth Fund - 46,151
<PAGE>
PAGE 89
<PAGE>
PAGE 1
Item 27. Indemnification
The Articles of Incorporation of the registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
PAGE 2
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)
Directors and officers of IDS Financial Corporation who are
directors and/or officers of one or more other companies:
Ronald G. Abrahamson, Vice President--Field Administration
IDS Financial Services Inc. Vice President-Field
IDS Tower 10 Administration
Minneapolis, MN 55440
Douglas A. Alger, Vice President--Total Compensation
IDS Financial Services Inc. Vice President-
IDS Tower 10 Total Compensation
Minneapolis, MN 55440
Jerome R. Amundson, Vice President and Controller--Mutual Funds
Operations
IDS Financial Services Inc. Vice President and
IDS Tower 10 Controller-Mutual Funds
Minneapolis, MN 55440 Operations
Peter J. Anderson, Director and Senior Vice President--Investments
IDS Securities Corporation Executive Vice President-
Investments
IDS Advisory Group Inc. Director and Chairman
IDS Tower 10 of the Board
Minneapolis, MN 55440
IDS Capital Holdings Inc. Director and President
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Financial Services Inc. Senior Vice President-
Advisory Group and Equity
Management
IDS Fund Management Limited Director
NCM Capital Management Group, Inc. Director
2 Mutual Plaza
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President--Sales and Marketing, IDS
Institutional Retirement Services
IDS Financial Services Inc. Vice President-Sales and
IDS Tower 10 Marketing, IDS
Minneapolis, MN 55440 Institutional Retirement
Services
Alvan D. Arthur, Region Vice President--Pacific Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Pacific Region
Minneapolis, MN 55440
<PAGE>
PAGE 3
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Kent L. Ashton, Vice President--Group Management Office, Banking
and Certificates Group
IDS Financial Services Inc. President-Group Management
IDS Tower 10 Office, Banking and
Minneapolis, MN 55440 Certificates Group
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-Senior
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Timothy V. Bechtold, Vice President--Insurance Product Development
IDS Financial Services Inc. Vice President-Insurance
IDS Tower 10 Product Development
Minneapolis, MN 55440
IDS Life Insurance Company Vice President-Insurance
Product Development
John D. Begley, Region Vice President--Mid-Central Region
IDS Insurance Agency of Alabama Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of Massachusetts Vice President-Mid-Central
Inc. Region
IDS Insurance Agency of Nevada, Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Mid-Central
Region
IDS Insurance Agency of North Carolina Vice President-Mid-Central
Inc. Region
IDS Insurance Agency of Ohio Inc. Vice President-Mid-Central
Inc. Region
IDS Insurance Agency of Wyoming Inc. Vice President-Mid-Central
Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Mid-Central Region
Minneapolis, MN 55440
Carl E. Beihl, Vice President--Strategic Technology Planning
IDS Financial Services Inc. Vice President-
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Alan F. Bignall, Vice President--Financial Planning Systems
IDS Financial Services Inc. Vice President-
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
<PAGE>
PAGE 4
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Brent L. Bisson, Region Vice President--Northwest Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Northwest Region
Minneapolis, MN 55440
IDS Insurance Agency of Alabama Inc. Vice President-
Northwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Northwest Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Northwest Region
IDS Insurance Agency of Nevada, Inc. Vice President-
Northwest Region
IDS Insurance Agency of New Mexico Vice President-
Inc. Northwest Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Northwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Northwest Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Northwest Region
Thomas J. Brakke, Vice President--Investment Services and
Investment Research
IDS Financial Services Inc. Vice President-Investment
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Karl J. Breyer, Director, Senior Vice President and General Counsel
IDS Financial Services Inc. Senior Vice President
IDS Tower 10 and Special Counsel
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director and President
American Express Minnesota Foundation Director
John L. Burbidge, Vice President--Government Relations
IDS Life Insurance Company Vice President
IDS Financial Services Inc. Vice President-
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Harold E. Burke, Vice President and Assistant General Counsel
IDS Financial Services Inc. Vice President and
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Daniel J. Candura, Vice President--Marketing Support
IDS Financial Services Inc. Vice President-Marketing
IDS Tower 10 Support
Minneapolis, MN 55440
<PAGE>
PAGE 5
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Orison Y. Chaffee III, Vice President--Field Real Estate
IDS Financial Services Inc. Vice President-Field
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James Choat, Director and Senior Vice President--Field Management
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Field Management
Minneapolis, MN 55440
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 Vice President--North
Inc. Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Vice President--North
Inc. Central Region
IDS Insurance Agency of North Carolina Vice President--North
Inc. 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 Director
American Express Minnesota Foundation Director
Kenneth J. Ciak, Vice President and General Manager--IDS Property
Casualty
IDS Property Casualty Insurance Co. Director and President
1 WEG Blvd
DePere, Wisconsin 54115
IDS Financial Services Inc. Vice President and General
Manager-IDS Property
Casualty
Roger C. Corea, Region Vice President--Northeast Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Northeast Region
Minneapolis, MN 55440
IDS Life Insurance Co. of New York Director
Box 5144
Albany, NY 12205
IDS Insurance Agency of Alabama Inc. Vice President -
Northeast Region
IDS Insurance Agency of Arkansas Inc. Vice President -
Northeast Region
IDS Insurance Agency of Massachusetts Vice President -
Inc. Northeast Region
<PAGE>
PAGE 6
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of Nevada Inc. Vice President -
Northeast Region
IDS Insurance Agency of New Mexico Inc. Vice President -
Northeast Region
IDS Insurance Agency of North Carolina Vice President -
Inc. Northeast Region
IDS Insurance Agency of Ohio, Inc. Vice President -
Northeast Region
IDS Insurance Agency of Wyoming Inc. Vice President -
Northeast Region
Kevin F. Crowe, Region Vice President--Atlantic Region
IDS Financial Services Inc. Region Vice President -
IDS Tower 10 Atlantic Region
Minneapolis, MN 55440
Alan R. Dakay, Vice President--Institutional Insurance Marketing
IDS Financial Services Inc. Vice President -
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
American Enterprise Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
William F. Darland, Region Vice President--South Central Region
IDS Insurance Agency of Alabama Inc. Vice President-
South Central Region
IDS Insurance Agency of Arkansas Inc. Vice President -
South Central Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. South Central Region
IDS Insurance Agency of Nevada Inc. Vice President-
South Central Region
IDS Insurance Agency of New Mexico Inc. Vice President-
South Central Region
IDS Insurance Agency of North Carolina Vice President-
Inc. South Central Region
IDS Insurance Agency of Ohio Inc. Vice President-
South Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-
South Central Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 South Central Region
Minneapolis, MN 55440
<PAGE>
PAGE 7
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
William H. Dudley, Director, Executive Vice President--Investment
and Brokerage Operations
IDS Financial Services Inc. Director, Executive Vice
IDS Tower 10 President-Investment and
Minneapolis, MN 55440 Brokerage Operations
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Advisory Group Inc. Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
IDS Life Insurance Company Vice President
American Enterprise Investment Director
Services Inc.
Roger S. Edgar, Director, Senior Vice President--Information
Systems
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Information Systems
Minneapolis, MN 55440
Gordon L. Eid, Director, Senior Vice President and Deputy 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 Director and Vice President
Inc.
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 Director and Vice President
Inc.
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
IDS Financial Services Inc. Senior Vice President and
IDS Tower 10 General Counsel
Minneapolis, MN 55440
Investors Syndicate Development Corp. Director
IDS Real Estate Services, Inc. Vice President
Mark A. Ernst, Vice President--Tax and Business Services
IDS Financial Services Inc. Vice President-Tax and
IDS Tower 10 Business Services
Minneapolis, MN 55440
IDS Tax and Business Services Vice President-Tax and
Business Services
<PAGE>
PAGE 8
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
IDS Financial Services Inc. Vice President-
Mutual Fund Equity
Investments
IDS International Inc. Vice President and
Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Tower 10
Minneapolis, MN 55440
Louis C. Fornetti, Director, Senior Vice President--Corporate
Controller
IDS Financial Services Inc. Senior Vice President-
Corporate Controller
IDS Property Casualty Insurance Co. Director and Vice President
IDS Tower 10
Minneapolis, MN 55440
American Enterprise Investment Vice President
Services Inc.
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 Vice President
Inc.
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Vice President
Inc.
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Real Estate Services, Inc. Vice President
IDS Securities Corporation Vice President
Investors Syndicate Development Corp. Vice President
IDS Bank & Trust Director
Douglas L. Forsberg, Vice President--Securities Services
IDS Financial Services Inc. Vice President-
Securities Services
IDS Securities Services Vice President and
General Manager
American Enterprise Investment Director, President and
Services Inc. Chief Executive Officer
<PAGE>
PAGE 9
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Carl W. Gans, Region Vice President--North Central Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 North Central Region
Minneapolis, MN 55440
Robert G. Gilbert, Vice President--Real Estate
IDS Financial Services Inc. Vice President-
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden, Vice President--Field Compensation Development
IDS Financial Services Inc. Vice President-Field
IDS Tower 10 Compensation Development
Minneapolis, MN 55440
Harvey Golub, Director
American Express Company Director and President
American Express Tower
World Financial Center
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Plus 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 International Fund, Inc. Director
IDS Investors 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
IDS Life Capital Resource Fund, Inc. Director
<PAGE>
PAGE 10
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Life Special Income Fund, Inc. Director
IDS Life Managed Fund, Inc. Director
IDS Life Moneyshare Fund, Inc. Director
National Computer Systems, Inc. Director
11000 Prairie Lakes Drive
Minneapolis, MN 55440
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Enterprise Investment Vice President and
Services Inc. Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Cable Corporation Vice President and
Treasurer
IDS Cable II Corporation Vice President and
Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice 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 Vice President and
Inc. 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 Vice President and
Inc. 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 Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Vice President and
Treasurer
<PAGE>
PAGE 11
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Partnership Services Corporation 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 Vice President and
Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
Peninsular Properties, Inc. Vice President and
Treasurer
IDS Financial Services Inc. Vice President and
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Sloan Financial Group, Inc. Director
2 Mutual Plaza
501 Willard Street
Durham, NC 27701
NCM Capital Management Group, Inc. Director
2 Mutual Plaza
501 Willard Street
Durham, NC 27701
Suzanne Graf, Vice President--Systems Services
IDS Financial Services Inc. Vice President-
IDS Tower 10 Systems Services
Minneapolis, MN 55440
David A. Hammer, Vice President and Marketing Controller
IDS Financial Services Inc. Vice President and
IDS Tower 10 Marketing Controller
Minneapolis, MN 55440
IDS Plan Services of California, Inc. Director and Vice President
Robert L. Harden, Region Vice President--Mid-Atlantic Region
IDS Insurance Agency of Alabama Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Mid Atlantic Region
IDS Insurance Agency of Nevada Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Mid Atlantic Region
<PAGE>
PAGE 12
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of North Carolina Vice President-
Inc. Mid Atlantic Region
IDS Insurance Agency of Ohio Inc. Vice President-
Mid Atlantic Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Mid Atlantic Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Mid Atlantic Region
Minneapolis, MN 55440
Lorraine R. Hart, Vice President--Insurance Investments
IDS Financial Services Inc. Vice President-Insurance
IDS Tower 10 Investments
Minneapolis, MN 55440
American Enterprise Life Vice President-Investments
Insurance Company
IDS Life Insurance Company Vice President-Investments
Mark S. Hays, Vice President--Senior Portfolio Manager, IDS
International
IDS Financial Services Inc. Vice President-Senior
IDS Tower 10 Portfolio Manager, IDS
Minneapolis, MN 55440 International
IDS Fund Management Limited Director
IDS International, Inc. Senior Vice President
Brian M. Heath, Region Vice President--Southwest Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Southwest Region
Minneapolis, MN 55440
IDS Insurance Agency of Alabama Inc. Vice President-
Southwest Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southwest Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Southwest Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southwest Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southwest Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Southwest Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southwest Region
IDS Insurance Agency of Texas Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Vice President-
Southwest Region
<PAGE>
PAGE 13
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-Senior
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
IDS Advisory Group Inc. Vice President
James G. Hirsh, Vice President and Assistant General Counsel
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Vice President
Inc.
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Vice President
Inc.
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Securities Corporation Director, Vice President
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations
and Chief Compliance Officer
IDS Financial Services Inc. Vice President-
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
American Enterprise Investment Vice President and
Services Inc. Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
IDS Financial Services Inc. Chairman, Chief Executive
IDS Tower 10 Officer and President
Minneapolis, MN 55440
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Deposit Corp. Director
IDS Life Insurance Company Director and Chairman
of the Board
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
Peninsular Properties, Inc. Director and Chairman of
Board
Marietta Johns, Director; Senior Vice President--Field Management
IDS Financial Services Inc. Senior Vice President-
ACUMA Ltd.
<PAGE>
PAGE 14
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Douglas R. Jordal, Vice President--Taxes
IDS Financial Services Inc. Vice President-Taxes
IDS Tower 10
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
Craig A. Junkins, Vice President--IDS 1994 Implementation Planning
and Financial Planning Development
IDS Financial Services Inc. Vice President-IDS 1994
IDS Tower 10 Implementation Planning and
Minneapolis, MN 55440 Financial Planning
Development
James E. Kaarre, Vice President--Marketing Information
IDS Financial Services Inc. Vice President-
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
Susan D. Kinder, Director and Senior Vice President--Human
Resources
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Human Resources
Minneapolis, MN 55440
American Express Minnesota Foundation Director
Richard W. Kling, Vice President--Insurance Marketing and Products
IDS Financial Services Inc. Vice President-
Insurance Marketing and
Products
IDS Insurance Agency of Alabama Inc. Director and Executive Vice
President
IDS Insurance Agency of Arkansas Inc. Director and Executive Vice
President
IDS Insurance Agency of Massachusetts Director and Executive Vice
Inc. President
IDS Insurance Agency of Nevada Inc. Director and Executive Vice
President
IDS Insurance Agency of New Mexico Inc. Director and Executive Vice
President
IDS Insurance Agency of North Carolina Director and Executive Vice
Inc. President
IDS Insurance Agency of Ohio Inc. Director and Executive Vice
President
IDS Insurance Agency of Wyoming Inc. Director and Executive Vice
President
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Member of Board of Managers
<PAGE>
PAGE 15
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Life Insurance Company Director and Executive Vice
IDS Tower 10 President-Marketing and
Minneapolis, MN 55440 Products
IDS Life Insurance Company Director
of New York
P.O. Box 5144
Albany, NY 12205
Harold Knutson, Vice President--System Services
IDS Financial Services Inc. Vice President--
IDS Tower 10 System Services
Minneapolis, MN 55440
Paul F. Kolkman, Vice President--Corporate Actuary
IDS Financial Services Inc. Vice President-
Corporate Actuary
IDS Life Insurance Company Director and Vice
President-Finance
IDS Life Series Fund, Inc. Vice President and Chief
IDS Tower 10 Actuary
Minneapolis, MN 55440
Claire Kolmodin, Vice President--Service Quality
IDS Financial Services Inc. Vice President-
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kraeger, Vice President--Field Management Development
IDS Financial Services Inc. Vice President-Field
IDS Tower 10 Management Development
Minneapolis, MN 55440
Christopher R. Kudrna, Vice President--Systems and Technology
Development
IDS Financial Services Inc. Vice President-Systems and
IDS Tower 10 Technology Development
Minneapolis, MN 55440
Steven C. Kumagai, Director, Senior Vice President and Associate
General Sales Manager
IDS Financial Services Inc. Director; Senior Vice
IDS Tower 10 President and Associate
Minneapolis, MN 55440 General Sales Manager
<PAGE>
PAGE 16
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Mitre Kutanovski, Region Vice President--Midwest Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Midwest Region
Minneapolis, MN 55440
Edward Labenski, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-
Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
IDS Tower 10
Minneapolis, MN 55440
Peter L. Lamaison, Vice President--IDS International Division
IDS Financial Services Inc. Vice President-
IDS International
Division
IDS Fund Management Limited Director and Chairman of
the Board
IDS International, Inc. Director, President and
IDS Tower 10 Chief Executive Officer
Minneapolis, MN 55440
Kurt A. Larson, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
Ryan R. Larson, Vice President--Annuity Product Development
IDS Financial Services Inc. Vice President-
Annuity Product
Development
IDS Life Insurance Company Vice President,
IDS Tower 10 Annuity Product
Minneapolis, MN 55440 Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
IDS Financial Services Inc. Vice President and
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Peter A. Lefferts, Director and Senior Vice President--Banking and
Certificates
IDS Deposit Corp. Director and Chairman of
the Board
IDS Bank & Trust Director and Chairman of
the Board
<PAGE>
PAGE 17
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Investors Syndicate Development Corp. Director, Chairman of the
Board and President
IDS Plan Services of California, Inc. Director
IDS Sales Support Inc. Director
IDS Certificate Company Director, Chairman of the
IDS Tower 10 Board and President
Minneapolis, MN 55440
Douglas A. Lennick, Director, Senior Vice President and General
Sales Manager
IDS Financial Services Inc. Director; Senior Vice
IDS Tower 10 President and General Sales
Minneapolis, MN 55440 Manager
Mary Malevich, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-
Senior Portfolio
Manager
IDS International Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Certificate Operations
IDS Certificate Company Vice President-Operations
IDS Financial Services Inc. Vice President-Certificate
IDS Tower 10 Operations
Minneapolis, MN 55440
William J. McKinney, Vice President--Field Management Support
IDS Financial Services Inc. Vice President-Field
IDS Tower 10 Management Support
Minneapolis, MN 55440
Thomas Medcalf, Vice President--Senior Portfolio Manager
IDS Financial Services Inc. Vice President-Senior
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
William C. Melton, Vice President-International Research and Chief
International Economist
IDS Financial Services Inc. Vice President-
IDS Tower 10 International Research and
Minneapolis, MN 55440 Chief International
Economist
Janis E. Miller, Vice President--Mutual Funds Products and
Marketing
IDS Financial Services Inc. Vice President-Mutual Funds
IDS Tower 10 Products and Marketing
Minneapolis, MN 55440<PAGE>
PAGE 18
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
James A. Mitchell, Director, Senior Vice President--Insurance
Operations
American Enterprise Life Insurance Director and Chairman of
Company the Board
P.O. Box 534
Minneapolis, MN 55440
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Director and President
Inc.
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 Director and President
Inc.
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director, President
IDS Tower 10 and Chief Executive
Minneapolis, MN 55440 Officer
IDS Financial Services Inc. Senior Vice President-
Insurance Operations
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A Member of the Board of
and B Managers, Chairman and
President
IDS Life Capital Resource Fund, Inc. Director and Executive
Vice President
IDS Life Special Income Fund, Inc. Director and Executive
Vice President
IDS Life Managed Fund, Inc. Director and Executive
Vice President
IDS Life Moneyshare Fund, Inc. Director and Executive
IDS Tower 10 Vice President
Minneapolis, MN 55440
IDS Life Insurance Company Director, Chairman
of New York of the Board and Chief
P.O. Box 5144 Executive Officer
Albany, NY 12205
Pamela J. Moret, Vice President--Corporate Communications
IDS Financial Services Inc. Vice President-
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
American Express Minnesota Foundation Director and President
Robert J. Neis, Vice President--Information Systems Operations
IDS Financial Services Inc. Vice President-
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
<PAGE>
PAGE 19
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Vernon F. Palen, Region Vice President--Rocky Mountain Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Rocky Mountain Region
Minneapolis, MN 55440
IDS Insurance Agency of Alabama Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Rocky Mountain Region
IDS Insurance Agency of Nevada Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Rocky Mountain Region
IDS Insurance Agency of Ohio Inc. Vice President-
Rocky Mountain Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Rocky Mountain Region
James R. Palmer, Vice President--Insurance Operations
IDS Financial Services Inc. Vice President-
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
IDS Life Insurance Company Vice President-Taxes
Judith A. Pennington, Vice President--Field Technology
IDS Financial Services Inc. Vice President-
IDS Tower 10 Field Technology
Minneapolis, MN 55440
George M. Perry, Vice President--Corporate Strategy and Development
IDS Financial Services Inc. Vice President-
IDS Tower 10 Corporate Strategy
Minneapolis, MN 55440 and Development
IDS Property Casualty Insurance Co. Director
IDS Insurance Agency of Alabama Inc. Director and Executive
Vice President
IDS Insurance Agency of Arkansas Inc. Director and Executive
Vice President
IDS Insurance Agency of Massachusetts Director and Executive
Inc. Vice President
IDS Insurance Agency of Nevada Inc. Director and Executive
Vice President
<PAGE>
PAGE 20
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of New Mexico Inc. Director and Executive
Inc. Vice President
IDS Insurance Agency of North Carolina Director and Executive
Inc. Vice President
IDS Insurance Agency of Ohio Inc. Director and Executive
Vice President
IDS Insurance Agency of Wyoming Inc. Director and Executive
Vice President
Susan B. Plimpton, Vice President -- American Express Marketing
IDS Financial Services Inc. Vice President--
IDS Tower 10 American Express Marketing
Minneapolis, MN 55440
Ronald W. Powell, Vice President and Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
IDS Financial Services Inc. Vice President and
Assistant General Counsel
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 Life Series Fund, Inc. Secretary
IDS Life Variable Annuity Funds Secretary
A and B
IDS Partnership Services Corporation Vice President and
IDS Tower 10 Assistant Secretary
Minneapolis, MN 55440
James M. Punch, Vice President--TransAction Services
IDS Financial Services Inc. Vice President-Trans
IDS Tower 10 Action Services
Minneapolis, MN 55440
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund
Investments
IDS Financial Services Inc. Vice President--
IDS Tower 10 Taxable Mutual Fund
Minneapolis, MN 55440 Investments
<PAGE>
PAGE 21
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Roger B. Rogos, Region Vice President--Great Lakes Region
IDS Insurance Agency of Alabama Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Great Lakes Region
IDS Insurance Agency of Nevada Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Great Lakes Region
IDS Insurance Agency of Ohio Inc. Vice President-
Great Lakes Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Great Lakes Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Great Lakes Region
Minneapolis, MN 55440
ReBecca K. Roloff, Vice President--1994 Program Director
IDS Life Insurance Company Director and Executive Vice
IDS Tower 10 President-Operations
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-1994
Program Director
Stephen W. Roszell, Vice President--Advisory Institutional
Marketing
IDS Advisory Group Inc. President and Chief
IDS Tower 10 Executive Officer
Minneapolis, MN 55440
IDS Financial Services Inc. Vice President-Advisory
Institutional Marketing
Robert A. Rudell, Vice President--IDS Institutional Retirement
Services
IDS Financial Services Inc. Vice President-IDS
IDS Tower 10 Institutional Retirement
Minneapolis, Mn 55440 Services
John P. Ryan, Vice President and General Auditor
IDS Financial Services Inc. Vice President and General
IDS Tower 10 Auditor
Minneapolis, MN 55440
<PAGE>
PAGE 22
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Erven A. Samsel, Director and Senior Vice President--Field
Management
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Field Management
Minneapolis, MN 55440
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 Vice President-
Inc. 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 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
R. Reed Saunders, Director, Senior Vice President and Chief
Marketing Officer
IDS Property Casualty Insurance Co. Director
IDS Financial Services Inc. Director, Senior Vice
IDS Tower 10 President and Chief
Minneapolis, MN 55440 Marketing Officer
Stuart A. Sedlacek, Vice President--Structured Products Group
IDS Financial Services Inc. Vice President-
IDS Tower 10 Structured Products
Minneapolis, MN 55440 Group
Donald K. Shanks, Vice President--Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
IDS Financial Services Inc. Vice President-
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons, Vice President--Senior Portfolio Manager,
Insurance Investments
IDS Financial Services Inc. Vice President-Senior
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440 Insurance Investments
American Enterprise Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
<PAGE>
PAGE 23
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
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
Peninsular Properties, Inc. Director and President
Judy P. Skoglund, Vice President--Human Resources and Organization
Development
IDS Financial Services Inc. Vice President-Human
IDS Tower 10 Resources and Organization
Minneapolis, MN 55440 Development
Julian W. Sloter, Region Vice President--Southeast Region
IDS Insurance Agency of Alabama Inc. Vice President-
Southeast Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Southeast Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Southeast Region
IDS Insurance Agency of Nevada Inc. Vice President-
Southeast Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Southeast Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Southeast Region
IDS Insurance Agency of Ohio Inc. Vice President-
Southeast Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Southeast Region
IDS Financial Services Inc. Region Vice President-
IDS Tower 10 Southeast Region
Minneapolis, MN 55440
Ben C. Smith, Vice President--Workplace Marketing
IDS Financial Services Inc. Vice President-
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith, Vice President--Finance and CFO/UK
IDS Financial Services Inc. Vice President-
IDS Tower 10 Finance and CFO/UK
Minneapolis, MN 55440
IDS Life Insurance Company Director
IDS Life Capital Resource Fund, Inc. Treasurer
IDS Life Special Income Fund, Inc. Treasurer
IDS Life Managed Fund, Inc. Treasurer
IDS Life Moneyshare Fund, Inc. Treasurer
<PAGE>
PAGE 24
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
James B. Solberg, Vice President--Advanced Financial Planning
IDS Financial Services Inc. Vice President-
IDS Tower 10 Advanced Financial Planning
Minneapolis, MN 55440
Bridget Sperl, Vice President--Human Resources Management Services
IDS Financial Services Inc. Vice President-Human
IDS Tower 10 Resources Management
Minneapolis, MN 55440
Jeffrey E. Stiefler, Director
American Express Company President
Lois A. Stilwell, Vice President--Sales Training and Communications
IDS Financial Services Inc. Vice President-
IDS Tower 10 Sales Training and
Minneapolis, MN 55440 Communications
William A. Stoltzmann, Vice President and Assistant General Counsel
IDS Financial Services Inc. Vice President and
Assistant General Counsel
IDS Life Insurance Company Vice President, General
IDS Tower 10 Counsel and Secretary
Minneapolis, MN 55440
IDS Life Variable Annuity Funds General Counsel and
A and B Assistant Secretary
IDS Life Series Fund, Inc. General Counsel and
Assistant Secretary
American Enterprise Life Insurance Director, Vice President,
Company General Counsel
P.O. Box 534 and Secretary
Minneapolis, MN 55440
James J. Strauss, Vice President--Corporate Planning and Analysis
IDS Financial Services Inc. Vice President-
IDS Tower 10 Corporate Planning and
Minneapolis, MN 55440 Analysis
Jeffrey J. Stremcha, Vice President--Information Resource
Management/ISD
IDS Financial Services Inc. Vice President-Information
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
<PAGE>
PAGE 25
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Fenton R. Talbott, Director and Senior Vice President--ACUMA Ltd.
ACUMA Ltd. President and Chief
ACUMA House Executive Officer
The Glanty, Egham
Surrey TW 20 9 AT
UK
Neil G. Taylor, Vice President--IDS 1994
IDS Financial Services Inc. Vice President
IDS Tower 10 IDS 1994
Minneapolis, MN 55440
John R. Thomas, Director and Senior Vice President--Mutual Funds
Operations
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Mutual Funds Operations
Minneapolis, MN 55440
IDS Blue Chip Advantage Fund Director
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Cash Management Fund, Inc. Director
IDS Discovery Fund, Inc. Director
IDS Diversified Equity Income Fund Director
IDS Equity Plus Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Global Bond Fund, Inc. Director
IDS Global Growth Fund Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Mutual Director
IDS New Dimensions Fund, Inc. Director
IDS Planned Investment Account 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
American Express Minnesota Foundation Director
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 Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
<PAGE>
PAGE 26
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
Melinda S. Urion, Vice President--Insurance Controller
IDS Financial Services Inc. Vice President-Insurance
IDS Tower 10 Controller
Minneapolis, MN 55440
IDS Life Insurance Company Director, Vice President,
Controller and Treasurer
IDS Life Series Fund, Inc. Vice President and
Controller
American Enterprise Life Vice President, Controller
Insurance Company and Treasurer
Charles R. Utoft, Vice President--Equity and Fixed Income Trading
IDS Financial Services Inc. Vice President-Equity
IDS Tower 10 and Fixed Income Trading
Minneapolis, MN 55440
Wesley W. Wadman, Vice President--Senior Portfolio Manager
IDS Fund Management Limited Director
IDS Financial Services Inc. Vice President-
Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Senior Vice President
IDS Tower 10
Minneapolis, MN 55440
Norman Weaver, Jr., Director and Senior Vice President--Field
Management
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Field Management
Minneapolis, MN 55440
IDS Insurance Agency of Alabama Inc. Vice President-
Pacific Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Pacific Region
IDS Insurance Agency of Massachusetts Vice President-
Inc. Pacific Region
IDS Insurance Agency of Nevada Inc. Vice President-
Pacific Region
IDS Insurance Agency of New Mexico Inc. Vice President-
Pacific Region
IDS Insurance Agency of North Carolina Vice President-
Inc. Pacific Region
IDS Insurance Agency of Ohio Inc. Vice President-
Pacific Region
IDS Insurance Agency of Wyoming Inc. Vice President-
Pacific Region
Michael L. Weiner, Vice President--Corporate Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Financial Services Inc. Vice President-Corporate
Tax Operations<PAGE>
PAGE 27
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Futures III Corporation Vice President, Treasurer
and Secretary
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
IDS Tower 10 and Secretary
Minneapolis, MN 55440
Lawrence J. Welte, Vice President--Investment Administration
IDS Financial Services Inc. Vice President-
IDS Tower 10 Investment Administration
Minneapolis, MN 55440
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
William N. Westhoff, Director and Senior Vice President--Fixed
Income Management
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Fixed Income Management
Minneapolis, MN 55440
American Enterprise Life Insurance Director
Company
Investors Syndicate Development Corp. Director
IDS Partnership Services Corporation Director, Vice President
IDS Property Casualty Insurance Vice President-Investment
Company Officer
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Edwin Wistrand, Vice President and Assistant General Counsel
IDS Financial Services Inc. Vice President and
IDS Tower 10 Assistant General Counsel
Minneapolis, MN 55440
Michael Woodward, Director and Senior Vice President--Field
Management
IDS Financial Services Inc. Senior Vice President-
IDS Tower 10 Field Management
Minneapolis, MN 55440
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 Vice President-
Inc. North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
<PAGE>
PAGE 28
Item 28a. Business and Other Connections of Investment Adviser (IDS
Financial Corporation)(cont'd)
IDS Insurance Agency of North Carolina Vice President-
Inc. 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 of New York Director
<PAGE>
PAGE 29
Item 29. Principal Underwriters.
(a) IDS Financial Services Inc. acts as principal underwriter
for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Plus 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 Investor's
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 Field Administration
Minneapolis, MN 55440
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Jerome R. Amundson Vice President and None
IDS Tower 10 Controller-Mutual Funds
Minneapolis, MN 55440 Operations
Peter J. Anderson Senior Vice President- None
IDS Tower 10 Advisory Group and
Minneapolis, MN 55440 Equity Management
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 IDS Institutional Retirement
Services
Alvan D. Arthur Region Vice President- None
IDS Tower 10 Pacific Region
Minneapolis, MN 55440
Kent L. Ashton Vice President-Group None
IDS Tower 10 Management Office,
Minneapolis, MN 55440 Banking and Certificates
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
<PAGE>
PAGE 30
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Timothy V. Bechtold Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
John D. Begley Region Vice President- None
Olentangy Valley Center Mid-Central Region
Suite 300
7870 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Region Vice President- None
Seafirst Financial Northwest Region
Center, Suite 1730
601 W. Riverside Ave.
Spokane, WA 99201
Thomas J. Brakke Vice President- None
IDS Tower 10 Investment Services
Minneapolis, MN 55440 and Investment Research
Karl J. Breyer Senior Vice President None
IDS Tower 10 and Special Counsel
Minneapolis, MN 55440
John L. Burbidge Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
Suite 124 Field Management
6210 Campbell Rd.
Dallas, TX 75248
<PAGE>
PAGE 31
Item 29. (continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
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 Region Vice President- None
345 Woodcliff Drive Northeast Region
Fairport, NY 14450
Kevin F. Crowe Region Vice President- None
IDS Tower 10 Atlantic Region
Minneapolis, MN 55440
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
William F. Darland Region Vice President- None
Suite 108C South Central Region
301 Sovereign Court
Manchester, MO 63011
William H. Dudley Director, Executive Director/
IDS Tower 10 Vice President- Trustee
Minneapolis MN 55440 Investment and Brokerage
Operations
Roger S. Edgar Senior Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440
Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Tax and Business Services
Minneapolis, MN 55440
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 Corporate Controller
Minneapolis, MN 55440
Douglas L. Forsberg Vice President- None
IDS Tower 10 Securities Services
Minneapolis, MN 55440
<PAGE>
PAGE 32
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Carl W. Gans Region Vice President- None
IDS Tower 10 North Central Region
Minneapolis, MN 55440
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
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Robert L. Harden Region Vice President- None
Suite 403 Mid-Atlantic Region
8500 Leesburg Pike
Vienna, VA 22180
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Mark S. Hays Vice President-Senior None
IDS Tower 10 Portfolio Manager, IDS
Minneapolis, MN 55440 International
Brian M. Heath Region Vice President- None
IDS Tower 10 Southwest Region
Minneapolis, MN 55440
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
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
<PAGE>
PAGE 33
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
David R. Hubers Chairman, Chief None
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta Johns Senior Vice President- None
IDS Tower 10 ACUMA Ltd.
Minneapolis, MN 55440
Douglas R. Jordal Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440
Craig A. Junkins Vice President - IDS 1994 None
IDS Tower 10 Implementation Planning
Minneapolis, MN 55440 and Financial Planning
Development
James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Vice President- None
IDS Tower 10 Insurance Marketing
Minneapolis, MN 55440 and Products
Harold Knutson Vice President- None
IDS Tower 10 System Services
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Corporate Actuary
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Vice President-Field None
IDS Tower 10 Management Development
Minneapolis, MN 55440
Christopher Kudrna Vice President- None
IDS Tower 10 Systems and Technology
Minneapolis, MN 55440 Development
Steven C. Kumagai Director; Senior Vice None
IDS Tower 10 President- Associate
Minneapolis, MN 55440 General Sales Manager
<PAGE>
PAGE 34
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Mitre Kutanovski Region Vice President- None
IDS Tower 10 Midwest Region
Minneapolis, MN 55440
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Peter L. Lamaison Vice President- None
One Broadgate IDS International
London, England Division
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Ryan R. Larson Vice President- None
IDS Tower 10 Annuity Product
Minneapolis, MN 55440 Development
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Douglas A. Lennick Director, Senior Vice None
IDS Tower 10 President and General
Minneapolis, MN 55440 Sales Manager
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Certificate Operations
Minneapolis, MN 55440
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President-International None
IDS Tower 10 Research and Chief
Minneapolis, MN 55440 International Economist
Janis E. Miller Vice President-Mutual None
IDS Tower 10 Funds Products and
Minneapolis, MN 55440 Marketing
<PAGE>
PAGE 35
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James A. Mitchell Senior Vice President- None
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations
Vernon F. Palen Region Vice President- None
Suite D-222 Rocky Mountain Region
7100 E. Lincoln Drive
Scottsdale, AZ 85253
James R. Palmer Vice President- None
IDS Tower 10 Insurance Operations
Minneapolis, MN 55440
Judith A. Pennington Vice President- None
IDS Tower 10 Field Technology
Minneapolis, MN 55440
George M. Perry Vice President- None
IDS Tower 10 Corporate Strategy
Minneapolis, MN 55440 and Development
Susan B. Plimpton Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Marketing
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 TransAction Services
Minneapolis, MN 55440
Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440
Roger B. Rogos Region Vice President- None
Suite 15, Parkside Place Great Lakes
945 Boardman-Canfield Rd Region
Youngstown, Ohio 44512
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
<PAGE>
PAGE 36
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Robert A. Rudell Vice President- None
IDS Tower 10 IDS Institutional
Minneapolis, MN 55440 Retirement Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven A. Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Braintree, MA 02184
R. Reed Saunders Director, Senior None
IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief Marketing Officer
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Structured Products
Minneapolis, MN 55440 Group
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 Vice President- None
9040 Roswell Rd. Southeast Region
River Ridge-Suite 600
Atlanta, GA 30350
Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440
William A. Smith Vice President- None
IDS Tower 10 Finance and CFO/UK
Minneapolis, MN 55440
James B. Solberg Vice President- None
IDS Tower 10 Advanced Financial
Minneapolis, MN 55440 Planning
<PAGE>
PAGE 37
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Lois Stilwell Vice President- None
IDS Tower 10 Sales Training and
Minneapolis, MN 55440 Communications
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 Taylor Vice President- None
IDS Tower 10 IDS 1994
Minneapolis, MN 55440
John R. Thomas Senior Vice President- Director/
IDS Tower 10 Mutual Funds Operations Trustee
Minneapolis, MN 55440
Melinda S. Urion Vice President- None
IDS Tower 10 Insurance Controller
Minneapolis, MN 55440
Charles R. Utoft Vice President- None
IDS Tower 10 Equity and Fixed
Minneapolis, MN 55440 Income Trading
Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Norman Weaver Jr. Senior Vice President- None
Suite 215 Field Management
1501 Westcliff Drive
Newport Beach, CA 92660
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
<PAGE>
PAGE 38
Item 29. (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
William N. Westhoff Senior Vice President- None
IDS Tower 10 Fixed Income Management
Minneapolis, MN 55440
Edwin Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael Woodward Senior Vice President- None
Suite 815 Field Management
8585 Broadway
Merrillville, IN 46410
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.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
<PAGE>
PAGE 90
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Strategy Fund,
Inc., has duly caused this Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis and the State of Minnesota
on the 24th day of March, 1994.
IDS STRATEGY FUND INC.
By /s/ William R. Pearce**
William R. Pearce, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by
the following persons in the capacities indicated on the 24th day
of March, 1994.
Signature Capacity
/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director
/s/ Leslie L. Ogg** Treasurer, Principal
Leslie L. Ogg Financial Officer and
Principal Accounting
Officer
Director
Lynne V. Cheney
/s/ William H. Dudley* Director
William H. Dudley
/s/ Robert F. Froehlke* Director
Robert F. Froehlke
/s/ David R. Hubers* Director
David R. Hubers
/s/ Anne P. Jones* Director
Anne P. Jones
/s/ Donald M. Kendall* Director
Donald M. Kendall
/s/ Melvin R. Laird* Director
Melvin R. Laird
/s/ Lewis W. Lehr* Director
Lewis W. Lehr
<PAGE>
PAGE 91
Signatures Capacity
/s/ Edson W. Spencer* Director
Edson W. Spencer
/s/ John R. Thomas* Director
John R. Thomas
/s/ Wheelock Whitney* Director
Wheelock Whitney
*Signed pursuant to Directors' Power of Attorney dated Oct. 14,
1993, filed electronically as Exhibit 17(a) to Post-Effective
Amendment No. 22 by:
__________________________
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated June 1,
1993, filed electronically as Exhibit 17(b) to Post-Effective
Amendment No. 22 by:
__________________________
Leslie L. Ogg
<PAGE>
PAGE 92
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 22
TO REGISTRATION STATEMENT NO. 2-89288
This post-effective amendment comprises the following papers and
documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Part C.
Other Information.
Exhibits.
The signatures.
<PAGE>
PAGE 1
IDS Strategy Fund, Inc.
Registration Number 2-89288/811-3956
Exhibit Index
Exhibit 17a: Directors' Power of Attorney.
Exhibit 17b: Officers' Power of Attorney.
<PAGE>
PAGE 1
DIRECTORS/TRUSTEES POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as officers and trustees of the below
listed open-end, diversified investment companies that previously
have filed registration statements and amendments thereto pursuant
to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 with the Securities and Exchange
Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Plus Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522
hereby constitutes and appoints William R. Pearce and Leslie L. Ogg
or either one of them, as her or his attorney-in-fact and agent, to
sign for her or him in her or his name, place and stead any and all
further amendments to said registration statements filed pursuant
to said Acts and any rules and regulations thereunder, and to file
such amendments with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission,
<PAGE>
PAGE 2
granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in
connection therewith.
Dated the 14th day of October, 1993.
/s/ William H. Dudley /s/ Lewis W. Lehr
William H. Dudley Lewis W. Lehr
/s/ Robert F. Froehlke /s/ William R. Pearce
Robert F. Froehlke William R. Pearce
/s/ David R. Hubers /s/ Aulana L. Peters
David R. Hubers Aulana L. Peters
/s/ Anne P. Jones /s/ Edson W. Spencer
Anne P. Jones Edson W. Spencer
/s/ Donald M. Kendall /s/ John R. Thomas
Donald M. Kendall John R. Thomas
/s/ Melvin R. Laird /s/ Wheelock Whitney
Melvin R. Laird Wheelock Whitney
<PAGE>
PAGE 1
OFFICERS' POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as officers of the below listed open-
end, diversified investment companies that previously have filed
registration statements and amendments thereto pursuant to the
requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 with the Securities and Exchange Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Plus Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522
hereby constitutes and appoints the other as his attorney-in-fact
and agent, to sign for him in his name, place and stead any and all
further amendments to said registration statements filed pursuant
to said Acts and any rules and regulations thereunder, and to file
such amendments with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission,
granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in
connection therewith.
Dated the 1st day of June, 1993.
/s/ William R. Pearce /s/ Leslie L. Ogg
William R. Pearce Leslie L. Ogg
