IDS STRATEGY FUND INC, 485APOS, 1994-12-23

IDS STRATEGY FUND INC
485APOS, 1994-12-23

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<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 24 (File No. 2-89288) /X/

and/or

REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 26 (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 (check appropriate box)

/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/X/ on March 3, 1995 pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

------------------------

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 FILED ITS 24F-2 NOTICE FOR ITS MOST RECENT FISCAL YEAR
ON OR ABOUT MAY 27, 1994.

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<PAGE>

CROSS REFERENCE SHEET FOR IDS STRATEGY AGGRESSIVE FUND
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
- ---------------------------------------
Page Number in
Item No. Prospectus
- ---------------- ---------------------
<C> <S>
1 4
2 6; 6-7
3(a) 8
(b) NA
(c) 8-10
(d) 8
4(a) 6; 10-12; 26-29
(b) 10-12
(c) 10-12
5(a) 27; 27-28
(b) 26-29; 30
(b)(i) 30
(b)(ii) 28-29
(b)(iii) 28-29
(c) 6
(d) 6
(e) 28-29
(f) 29
(g) 28-29
5A(a) *
(b) *
6(a) 26; 26
(b) NA
(c) NA
(d) 26
(e) 3; 23-24
(f) 24; 24-25
(g) 25-26
7(a) 29
(b) 9-10; 12
(c) 13-23
(d) 17
(e) NA
(f) 29
8(a) 18-21
(b) NA
(c) 17
(d) 20
9 None

<CAPTION>
PART B
---------------------
Page Number in
Statement of
Additional
Item No. Information
- ---------------- ---------------------
<C> <S>
10 57
11 58
12 NA
13(a) 59-61; 81-97
(b) 59-61
(c) 60-61
(d) 63
14(a) 27-28**; 77-80
(b) 77-80
(c) 79-80
15(a) NA
(b) NA
(c) 79-80
16(a)(i) 26-29**; 30**
(a)(ii) 74; 76
(a)(iii) 74
(b) 74; 76
(c) NA
(d) None
(e) NA
(f) 75; 76
(g) NA
(h) 80; 80
(i) 75; 80
17(a) 61-63
(b) 64
(c) 61-63
(d) 63
(e) 63
18(a) 26**; 26**
(b) NA
19(a) 67-70
(b) 65-67; 67-70
(c) NA
20 73
21(a) 75
(b) 75
(c) NA
22(a) NA
(b) 64-65
23 80

<FN>
*Designates information is located in annual report.
**Designates page number in prospectus, which is hereby incorporated in this
Statement of Additional Information.
</TABLE>

<PAGE>

CROSS REFERENCE SHEET FOR IDS EQUITY VALUE FUND
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
- ---------------------------------------
Page Number in
Item No. Prospectus
- ---------------- ---------------------
<C> <S>
1 31
2 33; 33-34
3(a) 35
(b) NA
(c) 35-36
(d) 35
4(a) 33; 37-39; 53-55
(b) 37-39
(c) 37-39
5(a) 53; 53-54
(b) 53-55; 55-56
(b)(i) 55-56
(b)(ii) 54-55
(b)(iii) 54-55
(c) 33
(d) 33
(e) 54-55
(f) 55
(g) 54-55
5A(a) *
(b) *
6(a) 53; 53
(b) NA
(c) NA
(d) 53
(e) 31; 49
(f) 50; 50
(g) 50-52
7(a) 55
(b) 36-37; 39
(c) 40-49
(d) 43
(e) NA
(f) 55
8(a) 44-46
(b) NA
(c) 43
(d) 46
9 None

<CAPTION>
PART B
- ---------------------------------------
Page Number in
Statement of
Additional
Item No. Information
- ---------------- ---------------------
<C> <S>
10 99
11 100
12 NA
13(a) 101-103; 123-139
(b) 101-103
(c) 102-103
(d) 106
14(a) 53-54**; 119-121
(b) 119-121
(c) 121
15(a) NA
(b) NA
(c) 121
16(a)(i) 53-55**; 55-56**
(a)(ii) 116; 118
(a)(iii) 116
(b) 116; 118
(c) NA
(d) None
(e) NA
(f) 117; 118
(g) NA
(h) 122; 122
(i) 117; 122
17(a) 103-106
(b) 106-107
(c) 103-106
(d) 106-107
(e) 106-107
18(a) 53**; 53**
(b) NA
19(a) 109-112
(b) 108-109; 109-112
(c) NA
20 115
21(a) 117
(b) 117
(c) NA
22(a) NA
(b) 107
23 122

<FN>
*Designates information located in annual report.
**Designates page number in prospectus, which is hereby incorporated in this
Statement of Additional Information.
</TABLE>

<PAGE>

IDS STRATEGY AGGRESSIVE FUND

PROSPECTUS

MAY 27, 1994 AS REVISED MARCH 3, 1995

The goal of IDS Strategy Aggressive Fund, a part of IDS Strategy Fund, Inc., is
long-term growth of capital. The fund invests primarily in common stocks that
are selected for their above-average growth potential.

This prospectus contains facts that can help you decide if the fund is the right
investment for you. Read it before you invest and keep it for future reference.

Additional facts about the fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission. The SAI, dated May 27,
1994 as revised March 3, 1995, is incorporated here by reference. For a free
copy, contact American Express 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 FUND 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.

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852

1
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
THE FUND IN BRIEF..........................................
Goal.....................................................
Types of fund investments................................
Manager and distributor..................................
Portfolio manager........................................
Alternative sales arrangements...........................
SALES CHARGE AND FUND EXPENSES.............................
Sales charge.............................................
Operating expenses.......................................
PERFORMANCE................................................
Financial highlights.....................................
Total returns............................................
Key terms................................................
INVESTMENT POLICIES AND RISKS..............................
Facts about investments and their risks..................
Alternative investment option............................
Valuing assets...........................................
HOW TO BUY, EXCHANGE OR SELL SHARES........................
Alternative sales arrangements...........................
How to buy shares........................................
How to exchange shares...................................
How to sell shares.......................................
Reductions of the sales charge...........................
Waivers of the sales charge..............................
SPECIAL SHAREHOLDER SERVICES...............................
Services.................................................
Quick telephone reference................................
DISTRIBUTIONS AND TAXES....................................
Dividend and capital gain distributions..................
Reinvestments............................................
Taxes....................................................
HOW THE FUND IS ORGANIZED..................................
Shares...................................................
Voting rights............................................
Shareholder meetings.....................................
Directors and officers...................................
Investment manager and transfer agent....................
Distributor..............................................
ABOUT AEFC.................................................
General information......................................
</TABLE>

2
<PAGE>

THE FUND IN BRIEF

GOAL

IDS Strategy Aggressive Fund seeks to provide shareholders with long-term growth
of capital. Because any investment involves risk, achieving this goal cannot be
guaranteed. Only shareholders can change the goal.

TYPES OF FUND INVESTMENTS

The fund is a diversified mutual fund that invests primarily in common stocks
that are selected for their above-average growth potential. Some of the fund's
investments may be considered speculative and involve additional investment
risk.

MANAGER AND DISTRIBUTOR

The fund is managed by American Express Financial Corporation (AEFC), a provider
of financial services since 1894. AEFC currently manages more than $38 billion
in assets for the IDS MUTUAL FUND GROUP. Shares of the fund are sold through
American Express Financial Advisors Inc., a wholly owned subsidiary of AEFC.

PORTFOLIO MANAGER

David Bayer joined American Express Financial Corporation in 1992. He became
portfolio manager of Agressive Equity fund in July 1994. He previously held the
position of senior analyst. Prior to joining American Express Financial
Corporation, he had been an analyst with Montgomery Securities.

ALTERNATIVE SALES ARRANGEMENTS

The fund offers its shares in three classes. Class A shares are subject to a
sales charge at the time of purchase. Class B shares are subject to a contingent
deferred sales charge (CDSC) on redemptions made within 6 years of purchase and
an annual distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors. Other differences between the
classes include the fees paid by each class. The fund offers these alternatives
so you may choose the method of purchasing shares that is most beneficial given
the amount of purchase, length of time you expect to hold the shares and other
circumstances.

SALES CHARGE AND FUND EXPENSES

SALES CHARGE

When you buy Class A shares, you pay a maximum sales charge of 5% of the public
offering price. This charge can be reduced, depending on your total investments
in IDS funds. See "Reductions of the sales charge." No sales charge applies at
the time of purchase of Class B shares, although Class B shares may be subject
to a CDSC on redemptions made within 6 years and are subject to annual
distribution (12b-1) fees. Class Y shares are sold without a sales charge to
qualifying institutional investors.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
Class A Class B Class Y
------------- ------------- -------------
<S> <C> <C> <C>
Maximum sales charge on purchases (as a percentage of
offering price).................................... 5% 0% 0%
Maximum deferred sales charge imposed on redemptions
(as a percent of original purchase price).......... 0% 5% 0%
</TABLE>

3
<PAGE>
OPERATING EXPENSES

The fund pays certain expenses out of its assets for each class of shares. 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>
Class A Class B Class Y
----------- ----------- -----------
<S> <C> <C> <C>
Management fee...................................... 0.00% 0.00% 0.00%
12b-1 fee........................................... 0.00% 0.00% 0.00%
Other expenses...................................... 0.00% 0.00% 0.00%
Total............................................... 0.00% 0.00% 0.00%
</TABLE>

Expenses for Class B are based on actual expenses for the last fiscal year,
restated to reflect current fees. Expenses for Class A and Class Y are estimated
based on the restated expenses for Class B.

EXAMPLE: Suppose for each year for the next 10 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>
1 year 3 years 5 years 10 years**
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Class A......................... $ $ $ $
Class B......................... $ $ $ $
Class B*........................ $ $ $ $
Class Y......................... $ $ $ $
<FN>
*Assuming Class B shares are not redeemed at the end of the period.
**Assuming conversion of Class B shares to Class A shares after 8 years.
</TABLE>

THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL EXPENSES
MAY BE HIGHER OR LOWER THAN THOSE SHOWN. Because Class B pays annual
distribution (12b-1) fees, long-term shareholders of Class B may indirectly pay
an equivalent of more than a 6.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.

4
<PAGE>
PERFORMANCE

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Fiscal period ended March 31, Per share income and capital changes*
-----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
------ ------ ------ ------ ------ ------ ------ ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $15.12 $15.37 $13.73 $12.42 $9.98 $9.17 $12.29 $9.21 $6.24 $5.00

<CAPTION>
Income from investment operations:
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income (loss)............ (.14) (.11) (.03) .15 .01 (.02) (.01) (.01) -- .02
Net gains (losses) on securities (both
realized and unrealized)............... .83 .61 2.35 2.01 2.43 .83 (2.71) 3.40 3.08 1.24
Total from investment operations........ .69 .50 2.32 2.16 2.44 .81 (2.72) 3.39 3.08 1.26
<CAPTION>
Less distributions:
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends from net investment income.... -- -- (.01) (.16) -- -- -- -- -- (.02)
Distributions from realized gains....... (1.42) (.75) (.67) (.69) -- -- (.40) (.31) (.11) --
Total distributions..................... (1.42) (.75) (.68) (.85) -- -- (.40) (.31) (.11) (.02)
Net asset value, end of period.......... $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17 $12.29 $9.21 $6.24
<CAPTION>
Ratios/supplemental data
-----------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
------ ------ ------ ------ ------ ------ ------ ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (in
millions).............................. $652 $582 $473 $352 $283 $246 $261 $279 $85 $21
Ratio of expenses to average daily net
assets................................. 1.71% 1.75% 1.62% 1.61% 1.49% 1.69% 1.68% 1.64% 1.76% 1.32%++
Ratio of net income (loss) to average
daily net assets....................... (.99%) (.82%) (.27%) 1.17% .14% (.17%) (.12%) (.09%) .02% .83%***
Portfolio turnover rate (excluding
short-term securities)................. 55% 49% 52% 64% 33% 48% 39% 43% 67% 26%
Total return+........................... 4.1% 3.2% 16.8% 18.9% 24.4% 8.8% (21.9%) 36.9% 49.3% 25.1%+++
<FN>
*For a share outstanding throughout the period. Rounded to the
nearest cent.
**Commencement of operations. Period from May 14, 1984 to March 31,
1985.
***Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++During portions of this period, AEFC waived its advisory and
distribution fees and reimbursed the fund for nonadvisory expenses.
Had AEFC not done so, the ratio of expenses to average daily net
assets would have been 1.97%.
+++For the fiscal period ended March 31, 1985, the annualized total
return is 29.0%.
</TABLE>

The information in this table has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditors' report and additional
information about the performance of the fund are contained in the fund's annual
report which, if not included with this prospectus, may be obtained without
charge. Information on Class A and Class Y shares is not included because no
shares of those classes were outstanding for the periods shown.

5
<PAGE>
TOTAL RETURNS

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS as of March 31, 1994
- ------------------------------------------------------------------------------------
Since
Purchase made 1 year ago 5 years ago inception*
- -------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
Strategy Aggressive:
Class B................................... +0.1% +12.9% +15.2%
S&P 500 +1.5% +12.1% +14.8%
Lipper Small Co. Growth Fund Index.......... +11.3% +13.5% +12.9%
<FN>
*May 14, 1984
</TABLE>

<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS as of March 31, 1994
- -----------------------------------------------------------------------------------
Since
Purchase made 1 year ago 5 years ago inception*
- ------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
Strategy Aggressive:
Class B.................................. +0.1% +84.6% +303.8%
S&P 500.................................... +1.5% +77.2% +292.8%
Lipper Small Co. Growth Fund Index......... +11.3% +88.5% +233.1%
<FN>
*May 14, 1984
</TABLE>

These examples show total returns from hypothetical investments in Class B
shares of the fund. No shares for Class A and Class Y were outstanding during
the periods presented. These returns are compared to those of popular indexes
for the same periods.

For purposes of calculation, information about the fund assumes:

- - redemption at the end of each period and deduction of the applicable
contingent deferred sales charge for Class B shares

- - no adjustments for taxes an investor may have paid on the reinvested income
and capital gains

- - a period of widely fluctuating securities prices. Returns shown should not be
considered a representation of the fund's future performance.

The fund includes primarily common stocks that 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 the fund invests.

Lipper Small Company Growth Fund Index, published by Lipper Analytical Services,
Inc., includes 30 funds that are generally similar to the fund, although some
funds in the index may have somewhat different investment policies or
objectives.

KEY TERMS

NET ASSET VALUE (NAV)

Value of a single fund share. For each class, it is the total market value of
all of a fund's investments and other assets attributable to that class, less
any liabilities attributable to that class, divided by the number of shares of
that class outstanding.

6
<PAGE>

When you buy shares, you pay the NAV plus any applicable sales charge. When you
sell shares, the price you receive is the NAV minus any applicable sales charge.
The NAV usually changes daily, 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).

PUBLIC OFFERING PRICE

Price at which you buy shares. It is the NAV plus the sales charge for Class A.
It is the NAV for Class B and Class Y. NAVs and public offering prices 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 or losses
are realized when securities that have increased or decreased 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.

INVESTMENT POLICIES AND RISKS

The 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. Under normal market conditions, 65% of its total assets
will be invested in equity securities. The fund may invest in preferred stocks,
convertible securities, debt securities, foreign investments, derivative
instruments and money market instruments. The various types of investments the
portfolio manager uses to achieve investment performance are described in more
detail in the next section and in the SAI.

FACTS ABOUT INVESTMENTS AND THEIR RISKS

COMMON STOCKS: Stock prices are subject to market fluctuations. Stocks of
larger, established companies that pay dividends may be less volatile than the
stock market as a whole. Stocks of smaller 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 the 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.

7
<PAGE>
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.

DEBT SECURITIES: The price of an investment-grade bond fluctuates as interest
rates change or if its credit rating is upgraded or downgraded. Prices of bonds
below investment grade may react more to the ability of the issuing company to
pay interest and principal when due. These bonds have greater price fluctuations
and are more likely to experience a default. The fund may invest in debt
securities given a B rating or higher by Moody's Investors Service, Inc. or by
Standard & Poor's Corporation or in bonds of comparable quality in the judgment
of the fund's portfolio manager. Securities that are subsequently downgraded in
quality may continue to be held by the fund, and will be sold only if the fund's
portfolio manager believes it is advantageous to do so.

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. The fund may
invest up to 25% of its total assets in foreign investments.

DERIVATIVE INSTRUMENTS: The portfolio manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance characteristics. A
small change in the value of the underlying security, currency or index will
cause a sizable gain or loss in the price of the derivative instrument.
Derivative instruments allow the portfolio manager to change the investment
performance characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other parties, and
inability to close such instruments. The fund will use derivative instruments
only to achieve the same investment performance characteristics it could achieve
by directly holding those securities and

8
<PAGE>

currencies permitted under the investment policies. The fund will designate cash
or appropriate liquid assets to cover its portfolio obligations. No more than 5%
of the 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
appendix 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. The 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 the
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 the
fund's total 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: The 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 the fund's net assets.

ALTERNATIVE INVESTMENT OPTION

In the future, the board of the fund may determine for operating efficiencies to
use a master feeder structure. Under that structure, the fund's investment
portfolio would be managed by another investment company with the same goal as
the fund, rather than investing directly in a portfolio of securities.

VALUING ASSETS

- - Securities (except bonds) and assets with available market values are valued
on that basis.

- - Securities maturing in 60 days or less are valued at amortized cost.

- - Bonds and assets without readily available market values are valued according
to methods selected in good faith by the board of directors.

9
<PAGE>
HOW TO BUY, EXCHANGE OR SELL SHARES

HOW TO BUY SHARES -- ALTERNATIVE SALES ARRANGEMENTS

The fund offers three different classes of shares -- Class A, Class B and Class
Y. The primary differences among the classes are in the sales charge structures
and in their ongoing expenses. These differences are summarized in the table
below. You may choose the class that best suits your circumstances and
objectives.

<TABLE>
<CAPTION>
Sales charge and Service fee
distribution (12b-1) (as a% of average
fee daily net assets) Other information
----------------------- -------------------- -----------------------
<S> <C> <C> <C>
Class A Maximum initial sales Service fee of Initial sales charge
charge of 5% 0.175% waived or reduced for
certain purchases
Class B No initial sales Service fee of Shares convert to Class
charge; distribution 0.175% A after 8 years; CDSC
fee of 0.75% of daily waived in certain
net assets; maximum circumstances
CDSC of 5% declines to
0% after 6 years
Class Y None None Available only to
certain qualifying
institutional investors
</TABLE>

CONVERSION OF CLASS B SHARES TO CLASS A SHARES -- Eight calendar years after
Class B shares are purchased, Class B shares will convert to Class A shares and
will no longer be subject to a distribution fee. Current holdings of Class B
shares will convert beginning in 1996. The conversion will be on the basis of
relative net asset values of the two classes, without the imposition of any
sales charge. Class B shares purchased through reinvested dividends and
distributions will convert to Class A shares in a pro-rata portion as the Class
B shares purchased other than through reinvestment.

10
<PAGE>

CONSIDERATIONS IN DETERMINING WHETHER TO PURCHASE CLASS A OR CLASS B SHARES --
You should consider the information below in determining whether to purchase
Class A or Class B shares.

<TABLE>
<CAPTION>
If you purchase Class A shares If you purchase Class B shares
- --------------------------------------- ---------------------------------------
<S> <C>
SALES CHARGES ON PURCHASE OR REDEMPTION
- - You will not have all of your - All of your money is invested in
purchase price invested. Part of your shares of stock. However, you will
purchase price will go to pay the pay a sales charge if you redeem your
sales charge. You will not pay a shares within 6 years of purchase.
sales charge when you redeem your
shares.

- - You will be able to take advantage of - No reductions of the sales charge are
reductions in the sales charge. If available for large purchases.
your investments in IDS funds total
$250,000 or more, you are better off
paying the reduced sales charge in
Class A than paying the higher fees
in Class B. If you qualify for a
waiver of the sales charge, you
should purchase Class A shares.

- - The sales charges and distribution fee are structured so that you will have
approximately the same total return at the end of 8 years regardless of which
class you chose.
</TABLE>

<TABLE>
<CAPTION>
ONGOING EXPENSES
<S> <C>
- - Your shares will have a lower - The distribution and transfer
expense ratio than Class B agent fees for Class B will
shares because Class A does cause your shares to have a
not pay a distribution fee and higher expense ratio and to
the transfer agent fee for pay lower dividends than Class
Class A is lower than the fee A shares. After 8 years, Class
for Class B. As a result, B shares will convert to Class
Class A shares will pay higher A shares and will no longer be
dividends than Class B shares. subject to higher fees.
</TABLE>

You should consider how long you plan to hold your shares and whether the
accumulated higher fees and CDSC on Class B shares prior to conversion would be
less than the initial sales charge on Class A shares. Also consider to what
extent the difference would be offset by the lower expenses on Class A shares.
To help you in this analysis, the Example in the "Sales charge and fund
expenses" section of the prospectus illustrates the charges applicable to each
class of shares.

11
<PAGE>

CLASS Y SHARES -- Class Y shares are offered to certain institutional investors.
Class Y shares are sold without a front-end sales charge or a CDSC and are not
subject to either a service fee or a distribution fee. The following investors
are eligible to purchase Class Y shares:

- Qualified employee benefit plans* if the plan:

-- uses a daily transfer recordkeeping service offering participants daily
access to IDS funds and has

-- at least $10 million in plan assets or

-- 500 or more participants; or

-- does not use daily transfer recordkeeping and has

-- at least $3 million invested in funds of the IDS MUTUAL FUND GROUP
or

-- 500 or more participants.

- Trust companies or similar institutions, and charitable organizations that
meet the definition in Section 501(c)(3) of the Internal Revenue Code.*
These must have at least $10 million invested in funds of the IDS MUTUAL
FUND GROUP.

- Nonqualified deferred compensation plans* whose participants are included
in a qualified employee benefit plan described above.

*Eligibility must be determined in advance by AEFC. To do so, contact your
financial advisor.

Financial advisors may receive different compensation for selling Class A, Class
B and Class Y shares.

HOW TO BUY SHARES

If you're investing in this fund for the first time, you'll need to set up an
account. Your financial advisor 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 AEFC 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.

12
<PAGE>
PURCHASE POLICIES:

- - 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.

- - The minimums allowed for investment may change from time to time.

- - Wire orders can be accepted only on days when your bank, AEFC the fund and
Norwest Bank Minneapolis are open for business.

- - Wire purchases are completed when wired payment is received and the fund
accepts the purchase.

- - AEFC and the fund are not responsible for any delays that occur in wiring
funds, including delays in processing by the bank.

- - You must pay any fee the bank charges for wiring.

- - The fund reserves the right to reject any application for any reason.

- - If your application does not specify which class of share you are purchasing,
it will be assumed that you are investing in Class A shares.

13
<PAGE>
THREE WAYS TO INVEST

<TABLE>
<S> <C> <C>
1
BY REGULAR Send your check and application MINIMUM AMOUNTS
ACCOUNT (or your name and account number Initial investment: $2,000
if you have an established Additional investments: $100
account) to: Account balances: $300*
Qualified retirement accounts:
none

American Express Financial
Advisors Inc.
P.O. Box 74
Minneapolis, MN 55440-0074

Your financial advisor will help
you with this process.
2
BY SCHEDULED Contact your financial advisor MINIMUM AMOUNTS
INVESTMENT to set up one of the following Initial investment: $100
PLAN scheduled plans: Additional investments: $100/mo
Account balances: none
- automatic payroll deduction (on active plans of monthly
- bank authorization payments)
- direct deposit of Social
Security check
- other plan approved by the
fund
3
BY WIRE If you have an established If this information is not
account, you may wire money to: included, the order may be
Norwest Bank Minneapolis rejected and all money received
by the fund, less any costs the
Routing No. 091000019 fund or AEFC incurs, will be
Minneapolis, MN returned promptly.
Attn: Domestic Wire Dept.

Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your
name).

<FN>

*If your account balance falls below $300, AEFC 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.
</TABLE>

HOW TO EXCHANGE SHARES

You can exchange your shares of the fund at no charge for shares of the same
class of any other publicly offered fund in the IDS MUTUAL FUND GROUP available
in your state. For complete information, including fees and expenses, read the
prospectus carefully before exchanging into a new fund.

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.

14
<PAGE>
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 the 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. American Express 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, minus any
applicable sales charge, at the close of business on the day your request is
accepted at the Minneapolis headquarters. If your request arrives after the
close of business, the price per share will be the net asset value, minus any
applicable sales charge, 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 advisor.

TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES

<TABLE>
<S> <C> <C>
1 Include in your letter:
BY LETTER - the name of the fund(s)
- the class of shares to be redeemed
- your account number(s) (for exchanges, both
funds must be registered in the same ownership)
- your Taxpayer Identification Number (TIN)
- the dollar amount or number of shares you want
to exchange or sell
- signature of all registered account owners
- for redemptions, indicate how you want your
sales proceeds delivered to you
- any paper certificates of shares you hold

REGULAR MAIL:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534

EXPRESS MAIL:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402
</TABLE>

15
<PAGE>

- 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 American Express Shareholder
Service. Each registered owner must sign the
request.

- AEFC 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.

- Phone privileges may be modified or discontinued
at any time.

MINIMUM AMOUNT
Redemption: $100

MAXIMUM AMOUNT
Redemption: $50,000
</TABLE>

EXCHANGE POLICIES:

- - 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.

- - Exchanges must be made into the same class in the new fund.

- - If your exchange creates a new account, it must satisfy the minimum investment
amount for new purchases.

- - Once we receive your exchange request, you cannot cancel it.

- - Shares of the new fund may not be used on the same day for another exchange.

- - If your shares are pledged as collateral, the exchange will be delayed until
written approval is obtained from the secured party.

- - AEFC and the fund reserve the right to reject any exchange, limit the amount,
or modify or discontinue the exchange privilege, to prevent abuse or adverse
effects on the fund and its shareholders. For example, if exchanges are too
numerous or too large, they may disrupt the fund's investment strategies or
increase its costs.

REDEMPTION POLICIES:

16
<PAGE>

To take advantage of this option, 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.

- - 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 the date of purchase before
AEFC mails a check to you. (A check may be mailed earlier if your bank provides
evidence satisfactory to the fund and AEFC that your check has cleared.)

THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES

<TABLE>
<S> <C> <C>
1
BY REGULAR OR EXPRESS MAIL - Mailed to the address on record.

- Payable to names listed on the account.

NOTE: The express mail delivery charges you pay
will vary depending on the courier you select.
2
BY WIRE - Minimum wire redemption: $1,000.

- Request that money be wired to your bank.

- Bank account must be in the same ownership as
the IDS fund account.

NOTE: Pre-authorization required. For
instructions, contact your financial advisor or
American Express Shareholder Service.
3
BY SCHEDULED PAYOUT PLAN - Minimum payment: $50.

- Contact your financial advisor or American
Express Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.

- Buying new shares while under a payout plan may
be disadvantageous because of the sales charges.
</TABLE>

17
<PAGE>

CLASS A -- INITIAL SALES CHARGE ALTERNATIVE

On purchases of Class A shares, you pay a 5% sales charge on the first $50,000
of your total investment and less on investments after the first $50,000:

<TABLE>
<CAPTION>
Sales charge as a
percent of:*
-------------------
Public Net
offering amount
Total investment price invested
- -------------------- -------- --------
<S> <C> <C>
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
More than $1,000,000 0.0 0.00
<FN>
*To calculate the actual sales charge on an investment greater than $50,000,
amounts for each applicable increment must be totaled. See the SAI.
</TABLE>

REDUCTIONS OF THE SALES CHARGE ON CLASS A SHARES

Your sales charge may be reduced, depending on the totals of:

- -_ the amount you are investing in this fund now,

- -_ the amount of your existing investment in this fund, if any, and

- -_ the amount you and your immediate family (spouse or unmarried children under
21) are investing or have in other funds in the IDS MUTUAL FUND GROUP that
carry a sales charge.

Other policies that affect your sales charge:

- - IDS Tax-Free Money Fund and Class A shares of IDS Cash Management Fund do not
carry sales charges. However, you may count investments in these funds if you
acquired shares in them by exchanging shares from IDS funds that carry sales
charges.

- - IRA purchases or other employee benefit plan purchases made through a payroll
deduction plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be added
together to reduce sales charges for all shares purchased through that plan.

For more details, see the SAI.

WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES

Sales charges do not apply to:

- -_ Current or retired trustees, directors, officers or employees of the fund or
AEFC or its subsidiaries, their spouses and unmarried children under 21.

- -_ Current or retired American Express financial advisors, their spouses and
unmarried children under 21.

- -_ Qualified employee benefit plans* using a daily transfer recordkeeping system
offering participants daily access to IDS funds.

(Participants in certain qualified plans for which the initial sales charge is
waived may be subject to a deferred sales charge of up to 4% on certain
redemptions. For more information, see the SAI.)

18
<PAGE>

- -_ Shareholders who have at least $1 million invested in funds of the IDS MUTUAL
FUND GROUP. If the investment is redeemed in the first year after purchase, a
CDSC of 1% will be charged on the redemption.

- -_ Purchases made within 30 days after a redemption of shares (up to the amount
redeemed):

-- of a product distributed by American Express Financial Advisors in a
qualified plan subject to a deferred sales charge or

-- in a qualified plan where American Express Trust Company acts as trustee
or recordkeeper.

Send the fund a written request along with your payment, indicating the amount
of the redemption and the date on which it occurred.

- -_ Purchases made with dividend or capital gain distributions from another fund
in the IDS MUTUAL FUND GROUP that has a sales charge.

*Eligibility must be determined in advance by AEFC. To do so, contact your
financial advisor.

CLASS B -- CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE

Where a CDSC is imposed on a redemption, it is based on the amount of the
redemption and the number of calendar years, including the year of purchase,
between purchase and redemption. The following table shows the declining scale
of percentages that apply to redemptions during each year after a purchase:

<TABLE>
<CAPTION>
If a
redemption
is made The percentage rate
during the for the CDSC is:
- -------------- --------------------
<S> <C>
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
</TABLE>

If the amount you are redeeming reduces the current net asset value of your
investment in Class B shares below the total dollar amount of all your purchase
payments during the last 6 years (including the year in which your redemption is
made), the CDSC is based on the lower of the redeemed purchase payments or
market value.

The following example illustrates how the CDSC is applied. Assume you had
invested $10,000 in Class B shares and that your investment had appreciated in
value to $12,000 after 15 months, including reinvested dividend and capital gain
distributions. You could redeem any amount up to $2,000 without paying a CDSC
($12,000 current value less $10,000 purchase amount). If you redeemed $2,500,
the CDSC would apply only to the $500 that represented part of your original
purchase price. The CDSC rate would be 4% because a redemption after 15 months
would take place during the second year after purchase.

19
<PAGE>

payment you made. Of course, once a purchase payment is considered to have been
redeemed, the next amount redeemed is the next oldest purchase payment. By
redeeming the oldest purchase payments first, lower CDSCs are imposed than would
otherwise be the case.

WAIVERS OF THE SALES CHARGE FOR CLASS B SHARES

The CDSC on Class B shares will be waived on redemptions of shares:

- - In the event of the shareholder's death,

- - Purchased by any trustee, director, officer or employee of a fund or AEFC or
its subsidiaries,

- - Purchased by any American Express financial advisor,

- - Held in a trusteed employee benefit plan,

- - Held in IRAs or certain qualified plans for which AEFC acts as custodian, such
as Keogh plans, tax-sheltered custodial accounts or corporate pension plans,
provided that the shareholder is:

-- at least 59 1/2 years old, and

-- taking a retirement distribution (if the redemption is part of a
transfer to an IRA or qualified plan in a product distributed by
American Express Financial Advisors, or a custodian-to-custodian
transfer to a product not distributed by American Express Financial
Advisors, the CDSC will not be waived), or

-- redeeming under an approved substantially equal periodic payment
arrangement.

SPECIAL SHAREHOLDER SERVICES

SERVICES

To help you track and evaluate the performance of your investments, AEFC
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 advisor.

QUICK TELEPHONE REFERENCE

AMERICAN EXPRESS TELEPHONE TRANSACTION SERVICE
Redemptions and exchanges, dividend payments or reinvestments and automatic
payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800

AMERICAN EXPRESS SHAREHOLDER SERVICE
Fund performance, objectives and account inquiries
612-671-3733

20
<PAGE>
TTY SERVICE
For the hearing impaired
800-846-4852

AMERICAN EXPRESS INFOLINE
Automated account information (TouchTone-R- 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 fund distributes to shareholders investment income and net capital gains. It
does so to qualify as a regulated investment company and to avoid paying
corporate income and excise taxes. Dividend and capital gains distributions will
have tax consequences you should know about.

DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS

The fund distributes its net investment income (dividends and interest earned on
securities held by the fund, less operating expenses) to shareholders of record
by the end of the calendar year. 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. 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.)

Dividends paid by each class will be calculated at the same time, in the same
manner and in the same amount, except the expenses attributable solely to Class
A, Class B and Class Y will be paid exclusively by that class. Class B
shareholders will receive lower per share dividends than Class A and Class Y
shareholders because expenses for Class B are higher than for Class A or Class
Y. Class A shareholders will receive lower per share dividends than Class Y
shareholders because expenses for Class A are higher than for Class Y.

REINVESTMENTS

Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the fund, unless:

- - you request the fund in writing or by phone to pay distributions to you in
cash, or

- - 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 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.

21
<PAGE>
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.

Each January, AEFC 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.

"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 AEFC.

If you don't provide the TIN to AEFC, 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:

- - a $50 penalty for each failure to supply your correct TIN

- - a civil penalty of $500 if you make a false statement that results in no
backup withholding

- - 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.

22
<PAGE>
HOW TO DETERMINE THE CORRECT TIN

<TABLE>
<CAPTION>
Use the Social Security or Employer
For this type of account: Identification number of:
- --------------------------------------- ---------------------------------------
<S> <C>
Individual or joint account The individual or first person listed
on the account

Custodian account of a minor (Uniform The minor
Gifts/Transfers to Minors Act)

A living trust The grantor-trustee (the person who
puts the money into the trust)

An irrevocable trust, pension trust or The legal entity (not the personal
estate representative or trustee, unless no
legal entity is designated in the
account title)

Sole proprietorship or partnership The owner or partnership

Corporate The corporation

Association, club or tax-exempt The organization
organization
</TABLE>

For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors 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 this fund. Tax matters are highly individual and
complex, and you should consult a qualified tax advisor about your personal
situation.

HOW THE FUND IS ORGANIZED

IDS Strategy Fund, Inc., of which Strategy Aggressive Fund is 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.

The fund is owned by its shareholders. The fund issues shares in three classes
- -- Class A, Class B and Class Y. Each class has different sales arrangements and
bears different expenses. Each class represents interests in the assets of the
fund. Par value is 1 cent per share. Both full and fractional shares can be
issued.

The fund no longer issues stock certificates.

VOTING RIGHTS

As a shareholder, you have voting rights over the fund's management and
fundamental policies. You are entitled to one vote for each share you own.

23
<PAGE>

Each class has exclusive voting rights with respect to the provisions of the
fund's distribution plan that pertain to a particular class and other matters
for which separate class voting is appropriate under applicable law.

SHAREHOLDER MEETINGS

The fund does 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 that oversees the operations of the fund
and chooses 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 FUND

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.

HEINZ F. HUTTER

FORMER PRESIDENT AND CHIEF OPERATING OFFICER, CARGILL, INC.

ANNE P. JONES

Attorney and telecommunications consultant.

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.

WHEELOCK WHITNEY
Chairman, Whitney Management Company.

C. ANGUS WURTELE
Chairman of the board and chief executive officer, The Valspar Corporation.

INTERESTED DIRECTORS WHO ARE OFFICERS AND/OR EMPLOYEES OF AEFC
WILLIAM H. DUDLEY
Executive vice president, AEFC.

24
<PAGE>

DAVID R. HUBERS
President and chief executive officer, AEFC.
JOHN R. THOMAS
Senior vice president, AEFC.

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 fund pays AEFC for managing its portfolio, providing administrative services
and serving as transfer agent (handling shareholder accounts).

Under its Investment Management Services Agreement, AEFC determines which
securities will be purchased, held or sold (subject to the direction and control
of the fund's board of directors). Effective March 3, 1995, the fund pays AEFC a
fee for these services based on the average daily net assets of the fund, as
follows:

<TABLE>
<CAPTION>
Annual rate
Assets at each asset
(billions) level
- -------------------- ------------------
<S> <C> <C>
First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500
</TABLE>

25
<PAGE>

For the fiscal year ended March 31, 1994, under a prior agreement, the fund paid
AEFC a total investment management fee of 0.63% of its average daily net assets.
Under the Agreement, the fund also pays taxes, brokerage commissions and
nonadvisory expenses.

Under an Administrative Services Agreement, the fund pays AEFC for
administration and accounting services at an annual rate of 0.05% decreasing in
gradual percentages to 0.03% as assets increase.

In addition, under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The fund pays AEFC an annual fee per
shareholder account for this service as follows:

- Class A $15

- Class B $16

- Class Y $15

DISTRIBUTOR

The fund sells shares through American Express Financial Advisors, a wholly
owned subsidiary of AEFC, under a Distribution Agreement. Financial advisors
representing American Express Financial Advisors provide information to
investors about individual investment programs, the fund and its operations, new
account applications, exchange and redemption requests. The cost of these
services is paid partially by the fund's sales charge.

Portions of sales charges may be paid to securities dealers who have sold the
fund's shares, or to banks and other financial institutions. The proceeds paid
to others range from 0.8% to 4% of the fund's offering price depending on the
monthly sales volume.

For Class B shares, to help defray costs not covered by sales charges, including
costs for marketing, sales administration, training, overhead, direct marketing
programs, advertising and related functions, the fund pays American Express
Financial Advisors a distribution fee, also known as a 12b-1 fee. This fee is
paid under a Plan and Agreement of Distribution that follows the terms of Rule
12b-1 of the Investment Company Act of 1940. Under this Agreement, the fund pays
a distribution fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares for distribution-related services. The
total 12b-1 fee paid by the fund under a prior agreement for the fiscal year
ended March 31, 1994 was 0.71% of its average daily net assets. This fee will
not cover all of the costs incurred by American Express Financial Advisors.

Under a Shareholder Service Agreement, the fund also pays a fee for service
provided to shareholders by financial advisors and other servicing agents. The
fee is calculated at a rate of 0.175% of the fund's average daily net assets
attributable to Class A and Class B shares.

Total expenses paid by the fund in the fiscal year ended March 31, 1994 were
1.71% of its average daily net assets.

Total fees and expenses (excluding taxes and brokerage commissions) cannot
exceed the most restrictive applicable state expense limitation.

24
<PAGE>

ABOUT AEFC

GENERAL INFORMATION

The AEFC 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, AEFC 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 $99 billion.

American Express Financial Advisors serves individuals and businesses through
its nationwide network of more than 175 offices and more than 7,800 advisors.

Other AEFC subsidiaries provide investment management and related services for
pension, profit sharing, employee savings and endowment funds of businesses and
institutions.

AEFC 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 AEFC.

25
<PAGE>

IDS EQUITY VALUE FUND

PROSPECTUS

MAY 27, 1994 AS REVISED MARCH 3, 1995

The goals of IDS Equity Value Fund, a part of IDS Strategy Fund, Inc. are growth
of capital and income. The fund invests primarily in equity securities that
provide income, offer the opportunity for long-term capital growth, or both.

This prospectus contains facts that can help you decide if the fund is the right
investment for you. Read it before you invest and keep it for future reference.

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852

1
<PAGE>
TABLE OF CONTENTS

2
<PAGE>

THE FUND IN BRIEF

GOAL

IDS Equity Value Fund seeks to provide shareholders with growth of capital and
income. Because any investment involves risk, achieving this goal cannot be
guaranteed. Only shareholders can change the goal.

TYPES OF FUND INVESTMENTS

The fund is a diversified mutual fund that invests primarily in equity
securities that the investment manager believes are undervalued and therefore
have intrinsic investment value. Some of the fund's investments may be
considered speculative and involve additional investment risk.

MANAGER AND DISTRIBUTOR

PORTFOLIO MANAGER

Tom Medcalf joined AEFC 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.

ALTERNATIVE SALES ARRANGEMENTS

SALES CHARGE AND FUND EXPENSES

SALES CHARGE

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
Class A Class B Class Y
------------- ------------- -------------
<S> <C> <C> <C>
Maximum sales charge on purchases (as a percentage of
offering price)...................................... 5% 0% 0%
Maximum deferred sales charge imposed on redemptions
(as a percent of original purchase price)............ 0% 5% 0%
</TABLE>

3
<PAGE>
OPERATING EXPENSES

ANNUAL FUND OPERATING EXPENSES
(% of average daily net assets):

4
<PAGE>
PERFORMANCE

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Fiscal period ended March 31, Per share income and capital changes*
----------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
------ ----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.46 $8.90 $8.22 $7.92 $7.96 $7.26 $7.85 $7.38 $5.78 $5.00

<CAPTION>
Income from investment operations:
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income................................... .18 .19 .22 .26 .29 .27 .27 .23 .21 .17
Net gains (losses) on securities (both realized and
unrealized)............................................ .37 1.18 .98 .48 .51 1.29 (.19) .90 1.69 .88
Total from investment operations........................ .55 1.37 1.20 .74 .80 1.56 .08 1.13 1.90 1.05
<CAPTION>
Less distributions:
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends from net investment income.................... (.18) (.19) (.22) (.26) (.31) (.27) (.27) (.22) (.21) (.16)
Distributions from realized gains....................... (.66) (.61) (.30) (.18) (.53) (.59) (.40) (.44) (.09) (.11)
Excess distribution of realized gain.................... -- (.01) -- -- -- -- -- -- -- --
Total distributions..................................... (.84) (.81) (.52) (.44) (.84) (.86) (.67) (.66) (.30) (.27)
Net asset value, end of period.......................... $ 9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26 $7.85 $7.38 $5.78
<CAPTION>
Ratios/supplemental data
----------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
------ ----- ----- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets, end of period (in millions)................. $1,031 $758 $497 $370 $311 $230 $162 $119 $51 $12
Ratio of expenses to average daily net assets........... 1.56% 1.63% 1.66% 1.66% 1.61% 1.65% 1.65% 1.67% 1.86% 1.38%++
Ratio of net income to average daily net assets......... 1.93% 2.15% 2.56% 3.41% 3.61% 3.70% 3.78% 3.47% 3.93% 5.10%***
Portfolio turnover rate (excluding short-term
securities)............................................ 70% 48% 72% 65% 67% 54% 49% 30% 28% 36%
Total return+........................................... 5.5% 16.0% 15.0% 10.1% 9.9% 22.2% 1.3% 15.7% 33.4% 21.3%+++
<FN>

*For a share outstanding throughout the period. Rounded to the
nearest cent.
**Commencement of operations. Period from May 14, 1984 to March 31,
1985.
***Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++During portions of this period, AEFC waived its advisory and
distribution fees and reimbursed the fund for nonadvisory expenses.
Had AEFC not done so, the ratio of expenses to average daily net
assets would have been 2.27%.
+++For the fiscal period ended March 31, 1985, the annualized total
return is 24.5%.
</TABLE>

5
<PAGE>
TOTAL RETURNS

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS as of March 31, 1994
- ----------------------------------------------------------------------------------
Since
Purchase made 1 year ago 5 years ago inception*
- --------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Equity Value:
Class B.............................. +1.5% +11.0% +14.9%
S&P 500................................ +1.5% +12.1% +14.8%
Lipper Growth and Income Fund Index.... +4.8% +11.2% +14.2%

<CAPTION>
CUMULATIVE TOTAL RETURNS as of March 31, 1994
- ----------------------------------------------------------------------------------
Since
Purchase made 1 year ago 5 years ago inception*
- --------------------------------------- ----------- ----------- ---------------
<S> <C> <C> <C>
Equity Value:
Class B.............................. +1.5% +69.4% +295.0%
S&P 500................................ +1.5% +77.2% +292.8%
Lipper Growth and Income Fund Index.... +4.8% +70.4% +272.1%
<FN>
*May 14, 1984
</TABLE>

For purposes of calculation, information about the fund assumes:

- -_ redemption at the end of each period and deduction of the applicable
contingent deferred sales charge for Class B shares

- -_ no adjustments for taxes an investor may have paid on the reinvested income
and capital gains

- -_ a period of widely fluctuating securities prices. Returns shown should not be
considered a representation of the fund's future performance.

The fund invests in common stocks that 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.

Lipper Growth and Income Fund Index, published by Lipper Analytical Services,
Inc., includes 30 funds that are generally similar to the fund, although some
funds in the index may have somewhat different investment policies or
objectives.

KEY TERMS

NET ASSET VALUE (NAV)

When you buy shares, you pay the NAV plus any applicable sales charge. When you
sell shares, the price you receive is the NAV minus any applicable

6
<PAGE>

sales charge. The NAV usually changes daily, 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).

PUBLIC OFFERING PRICE

INVESTMENT INCOME

Dividends and interest earned on securities held by the fund.

CAPITAL GAINS OR LOSSES

DISTRIBUTIONS

Payments to shareholders of two types: investment income (dividends) and
realized net long-term capital gains (capital gains distributions).

TOTAL RETURN

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.

INVESTMENT POLICIES AND RISKS

The fund invests primarily in securities that provide income, offer the
opportunity for long-term capital appreciation, or both. Under normal market
conditions, 65% of its total assets will be invested in equity securities. The
fund may invest in preferred stocks, convertible securities, debt securities,
foreign investments, derivative instruments and money market instruments.

The various types of investments the portfolio manager uses to achieve
investment performance are described in more detail in the next section and in
the SAI.

FACTS ABOUT INVESTMENTS AND THEIR RISKS

PREFERRED STOCKS: If a company earns a profit, it generally must pay its
preferred stockholders a dividend at a pre-established rate.

7
<PAGE>

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.

8
<PAGE>

The investment policies described above may be changed by the board of
directors.

ALTERNATIVE INVESTMENT OPTION

VALUING ASSETS

- -_ Securities (except bonds) and assets with available market values are valued
on that basis.

- -_ Securities maturing in 60 days or less are valued at amortized cost.

- -_ Bonds and assets without readily available market values are valued according
to methods selected in good faith by the board of directors.

9
<PAGE>

HOW TO BUY, EXCHANGE OR SELL SHARES

HOW TO BUY SHARES -- ALTERNATIVE SALES ARRANGEMENTS

Class B No initial sales Service fee of Shares convert to Class
charge; distribution 0.175% A after 8 years; CDSC
fee of 0.75% of daily waived in certain
net assets; maximum circumstances
CDSC of 5% declines to
0% after 6 years

Class Y None None Available only to
certain qualifying
institutional investors
</TABLE>

10
<PAGE>

CONSIDERATIONS IN DETERMINING WHETHER TO PURCHASE CLASS A OR CLASS B SHARES
- --__You should consider the information below in determining whether to purchase
Class A or Class B shares.

- - The sales charges and distribution fee are structured so that you will have
approximately the same total return at the end of 8 years regardless of which
class you chose.

<CAPTION>
ONGOING EXPENSES
<S> <C>
- - Your shares will have a lower - The distribution and transfer agent
expense ratio than Class B shares fees for Class B will cause your
because Class A does not pay a shares to have a higher expense ratio
distribution fee and the transfer and to pay lower dividends than Class
agent fee for Class A is lower than A shares. After 8 years, Class B
the fee for Class B. As a result, shares will convert to Class A shares
Class A shares will pay higher and will no longer be subject to
dividends than Class B shares. higher fees.
</TABLE>

11
<PAGE>

CLASS Y SHARES --__Class Y shares are offered to certain institutional
investors. Class Y shares are sold without a front-end sales charge or a CDSC
and are not subject to either a service fee or a distribution fee. The following
investors are eligible to purchase Class Y shares:

- Qualified employee benefit plans* if the plan:

-- uses a daily transfer recordkeeping service offering participants daily
access to IDS funds and has

-- at least $10 million in plan assets or
-- 500 or more participants; or

-- does not use daily transfer recordkeeping and has
-- at least $3 million invested in funds of the IDS MUTUAL FUND GROUP
or

-- 500 or more participants.

- Nonqualified deferred compensation plans* whose participants are included
in a qualified employee benefit plan described above.

*Eligibility must be determined in advance by AEFC. To do so, contact your
financial advisor.

Financial advisors may receive different compensation for selling Class A, Class
B and Class Y shares.

HOW TO BUY SHARES

IMPORTANT: When opening an account, you must provide AEFC with your correct
Taxpayer Identification Number (Social Security or Employer Identification
number). See "Distributions and taxes."

PURCHASE POLICIES:

- - The minimums allowed for investment may change from time to time.

- - Wire orders can be accepted only on days when your bank, AEFC the fund and
Norwest Bank Minneapolis are open for business.

- - Wire purchases are completed when wired payment is received and the fund
accepts the purchase.

- - AEFC and the fund are not responsible for any delays that occur in wiring
funds, including delays in processing by the bank.

12
<PAGE>
- - You must pay any fee the bank charges for wiring.

- - The fund reserves the right to reject any application for any reason.

- - If your application does not specify which class of share you are purchasing,
it will be assumed that you are investing in Class A shares.

THREE WAYS TO INVEST

Your financial advisor will help
you with this process.
2
BY SCHEDULED Contact your financial advisor MINIMUM AMOUNTS
INVESTMENT to set up one of the following Initial investment: $100
PLAN scheduled plans: Additional investments: $100/mo
Account balances: none
- automatic payroll deduction (on active plans of monthly
- bank authorization payments)
- direct deposit of
Social Security check
- other plan approved by the
fund
3
BY WIRE If you have an established If this information is not
account, you may wire money to: included, the order may be
rejected and all money received
Norwest Bank Minneapolis by the fund, less any costs the
Routing No. 091000019 fund or AEFC incurs, will be
Minneapolis, MN returned promptly.
Attn: Domestic Wire Dept.

Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your
name).

<FN>

HOW TO EXCHANGE SHARES

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

13
<PAGE>
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 the 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. American Express Shareholder
Service will mail payment within seven days after receiving your request.

TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES

<TABLE>
<S> <C> <C>
1
BY LETTER Include in your letter:

- the name of the fund(s)

- the class of shares to be redeemed

- your account number(s) (for exchanges, both
funds must be registered in the same ownership)

- your Taxpayer Identification Number (TIN)

- the dollar amount or number of shares you want
to exchange or sell

- signature of all registered account owners

- for redemptions, indicate how you want your
sales proceeds delivered to you

- any paper certificates of shares you hold

REGULAR MAIL:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534

EXPRESS MAIL:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402
</TABLE>

14
<PAGE>

<TABLE>
<S> <C> <C>
2 - The fund and AEFC will honor any telephone
BY PHONE exchange or redemption request believed to be
American Express Telephone authentic and will use reasonable procedures to
Transaction Service: confirm that they are. This includes asking
800-437-3133 or identifying questions and tape recording calls.
612-671-3800 So long as reasonable procedures are followed,
neither the fund nor AEFC will be liable for any
loss resulting from fraudulent requests.
- 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 American Express Shareholder
Service. Each registered owner must sign the
request.
- AEFC 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.
- Phone privileges may be modified or discontinued
at any time.
MINIMUM AMOUNT
Redemption: $100
MAXIMUM AMOUNT
Redemption: $50,000
</TABLE>

EXCHANGE POLICIES:

- - Exchanges must be made into the same class in the new fund.

- - If your exchange creates a new account, it must satisfy the minimum investment
amount for new purchases.

- - Once we receive your exchange request, you cannot cancel it.

- - Shares of the new fund may not be used on the same day for another exchange.

- - If your shares are pledged as collateral, the exchange will be delayed until
written approval is obtained from the secured party.

REDEMPTION POLICIES:

- - 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 reinvest in this manner, any CDSC you paid on
the amount you are reinvesting also will be reinvested in the fund. To take
advantage of this option, 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.

15
<PAGE>
- - A telephone redemption request will not be allowed within 30 days of a
phoned-in address change.

THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES

<TABLE>
<S> <C> <C>
1 - Mailed to the address on record.
BY REGULAR OR EXPRESS MAIL - Payable to names listed on the account.
NOTE: The express mail delivery charges you pay
will vary depending on the courier you
select.
2 - Minimum wire redemption: $1,000.
BY WIRE - Request that money be wired to your bank.
- Bank account must be in the same ownership as
the IDS fund account.
NOTE: Pre-authorization required. For
instructions, contact your financial advisor or
American Express Shareholder Service.
3 - Minimum payment: $50.
BY SCHEDULED PAYOUT PLAN - Contact your financial advisor or American
Express Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
- Buying new shares while under a payout plan may
be disadvantageous because of the sales charges.
</TABLE>

CLASS A -- INITIAL SALES CHARGE ALTERNATIVE

On purchases of Class A shares, you pay a 5% sales charge on the first $50,000
of your total investment and less on investments after the first $50,000:

<TABLE>
<CAPTION>
Sales charge as a percent
of:*
---------------------------
Public
offering Net amount
Total investment price invested
- ------------------------ ------------- ------------
<S> <C> <C>
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
More than $1,000,000 0.0 0.00
<FN>
*To calculate the actual sales charge on an investment greater than $50,000,
amounts for each applicable increment must be totaled. See the SAI.
</TABLE>

REDUCTIONS OF THE SALES CHARGE ON CLASS A SHARES

Your sales charge may be reduced, depending on the totals of:

- -_ the amount you are investing in this fund now,

- -_ the amount of your existing investment in this fund, if any, and

- -_ the amount you and your immediate family (spouse or unmarried children under
21) are investing or have in other funds in the IDS MUTUAL FUND GROUP that
carry a sales charge.

16
<PAGE>

Other policies that affect your sales charge:

- -_ IDS Tax-Free Money Fund and Class A shares of IDS Cash Management Fund do not
carry sales charges. However, you may count investments in these funds if you
acquired shares in them by exchanging shares from IDS funds that carry sales
charges.

- -_ IRA purchases or other employee benefit plan purchases made through a payroll
deduction plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be added
together to reduce sales charges for all shares purchased through that plan.