<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 25 (File No. 2-89288) /X/
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 (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)
/X/ on March 20, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) 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:
/X/ 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
AND IDS EQUITY VALUE FUND
SHOWING LOCATION IN EACH FUND'S 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
- ---------------------------------------------------------------------------------
ITEM NO. SECTION IN PROSPECTUS
- ------------ ------------------------------------------------------------------
<C> <S>
1 Cover page of prospectus
2 The fund in brief; Sales charge and fund expenses
3(a) Financial highlights
(b) NA
(c) Performance
(d) Financial highlights
4(a) The fund in brief; Investment policies and risks; How the fund is
organized
(b) Investment policies and risks
(c) Investment policies and risks
5(a) Directors and officers; Directors and officers of the fund
(listing)
(b) How the fund is organized; About American Express Financial
Corporation
(b)(i) About American Express Financial Corporation -- General
information
(b)(ii) Investment manager and transfer agent
(b)(iii) Investment manager and transfer agent
(c) Portfolio manager
(d) The fund in brief
(e) Investment manager and transfer agent
(f) Distributor
(g) Investment manager and transfer agent
5A(a) *
(b) *
6(a) Shares; Voting rights
(b) NA
(c) NA
(d) Voting rights
(e) Cover page; Special shareholder services
(f) Dividends and capital gain distributions; Reinvestments
(g) Taxes
7(a) Distributor
(b) Key terms; Valuing assets
(c) How to buy, exchange or sell shares
(d) How to buy shares
(e) NA
(f) Distributor
8(a) How to sell shares
(b) NA
(c) How to buy shares: Three ways to invest
(d) How to buy, exchange or sell shares: Redemption policies --
"Important..."
9 None
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B
- ---------------------------------------------------------------------------------
ITEM NO. SECTION IN SAI
- ------------ ------------------------------------------------------------------
<C> <S>
10 Cover page of SAI
11 Table of Contents
12 NA
13(a) Additional Investment Policies; all appendices except Dollar-Cost
Averaging
(b) Additional Investment Policies
(c) Additional Investment Policies
(d) Portfolio Transactions
14(a) Directors and officers of the fund;** Directors and Officers
(b) Directors and Officers
(c) Directors and Officers
15(a) NA
(b) NA
(c) Directors and Officers
16(a)(i) How the fund is organized; About American Express Financial
Corporation**
(a)(ii) Agreements: Investment Management Services Agreement, Plan and
Agreement of Distribution
(a)(iii) Agreements: Investment Management Services Agreement
(b) Agreements: Investment Management Services Agreement
(c) NA
(d) Agreements: Administrative Services Agreement, Shareholder Service
Agreement
(e) NA
(f) Agreements: Distribution Agreement
(g) NA
(h) Custodian; Independent Auditors
(i) Agreements: Transfer Agency Agreement; Custodian
17(a) Portfolio Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with American
Express Financial Corporation
(c) Portfolio Transactions
(d) Portfolio Transactions
(e) Portfolio Transactions
18(a) Shares and Voting rights**
(b) NA
19(a) Investing in the Fund
(b) Valuing Fund Shares; Investing in the Fund
(c) NA
20 Taxes
21(a) Agreements: Distribution Agreement
(b) Agreements: Distribution Agreement
(c) NA
22(a) Performance Information (for money market funds only)
(b) Performance Information (for all funds except money market funds)
23 Financial Statements
<FN>
- ------------------------
*Designates information is located in annual report.
**Designates page number in prospectus.
</TABLE>
<PAGE>
This prospectus IDS
contains facts that can STRATEGY
help you decide if the AGGRESSIVE
fund is the right FUND
investment for you.
Read it before you PROSPECTUS
invest and keep it for MAY 27, 1994
future reference. AS REVISED MARCH 20,
Additional facts about 1995
the fund are in a [GRAPHIC]
Statement of Additional
Information (SAI), THE GOAL OF IDS
filed with the STRATEGY AGGRESSIVE
Securities and Exchange FUND, A PART OF IDS
Commission. The SAI, STRATEGY FUND, INC., IS
dated May 27, 1994 as LONG-TERM GROWTH OF
revised March 20, 1995, CAPITAL. THE FUND
is incorporated here by INVESTS PRIMARILY IN
reference. For a free COMMON STOCKS THAT ARE
copy, contact American SELECTED FOR THEIR
Express Shareholder ABOVE- AVERAGE GROWTH
Service. POTENTIAL.
THESE SECURITIES HAVE American Express
NOT BEEN APPROVED OR Shareholder Service
DISAPPROVED BY THE P.O. Box 534
SECURITIES AND EXCHANGE Minneapolis, MN
COMMISSION OR ANY STATE 55440-0534
SECURITIES COMMISSION, 612-671-3733
NOR HAS THE SECURITIES TTY: 800-846-4852
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.
<PAGE>
- ------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------
THE FUND IN BRIEF
Goal 3P
Types of fund investments 3P
Manager and distributor 3P
Portfolio manager 3P
Alternative sales arrangements 3P
- ------------------------------------------
SALES CHARGE AND FUND EXPENSES
- ------------------------------------------
PERFORMANCE
Financial highlights 6P
Total returns 7P
Key terms 9P
- ------------------------------------------
INVESTMENT POLICIES AND RISKS
Facts about investments and their
risks 10P
Alternative investment option 14P
Valuing assets 14P
- ------------------------------------------
HOW TO BUY, EXCHANGE OR SELL SHARES
Alternative sales arrangements 15P
How to buy shares 17P
How to exchange shares 20P
How to sell shares 20P
Reductions and waivers of the
sales charge 25P
- ------------------------------------------
SPECIAL SHAREHOLDER SERVICES
Services 29P
Quick telephone reference 29P
- ------------------------------------------
DISTRIBUTIONS AND TAXES
Dividend and capital gain
distributions 30P
Reinvestments 30P
Taxes 31P
- ------------------------------------------
HOW THE FUND IS ORGANIZED
Shares 34P
Voting rights 34P
Shareholder meetings 34P
Directors and officers 34P
Investment manager and transfer
agent 36P
Distributor 37P
- ------------------------------------------
ABOUT AMERICAN EXPRESS FINANCIAL CORPORATION
General information 38P
- ------------------------------------------
APPENDIX
Descriptions of derivative
instruments 39P
2P
<PAGE>
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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, a
provider of financial services since 1894. American Express
Financial Corporation currently manages more than $37 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 American Express Financial Corporation.
PORTFOLIO MANAGER
David Bayer joined American Express Financial Corporation in
1992. He became portfolio manager of this 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.
3P
<PAGE>
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Sales charge and fund expenses
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 are incurred directly
by an investor on the purchase or redemption of fund shares. Fund
operating expenses are paid out of fund assets for each class of
shares. Operating expenses are reflected in the fund's daily
share price and dividends, and are not charged directly to
shareholder accounts.
-------------------------------------------------------------
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
percentage of original
purchase price)............... 0% 5% 0%
-----------------------------------------------------------
</TABLE>
-------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES*
(% OF AVERAGE DAILY NET ASSETS):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
<S> <C> <C> <C>
-----------------------------------------------------------
Management fee............... 0.60% 0.60% 0.60%
-----------------------------------------------------------
12b-1 fee.................... 0.00% 0.75% 0.00%
-----------------------------------------------------------
Other expenses**............. 0.60% 0.60% 0.42%
-----------------------------------------------------------
Total........................ 1.20% 1.95% 1.02%
<FN>
*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, excluding 12b-1 fees and transfer agent
and servicing fee (under other expenses) based on agreements
for that class.
**Other expenses include an administrative services fee, a
shareholder services fee, a transfer agent fee and other
non-advisory expenses.
</TABLE>
4P
<PAGE>
- --------------------------------------------------------------------------------
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...................... $62 $86 $113 $189
------------------------------------------------------------------------
Class B...................... $70 $101 $125 $208
------------------------------------------------------------------------
Class B*..................... $20 $61 $105 $208
------------------------------------------------------------------------
Class Y...................... $10 $32 $56 $125
<FN>
*Assuming Class B shares are not redeemed at the end of the
period.
**Based on 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.
5P
<PAGE>
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Performance
FINANCIAL HIGHLIGHTS
FISCAL PERIOD ENDED MARCH 31,
- --------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES*
<TABLE>
<CAPTION>
1994++++ 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
Net asset value, $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17 $12.29 $9.21 $6.24 $5.00
beginning of period
INCOME FROM INVESTMENT OPERATIONS:
--------------------------------------------------------------------------------------------------
Net investment income (loss) (.02) (.14) (.11) (.03) .15 .01 (.02) (.01) (.01) -- .02
--------------------------------------------------------------------------------------------------
Net gains (losses) on (.17) .83 .61 2.35 2.01 2.43 .83 (2.71) 3.40 3.08 1.24
securities (both realized and
unrealized)
--------------------------------------------------------------------------------------------------
Total from investment (.19) .69 .50 2.32 2.16 2.44 .81 (2.72) 3.39 3.08 1.26
operations
LESS DISTRIBUTIONS:
--------------------------------------------------------------------------------------------------
Dividends from net investment -- -- -- (.01) (.16) -- -- -- -- -- (.02)
income
--------------------------------------------------------------------------------------------------
Distributions from realized -- (1.42) (.75) (.67) (.69) -- -- (.40) (.31) (.11) --
gains
--------------------------------------------------------------------------------------------------
Total distributions........... -- (1.42) (.75) (.68) (.85) -- -- (.40) (.31) (.11) (.02)
--------------------------------------------------------------------------------------------------
Net asset value, end of period $14.20 $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17 $12.29 $9.21 $6.24
</TABLE>
- --------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
1994++++ 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------
Net assets, end of period (in $702 $652 $582 $473 $352 $283 $246 $261 $279 $85 $21
millions)
--------------------------------------------------------------------------------------------------
Ratio of expenses to average 1.85%*** 1.71% 1.75% 1.62% 1.61% 1.49% 1.69% 1.68% 1.64% 1.76% 1.32%++
daily net assets
--------------------------------------------------------------------------------------------------
Ratio of net income (loss) to (.35%)*** (.99%) (.82%) (.27%) 1.17% .14% (.17%) (.12%) (.09%) .02% .83%***
average daily net assets
--------------------------------------------------------------------------------------------------
Portfolio turnover rate 52% 55% 49% 52% 64% 33% 48% 39% 43% 67% 26%
(excluding short-term
securities)
--------------------------------------------------------------------------------------------------
Total return+ (1.4%)**** 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.
**** For the fiscal period ended Sept. 30, 1994, the
annualized total return is (2.7%).
+ Total return does not reflect contingent deferred
sales charge.
++ During portions of this period, IDS waived its
advisory and distribution fees and reimbursed the fund
for nonadvisory expenses. Had IDS 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%.
++++ Six months ended Sept. 30, 1994 (unaudited).
</TABLE>
Except for the semiannual period ended Sept. 30, 1994, 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.
6P
<PAGE>
- --------------------------------------------------------------------------------
TOTAL RETURNS
-------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE
PURCHASE MADE AGO 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>
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CUMULATIVE TOTAL RETURNS
AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE
PURCHASE MADE AGO 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. These returns are compared to
those of popular indexes for the same periods. No shares for
Class A and Class Y were outstanding during the periods
presented.
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.
7P
<PAGE>
- ---------------------------------------------------------------------------
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.
8P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
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.
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 for classes of funds
large enough to be listed.
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.
9P
<PAGE>
----------------------------------------------------------
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.
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.
10P
<PAGE>
- --------------------------------------------------------------------------------
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.
11P
<PAGE>
- ---------------------------------------------------------------------------
Investment policies and risks
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 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 Appendix to this
prospectus.
12P
<PAGE>
- --------------------------------------------------------------------------------
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.
13P
<PAGE>
- ---------------------------------------------------------------------------
Investment policies and risks
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.
14P
<PAGE>
----------------------------------------------------------
How to buy, exchange or sell 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>
SERVICE FEE
SALES CHARGE AND DISTRIBUTION (AS A% OF AVERAGE
(12B-1) FEE DAILY NET ASSETS) OTHER INFORMATION
<S> <C> <C> <C>
----------------------------------------------------------
Class A Maximum initial sales charge Service fee of 0.175% Initial sales charge waived or
of 5% reduced for certain purchases
----------------------------------------------------------
Class B No initial sales charge; Service fee of 0.175% Shares convert to Class A
distribution fee of 0.75% of after 8 years; CDSC waived in
daily net assets; maximum CDSC certain circumstances
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.
15P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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.
SALES CHARGES ON PURCHASE OR REDEMPTION
IF YOU PURCHASE CLASS A SHARES IF YOU PURCHASE CLASS B SHARES
- - You will not have all of your purchase - All of your money is invested in
price invested. Part of your purchase shares of stock. However, you
price will go to pay the sales charge. will pay a sales charge if you
You will not pay a sales charge when redeem your shares within 6 years
you redeem your shares. of purchase.
- - You will be able to take advantage of - No reductions of the sales charge
reductions in the sales charge. If are available for large
your investments in IDS funds total purchases.
$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.
ONGOING EXPENSES
- - Your shares will have a lower expense - The distribution and transfer
ratio than Class B shares because agent fees for Class B will cause
Class A does not pay a distribution your shares to have a higher
fee and the transfer agent fee for expense ratio and to pay lower
Class A is lower than the fee for dividends than Class A shares.
Class B. As a result, Class A shares After 8 years, Class B shares
will pay higher dividends than Class B will convert to Class A shares
shares. and will no longer be subject to
higher fees.
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.
16P
<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 American
Express Financial Advisors. 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 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.
17P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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,
American Express Financial Corporation, 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.
- American Express Financial Corporation 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.
18P
<PAGE>
- --------------------------------------------------------------------------------
THREE WAYS TO INVEST
- --------------------------------------------------------------
- --
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 *
American Express Qualified retirement
Financial Advisors Inc. accounts: none
P.O. Box 74
Minneapolis, MN 55440-0074
Your financial advisor will help
you with this process.
- --------------------------------------------------------------
- --
2
BY Contact your financial advisor to MINIMUM AMOUNTS
SCHEDULED set up one of the following Initial investment: $100
INVESTMENT scheduled plans: Additional investments: $100 /mo
PLAN - automatic payroll deduction Account balances: none
- bank authorization (on active plans of
- direct deposit of Social monthly payments)
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
Routing No. 091000019 by the fund, less any costs the
Minneapolis, MN fund or American Express
Attn: Domestic Wire Dept. Financial Corporation incurs,
will be returned promptly.
Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 for Each wire investment: $1,000
personal account # (your account
number) for (your name).
*If your account balance falls below $300, you will be asked 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.
19P
<PAGE>
- --------------------------------------------------------------------------------
How to buy, exchange or sell shares
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. Exchanges into IDS
Tax-Free Money Fund must be made from Class A shares. 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.
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.
20P
<PAGE>
- --------------------------------------------------------------------------------
TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
- --------------------------------------------------------------
- --
1
BY LETTER Include in your letter: REGULAR MAIL:
- the name of the fund(s) American Express Shareholder
- the class of shares to be Service
exchanged or redeemed Attn: Redemptions
- your account number(s) (for P.O. Box 534
exchanges, both funds must be Minneapolis, MN 55440-0534
registered in the same EXPRESS MAIL:
ownership) American Express Shareholder
- your Taxpayer Identification Service
Number (TIN) Attn: Redemptions
- the dollar amount or number 733 Marquette Ave.
of shares you want to Minneapolis, MN 55402
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
- --------------------------------------------------------------
- --
2
BY PHONE - The fund and American Express American Express Shareholder
American Financial Corporation will Service. Each registered owner
Express honor any telephone exchange must sign the request.
Telephone or redemption request - American Express Financial
Transaction believed to be authentic and Corporation answers phone
Service: will use reasonable requests promptly, but you
800-437-3133 procedures to confirm that may experience delays when
or they are. This includes call volume is high. If you
612-671-3800 asking identifying questions are unable to get through,
and tape recording calls. So use mail procedure as an
long as reasonable procedures alternative.
are followed, neither the - Phone privileges may be
fund nor American Express modified or discontinued at
Financial Corporation will be any time.
liable for any loss resulting MINIMUM AMOUNT
from fraudulent requests. Redemption: $100
- Phone exchange and redemption MAXIMUM AMOUNT
privileges automatically Redemption: $50,000
apply to all accounts except
custodial, corporate or
qualified retirement accounts
unless you request these
privileges NOT apply by
writing
21P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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.
- American Express Financial Corporation 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.
22P
<PAGE>
- --------------------------------------------------------------------------------
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.
- 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 a check is mailed to
you. (A check may be mailed earlier if your bank provides
evidence satisfactory to the fund and American Express Financial
Corporation that your check has cleared.)
23P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES
- --------------------------------------------------------------
- --
1
BY REGULAR - Mailed to the address on record.
OR EXPRESS - Payable to names listed on the account.
MAIL
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 - Minimum payment: $50.
SCHEDULED - Contact your financial advisor or American Express Shareholder
PAYOUT Service to set up regular payments to you on a monthly,
PLAN bimonthly, quarterly, semiannual or annual basis.
- Buying new shares while under a payout plan may be
disadvantageous because of the sales charges.
24P
<PAGE>
- --------------------------------------------------------------------------------
REDUCTIONS AND WAIVERS OF THE SALES CHARGE
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:
-------------------------------------------------------------
TOTAL INVESTMENT SALES CHARGE AS A PERCENT OF:*
<TABLE>
<CAPTION>
PUBLIC OFFERING NET AMOUNT
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.
25P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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 American Express Financial Corporation 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.)
- 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 American Express
Financial Advisors. To do so, contact your financial advisor.
26P
<PAGE>
- --------------------------------------------------------------------------------
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 THE PERCENTAGE
IS MADE RATE FOR THE
DURING 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.
27P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
Because the CDSC is imposed only on redemptions that reduce the
total of your purchase payments, you never have to pay a CDSC on
any amount you redeem that represents appreciation in the value
of your shares, income earned by your shares or capital gains. In
addition, when determining the rate of any CDSC, your redemption
will be made from the oldest purchase 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 American Express Financial Corporation 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 American
Express Trust Company 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.
28P
<PAGE>
----------------------------------------------------------
Special shareholder services
SERVICES
To help you track and evaluate the performance of your
investments, American Express Financial Corporation 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 Redemptions and exchanges, National/Minnesota:
EXPRESS dividend payments or 800-437-3133
TELEPHONE reinvestments and automatic Mpls./St. Paul area:
TRANSACTION payment arrangements 671-3800
SERVICE
----------------------------------------------------
AMERICAN Fund performance, objectives and 612-671-3733
EXPRESS account inquiries
SHAREHOLDER
SERVICE
----------------------------------------------------
TTY SERVICE For the hearing impaired 800-846-4852
----------------------------------------------------
AMERICAN Automated account information National/Minnesota:
EXPRESS (TouchTone-Registered Trademark- 800-272-4445
INFOLINE phones only), including current Mpls./St. Paul area:
fund prices and performance, 671-1630
account values and recent
account transactions
----------------------------------------------------
29P
<PAGE>
----------------------------------------------------------
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.
30P
<PAGE>
- --------------------------------------------------------------------------------
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.
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, will receive 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).
31P
<PAGE>
- ---------------------------------------------------------------------------
Distributions and taxes
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 American Express Financial Corporation.
If you don't provide the TIN, 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.
32P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
HOW TO DETERMINE THE CORRECT TIN
FOR THIS TYPE OF ACCOUNT: USE THE SOCIAL SECURITY
OR
EMPLOYER IDENTIFICATION
NUMBER OF:
----------------------------------------------------
Individual or joint The individual or first
account person listed on the
account
----------------------------------------------------
Custodian account of a The minor
minor (Uniform
Gifts/Transfers to Minors
Act)
----------------------------------------------------
A living trust The grantor-trustee (the
person who puts the money
into the trust)
----------------------------------------------------
An irrevocable trust, The legal entity (not the
pension 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 tax- The organization
exempt organization
----------------------------------------------------
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.
33P
<PAGE>
----------------------------------------------------------
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.
SHARES
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. 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.
34P
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
DIRECTORS AND OFFICERS OF THE FUND
President and WILLIAM R. PEARCE
interested director President of all funds in the IDS MUTUAL FUND GROUP.
- ------------------------------------------------------------------
Independent LYNNE V. CHENEY
directors 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 WILLIAM H. DUDLEY
who are officers Executive vice president, American Express Financial
and/or employees Corporation.
of American Express DAVID R. HUBERS
Financial President and chief executive officer, American Express
Corporation Financial Corporation.
JOHN R. THOMAS
Senior vice president, American Express Financial
Corporation.
- ------------------------------------------------------------------
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.
35P
<PAGE>
- ---------------------------------------------------------------------------
How the fund is organized
INVESTMENT MANAGER AND TRANSFER AGENT
The fund pays American Express Financial Corporation for managing
its portfolio, providing administrative services and serving as
transfer agent (handling shareholder accounts).
Under its Investment Management Services Agreement, American
Express Financial Corporation determines which securities will be
purchased, held or sold (subject to the direction and control of
the fund's board of directors). Effective March 1995, the fund
pays American Express Financial Corporation a fee for these
services based on the average daily net assets of the fund, as
follows:
<TABLE>
<CAPTION>
ASSETS ANNUAL RATE
(BILLIONS) AT EACH ASSET VALUE
<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>
For the fiscal year ended March 31, 1994, under a prior
agreement, the fund paid American Express Financial Corporation 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
American Express Financial Corporation 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, American
Express Financial Corporation maintains shareholder accounts and
records. The fund pays American Express Financial Corporation an
annual fee per shareholder account for this service as follows:
- Class A $15
- Class B $16
- Class Y $15
36P
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTOR
The fund sells shares through American Express Financial
Advisors, a wholly owned subsidiary of American Express Financial
Corporation, 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.
37P
<PAGE>
----------------------------------------------------------
About American Express Financial Corporation
GENERAL INFORMATION
The American Express Financial Corporation 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, American Express Financial Corporation
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 American Express Financial Corporation subsidiaries provide
investment management and related services for pension, profit
sharing, employee savings and endowment funds of businesses and
institutions.
American Express Financial Corporation 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 American Express
Financial Corporation.
38P
<PAGE>
----------------------------------------------------------
Appendix
-------------------------------------------------------------
DESCRIPTIONS OF DERIVATIVE INSTRUMENTS
What follows are brief descriptions of derivative instruments the
fund may use. At various times the fund may use some or all of
these instruments and is not limited to these instruments. It may
use other similar types of instruments if they are consistent
with the fund's investment goal and policies. For more
information on these instruments, see the Statement of Additional
Information.
OPTIONS AND FUTURES CONTRACTS. An option is an agreement to buy
or sell an instrument at a set price during a certain period of
time. A futures contract is an agreement to buy and sell an
instrument for a set price on a future date. The fund may buy and
sell options and futures contracts to manage its exposure to
changing interest rates, security prices and currency exchange
rates. Options and futures may be used to hedge the fund's
investments against price fluctuations or to increase market
exposure.
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES. Asset-backed and
mortgage-backed securities include interests in pools of consumer
loans or mortgages, such as collateralized mortgage obligations
and stripped mortgage-backed securities. Interest and principal
payments depend on payment of the underlying loans or mortgages.
The value of these securities may also be affected by changes in
interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved. Stripped
mortgage-backed securities include interest only (IO) and
principal only (PO) securities. Cash flows and yields on IOs and
POs are extremely sensitive to the rate of principal payments on
the underlying mortgage loans or mortgage-backed securities.
INDEXED SECURITIES. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other
financial indicators. Most indexed securities are short-to
intermediate-term fixed income securities whose values at
maturity or interest rates rise or fall according to the change
in one or more specified underlying instruments. Indexed
securities may be more volatile than the underlying instrument
itself.
INVERSE FLOATERS. Inverse floaters are created using the interest
payment on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. The remainder, minus a servicing fee, is
paid to holders of inverse floaters. Inverse floaters are
extremely sensitive to changes in interest rates.
STRUCTURED PRODUCTS. Structured products are over-the-counter
financial instruments created specifically to meet the needs of
one or a small number of investors. The instrument may consist of
a warrant, an option or a forward contract embedded in a note or
any of a wide variety of debt, equity and/or currency
combinations. Risks of structured products include the inability
to close such instruments, rapid changes in the market and
defaults by other parties.
39P
<PAGE>
This prospectus IDS
contains facts that can EQUITY VALUE
help you decide if the FUND
fund is the right
investment for you. PROSPECTUS
Read it before you MAY 27, 1994
invest and keep it for AS REVISED MARCH 20,
future reference. 1995
Additional facts about [GRAPHIC]
the fund are in a
Statement of Additional THE GOALS OF IDS EQUITY
Information (SAI), VALUE FUND, A PART OF
filed with the IDS STRATEGY FUND, INC.
Securities and Exchange ARE GROWTH OF CAPITAL
Commission. The SAI, AND INCOME. THE FUND
dated May 27, 1994 as INVESTS PRIMARILY IN
revised March 20, 1995, EQUITY SECURITIES THAT
is incorporated here by PROVIDE INCOME, OFFER
reference. For a free THE OPPORTUNITY FOR
copy, contact American LONG-TERM CAPITAL
Express Shareholder GROWTH, OR BOTH.
Service. American Express
THESE SECURITIES HAVE Shareholder Service
NOT BEEN APPROVED OR P.O. Box 534
DISAPPROVED BY THE Minneapolis, MN
SECURITIES AND EXCHANGE 55440-0534
COMMISSION OR ANY STATE 612-671-3733
SECURITIES COMMISSION, TTY: 800-846-4852
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.
<PAGE>
- ------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------
THE FUND IN BRIEF
Goal 3P
Types of fund investments 3P
Manager and distributor 3P
Portfolio manager 3P
Alternative sales arrangements 3P
- ------------------------------------------
SALES CHARGE AND FUND EXPENSES
- ------------------------------------------
PERFORMANCE
Financial highlights 6P
Total returns 7P
Key terms 9P
- ------------------------------------------
INVESTMENT POLICIES AND RISKS
Facts about investments and their
risks 10P
Alternative investment option 14P
Valuing assets 14P
- ------------------------------------------
HOW TO BUY, EXCHANGE OR SELL SHARES
Alternative sales arrangements 15P
How to buy shares 17P
How to exchange shares 20P
How to sell shares 20P
Reductions and waivers of the
sales charge 25P
- ------------------------------------------
SPECIAL SHAREHOLDER SERVICES
Services 29P
Quick telephone reference 29P
- ------------------------------------------
DISTRIBUTIONS AND TAXES
Dividend and capital gain
distributions 30P
Reinvestments 30P
Taxes 31P
- ------------------------------------------
HOW THE FUND IS ORGANIZED
Shares 34P
Voting rights 34P
Shareholder meetings 34P
Directors and officers 34P
Investment manager and transfer
agent 36P
Distributor 37P
- ------------------------------------------
ABOUT AMERICAN EXPRESS FINANCIAL CORPORATION
General information 38P
- ------------------------------------------
APPENDIX
Descriptions of derivative
instruments 39P
2P
<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
The fund is managed by American Express Financial Corporation, a
provider of financial services since 1894. American Express
Financial Corporation currently manages more than $37 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 American Express Financial Corporation.
PORTFOLIO MANAGER
Tom Medcalf joined American Express Financial Corporation 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
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 six 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.
3P
<PAGE>
----------------------------------------------------------
Sales charge and fund expenses
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 six 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 are incurred directly
by an investor on the purchase or redemption of fund shares. Fund
operating expenses are paid out of fund assets for each class of
shares. Operating expenses are reflected in the fund's daily
share price and dividends, and are not charged directly to
shareholder accounts.
-------------------------------------------------------------
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
percentage of original
purchase price)............... 0% 5% 0%
-----------------------------------------------------------
</TABLE>
-------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES*
(% OF AVERAGE DAILY NET ASSETS):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
<S> <C> <C> <C>
-----------------------------------------------------------
Management fee............... 0.52% 0.52% 0.52%
-----------------------------------------------------------
12b-1 fee.................... 0.00% 0.75% 0.00%
-----------------------------------------------------------
Other expenses**............. 0.53% 0.53% 0.35%
-----------------------------------------------------------
Total........................ 1.05% 1.80% 0.87%
<FN>
*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, excluding 12b-1 fees and transfer agent
fee and servicing fee (under other expenses) based on
agreements for that class.
**Other expenses include an administrative services fee, a
shareholder services fee, a transfer agent fee and other
non-advisory expenses.
</TABLE>
4P
<PAGE>
- --------------------------------------------------------------------------------
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...................... $60 $82 $105 $172
------------------------------------------------------------------------
Class B...................... $68 $97 $118 $192
------------------------------------------------------------------------
Class B*..................... $18 $57 $98 $192
------------------------------------------------------------------------
Class Y...................... $9 $28 $48 $108
<FN>
*Assuming Class B shares are not redeemed at the end of the
period.
**Based on conversion of Class B shares to Class A shares after
eight 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.
5P
<PAGE>
- ------------------------------------------------------------------------------
Performance
FINANCIAL HIGHLIGHTS
FISCAL PERIOD ENDED MARCH 31,
- --------------------------------------------------------------
PER SHARE INCOME AND CAPITAL CHANGES*
<TABLE>
<CAPTION>
1994++++ 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
Net asset value, $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26 $7.85 $7.38 $5.78 $5.00
beginning of period
INCOME FROM INVESTMENT OPERATIONS:
------------------------------------------------------------------------------------------------
Net investment income .09 .18 .19 .22 .26 .29 .27 .27 .23 .21 .17
------------------------------------------------------------------------------------------------
Net gains (losses) on .19 .37 1.18 .98 .48 .51 1.29 (.19) .90 1.69 .88
securities (both realized
and unrealized)
------------------------------------------------------------------------------------------------
Total from investment .28 .55 1.37 1.20 .74 .80 1.56 .08 1.13 1.90 1.05
operations
LESS DISTRIBUTIONS:
------------------------------------------------------------------------------------------------
Dividends from net (.09) (.18) (.19) (.22) (.26) (.31) (.27) (.27) (.22) (.21) (.16)
investment income
------------------------------------------------------------------------------------------------
Distributions from -- (.66) (.61) (.30) (.18) (.53) (.59) (.40) (.44) (.09) (.11)
realized gains
------------------------------------------------------------------------------------------------
Excess distribution of -- -- (.01) -- -- -- -- -- -- -- --
realized gain
------------------------------------------------------------------------------------------------
Total distributions (.09) (.84) (.81) (.52) (.44) (.84) (.86) (.67) (.66) (.30) (.27)
------------------------------------------------------------------------------------------------
Net asset value, end of $9.36 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26 $7.85 $7.38 $5.78
period
</TABLE>
- --------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
1994++++ 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985**
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
Net assets, end of period $1,180 $1,031 $758 $497 $370 $311 $230 $162 $119 $51 $12
(in millions)
------------------------------------------------------------------------------------------------
Ratio of expenses to 1.58%*** 1.56% 1.63% 1.66% 1.66% 1.61% 1.65% 1.65% 1.67% 1.86% 1.38%++
average daily net assets
------------------------------------------------------------------------------------------------
Ratio of net income to 1.89%*** 1.93% 2.15% 2.56% 3.41% 3.61% 3.70% 3.78% 3.47% 3.93% 5.10%***
average daily net assets
------------------------------------------------------------------------------------------------
Portfolio turnover rate 43% 70% 48% 72% 65% 67% 54% 49% 30% 28% 36%
(excluding short-term
securities)
------------------------------------------------------------------------------------------------
Total return+ 3.1%**** 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.
**** For the fiscal period ended Sept. 30, 1994, the
annualized total return is 6.2%
+ Total return does not reflect contingent deferred
sales charge.
++ During portions of this period, IDS waived its
advisory and distribution fees and reimbursed the fund
for nonadvisory expenses. Had IDS 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%.
++++ Six months ended Sept. 30, 1994 (unaudited).
</TABLE>
Except for the semiannual period ended Sept. 30, 1994, 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.
6P
<PAGE>
- --------------------------------------------------------------------------------
TOTAL RETURNS
-------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE
PURCHASE MADE AGO 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%
</TABLE>
-------------------------------------------------------------
CUMULATIVE TOTAL RETURNS
AS OF MARCH 31, 1994
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE
PURCHASE MADE AGO 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>
These examples show total returns from hypothetical investments
in Class B shares of the fund. These returns are compared to
those of popular indexes for the same periods. No shares for
Class A and Class Y were outstanding during the periods
presented.
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.
7P
<PAGE>
- ---------------------------------------------------------------------------
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.
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 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.
8P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
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.
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 for classes of funds
large enough to be listed.
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.
9P
<PAGE>
----------------------------------------------------------
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
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.
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.
10P
<PAGE>
- --------------------------------------------------------------------------------
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.
11P
<PAGE>
- ---------------------------------------------------------------------------
Investment policies and risks
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 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 Appendix to this
prospectus.
12P
<PAGE>
- --------------------------------------------------------------------------------
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.
13P
<PAGE>
- ---------------------------------------------------------------------------
Investment policies and risks
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.
14P
<PAGE>
----------------------------------------------------------
How to buy, exchange or sell 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>
SERVICE FEE
(AS A % OF
SALES CHARGE AND DISTRIBUTION AVERAGE
(12B-1) FEE DAILY NET ASSETS) OTHER INFORMATION
<S> <C> <C> <C>
----------------------------------------------------------
Class A Maximum initial sales charge Service fee of Initial sales charge waived or
of 5% 0.175% reduced for certain purchases
----------------------------------------------------------
Class B No initial sales charge; Service fee of Shares convert to Class A
distribution fee of 0.75% of 0.175% after 8 years; CDSC waived in
daily net assets; maximum CDSC certain circumstances
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.
15P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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.
SALES CHARGES ON PURCHASE OR REDEMPTION
IF YOU PURCHASE CLASS A SHARES IF YOU PURCHASE CLASS B SHARES
- - You will not have all of your purchase - All of your money is invested in
price invested. Part of your purchase shares of stock. However, you
price will go to pay the sales charge. will pay a sales charge if you
You will not pay a sales charge when redeem your shares within 6 years
you redeem your shares. of purchase.
- - You will be able to take advantage of - No reductions of the sales charge
reductions in the sales charge. If are available for large
your investments in IDS funds total purchases.
$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.
ONGOING EXPENSES
- - Your shares will have a lower expense - The distribution and transfer
ratio than Class B shares because agent fees for Class B will cause
Class A does not pay a distribution your shares to have a higher
fee and the transfer agent fee for expense ratio and to pay lower
Class A is lower than the fee for dividends than Class A shares.
Class B. As a result, Class A shares After 8 years, Class B shares
will pay higher dividends than Class B will convert to Class A shares
shares. and will no longer be subject to
higher fees.
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.
16P
<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 American
Express Financial Advisors. 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 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.
17P
<PAGE>
- --------------------------------------------------------------------------------
How to buy, exchange or sell shares
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,
American Express Financial Corporation, 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.
- American Express Financial Corporation 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.
18P
<PAGE>
- --------------------------------------------------------------------------------
THREE WAYS TO INVEST
- --------------------------------------------------------------
- --
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 *
American Express Qualified retirement
Financial Advisors Inc. accounts: none
P.O. Box 74
Minneapolis, MN 55440-0074
Your financial advisor will help
you with this process.
- --------------------------------------------------------------
- --
2
BY Contact your financial advisor to MINIMUM AMOUNTS
SCHEDULED set up one of the following Initial investment: $100
INVESTMENT scheduled plans: Additional investments: $100 /mo
PLAN - automatic payroll deduction Account balances: none
- bank authorization (on active plans of
- direct deposit of Social monthly payments)
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
Routing No. 091000019 by the fund, less any costs the
Minneapolis, MN fund or American Express
Attn: Domestic Wire Dept. Financial Corporation incurs,
will be returned promptly.
Give these instructions: MINIMUM AMOUNTS
Credit IDS Account #00-30-015 for Each wire investment: $1,000
personal account # (your account
number) for (your name).
*If your account balance falls below $300, you will be asked 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.
19P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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. Exchanges into IDS
Tax-Free Money Fund must be made from Class A shares. 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.
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.
20P
<PAGE>
- --------------------------------------------------------------------------------
TWO WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
- --------------------------------------------------------------
- --
1
BY LETTER Include in your letter: - any paper certificates of
- the name of the fund(s) shares you hold
- the class of shares to be REGULAR MAIL:
exchanged or redeemed American Express Shareholder
- your account number(s) (for Service
exchanges, both funds must be Attn: Redemptions
registered in the same P.O. Box 534
ownership) Minneapolis, MN 55440-0534
- your Taxpayer Identification EXPRESS MAIL:
Number (TIN) American Express Shareholder
- the dollar amount or number Service
of shares you want to Attn: Redemptions
exchange or sell 733 Marquette Ave.
- signature of all registered Minneapolis, MN 55402
account owners
- for redemptions, indicate how
you want your sales proceeds
delivered to you
- --------------------------------------------------------------
- --
2
BY PHONE - The fund and American Express NOT apply by writing American
American Financial Corporation will Express Shareholder Service.
Express honor any telephone exchange Each registered owner must sign
Telephone or redemption request the request.
Transaction believed to be authentic and - American Express Financial
Service: will use reasonable Corporation answers phone
800-437-3133 procedures to confirm that requests promptly, but you
or they are. This includes may experience delays when
612-671-3800 asking identifying questions call volume is high. If you
and tape recording calls. So are unable to get through,
long as reasonable procedures use mail procedure as an
are followed, neither the alternative.
fund nor American Express - Phone privileges may be
Financial Corporation will be modified or discontinued at
liable for any loss resulting any time.
from fraudulent requests. MINIMUM AMOUNT
- Phone exchange and redemption Redemption: $100
privileges automatically MAXIMUM AMOUNT
apply to all accounts except Redemption: $50,000
custodial, corporate or
qualified retirement accounts
unless you request these
privileges
21P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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.
- American Express Financial Corporation 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:
- 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.
- A telephone redemption request will not be allowed within 30
days of a phoned-in address change.
22P
<PAGE>
- --------------------------------------------------------------------------------
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 a check is mailed to
you. (A check may be mailed earlier if your bank provides
evidence satisfactory to the fund and American Express Financial
Corporation that your check has cleared.)
23P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
THREE WAYS TO RECEIVE PAYMENT WHEN YOU SELL SHARES
- --------------------------------------------------------------
- --
1
BY REGULAR - Mailed to the address on record.
OR EXPRESS - Payable to names listed on the account.
MAIL
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 - Minimum payment: $50.
SCHEDULED - Contact your financial advisor or American Express Shareholder
PAYOUT Service to set up regular payments to you on a monthly,
PLAN bimonthly, quarterly, semiannual or annual basis.
- Buying new shares while under a payout plan may be
disadvantageous because of the sales charges.
24P
<PAGE>
- --------------------------------------------------------------------------------
REDUCTIONS AND WAIVERS OF THE SALES CHARGE
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:
-------------------------------------------------------------
TOTAL INVESTMENT SALES CHARGE AS A PERCENT OF:*
<TABLE>
<CAPTION>
PUBLIC OFFERING NET AMOUNT
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.
25P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
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 American Express Financial Corporation 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.)
- 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 American Express
Financial Advisors. To do so, contact your financial advisor.
26P
<PAGE>
- --------------------------------------------------------------------------------
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 THE PERCENTAGE
IS MADE RATE FOR THE
DURING 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.
27P
<PAGE>
- ---------------------------------------------------------------------------
How to buy, exchange or sell shares
Because the CDSC is imposed only on redemptions that reduce the
total of your purchase payments, you never have to pay a CDSC on
any amount you redeem that represents appreciation in the value
of your shares, income earned by your shares or capital gains. In
addition, when determining the rate of any CDSC, your redemption
will be made from the oldest purchase 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 American Express Financial Corporation 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 American
Express Trust Company 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.
28P
<PAGE>
----------------------------------------------------------
Special shareholder services
SERVICES
To help you track and evaluate the performance of your
investments, American Express Financial Corporation 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 Redemptions and exchanges, National/Minnesota:
EXPRESS dividend payments or 800-437-3133
TELEPHONE reinvestments and automatic Mpls./St. Paul area:
TRANSACTION payment arrangements 671-3800
SERVICE
----------------------------------------------------
AMERICAN Fund performance, objectives and 612-671-3733
EXPRESS account inquiries
SHAREHOLDER
SERVICE
----------------------------------------------------
TTY SERVICE For the hearing impaired 800-846-4852
----------------------------------------------------
AMERICAN Automated account information National/Minnesota:
EXPRESS (TouchTone-Registered Trademark- 800-272-4445
INFOLINE phones only), including current Mpls./St. Paul area:
fund prices and performance, 671-1630
account values and recent
account transactions
----------------------------------------------------
29P
<PAGE>
----------------------------------------------------------
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 at the end of each calendar
quarter. 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.
30P
<PAGE>
- --------------------------------------------------------------------------------
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.
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, you will receive 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).
31P
<PAGE>
- ---------------------------------------------------------------------------
Distributions and taxes
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 American Express Financial Corporation.
If you don't provide the TIN, 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.
32P
<PAGE>
- --------------------------------------------------------------------------------
-------------------------------------------------------------
HOW TO DETERMINE THE CORRECT TIN
FOR THIS TYPE OF ACCOUNT USE THE SOCIAL SECURITY
OR
EMPLOYER IDENTIFICATION
NUMBER OF
----------------------------------------------------
Individual or joint The individual or first
account person listed on the
account
----------------------------------------------------
Custodian account of a The minor
minor (Uniform
Gifts/Transfers to Minors
Act)
----------------------------------------------------
A living trust The grantor-trustee (the
person who puts the money
into the trust)
----------------------------------------------------
An irrevocable trust, The legal entity (not the
pension 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 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.
33P
<PAGE>
----------------------------------------------------------
How the fund is organized
The fund is a diversified, 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.
SHARES
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. 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.
34P
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
DIRECTORS AND OFFICERS OF THE FUND
President and WILLIAM R. PEARCE
interested director President of all funds in the IDS MUTUAL FUND GROUP.
- ------------------------------------------------------------------
Independent LYNNE V. CHENEY
directors 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 WILLIAM H. DUDLEY
who are officers Executive vice president, American Express Financial
and/or employees Corporation.
of American Express DAVID R. HUBERS
Financial President and chief executive officer, American Express
Corporation Financial Corporation.
JOHN R. THOMAS
Senior vice president, American Express Financial
Corporation.
- ------------------------------------------------------------------
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.
35P
<PAGE>
- ---------------------------------------------------------------------------
How the fund is organized
INVESTMENT MANAGER AND TRANSFER AGENT
The fund pays American Express Financial Corporation for managing
its portfolio, providing administrative services and serving as
transfer agent (handling shareholder accounts).
Under its Investment Management Services Agreement, American
Express Financial Corporation determines which securities will be
purchased, held or sold (subject to the direction and control of
the fund's board of directors). Effective March 1995, the fund
pays American Express Financial Corporation a fee for these
services based on the average daily net assets of the fund, as
follows:
<TABLE>
<CAPTION>
ASSETS ANNUAL RATE
(BILLIONS) AT EACH ASSET LEVEL
<S> <C> <C>
----------------------------------------
First $ 0.50 0.530%
----------------------------------------
Next 0.50 0.505
----------------------------------------
Next 1.0 0.480
----------------------------------------
Next 1.0 0.455
----------------------------------------
Next 3.0 0.430
----------------------------------------
Over 6.0 0.400
</TABLE>
For the fiscal year ended March 31, 1994, under a prior
agreement, the fund paid American Express Financial Corporation a
total investment management fee of 0.54% 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
American Express Financial Corporation for administration and
accounting services at an annual rate of 0.04% decreasing in
gradual percentages to 0.02% as assets increase.
In addition, under a separate Transfer Agency Agreement, American
Express Financial Corporation maintains shareholder accounts and
records. The fund pays American Express Financial Corporation an
annual fee per shareholder account for this service as follows:
- Class A $15
- Class B $16
- Class Y $15
36P
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTOR
The fund sells shares through American Express Financial
Advisors, a wholly owned subsidiary of American Express Financial
Corporation, 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 1.56% of its average daily net assets.
Total fees and expenses (excluding taxes and brokerage
commissions) cannot exceed the most restrictive applicable state
expense limitation.
37P
<PAGE>
----------------------------------------------------------
About American Express Financial Corporation
GENERAL INFORMATION
The American Express Financial Corporation 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, American Express Financial Corporation
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 American Express Financial Corporation subsidiaries provide
investment management and related services for pension, profit
sharing, employee savings and endowment funds of businesses and
institutions.
American Express Financial Corporation 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 American Express
Financial Corporation.
38P
<PAGE>
----------------------------------------------------------
Appendix
-------------------------------------------------------------
DESCRIPTIONS OF DERIVATIVE INSTRUMENTS
What follows are brief descriptions of derivative instruments the
fund may use. At various times the fund may use some or all of
these instruments and is not limited to these instruments. It may
use other similar types of instruments if they are consistent
with the fund's investment goal and policies. For more
information on these instruments, see the Statement of Additional
Information.
OPTIONS AND FUTURES CONTRACTS. An option is an agreement to buy
or sell an instrument at a set price during a certain period of
time. A futures contract is an agreement to buy and sell an
instrument for a set price on a future date. The fund may buy and
sell options and futures contracts to manage its exposure to
changing interest rates, security prices and currency exchange
rates. Options and futures may be used to hedge the fund's
investments against price fluctuations or to increase market
exposure.
ASSET-BACKED AND MORTGAGE-BACKED SECURITIES. Asset-backed and
mortgage-backed securities include interests in pools of consumer
loans or mortgages, such as collateralized mortgage obligations
and stripped mortgage-backed securities. Interest and principal
payments depend on payment of the underlying loans or mortgages.
The value of these securities may also be affected by changes in
interest rates, the market's perception of the issuers and the
creditworthiness of the parties involved. Stripped
mortgage-backed securities include interest only (IO) and
principal only (PO) securities. Cash flows and yields on IOs and
POs are extremely sensitive to the rate of principal payments on
the underlying mortgage loans or mortgage-backed securities.
INDEXED SECURITIES. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other
financial indicators. Most indexed securities are short-to
intermediate-term fixed income securities whose values at
maturity or interest rates rise or fall according to the change
in one or more specified underlying instruments. Indexed
securities may be more volatile than the underlying instrument
itself.
INVERSE FLOATERS. Inverse floaters are created using the interest
payment on securities. A portion of the interest received is paid
to holders of instruments based on current interest rates for
short-term securities. The remainder, minus a servicing fee, is
paid to holders of inverse floaters. Inverse floaters are
extremely sensitive to changes in interest rates.
STRUCTURED PRODUCTS. Structured products are over-the-counter
financial instruments created specifically to meet the needs of
one or a small number of investors. The instrument may consist of
a warrant, an option or a forward contract embedded in a note or
any of a wide variety of debt, equity and/or currency
combinations. Risks of structured products include the inability
to close such instruments, rapid changes in the market and
defaults by other parties.
39P
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS STRATEGY AGGRESSIVE FUND
May 27, 1994, as revised March 20, 1995
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 which may be obtained
from your American Express financial advisor or by writing to
American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.
This SAI is dated May 27, 1994 as revised March 20, 1995, and it is
to be used with the prospectus dated May 27, 1994 as revised March
20, 1995, the Annual Report for the fiscal year ended March 31,
1994, and the Semiannual Report for the period ended Sept. 30, 1994.
-1-
<PAGE>
TABLE OF CONTENTS
Goal and Investment Policies.........................See Prospectus
Additional Investment Policies................................p.
Portfolio Transactions........................................p.
Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation........................p.
Performance Information.......................................p.
Valuing Fund Shares...........................................p.
Investing in the Fund.........................................p.
Redeeming Shares..............................................p.
Pay-out Plans.................................................p.
Exchanges.....................................................p.
Taxes.........................................................p.
Agreements....................................................p.
Directors and Officers........................................p.
Custodian.....................................................p.
Independent Auditors..........................................p.
Financial Statements..............................See Annual Report
Prospectus....................................................p.
Appendix A: Foreign Currency Transactions....................p.
Appendix B: Options and Stock Index Futures Contracts........p.
Appendix C: Mortgage-Backed Securities.......................p.
Appendix D: Description of Corporate Bond Ratings............p.
Appendix E: Dollar-Cost Averaging............................p.
-2-
<PAGE>
ADDITIONAL 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 the fund will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the fund may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The fund has not borrowed in the past and has
no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the
fund's total assets.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'Invest more than 5% of its total assets, at market value, in
securities of any one company, government or political subdivision
thereof, except the limitation will not apply to investments in
securities issued by the U.S. government, its agencies or
instrumentalities, and except that up to 25% of the fund's total
assets may be invested without regard to this limitation.
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real
estate business. For purposes of this policy, real estate includes
real estate limited partnerships.
'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the fund from buying or selling options and futures
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.
'Make a loan of any part assets to American Express
Financial Corporation, to the directors and officers of
American Express Financial Corporation or to its own directors
and officers.
'Purchase securities of an issuer if the directors and officers of
the fund and of American Express Financial Corporation (AEFC) hold
more than a certain percentage of the issuer's outstanding
securities. If the holdings of all directors and officers of the
fund and of AEFC who own more than 0.5% of an issuer's securities
are added together, and if in total they own more than 5%, the fund
will not purchase securities of that issuer.
-3-
<PAGE>
'Lend portfolio securities in excess of 30% of its net assets.
This policy may not be changed without shareholder approval. The
current policy of the fund's board of directors is to make these
loans, either long- or short-term, to broker-dealers. In making
such loans the fund gets the market price in cash, U.S. government
securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board of
directors. If the market price of the loaned securities goes up,
the 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, the 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.
'Issue senior securities, except to the extent that borrowing from
banks and using options, foreign currency forward contracts or
future contracts (as discussed elsewhere in the fund's prospectus
and statement of additional information) may be deemed to
constitute issuing a senior security.
Unless changed by the board of directors, the fund will not:
'Pledge or mortgage its assets beyond 15% of the total assets. If
the fund were ever to do so, valuation of the pledged or mortgaged assets
would be based on market values. 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.
'Invest more than 5% of its total assets in securities of companies,
including any predecessors, that have a record of less than three years
continuous operations.
'Invest more than 10% of its total assets in the securities of investment
companies.
'Invest in a company to control or manage it.
'Invest in exploration or development programs, such as oil, gas or
mineral programs.
'Buy on margin or sell securities short but the 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.
-4-
<PAGE>
'Invest more than 10% of the fund's net assets in securities and
derivative instruments that are illiquid. 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.
In determining the liquidity of 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, 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.
In determining the liquidity of commercial paper issued in
transactions not involving a public offering under Section 4(2) of
the Securities Act of 1933, 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.
The 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 the 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. The 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.
Notwithstanding any of the fund's other investment policies, the
fund may invest its assets in an open-end management investment
company having substantially the same investment objectives,
policies and restrictions as the fund for the purpose of having
those assets managed as part of a combined pool.
For a discussion on foreign currency transactions, see Appendix A.
For a discussion on options and stock index futures, see Appendix B. For
a discussion on mortgage-backed securities, see Appendix C. For a
description of corporate bond ratings, see Appendix D.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, American Express
Financial Corporation is authorized to determine, consistent with each
fund's investment goal and policies, which securities will be purchased,
held or sold. In determining where the buy and sell orders are to be
-5-
<PAGE>
placed, American Express Financial Corporation 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, American
Express Financial Corporation 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.
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 American Express Financial Corporation
to do so to the extent authorized by law, if American Express Financial
Corporation 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 American Express Financial Corporation's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP and other
funds for which it acts as investment advisor.
Research provided by brokers supplements American Express Financial
Corporation's own research activities. Such services include economic
data on, and analysis of, U.S. and foreign economies; information on
specific industries; information about specific companies, including
earnings estimates; purchase recommendations for stocks and bonds;
portfolio strategy services; political, economic, business and industry
trend assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. American Express Financial Corporation
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,
American Express Financial Corporation must follow procedures authorized
by the board of directors. To date, three procedures have been authorized.
One procedure permits American Express Financial Corporation 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 American Express Financial Corporation, 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 American Express Financial
Corporation, 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. American Express Financial Corporation 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
the handling of large orders, the willingness of a broker to risk
-6-
<PAGE>
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 American Express Financial Corporation believes
it may obtain better overall execution. American Express Financial
Corporation 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
American Express Financial Corporation in providing advice to all the
funds in the IDS MUTUAL FUND GROUP 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 American Express Financial Corporation or
any of its subsidiaries. When a fund buys or sells the same security as
another fund or account, American Express Financial Corporation
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. American
Express Financial Corporation has assured the funds it will continue
to seek ways to reduce brokerage costs.
On a periodic basis, American Express Financial Corporation makes a
comprehensive review of the broker-dealers and the overall reasonableness
of their commissions. The review evaluates execution, operational
efficiency and research services.
The fund paid total brokerage commissions of $654,720 for the
fiscal year ended March 31,1994, $495,892 for fiscal year 1993,
and $468,699 for fiscal year 1992. Substantially all firms
through whom transactions were executed provide research services.
In fiscal year 1994, transactions amounting to $5,548,000, on which
$12,351 in commissions were imputed or paid, were specifically
directed to firms.
On March 31, 1994, at the end of the fiscal year, the fund held
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 as presented below:
<TABLE>
<CAPTION>
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
- -------------- -------------------
<S> <C>
Morgan Stanley Group $4,790,301
Dean Witter 5,220,000
</TABLE>
The portfolio turnover rate was 55% in the fiscal year ended Mar.
31, 1994, and 49% in fiscal year 1993.
-7-
<PAGE>
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AEFC
Affiliates of American Express Company (American Express) (of which
American Express Financial Corporation is a wholly owned subsidiary)
may engage in brokerage and other securities transactions on behalf
of the fund according to procedures adopted by the fund's board of
directors and to the extent consistent with applicable provisions of
the federal securities laws. American Express Financial Corporation will
use an American Express affiliate only if (i) American Express Financial
Corporation determines that the 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 Services
Agreement.
American Express Financial Corporation may direct brokerage to
compensate an affiliate. American Express Financial Corporation will
receive research on South Africa from New Africa Advisers a
wholly-owned subsidiary of Sloan Financial Group. American Express
Financial Corporation owns 100% of IDS Capital Holdings Inc. which
in turn owns 40% of Sloan Financial Group. New Africa Advisers will
send research to American Express Financial Corporation and in turn
American Express Financial Corporation will direct trades to a
particular broker. The broker will have an agreement to pay New Africa
Advisers. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.
Information about brokerage commissions paid by the fund for the
last three fiscal years to brokers affiliated with American Express
Financial Corporation 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>
Lehman Brothers,
Inc. ............ 1 $ 4,710 .16% .17% -0- -0-
American
Enterprise
Investment
Services Inc. ... 2 38,821 .96 1.45 31,784 29,365
<FN>
(1) Until May 31, 1994, under common control with American Express
Financial Corporation as a subsidiary of American Express. As of
May 31, 1994 is no longer a subsidiary of American Express.
(2) Wholly owned subsidiary of American Express Financial Corporation.
</TABLE>
PERFORMANCE INFORMATION
The fund may quote various performance figures to illustrate past
performance. An explanation of the methods used by the fund to
compute performance follows below.
AVERAGE ANNUAL TOTAL RETURN
The fund may calculate average annual total return for a class 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:
-8-
<PAGE>
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
The fund may calculate aggregate total return for a class for
certain periods representing the cumulative change in the value of
an investment in the fund over a specified period of time according
to the following formula:
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)
In its sales material and other communications, the 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 FUND SHARES
The value of an individual share for the class is determined by
using the net asset value before shareholder transactions for the
day. On April 4, 1994, the first business day following the end
of the fiscal year, the computation looked like this:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class B* 640,071,616 divided by 45,323,834 equals $ 14.12
<FN>
*Shares of Class A and Class Y were not outstanding on that date.
</TABLE>
In determining net assets before shareholder transactions, the
fund's securities are valued as follows as of the close of the New
York Stock Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
-9-
<PAGE>
'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.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange (the
"Exchange"). Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current rate of exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange 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 (the "board").
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
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. The board 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.
-10-
<PAGE>
The by-laws provide that during any period in which the sale of
shares of the fund shall be discontinued, the board, 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 then sold. The purpose of
this provision is to distribute these charges over all outstanding
shares when no further sales are being made.
The New York Stock Exchange, American Express Financial Corporation
and the fund 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 FUND
Sales Charge
Shares of the fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge, if applicable. The sales charge is paid to
American Express Financial Advisors by the person buying the
shares.
Class A - Calculation of the Sales Charge
Sales charges are determined as follows:
<TABLE>
<CAPTION>
Within each increment,
sales charge as a
percentage of:
----------------------------------------
Public Net
Amount of Investment Offering Price Amount Invested
- -------------------- -------------- ---------------
<S> <C> <C> <C>
First $ 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
</TABLE>
Sales charges on an investment greater than $50,000 are calculated
for each increment separately and then totaled. The resulting
total sales charge, expressed as a percentage of the public
offering price and of the net amount invested, will vary depending
on the proportion of the investment at different sales charge
levels.
For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.
-11-
<PAGE>
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.
The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE>
<CAPTION>
On total investment, sales
charge as a percentage of
-------------------------------------------
Public Net
Offering Price Amount Invested
-------------- ---------------
Amount of Investment ranges from:
- -------------------- -------------------------------------------
<S> <C> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 1,000,000 3.80-2.00 3.95-2.04
More than 1,000,000 0.00 0.00
</TABLE>
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:
Deferred Sales Charge
<TABLE>
<CAPTION>
Number of Participants
----------------------
Total Plan Assets 1-99 100 or more
- ----------------- ---- -----------
<S> <C> <C>
Less than $1 million 4% 0%
$1 million or more 0% 0%
- ---------------------------------------------------------
</TABLE>
Class A - Reducing the Sales Charge
Sales charges are based on the total amount of your investments in
the fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.
-12-
<PAGE>
The total amount invested includes any shares held in the fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.
Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the fund or American Express Financial
Corporation or its subsidiaries and deceased advisors.
The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Growth Fund and $5,000 in this fund. If you
invest $40,000 more in this fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.
Finally, Individual Retirement Account (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 shares purchased through
that plan.
Class A - Letter of Intent
You can reduce the sales charges in Class A by filing a letter-of-
intent stating that you intend to invest $1 million over a period
of 13 months. The agreement can start at any time and will remain
in effect for 13 months. Your investment will be charged normal
sales charges until you have invested $1 million. At that time,
the sales charges previously paid will be reversed. If you do not
invest $1 million by the end of 13 months, there is no penalty,
you'll just miss out on the sales charge adjustment. A letter-of-
intent is not an option (absolute right) to buy shares.
Here's an example. You file a letter-of-intent to invest $1
million and make an investment of $100,000 at that time. You pay
the normal 5% sales charge on the first $50,000 and 4.5% sales
charge on the next $50,000 of this investment. Let's say you make
a second investment of $900,000 (bringing the total up to $1
million) one month before the 13-month period is up. What sales
charge do you pay? American Express Financial Corporation makes
an adjustment on your last purchase so that there's no sales charge
on the total $1 million investment, just as if you had invested $1 million
all at once.
Systematic Investment Programs
After you make your initial investment of $2,000 or more, you can
arrange to make additional payments of $100 or more on a regular
basis. These minimums do not apply to all systematic investment
programs. You decide how often to make payments - monthly,
quarterly or semiannually. You are not obligated to make any
-13-
<PAGE>
payments. You can omit payments or discontinue the investment
program altogether. The fund also can change the program or end it
at 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? 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 the program 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 E.
Automatic Directed Dividends
Dividends, including 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 in the same class of this
fund without paying a sales charge. 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
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 IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;
'Between two American Express Trust Company 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).
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.
The fund's investment goal is 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.
-14-
<PAGE>
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 can suspend the computation of net
asset value, stop accepting payments for purchase of shares or suspend
the duty of the fund to redeem shares for more than seven days.
Such emergency situations would occur if:
'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or
'Disposal of the 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 the fund stop selling shares, the board 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.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments. If you redeem Class B shares you 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
American Express Trust Company acts as custodian, you can elect to
receive your dividends and other distributions in cash when
permitted by law. If you redeem an IRA or a qualified retirement
account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should
consult your tax advisor about this complex area of the tax law.
Applications for a systematic investment in a class of the fund
subject to a sales charge normally will not be accepted 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, please write or call American Express
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
-15-
<PAGE>
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 American Express Financial Corporation
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'll have to send in a
separate redemption request for each pay-out. The fund reserves
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 regular intervals during the time period you choose.
This plan is designed to end in complete redemption 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
for each payment and that amount will be sent to you. The length
of time these payments continue is based on the number of shares in
your account.
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 the 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.
EXCHANGES
If you buy shares in the fund and then exchange into another fund,
it is considered a sale and subsequent purchase of shares. Under
the tax laws, if this exchange is done within 91 days, any sales
charge waived on Class A shares on a subsequent purchase of shares
applies to the new shares acquired in the exchange. Therefore, you
cannot create a tax loss or reduce a tax gain attributable to the
sales charge when exchanging shares within 91 days.
-16-
<PAGE>
Retirement Accounts
If you have a nonqualified investment in the fund and you wish to
move part or all of those shares to an IRA or qualified retirement
account in the fund, you can do so without paying a sales charge.
However, this type of exchange is considered a sale of shares and
may result in a gain or loss for tax purposes. In addition, this
type of exchange may result in an excess contribution under IRA or
qualified plan regulations if the amount exchanged plus the amount
of the initial sales charge applied to the amount exchanged exceeds
annual contribution limitations. For example: If you were to
exchange $2,000 in Class A shares from a nonqualified account to an
IRA without considering the 5% ($100) initial sales charge
applicable to that $2,000, you may be deemed to have exceeded
current IRA annual contribution limitations. You should consult
your tax advisor for further details about this complex subject.
TAXES
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 the fund's dividend that is attributable to
dividends the fund received from domestic (U.S.) securities. For
the fiscal year ended March 31,1994, none of the fund's net
investment income dividends qualified for the corporate deduction.
Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the fund are paid to shareholders as part of their
ordinary income dividend and are taxable.
Under federal tax law and an election made by the fund under
federal tax regulations, by the end of a calendar year the 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 fund intends 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.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax advisor as to the
application of federal, state and local income tax laws to fund
distributions.
-17-
<PAGE>
AGREEMENTS
Investment Management Services Agreement
The fund has an Investment Management Services Agreement with American
Express Financial Corporation. For its services, American Express Financial
Corporation is paid a fee based on the following schedule:
<TABLE>
<CAPTION>
Annual rate
Group assets at each
(billions) asset level
- ------------ -----------
<S> <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>
In March 1995, the daily rate applied to each fund's assets is
expected to be approximately 0.60% on an annual basis. The 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 management fee is paid monthly. Under a prior agreement, the
total amount paid was $3,959,394 for the year ended March 31, 1994,
$3,253,165 for 1993, and $2,797,494 for 1992.
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; 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. Under a prior agreement, the funds paid
nonadvisory expenses of $554,830 for fiscal year ended March 31,
1994, $417,972 for fiscal year 1993, and $360,924 for fiscal year
1992.
Administrative Services Agreement
The fund has an Administrative Services Agreement with American Express
Financial Corporation. Under this agreement, the fund pays American Express
Financial Corporation for providing administration and accounting services.
The fee is calculated as follows:
<TABLE>
<CAPTION>
Assets Annual rate
(billions) each asset level
---------- ----------------
<S> <C>
First $1.0 0.050%
Next 1.0 0.045
Next 1.0 0.040
Next 3.0 0.035
Over 6.0 0.030
</TABLE>
-18
<PAGE>
Transfer Agency Agreement
The fund has a Transfer Agency Agreement with American Express Financial
Corporation. This agreement governs American Express Financial Corporation's
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 the
fund's shares. Under the agreement, American Express Financial
Corporation will earn a fee from the fund determined by multiplying
the number of shareholder accounts at the end of the day by a rate
determined for each class and dividing by the number of days in the year.
The rate for Class A and Class Y is $15 per year. The rate for Class B is $16
per year. The fees paid to American Express Financial Corporation may be
changed from time to time upon agreement of the parties without
shareholder approval. The fund paid fees of $1,796,377 for the
fiscal year ended March 31, 1994.
Distribution Agreement
Under a Distribution Agreement, contingent deferred sales charges deducted
for distributing fund shares are paid to American Express Financial
Advisors daily. Sales charges amounted to $544,083 for the
fiscal year ended March 31, 1994. Commissions paid to
personal financial advisors totaled $979,602. The amounts were $387,136 and
$1,878,071 for fiscal year 1993, and $348,185 and $1,775,783
for fiscal year 1992.
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>
American Express
Financial Corporation None None $43,531* $4,455,232**
American Express
Financial Advisors $545,083 None None None
<FN>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with American Express Financial Corporation."
**Distribution fees paid pursuant to the Plan and Supplemental
Agreement of Distribution.
</TABLE>
Shareholder Service Agreement
The fund pays a fee for service provided to shareholders by
financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the fund's average daily net
assets attributable to Class A and Class B shares.
-19-
<PAGE>
Plan and Agreement of Distribution
For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the fund's shares except compensation to
the sales force. A substantial portion of the costs are not
specifically identified to any one fund in the IDS MUTUAL FUND
GROUP. Under the Plan, American Express Financial Advisors is paid
a fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares.
The Plan must be approved annually by the board, including a majority
of the disinterested directors, if it is to continue for more than a year.
At least quarterly, the board must review written reports concerning the
amounts expended under the Plan and the 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 directors
who are not interested persons of the fund 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 by American Express
Financial Advisors. The Plan (or any agreement related to it) will
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 the
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 disinterested directors is the responsibility of the
other disinterested directors. No interested person of the 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.
Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the 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. At the end of each month, if the fees and expenses of the
fund exceed this limitation for the fund's fiscal year in progress,
American Express Financial Corporation will assume all expenses in
excess of the limitation. American Express Financial Corporation
then may bill the fund for such expenses in subsequent months up to
the end of that fiscal year, but not after that date. No interest
charges are assessed by American Express Financial Corporation for
expenses it assumes.
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<PAGE>
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+'
Born in 1941.
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. Director, The Reader's Digest Association Inc.,
Lockheed Corp., and the Interpublic Group of Companies, Inc.
(advertising).
WILLIAM H. DUDLEY+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of American Express Financial
Corporation.
ROBERT F. FROEHLKE+
Born in 1922.
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectual
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
DAVID R. HUBERS**
Born in 1943.
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of American Express
Financial Corporation. Previously, senior vice president, finance and chief
financial officer of American Express Financial Corporation.
HEINZ F. HUTTER+
Born in 1929.
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.
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<PAGE>
ANNE P. JONES+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
DONALD M. KENDALL'
Born in 1921.
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
MELVIN R. LAIRD+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
LEWIS W. LEHR'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
WILLIAM R. PEARCE+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
EDSON W. SPENCER
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
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JOHN R. THOMAS**
Born in 1937.
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of American Express Financial
Corporation.
WHEELOCK WHITNEY+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. ANGUS WURTELE
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person 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 American Express Financial Corporation
or American Express.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
Besides Mr. Pearce, who is president, the fund's other officer is:
LESLIE L. OGG
Born in 1938.
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.
Members who are not officers of the fund or officers or
directors of American Express Financial Corporation receive an
annual base fee of $1,000. They receive a fee for all board and
committee meetings they attend. The fee is shared equally among
each fund in the IDS MUTUAL FUND GROUP holding concurrent meetings.
The fees are $500 for Board, Executive, Audit and Investment
Review committees, $750 for Personnel with out-of-state members
receiving an additional $500 if an extra day of travel is required.
The Chair of Contracts receives an additional $5000. In addition
members who retire after age 70 or earlier for health reasons
receive monthly retirement benefits of 1/2 of the base fee on the
date they retire divided by 12 for each month of service up to
120 months.
During the fiscal year that ended March 31, 1994, the members of
the board, for attending up to 50 meetings, received the following
compensation, in total, from all funds in the IDS MUTUAL FUND
GROUP.
<TABLE>
<CAPTION>
Board Compensation
Aggregate Retirement Estimated Total Cash
Compensation Benefits Annual Compensation
from Accrued as Benefit on from
Nominee Fund Fund Expenses Retirement GROUP
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lynne V. Cheney $ 107 $ -- $ 500 $ 6,000
(part of year)
Robert F. Froehlke 1,123 1,067 500 64,534
(part of year)
Anne P. Jones 1,080 327 500 72,200
Donald M. Kendall 1,021 1,451 500 66,000
Melvin R. Laird 1,105 1,038 500 71,900
Lewis W. Lehr 1,067 1,437 488 70,500
William R. Pearce 108 555 500 13,367
(part of year)
Edson W. Spencer 1,114 683 267 72,700
Wheelock Whitney 1,162 612 500 74,800
</TABLE>
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
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<PAGE>
$60,000 from this fund. All directors and officers as a group
earned $22,696, including $7,467 of retirement plan expense, from
this fund.
CUSTODIAN
The funds' securities and cash are held by American Express Trust
Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307, through a custodian agreement. The
custodian is permitted to deposit some or all of its securities in
central depository systems as allowed by federal law.
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
Morgan Stanley or in such other financial institutions as may be
permitted by law and by the fund's sub-custodian agreement.
INDEPENDENT AUDITORS
The financial statements contained in the Annual Report to
shareholders, for the fiscal year ended March 31, 1994, were
audited by independent auditors, KPMG Peat Marwick LLP, 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 the fund.
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
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. The 1994 Semiannual Report to shareholders
is also incorporated in this SAI by reference.
PROSPECTUS
The prospectus for IDS Strategy Aggressive Fund dated May 27, 1994
as revised March 20, 1995, is hereby incorporated in this SAI by
reference.
-24-
<PAGE>
APPENDIX A
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies
of foreign countries, and since the fund may hold cash and cash-
equivalent investments in foreign currencies, the value of the
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. The 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.
The 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.
The 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
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.
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<PAGE>
The 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.
The 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.
Although the 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
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<PAGE>
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. The 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.
The 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.
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
-29-
<PAGE>
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. The fund may enter
into currency futures contracts to sell currencies. It also may
buy put and write covered call options on currency futures.
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
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<PAGE>
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.
The fund will not use leverage in its currency 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.
-31-
<PAGE>
APPENDIX B
OPTIONS AND STOCK INDEX FUTURES CONTRACTS
The fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. The fund may enter
into stock index futures contracts traded on any U.S. or foreign
exchange. The 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, the 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 may benefit the 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
-32-
<PAGE>
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 the 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. The fund will write covered options when
it feels it is appropriate and will follow these guidelines:
'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 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.).
'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 the fund, 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.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the 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.
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<PAGE>
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 call 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 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.
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 by 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 New York Stock Exchange.
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 the index will take place. Instead,
settlement in cash must occur upon the termination of the contract.
For example, excluding any transaction costs, if the 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.
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<PAGE>
Unlike the purchase or sale of an equity security, no price would
be paid or received by the fund upon entering into 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 the 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 THE FUND WOULD USE STOCK INDEX FUTURES CONTRACTS. The fund
intends to use stock index futures contracts and related options
for hedging and not for speculation. Hedging permits the fund to
gain rapid exposure to or protect itself from changes in the
market. For example, the fund may find itself with a high cash
position at the beginning of a 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.
The 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 portfolio securities.
SPECIAL RISKS OF TRANSACTIONS IN STOCK INDEX FUTURES CONTRACTS.
1. Liquidity. The 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
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<PAGE>
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 fund intends 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
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 futures contracts and movements in
the value of securities subject to the hedge. If this occurred,
the fund could lose money on the contracts and also experience a
decline in the value of its portfolio securities. While this could
occur, the investment manager 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 also is possible that if the fund has hedged against
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<PAGE>
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 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 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 fund 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 fund 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 the 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, the
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
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<PAGE>
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 fund's tax advisors currently believe marking
to market is not required. Depending on developments, and although
no assurance is given, the fund may seek Internal Revenue Service
(IRS) rulings clarifying questions concerning such treatment.
Certain provisions of the Internal Revenue Code may also limit the
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, 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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<PAGE>
APPENDIX C
MORTGAGE-BACKED SECURITIES
A mortgage pass through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. 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 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.
STRIPPED MORTGAGE-BACKED SECURITIES. The fund may invest in
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
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.
MORTGAGE-BACKED SECURITY SPREAD OPTIONS. The fund may purchase
mortgage-backed security (MBS) put spread options and write covered
MBS call spread options. MBS spread options are based upon the
changes in the price spread between a specified mortgage-backed
security and a like-duration Treasury security. MBS spread options
are traded in the OTC market and are of short duration, typically
one to two months. The fund would buy or sell covered MBS call
spread options in situations where mortgage-backed securities are
expected to under perform like-duration Treasury securities.
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<PAGE>
APPENDIX D
DESCRIPTION OF CORPORATE BOND RATINGS
BOND RATINGS
The 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.
Bonds rated Aaa and AAA are judged to be of the best quality and
carry the smallest degree of investment risk. Capacity to pay
interest and repay principal is extremely strong. Prices are
responsive only to interest rate fluctuations.
Bonds rated Aa and AA also are 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. Long-term risk may appear
greater than the Aaa or AAA group. Prices are primarily responsive
to interest rate fluctuations.
Bonds rated A are considered upper-medium grade. Protection for
interest and principal is deemed adequate but susceptible to future
impairment. The market prices of such obligations move primarily
with interest rate fluctuations but also with changing economic or
trade conditions.
Bonds rated Baa and BBB are considered medium-grade obligations.
Protection for interest and principal is adequate over the short-
term; however, these obligations have certain speculative
characteristics. They are susceptible to changing economic
conditions and require constant review. Such bonds are more
responsive to business and trade conditions than to interest rate
fluctuations.
Bonds rated Ba and BB are considered to have speculative elements.
Their future cannot be considered well assured. The protection of
interest and principal payments may be very moderate and not well
safeguarded during future good and bad times. Uncertainty of
position characterizes these bonds.
Bonds rated B or lower lack characteristics of the desirable
investments. There may be small assurance over any long period of
time of the payment of interest and principal or of the maintenance
of other contract terms. Some of these bonds are of poor standing
and may be in default or have other marked short-comings.
Bonds rated Caa and CCC are of poor standing. Such issues may be
in default or there may be elements of danger with respect to
principal or interest.
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<PAGE>
Bonds rated Ca and CC represent obligations that are highly
speculative. Such issues are often in default or have other marked
shortcomings.
Bonds rated C are obligations with a higher degree of speculation.
These securities have major risk exposures to default.
Bonds rated D are in payment default. The D rating is used when
interest payments or principal payments are not made on the due
date.
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<PAGE>
APPENDIX E
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
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
REGULAR MARKET PRICE SHARES
INVESTMENT OF A SHARE ACQUIRED
- -------------------------------------------------------------------
<S> <C> <C>
$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
</TABLE>
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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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
IDS EQUITY VALUE FUND
May 27, 1994 as revised March 20, 1995
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 which may be obtained
from your American Express financial advisor or by writing to
American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.
This SAI is dated May 27, 1994 as revised March 20, 1995, and it is
to be used with the prospectus dated May 27, 1994 as revised March
20, 1995, the Annual Report for the fiscal year ended March 31, 1994, and
the Semiannual Report for the period ended Sept. 30, 1994.
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<PAGE>
TABLE OF CONTENTS
Goal and Investment Policies.........................See Prospectus
Additional Investment Policies................................p.
Portfolio Transactions........................................p.
Brokerage Commissions Paid to Brokers Affiliated with American
Express Financial Corporation.................................p.
Performance Information.......................................p.
Valuing Fund Shares...........................................p.
Investing in the Fund.........................................p.
Redeeming Shares..............................................p.
Pay-out Plans.................................................p.
Exchanges.....................................................p.
Taxes.........................................................p.
Agreements....................................................p.
Directors and Officers........................................p.
Custodian.....................................................p.
Independent Auditors..........................................p.
Financial Statements..............................See Annual Report
Prospectus....................................................p.
Appendix A: Foreign Currency Transactions....................p.
Appendix B: Options and Stock Index Futures Contracts........p.
Appendix C: Mortgage-Backed Securities.......................p.
Appendix D: Description of Corporate Bond Ratings............p.
Appendix E: Dollar-Cost Averaging............................p.
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<PAGE>
ADDITIONAL 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 the fund will not:
'Act as an underwriter (sell securities for others). However,
under the securities laws, the fund may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.
'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The fund has not borrowed in the past and has
no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the
fund's total assets.
'Purchase more than 10% of the outstanding voting securities of an
issuer.
'Invest more than 5% of its total assets, at market value, in
securities of any one company, government or political subdivision
thereof, except the limitation will not apply to investments in
securities issued by the U.S. government, its agencies or
instrumentalities, and except that up to 25% of the fund's total
assets may be invested without regard to this limitation.
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real
estate business. For purposes of this policy, real estate includes
real estate limited partnerships.
'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the fund from buying or selling options and futures
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.
'Make a loan of any part of its assets to American Express
Financial Corporation, to the directors and officers of American
Express Financial Corporation or to its own directors and officers.
'Purchase securities of an issuer if the directors and officers of
the fund and of American Express Financial Corporation hold
more than a certain percentage of the issuer's outstanding
securities. If the holdings of all directors and officers of the
fund and of American Express Financial Corporation who own more than
0.5% of an issuer's securities are added together, and if in total they
own more than 5%, the fund will not purchase securities of that issuer.
'Lend portfolio securities in excess of 30% of its net assets.
This policy may not be changed without shareholder approval. The
current policy of the fund's board of directors is to make these
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<PAGE>
loans, either long- or short-term, to broker-dealers. In making
such loans the fund gets the market price in cash, U.S. government
securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board of
directors. If the market price of the loaned securities goes up,
the 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, the 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.
'Issue senior securities, except to the extent that borrowing from
banks and using options, foreign currency forward contracts or
future contracts (as discussed elsewhere in the fund's prospectus
and statement of additional information) may be deemed to
constitute issuing a senior security.
Unless changed by the board of directors, the fund will not:
'Pledge or mortgage its assets beyond 15% of total assets. If the fund
were ever to do so, valuation of the pledged or mortgaged assets would be
based on market values. For the purposes of this restriction, collateral
arrangements for margin deposits on futures contracts are not deemed
to be a pledge of assets.
'Invest more than 5% of its total assets in securities of companies, including
any predecessor, that have a record of less than three years continuous
operations.
'Invest more than 10% of its total assets in the securities of investment
companies.
'Invest in a company to control or manage it.
'Invest in exploration or development programs, such as oil, gas or
mineral programs.
'Buy on margin or sell securities short but the 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 securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
-4-
<PAGE>
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.
In determining the liquidity of 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, 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.
In determining the liquidity of commercial paper issued in
transactions not involving a public offering under Section 4(2) of
the Securities Act of 1933, 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.
The 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 the fund. Payment and interest
terms, however, are fixed at the time the purchaser enters into a
commitment. Under normal market conditions, the fund does not
intend to commit more than 5% of its total assets to these
practices. The 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 total assets the same as owned securities.
Notwithstanding any of the fund's other investment policies, the
fund may invest its assets in an open-end management investment
company having substantially the same investment objectives,
policies and restrictions as the fund for the purpose of having
those assets managed as part of a combined pool.
For a discussion on foreign currency transactions, see Appendix A. For
a discussion on options and stock index futures contracts, see
Appendix B. For a discussion on mortgage-backed securities, see
Appendix C. For a description of corporate bond ratings, see
Appendix D.
PORTFOLIO TRANSACTIONS
Subject to policies set by the board of directors, American Express
Financial Corporation is authorized to determine, consistent with
each fund's investment goal and policies, which securities will be
purchased, held or sold. In determining where the buy and sell orders
are to be placed, American Express Financial Corporation 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
-5-
<PAGE>
broker-dealers to execute transactions, American Express Financial
Corporation 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.
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 American Express Financial Corporation
to do so to the extent authorized by law, if American Express Financial
Corporation 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 American Express Financial Corporation's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP and other
funds for which it acts as investment advisor.
Research provided by brokers supplements American Express Financial
Corporation's own research activities. Such services include economic
data on, and analysis of, U.S. and foreign economies; information on
specific industries; information about specific companies, including
earnings estimates; purchase recommendations for stocks and bonds;
portfolio strategy services; political, economic, business and industry
trend assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. American Express Financial Corporation
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,
American Express Financial Corporation must follow procedures authorized
by the board of directors. To date, three procedures have been authorized.
One procedure permits American Express Financial Corporation 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 American Express Financial Corporation, 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 American Express Financial Corporation, 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. American Express
Financial Corporation 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 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
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<PAGE>
arrangement, some portfolio transactions may not be effected at the
lowest commission, but American Express Financial Corporation believes
it may obtain better overall execution. American Express Financial
Corporation 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
American Express Financial Corporation in providing advice to all the
funds in the IDS MUTUAL FUND GROUP 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 American Express Financial Corporation or any
of its subsidiaries. When a fund buys or sells the same security as
another fund or account, American Express Financial Corporation 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. American Express Financial Corporation
has assured the funds it will continue to seek ways to reduce brokerage
costs.
On a periodic basis, American Express Financial Corporation makes
a comprehensive review of the broker-dealers and the overall
reasonableness of their commissions. The review evaluates execution,
operational efficiency and research services.
The fund paid total brokerage commissions of $2,723,753 for the
fiscal year ended March 31, 1994, $1,334,606 for fiscal year 1993,
and $1,416,836 for fiscal year 1992. Substantially all firms
through whom transactions were executed provide research services.
In fiscal year 1994, transactions amounting to $198,789,000, on which
$390,001 in commissions were imputed or paid, were specifically
directed to firms.
On March 31, 1994, at the end of the fiscal year, the fund held
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 as presented below:
-7-
<PAGE>
<TABLE>
<CAPTION>
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
- -------------- -------------------
<S> <C>
BankAmerica $8,859,375
Merrill Lynch & Co., Inc. 5,286,163
Morgan Stanley Group 1,099,578
</TABLE>
The portfolio turnover rate was 70% in the fiscal year ended March
31, 1994, and 48% in fiscal year 1993.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN EXPRESS
FINANCIAL CORPORATION
Affiliates of American Express Company (American Express) (of which
American Express Financial Corporation is a wholly owned subsidiary)
may engage in brokerage and other securities transactions on behalf
of the fund according to procedures adopted by the fund's board of
directors and to the extent consistent with applicable provisions of
the federal securities laws. American Express Financial Corporation
will use an American Express affiliate only if (i) American Express
Financial Corporation determines that the 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 Services
Agreement.
American Express Financial Corporation may direct brokerage to compensate
an affiliate. American Express Financial Corporation will receive research
on South Africa from New Africa Advisers a wholly-owned subsidiary of
Sloan Financial Group. American Express Financial Corporation owns 100%
of IDS Capital Holdings Inc. which in turn owns 40% of Sloan Financial
Group. New Africa Advisers will send research to American Express Financial
Corporation and in turn American Express Financial Corporation will direct
trades to a particular broker. The broker will have an agreement to pay
New Africa Advisers. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.
Information about brokerage commissions paid by the fund for the
last three fiscal years to brokers affiliated with American Express
Financial Corporation 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>
Lehman
Brothers
Inc. ........... 1 $17,037 .58% .61% $-0- $-0-
American
Enterprise
Investment
Services Inc.... 2 84,625 2.10 3.15 81,360 34,420
The Robinson
Humphrey
Company, Inc.... 3 5,749 .14 .21 11,418 -0-
Shearson Lehman
Brothers, Inc... 3 62,015 1.53 1.65 85,115 64,456
<FN>
(1) Until May 31, 1994, under common control with American Express Financial
Corporation as a subsidiary of American Express. As of May 31, 1994 is no
longer a subsidiary of American Express.
(2) Wholly owned subsidiary of American Express Financial Corporation.
(3) Under common control with American Express Financial Corporation as an
indirect subsidiary of American Express until July 30, 1993.
-8-
<PAGE>
series of Strategy Fund. The only trading permitted by any series
of Strategy Fund is certain agency trading or an exchange that has
fixed commissions (i.e. Japanese exchanges(s)).
</TABLE>
PERFORMANCE INFORMATION
The fund may quote various performance figures to illustrate past
performance. An explanation of the methods used by the fund to
compute performance follows below.
AVERAGE ANNUAL TOTAL RETURN
The fund may calculate average annual total return for a class 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
The fund may calculate aggregate total return for a class for
certain periods representing the cumulative change in the value of
an investment in the fund over a specified period of time according
to the following formula:
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)
In its sales material and other communications, the 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.
-9-
<PAGE>
VALUING FUND SHARES
The value of an individual share for the class is determined by
using the net asset value before shareholder transactions for the
day. On April 4, 1994, the first business day following the end of
the fiscal year, the computation looked like this:
<TABLE>
<CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B*
$1,019,275,085 divided by $112,526,528 equals $9.06
<FN>
*Shares of Class A and Class Y were not outstanding on that date.
</TABLE>
In determining net assets before shareholder transactions, the
fund's securities are valued as follows as of the close of the New
York Stock Exchange:
'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exists, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.
'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.
'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange (the
"Exchange"). Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current rate of exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange 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 (the "board").
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
-10-
<PAGE>
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.
The New York Stock Exchange, American Express Financial Corporation,
and the fund 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 FUND
Sales Charge
Shares of the fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge, if applicable. For Class B and Class Y, there is
no initial sales charge so the public offering price is the same as
the net asset value. The sales charge is paid to American Express
Financial Advisors by the person buying the shares.
Class A - Calculation of the Sales Charge
Sales charges are determined as follows:
<TABLE>
<CAPTION>
Within each increment,
sales charge as a
percentage of:
----------------------------------------
Public Net
Amount of Investment Offering Price Amount Invested
- -------------------- -------------- ---------------
<S> <C> <C> <C>
First $ 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
</TABLE>
Sales charges on an investment greater than $50,000 are calculated
for each increment separately and then totaled. The resulting
total sales charge, expressed as a percentage of the public
offering price and of the net amount invested, will vary depending
on the proportion of the investment at different sales charge
levels.
For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
-11-
<PAGE>
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.
The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE>
<CAPTION>
On total investment, sales
charge as a percentage of
-------------------------------------------
Public Net
Offering Price Amount Invested
-------------- ---------------
Amount of Investment ranges from:
- -------------------- -------------------------------------------
<S> <C> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 1,000,000 3.80-2.00 3.95-2.04
More than 1,000,000 0.00 0.00
</TABLE>
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:
Deferred Sales Charge
<TABLE>
<CAPTION>
Number of Participants
----------------------
Total Plan Assets 1-99 100 or more
- ----------------- ---- -----------
<S> <C> <C>
Less than $1 million 4% 0%
$1 million or more 0% 0%
- ---------------------------------------------------------
</TABLE>
Class A - Reducing the Sales Charge
Sales charges are based on the total amount of your investments in
the fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.
The total amount invested includes any shares held in the fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
-12-
<PAGE>
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.
Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the fund or American Express Financial
Corporation or its subsidiaries and deceased advisors.
The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Growth Fund and $5,000 in this fund. If you
invest $40,000 more in this fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.
Finally, Individual Retirement Account (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 shares purchased through
that plan.
Class A - Letter of Intent
You can reduce the sales charges in Class A by filing a letter-of-
intent stating that you intend to invest $1 million over a period
of 13 months. The agreement can start at any time and will remain
in effect for 13 months. Your investment will be charged normal
sales charges until you have invested $1 million. At that time,
the sales charges previously paid will be reversed. If you do not
invest $1 million by the end of 13 months, there is no penalty,
you'll just miss out on the sales charge adjustment. A letter-of-
intent is not an option (absolute right) to buy shares.
Here's an example. You file a letter-of-intent to invest $1
million and make an investment of $100,000 at that time. You pay
the normal 5% sales charge on the first $50,000 and 4.5% sales
charge on the next $50,000 of this investment. Let's say you make
a second investment of $900,000 (bringing the total up to $1
million) one month before the 13-month period is up. What sales
charge do you pay? American Express Financial Corporation makes an
adjustment on your last purchase so that there's no sales charge on
the total $1 million investment, just as if you had invested $1 million
all at once.
Systematic Investment Programs
After you make your initial investment of $2,000 or more, you can
arrange to make additional payments of $100 or more on a regular
basis. These minimums do not apply to all systematic investment
programs. You decide how often 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 fund also can change the program or end it
at any time. If there is no obligation, why do it? Putting money
-13-
<PAGE>
aside is an important part of financial planning. With a
systematic investment program, you have a goal to work for.
How does this work? 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 the program 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 E.
Automatic Directed Dividends
Dividends, including 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 in the same class of this
fund without paying a sales charge. 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
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 IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;
'Between two American Express Trust Company 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).
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.
The fund's investment goal is 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.
-14-
<PAGE>
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 can suspend the computation of net
asset value, stop accepting payments for purchase of shares or suspend
the duty of the fund to redeem shares for more than seven days. Such
emergency situations would occur if:
'The New York Stock Exchange closes for reasons other than the usual
weekend and holiday closings or trading on the Exchange is restricted, or
'Disposal of the 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 the fund stop selling shares, the board 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.
PAY-OUT PLANS
You can use any of several pay-out plans to redeem your investment
in regular installments. If you redeem Class B shares you 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
American Express Trust Company acts as custodian, you can elect to
receive your dividends and other distributions in cash when
permitted by law. If you redeem an IRA or a qualified retirement
account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should
consult your tax advisor about this complex area of the tax law.
Applications for a systematic investment in a class of the fund
subject to a sales charge normally will not be accepted 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, please write or call American Express
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,
-15-
<PAGE>
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 American Express Financial Corporation
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'll have to send
in a separate redemption request for each pay-out. The fund reserves
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 regular intervals during the time period you choose.
This plan is designed to end in complete redemption 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
for each payment and that amount will be sent to you. The length
of time these payments continue is based on the number of shares in
your account.
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 the 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.
EXCHANGES
If you buy shares in the fund and then exchange into another fund,
it is considered a sale and subsequent purchase of shares. Under
the tax laws, if this exchange is done within 91 days, any sales
charge waived on Class A shares on a subsequent purchase of shares
applies to the new shares acquired in the exchange. Therefore, you
cannot create a tax loss or reduce a tax gain attributable to the
sales charge when exchanging shares within 91 days.
Retirement Accounts
If you have a nonqualified investment in the fund and you wish to
move part or all of those shares to an IRA or qualified retirement
account in the fund, you can do so without paying a sales charge.
However, this type of exchange is considered a sale of shares and
may result in a gain or loss for tax purposes. In addition, this
-16-
<PAGE>
type of exchange may result in an excess contribution under IRA or
qualified plan regulations if the amount exchanged plus the amount
of the initial sales charge applied to the amount exchanged exceeds
annual contribution limitations. For example: If you were to
exchange $2,000 in Class A shares from a nonqualified account to an
IRA without considering the 5% ($100) initial sales charge
applicable to that $2,000, you may be deemed to have exceeded
current IRA annual contribution limitations. You should consult
your tax advisor for further details about this complex subject.
TAXES
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 the fund's dividend that is attributable to
dividends the fund received from domestic (U.S.) securities. For
the fiscal year ended March 31, 1994, 38.83% of the fund's net
investment income dividends qualified for the corporate deduction.
Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the fund are paid to shareholders as part of their
ordinary income dividend and are taxable.
Under federal tax law and an election made by the fund under
federal tax regulations, by the end of a calendar year the 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 fund intends 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.
This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax advisor as to the
application of federal, state and local income tax laws to fund
distributions.
-17-
<PAGE>
AGREEMENTS
Investment Management Services Agreement
The fund has an Investment Management Services Agreement with American
Express Financial Corporation. For its services, American Express Financial
Corporation is paid a fee based on the following schedule:
<TABLE>
<CAPTION>
Assets Annual rate at
(billions) each asset level
- ---------- ----------------
<S> <C>
First $0.50 0.530%
Next 0.50 0.505
Next 1.0 0.480
Next 1.0 0.455
Next 3.0 0.430
Over 6.0 0.400
</TABLE>
In March 1995, the daily rate applied to the fund's assets is
expected to be approximately 0.52% on an annual basis. The 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 management fee is paid monthly. Under a prior agreement, the
total amount paid was $4,938,986 for the fiscal year ended March
31, 1994, $3,317,937 for fiscal year 1993, and $2,690,959 for
fiscal year 1992.
Under the current Agreement, the fund also pays taxes, brokerage
commissions and nonadvisory expenses, that include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for shares; fund office expenses; consultants' fees;
compensation of directors, officers and employees; corporate filing
fees; 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. Under a
prior agreement, the fund paid nonadvisory expenses of $785,313
for the fiscal year ended March 31, 1994, $499,520 for fiscal
year 1993, and $374,544 for fiscal year 1992.
Administrative Services Agreement
The fund has an Administrative Services Agreement with American Express
Financial Corporation. Under this agreement, the fund pays American Express
Financial Corporation for providing administration and accounting services.
The fee is calculated as follows:
<TABLE>
<CAPTION>
Assets Annual rate
(billions) each asset level
---------- ----------------
<S> <C>
First $0.50 0.040%
Next 0.50 0.035
Next 1.0 0.030
Next 1.0 0.025
Next 3.0 0.020
Over 6.0 0.020
</TABLE>
-18-
<PAGE>
Transfer Agency Agreement
The fund has a Transfer Agency Agreement with American Express
Financial Corporation. This agreement governs American Express
Financial Corporation's 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 the fund's shares. Under the agreement, American Express Financial
Corporation will earn a fee from the fund determined by multiplying
the number of shareholder accounts at the end of the day by a rate
determined for each class and dividing by the number of days in the
year. The rate for Class A and for Class Y is $15 per year. The rate
for Class B is $16 per year. The fees paid to American Express Financial
Corporation may be changed from time to time upon agreement of the parties
without shareholder approval. The fund paid fees of $2,116,737 for the
fiscal year ended March 31, 1994.
Distribution Agreement
Under a Distribution Agreement, contingent deferred sales charges
deducted for distributing fund shares are paid to American Express
Financial Advisors daily. Sales charges amounted to $551,640 for the
fiscal year ended March 31, 1994. Commissions paid to personal financial
advisors totaled $2,334,603. The amounts were $406,301 and $3,214,258
for fiscal year 1993, and $424,531 and $1,896,857 for fiscal year 1992.
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>
American
Express
Financial
Corporation None None $169,426* $6,464,137**
American
Express
Financial
Advisors $551,640 None None None
<FN>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with American Express Financial Corporation."
**Distribution fees paid pursuant to the Plan and Supplemental
Agreement of Distribution.
</TABLE>
Shareholder Service Agreement
The fund pays a fee for service provided to shareholders by
financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the fund's average daily net
assets attributable to Class A and Class B shares.
-19-
<PAGE>
Plan and Agreement of Distribution
For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the fund's shares except compensation to
the sales force. A substantial portion of the costs are not
specifically identified to any one fund in the IDS MUTUAL FUND
GROUP. Under the Plan, American Express Financial Advisors is paid
a fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares.
The Plan must be approved annually by the board, including a majority
of the disinterested directors, if it is to continue for more than a
year. At least quarterly, the board must review written reports
concerning the amounts expended under the Plan and the 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 directors
who are not interested persons of the fund 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 by American Express
Financial Advisors. The Plan (or any agreement related to it) will
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 the
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 disinterested directors is the responsibility of the
other disinterested directors. No interested person of the 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.
Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the 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. At the end of each month, if the fees and expenses of the
fund exceed this limitation for the fund's fiscal year in progress,
American Express Financial Corporation will assume all expenses
in excess of the limitation. American Express Financial Corporation
then may bill the fund for such expenses in subsequent months up to
the end of that fiscal year, but not after that date. No interest
charges are assessed by American Express Financial Corporation for expenses
it assumes.
-20-
<PAGE>
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+'
Born in 1941.
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. Director, The Reader's Digest Association Inc.,
Lockheed Corp., and the Interpublic Group of Companies, Inc.
(advertising).
WILLIAM H. DUDLEY+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN
Executive vice president and director of American Express Financial
Corporation.
ROBERT F. FROEHLKE+
Born in 1922.
1201 Yale Place
Minneapolis, MN
Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.
DAVID R. HUBERS**
Born in 1943.
2900 IDS Tower
Minneapolis, MN
President, chief executive officer and director of American Express
Financial Corporation. Previously, senior vice president, finance
and chief financial officer of American Express Financial Corporation.
HEINZ F. HUTTER+
Born in 1929.
P.O. Box 5724
Minneapolis, MN
President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.
-21-
<PAGE>
ANNE P. JONES+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.
DONALD M. KENDALL'
born in 1921.
PepsiCo, Inc.
Purchase, NY
Former chairman and chief executive officer, PepsiCo, Inc.
MELVIN R. LAIRD+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.
Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).
LEWIS W. LEHR'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN
Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).
WILLIAM R. PEARCE+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN
President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).
EDSON W. SPENCER
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
-22-
<PAGE>
JOHN R. THOMAS**
Born in 1937.
2900 IDS Tower
Minneapolis, MN
Senior vice president and director of American Express Financial Corporation.
WHEELOCK WHITNEY+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. ANGUS WURTELE
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN
Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person 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 American Express Financial Corporation
or American Express.
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.
Besides Mr. Pearce, who is president, the fund's other officer is:
LESLIE L. OGG
Born in 1938.
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.
Members who are not officers of the fund or officers or directors of
American Express Financial Corporation receive an annual base fee of
$1,500. They receive a fee for all board and committee meetings they
attend. The fee is shared equally among each fund in the IDS MUTUAL
FUND GROUP holding concurrent meetings. The fees are $500 for Board,
Executive, Audit and Investment Review committees, $750 for Personnel
with out-of-state members receiving an additional $500 if an extra day
of travel is required. The Chair of Contracts receives an additional
$5000. In addition members who retire after age 70 or earlier for health
reasons receive monthly retirement benefits of 1/2 of the base fee on the
date they retire divided by 12 for each month of service up to 120 months.
During the fiscal year that ended March 31, 1994, the members of
the board, for attending up to 50 meetings, received the following
compensation, in total, from all funds in the IDS MUTUAL FUND
GROUP.
<TABLE>
<CAPTION>
Board compensation
Aggregate Retirement Estimated Total Cash
compensation benefits annual compensation
from the accrued as benefit on from the IDS
Board member fund fund expenses retirement MUTUAL FUND GROUP
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lynne V. Cheney $ 128 $ -- $ 625 $ 6,000
(part of year)
Robert F. Froehlke 1,311 1,297 625 64,534
(part of year)
Anne P. Jones 1,267 398 625 72,200
Donald M. Kendall 1,209 1,764 625 66,000
Melvin R. Laird 1,293 1,262 625 71,900
Lewis W. Lehr 1,254 1,746 609 70,500
William R. Pearce 108 674 625 13,367
(part of year)
Edson W. Spencer 1,302 830 333 72,700
Wheelock Whitney 1,350 744 625 74,800
</TABLE>
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 $27,499, including $9,078 of retirement plan expense, from this fund.
-23-
<PAGE>
CUSTODIAN
The funds' securities and cash are held by American Express Trust
Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307, through a custodian agreement. The
custodian is permitted to deposit some or all of its securities in
central depository systems as allowed by federal law.
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
Morgan Stanley or in such other financial institutions as may be
permitted by law and by the fund's sub-custodian agreement.
INDEPENDENT AUDITORS
The financial statements contained in the Annual Report to
shareholders, for the fiscal year ended March 31, 1994, were
audited by independent auditors, KPMG Peat Marwick LLP, 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 the fund.
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
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. The 1994 Semiannual Report to shareholders
is also incorporated in this SAI by reference.
PROSPECTUS
The prospectus for IDS Equity Value Fund dated May 27, 1994, as
revised March 20, 1995, is hereby incorporated in this SAI by
reference.
-24-
<PAGE>
APPENDIX A
FOREIGN CURRENCY TRANSACTIONS
Since investments in foreign countries usually involve currencies
of foreign countries, and since the fund may hold cash and cash-
equivalent investments in foreign currencies, the value of the
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. The 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.
The 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.
The 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
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.
-25-
<PAGE>
The 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.
The 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.
Although the 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
-26-
<PAGE>
(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. The 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.
The 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.
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
-27-
<PAGE>
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. The fund may enter
into currency futures contracts to sell currencies. It also may
buy put and write covered call options on currency futures.
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.
-28-
<PAGE>
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.
The fund will not use leverage in its currency 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.
-29-
<PAGE>
APPENDIX B
OPTIONS AND STOCK INDEX FUTURES CONTRACTS
The fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. The fund may enter
into stock index futures contracts traded on any U.S. or foreign
exchange. The 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, the 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 may benefit the 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
market and its price on the options market. It is anticipated the
-30-
<PAGE>
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 the 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. The fund will write covered options when
it feels it is appropriate and will follow these guidelines:
'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 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.).
'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 the fund, 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.
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the 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
-31-
<PAGE>
recognize a capital gain or loss based upon the difference between
the proceeds and the security's basis. Premiums received from
writing outstanding call 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 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.
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 by 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 New York Stock Exchange.
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 the index will take place. Instead,
settlement in cash must occur upon the termination of the contract.
For example, excluding any transaction costs, if the 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 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
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<PAGE>
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 the 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 THE FUND WOULD USE STOCK INDEX FUTURES CONTRACTS. The fund
intends to use stock index futures contracts and related options
for hedging and not for speculation. Hedging permits the fund to
gain rapid exposure to or protect itself from changes in the
market. For example, the fund may find itself with a high cash
position at the beginning of a 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.
The 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 portfolio securities.
SPECIAL RISKS OF TRANSACTIONS IN STOCK INDEX FUTURES CONTRACTS.
1. LIQUIDITY. The 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
-33-
<PAGE>
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 fund intends 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
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 futures contracts and movements in
the value of securities subject to the hedge. If this occurred,
the fund could lose money on the contracts and also experience a
decline in the value of its portfolio securities. While this could
occur, the investment manager 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 also is 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
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<PAGE>
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 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 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 fund 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 fund 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 the 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, the
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 fund's tax advisors currently believe marking
to market is not required. Depending on developments, and although
no assurance is given, the fund may seek Internal Revenue Service
-35-
<PAGE>
(IRS) rulings clarifying questions concerning such treatment.
Certain provisions of the Internal Revenue Code may also limit the
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, 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.
-36-
<PAGE>
APPENDIX C
MORTGAGE-BACKED SECURITIES
A mortgage pass through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. 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 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.
STRIPPED MORTGAGE-BACKED SECURITIES. The fund may invest in
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
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.
MORTGAGE-BACKED SECURITY SPREAD OPTIONS. The fund may purchase
mortgage-backed security (MBS) put spread options and write covered
MBS call spread options. MBS spread options are based upon the
changes in the price spread between a specified mortgage-backed
security and a like-duration Treasury security. MBS spread options
are traded in the OTC market and are of short duration, typically
one to two months. The fund would buy or sell covered MBS call
spread options in situations where mortgage-backed securities are
expected to under perform like-duration Treasury securities.
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<PAGE>
APPENDIX D
DESCRIPTION OF CORPORATE BOND RATINGS
BOND RATINGS
The 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.
Bonds rated Aaa and AAA are judged to be of the best quality and
carry the smallest degree of investment risk. Capacity to pay
interest and repay principal is extremely strong. Prices are
responsive only to interest rate fluctuations.
Bonds rated Aa and AA also are 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. Long-term risk may appear
greater than the Aaa or AAA group. Prices are primarily responsive
to interest rate fluctuations.
Bonds rated A are considered upper-medium grade. Protection for
interest and principal is deemed adequate but susceptible to future
impairment. The market prices of such obligations move primarily
with interest rate fluctuations but also with changing economic or
trade conditions.
Bonds rated Baa and BBB are considered medium-grade obligations.
Protection for interest and principal is adequate over the short-
term; however, these obligations have certain speculative
characteristics. They are susceptible to changing economic
conditions and require constant review. Such bonds are more
responsive to business and trade conditions than to interest rate
fluctuations.
Bonds rated Ba and BB are considered to have speculative elements.
Their future cannot be considered well assured. The protection of
interest and principal payments may be very moderate and not well
safeguarded during future good and bad times. Uncertainty of
position characterizes these bonds.
Bonds rated B or lower lack characteristics of the desirable
investments. There may be small assurance over any long period of
time of the payment of interest and principal or of the maintenance
of other contract terms. Some of these bonds are of poor standing
and may be in default or have other marked short-comings.
Bonds rated Caa and CCC are of poor standing. Such issues may be
in default or there may be elements of danger with respect to
principal or interest.
-38-
<PAGE>
Bonds rated Ca and CC represent obligations that are highly
speculative. Such issues are often in default or have other marked
shortcomings.
Bonds rated C are obligations with a higher degree of speculation.
These securities have major risk exposures to default.
Bonds rated D are in payment default. The D rating is used when
interest payments or principal payments are not made on the due
date.
-39-
<PAGE>
APPENDIX E
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
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
REGULAR MARKET PRICE SHARES
INVESTMENT OF A SHARE ACQUIRED
- -------------------------------------------------------------------
<S> <C> <C>
$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
</TABLE>
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).
-40-
<PAGE>
Independent auditors' report
___________________________________________________________________
The board of directors and shareholders
IDS Strategy Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of the Aggressive Equity, Equity,
Income, Short-Term Income and Worldwide Growth Funds within IDS Strategy Fund,
Inc. as of March 31, 1994, and the related statements of operations for the year
then ended and the statements of changes in net assets for each of the years in
the two-year period ended March 31, 1994, and the financial highlights for each
of the years in the nine-year period ended March 31, 1994 (each of the years in
the seven-year period ended March 31, 1994, for Worldwide Growth Fund), and the
period from May 14, 1984 (commencement of operations), to March 31, 1985, for
all Funds except Worldwide Growth Fund. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered and
securities on loan, we request confirmations from brokers, and where replies are
not received, we carry out other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Aggressive Equity, Equity,
Income, Short-Term Income and Worldwide Growth Funds of IDS Strategy Fund, Inc.
at March 31, 1994, and the results of their operations for the year then ended
and the changes in their net assets for each of the years in the two-year period
ended March 31, 1994, and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 6, 1994
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
IDS Strategy Fund, Inc.
March 31, 1994
_____________________________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________________________
Aggressive
Equity Equity Income
Fund Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Investments in securities, at value (Note 1)
(identified cost $529,039,067, $1,020,591,684 and $737,660,476) $637,827,911 $1,039,795,889 $735,904,405
Cash in bank on demand deposit 6,252,816 4,404,581 --
Dividends and accrued interest receivable 124,433 4,536,007 13,446,189
Receivable for investment securities sold 18,005,392 17,474,595 14,034,132
Receivable for foreign currency contracts held, at value
(Notes 1 and 8) -- 8,056,998 --
U.S. government securities held as collateral (Note 6) -- 8,053,880 15,593,553
_____________________________________________________________________________________________________________________________
Total assets 662,210,552 1,082,321,950 778,978,279
_____________________________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit -- -- 1,617,016
Dividends payable to shareholders -- 51,592 1,007,871
Payable for foreign currency contracts held, at value
(Notes 1 and 8) -- 8,231,673 --
Payable for investment securities purchased 8,770,471 14,151,632 6,293,826
Payable upon return of securities loaned (Note 6) -- 26,890,280 17,553,553
Accrued investment management and services fee 367,254 481,747 343,537
Accrued 12b-1 fee 409,749 651,348 548,756
Accrued transfer agency fee 157,122 196,317 112,163
Other accrued expenses 253,720 349,553 217,271
_____________________________________________________________________________________________________________________________
Total liabilities 9,958,316 51,004,142 27,693,993
_____________________________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $652,252,236 $1,031,317,808 $751,284,286
_____________________________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 45,323,834, 112,526,528 and 120,617,506 shares $ 453,238 $ 1,125,265 $ 1,206,175
Additional paid-in capital 535,221,625 968,845,073 737,332,680
Undistributed net investment income -- 1,360,998 371,691
Accumulated net realized gain (Notes 1 and 10) 7,788,529 40,956,942 14,367,311
Unrealized appreciation (depreciation) (Notes 7 and 8) 108,788,844 19,029,530 (1,993,571)
_____________________________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding
capital stock $652,252,236 $1,031,317,808 $751,284,286
_____________________________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 14.39 $ 9.17 $ 6.23
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
IDS Strategy Fund, Inc.
March 31, 1994
_____________________________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________________________
Short-Term Worldwide
Income Growth
Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Investments in securities, at value (Note 1)
(identified cost $191,584,151 and $198,443,206) $189,556,346 $211,061,718
Cash in bank on demand deposit (including foreign currency holdings of $0 and $981,004) 709,134 3,406,482
Dividends and accrued interest receivable 1,456,928 868,315
Receivable for investment securities sold -- 10,290,824
Receivable for foreign currency contracts held, at value (Notes 1 and 8) -- 21,879,771
_____________________________________________________________________________________________________________________________
Total assets 191,722,408 247,507,110
_____________________________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________________________
Dividends payable to shareholders 107,765 --
Payable for foreign currency contracts held, at value (Notes 1 and 8) -- 21,973,631
Payable for investment securities purchased -- 7,695,143
Payable upon return of securities loaned (Note 6) -- 1,965,000
Accrued investment management and services fee 83,225 154,079
Accrued 12b-1 fee 135,008 147,864
Accrued transfer agency fee 30,620 62,636
Other accrued expenses 94,840 188,453
_____________________________________________________________________________________________________________________________
Total liabilities 451,458 32,186,806
_____________________________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $191,270,950 $215,320,304
_____________________________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 192,181,825 and 40,101,361 shares $ 1,921,818 $ 401,014
Additional paid-in capital 191,209,229 207,273,076
Undistributed net investment income 44,803 --
Accumulated net realized gain (loss) (Notes 1 and 10) 122,905 (4,878,438)
Unrealized appreciation (depreciation) (Note 8) (2,027,805) 12,524,652
_____________________________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $191,270,950 $215,320,304
_____________________________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 1.00 $ 5.37
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of operations
IDS Strategy Fund, Inc.
Year ended March 31, 1994
_____________________________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________________________
Aggressive
Equity Equity Income
Fund Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $27,827, $729,612
and $0) $ 2,725,608 $26,712,364 $ 991,601
Interest (net of foreign taxes withheld of $0, $29,669 and $0) (Note 1) 1,820,391 5,227,226 55,838,169
_____________________________________________________________________________________________________________________________
Total income 4,545,999 31,939,590 56,829,770
_____________________________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 3,959,394 4,938,986 3,774,421
12b-1 fee 4,455,232 6,464,137 5,870,906
Transfer agency fee 1,796,377 2,116,737 1,249,460
Compensation of directors 15,776 16,991 13,870
Compensation of officers 6,920 10,508 7,650
Custodian fees 88,903 166,106 66,378
Postage 258,150 300,162 170,949
Registration fees 62,897 144,228 128,272
Reports to shareholders 80,935 92,596 51,664
Audit fees 17,500 17,000 18,000
Administrative 9,073 14,695 10,290
Other 14,676 23,027 15,759
_____________________________________________________________________________________________________________________________
Total expenses 10,765,833 14,305,173 11,377,619
_____________________________________________________________________________________________________________________________
Investment income (loss) -- net (6,219,834) 17,634,417 45,452,151
_____________________________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including gain of $92, $250,049 and $16,101 from
foreign currency transactions) (Note 3) 41,329,221 81,083,334 26,309,082
Net realized loss on closed financial futures contracts -- -- (485,450)
Net realized gain on closed options contracts written (Note 5) 249,927 -- --
_____________________________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 41,579,148 81,083,334 25,823,632
Net change in unrealized appreciation or depreciation (12,150,355) (57,859,852) (46,913,616)
_____________________________________________________________________________________________________________________________
Net gain (loss) on investments and foreign currency 29,428,793 23,223,482 (21,089,984)
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations $23,208,959 $40,857,899 $24,362,167
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of operations
IDS Strategy Fund, Inc.
Year ended March 31, 1994
_____________________________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________________________
Short-Term Worldwide
Income Growth
Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $236,111) $ -- $ 2,182,765
Interest (Note 1) 10,422,882 392,842
_____________________________________________________________________________________________________________________________
Total income 10,422,882 2,575,607
_____________________________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 943,248 1,039,144
12b-1 fee 1,551,273 998,381
Transfer agency fee 377,243 481,828
Compensation of directors 7,475 9,799
Compensation of officers 3,023 970
Custodian fees 24,606 214,031
Postage 84,644 85,366
Registration fees 57,280 79,312
Reports to shareholders 21,959 20,196
Audit fees 13,000 15,500
Administrative 2,439 1,892
Other -- 14,920
_____________________________________________________________________________________________________________________________
Total expenses 3,086,190 2,961,339
_____________________________________________________________________________________________________________________________
Investment income (loss) -- net 7,336,692 (385,732)
_____________________________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(net of foreign taxes withheld of $57,227 and including gain of $9,483
from foreign currency transactions on Worldwide Growth Fund) (Note 3) 845,891 6,245,625
Net change in unrealized appreciation or depreciation (6,042,618) 7,260,496
_____________________________________________________________________________________________________________________________
Net gain (loss) on investments and foreign currency (5,196,727) 13,506,121
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 2,139,965 $13,120,389
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
Year ended March 31,
_____________________________________________________________________________________________________________________________
Operations and distributions 1994 1993 1994 1993
_____________________________________________________________________________________________________________________________
Aggressive Equity Equity
Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Investment income (loss) -- net $ (6,219,834) $ (4,163,848) $ 17,634,417 $ 12,952,134
Net realized gain on investments
and foreign currency 41,579,148 29,295,121 81,083,334 48,334,196
Net change in unrealized appreciation or
depreciation (12,150,355) (7,837,538) (57,859,852) 33,309,097
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting
from operations 23,208,959 17,293,735 40,857,899 94,595,427
_____________________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income -- -- (16,824,052) (12,695,609)
Net realized gain on investments (57,232,536) (26,095,639) (64,484,810) (41,805,941)
Excess distribution of realized gain (Note 1) (92) -- (251,175) (452,958)
_____________________________________________________________________________________________________________________________
Total distributions (57,232,628) (26,095,639) (81,560,037) (54,954,508)
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 169,955,924 169,004,413 322,046,101 227,893,957
Reinvestment of distributions at net asset value 57,007,903 25,987,788 80,767,882 54,422,128
Payments for redemptions or transfers to other
funds (Note 2) (122,745,185) (77,181,214) (89,266,723) (60,309,323)
_____________________________________________________________________________________________________________________________
Increase in net assets from
capital share transactions 104,218,642 117,810,987 313,547,260 222,006,762
_____________________________________________________________________________________________________________________________
Total increase in net assets 70,194,973 109,009,083 272,845,122 261,647,681
_____________________________________________________________________________________________________________________________
Net assets at beginning of year 582,057,263 473,048,180 758,472,686 496,825,005
_____________________________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income
of $0 and $0, $1,360,998 and $537,031) $652,252,236 $582,057,263 $1,031,317,808 $758,472,686
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
Year ended March 31,
_____________________________________________________________________________________________________________________________
Operations and distributions 1994 1993 1994 1993
_____________________________________________________________________________________________________________________________
Income Short-Term Income
Fund Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Investment income -- net $ 45,452,151 $ 33,897,593 $ 7,336,692 $ 7,687,700
Net realized gain on investments
and foreign currency 25,823,632 3,597,584 845,891 554,879
Net change in unrealized appreciation or
depreciation (46,913,616) 31,597,281 (6,042,618) 1,809,639
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations 24,362,167 69,092,458 2,139,965 10,052,218
_____________________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (45,573,627) (33,849,058) (7,385,954) (7,668,737)
Net realized gain on investments (8,394,602) -- (677,373) (460,620)
Excess distribution of realized gains (Note 1) -- (169,503) -- --
_____________________________________________________________________________________________________________________________
Total distributions (53,968,229) (34,018,561) (8,063,327) (8,129,357)
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 382,357,534 260,293,243 218,094,276 147,023,386
Reinvestment of distributions at net asset value 48,115,538 30,099,391 7,670,363 7,726,027
Payments for redemptions or transfers to other
funds (Note 2) (229,945,785) (112,327,555) (205,406,418) (134,825,015)
_____________________________________________________________________________________________________________________________
Increase in net assets from
capital share transactions 200,527,287 178,065,079 20,358,221 19,924,398
_____________________________________________________________________________________________________________________________
Total increase in net assets 170,921,225 213,138,976 14,434,859 21,847,259
_____________________________________________________________________________________________________________________________
Net assets at beginning of year 580,363,061 367,224,085 176,836,091 154,988,832
_____________________________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income
of $371,691 and $897,397, $44,803 and $127,781) $751,284,286 $580,363,061 $191,270,950 $176,836,091
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
Year ended March 31,
_____________________________________________________________________________________________________________________________
Operations and distributions 1994 1993
_____________________________________________________________________________________________________________________________
Worldwide Growth
Fund
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Investment loss -- net $ (385,732) $ (366,557)
Net realized gain (loss) on investments and foreign currency 6,245,625 (3,402,949)
Net change in unrealized appreciation or depreciation 7,260,496 6,384,977
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations 13,120,389 2,615,471
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 166,514,051 20,334,356
Payments for redemptions or transfers to other funds (Note 2) (15,761,295) (10,739,076)
_____________________________________________________________________________________________________________________________
Increase in net assets from capital share transactions 150,752,756 9,595,280
_____________________________________________________________________________________________________________________________
Total increase in net assets 163,873,145 12,210,751
_____________________________________________________________________________________________________________________________
Net assets at beginning of year 51,447,159 39,236,408
_____________________________________________________________________________________________________________________________
Net assets at end of year $215,320,304 $51,447,159
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies
IDS Strategy Fund, Inc. (Strategy) is registered under the Investment
Company Act of 1940 (as amended) as a diversified, open-end
management investment company. Significant accounting policies
followed by Strategy are summarized below:
Valuation of securities
All securities are valued at the close of each business day.
Securities traded on national securities exchanges or included in
national market systems are valued at the last quoted sales price;
securities for which market quotations are not readily available,
including illiquid securities, are valued at fair value according to
methods selected in good faith by the board of directors.
Determination of fair value involves, among other things, reference
to market indexes, matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market
value based on current interest rates; those maturing in 60 days or
less are valued at amortized cost.
Options transactions
In order to produce incremental earnings, protect gains, and
facilitate buying and selling of securities for investment purposes,
each fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market where the
completion of the obligation is dependent upon the credit standing of
the other party. The fund also may buy and sell put and call options
and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call
option is that the fund gives up the opportunity of profit if the
market price of the security increases. The risk in writing a put
option is that the fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying
an option is that the fund pays a premium whether or not the option
is exercised. The fund also has the additional risk of not being
able to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their
primary exchanges and unrealized appreciation or depreciation is
recorded. The fund will realize a gain or loss upon expiration or
closing of the option transaction. When an option is exercised, the
proceeds on sales for a written call option, the purchase cost for a
written put option or the cost of a security for a purchased put or
call option is adjusted by the amount of premium received or paid.
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies (continued)
Futures transactions
In order to gain exposure to or protect itself from changes in the
market, each fund may buy and sell stock index or 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
contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market
and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, each fund is required to
deposit either cash or securities in an amount (initial margin) equal
to a certain percentage of the contract value. Subsequent payments
(variation margin) are made or received by the fund each day. The
variation margin payments are equal to the daily
changes in the contract value and are recorded as unrealized gains
and losses. The fund recognizes a realized gain or loss when the
contract is closed or expires.
Foreign currency translations and
forward foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate
of exchange. Foreign currency amounts related to the purchase or
sale of securities and income and expenses are translated at the
exchange rate on the transaction date. It is not practicable to
identify that portion of realized and unrealized gain (loss) arising
from changes in the exchange rates from the portion arising from
changes in the market value of investments.
Each fund may enter into forward foreign currency exchange contracts
for operational purposes. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by each fund and
the resulting unrealized appreciation or depreciation are determined
using foreign currency exchange rates from an independent pricing
service. Each fund is subject to the credit risk that the other
party will not complete the obligations of the contract.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the
fund on a forward-commitment or when-isssued basis can take place one
month or more after the transaction date. During this period, such
securities are subject to market fluctuations, and they may affect
the fund's gross assets the same as owned securities.
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies (continued)
During the fiscal year ended March 31, 1994, Income and Short-Term
Income Funds entered into transactions to sell purchase commitments
to third parties at the current market values and concurrently
acquired other purchase commitments for similar securities at later
dates. As an inducement for a fund to "roll over" its purchase
commitments, the fund receives negotiated fees. For the fiscal year
ended March 31, 1994, such fees earned by the funds amounted to
$143,336 and $138,359 for Income and Short-Term Income funds,
respectively. Such fees have been classified as interest income.
Federal taxes
Since Strategy's policy is to comply with all sections of the
Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to shareholders, no
provision for income or excise taxes is required. For federal
income tax purposes, each fund is treated as a separate taxable
entity.
Net investment income (loss) and net realized gains (losses) may
differ for financial statement and tax purposes primarily because of
the deferral of losses on certain futures contracts, the recognition
of certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred due to "wash
sale" transactions. The character of distributions made during the
year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes.
The effect on dividend distributions of certain book-to-tax
differences is presented as "excess distributions" in the statement
of changes in net assets. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized
gains (losses) were recorded by the fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, net investment income has been increased
(decreased) by $6,219,834, $13,602, $(404,230), $(33,716), and
$385,732 and accumulated net realized gain (loss) has been increased
(reduced) by $11,812, $0, $404,230, $33,716 and $(18,945) resulting
in a net reclassification adjustment to decrease paid in capital by
$6,231,646, $13,602, $0, $0 and $366,787 for Aggressive Equity,
Equity, Income, Short-Term Income and Worldwide Growth Funds,
respectively.
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies (continued)
Dividends to shareholders
Dividends from net investment income, declared and paid annually by
the end of the calendar year for Aggressive Equity and Worldwide
Growth Funds, declared and paid quarterly for Equity Fund and
declared daily and paid quarterly for Income and Short-Term Income
Funds, are reinvested in additional shares of each fund at net asset
value or payable in cash. Capital gains, when available, are
distributed along with the last income dividend at the end of the
calendar year.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date and interest income, including level-yield amortization of
premium and discount, is accrued daily.
___________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, each fund pays IDS
Financial Corporation (IDS) a fee for managing its investments,
recordkeeping and other specified services. The fee is a percentage
of each fund's average daily net assets consisting of a group asset
charge in reducing percentages from 0.46% to 0.32% annually on the
combined net assets of all non-money market funds in the IDS MUTUAL
FUND GROUP and an individual annual asset charge of 0.23% of average
daily net assets for Aggressive Equity, 0.14% for Equity, 0.13% for
Income and Short-Term Income and 0.46% for Worldwide Growth. From
its fee, IDS pays IDS International, Inc. a subadvisory fee equal to
0.35% of Worldwide Growth Fund's average daily net assets.
Each fund also pays IDS a distribution fee equal, on an annual basis,
to 1% of the lesser of (i) aggregate purchase payments for shares
sold since inception, including purchase payments for shares
exchanged from another of the Strategy Funds and the value of all
shares exchanged from another fund in the IDS MUTUAL FUND GROUP
(excluding appreciation and reinvested income dividends and capital
gain distributions), less the aggregate amount of any redemptions of
purchase payments, or (ii) that fund's average daily net assets. Of
the distribution 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.
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
2. Expenses and sales charges (continued)
Each fund also pays IDS a transfer agency fee at an annual rate of
$16 per shareholder account for Aggressive Equity, Equity and
Worldwide Growth Funds and $16.50 per shareholder account for Income
and Short-Term Income Funds. The transfer agency fee is
reduced by earnings on monies pending shareholder redemptions.
IDS will assume and pay any expenses (except taxes and brokerage
commissions and excluding distribution fees under the Plan of
Distribution) of each fund in excess of the most restrictive
applicable state expense limitation.
Contingent deferred sales charges deducted by IDS Financial Services
Inc., the funds' distributor, for the year ended March 31, 1994,
aggregated $1,960,787: $544,083 for Aggressive Equity, $551,640 for
Equity, $566,372 for Income, $218,685 for Short-Term Income and
$80,007 for Worldwide Growth Funds. Each fund also pays custodian
fees to IDS Trust Company, an affiliate of IDS.
Strategy has a retirement plan for its independent directors. Upon
retirement, directors receive monthly payments equal to one-half of
the retainer fee for as many months as they served as directors up to
120 months. There are no death benefits. The plan is not funded but
each fund recognizes the cost of payments during the time the
directors serve on the board. The retirement plan expense for
Strategy Fund for the year ended March 31, 1994, aggregated $31,804:
$7,467 for Aggressive Equity, $9,078 for Equity, $8,709 for Income,
$2,273 for Short-Term Income and $4,277 for Worldwide Growth Funds.
___________________________________________________________________
3. Securities transactions
For the year ended March 31, 1994, cost of purchases and proceeds
from sales (other than short-term obligations) aggregated
$402,523,222 and $308,243,362 for Aggressive Equity, $757,911,560 and
$569,377,155 for Equity, $539,093,736 and $415,788,079 for Income,
$95,454,088 and $126,631,148 for Short-Term Income and $197,874,671
and $65,480,275 for Worldwide Growth Funds. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with IDS were
$43,531 for Aggressive Equity and $169,426 for Equity Fund for the
year ended March 31, 1994.
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
4. Capital share transactions
Transactions in shares of each fund for the years indicated are as
follows:
<TABLE>
<CAPTION>
Number of shares:
________________________________________________________________________________________________________________________
Aggressive Equity Fund Equity Fund Income Fund
_____________________________ ______________________________ ______________________________
Year ended March 31, Year ended March 31, Year ended March 31,
1994 1993 1994 1993 1994 1993
________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Sold or transferred
from other funds 11,014,310 11,172,515 33,138,214 24,815,396 58,097,430 41,915,779
Issued for reinvested
distributions 3,765,876 1,692,133 8,433,793 6,084,329 7,354,593 4,813,601
Redeemed or transferred
to other funds (7,951,989) (5,150,347) (9,197,496) (6,569,392) (35,064,814) (18,112,071)
________________________________________________________________________________________________________________________
Net increase 6,828,197 7,714,301 32,374,511 24,330,333 30,387,209 28,617,309
________________________________________________________________________________________________________________________
Number of shares:
________________________________________________________________________________________________________________________
Short-Term Income Fund Worldwide Growth Fund
______________________________ ______________________________
Year ended March 31, Year ended March 31,
1994 1993 1994 1993
________________________________________________________________________________________________________________________
Sold or transferred from other funds 213,765,797 142,974,696 31,676,228 4,755,126
Issued for reinvested distributions 7,523,292 7,516,322 -- --
Redeemed or transferred to other funds (201,051,396) (131,159,992) (2,983,522) (2,504,504)
________________________________________________________________________________________________________________________
Net increase 20,237,693 19,331,026 28,692,706 2,250,622
________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
5. Options contracts written
The number of contracts and premium amounts associated with call
options contracts written in Aggressive Equity Fund is as follows:
Year ended
March 31, 1994
_______________________
Contracts Premium
_____________________________________________________
Balance March 31, 1993 -- $ --
Opened 2,450 610,039
Closed (2,450) (610,039)
_____________________________________________________
Balance March 31, 1994 -- $ --
_____________________________________________________
___________________________________________________________________
6. Lending of fund securities
At March 31, 1994, securities valued at $26,225,274 for Equity,
$16,977,700 for Income and $1,828,950 for Worldwide Growth were on
loan to brokers. For collateral, Equity received $18,836,400 in cash
and U.S. government securities valued at $8,053,880, Income received
$1,960,000 in cash and U.S. government securities valued at
$15,593,553, and Worldwide Growth received $1,965,000 in cash. Income
from securities lending amounted to $7,884, $91,955, $50,535 and
$26,676 for Aggressive Equity, Equity, Income and Worldwide Growth
Funds, respectively, for the year ended March 31, 1994. The risks to
the fund of securities lending are that the borrower may not provide
additional collateral when required or return the securities when
due.
___________________________________________________________________
7. Interest rate futures contracts
At March 31, 1994, investments in securities in Income Fund included
securities valued at $579,037 that were pledged as collateral to
cover initial margin deposits on 50 purchase contracts. The market
value of the open contracts at March 31, 1994, was $4,567,188 with a
net unrealized loss of $237,500.
___________________________________________________________________
8. Foreign currency contracts
At March 31, 1994, Equity and Worldwide Growth Funds had entered into
foreign currency exchange contracts that obligate the fund to deliver
currencies at specified future dates. The unrealized depreciation of
$174,675 and $93,860, respectively, on these
contracts are included in the accompanying financial statements. The
terms of the open contracts are as follows:
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
___________________________________________________________________
8. Foreign currency contracts (continued)
<TABLE>
<CAPTION>
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered March 31, 1994 received March 31, 1994
______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Equity April 6, 1994 2,576 $ 1,806 1,807 $ 1,807
Australian Dollar U.S. Dollar
April 15, 1994 25,965 25,965 45,600 25,652
U.S. Dollar New Zealand Dollar
April 25, 1994 13,700,000 8,203,902 8,029,539 8,029,539
Deutsche Mark U.S. Dollar
__________ __________
$8,231,673 $8,056,998
______________________________________________________________________________________________________________________________
Worldwide April 5, 1994 1,544,561 $2,299,079 2,288,538 $2,288,538
Growth British Pound U.S. Dollar
April 5, 1994 1,059,657 1,577,300 1,582,624 1,582,624
British Pound U.S. Dollar
April 5, 1994 808,632 1,203,648 1,209,713 1,209,713
British Pound U.S. Dollar
April 5, 1994 539,994 803,781 808,344 808,344
British Pound U.S. Dollar
April 5, 1994 329,039 489,774 488,688 488,688
British Pound U.S. Dollar
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Notes to financial statements
IDS Strategy Fund, Inc.
______________________________________________________________________________________________________________________________
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered March 31, 1994 received March 31, 1994
______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Worldwide Growth April 5, 1994 191,748 $ 285,417 285,992 $285,992
(continued) British Pound U.S. Dollar
April 5, 1994 1,132 1,685 1,694 1,694
British Pound U.S. Dollar
April 5, 1994 93,643,691 914,713 912,022 912,022
Japanese Yen U.S. Dollar
April 5, 1994 135,966,178 1,000,855 988,989 988,989
Spanish Peseta U.S. Dollar
April 5, 1994 274,842 2,023 1,999 1,999
Spanish Peseta U.S. Dollar
April 5, 1994 671,249 671,249 451,487 672,039
U.S. Dollar British Pound
April 5, 1994 477,901 477,901 320,933 477,709
U.S. Dollar British Pound
April 5, 1994 260,306 260,306 2,057,849 263,166
U.S. Dollar Swedish Krona
April 6, 1994 398,438 3,892 3,880 3,880
Japanese Yen U.S. Dollar
April 6, 1994 211,205 211,205 1,655,849 211,756
U.S. Dollar Swedish Krona
April 6, 1994 91,191 91,191 128,710 90,258
U.S. Dollar Australian Dollar
April 7, 1994 756,705 756,705 1,078,603 756,371
U.S. Dollar Australian Dollar
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Notes to financial statements
IDS Strategy Fund, Inc.
______________________________________________________________________________________________________________________________
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered March 31, 1994 received March 31, 1994
______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Worldwide Growth April 8, 1994 23,856,819 $ 175,611 174,980 $ 174,980
(continued) Spanish Peseta U.S. Dollar
April 8, 1994 591,431 591,431 841,775 590,294
U.S. Dollar Australian Dollar
April 18, 1994 328,689 489,254 487,052 487,052
British Pound U.S. Dollar
April 28, 1994 954,268,900 9,329,749 9,245,000 9,245,000
Japanese Yen U.S. Dollar
April 29, 1994 14,637 2,568 2,561 2,561
French Franc U.S. Dollar
April 29, 1994 168,021 168,021 965,027 169,333
U.S. Dollar French Franc
April 29, 1994 166,273 166,273 950,418 166,769
U.S. Dollar French Franc
___________ ___________
$21,973,631 $21,879,771
</TABLE>
___________________________________________________________________
9. Illiquid securities
At March 31, 1994, investments in securities for Income Fund included
issues that are illiquid. The fund currently limits investments in
illiquid securities to 10% of the net assets, at market value, at the
time of purchase. The aggregate value of such
securities at March 31, 1994, was $4,954,589 which represents 0.7% of
net assets. Pursuant to guidelines adopted by the fund's board of
directors, certain unregistered securities are determined to be
liquid and are not included within the 10% limitation specified
above.
___________________________________________________________________
10. Capital loss carryover
For federal income tax purposes, Worldwide Growth Fund had a capital
loss carryover of $4,862,260 at March 31, 1994, that, if not offset
by subsequent capital gains, will expire in 1998 through 2001. It is
unlikely the board of directors will authorize a
distribution of any net realized capital gains until the available
capital loss carryover has been offset or expires.
___________________________________________________________________
11. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on pages 7-11 of the prospectus.
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (87.4%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Airlines (2.7%)
Mesa Airlines 325,000 (b) $ 6,662,500
Southwest Airlines 330,000 10,807,500
____________
Total 17,470,000
_____________________________________________________________________________________________________________________________
Automotive & related (0.6%)
Ek Chor China Motorcycle 180,000 4,140,000
_____________________________________________________________________________________________________________________________
Banks and savings & loans (1.6%)
Bankcorp Hawaii 180,000 5,400,000
Mercantile Bancorp 110,000 5,266,250
_____________
Total 10,666,250
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.8%)
Celestial Seasonings 123,300 (b) 3,544,875
Cott
75,000 1,875,000
____________
Total 5,419,875
_____________________________________________________________________________________________________________________________
Communications equipment (5.3%)
ADC Telecommunications 118,300 (b) 4,524,975
Andrew 125,000 (b) 4,031,250
Cellular 100,000 (b) 4,450,000
Centigram Communications 105,000 (b) 3,570,000
Commnet Cellular 190,000 (b) 3,182,500
ECI Telecom 135,000 3,105,000
Newbridge Networks 155,000 (b) 8,466,875
Vanguard Cellular System 110,000 (b) 3,203,750
____________
Total 34,534,350
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Computers & office equipment (23.2%)
Acclaim Entertainment 130,000 (b) $ 2,047,500
Adobe Systems 90,000 2,182,500
Amer Mgmt Systems 180,000 (b) 3,532,500
Avid Technology 67,900 (b) 1,612,625
BMC Software 100,000 (b) 6,175,000
Chipcom 95,000 (b) 4,868,750
Cisco Systems 470,000 (b) 16,097,500
COMPAQ Computer 135,000 (b) 13,196,250
Compuware 26,400 (b) 1,112,100
Danka Business Systems 65,000 2,551,250
Electronic Arts 70,000 (b) 1,837,500
First Financial Management 160,300 8,656,200
IMRS 36,200 (b) 796,400
Informix 210,000 (b) 4,357,500
Lotus Development 100,000 (b) 7,050,000
Medaphis 1,900 (b) 63,175
Microsoft 80,000 (b) 6,780,000
NetFRAME Systems 175,000 (b) 2,625,000
Novell 123,500 (b) 2,238,438
Oracle Systems 450,000 (b) 14,456,250
Parametric Technology 320,000 (b) 8,800,000
Silicon Graphics 150,000 (b) 3,581,250
Software Toolworks 205,000 (b) 2,946,875
Storage Technology 115,000 (b) 3,737,500
Sun Microsystems 350,000 (b) 9,581,250
Sybase 210,000 (b) 9,450,000
Synopsys 150,000 (b) 6,562,500
Viewlogic Systems 175,000 (b) 4,484,375
____________
Total 151,380,188
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Stratgey Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Electronics (5.4%)
Amtech 160,000 $ 2,800,000
Applied Material 190,000 (b) 8,455,000
Intel 110,000 7,425,000
Linear Technology 165,000 6,971,250
Sensormatic Electric 225,000 8,184,375
TriQuint Semiconductor 82,000 (b) 1,332,500
____________
Total 35,168,125
_____________________________________________________________________________________________________________________________
Energy (1.0%)
Enron Oil & Gas 85,000 3,633,750
HS Resources 140,000 (b) 2,905,000
____________
Total 6,538,750
_____________________________________________________________________________________________________________________________
Financial services (2.4%)
ADVANTA 110,000 3,217,500
Dean Witter 160,000 5,220,000
Paychex 60,000 2,152,500
Travelers (New) 150,000 5,268,750
____________
Total 15,858,750
_____________________________________________________________________________________________________________________________
Health care (10.6%)
Amgen 90,000 (b) 3,442,500
Biogen 48,000 (b) 1,668,000
Cardinal 40,000 1,840,000
Chiron 76,000 (b) 4,997,000
Forest Labs 215,000 (b) 9,218,125
Genentech 75,000 (b) 3,300,000
Gensia Pharmaceuticals 165,000 (b) 2,640,000
Haemonetics 250,000 (b) 4,968,750
Heart Technology 160,000 (b) 2,760,000
IDEXX Laboratories 80,000 (b) 2,160,000
IVAX 256,270 6,406,750
Medtronics 90,000 7,200,000
Pfizer 100,000 5,400,000
Sofamor/Danek Group 71,800 (b) 1,570,625
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Stryker 115,000 $ 3,162,500
Ventritex 170,000 (b) 3,612,500
Viagene 69,600 (b) 617,700
Zoll Medical 150,000 (b) 4,462,500
____________
Total 69,426,950
_____________________________________________________________________________________________________________________________
Health care services (0.7%)
United Healthcare 100,000 4,275,000
_____________________________________________________________________________________________________________________________
Household products (0.6%)
Valence Technology 274,000 (b) 3,836,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.8%)
Calgon Carbon 200,000 2,575,000
KENETECH 125,000 (b) 2,906,250
_____________
Total 5,481,250
_____________________________________________________________________________________________________________________________
Industrial transporation (0.9%)
Amer Freightways 66,000 (b) 1,303,500
Heartland Express 34,000 (b) 1,147,500
M.S. Carriers 140,000 (b) 3,150,000
____________
Total 5,601,000
_____________________________________________________________________________________________________________________________
Insurance (0.3%)
Equitable of Iowa 50,000 1,687,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Leisure time & entertainment (1.9%)
Bally Gaming Intl 150,000 (b) $ 2,343,750
Intl Game Technology 135,000 3,661,875
President Riverboat Casinos 160,000 (b) 2,680,000
Rio Hotel & Casino 150,000 (b) 2,156,250
Savoy Pictures Entertainment 112,000 (b) 1,638,000
____________
Total 12,479,875
_____________________________________________________________________________________________________________________________
Media (2.9%)
Comcast 170,000 3,081,250
Comcast Cl A 85,000 1,498,125
Information Resources 193,800 (b) 3,294,600
Multimedia 158,400 (b) 4,712,400
Tele-Communications Cl A 180,000 (b) 3,735,000
Viacom 100,000 (b) 2,650,000
____________
Total 18,971,375
_____________________________________________________________________________________________________________________________
Metals (0.2%)
Molten Metal Technology 65,000 (b) 1,340,625
_____________________________________________________________________________________________________________________________
Restaurants & lodging (4.3%)
Brinker Intl 360,000 (b) 10,350,000
Buffets 300,000 (b) 6,525,000
Cracker Barrel Old Country 220,000 5,885,000
Shoney's 257,800 5,446,025
____________
Total 28,206,025
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Retail (11.9%)
Consolidated Stores 170,000 (b) $ 2,932,500
CUC Intl 135,000 (b) 4,252,500
Gap 120,000 5,325,000
Home Depot 150,000 6,112,500
Home Shopping Network 110,000 (b) 1,416,250
Kohls 170,000 (b) 8,287,500
Lowe's 260,000 16,770,000
Men's Warehouse 75,000 (b) 2,137,500
Musicland Stores 200,000 (b) 3,900,000
Office Depot 110,000 (b) 3,836,250
Phillips-Van Heusen 250,000 8,718,750
Price/Costco 260,000 (b) 4,712,500
Wal-Mart Stores 350,000 9,056,250
_____________
Total 77,457,500
_____________________________________________________________________________________________________________________________
Utilities-gas (0.7%)
Enron 140,000 4,270,000
_____________________________________________________________________________________________________________________________
Utilities-telephone (1.7%)
ALC Communications 227,900 (b) 7,577,675
McCaw Cellular 75,000 (b) 3,712,500
____________
Total 11,290,175
_____________________________________________________________________________________________________________________________
Foreign (6.9%)(c)
Cifra ADR Series B 2,400,000 6,818,400
Grupo Televisa 30,000 (d) 1,530,000
Hutchison Whampoa 3,550,000 14,469,800
Renaissance Energy 130,000 (b) 2,607,046
Renaissance Energy 38,800 (b,d) 778,103
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Tarragon Oil & Gas 170,000 (b) $ 1,981,030
Telefonos de Mexico ADR 110,000 6,627,500
Television Broadcast 1,200,000 4,238,400
Vodafone Group ADR 75,000 5,803,125
____________
Total 44,853,404
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $463,864,225) $570,352,967
_____________________________________________________________________________________________________________________________
Preferred stocks & other (1.3%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Centocor
Warrants 48,500 $ 315,250
Gensia Pharmaceuticals
$3.75 Cv 60,000 (d) 2,535,000
Jan Bell
Warrants 2,473 (e) --
SAP
Preferred 3,550 5,426,832
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $5,903,612) $ 8,277,082
_____________________________________________________________________________________________________________________________
Bond (0.6%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
_____________________________________________________________________________________________________________________________
Ciba Geigy/Alza
6.25% Cv 2016 $4,000,000 (d) $ 4,100,000
_____________________________________________________________________________________________________________________________
Total bond
(Cost: $4,173,368) $ 4,100,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (8.4%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (0.9%)
Federal Home Loan Bank Disc Nt
04-14-94 3.42% $ 600,000 $ 599,261
Federal Natl Mtge Assn
Disc Nts
04-18-94 3.44 3,500,000 3,494,331
04-25-94
3.51 1,900,000 1,895,567
_____________
Total 5,989,159
_____________________________________________________________________________________________________________________________
Commerical paper (6.9%)
AIG Funding
05-02-94 3.59 5,400,000 5,383,353
AT&T Capital
04-05-94 3.37 1,700,000 1,699,365
Ciesco LP
04-18-94 3.53 2,300,000 2,296,177
Eiger Capital
04-19-94 3.53 4,400,000 (f) 4,392,256
05-02-94 3.62 2,500,000 (f) 2,492,228
Morgan Stanley Group
04-05-94 3.47 1,000,000 999,617
04-26-94 3.54 3,800,000 3,790,685
Pitney Bowes Credit
04-08-94 3.48 1,000,000 999,325
04-21-94 3.52 3,800,000 3,792,590
St. Paul Companies
04-06-94 3.47 2,300,000 2,298,895
Sara Lee
04-04-94 3.46 3,800,000 3,798,908
Sysco
04-08-94 3.45 2,000,000 (f) 1,998,662
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (cont'd)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
Commercial paper (cont'd)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Toyota Motor Credit
04-22-94 3.61% $5,000,000 $ 4,989,500
USAA Capital
05-03-94 3.61 3,200,000 3,189,760
05-04-94 3.61 2,300,000 2,292,410
05-05-94 3.61 800,000 797,280
___________
Total 45,211,011
_____________________________________________________________________________________________________________________________
Letter of credit (0.6%)
_____________________________________________________________________________________________________________________________
Bank of New York-
River Fuel
04-07-94 3.56% 3,900,000 (f) $ 3,897,692
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $55,097,862) $ 55,097,862
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $529,039,067)(g) $637,827,911
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Represents a security sold under Rule 144A which is exempt from registration under the
Securities Act of 1933, as amended. This security has been determined to be liquid under
guidelines established by the board of directors.
(e) Presently negligible market value.
(f) Commercial paper sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors". This security has been
determined to be liquid under guidelines established by the board of directors.
(g) At March 31, 1994, the cost of securities for federal income tax purposes was
$529,151,730 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $147,642,300
Unrealized depreciation (38,966,119)
___________________________________________________________________________________________
Net unrealized appreciation $108,676,181
___________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (83.5%)
(Percentages represent value of investments compared to net assets)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (1.4%)
Boeing 124,100 $ 5,568,987
Raytheon 140,000 9,047,500
____________
Total 14,616,487
_____________________________________________________________________________________________________________________________
Automotive & related (1.4%)
Ford Motor 68,000 (b) 3,995,000
General Motors 200,000 10,800,000
____________
Total 14,795,000
_____________________________________________________________________________________________________________________________
Banks and savings & loans (4.9%)
Ahmanson (HF) 250,000 4,218,750
BankAmerica 225,000 8,859,375
BB&T Financial 150,000 4,368,750
First Chicago 160,000 7,680,000
Great Western Financial 250,000 4,000,000
Mercantile Bancorp 150,000 7,181,250
NationsBank 162,000 7,411,500
PNC Bank 275,000 7,321,875
____________
Total 51,041,500
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.8%)
Amer Brands 275,000 (b) 8,318,750
_____________________________________________________________________________________________________________________________
Building materials (1.6%)
Masco 325,000 10,237,500
Potlatch 150,000 6,281,250
____________
Total 16,518,750
_____________________________________________________________________________________________________________________________
Computers and office equipment (1.9%)
Pitney Bowes 200,000 8,125,000
SCI Systems 100,100 (c) 1,601,600
Xerox 100,000 9,550,000
____________
Total 19,276,600
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Chemicals (4.3%)
ARCO Chemical 212,500 $ 9,429,687
Dow Chemical 175,000 10,521,875
Ecolab 320,000 6,560,000
Ethyl 629,800 7,636,325
Great Lakes Chemical 75,000 5,287,500
Wellman 240,000 4,950,000
___________
Total 44,385,387
_____________________________________________________________________________________________________________________________
Energy (4.3%)
Amoco 175,000 9,296,875
General Atlantic 98,000 (c) 1,494,500
Mobil 125,000 9,296,875
Occidental Petroleum 400,000 6,450,000
Texaco 140,000 8,820,000
Total 350,000 9,143,750
____________
Total 44,502,000
_____________________________________________________________________________________________________________________________
Financial services (7.4%)
ADVANTA Cl B 117,200 3,428,100
Avalon Properties 245,000 5,390,000
Beneficial 200,000 7,325,000
Bradley Real Estate Trust 220,000 1,925,000
Crown Amer 485,200 6,671,500
Federal Natl Mtge 110,000 8,552,500
Haagan (Alexander) Properties 300,000 5,175,000
Holly Residential 100,000 1,725,000
Household Intl 200,000 5,925,000
IRT Property 290,000 3,008,750
Kimco Realty 110,000 3,946,250
Kranzco Realty Trust 225,000 4,781,250
MBNA 450,000 9,506,250
Student Loan Marketing Assn 200,000 8,625,000
____________
Total 75,984,600
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Food (0.8%)
Hormel (George A) 425,000 $ 8,181,250
_____________________________________________________________________________________________________________________________
Furniture & appliances (1.1%)
Maytag 600,000 11,250,000
_____________________________________________________________________________________________________________________________
Health care (6.0%)
Amer Home Products 125,000 7,250,000
Beckman Instruments 200,000 5,125,000
Bergen Brunswig 171,800 2,877,650
Bristol-Meyers Squibb 150,000 7,743,750
Genzyme 175,000 (c) 4,681,250
Johnson & Johnson 185,000 6,983,750
Pfizer 150,000 8,100,000
Schering-Plough 125,000 7,031,250
SCI-Med Life Systems 150,000 (c) 5,212,500
SmithKline Beecham 260,000 6,500,000
____________
Total 61,505,150
_____________________________________________________________________________________________________________________________
Household products (1.7%)
Natl Presto 75,000 3,337,500
Procter & Gamble 175,000 9,384,375
Scotts Cl A 260,000 (c) 5,037,500
____________
Total 17,759,375
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.9%)
General Signal 270,000 8,910,000
_____________________________________________________________________________________________________________________________
Industrial transportation (1.5%)
Norfolk Southern 125,000 8,078,125
Union Pacific 125,000 7,093,750
____________
Total 15,171,875
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Insurance (5.0%)
Amer General 300,000 $ 8,287,500
Aon 175,000 8,400,000
Capital Holding 200,000 6,325,000
Enhance Financial Services 200,000 3,625,000
St. Paul Companies 110,000 8,552,500
Tempest Reinsurance 77,000 (c) 7,266,721
Travelers 241,269 8,474,574
____________
Total 50,931,295
_____________________________________________________________________________________________________________________________
Media (0.8%)
Dun & Bradstreet 150,000 8,812,500
_____________________________________________________________________________________________________________________________
Metals (3.2%)
Aluminum Co of Amer 110,000 7,878,750
Freeport-McMoRan 300,000 5,812,500
Freeport-McMoRan Copper & Gold 400,000 10,250,000
J&L Specialty Steel 350,000 4,812,500
Reynolds Metals 100,000 4,587,500
____________
Total 33,341,250
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (3.8%)
Emerson Electric 150,000 8,906,250
General Electric 100,000 9,962,500
ITT 110,000 9,432,500
Textron 200,000 10,800,000
____________
Total 39,101,250
_____________________________________________________________________________________________________________________________
Paper & packaging (2.5%)
Intl Paper 125,000 8,515,625
Longview Fibre 292,000 5,256,000
Rayonier 149,500 4,186,000
Union Camp 175,000 7,743,750
____________
Total 25,701,375
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Restaurants & lodging (1.5%)
McDonald's 200,000 $11,375,000
Ryan's Family Steak House 500,000 (c) 3,812,500
____________
Total 15,187,500
_____________________________________________________________________________________________________________________________
Retail (8.8%)
Carter Hawley Hale (New) 478,000 (b,c) 5,975,000
Dayton Hudson 125,000 9,125,000
Gibson Greetings 200,000 4,175,000
K mart 400,000 (b) 7,250,000
MacFrugals Bargains Closeouts 321,000 (c) 5,336,625
May Department Stores 175,000 7,284,375
Melville 150,000 5,718,750
Mercantile Stores 100,000 3,825,000
Meyer (Fred) 110,000 (c) 4,372,500
Musicland Stores 300,900 (c) 5,867,550
Nordstrom 250,000 9,937,500
Penney (JC) 150,000 7,931,250
Rite Aid 500,000 9,500,000
Yonkers 260,000 (c) 4,680,000
____________
Total 90,978,550
_____________________________________________________________________________________________________________________________
Textiles & apparel (0.8%)
Burlington Inds Equity 525,000 (c) 7,940,625
_____________________________________________________________________________________________________________________________
Utilities - telephone (1.4%)
Comsat 118,500 3,095,812
Pacific Telesis 225,000 11,840,625
____________
Total 14,936,437
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Foreign (15.7%)(d)
Anglovaal Inds 70,000 $ 2,535,050
Banco Central Hispanoamer 225,000 4,827,825
Barlow Rand 475,000 2,739,800
BASF 30,000 (b) 5,692,080
Bayar 25,000 (b,c) 5,620,150
BCE 119,400 4,313,325
Brierley Investments 7,843,200 5,247,101
Commerce Bancorp Aust 672,000 3,925,152
Compagnie Financiere de Paribas 50,000 3,820,846
Compagnie St Gobain 60,000 6,843,300
Credit Local 100,000 7,399,500
DeBeers Cons Mines ADR 250,000 5,218,750
Enterprise Oil ADR 360,464 6,488,352
Grupo Tribasa 130,000 3,331,250
Hanson ADR 525,000 10,434,375
Iberdrola 950,000 6,943,550
Imperial Chemical ADR 20,000 917,500
Imperial Chemical Inds 661,000 7,762,784
Mayne Nickless 905,000 4,993,790
Murray & Roberts Holdings 185,000 2,973,505
Northumbrian Water 194,000 1,876,950
Repsol (SA) ADR 200,000 5,900,000
Royal Dutch Petroleum 110,000 10,931,250
Sceptre Resources 238,100 (c) 2,086,332
Stockland Trust 1,044,423 2,380,240
Telefonos de Mexico L ADR 100,000 6,025,000
Tesco 2,500,000 7,942,500
Tolmex 325,000 4,094,025
Welsh Water 408,900 3,974,508
Westfield Trust 3,516,945 6,313,620
YPF Sociedad Anonima ADR 350,000 8,312,500
____________
Total 161,864,910
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $839,178,487) $861,012,416
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Bonds (1.7%)
_____________________________________________________________________________________________________________________________
Issuer and Principal
coupon rate amount Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Domestic (0.5%)
Carter Hawley Hale Stores
6.25% Cv 2000 $ 1,000,000 (f) $ 1,218,750
Delta Air Lines
3.23% Cv 2003 4,000,000 2,965,000
USF & G
4.50% Cv 2009 1,650,000 (g) 841,500
____________
Total 5,025,250
_____________________________________________________________________________________________________________________________
Foreign (1.2%) (d)
Amcor
(Australian Dollar)
6.50% Cv 2003 160,500,000 1,068,124
Banco de Santander
(Spanish Peseta)
9% Cv 1994 450,000,000 3,892,050
Escom
(South African Rand)
11% 2008 42,475,000 7,549,507
____________
Total 12,509,681
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $17,373,698) $17,534,931
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Preferred stocks & other (2.4%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
AMR
$3 Cv 100,000 (f) $ 4,350,000
Delta Airlines
$3.50 Cm Cv 55,000 2,605,625
Compagnie Financiere de Paribas
Rights 50,000 17,547
SunAmerica
$2.78 Cv 174,600 (b) 6,940,350
UAL
$6.25 Cv 40,000 (f) 3,510,000
Unisys
$3.75 Cm Cv 167,000 7,055,750
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $27,266,852) $24,479,272
_____________________________________________________________________________________________________________________________
Short-term securities (13.2%)
_____________________________________________________________________________________________________________________________
Annualized Amount
yield on payable at
date of maturity
Issuer purchase Value(a)
_____________________________________________________________________________________________________________________________
U.S. government agency (0.2%)
Federal Natl Mtge Assn Disc Nts
04-25-94 3.43% $1,000,000 $ 997,720
04-25-94 3.51 500,000 498,834
04-27-94 3.50 1,300,000 1,296,723
____________
Total 2,793,277
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Short-term securities (continued)
_____________________________________________________________________________________________________________________________
Annualized Amount
yield on payable at
date of maturity
Issuer purchase Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Commercial paper (13.0%)
Amer General
04-25-94 3.55% $5,000,000 $4,988,233
Ameritech
05-19-94 3.20 2,000,000 1,989,601
Amgen
04-15-94 3.56 6,300,000 6,291,302
AT&T Capital
04-25-94 3.60 5,300,000 5,287,351
Becton Dickinson
04-08-94 3.55 1,600,000 1,598,899
04-28-94 3.59 1,500,000 1,495,978
Clorox
04-04-94 3.46 5,800,000 5,798,333
Colgate Palmolive
04-04-94 3.56 1,600,000 (e) 1,599,527
Columbia Fuels
04-19-94 3.15 5,000,000 4,990,901
Commercial Credit
04-15-94 3.56 5,300,000 5,292,683
Consolidated Rail
04-28-94 3.62 5,000,000 (e) 4,986,500
Eiger Capital
04-22-94 3.57 5,800,000 (e) 5,787,955
General Electric Capital
04-11-94 3.56 8,000,000 7,992,111
Household Finance
04-21-94 3.55 5,000,000 4,990,194
04-28-94 3.63 4,500,000 4,487,783
Merrill Lynch
04-08-94 3.15 1,700,000 1,698,833
05-06-94 3.63 3,600,000 3,587,330
Morgan Stanley Group
04-05-94 3.47 1,100,000 1,099,578
Norfolk Southern
04-26-94 3.54 5,700,000 (e) 5,686,067
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Short-term securities (continued)
_____________________________________________________________________________________________________________________________
Annualized Amount
yield on payable at
date of maturity
Issuer purchase Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Commercial paper (cont'd)
PepsiCo
04-13-94 3.51% $4,700,000 $ 4,694,517
04-22-94 3.62 3,000,000 2,993,700
Reed Publishing (USA)
04-14-94 3.53 4,300,000 (e) 4,294,534
04-18-94 3.53 5,400,000 (e) 5,391,024
St. Paul Companies
04-06-94 3.47 2,000,000 (e) 1,999,039
04-29-94 3.54 2,500,000 (e) 2,493,155
Scherering
04-29-94 3.61 3,400,000 3,390,480
Toyota Motor Credit
04-22-94 3.61 5,000,000 4,989,500
04-27-94 3.61 7,000,000 6,981,800
USAA Capital
04-20-94 3.57 3,800,000 3,792,880
05-03-94 3.61 5,100,000 5,083,680
05-04-94 3.61 5,750,000 5,731,025
05-05-94 3.61 2,500,000 2,491,500
____________
Total 133,975,993
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $136,772,647) $ 136,769,270
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,020,591,684)(h) $1,039,795,889
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund
March 31, 1994
_____________________________________________________________________________________________________________________________
Investments in securities (continued)
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Security is partially or fully on loan. See Note 6 to the financial statements.
(c) Presently non-income producing.
(d) Foreign security values are stated in U.S. dollars; principal amounts are denominated in the currency indicated.
(e) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors". This
security has been determined to be liquid under guidelines established by the Board of Directors.
(f) Represents a security sold under Rule 144A which is exempt from registration under the Securities Act of 1933, as amended.
This security has been determined to be liquid under guidelines established by the board of directors.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(h) At March 31, 1994, the cost of securities for federal income tax purposes was $1,020,639,744 and the
aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $73,654,205
Unrealized depreciation (54,498,060)
____________________________________________________________________________________________
Net unrealized appreciation
$19,156,145
____________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (84.4%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (7.6%)
U.S. Treasury 5.125% 1995 $10,000,000 $10,018,500
5.875 1995 15,000,000 (b) 15,197,847
6.375 1999 2,000,000 (c) 2,014,040
6.75 1997 10,000,000 10,292,699
Resolution Refunding Corp
Zero Coupon 8.54 1998 15,000,000 (d) 11,359,948
8.68 1999 6,500,000 (d) 4,743,764
8.70 1999 5,000,000 (d) 3,594,250
____________
Total 57,221,048
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (3.8%)
Federal Home Loan Mtge Corp 6.50 1994-07 1,482,068 1,379,242
8.00 1994-17 1,811,409 1,826,693
Collateralized Mtge Obligation 7.55 2020 218,749 217,087
Inverse Floater 7.529 2023 5,000,000 (e) 2,350,000
Inverse Floater Collateralized Mtge Obligation 7.582 2000 1,850,081 (e) 1,665,072
Federal Natl Mtge Assn 6.50 1994-23 4,903,263 4,560,034
6.50 1994-24 11,947,890 11,111,538
Collateralized Mtge Obligation Series Z 6.00 2024 5,025,000 (f) 3,536,997
Govt Natl Mtge Assn 9.50 2020 787,285 836,982
Prudential Bache
Collateralized Mtge
Obligation Trust 7.965 2019 981,305 995,466
____________
Total 28,479,111
_____________________________________________________________________________________________________________________________
Financial (12.7%)
Banks and savings & loans (5.4%)
BankAmerica
Sub Nts 7.50 2002 3,000,000 3,007,500
Barclays NA Capital 9.75 2021 3,600,000 4,104,000
Citicorp
Sub Secured Nts 8.00 2003 4,000,000 4,125,000
Commercial Federal
Sub Nts 10.25 1999 4,000,000 3,990,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Continental Bank 7.875% 2003 $1,000,000 $ 1,021,250
12.50 2001 3,500,000 4,519,375
CoreStates Capital
Gtd Sub Nts 9.375 2003 4,300,000 4,853,625
First Chicago 8.875 2002 4,200,000 4,557,000
First Union
Sr Nts 8.875 2003 3,000,000 2,853,750
Fleet Norstar Finance
Sub Nts 9.00 2001 4,000,000 4,370,000
Society
Sub Nts 8.125 2002 3,000,000 3,116,250
____________
Total 40,517,750
_____________________________________________________________________________________________________________________________
Financial services (3.6%)
AmeriTech Capital Funding 9.10 2016 4,000,000 4,510,000
Corporate Property Investors 7.05 2003 2,000,000 (g) 1,902,500
7.18 2013 2,000,000 (g) 1,882,500
Exxon Capital
Gtd Nts 6.625 2002 5,000,000 4,893,750
General Electric Capital
Reset Nt 8.65 1996 1,285,000 (h) 1,362,100
Goldman Sachs Group LP 7.125 2003 4,000,000 (g) 3,915,000
GPA Delaware 8.75 1998 3,000,000 2,475,000
Kearny (RE) LP 7.70 2001 1,750,000 1,767,500
Property Trust Amer 7.50 2014 5,000,000 4,643,750
____________
Total 27,352,100
_____________________________________________________________________________________________________________________________
Insurance (3.7%)
Berkley (WR) 8.70 2022 3,000,000 3,172,500
General Amer Life 7.625 2024 3,000,000 (g) 2,771,250
Leucadia Natl
Cv 5.25 2003 2,600,000 2,561,000
Sr Nt 7.75 2013 4,000,000 3,750,000
Mass Mutual Life 7.625 2023 5,000,000 (g) 4,756,250
NAC Re
Cv Sub Deb 5.25 2002 1,000,000 (g) 927,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Nationwide Mutual 7.50% 2024 $4,000,000 (g) $ 3,700,000
New England Mutual
Credit Sensitive Nts 7.875 2024 5,000,000 (g) 4,606,250
Reliance Group Holdings
Sr Nts 9.00 2000 1,000,000 932,500
USF&G
Zero Coupon Cv Sub Nts 4.50 2009 1,200,000 (d) 612,000
____________
Total 27,789,250
_____________________________________________________________________________________________________________________________
Industrial (34.4%)
Aerospace & defense (0.5%)
Allison Engine Acquisition
Sr Sub Nts 10.00 2003 1,000,000 985,000
Fairchild Inds
Sr Sec Nts 12.25 1999 3,000,000 3,015,000
____________
Total 4,000,000
_____________________________________________________________________________________________________________________________
Airlines (1.6%)
Delta Air Lines 10.375 2011 5,500,000 5,795,625
United Air Lines 10.02 2014 3,000,000 3,150,660
10.25 2021 2,900,000 3,012,375
____________
Total 11,958,660
_____________________________________________________________________________________________________________________________
Automotive & related (1.9%)
Auburn Hills Trust
Gtd Exchangeable Certs 12.375 2020 2,000,000 2,860,000
Chrysler Financial 13.25 1999 290,000 375,912
Reset Nt 10.34 2008 3,000,000 (h) 3,255,000
Exide 10.75 2002 2,900,000 3,103,000
General Motors 9.40 2021 4,000,000 4,565,000
____________
Total 14,158,912
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.3%)
RJR Nabisco
SF Deb 8.375 2017 2,058,000 1,916,513
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Building materials (2.0%)
Baldwin 10.375% 2003 $3,250,000 $ 3,189,062
Nortek
Sr Sub Nts 9.875 2004 2,500,000 2,312,500
Owens-Corning Fiberglas 9.375 2012 2,000,000 2,147,500
Sherwin Williams
Gtd Deb 9.875 2016 2,000,000 2,217,500
SnyderGeneral
Sr Sub Deb 14.25 2000 3,000,000 3,153,750
USG
Sr Nts 8.00 1997 2,000,000 2,032,500
____________
Total 15,052,812
_____________________________________________________________________________________________________________________________
Chemicals (2.9%)
G-I Holdings
Sub Nts 11.37 1998 8,000,000 (g) 4,910,000
Goodrich (BF) 9.625 2001 3,000,000 3,258,750
Hanna (MA)
Sr Nts 9.375 2003 4,000,000 4,360,000
Praxair 8.70 2022 3,000,000 3,180,000
Sifto Canada
Sr Sub Nt 8.50 2000 3,000,000 2,880,000
Uniroyal Chemical
Sr Sub Nts 11.00 2003 3,000,000 3,120,000
____________
Total 21,708,750
_____________________________________________________________________________________________________________________________
Communications equipment (0.6%)
MFS Communications
Zero Coupon Sr Nt 9.34 1999 4,000,000 (d) 2,400,000
NEXTEL Communications
Zero Coupon Sr Nt 9.75 1999 4,000,000 (d) 2,400,000
____________
Total 4,800,000
_____________________________________________________________________________________________________________________________
Computers & office equipment (1.1%)
Anacomp 12.25 1997 3,000,000 (i) 3,135,000
Conner Peripheral
Cv 6.75 2001 2,000,000 1,750,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Convex Computer
Cv 6.00% 2012 $2,000,000 $ 1,425,000
Data General
SF Deb 8.375 2002 2,000,000 1,840,000
____________
Total 8,150,000
_____________________________________________________________________________________________________________________________
Electronics (0.3%)
Berg Electronics 11.375 2003 2,000,000 2,040,000
_____________________________________________________________________________________________________________________________
Energy (2.6%)
Cross Timbers Oil
Cv Sub Nts 5.25 2003 500,000 453,750
McDermott 9.375 2002 1,900,000 2,073,375
PDV Amer 7.875 2003 5,000,000 4,793,750
Questar Pipeline 9.375 2021 3,000,000 3,393,750
Texaco Capital
Gtd Deb 7.50 2043 3,000,000 2,835,000
USX 9.125 2013 3,000,000 3,045,000
9.375 2022 3,000,000 3,112,500
____________
Total 19,707,125
_____________________________________________________________________________________________________________________________
Energy equipment & services (0.4%)
Global Marine
Sr Secured Nts 12.75 1999 2,500,000 2,712,500
_____________________________________________________________________________________________________________________________
Food (0.2%)
Fresh Del Monte Produce 10.00 2003 2,000,000 1,847,500
_____________________________________________________________________________________________________________________________
Furniture & appliances (0.3%)
Sealy
Sr Sub Nts 9.50 2003 2,000,000 1,970,000
_____________________________________________________________________________________________________________________________
Health care services (1.6%)
Amer Medical Intl
SF Deb 11.25 2015 4,000,000 4,305,000
Foundation Health
Sr Nts 7.75 2003 3,400,000 3,289,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
HEALTHSOUTH Rehab
Sr Sub Nts 9.50% 2001 $1,000,000 $ 980,000
Hillhaven
Sr Nts 10.125 2001 3,000,000 3,075,000
____________
Total 11,649,500
_____________________________________________________________________________________________________________________________
Household products (0.4%)
Revlon Consumer Products 10.50 2003 2,500,000 2,250,000
Revlon Worldwide
Zero Coupon Sr Sec 12.00 1998 2,500,000 (d) 1,137,500
____________
Total 3,387,500
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.6%)
Mascotech
Cv 4.50 2003 1,500,000 1,359,375
Omega Healthcare 7.11 2000 2,909,023 (g) 2,879,933
____________
Total 4,239,308
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (1.2%)
Cinemark (USA)
Sr Nts 12.00 2002 3,000,000 3,300,000
GB Property
1st Mtge 10.875 2004 3,000,000 2,910,000
Showboat
1st Mtge 9.25 2008 3,000,000 2,820,000
____________
Total 9,030,000
_____________________________________________________________________________________________________________________________
Media (5.4%)
Adelphia Communications
Sr Deb 11.875 2004 3,000,000 3,255,000
Cablevision Inds 9.25 2008 3,500,000 3,325,000
Cablevision Systems
Sr Sub Deb 9.875 2013 3,000,000 3,090,000
Comcast
Cv 1.125 2007 1,500,000 669,375
Continental Cablevision
Sr Deb 8.875 2005 2,500,000 2,462,500
News Corp 10.15 2010 3,951,543 (g) 4,406,643
Robin Media Group 11.125 1997 2,000,000 2,042,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Rogers Communications
Sr Deb 10.875% 2004 $2,000,000 $ 2,105,000
Zero Coupon Cv 5.50 1998 6,000,000 (d) 2,310,000
Sci Television 7.50 1998 4,000,000 3,880,000
SPI Holding
Zero Coupon Sr Disc Nts 11.50 1996 4,000,000 (d) 3,010,000
Tele-Communications
Sr Deb 9.80 2012 3,500,000 3,880,625
Turner Broadcasting System
Sr Nts 8.375 2013 6,900,000 6,382,500
____________
Total 40,819,143
_____________________________________________________________________________________________________________________________
Metals (0.5%)
A.K. Steel
Sr Nt 10.75 2004 2,000,000 1,990,000
Geneva Steel
Sr Nt 9.50 2004 2,000,000 1,880,000
____________
Total 3,870,000
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (1.0%)
Mark IV Inds
Sr Sub Nts 8.75 2003 3,300,000 3,151,500
Talley Inds
Zero Coupon Sr Disc Deb 12.20 1998 2,000,000 (d) 1,225,000
Talley Mfg & Technology 10.75 2003 3,000,000 3,000,000
____________
Total 7,376,500
_____________________________________________________________________________________________________________________________
Paper & packaging (2.7%)
Container Corp Amer
Sr Nts 9.75 2003 3,000,000 2,981,250
Federal Paper Board 10.00 2011 1,900,000 2,170,750
Gaylord Container
Sr Nts 11.50 2001 2,500,000 2,534,375
Pope & Talbot 8.375 2013 3,000,000 2,928,750
Repap Wisconsin
Sr Secured Nts 9.25 2002 2,000,000 1,930,000
Riverwood Intl
Cv 6.75 2003 1,000,000 (g) 1,065,000
Silgan
Sr Sub Nts 11.75 2002 4,000,000 4,260,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Stone Container
Sr Nts 9.875% 2001 $3,000,000 $ 2,775,000
____________
Total 20,645,125
_____________________________________________________________________________________________________________________________
Restaurants & lodging (1.3%)
Bally's Grand
1st Mtge 10.375 2003 1,500,000 (g) 1,466,250
Family Restaurant
Sr Nts 9.75 2002 2,500,000 2,337,500
Hammons (Jonn Q) Hotel
1st Mtge 8.875 2004 3,000,000 2,820,000
Trump Taj Mahal
Pay-in-Kind -- 1999 3,000,000 2,985,000
____________
Total 9,608,750
_____________________________________________________________________________________________________________________________
Retail (3.6%)
Dairy Mart Stores
Sr Sub Nts 10.25 2004 2,500,000 2,425,000
Eckerd (Jack)
Sr Sub Nts 9.25 2004 2,000,000 1,837,500
Eye Care Center 12.00 2003 4,000,000 (g) 4,120,000
Grand Union 12.25 2002 3,000,000 3,105,000
Sr Sub Nts 12.25 2002 2,000,000 1,990,000
Kash n' Karry Food Stores
Sub Deb 14.00 2001 4,000,000 (j) 3,160,000
Penn Traffic
Sr Nts 10.25 2002 1,000,000 1,070,000
Sr Sub Nts 9.625 2005 3,000,000 2,985,000
Specialty Retailers 10.00 2000 3,000,000 3,030,000
Wal-Mart Stores 8.875 2011 3,500,000 3,749,375
____________
Total 27,471,875
_____________________________________________________________________________________________________________________________
Textiles & apparel (1.2%)
Dominion Textiles
Sr Nt 8.875 2003 3,900,000 3,627,000
JPS Textile Group 9.85 1999 1,000,000 1,010,000
11.75 1996 2,000,000 (g) 2,040,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
WestPoint Stevens
Sr Nts 8.75% 2001 $2,500,000 $2,362,500
____________
Total 9,039,500
_____________________________________________________________________________________________________________________________
Miscellaneous industry (0.2%)
ECM Funding LP 11.918 2002 1,290,316 (i) 1,447,089
_____________________________________________________________________________________________________________________________
Municipal (0.6%)
Washington Public Power Supply System
Bonneville Nuclear Project #3
Refunding Revenue Bonds 5.375 2015 5,000,000 4,377,100
_____________________________________________________________________________________________________________________________
Transportation (0.9%)
AMR 9.75 2000 3,000,000 3,266,250
9.80 2021 3,000,000 3,165,000
Interpool
Cv 5.25 2018 200,000 187,250
____________
Total 6,618,500
_____________________________________________________________________________________________________________________________
Utilities (9.4%)
Electric (7.2%)
Arizona Public Service
1st Mtge 8.75 2024 3,000,000 3,206,250
Sale Lease-Backed Obligation 8.00 2015 3,600,000 3,541,500
Commonwealth Edison
1st Mtge 9.875 2020 4,000,000 4,490,000
Gulf States Utilities
1st Mtge 8.70 2024 6,000,000 6,142,500
Long Island Lighting 9.00 2022 3,000,000 3,007,500
Gen Ref Mtge 9.625 2024 3,000,000 3,195,000
Louisiana Power & Light
Sale Lease-Backed Obligation 10.30 2005 1,900,000 2,014,000
Midland Cogeneration Venture 10.33 2002 1,844,356 1,925,046
11.75 2005 2,000,000 2,100,000
Sub Secured Sale Lease-Backed
Obligation 10.33 2002 2,978,957 (g) 3,109,287
Pacific Gas & Electric
1st & Ref 8.25 2022 4,000,000 4,085,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Pennsylvania Power & Light
1st Mtge 9.25% 2019 $ 900,000 $ 983,250
Sithe Independence Funding 9.00 2013 2,000,000 2,077,500
Texas-New Mexico Power
1st Mtge 9.25 2000 3,000,000 3,082,500
1st Mtge 10.00 2017 3,000,000 3,146,250
Texas Utilities Electric
1st Mtge 7.375 2025 3,000,000 2,745,000
1st Mtge 9.75 2021 4,900,000 5,469,625
____________
Total 54,320,208
_____________________________________________________________________________________________________________________________
Gas (1.2%)
Tennessee Gas Pipeline 6.00 2011 600,000 470,250
Transco Energy 9.375 2001 4,000,000 4,080,000
Transcontinental Gas Pipeline 8.875 2002 4,000,000 4,165,000
____________
Total 8,715,250
_____________________________________________________________________________________________________________________________
Telephone (1.0%)
New York Tel 9.375 2031 3,500,000 4,007,500
Pacific Bell 7.375 2043 4,000,000 3,685,000
____________
Total 7,692,500
_____________________________________________________________________________________________________________________________
Foreign (15.0%)(k)
ABN Amro
(U.S. Dollar) 7.75 2023 1,700,000 1,663,875
(U.S. Dollar) 7.125 2093 3,800,000 3,334,500
Agnico Eagle Mines
(U.S. Dollar) Cv 3.50 2004 850,000 735,250
Banca Italy N.Y.
(U.S. Dollar) 8.25 2007 3,000,000 3,078,750
Bank of Scotland
(U.S. Dollar) 8.80 2004 3,500,000 (g) 3,808,630
Canadian Pacific Forest
(U.S. Dollar) 9.375 2004 3,000,000 (g) 2,970,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Doman Inds
(U.S. Dollar) 8.75% 2004 $ 3,000,000 $ 2,771,250
Ford Capital BV
(U.S. Dollar) 9.125 1998 4,000,000 4,350,000
Govt of Canada
(Canadian Dollar) 10.50 2001 4,750,000 3,909,844
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 4,000,000 (g) 3,765,000
Hanson Inds
(British Pound) Cv 9.50 2006 1,000,000 1,770,400
Hydro Quebec
(U.S. Dollar) 9.40 2021 2,400,000 2,739,000
KEPC
(U.S. Dollar) 6.375 2003 3,000,000 2,688,750
(U.S. Dollar) 8.00 2002 2,800,000 2,824,500
Korea Telecom
(U.S. Dollar) 7.40 1999 2,000,000 2,020,000
Lend Lease Euro
(U.S. Dollar) Cv 4.75 2003 1,000,000 (g) 1,156,250
Macmillan Bloeo
(U.S. Dollar) 8.50 2004 3,000,000 3,086,250
Mexican/United States Govt Euro
(U.S. Dollar) 6.25 2019 3,000,000 2,062,500
Noranda Forest
(U.S. Dollar) 7.50 2003 4,000,000 3,820,000
(U.S. Dollar) 8.875 1999 5,000,000 5,193,750
Peoples Republic of China
(U.S. Dollar) 6.50 2004 5,000,000 (b) 4,450,000
Petroleos Mexicanos
(U.S. Dollar) 8.625 2023 5,000,000 4,443,750
Placer Dome
(U.S. Dollar) 7.125 2003 5,000,000 4,868,750
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Province of Ontario
(U.S. Dollar) 7.375% 2003 $3,000,000 $ 3,000,000
PT Indah Kiat Euro
(U.S. Dollar) 8.875 2000 3,000,000 2,831,250
Qantas Air
(U.S. Dollar) 7.50 2003 4,000,000 (g) 3,860,000
Republic of Argentina
(U.S. Dollar) 4.00 2023 8,000,000 4,160,000
Republic of Columbia
(U.S. Dollar) 7.25 2004 3,500,000 3,272,500
Republic of Italy
(U.S. Dollar) 6.875 2023 5,500,000 4,826,250
Roche Holdings
(U.S. Dollar) 2.75 2000 4,000,000 3,182,480
Rogers Cantel Mobile
(U.S.Dollar) Sr Sec Gtd Nts 10.75 2001 3,000,000 3,150,000
Rogers Comunication
(U.S. Dollar) Cv 2.00 2005 2,000,000 1,295,000
Shangri-La Asia Euro
(U.S. Dollar) Cv 2.875 2000 600,000 (g) 513,000
Tarkett Intl
(U.S. Dollar) 9.00 2002 3,000,000 (g) 2,775,000
TOLMEX
(U.S. Dollar) 8.375 2003 4,000,000 3,845,000
United Engineers Malaysia
(U.S.Dollar) Cv 2.00 2004 500,000 (g) 455,000
U.K. Treasury
(British Pound) 8.00 2003 2,500,000 3,825,950
____________
Total 112,502,429
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $635,827,610) $634,192,308
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Preferred stocks & other (3.0%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
ABN AMRO Holdings
6% Cv 27,400 $ 946,232
Algoma Finance
5.50% Series A 50,000 749,774
Amer Life Holdings
2.16% Cv 120,000 3,060,000
Anacomp
$8.25 Series 1 10,000 (i) 372,500
Dr. Pepper/Seven-Up
Common 40,500 (j) 972,000
Envirodyne Inds
Common 30,296 (j) 219,646
EnviroSource
7.25% Cv 30,000 3,420,000
First Chicago
2.875% Cm Cv 25,000 1,309,375
Hills Stores 57,239 (j) 1,137,625
Cv 38,416 (j) 768,320
Rights 26,828 241,586
Liberty Media
6% Cl E 25,000 1,875,000
Magma Copper
2.8125% Cv 15,000 871,875
Merry Land & Investment
1.75% Cm Cv 22,000 621,500
Natl Health Investors
8.50% Cv 23,000 575,000
Occidental Petroleum
3.875% Cm Cv 14,000 (g) 668,500
Pittston Mineral
6.25% Cv Series C 10,000 (g) 390,000
Property Trust Amer
$1.75 Cv Series A 22,605 615,986
Public Service of
New Hampshire
10.60% Cm 71,000 1,881,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Snyder Oil
6% Cv 50,000 $ 1,300,000
Sonoco Products
$2.25 Cv 16,800 877,800
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $22,994,988) $22,874,219
_____________________________________________________________________________________________________________________________
Short-term securities (10.5%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
U.S. government agencies (0.9%)
Federal Home Loan Bank Disc Notes
04-25-94 3.47% $1,000,000 $ 997,693
04-28-94 3.51 3,000,000 2,992,125
Federal Natl Mtge Assn Disc Note
04-25-94 3.43 2,700,000 2,693,844
____________
Total 6,683,662
_____________________________________________________________________________________________________________________________
Commercial paper (9.6%)
AIG Funding
05-02-94 3.59 5,900,000 5,881,812
Aon
04-08-94 3.59 500,000 499,652
AT&T Capital
04-25-94 3.60 2,700,000 2,693,556
Campbell Soup
04-12-94 3.53 3,100,000 3,096,666
Commerzbank
U.S. Finance
04-06-94 3.46 2,600,000 2,598,754
Cooper Inds
04-08-94 3.55 2,100,000 2,098,551
Corporate Asset Funding
04-08-94 3.56 4,100,000 4,097,170
04-11-94 3.53 2,200,000 2,197,849
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (continued)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
CPC Intl
05-06-94 3.63% $5,500,000 (l) $ 5,480,643
Dun & Bradstreet
04-19-94 3.56 7,700,000 7,686,332
Fleet Funding
04-07-94 3.56 600,000 (l) 599,645
04-18-94 3.58 5,000,000 (l) 4,991,571
Gateway Fuel
04-13-94 3.56 4,300,000 4,294,912
Goldman Sachs
05-04-94 3.61 5,300,000 5,282,510
Hewlett-Packard
05-02-94 3.69 700,000 697,788
Penney (JC) Funding
05-12-94 3.62 700,000 697,130
Pennsylvania Power & Light
Energy Trust
04-15-94 3.56 7,000,000 6,990,336
St. Paul Companies
04-20-94 3.54 4,100,000 (l) 4,092,372
Schering
04-28-94 3.61 3,000,000 2,991,900
USAA Capital
04-20-94 3.57 1,800,000 1,796,627
05-05-94 3.61 3,400,000 3,388,440
____________
Total 72,154,216
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $78,837,878) $ 78,837,878
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $737,660,476)(m) $735,904,405
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund
March 31, 1994
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Security is partially or fully on loan. See Note 5 to the financial statements.
(c) Partially pledged as initial deposit on the following open interest rate futures purchase contract (see Note
7 to the financial statements):
Type of security Par value
_________________________________________________________________________________
<S> <C> <C>
Municipal Bond, June 1994 5,000,000
_________________________________________________________________________________
(d) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date
of acquisition.
(e) Inverse floaters represent securities which pay interest at a rate that increases (decreases)
with a decline (increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed
is the rate in effect on March 31, 1994.
(f) This security is a collateralized mortgage obligation whose payment of principal has been deferred until
payment of a previous series within the trust have been paid off.
(g) Represents a security sold under Rule 144A which is exempt from registration under the Securities Act of
1933, as amended. This security has been determined to be liquid under guidelines established by the
board of directors.
(h) Interest rate varies, rate shown is the effective rate on March 31, 1994.
(i) Identifies issues considered to be illiquid, (see Note 9 to the financial statements). Information
concerning such security holdings at March 31, 1994, is as follows:
Security Acquisition Cost
date
__________________________________________________________________________________
Anacomp
$8.25 Series 1 08-20-92 $ 347,500
12.25% Series B 08-21-92 3,153,750
ECM Funding LP
11.918% 2002 04-13-92 1,290,316
__________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Income Fund
March 31, 1994
_____________________________________________________________________________________________________________________________
Notes to investments in securities (continued)
_____________________________________________________________________________________________________________________________
(j) Presently non-income producing. For long-term debt securities, items identified are in default as to payment of interest
and/or principal.
(k) Foreign security values are stated in U.S. dollars; principal amounts are denominated in the currency indicated.
(l) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This
security has been determined to be liquid under guidelines established by the board of directors.
(m) At March 31, 1994, the cost of securities for federal income tax purposes was $737,401,362 and the aggregate gross
unrealized appreciation and depreciation based on that cost was:
<S> <C>
Unrealized appreciation $20,347,825
Unrealized depreciation (21,844,782)
________________________________________________________________________________________________________________
Net unrealized depreciation $(1,496,957)
________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Short-Term Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (66.9%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (21.2%)
U.S. Treasury 5.625% 1998 $25,000,000 $24,706,498
7.50 1996 5,000,000 5,205,150
7.875 1996 10,100,000 10,607,947
____________
Total 40,519,595
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (32.5%)
Federal Home Loan Mtge Corp 5.332 1994-19 38,098 (b) 38,790
5.50 1994-21 3,485,455 (b) 3,555,583
5.587 1994-22 4,885,215 (b) 5,053,119
5.633 1994-20 1,845,572 (b) 1,884,052
5.641 1994-21 2,949,806 (b) 3,095,438
5.73 1994-22 1,763,983 (b) 1,801,026
5.782 1994-21 1,135,530 (b) 1,188,752
5.814 1994-22 655,295 (b) 669,724
5.851 1994-22 5,948,758 (b) 6,083,498
7.983 1994-18 1,140,317 (b) 1,172,388
Collateralized Mtge Obligation 6.50 1994-03 2,070,820 1,927,147
6.85 1994-20 2,400,000 (b) 2,304,192
Inverse Floater 20.577 2021 862,113 (c) 905,813
Federal Natl Mtge Assn 3.849 1994-24 3,974,480 (b) 4,049,001
5.094 1994-21 1,191,828 (b) 1,214,890
5.379 1994-21 411,164 (b) 420,173
5.451 1994-21 1,304,603 (b) 1,334,674
5.60 1994-21 1,029,930 (b) 1,054,802
6.50 1994-24 10,363,556 9,638,107
Collateralized Mtge Obligation 6.50 2017 5,065,466 5,092,212
6.825 2022 1,700,000 1,173,000
Collateralized Mtge Obligation Inverse Floater 10.563 2022 800,000 (c) 803,592
11.423 2023 2,276,746 (c) 2,046,226
Interest Only 7.50 2007 1,147,382 (d) 812,711
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy, Fund, Inc.
Short-Term Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Govt Natl Mtge Assn 9.50% 1994-16 $4,102,527 $ 4,361,499
Salomon Brothers Capital
Collateralized Mtge Obligation 8.00 2003 512,404 514,966
____________
Total 62,195,375
_____________________________________________________________________________________________________________________________
Automotive & related (4.0%)
Ford Motor Credit 8.50 1994 2,500,000 2,528,125
General Motors Acceptance 6.50 1995 2,500,000 2,528,125
9.00 1995 2,500,000 2,575,000
____________
Total 7,631,250
_____________________________________________________________________________________________________________________________
Banks and savings & loans (1.8%)
Bank New York Master Credit Card 7.95 1996 2,333,333 2,354,730
Morgan (JP)
Sub Cap Nts 8.875 1994 1,000,000 1,013,750
____________
Total 3,368,480
_____________________________________________________________________________________________________________________________
Beverages & tobacco (2.7%)
Philip Morris 8.25 1995 5,000,000 5,143,750
_____________________________________________________________________________________________________________________________
Commercial finance (1.1%)
Ford Credit
Asset-Backed Obligation 8.75 1995 591,820 594,187
General Motors Acceptance Credit
Asset-Backed Obligation 8.25 1995 557,422 565,014
US Auto Rec
Asset-Backed Obligation 8.15 1996 475,741 474,885
Asset-Backed Obligation 8.65 1995 455,892 456,403
____________
Total 2,090,489
_____________________________________________________________________________________________________________________________
Financial services (1.5%)
Beneficial 9.35 1995 1,900,000 1,995,000
Discover Card
Asset-Backed Obligation 8.375 1996 1,000,000 1,001,250
____________
Total 2,996,250
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Short-term Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (continued)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Foreign (2.1%)(e)
Mitsubishi Bank 8.625% 1994 $4,000,000 $ 4,032,000
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $130,004,994) $127,977,189
_____________________________________________________________________________________________________________________________
Short-term securities (32.2%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
U.S. government agencies (1.3%)
Federal Home Loan Bank Disc Note
04-14-94 3.42% $1,700,000 $ 1,697,907
Federal Natl Mtge Assn Disc Note
04-25-94 3.43 800,000 798,176
____________
Total 2,496,083
_____________________________________________________________________________________________________________________________
Commercial paper (30.4%)
ABB Treasury Center (USA)
04-12-94 3.54 4,100,000 (f) 4,095,578
Aon
04-20-94 3.64 1,400,000 1,397,322
Becton Dickinson
04-11-94 3.54 3,500,000 3,496,568
BellSouth Capital Funding
04-25-94 3.51 4,200,000 4,190,200
Cafco Public
05-02-94 3.61 1,500,000 1,495,350
Ciesco LP
04-19-94 3.53 2,700,000 2,695,248
04-27-94 3.66 6,400,000 6,383,129
Goldman Sachs Group
04-29-94 3.61 1,300,000 1,296,360
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Short-Term Income Fund (Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (continued)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Commercial paper (cont'd)
Heinz (H.J.)
05-09-94 3.67% $9,400,000 $ 9,363,784
Lincoln Natl
04-18-94 3.54 1,200,000 (f) 1,198,000
Morgan Stanley Group
04-05-94 3.47 1,800,000 1,799,310
Nestle Capital
04-04-94 3.47 2,700,000 2,699,221
PACCAR Financial
04-07-94 3.51 3,300,000 3,298,075
04-14-94 3.53 4,100,000 4,094,788
Sara Lee
04-04-94 3.46 3,300,000 3,299,051
Schering
04-28-94 3.61 4,000,000 3,989,200
USAA Capital
04-20-94 3.57 3,300,000 3,293,817
____________
Total 58,085,001
_____________________________________________________________________________________________________________________________
Letter of credit (0.5%)
Bank of Amer-
AES Barbers Point
04-20-94 3.66 1,000,000 998,073
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $61,579,157) $ 61,579,157
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $191,584,151)(g) $189,556,346
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Short-Term Income Fund
March 31, 1994
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on
March 31, 1994.
(c) Inverse floaters represent securities which pay interest at a rate that increases (decreases) with a decline (increase)
in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed is the rate in effect on March 31, 1994.
(d) Principal amounts and interest rates disclosed for interest-only securities represent amortized cost and coupon rates,
respectively.
(e) Foreign security values and principal amounts are stated in U.S. dollars.
(f) Commercial paper sold within terms of a private placement memorandum, exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers
in that program or other "accredited investors". This security has been determined to be liquid
under guidelines established by the board of directors.
(g) On March 31, 1994, the cost of securities for federal income tax purposes was $191,559,307
and the aggregate gross unrealized appreciation and depreciation based on that cost was:
<S> <C>
Unrealized appreciation $ 1,027,286
Unrealized depreciation (3,030,247)
____________________________________________________________________________________________
Net unrealized depreciation $(2,002,961)
____________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (90.3%)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Australia (6.1%)
Banks and savings & loans (1.3%)
Westpac Banking 891,000 $2,854,764
_____________________________________________________________________________________________________________________________
Energy (0.9%)
Broken Hill Proprietary 173,000 1,999,188
_____________________________________________________________________________________________________________________________
Industrial transportation (0.7%)
Brambles 156,000 1,487,772
_____________________________________________________________________________________________________________________________
Metals (2.0%)
CRA 179,200 2,093,414
Pasminco 1,574,500 (c) 2,207,449
____________
Total 4,300,863
_____________________________________________________________________________________________________________________________
Retail (1.2%)
Woolworth 1,178,800 2,578,036
_____________________________________________________________________________________________________________________________
Belgium (1.1%)
Chemicals (0.6%)
UCB 2,000 1,331,858
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.5%)
Bekaert 1,400 961,849
_____________________________________________________________________________________________________________________________
Canada (0.6%)
Media
BCE Mobile Telecom 45,100 (c) 1,205,926
_____________________________________________________________________________________________________________________________
Chile (0.1%)
Utilities-telephone
Chile Telephone 3,500 312,375
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Finland (0.4%)
Banks and savings & loans
Kansallis-Osake-Bank 375,000 (c) $ 783,375
_____________________________________________________________________________________________________________________________
France (6.7%)
Banks and savings & loans (0.5%)
Credit Commerciale de France 24,277 1,037,259
_____________________________________________________________________________________________________________________________
Building materials (1.1%)
LaFarge-Coppee 30,129 (d) 2,331,412
_____________________________________________________________________________________________________________________________
Electronics (0.4%)
Alcatel Alsthom 8,256 964,813
_____________________________________________________________________________________________________________________________
Energy (1.7%)
Elf Acquitaine 29,800 (c) 1,934,705
TOTAL France Petroleum Cl B 33,330 1,769,123
____________
Total 3,703,828
_____________________________________________________________________________________________________________________________
Financial services (1.3%)
Compagnie de Suez 51,000 2,805,459
_____________________________________________________________________________________________________________________________
Food (0.4%)
Eridania Beghin-Say 5,000 820,315
_____________________________________________________________________________________________________________________________
Health care (0.4%)
L'Oreal 4,500 926,212
_____________________________________________________________________________________________________________________________
Retail (0.1%)
Guilbert 2,522 233,656
_____________________________________________________________________________________________________________________________
Utilities-electric (0.8%)
Lyonnaise Des Eaux 17,140 1,708,275
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Germany (3.3%)
Banks and savings & loans (0.7%)
Duetsche Bank 3,000 $1,418,979
_____________________________________________________________________________________________________________________________
Building materials (0.2%)
Hochtief 550 351,477
_____________________________________________________________________________________________________________________________
Industrial transportation (0.8%)
Prueussag 6,400 1,761,043
_____________________________________________________________________________________________________________________________
Insurance (0.9%)
Munchener Ruckvericherungs 1,000 1,918,350
_____________________________________________________________________________________________________________________________
Utilities-electric (0.7%)
Veba 5,500 1,600,770
_____________________________________________________________________________________________________________________________
Hong Kong (6.3%)
Banks and savings & loans (0.9%)
Hang Seng Bank 292,000 1,907,928
_____________________________________________________________________________________________________________________________
Industrial transportation (0.6%)
Shun Tak Holdings 1,130,000 1,271,250
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (1.8%)
Hutchison Whampoa 345,000 1,406,220
Swire Pacific 372,000 2,575,356
____________
Total 3,981,576
_____________________________________________________________________________________________________________________________
Real estate (3.0%)
Great Eagle Holdings 2,552,000 1,607,760
Sun Hung Kai Properties 253,500 1,738,503
Wharf 790,000 3,046,240
____________
Total 6,392,503
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Italy (2.1%)
Automotive & related (1.3%)
Fiat 1,229,000 $ 2,723,464
_____________________________________________________________________________________________________________________________
Building materials (0.3%)
Cartiere Burgo 85,500 (c) 616,370
_____________________________________________________________________________________________________________________________
Communications equipment (0.5%)
STET 342,000 1,222,650
_____________________________________________________________________________________________________________________________
Japan (27.7%)
Banks and savings & loans (0.9%)
Fuji Bank 91,000 1,919,918
_____________________________________________________________________________________________________________________________
Building materials (0.9%)
Maeda Road 100,000 1,973,100
_____________________________________________________________________________________________________________________________
Chemicals (0.5%)
Mitsubishi Kasei 218,000 1,017,842
_____________________________________________________________________________________________________________________________
Electronics (9.4%)
Canon 66,000 1,044,384
Hitachi 232,000 2,107,488
Konika 145,000 903,495
Kyocera 33,000 2,121,009
Matsushita Communications 40,000 (d) 910,360
Matsushita Electric 110,000 1,826,550
Matsushita Kotobuki Electric 25,000 832,700
Nintendo 24,000 1,570,680
Rohm 58,000 (d) 2,209,510
Sony 69,000 3,942,798
TDK 34,000 1,428,068
Toshiba 179,000 1,288,621
____________
Total 20,185,663
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Japan (cont'd)
Financial services (2.0%)
Daiwa Securities 119,000 (c) $1,906,261
Sumitomo Trust & Banking 167,000 2,495,815
____________
Total 4,402,076
_____________________________________________________________________________________________________________________________
Food (0.4%)
Nicherei 131,000 (c) 882,809
_____________________________________________________________________________________________________________________________
Industrial equipment & services (4.2%)
Chiyoda 24,000 602,472
Fanuc 46,000 1,860,194
Fuji Machine Manufacturing 48,000 1,265,904
Mitsubishi Heavy Inds 350,000 2,225,300
Sumitomo Electric 218,000 3,194,136
____________
Total 9,148,006
_____________________________________________________________________________________________________________________________
Industrial transportation (1.8%)
Nippon Express 182,000 1,813,266
Nippon Steel 639,000 2,009,655
____________
3,822,921
_____________________________________________________________________________________________________________________________
Media (1.2%)
Kokusai Denshin Denwa 11,000 1,278,629
Tokyo Broadcasting Systems 75,000 1,267,350
____________
Total 2,545,979
_____________________________________________________________________________________________________________________________
Real estate (0.2%)
Mitsui Fudoson 45,000 509,850
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Japan (cont'd)
Retail (5.6%)
Aoyama Trading 34,000 $ 1,936,198
Family Mart 26,500 (c) 1,573,808
Ito-Yokado 66,000 3,500,640
Joshin Denki 38,000 608,722
Jusco 77,000 1,699,775
Keiyo 70,350 (d) 1,326,238
Marui 93,000 1,389,885
____________
Total 12,035,266
_____________________________________________________________________________________________________________________________
Miscellaneous (0.6%)
Itochu 188,000 1,276,144
_____________________________________________________________________________________________________________________________
Malaysia (2.6%)
Banks and savings & loans (0.4%)
Malayan Banking Berhad 167,500 867,482
_____________________________________________________________________________________________________________________________
Furniture & appliances (0.3%)
Berjaya Singer Berhad 365,000 562,830
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.4%)
Resorts World Berhad 179,000 860,453
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (0.8%)
Sime Darby 803,000 1,825,219
_____________________________________________________________________________________________________________________________
Utilities-electric (0.7%)
Tenaga Nasional Berhad 288,000 1,491,552
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Mexico (3.9%)
Building materials (2.8%)
Cemex Cl B ADR 85,000 (c) $4,080,000
Empresas 50,000 (d) 1,200,000
Grupo Mexicano de Desarollo 41,800 (c) 700,150
____________
Total 5,980,150
_____________________________________________________________________________________________________________________________
Communications equipment (0.7%)
Telefonos de Mexico 25,000 1,506,250
_____________________________________________________________________________________________________________________________
Retail (0.4%)
Benavides Cl B 162,000 (c) 906,876
_____________________________________________________________________________________________________________________________
Netherlands (2.2%)
Chemicals (0.7%)
Akzo Nobel N.V. 13,300 1,539,063
_____________________________________________________________________________________________________________________________
Financial services (0.3%)
Intl Nederlanden Groep 13,500 577,895
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.3%)
Stork 31,000 742,915
_____________________________________________________________________________________________________________________________
Media (0.9%)
Elsevier 21,100 1,861,653
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Norway (1.0%)
Energy (0.5%)
Saga Petroleum 103,000 $1,050,394
_____________________________________________________________________________________________________________________________
Industrial transportation (0.5%)
First Olsen Tankers 130,000 (c) 1,074,840
_____________________________________________________________________________________________________________________________
Singapore (5.1%)
Automotive and related (1.0%)
Cycle and Carriage 369,000 2,235,402
_____________________________________________________________________________________________________________________________
Banks and savings & loans (1.9%)
Development Bank Singapore ADR 11,250 393,750
Development Bank Singapore ORD 186,500 1,653,136
Overseas Union Bank 440,000 2,005,960
____________
Total 4,052,846
_____________________________________________________________________________________________________________________________
Beverages & tobacco (1.1%)
Fraser & Neave 214,600 2,299,224
_____________________________________________________________________________________________________________________________
Industrial transportation (1.1%)
Keppel 294,000 1,799,868
Sembawang Shipyard 91,000 626,717
____________
Total 2,426,585
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
South Africa (0.4%)
Gold mines
Anglo Amer 21,000 $ 863,058
_____________________________________________________________________________________________________________________________
Spain (3.2%)
Banks and savings & loans (0.9%)
Banco Popular Espanol 16,380 1,784,486
_____________________________________________________________________________________________________________________________
Energy (0.6%)
Repsol 43,000 1,349,942
_____________________________________________________________________________________________________________________________
Utilities-telephone (1.7%)
Telefonica de Espana 300,000 3,676,800
_____________________________________________________________________________________________________________________________
Sweden (1.8%)
Energy (0.9%)
Asea Cl B 26,700 2,004,289
_____________________________________________________________________________________________________________________________
Health care (0.7%)
Astra Cl A 35,250 689,701
Astra Cl B 36,300 687,014
____________
Total 1,376,715
_____________________________________________________________________________________________________________________________
Metals (0.2%)
Trelleborg Cl B 44,000 509,212
_____________________________________________________________________________________________________________________________
Switzerland (1.6%)
Banks and savings & loans (1.1%)
Schweizerischer Bankverein 16,200 2,354,476
_____________________________________________________________________________________________________________________________
Insurance (0.5%)
Schweiz-Ruckversicherungs 2,680 (c) 1,117,220
_____________________________________________________________________________________________________________________________
Thailand (0.6%)
Banks and savings & loans (0.3%)
Siam Commercial Bank 126,000 768,978
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.3%)
Shinawatra Computer 23,000 546,963
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
United Kingdom (13.5%)
Building materials (1.2%)
CRH 160,000 $ 900,160
Tarmac 688,000 1,771,600
____________
Total 2,671,760
_____________________________________________________________________________________________________________________________
Computuers & office equipment (2.3%)
Rank Organisation 635,000 3,657,600
WPP 720,000 1,211,040
____________
Total 4,868,640
_____________________________________________________________________________________________________________________________
Electronics (0.2%)
Racal Electronics 146,000 454,060
_____________________________________________________________________________________________________________________________
Insurance (1.1%)
Sun Alliance Group 500,000 2,411,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (1.4%)
Siebe 360,000 3,172,320
_____________________________________________________________________________________________________________________________
Industrial transportation (1.0%)
British Airways 355,000 2,137,455
_____________________________________________________________________________________________________________________________
Metals (0.6%)
RTZ 103,848 1,270,580
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
United Kingdom (cont'd)
Multi-industry conglomerates (3.6%)
BTR 610,000 $ 3,273,260
Hanson 593,100 2,381,297
T & N 605,000 2,026,145
____________
Total 7,680,702
_____________________________________________________________________________________________________________________________
Real estate (0.8%)
MEPC 250,000 1,659,500
_____________________________________________________________________________________________________________________________
Retail (1.3%)
Next 780,000 2,728,440
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $181,499,697) $194,501,394
_____________________________________________________________________________________________________________________________
Other (0.3%)
_____________________________________________________________________________________________________________________________
Issuer (b) Shares Value(a)
_____________________________________________________________________________________________________________________________
Broken Hill Proprietary
Warrants 600,000 $ 513,000
Kingfisher
Warrants 200,000 81,870
_____________________________________________________________________________________________________________________________
Total other
(Cost: $978,055) $ 594,870
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund Percentages represent value of
March 31, 1994 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (7.4%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
Yield on Payable
Date of at
Purchase Maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.1%)
Federal Natl Mtge
Assn Disc Note
04-25-94 3.43% $ 200,000 $ 199,544
_____________________________________________________________________________________________________________________________
Commercial paper (7.3%)
Becton Dickinson
Real Estate
04-08-94 3.55 2,200,000 2,198,486
04-28-94 3.59 2,100,000 2,094,369
CAFCO
04-20-94 3.54 2,200,000 2,195,901
Ciesco LP
04-19-94 3.53 2,300,000 2,295,952
Heinz (HJ)
05-09-94 3.67 2,800,000 2,789,212
Kredietbank
04-25-94 3.65 2,700,000 2,693,466
Lincoln Natl
04-18-94 3.53 700,000 (e) 698,837
Southwestern Bell Capital
04-05-94 3.53 800,000 (e) 799,687
____________
15,765,910
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $15,965,454) $ 15,965,454
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $198,443,206)(f) $211,061,718
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Worldwide Growth Fund
March 31, 1994
_____________________________________________________________________________________________________________________________
Notes to Investments in Securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Foreign security values are stated in U.S. dollars.
(c) Presently non-income producing.
(d) Security is partially or fully on loan. See Note 6 to the financial statements.
(e) Commercial paper sold within terms of a private placement memorandum, exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or
other "accredited investors." This security has been determined to be liquid under guidelines
established by the board of directors.
(f) At March 31, 1994, the cost of securities for federal income tax purposes was $198,449,923
and the aggregate gross unrealized appreciation and depreciation based on that cost was:
<S> <C>
Unrealized appreciation $18,839,485
Unrealized depreciation (6,227,690)
_________________________________________________________________________________________________________________________
Net unrealized appreciation $12,611,795
_________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
Financial statements
<TABLE>
Statements of assets and liabilities
IDS Strategy Fund, Inc.
Sept. 30, 1994
<CAPTION>
_____________________________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________________________
Aggressive
Equity Equity Income
Fund Fund Fund
_____________________________________________________________________________________________________________________________
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Investments in securities, at value (Note 1)
(identified cost $608,579,329, $1,139,351,926 and $693,369,648) $716,736,589 $1,167,584,354 $660,541,563
Cash in bank on demand deposit -- 3,901,518 --
Dividends and accrued interest receivable 453,937 3,373,734 13,148,720
Receivable for investment securities sold 18,025,946 23,021,341 17,061,087
Receivable for foreign currency contracts held, at value
(Notes 1 and 8) -- 11,417,052 2,958,480
U.S. government securities held as collateral (Note 6) -- 18,858,377 25,843,064
_____________________________________________________________________________________________________________________________
Total assets 735,216,472 1,228,156,376 719,552,914
_____________________________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 7,983,006 -- 3,143,687
Dividends payable to shareholders -- 78,536 347,303
Payable for foreign currency contracts held, at value
(Notes 1 and 8) -- 11,308,256 2,961,920
Payable for investment securities purchased 22,333,568 9,698,805 4,245,138
Payable upon return of securities loaned (Note 6) 1,591,200 25,874,377 27,423,064
Accrued investment management and services fee 357,082 521,633 293,862
Accrued 12b-1 fee 448,518 737,910 471,111
Accrued transfer agency fee 163,234 208,573 106,750
Other accrued expenses 364,093 197,700 235,934
_____________________________________________________________________________________________________________________________
Total liabilities 33,240,701 48,625,790 39,228,769
___________________________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $701,975,771 $1,179,530,586 $680,324,145
_____________________________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par
value;
outstanding 49,450,588, 126,083,198 and 115,444,256 shares $ 494,506 $ 1,260,832 $ 1,154,443
Additional paid-in capital 592,319,918 1,095,510,164 706,145,965
Undistributed net investment income (1,149,749) 673,354 677
Accumulated net realized gain (Note 1) 2,153,836 53,745,012 5,878,022
Unrealized appreciation (depreciation) (Notes 7 and 8) 108,157,260 28,341,224 (32,854,962)
_____________________________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding
capital stock $701,975,771 $1,179,530,586 $680,324,145
_____________________________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 14.20 $ 9.36 $ 5.89
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of assets and liabilities
IDS Strategy Fund, Inc.
Sept. 30, 1994
<CAPTION>
_____________________________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________________________
Short-Term Worldwide
Income Growth
Fund Fund
_____________________________________________________________________________________________________________________________
(Unaudited) (Unaudited)
<S> <C> <C>
Investments in securities, at value (Note 1)
(identified cost $217,312,688 and $294,683,406) $213,661,928 $311,673,497
Cash in bank on demand deposit -- 1,788,893
Dividends and accrued interest receivable 1,901,986 1,236,505
Receivable for investment securities sold -- 1,351,329
Receivable for foreign currency contracts held, at value (Notes 1 and 8) -- 32,523,646
U.S. government securities held as collateral (Note 6) -- 7,462,476
_____________________________________________________________________________________________________________________________
Total assets 215,563,914 356,036,346
_____________________________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 3,205,909 --
Dividends payable to shareholders 65,877 --
Payable for foreign currency contracts held, at value (Notes 1 and 8) -- 32,870,533
Payable for investment securities purchased -- 5,181,265
Payable upon return of securities loaned (Note 6) -- 16,752,476
Accrued investment management and services fee 92,062 209,037
Accrued 12b-1 fee 149,414 202,299
Accrued transfer agency fee 32,413 79,661
Other accrued expenses 131,230 168,147
_____________________________________________________________________________________________________________________________
Total liabilities 3,676,905 55,463,418
___________________________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $211,887,009 $300,572,928
_____________________________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par
value;
outstanding 216,523,952 and 52,996,955 shares $ 2,165,240 $ 529,970
Additional paid-in capital 214,957,607 279,382,137
Undistributed net investment income 108,947 301,764
Accumulated net realized gain (Note 1) (1,694,025) 3,715,853
Unrealized appreciation (depreciation) (Notes 7 and 8) (3,650,760) 16,643,204
_____________________________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding
capital stock $211,887,009 $ 300,572,928
_____________________________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 0.98 $ 5.67
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of operations
IDS Strategy Fund, Inc.
Six months ended Sept. 30, 1994
<CAPTION>
_____________________________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________________________
Aggressive
Equity Equity Income
Fund Fund Fund
_____________________________________________________________________________________________________________________________
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C>
Income:
Dividends (net of foreign taxes withheld of $9,108, $216,270
and $5,076) (Note 1) $2,178,989 $15,023,333 $ 574,113
Interest (net of foreign taxes withheld of $0, $30,054 and $0) 2,754,599 4,468,320 28,202,937
_____________________________________________________________________________________________________________________________
Total income 4,933,588 19,491,653 28,777,050
_____________________________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 2,055,548 3,001,174 1,873,513
12b-1 fee 2,615,387 4,228,463 2,994,070
Transfer agency fee 978,452 1,240,163 663,168
Compensation of directors 33,974 8,414 6,965
Compensation of officers 3,051 4,423 3,424
Custodian fees 68,242 108,439 37,582
Postage 188,283 168,712 114,576
Registration fees 50,844 62,773 100,557
Reports to shareholders 63,912 40,280 30,086
Audit fees 8,750 8,750 9,250
Administrative 3,307 4,675 4,723
Other 13,587 12,093 9,441
_____________________________________________________________________________________________________________________________
Total expenses 6,083,337 8,888,359 5,847,355
_____________________________________________________________________________________________________________________________
Investment income (loss) -- net (1,149,749) 10,603,294 22,929,695
_____________________________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________________________
Net realized gain (loss) on security and foreign currency
transactions
(including gain (loss) of $(476), $(94,296) and $2,508 from
foreign currency transactions) (Note 3) (5,634,693) 12,788,070 (8,264,077)
Net realized loss on closed financial futures contracts -- -- (326,938)
Net realized gain on closed options contracts written (Note 4) -- -- 101,726
_____________________________________________________________________________________________________________________________
Net realized gain (loss) on investments and foreign currency (5,634,693) 12,788,070 (8,489,289)
Net change in unrealized appreciation or depreciation (631,584) 9,311,694 (30,861,391)
_____________________________________________________________________________________________________________________________
Net gain (loss) on investments and foreign currency (6,266,277) 22,099,764 (39,350,680)
_____________________________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations $(7,416,026) $32,703,058 $(16,420,985)
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of operations
IDS Strategy Fund, Inc.
Six months ended Sept. 30, 1994
<CAPTION>
_____________________________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________________________
Short-Term Worldwide
Income Growth
Fund Fund
_____________________________________________________________________________________________________________________________
(Unaudited) (Unaudited)
<S> <C>
Income:
Dividends (net of foreign taxes withheld of $190,520) $ -- $ 2,595,122
Interest 5,605,840 616,424
_____________________________________________________________________________________________________________________________
Total income 5,605,840 3,211,546
_____________________________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 556,132 1,125,094
12b-1 fee 900,757 1,096,658
Transfer agency fee 196,741 448,324
Compensation of directors 3,334 5,111
Compensation of officers 1,574 578
Custodian fees 25,840 114,033
Postage 34,472 54,389
Registration fees 71,671 43,945
Reports to shareholders 8,654 9,534
Audit fees 6,750 8,500
Administrative 2,599 1,021
Other 1,452 2,595
_____________________________________________________________________________________________________________________________
Total expenses 1,809,976 2,909,782
_____________________________________________________________________________________________________________________________
Investment income (loss) -- net 3,795,864 301,764
_____________________________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________________________
Net realized gain (loss) on security and foreign currency
transactions
(including loss of $1,256,127 from foreign currency transactions
on Worldwide Growth Fund) (Note 3) (1,816,930) 8,594,291
Net change in unrealized appreciation or depreciation (1,622,955) 4,118,552
_____________________________________________________________________________________________________________________________
Net gain (loss) on investments and foreign currency (3,439,885) 12,712,843
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 355,979 $ 13,014,607
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
<CAPTION>
_____________________________________________________________________________________________________________________________
Operations and distributions
_____________________________________________________________________________________________________________________________
Aggressive Equity Equity
Fund Fund
___________________________________ ______________________________________
Six months ended Year Ended Six months ended Year ended
9/30/94 3/31/94 9/30/94 3/31/94
(Unaudited) (Unaudited)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Investment income (loss) -- net $(1,149,749) $ (6,219,834) $10,603,294 $17,634,417
Net realized gain (loss) on investments
and foreign currency (5,634,693) 41,579,148 12,788,070 81,083,334
Net change in unrealized appreciation or
depreciation (631,584) (12,150,355) 9,311,694 (57,859,852)
_____________________________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting
from operations (7,416,026) 23,208,959 32,703,058 40,857,899
_____________________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income -- -- (11,290,938) (16,824,052)
Net realized gains -- (57,232,536) -- (64,484,810)
Excess distribution of realized gains (Note 1) -- (92) -- (251,175)
_____________________________________________________________________________________________________________________________
Total distributions -- (57,232,628) (11,290,938) (81,560,037)
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 95,836,228 169,955,924 166,077,074 322,046,101
Reinvestment of distributions at net asset value -- 57,007,903 11,122,796 80,767,882
Payments for redemptions or transfers to other
funds (Note 2) (38,696,667) (122,745,185) (50,399,212) (89,266,723)
_____________________________________________________________________________________________________________________________
Increase in net assets from
capital share transactions 57,139,561 104,218,642 126,800,658 313,547,260
_____________________________________________________________________________________________________________________________
Total increase in net assets 49,723,535 70,194,973 148,212,778 272,845,122
Net assets at beginning of period 652,252,236 582,057,263 1,031,317,808 758,472,686
_____________________________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income
of $(1,149,749) and $0, $673,354 and $1,360,998) $701,975,771 $652,252,236 $1,179,530,586 $1,031,317,808
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
<CAPTION>
_____________________________________________________________________________________________________________________________
Operations and distributions
_____________________________________________________________________________________________________________________________
Income Short-Term Income
Fund Fund
___________________________________ ____________________________________
Six months ended Year Ended Six months ended Year ended
9/30/94 3/31/94 9/30/94 3/31/94
(Unaudited) (Unaudited)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Investment income (loss) -- net $22,929,695 $ 45,452,151 $ 3,795,864 $ 7,336,692
Net realized gain (loss) on investments
and foreign currency (8,489,289) 25,823,632 (1,816,930) 845,891
Net change in unrealized appreciation or
depreciation (30,861,291) (46,913,616) (1,622,955) (6,042,618)
_____________________________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting
from operations (16,420,985) 24,362,167 355,979 2,139,965
_____________________________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (23,300,709) (45,573,627) (3,731,720) (7,385,954)
Net realized gains -- (8,394,602) -- (677,373)
_____________________________________________________________________________________________________________________________
Total distributions (23,300,709) (53,968,229) (3,731,720) (8,063,327)
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 83,158,225 382,357,534 126,578,217 218,094,276
Reinvestment of distributions at net asset value 21,079,378 48,115,538 3,588,700 7,670,363
Payments for redemptions or transfers to other
funds (Note 2) (135,476,050) (229,945,785) (106,175,117) (205,406,418)
_____________________________________________________________________________________________________________________________
Increase (decrease) in net assets from
capital share transactions (31,238,447) 200,527,287 23,991,800 20,358,221
_____________________________________________________________________________________________________________________________
Total increase in net assets (70,960,141) 70,194,973 148,212,778 14,434,859
Net assets at beginning of period 751,284,286 580,303,061 191,270,950 176,836,091
_____________________________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income
of $677 and $371,691, $108,947 and $44,803) $680,324,145 $751,284,286 $211,887,009 $191,270,950
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of changes in net assets
IDS Strategy Fund, Inc.
<CAPTION>
_____________________________________________________________________________________________________________________________
Operations and distributions
_____________________________________________________________________________________________________________________________
Worldwide Growth
Fund
___________________________________
Six months ended Year Ended
9/30/94 3/31/94
(Unaudited)
_____________________________________________________________________________________
<S> <C> <C>
Investment income (loss) -- net $ 301,764 $ (385,732)
Net realized gain on investments and foreign currency 8,594,291 6,245,625
Net change in unrealized appreciation or depreciation 4,118,552 7,260,496
_____________________________________________________________________________________________________________________________
Net increase in net assets resulting from operations 13,014,607 13,120,389
_____________________________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________________________
Proceeds from sales or transfers from other funds 84,294,012 166,514,051
Payments for redemptions or transfers to other
funds (Note 2) (12,055,955) (15,761,295)
_____________________________________________________________________________________________________________________________
Increase in net assets from capital share transactions 72,238,017 150,752,756
_____________________________________________________________________________________________________________________________
Total increase in net assets 85,252,624 163,873,145
Net assets at beginning of period 215,320,304 51,447,159
_____________________________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income
of $301,764 and $0) $300,572,928 $215,320,304
_____________________________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Strategy Fund, Inc.
(Unaudited as to Sept. 30, 1994)
______________________________________________________________________________
1. Summary of significant accounting policies
IDS Strategy Fund, Inc. (Strategy) is registered
under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment
company. Significant accounting policies followed by
Strategy are summarized below:
Valuation of securities
All securities are valued at the close of each
business day. Securities traded on national
securities exchanges or included in national market
systems are valued at the last quoted sales price;
securities for which market quotations are not
readily available, including illiquid securities, are
valued at fair value according to methods selected in
good faith by the board of directors. Determination
of fair value involves, among other things, reference
to market indexes, matrixes and data from independent
brokers. Short-term securities maturing in more than
60 days from the valuation date are valued at the
market price or approximate market value based on
current interest rates; those maturing in 60 days or
less are valued at amortized cost.
Options transactions
In order to produce incremental earnings, protect
gains, and facilitate buying and selling of
securities for investment purposes, each fund may buy
or write options traded on any U.S. or foreign
exchange or in the over-the-counter market where the
completion of the obligation is dependent upon the
credit standing of the other party. The fund also may
buy and sell put and call options and write covered
call options on portfolio securities and may write
cash-secured put options. The risk in writing a call
option is that the fund gives up the opportunity of
profit if the market price of the security increases.
The risk in writing a put option is that the fund may
incur a loss if the market price of the security
decreases and the option is exercised. The risk in
buying an option is that the fund pays a premium
whether or not the option is exercised. The fund also
has the additional risk of not being able to enter
into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing
prices on their primary exchanges and unrealized
appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or
closing of the option transaction. When an option is
exercised, the proceeds on sales for a written call
<PAGE>
option, the purchase cost for a written put option or
the cost of a security for a purchased put or call
option is adjusted by the amount of premium received
or paid.
Futures transactions
In order to gain exposure to or protect itself from
changes in the market, each fund may buy and sell
stock index or 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
contracts. Risks of entering into futures contracts
and related options include the possibility that
there may be an illiquid market and that a change in
the value of the contract or option may not correlate
with changes in the value of the underlying
securities.
Upon entering into a futures contract, each fund is
required to deposit either cash or securities in an
amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation
margin) are made or received by the fund each day.
The variation margin payments are equal to the daily
changes in the contract value and are recorded as
unrealized gains and losses. The fund recognizes a
realized gain or loss when the contract is closed or
expires.
Foreign currency translations and foreign
currency contracts
Securities and other assets and liabilities
denominated in foreign currencies are translated
daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the
purchase or sale of securities and income and
expenses are translated at the exchange rate on the
transaction date. The effect of changes in foreign
exchange rates on realized and unrealized security
gains or losses is reflected as a component of such
gains or losses. In the statement of operations, net
realized gains or losses from foreign currency
transactions may arise from sales of foreign
currency, closed forward contracts, exchanged gains
or losses realized between the trade date and
settlement dates on securities transactions, and
other translation gains or losses on dividends,
interest income and foreign withholding taxes.
Each fund may enter into forward foreign currency
exchange contracts for operational purposes. The net
U.S. dollar value of foreign currency underlying all
contractual commitments held by each fund and the
resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from
an independent pricing service. Each fund is subject
to the credit risk that the other party will not
complete the obligations of the contract.
<PAGE>
Securities purchased on a when-issued basis
Delivery and payment for securities that have been
purchased by the fund on a forward-commitment or
when-issued basis can take place one month or more
after the transaction date. During this period, such
securities are subject to market fluctuations, and
they may affect the fund's gross assets the same as
owned securities.
During the six months ended Sept. 30, 1994, Income
Fund entered into transactions to sell purchase
commitments to third parties at the current market
values and concurrently acquired other purchase
commitments for similar securities at later dates. As
an inducement for a fund to "roll over" its purchase
commitments, the fund receives negotiated fees. For
the six months ended Sept. 30, 1994, such fees earned
by the fund amounted to approximately $82,000 for
Income Fund. Such fees have been classified as
interest income.
Federal taxes
Since Strategy's policy is to comply with all
sections of the Internal Revenue Code applicable to
regulated investment companies and to distribute all
of its taxable income to shareholders, no provision
for income or excise taxes is required. For federal
income tax purposes, each fund is treated as a
separate taxable entity.
Net investment income (loss) and net realized gains
(losses) may differ for financial statement and tax
purposes primarily because of the deferral of losses
on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred
due to "wash sale" transactions. The character of
distributions made during the year from net
investment income or net realized gains may differ
from their ultimate characterization for federal
income tax purposes. The effect on dividend
distributions of certain book-to-tax differences is
presented as "excess distributions" in the statement
of changes in net assets. Also, due to the timing of
dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded
by the fund.
Dividends to shareholders
Dividends from net investment income, declared and
paid annually by the end of the calendar year for
Aggressive Equity and Worldwide Growth Funds,
declared and paid quarterly for Equity Fund and
declared daily and paid quarterly for Income and
Short-Term Income Funds, are reinvested in additional
shares of each fund at net asset value or payable in
cash. Capital gains, when available, are distributed
<PAGE>
along with the last income dividend at the end of the
calendar year.
Other
Security transactions are accounted for on the date
securities are purchased or sold. Dividend income is
recognized on the ex-dividend date and interest
income, including level-yield amortization of premium
and discount, is accrued daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, each
fund pays IDS Financial Corporation (IDS) a fee for
managing its investments, recordkeeping and other
specified services. The fee is a percentage of each
fund's average daily net assets consisting of a group
asset charge in reducing percentages from 0.46% to
0.32% annually on the combined net assets of all non-
money market funds in the IDS MUTUAL FUND GROUP and
an individual annual asset charge of 0.23% of average
daily net assets for Aggressive Equity, 0.14% for
Equity, 0.13% for Income and Short-Term Income and
0.46% for Worldwide Growth. From its fee, IDS pays
IDS International, Inc. a subadvisory fee equal to
0.35% of Worldwide Growth Fund's average daily net
assets.
Each fund also pays IDS a distribution fee equal, on
an annual basis, to 1% of the lesser of (i) aggregate
purchase payments for shares sold since inception,
including purchase payments for shares exchanged from
another of the Strategy Funds and the value of all
shares exchanged from another fund in the IDS MUTUAL
FUND GROUP (excluding appreciation and reinvested
income dividends and capital gain distributions),
less the aggregate amount of any redemptions of
purchase payments, or (ii) that fund's average daily
net assets. Of the distribution 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.
Each fund also pays IDS a transfer agency fee at an
annual rate of $16 per shareholder account for
Aggressive Equity, Equity and Worldwide Growth Funds
and $16.50 per shareholder account for Income and
Short-Term Income Funds. The transfer agency fee is
reduced by earnings on monies pending shareholder
redemptions.
IDS will assume and pay any expenses (except taxes
and brokerage commissions and excluding distribution
fees under the Plan of Distribution) of each fund in
excess of the most restrictive applicable state
expense limitation.
Contingent deferred sales charges deducted by IDS
Financial Services Inc., the funds' distributor, for
<PAGE>
the six months ended Sept. 30, 1994, aggregated
$1,512,089: $301,047 for Aggressive Equity, $430,633
for Equity, $443,977 for Income, $209,179 for Short-
Term Income and $127,253 for Worldwide Growth Funds.
Each fund also pays custodian fees to IDS Trust
Company, an affiliate of IDS.
Strategy has a retirement plan for its independent
directors. Upon retirement, directors receive monthly
payments equal to one-half of the retainer fee for as
many months as they served as directors up to 120
months. There are no death benefits. The plan is not
funded but each fund recognizes the cost of payments
during the time the directors serve on the board. The
retirement plan expense for Strategy Fund for the six
months ended Sept. 30, 1994, aggregated $12,023:
$4,055 for Aggressive Equity, $5,022 for Equity,
$609 for Income, $589 for Short-Term Income and
$1,748 for Worldwide Growth Funds.
______________________________________________________________________________
3. Securities transactions
For the six months ended Sept. 30, 1994, cost of
purchases and proceeds from sales (other than short-
term obligations) aggregated $323,247,009 and
$288,149,525 for Aggressive Equity, $455,118,041 and
$410,535,065 for Equity, $228,226,735 and
$228,790,282 for Income, $62,089,730 and $54,750,106
for Short-Term Income and $112,368,832 and
$58,584,869 for Worldwide Growth Funds. Realized
gains and losses are determined on an identified cost
basis.
Brokerage commissions paid to brokers affiliated with
IDS were $23,068, $48,134 and $1,164 for Aggressive
Equity, Equity Fund and Worldwide Growth funds,
respectively, for the six months ended Sept. 30,
1994.
______________________________________________________________________________
4. Options contracts written
The number of contracts and premium amounts
associated with call options contracts written in
Income Fund is as follows:
Six months ended
Sept. 30, 1994
Contracts Premium
_________________________________________________
Balance March 31, 1994 -- $ --
Opened 200 101,726
Closed (200) (101,726)
_________________________________________________
Balance Sept. 30, 1994 -- $ --
_________________________________________________
<PAGE>
______________________________________________________________________________
<TABLE>
<CAPTION>
5. Capital share transactions
Transactions in shares of each fund for the periods
indicated are as follows:
Number of shares:
________________________________________________________________________________________________________________________
Aggressive Equity Fund Equity Fund Income Fund
_____________________________ ______________________________ ______________________________
Six months ended Year ended Six months ended Year ended Six months ended Year ended
9/30/94 3/31/94 9/30/94 3/31/94 9/30/94 3/31/94
(Unaudited) (Unaudited) (Unaudited)
________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Sold or transferred
from other funds 6,925,302 11,014,310 17,724,827 33,138,214 13,761,328 58,097,430
Issued for reinvested
distributions -- 3,765,876 1,204,166 8,433,793 3,541,692 7,354,593
Redeemed or transferred
to other funds (2,798,548) (7,951,989) (5,372,323) (9,197,496) (22,476,270) (35,064,814)
________________________________________________________________________________________________________________________
Net increase (decrease) 4,126,754 6,828,197 13,556,670 32,374,511 (5,173,250) 30,387,209
________________________________________________________________________________________________________________________
Number of shares:
<CAPTION>
________________________________________________________________________________________________________________________
Short-Term Income Fund Worldwide Growth Fund
______________________________ ______________________________
Six months ended Year ended Six months ended Year ended
9/30/94 3/31/94 9/30/94 3/31/94
(Unaudited) (Unaudited)
________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold or transferred from other funds 128,614,035 213,765,797 15,042,043 31,676,228
Issued for reinvested distributions 3,658,608 7,523,292 -- --
Redeemed or transferred to other funds (107,930,516) (201,051,396) (2,146,449) (2,983,522)
________________________________________________________________________________________________________________________
Net increase 24,342,127 20,237,693 12,895,594 28,692,706
________________________________________________________________________________________________________________________
</TABLE>
______________________________________________________________________________
6. Lending of fund securities
At Sept. 30, 1994, securities valued at $1,535,950
for Aggressive Equity, $25,367,036 for Equity,
$26,567,300 for Income and $15,958,633 for Worldwide
Growth were on loan to brokers. For collateral,
Aggressive Equity received $1,591,200 in cash, Equity
received $7,016,000 in cash and U.S. government
securities valued at $18,858,377, Income received
$1,580,000 in cash and U.S. government securities
valued at $25,843,064 and Worldwide Growth received
$9,290,000 in cash and U.S. government securities
valued at $7,462,476. Income from securities lending
<PAGE>
amounted to $90,663, $86,382, $20,034 and $30,364 for
Aggressive Equity, Equity, Income and Worldwide
Growth Funds, respectively, for the six months ended
Sept. 30, 1994. The risks to the fund of securities
lending are that the borrower may not provide
additional collateral when required or return the
securities when due.
______________________________________________________________________________
7. Interest rate futures contracts
At Sept. 30, 1994, investments in securities in
Income Fund included securities valued at $558,314
that were pledged as collateral to cover initial
margin deposits on 150 purchase contracts. The market
value of the open contracts at Sept. 30, 1994,
was $14,840,625 with a net unrealized loss of
$23,437.
______________________________________________________________________________
8. Foreign currency contracts
At Sept. 30, 1994, Equity, Income and Worldwide
Growth Funds had entered into currency exchange
contracts that obligate the fund to deliver
currencies at specified future dates. The unrealized
appreciation (depreciation) of $108,796, $(3,440) and
$(346,887), respectively, on these contracts are
included in the accompanying financial statements.
The terms of the open contracts are as follows:
<TABLE>
<CAPTION>
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered Sept. 30, 1994 received Sept. 30, 1994
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Equity Oct. 4, 1994 1,098,887 $ 257,656 257,562 $ 257,562
South African Rand U.S. Dollar
Oct. 4, 1994 540,131 126,645 127,260 127,260
South African Rand U.S. Dollar
Oct. 4, 1994 415,930 97,523 97,488 97,488
South African Rand U.S. Dollar
Oct. 4, 1994 271,510 63,661 63,585 63,585
South African Rand U.S. Dollar
Nov. 25, 1994 16,700,000 10,762,771 10,871,157 10,871,157
Deutsche Mark U.S. Dollar
___________ ___________
$11,308,256 $11,417,052
______________________________________________________________________________________________________________________________
Income Nov. 7, 1994 4,000,000 $2,961,920 2,958,480 $2,958,480
Australian Dollar U.S. Dollar
______________________________________________________________________________________________________________________________
Worldwide Oct. 3, 1994 345,666 $ 345,666 219,494 $ 345,594
Growth U.S. Dollar British Pound
Oct. 3, 1994 194,967 194,967 323,629 194,906
U.S. Dollar New Zealand Dollar
<PAGE>
Oct. 4, 1994 8,688,306 1,124,380 1,124,380 1,124,380
Hong Kong Dollar U.S. Dollar
Oct. 4, 1994 602,840 602,840 59,397,882 599,676
U.S. Dollar Japanese Yen
Oct. 4, 1994 175,702 175,702 237,386 175,725
U.S. Dollar Australian Dollar
Oct. 5, 1994 269,125 269,125 170,601 268,611
U.S. Dollar British Pound
Oct. 6, 1994 798,290 798,290 2,045,778 798,041
U.S. Dollar Malaysian Dollar
Oct. 6, 1994 227,893 227,893 144,524 227,553
U.S. Dollar British Pound
Oct. 31, 1994 927,442,991 594,515 597,425 597,425
Italian Lira U.S. Dollar
Oct. 31, 1994 297,484,694 190,695 190,557 190,557
Italian Lira U.S. Dollar
Oct. 31, 1994 1,176 1,176 1,838,314 1,178
U.S. Dollar Italian Lira
Dec. 30, 1994 2,786,560,000 28,345,284 28,000,000 28,000,000
Japanese Yen U.S. Dollar
___________ ___________
$32,870,533 $32,523,646
</TABLE>
______________________________________________________________________________
9. Illiquid securities
At Sept. 30, 1994, investments in securities for
Income Fund included issues that are illiquid. The
fund currently limits investments in illiquid
securities to 10% of the net assets, at market value,
at the time of purchase. The aggregate value of such
securities at Sept. 30, 1994, was $4,424,969 which
represents 0.7% of net assets. Pursuant to guidelines
adopted by the fund's board of directors, certain
unregistered securities are determined to be liquid
and are not included within the 10% limitation
specified above.
<PAGE>
<TABLE>
<CAPTION>
10. Financial highlights
The tables below show certain important information
for evaluating the funds' results.
Aggressive Equity Fund
Fiscal period ended March 31,
Per share income and capital changes*
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $14.39 $15.12 $15.37 $13.73 $12.42 $9.98
beginning of period
Income from investment operations:
Net investment
income (loss) (.02) (.14) (.11) (.03) .15 .01
Net gains (losses) (.17) .83 .61 2.35 2.01 2.43
(both realized
and unrealized)
Total from investment (.19) .69 .50 2.32 2.16 2.44
operations
Less distributions:
Dividends from net -- -- -- (.01) (.16) --
investment income
Distributions from -- (1.42) (.75) (.67) (.69) --
realized gains
Total distributions -- (1.42) (.75) (.68) (.85) --
Net asset value, $14.20 $14.39 $15.12 $15.37 $13.73 $12.42
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $702 $652 $582 $473 $352 $283
(in millions)
Ratio of expenses to 1.85%*** 1.71% 1.75% 1.62% 1.61% 1.49%
average daily net assets
Ratio of net income (loss) (.35%)*** (.99%) (.82%) (.27%) 1.17% .14%
to average daily net assets
Portfolio turnover rate 52% 55% 49% 52% 64% 33%
(excluding short-term
securities)
Total return+ (1.4%)++ 4.1% 3.2% 16.8% 18.9% 24.4%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++For the fiscal period ended Sept. 30, 1994, the annualized total return is (2.7%).
<PAGE>
Equity Fund
Financial highlights
Fiscal period ended March 31,
Per share income and capital changes*
<CAPTION>
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $9.17 $9.46 $8.90 $8.22 $7.92 $7.96
beginning of period
Income from investment operations:
Net investment income .09 .18 .19 .22 .26 .29
Net gains (losses) .19 .37 1.18 .98 .48 .51
(both realized
and unrealized)
Total from investment .28 .55 1.37 1.20 .74 .80
operations
Less distributions:
Dividends from net (.09) (.18) (.19) (.22) (.26) (.31)
investment income
Distributions from -- (.66) (.61) (.30) (.18) (.53)
realized gains
Excess distribution of -- -- (.01) -- -- --
realized gain
Total distributions (.09) (.84) (.81) (.52) (.44) (.84)
Net asset value, $9.36 $9.17 $9.46 $8.90 $8.22 $7.92
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $1,180 $1,031 $758 $497 $370 $311
(in millions)
Ratio of expenses to 1.58%*** 1.56% 1.63% 1.66% 1.66% 1.61%
average daily net assets
Ratio of net income to 1.89%*** 1.93% 2.15% 2.56% 3.41% 3.61%
average daily net assets
Portfolio turnover rate 43% 70% 48% 72% 65% 67%
(excluding short-term
securities)
Total return+ 3.1%++ 5.5% 16.0% 15.0% 10.1% 9.9%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++For the fiscal period ended Sept. 30, 1994, the annualized total return is 6.2%.
<PAGE>
Income Fund
Financial highlights
Fiscal period ended March 31,
Per share income and capital changes*
<CAPTION>
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $6.23 $6.43 $5.96 $5.65 $5.44 $5.58
beginning of period
Income from investment operations:
Net investment income .20 .42 .45 .44 .44 .42
Net gains (losses) (.34) (.13) .47 .32 .20 (.14)
(both realized
and unrealized)
Total from investment (.14) .29 .92 .76 .64 .28
operations
Less distributions:
Dividends from net (.20) (.42) (.45) (.45) (.43) (.42)
investment income
Distributions from -- (.07) -- -- -- --
realized gains
Total distributions (.20) (.49) (.45) (.45) (.43) (.42)
Net asset value, $5.89 $6.23 $6.43 $5.96 $5.65 $5.44
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $680 $751 $580 $367 $258 $231
(in millions)
Ratio of expenses to 1.64%*** 1.60% 1.65% 1.69% 1.67% 1.72%
average daily net assets
Ratio of net income to 6.42%*** 6.38% 7.31% 7.65% 8.11% 7.43%
average daily net assets
Portfolio turnover rate 35% 61% 36% 82% 62% 83%
(excluding short-term
securities)
Total return+ (2.1%)++ 4.3% 15.9% 13.7% 12.2% 4.9%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++For the fiscal period ended Sept. 30, 1994, the annualized total return is (4.2%).
<PAGE>
Short-Term Income Fund
Financial highlights
Fiscal period ended March 31,
Per share income and capital changes*
<CAPTION>
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $1.00 $1.03 $1.02 $1.01 $1.00 $1.00
beginning of period
Income from investment operations:
Net investment income .02 .04 .05 .06 .07 .08
Net gains (losses) (.02) (.03) .01 .01 .01 --
(both realized
and unrealized)
Total from investment -- .01 .06 .07 .08 .08
operations
Less distributions:
Dividends from net (.02) (.04) (.05) (.06) (.07) (.08)
investment income
Net asset value, $ .98 $1.00 $1.03 $1.02 $1.01 $1.00
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $212 $191 $177 $155 $148 $125
(in millions)
Ratio of expenses to 1.71%*** 1.73% 1.76% 1.75% 1.67% 1.50%****
average daily net assets
Ratio of net income to 3.58%*** 4.12% 4.56% 6.17% 6.85% 7.70%
average daily net assets
Portfolio turnover rate 37% 58% 37% 35% 30% 49%
(excluding short-term
securities)
Total return+ 0.2%++ 1.3% 6.1% 7.0% 8.3% 7.6%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1994 (Unaudited).
***Adjusted to an annual basis.
****During the period from April 1, 1989 to Sept. 30, 1989, IDS voluntarily waived portions of its
advisory, distribution and transfer agency fees. Had IDS not done so, the ratio of expenses to
average net assets would have been 1.74%.
+Total return does not reflect contingent deferred sales charge.
++For the fiscal period ended Sept. 30, 1994, the annualized total return is 0.3%.
<PAGE>
Worldwide Growth Fund
Financial highlights
Fiscal period ended March 31,
Per share income and capital changes*
<CAPTION>
1994** 1994 1993 1992 1991*** 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $5.37 $4.51 $4.28 $4.42 $4.51 $4.33
beginning of period
Income from investment operations:
Net investment (.01) (.01) (.03) -- (.01) (.02)
income (loss)
Net gains (losses) .31 .87 .26 (.12) (.08) .21
(both realized
and unrealized)
Total from investment .30 .86 .23 (.12) (.09) .19
operations
Less distributions:
Dividends from net -- -- -- (.02) -- (.01)
investment income
Net asset value, $5.67 $5.37 $4.51 $4.28 $4.42 $4.51
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991*** 1990
Net assets, end of period $301 $215 $51 $39 $41 $45
(in millions)
Ratio of expenses to 2.21%**** 2.45% 2.91% 2.75% 2.47% 2.42%
average daily net assets
Ratio of net income (loss) .23%**** (.32%) (.84%) (.02%) (.20%) (.31%)
to average daily net assets
Portfolio turnover rate 25% 58% 106% 69% 91% 69%
(excluding short-term
securities)
Total return+ 5.6%++ 19.1% 5.2% (2.5%) (2.2%) 4.3%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1994 (Unaudited).
***On Oct. 10, 1990, a change was implemented in the fund's investment policies to permit
investments in Europe and other parts of the world. Also, the fund's name was changed
from Pan Pacific Growth to Worldwide Growth Fund.
****Adjusted to an annual basis.
+Total return does not reflect contingent deferred sales charge.
++For the fiscal period ended Sept. 30, 1994, the annualized total return is 11.5%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Aggressive Equity Fund (Percentages represent value of
Sept. 30, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (84.2%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Airlines (0.5%)
Southwest Airlines 171,000 $ 3,847,500
_____________________________________________________________________________________________________________________________
Banks and savings & loans (5.7%)
First Chicago 151,500 6,950,062
First Fidelity Bancorp 122,700 5,153,400
First Tennessee Natl 76,800 3,456,000
MBNA 182,500 4,220,313
Mercantile Bancorp 144,000 5,310,000
Meridian Bancorp 104,900 3,015,875
PNC Financial 200,000 5,175,000
Shawmut Natl 140,500 2,915,375
Signet Banking 115,600 3,988,200
_____________
Total 40,184,225
_____________________________________________________________________________________________________________________________
Building materials (0.6%)
Clayton Homes 227,900 (b) 4,330,100
_____________________________________________________________________________________________________________________________
Chemicals (1.3%)
Lyondell Petrochem 58,400 1,817,700
Methanex 213,300 (b) 3,839,400
Morton Intl 114,900 3,159,750
_____________
Total 8,816,850
_____________________________________________________________________________________________________________________________
Communications equipment (2.9%)
ADC Telecom 75,900 (b) 3,045,488
Andrew 95,000 (b) 4,761,875
DSC Communications 62,300 (b) 1,775,550
ECI Telecom 235,600 4,152,450
Northern Telecom 97,700 3,395,075
Scientific-Atlanta 80,900 3,306,787
____________
Total 20,437,225
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Computers & office equipment (20.2%)
Adobe Systems 215,300 6,997,250
Amer Power Conversion 192,600 (b) 3,864,037
AutoDesk 68,100 4,256,250
Business Objects 6,500 (b) 185,250
Cisco Systems 503,900 (b) 13,794,263
COMPAQ Computer 411,800 (b) 13,434,975
Compuware 120,000 (b) 5,647,500
Danka Business Systems 253,600 4,691,600
First Financial Management 75,000 4,312,500
Informix 189,000 5,244,750
Intuit 44,600 (b) 1,951,250
Komag 152,300 (b) 4,035,950
Microsoft 70,000 (b) 3,928,750
Oracle Systems 374,800 (b) 16,116,400
Parametric Technology 518,100 (b) 17,226,825
Powersoft 174,400 (b) 9,395,800
Silicon Graphics 150,000 (b) 3,862,500
Solectron 62,800 (b) 1,656,350
Sybase 107,000 (b) 4,908,625
Synopsys 220,300 (b) 9,968,575
Tech Data 192,600 (b) 3,707,550
3Com 63,200 (b) 2,362,100
____________
Total 141,549,050
_____________________________________________________________________________________________________________________________
Electronics (8.5%)
Applied Material 224,200 (b) 10,481,350
Cypress Semiconductor 93,900 (b) 1,631,513
Intel 364,300 22,404,450
Linear Technology 165,000 7,311,562
LSI Logic 46,800 (b) 1,749,150
Sensormatic Electric 225,000 7,706,250
Vishay Intertechnology 180,000 8,100,000
_____________
Total 59,384,275
_____________________________________________________________________________________________________________________________
Energy (0.4%)
Enron Oil & Gas 170,000 3,463,750
_____________________________________________________________________________________________________________________________
Financial services (3.1%)
ADVANTA 110,000 3,217,500
Dean Witter 130,500 4,910,063
First USA 74,500 2,616,812
Household Intl 192,900 6,896,175
Paychex 106,200 4,009,050
____________
Total 21,649,600
_____________________________________________________________________________________________________________________________
<PAGE>
Health care (8.1%)
Amgen 97,500 (b) 5,191,875
Biogen 59,200 (b) 3,226,400
Cardinal 173,400 7,261,125
Chiron 51,500 (b) 3,424,750
Forest Labs 137,400 (b) 6,766,950
Genentech 140,200 (b) 7,360,500
IDEXX Laboratories 167,900 (b) 4,953,050
Medtronics 117,200 6,196,950
Pfizer 154,700 10,693,637
Stryker 57,500 1,998,125
____________
Total 57,073,362
_____________________________________________________________________________________________________________________________
Health care services (4.4%)
Beverly Enterprises 112,000 (b) 1,722,000
HEALTHSOUTH Rehab 93,500 (b) 3,669,875
Mid Atlantic Medical Services 176,900 (b) 4,975,313
Oxford Health Plans 47,600 (b) 3,665,200
United Healthcare 167,600 8,882,800
U.S. HealthCare 165,700 7,715,406
___________
Total 30,630,594
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.7%)
Giddings & Lewis 101,400 1,806,188
Stewart & Stevenson 91,200 3,465,600
___________
Total 5,271,788
_____________________________________________________________________________________________________________________________
Industrial transportation (0.6%)
Amer Freightways 66,000 (b) 1,633,500
Heartland Express 31,800 938,100
TNT Freightways 55,600 1,431,700
____________
Total 4,003,300
_____________________________________________________________________________________________________________________________
Insurance (0.8%)
Coventry 100,000 (b) 2,350,000
Equitable of Iowa 88,600 3,189,600
____________
Total 5,539,600
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (1.8%)
Hasbro 159,500 4,705,250
Intl Game Technology 224,600 4,632,375
Marvel Entertainment Group 128,100 (b) 2,225,737
Savoy Pictures Entertainment 112,000 (b) 1,288,000
____________
Total 12,851,362
_____________________________________________________________________________________________________________________________
<PAGE>
Media (2.2%)
Comcast 170,000 2,592,500
Comcast Cl A 85,000 1,301,563
Multimedia 114,200 (b) 3,433,137
Tele-Communications Cl A 180,000 (b) 3,993,750
Viacom 100,000 (b) 3,975,000
____________
Total 15,295,950
_____________________________________________________________________________________________________________________________
Metals (0.5%)
Nucor 53,800 3,745,825
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (0.7%)
Alco Standard 54,500 3,385,812
Lancaster Colony 44,400 1,554,000
____________
Total 4,939,812
_____________________________________________________________________________________________________________________________
Restaurants & lodging (2.6%)
Brinker Intl 370,000 (b) 8,880,000
Buffets 160,000 (b) 2,520,000
Hospitality Franchise System 58,300 (b) 1,829,162
Starbucks 210,600 (b) 4,856,963
____________
Total 18,086,125
_____________________________________________________________________________________________________________________________
Retail (10.7%)
Ann Taylor Stores 251,900 (b) 9,068,400
Barnes & Noble 132,900 (b) 3,555,075
Bed Bath & Beyond 142,500 (b) 3,669,375
Best Buy 130,000 (b) 5,086,250
Corporate Express 29,200 (b) 605,900
CUC Intl 183,700 (b) 6,062,100
Home Depot 296,400 12,448,800
Kohls 142,900 (b) 6,930,650
Meyer (Fred) 107,700 (b) 3,540,638
Nordstrom 90,400 3,616,000
Office Depot 281,250 (b) 7,312,500
Pep Boys-Manny Moe & Jack 158,300 5,500,925
Wal-Mart Stores 156,800 3,665,200
Viking Office Products 137,200 (b) 4,150,300
_____________
Total 75,212,113
_____________________________________________________________________________________________________________________________
Utilities-gas (0.6%)
Enron 140,000 4,235,000
_____________________________________________________________________________________________________________________________
Utilities-telephone (2.1%)
AirTouch Communications 190,600 (b) 5,455,925
ALC Communications 155,000 (b) 5,076,250
AT & T 75,000 4,050,000
____________
Total 14,582,175
_____________________________________________________________________________________________________________________________
<PAGE>
Foreign (5.2%)(c)
Cifra ADR Series B 1,676,500 4,975,517
Ericsson LM Cl B ADR 32,700 1,757,625
Grupo Sidek ADR 195,000 (b) 3,900,000
Grupo Televisa 35,000 (d) 2,025,625
Hutchison Whampoa 1,200,000 5,667,600
Industrie Natuzzi 60,100 1,870,612
Renaissance Energy 162,100 (b) 3,491,067
Renaissance Energy 56,700 (b,d) 1,221,120
Tarragon Oil & Gas 170,000 (b) 2,187,203
Telefonos de Mexico ADR 58,600 3,662,500
Television Broadcast 1,200,000 5,574,000
_____________
Total 36,332,869
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $488,521,177) $591,462,450
_____________________________________________________________________________________________________________________________
Preferred stocks & other (2.4%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Gensia Pharmaceuticals
$3.75 Cv 60,000 (d) $ 1,335,000
Jan Bell
Warrants 2,473 (e) --
Nokia 102,900 (c) 6,019,650
SAP 17,750 9,046,252
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $10,722,561) $ 16,400,902
_____________________________________________________________________________________________________________________________
Bond (0.5%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
____________________________________________________________________________________________________________________________
Ciba Geigy/Alza
6.25% Cv 2016 $4,000,000 (d) $ 3,700,000
_____________________________________________________________________________________________________________________________
Total bond
(Cost: $4,160,991) $ 3,700,000
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________________________
Short-term securities (15.0%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.4%)
Student Loan Marketing Assn
10-17-94 4.74% $2,800,000 $ 2,794,126
_____________________________________________________________________________________________________________________________
Commercial paper (14.6%)
Amgen
10-21-94 4.94 6,700,000 6,681,687
Aon
10-27-94 4.92 800,000 797,169
Cafco
10-20-94 4.77 2,700,000 2,693,245
Cargill Financial Markets
10-28-94 4.89 5,000,000 (f) 4,981,738
Ciesco LP
10-05-94 4.77 3,800,000 3,797,994
Colgate Palmolive
10-06-94 4.76 4,600,000 (f) 4,596,972
Eiger Capital
10-06-94 4.77 2,803,000 (f) 2,801,151
Gateway Fuel
10-13-94 4.77 4,700,000 4,692,558
General Mills
10-25-94 4.79 4,200,000 4,186,672
Lilly (Eli)
10-12-94 4.85 6,000,000 5,991,127
Merrill Lynch
10-11-94 4.78 3,000,000 2,996,042
10-25-94 4.80 2,700,000 2,691,414
Motorola
10-19-94 4.78 2,700,000 2,693,574
10-20-94 4.77 5,000,000 4,987,465
Norfolk Southern
10-14-94 4.77 2,900,000 (f) 2,895,026
Paribas Finance
10-06-94 4.77 5,000,000 4,996,701
Pfizer
10-27-94 4.84 3,500,000 3,487,816
<PAGE>
Quaker Oats
10-25-94 4.94 5,100,000 5,083,272
St. Paul Companies
10-11-94 4.77 6,400,000 (f) 6,391,555
10-27-94 4.79 2,100,000 (f) 2,092,766
Sandoz
11-01-94 4.97 700,000 697,016
Southwestern Bell Capital
10-06-94 4.75 800,000 (f) 799,474
11-14-94 4.85 3,800,000 (f) 3,776,298
U.S. WEST Communications
11-04-94 4.79 5,900,000 5,873,532
Wal-Mart
10-03-94 4.85 11,700,000 11,696,847
___________
Total 102,379,111
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $105,174,600) $105,173,237
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $608,579,329)(g) $716,736,589
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Represents a security sold under Rule 144A, which is exempt from registration under the
Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines
established by the board of directors.
(e) Presently negligible market value.
(f) Commercial paper sold within terms of a private placement memorandum, exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program
or other "accredited investors". This security has been determined to be liquid under guidelines
established by the board of directors.
(g) At Sept. 30, 1994, the cost of securities for federal income tax purposes was
approximately $608,579,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $125,563,000
Unrealized depreciation (17,405,000)
___________________________________________________________________________________________
Net unrealized appreciation $108,158,000
___________________________________________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Strategy Fund, Inc.
Equity Fund (Percentages represent value of
Sept. 30, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (79.2%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (2.1%)
Raytheon 200,000 $ 12,825,000
United Technologies 200,000 12,525,000
____________
Total 25,350,000
_____________________________________________________________________________________________________________________________
Automotive & related (2.9%)
Chrysler 250,000 11,218,750
Ford Motor 400,000 (b) 11,100,000
General Motors 250,000 11,718,750
____________
Total 34,037,500
_____________________________________________________________________________________________________________________________
Banks and savings & loans (7.7%)
Ahmanson (HF) 540,000 11,272,500
BankAmerica 275,000 12,134,375
Bankers Trust 175,000 11,681,250
BB&T Financial 250,000 7,250,000
First American 170,000 5,610,000
First Chicago 120,000 5,505,000
Keycorp 330,000 10,065,000
Mercantile Bancorp 225,000 8,296,875
NationsBank 200,000 9,800,000
PNC Bank 362,000 9,366,750
____________
Total 90,981,750
_____________________________________________________________________________________________________________________________
Beverages & tobacco (3.0%)
Amer Brands 336,000 12,180,000
PepsiCo 350,000 11,593,750
UST 400,000 11,450,000
____________
Total 35,223,750
_____________________________________________________________________________________________________________________________
Building materials (2.7%)
Kaufman & Broad Home 687,000 9,360,375
Masco 500,000 12,062,500
Potlatch 266,000 10,972,500
____________
Total 32,395,375
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Chemicals (3.5%)
ARCO Chemical 212,500 10,518,750
Dow Chemical 175,000 13,693,750
Ecolab 320,000 6,960,000
Ethyl 846,000 9,623,250
___________
Total 40,795,750
_____________________________________________________________________________________________________________________________
Computers and office equipment (0.8%)
Pitney Bowes 280,000 9,940,000
_____________________________________________________________________________________________________________________________
Energy (3.2%)
Amoco 220,000 13,035,000
Exxon 215,000 12,389,375
Mobil 160,000 12,660,000
____________
Total 38,084,375
_____________________________________________________________________________________________________________________________
Financial services (4.3%)
ADVANTA Cl B 48,400 1,415,700
Beneficial 200,000 8,150,000
Federal Natl Mtge 131,000 10,316,250
Household Intl 320,000 11,440,000
MBNA 450,000 10,406,250
Student Loan Marketing Assn 275,000 8,971,875
____________
Total 50,700,075
_____________________________________________________________________________________________________________________________
Food (0.8%)
Hormel (George A) 425,000 9,562,500
_____________________________________________________________________________________________________________________________
Furniture & appliances (1.2%)
Black & Decker 590,000 12,906,250
Maytag 100,500 1,620,562
____________
Total 14,526,812
_____________________________________________________________________________________________________________________________
Health care (5.6%)
Beckman Instruments 427,100 12,599,450
Johnson & Johnson 297,000 15,332,625
Merck 364,000 12,922,000
Pfizer 173,000 11,958,625
SmithKline Beecham 415,000 12,813,125
____________
Total 65,625,825
_____________________________________________________________________________________________________________________________
Household products (0.3%)
Scotts Cl A 260,000 (c) 4,030,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (1.5%)
Deere 80,100 5,496,863
General Signal 360,000 12,645,000
____________
Total 18,141,863
_____________________________________________________________________________________________________________________________
Industrial transportation (3.1%)
<PAGE>
Norfolk Southern 200,000 12,450,000
Santa Fe Pacific 525,000 11,878,125
Union Pacific 225,000 12,065,625
____________
Total 36,393,750
_____________________________________________________________________________________________________________________________
Insurance (4.9%)
Amer General 400,000 10,850,000
Aon 325,000 10,846,875
Enhance Financial Services 300,000 5,737,500
St. Paul Companies 280,000 11,375,000
Tempest Reinsurance 77,000 (c) 7,710,010
Travelers 329,269 10,824,718
____________
Total 57,344,103
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.9%)
Caesars World 250,000 (c) 10,843,750
_____________________________________________________________________________________________________________________________
Metals (2.5%)
Freeport-McMoRan 300,000 5,812,500
Freeport-McMoRan Copper & Gold 407,500 10,187,500
Reynolds Metals 237,000 13,420,125
____________
Total 29,420,125
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (4.0%)
Emerson Electric 185,000 11,030,625
General Electric 275,000 13,234,375
ITT 150,000 12,506,250
Textron 200,000 10,175,000
____________
Total 46,946,250
_____________________________________________________________________________________________________________________________
Paper & packaging (3.5%)
Intl Paper 159,000 12,481,500
Longview Fibre 232,000 4,234,000
Rayonier 389,500 12,561,375
Union Camp 234,000 11,495,250
____________
Total 40,772,125
_____________________________________________________________________________________________________________________________
Retail (6.0%)
Broadway Stores 600,000 (b,c) 6,675,000
Dayton Hudson 125,000 (b) 9,562,500
May Dept Stores 275,000 10,828,125
Melville 275,000 9,796,875
Meyer (Fred) 335,000 (c) 11,013,125
Rite Aid 500,000 10,375,000
Sears Roebuck 250,000 12,000,000
____________
Total 70,250,625
_____________________________________________________________________________________________________________________________
Textiles & apparel (0.7%)
Burlington Inds 787,500 (c) 8,268,750
_____________________________________________________________________________________________________________________________
Utilities - gas (2.0%)
Enron 360,000 10,890,000
Tenneco 275,000 12,134,375
<PAGE>
____________
Total 23,024,375
_____________________________________________________________________________________________________________________________
Utilities - telephone (1.1%)
Comsat 500,000 12,812,500
_____________________________________________________________________________________________________________________________
Foreign (10.9%)(d)
Barlow Rand 185,900 1,253,152
Brierley Investments 7,843,200 5,945,146
British Gas 2,600,000 12,217,400
DeBeers Cons Mines ADR 524,000 12,379,500
Deutsche Bank 24,500 (c) 10,715,247
Grupo Tribasa 130,000 (c) 4,777,500
Hanson ADR 610,000 11,056,250
Hollandsche Beton Group 28,700 (c) 4,586,719
Iberdrola 950,000 6,008,750
Imperial Chemical Inds 661,000 8,653,151
Repsol (SA) ADR 342,000 10,473,750
Royal Dutch Petroleum 129,000 13,851,375
Sceptre Resources 400,000 (c) 3,281,760
Tolmex 325,000 4,927,877
Volker Stevin Certificates 39,500 (c) 1,986,890
Woolworth 2,800,000 5,843,600
YPF 420,000 10,605,000
____________
Total 128,563,067
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $899,669,736) $ 934,034,995
_____________________________________________________________________________________________________________________________
Bonds (1.1%)
_____________________________________________________________________________________________________________________________
Issuer and Principal
coupon rate amount Value(a)
_____________________________________________________________________________________________________________________________
Domestic (0.4%)
Broadway Stores
6.25% Cv 2000 $1,000,000 $ 1,082,500
Delta Air Lines
3.23% Cv 2003 4,000,000 2,720,000
USF & G
Zero Coupon
4.50% Cv 2009 1,650,000 (g) 787,875
______________
Total 4,590,375
_____________________________________________________________________________________________________________________________
Foreign (0.7%) (d)
Amcor
(Australian Dollar)
6.50% Cv 2003 160,500,000 1,104,935
Escom
(South African Rand)
11% 2008 42,475,000 6,881,799
____________
Total 7,986,734
_____________________________________________________________________________________________________________________________
Total bonds
<PAGE>
(Cost: $14,432,928) $ 12,577,109
_____________________________________________________________________________________________________________________________
<CAPTION>
Preferred stocks (1.9%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
AMR
$3 Cv 100,000 (f) $ 4,075,000
Delta Airlines
$3.50 Cm Cv 55,000 2,475,000
SunAmerica
$2.78 Cv 174,600 (b) 6,962,175
UAL
$6.25 Cv 40,000 (f) 3,365,000
Unisys
$3.75 Cm Cv 165,200 6,029,800
_____________________________________________________________________________________________________________________________
Total preferred stocks
(Cost: $27,181,658) $ 22,906,975
_____________________________________________________________________________________________________________________________
<CAPTION>
Short-term securities (16.8%)
_____________________________________________________________________________________________________________________________
Annualized Amount
yield on payable at
date of maturity
Issuer purchase Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.6%)
Federal Home Loan Mtge
Corp Disc Nts
10-04-94 4.71% $ 4,000,000 $ 3,998,437
11-02-94 4.82 3,500,000 3,485,067
____________
Total 7,483,504
_____________________________________________________________________________________________________________________________
Commercial paper (15.8%)
Amgen
10-07-94 4.79 16,400,000 16,386,962
AT&T Capital
10-18-94 4.78 6,100,000 6,086,289
10-27-94 4.79 6,600,000 6,577,263
Aon
10-13-94 4.79 4,200,000 4,193,322
10-21-94 4.78 3,800,000 3,789,951
Becton Dickinson
10-17-94 4.86 3,000,000 (e) 2,993,573
Beneficial
11-03-94 4.95 4,100,000 4,081,509
CIT Group
11-04-94 4.91 4,000,000 3,981,564
Cargill Financial Markets
10-20-94 4.91 7,000,000 (e) 6,981,934
Chevron Oil Finance
10-14-94 4.77 4,000,000 3,993,139
<PAGE>
Chevron Transport
10-13-94 4.78 1,700,000 (e) 1,697,303
Ciesco LP
10-19-94 4.82 6,400,000 6,384,124
Commercial Credit
11-07-94 4.90 2,000,000 1,989,989
Commerzbank
11-01-94 4.89 3,200,000 3,186,580
Consolidated Natl Gas
11-14-94 4.98 2,935,000 2,917,243
Consolidated Rail
10-28-94 4.82 1,800,000 (e) 1,793,547
Fleet Funding
10-12-94 4.78 4,558,000 (e) 4,551,385
General Mills
10-14-94 4.90 4,500,000 4,492,054
10-25-94 4.79 9,800,000 9,768,901
Hewlett-Packard
10-28-94 4.92 6,000,000 5,977,950
Household Finance
11-02-94 4.89 3,700,000 3,683,983
May Dept Stores
10-13-94 4.79 4,900,000 4,892,209
Mobil Australia Finance
(Delaware)
10-17-94 4.80 2,200,000 (e) 2,195,326
10-25-94 4.94 6,800,000 (e) 6,777,696
Natl Australia Funding
(Delaware)
10-07-94 4.77 600,000 599,525
11-01-94 4.90 4,400,000 4,381,510
Nestle Capital
10-03-94 4.74 9,900,000 9,897,404
11-01-94 4.90 5,500,000 5,476,888
Pitney Bowes Credit
10-18-94 4.87 6,300,000 6,285,571
St. Paul Companies
11-07-94 4.88 2,200,000 (e) 2,189,034
SBT Funding
10-19-94 4.82 1,400,000 (e) 1,396,640
Smithkline
10-03-94 4.54 5,100,000 5,098,531
Southwestern Bell Capital
10-26-94 4.78 4,500,000 (e) 4,485,156
11-14-94 4.85 4,000,000 (e) 3,975,051
Toyota Motor Credit
10-21-94 4.79 4,000,000 3,989,422
USAA Capital
10-12-94 4.77 5,300,000 5,292,308
US WEST Communications
10-05-94 4.54 2,300,000 2,298,745
10-24-94 4.78 6,000,000 5,981,792
10-28-94 4.87 4,900,000 4,882,176
____________
Total 185,603,549
_____________________________________________________________________________________________________________________________
Letter of credit (0.4%)
First Chicago-
Commed Fuel
<PAGE>
11-02-94 4.92 5,000,000 4,978,222
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $198,067,604) $ 198,065,275
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,139,351,926)(h) $1,167,584,354
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Security is partially or fully on loan. See Note 6 to the financial statements.
(c) Presently non-income producing.
(d) Foreign security values are stated in U.S. dollars. For debt securities, principal
amounts are denominated in the currency indicated.
(e) Commercial paper sold within terms of a private placement memorandum, exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and may
be sold only to dealers in that program or other "accredited investors". This
security has been determined to be liquid under guidelines established by the
board of directors.
(f) Represents a security sold under Rule 144A which is exempt from registration under
the Securities Act of 1933, as amended. This security has been determined to be
liquid under guidelines established by the board of directors.
(g) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(h) At Sept. 30, 1994, the cost of securities for federal income tax purposes was
approximately $1,139,352,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
<CAPTION>
<S> <C>
Unrealized appreciation $ 70,211,000
Unrealized depreciation (41,979,000)
____________________________________________________________________________________
Net unrealized appreciation $ 28,232,000
____________________________________________________________________________________
</TABLE>
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<C> <C> <S>
(a) FINANCIAL STATEMENTS:
List of financial statements filed as part of this Post-Effective Amendment to the
Registration Statement:
- Independent Auditors' Report dated May 6, 1994
- Statement of Assets and Liabilities, March 31, 1994
- Statement of Operations, Year ended March 31, 1994
- Statement of Changes in Net Assets, for the two-year period ended March 31,
1993 and March 31, 1994
- Notes to Financial Statements
- Investments in Securities, March 31, 1994
- Notes to Investments in Securities
Semiannual Report Data (unaudited):
- Statement of Assets and Liabilities, Sept. 30, 1994
- Statement of Operations, Period ended Sept. 30, 1994
- Statement of Changes in Net Assets, for the period ended Sept. 30, 1994
- Notes to Financial Statements
- Investments in Securities, Sept. 30, 1994
- Notes to Investments in Securities
(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) Form of Investment Management Services Agreement between Registrant and
American Express Financial Corporation, dated March 20, 1995, is filed
electronically herewith.
6. (a) Form of Distribution Agreement between Registrant and American Express
Financial Advisors Inc., dated March 20, 1995, is filed electronically
herewith.
7. All employees are eligible to participate in a profit sharing plan. Entry into
the plan is Jan. 1 or July 1. The Registrant contributes each year an amount
up to 15 percent of their annual salaries, the maximum deductible amount
permitted under Section 404(a) of the Internal Revenue Code.
8. (a) Form of Custodian Agreement between Registrant and American Express Trust
Company, dated March 20, 1995, is filed electronically herewith.
(b) 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) Form of Transfer Agency Agreement between Registrant and American Express
Financial Corporation, dated March 20, 1995, is filed electronically herewith.
(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.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
(c) Form of Shareholder Service Agreement between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, is filed electronically
herewith.
(d) Form of Administrative Services Agreement between Registrant and American
Express Financial Corporation, dated March 20, 1995, is filed electronically
herewith.
10. Not applicable.
11. Independent Auditors' Consent is filed electronically herewith.
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.
15. Form of Plan and Agreement of Distribution between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, is filed electronically
herewith.
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.
17. Financial Data Schedule is filed electronically herewith.
18(a). Directors' Power of Attorney to sign amendments to this Registration Statement
dated Nov. 10, 1994, filed electronically as Exhibit 18(a) to Registrant's
Post-Effective Amendment No. 24, is incorporated herein by reference.
18(b). Officers' Power of Attorney to sign amendments to this Registration Statement
dated June 1, 1993, was filed electronically as Exhibit 17(b) to
Post-Effective Amendment No. 22 to Registration Statement No. 2-89288, is
herein incorporated by reference.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
NUMBER OF RECORD
HOLDERS AS OF
TITLE OF CLASS JANUARY 23, 1995
- -------------- ------------------------
<S> <C>
Common Stock IDS Strategy --
Aggressive -- 127,307
Equity Value -- 163,850
</TABLE>
II-2
<PAGE>
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>
PAGE 1
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)
Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Service Quality
and Reengineering
American Express Service Corporation Vice President
Douglas A. Alger, Vice President--Total Compensation
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation
Jerome R. Amundson, Vice President and Controller--Investment Accounting
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Investment
Accounting
Peter J. Anderson, Director and Senior Vice President--Investments
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS Fund Management Limited Director
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services
Kent L. Ashton, Vice President--Financial Education Services
American Express Financial Advisors IDS Tower 10 Vice President-Financial
Minneapolis, MN 55440 Education Services
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Joseph M. Barsky III, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
Robert C. Basten, Vice President--Tax and Business Services
American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
Timothy V. Bechtold, Vice President--Insurance Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Insurance
Minneapolis, MN 55440 Product Development
IDS Life Insurance Company Vice President-Insurance
Product Development
Carl E. Beihl, Vice President--Strategic Technology Planning
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Financial Planning Systems
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Financial Planning
Systems
American Express Service Corporation Vice President
John C. Boeder, Vice President--Mature Market Group
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205
Karl J. Breyer, Director and Senior Vice President--Corporate Affairs and General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President
<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Harold E. Burke, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President
Daniel J. Candura, Vice President--Marketing Support
American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support
Cynthia M. Carlson, Vice President--American Express Securities Services
American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-IDS
Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate
James E. Choat, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of Nevada Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
Alan R. Dakay, Vice President--Institutional Insurance Marketing
American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President -
Institutional Insurance
Marketing
American Partners Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
Regenia David, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
William H. Dudley, Director and Executive Vice President--Investment Operations
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer
Roger S. Edgar, Director and Senior Vice President--Information Systems
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information Systems
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director
Robert M. Elconin, Vice President--Government Relations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President
Mark A. Ernst, Vice President--Retail Services
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board
Gordon M. Fines, Vice President--Mutual Fund Equity Investments
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Vice President and
Portfolio Manager
<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Louis C. Fornetti, Director, Senior Vice President and Chief Financial Officer
American Enterprise Investment IDS Tower 10 Vice President
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Tax & Business Director
Services Inc.
American Express Trust Company Director
IDS Cable Corporation Director
IDS Cable II Corporation Director
IDS Capital Holdings Inc. Senior Vice President
IDS Certificate Company Vice President
IDS Insurance Agency of Alabama Inc. Vice President
IDS Insurance Agency of Arkansas Inc. Vice President
IDS Insurance Agency of Massachusetts Inc. Vice President
IDS Insurance Agency of Nevada Inc. Vice President
IDS Insurance Agency of New Mexico Inc. Vice President
IDS Insurance Agency of North Carolina Inc. Vice President
IDS Insurance Agency of Ohio Inc. Vice President
IDS Insurance Agency of Wyoming Inc. Vice President
IDS Life Insurance Company Director
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Funds A&B Vice President
IDS Property Casualty Insurance Co. Director and Vice President
IDS Real Estate Services, Inc. Vice President
IDS Sales Support Inc. Director
IDS Securities Corporation Vice President
Investors Syndicate Development Corp. Vice President
Robert G. Gilbert, Vice President--Real Estate
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
John J. Golden, Vice President--Field Compensation Development
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development
Harvey Golub, Director
American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440
<PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Morris Goodwin Jr., Vice President and Corporate Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Minnesota Foundation Director, Vice President
and Treasurer
American Express Service Corporation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation 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 Deposit Corp. Director, President
and Treasurer
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of Nevada Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Vice President and
Treasurer
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 Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director
Suzanne Graf, Vice President--Systems Services
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
David A. Hammer, Vice President and Marketing Controller
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
Lorraine R. Hart, Vice President--Insurance Investments
American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Vice President-Investments
<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management
American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management
Raymond E. Hirsch, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President
James G. Hirsh, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel
Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Services
American Express Trust Company IDS Tower 10 Vice President
Minneapolis, MN 55440
Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President
IDS Securities Corporation Vice President and Chief
Compliance Officer
David R. Hubers, Director, President and Chief Executive Officer
American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and President
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director
Marietta L. Johns, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Douglas R. Jordal, Vice President--Taxes
American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corporation Vice President
Craig A. Junkins, Vice President--IDS 1994 Implementation Planning and Financial Planning
Development
American Express Financial Advisors IDS Tower 10 Vice President-IDS 1994
Minneapolis, MN 55440 Implementation Planning
and Financial Planning
Development
American Express Service Corporation Vice President
James E. Kaarre, Vice President--Marketing Information
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information
Linda B. Keene, Vice President--Market Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development
G. Michael Kennedy, Vice President--Investment Services and Investment Research
American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research
Susan D. Kinder, Director and Senior Vice President--Human Resources
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Richard W. Kling, Director and Senior Vice President--Risk Management Products
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Partners Life Insurance Co. Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of Nevada Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A&B Member of Board of
Managers, Chairman of the
Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
Harold D. Knutson, Vice President--System Services
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 System Services
Paul F. Kolkman, Vice President--Actuarial Finance
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
Claire Kolmodin, Vice President--Service Quality
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems
American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
American Express Service Corporation Vice President
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Edward Labenski, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President
Kurt A. Larson, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
Lori J. Larson, Vice President--Variable Assets Product Development
American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President
Ryan R. Larson, Vice President--IPG Product Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development
Daniel E. Laufenberg, Vice President and Chief U.S. Economist
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
Richard J. Lazarchic, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Peter A. Lefferts, Director, Senior Vice President and Chief Marketing Officer
American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Chief Marketing Officer
American Express Trust Company Director and Chairman of
the Board
IDS Life Insurance Company Director and Executive
Vice President-Marketing
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director
Douglas A. Lennick, Director and Executive Vice President--Private Client Group
American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
American Express Service Corporation Vice President
Mary J. Malevich, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International, Inc. Vice President and
Portfolio Manager
Fred A. Mandell, Vice President--Field Marketing Readiness
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
William J. McKinney, Vice President--Field Management Support
American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support
Thomas W. Medcalf, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
William C. Melton, Vice President-International Research and Chief International Economist
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Janis E. Miller, Vice President--Variable Assets
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205
James A. Mitchell, Director and Executive Vice President--Marketing and Products
American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
IDS Certificate Company Director and Chairman of
the Board
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
Pamela J. Moret, Vice President--Corporate Communications
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Communications
American Express Minnesota Foundation Director and President
Barry J. Murphy, Director and Senior Vice President--Client Service
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Robert J. Neis, Vice President--Information Systems Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations
James R. Palmer, Vice President--Insurance Operations
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Insurance Operations
IDS Life Insurance Company Vice President-Taxes
Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business
American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business
Judith A. Pennington, Vice President--Field Technology
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Field Technology
George M. Perry, Vice President--Corporate Strategy and Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Strategy
and Development
IDS Property Casualty Insurance Co. Director
Susan B. Plimpton, Vice President--Segmentation Development and Support
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support
Ronald W. Powell, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
James M. Punch, Vice President--TransAction Services
American Express Financial Advisors IDS Tower 10 Vice President-Trans
Minneapolis, MN 55440 Action Services
Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments
American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
ReBecca K. Roloff, Vice President--1994 Program Director
American Express Financial Advisors IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director
Stephen W. Roszell, Vice President--Advisory Institutional Marketing
American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
Robert A. Rudell, Vice President--American Express Institutional Services
American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director
IDS Sales Support Inc. Director and President
John P. Ryan, Vice President and General Auditor
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Erven A. Samsel, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
Stuart A. Sedlacek, Vice President--Assured Assets
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Chairman of the Board
and President
Donald K. Shanks, Vice President--Property Casualty
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President
<PAGE>
PAGE 18
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments
American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
Judy P. Skoglund, Vice President--Human Resources and Organization Development
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development
Ben C. Smith, Vice President--Workplace Marketing
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
William A. Smith, Vice President and Controller--Private Client Group
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group
Bridget Sperl, Vice President--Human Resources Management Services
American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services
Jeffrey E. Stiefler, Director
American Express Company American Express Tower Director and President
World Financial Center
New York, NY 10285
<PAGE>
PAGE 19
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William A. Stoltzmann, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund, Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity Funds A&B General Counsel and
Assistant Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary
James J. Strauss, Vice President--Corporate Planning and Analysis
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis
Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD
American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD
Fenton R. Talbott, Director
ACUMA Ltd. ACUMA House President and Chief
The Glanty, Egham Executive Officer
Surrey TW 20 9 AT
UK
<PAGE>
PAGE 20
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
John R. Thomas, Director and Senior Vice President--Information and Technology
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
IDS Bond Fund, Inc. Director
IDS California Tax-Exempt Trust Trustee
IDS Discovery Fund, Inc. Director
IDS Equity Select Fund, Inc. Director
IDS Extra Income Fund, Inc. Director
IDS Federal Income Fund, Inc. Director
IDS Global Series, Inc. Director
IDS Growth Fund, Inc. Director
IDS High Yield Tax-Exempt Fund, Inc. Director
IDS Investment Series, Inc. Director
IDS Managed Retirement Fund, Inc. Director
IDS Market Advantage Series, Inc. Director
IDS Money Market Series, Inc. Director
IDS New Dimensions Fund, Inc. Director
IDS Precious Metals Fund, Inc. Director
IDS Progressive Fund, Inc. Director
IDS Selective Fund, Inc. Director
IDS Special Tax-Exempt Series Trust Trustee
IDS Stock Fund, Inc. Director
IDS Strategy Fund, Inc. Director
IDS Tax-Exempt Bond Fund, Inc. Director
IDS Tax-Free Money Fund, Inc. Director
IDS Utilities Income Fund, Inc. Director
Melinda S. Urion, Vice President and Corporate Controller
American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Vice President and
Corporate Controller
American Partners Life Insurance Co. Director, Vice President,
Controller and Treasurer
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller
Wesley W. Wadman, Vice President--Senior Portfolio Manager
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Chairman
IDS International, Inc. Senior Vice President
<PAGE>
PAGE 21
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Norman Weaver, Jr., Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
Pacific Region
IDS Insurance Agency of Arkansas Inc. Vice President-
Pacific Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
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 Inc. Vice President-
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
American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary
Lawrence J. Welte, Vice President--Investment Administration
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer
Jeffry F. Welter, Vice President--Equity and Fixed Income Trading
American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading
<PAGE>
PAGE 22
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer
American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director
Edwin M. Wistrand, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
Michael R. Woodward, Director and Senior Vice President--Field Management
American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
North Region
IDS Insurance Agency of Arkansas Inc. Vice President-
North Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of Nevada Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region
IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>
<PAGE>
PAGE 23
Item 29. Principal Underwriters.
(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:
IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.
(b) As to each director, officer or partner of the principal
underwriter:
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering
Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440
Jerome R. Amundson Vice President and None
IDS Tower 10 Controller-Investment
Minneapolis, MN 55440 Accounting
Peter J. Anderson Senior Vice President- None
IDS Tower 10 Investments
Minneapolis, MN 55440
Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 American Express
Institutional Services
Alvan D. Arthur Group Vice President- None
IDS Tower 10 Central California/
Minneapolis, MN 55440 Western Nevada
Kent L. Ashton Vice President- None
IDS Tower 10 Financial Education
Minneapolis, MN 55440 Services
<PAGE>
PAGE 24
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440
Timothy V. Bechtold Vice President-Insurance None
IDS Tower 10 Product Development
Minneapolis, MN 55440
John D. Begley Group Vice Presdient- None
Olentangy Valley Center Ohio/Indiana
Suite 300
7870 Olentangy River Rd.
Columbus, OH 43235
Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning
Jack A. Benjamin Group Vice President- None
Greater Pennsylvania
Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems
Brent L. Bisson Group Vice President- None
Seafirst Financial Los Angeles Metro
Center, Suite 1730
601 W. Riverside Ave.
Spokane, WA 99201
John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
Bruce J. Bordelon Group Vice President- None
Gulf States
Charles R. Branch Group Vice President- None
Northwest
Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel
Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel<PAGE>
PAGE 25
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440
Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services
Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
James E. Choat Senior Vice President- None
Suite 124 Field Management
6210 Campbell Rd.
Dallas, TX 75248
Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304
Roger C. Corea Group Vice President- None
345 Woodcliff Drive Upstate New York
Fairport, NY 14450
Henry J. Cormier Group Vice President- None
Connecticut
John M. Crawford Group Vice President- None
Arkansas/Springfield/Memphis
Kevin F. Crowe Group Vice President- None
IDS Tower 10 Carolinas/Eastern Georgia
Minneapolis, MN 55440
Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Insurance
Minneapolis, MN 55440 Marketing
Regenia David Vice President- None
Systems Services
Scott M. Digiammarino Group Vice President- None
Washington/Baltimore
Bradford L. Drew Group Vice President- None
Eastern Florida
<PAGE>
PAGE 26
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
William H. Dudley Director and Executive Director/
IDS Tower 10 Vice President- Trustee
Minneapolis MN 55440 Investment 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
Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440
Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440
Joseph Evanovich Jr. Group Vice President- None
Nebraska/Iowa/Dakotas
Louise P. Evenson Group Vice President- None
San Francisco Bay Area
Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments
Louis C. Fornetti Senior Vice President None
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer
Douglas L. Forsberg Group Vice President- None
IDS Tower 10 Portland/Eugene
Minneapolis, MN 55440
William P. Fritz Group Vice President- None
Northern Missouri
Carl W. Gans Group Vice President- None
IDS Tower 10 Twin City Metro
Minneapolis, MN 55440
Bruce M. Gaurino Group Vice President- None
Hawaii
<PAGE>
PAGE 27
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440
John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development
Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440
Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440
Bruce M. Guarino Group Vice President- None
Hawaii
David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller
Teresa A. Hanratty Group Vice President- None
Northern New England
John R. Hantz Group Vice President- None
Detroit Metro
Robert L. Harden Group Vice President- None
Suite 403 Boston Metro
8500 Leesburg Pike
Vienna, VA 22180
Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440
Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management
Brian M. Heath Group Vice President- None
IDS Tower 10 North Texas
Minneapolis, MN 55440
Raymond E. Hirsch Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440
<PAGE>
PAGE 28
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
David J. Hockenberry Group Vice President- None
Eastern Tennessee
Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations
David R. Hubers Chairman, Chief None
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President
Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440
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
Linda B. Keene Vice President- None
Market Development
G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research
Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440
Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Harold D. Knutson Vice President- None
IDS Tower 10 System Services
Minneapolis, MN 55440
Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440
Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
David S. Kreager Group Vice President- None
IDS Tower 10 Greater Michigan
Minneapolis, MN 55440
Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
Mitre Kutanovski Group Vice President- None
IDS Tower 10 Chicago Metro
Minneapolis, MN 55440
Edward Labenski Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development
Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440
Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440
Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
MInneapolis, MN 55440 Manager
Peter A. Lefferts Senior Vice President and None
IDS Tower 10 Chief Marketing Officer
Minneapolis, MN 55440<PAGE>
PAGE 30
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group
Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440
Daniel E. Martin Group Vice President- None
Pittsburgh Metro
William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support
Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440
William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist
Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440
James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440
John P. Moraites Group Vice President- None
Kansas/Oklahoma
Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440
Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440
Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations<PAGE>
PAGE 31
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Ronald E. Newton Group Vice President- None
Rhode Island/Central
Massachusetts
Thomas V. Nicolosi Group Vice President- None
New York Metro Area
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
Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business
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 Segmentation Development
Minneapolis, MN 55440 and Support
Larry M. Post Group Vice President- None
Philadelphia Metro
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
R. Daniel Richardson Group Vice President- None
Southern Texas
<PAGE>
PAGE 32
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Roger B. Rogos Group Vice President- None
Suite 15, Parkside Pl. Western Florida
945 Boardman-Canfield Rd
Youngstown, Ohio 44512
ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing
Max G. Roth Group Vice President- None
Wisconsin/Upper Michigan
Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Services
John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440
Erven A. Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Braintree, MA 02184
Russell L. Scalfano Group Vice President- None
Illinois/Indiana/Kentucky
William G. Scholz Group Vice President- None
Arizona/Las Vegas
Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440
Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments
Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development<PAGE>
PAGE 33
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Julian W. Sloter Group Vice Presidnet- None
9040 Roswell Rd. Orlando/Jacksonville
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 and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group
James B. Solberg Group Vice President- None
IDS Tower 10 Eastern Iowa Area
Minneapolis, MN 55440
Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services
Paul J. Stanislaw Group Vice President- None
Southern California
Lois A. Stilwell Group Vice President- None
IDS Tower 10 Outstate Minnesota Area/
Minneapolis, MN 55440 North Dakota/Western Wisconsin
William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis
Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
Neil G. Taylor Group Vice President- None
IDS Tower 10 Seattle/Tacoma
Minneapolis, MN 55440
John R. Thomas Senior Vice President- Director/
IDS Tower 10 Information and Trustee
Minneapolis, MN 55440 Technology
Melinda S. Urion Vice President and None
IDS Tower 10 Corporate Controller
Minneapolis, MN 55440<PAGE>
PAGE 34
Item 29(b). (Continued)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant
Peter S. Velardi Group Vice President- None
Atlanta/Birmingham
Charles F. Wachendorfer Group Vice President- None
Denver/Salt Lake City/
Albuquerque
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
Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading
William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer
Thomas L. White Group Vice President- None
Cleveland Metro
Eric S. Williams Group Vice President- None
Virginia
Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel
Michael R. Woodward Senior Vice President- None
Suite 815 Field Management
8585 Broadway
Merrillville, IN 46410
<PAGE>
PAGE 35
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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Strategy Fund, Inc.,
certifies that it meets the requirements for the effectiveness of this Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and 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 27th day of February, 1995.
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 27th day of February, 1995.
SIGNATURE CAPACITY
- ----------------------------------- -------------------------
/s/ WILLIAM R. PEARCE** Presidents, Principal
- ----------------------------------- Executive Officer and
William R. Pearce Director
Treasurer, Principal
/s/ LESLIE L. OGG** Financial Officer and
- ----------------------------------- Principal Accounting
Leslie L. Ogg Officer
/s/ LYNNE V. CHENEY*
- ----------------------------------- 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/ HEINZ F. HUTTER*
- ----------------------------------- Director
Heinz F. Hutter
II-3
<PAGE>
SIGNATURE CAPACITY
- ----------------------------------- -------------------------
/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
/s/ EDSON W. SPENCER*
- ----------------------------------- Director
Edson W. Spencer
/s/ JOHN R. THOMAS*
- ----------------------------------- Director
John R. Thomas
/s/ WHEELOCK WHITNEY*
- ----------------------------------- Director
Wheelock Whitney
/s/ C. ANGUS WURTELE*
- ----------------------------------- Director
C. Angus Wurtele
*Signed pursuant to Directors' Power of Attorney dated November 10, 1994, filed
electronically as Exhibit 18(a) to Registrant's Post-Effective Amendment No.
24, by:
/s/ Leslie L. Ogg
- -------------------------------------------
Leslie L. Ogg
**Signed pursuant to Officers' Power of Attorney dated June 1, 1993, filed as
Exhibit 17(b) to Post-Effective Amendment No. 22 by:
/s/ Leslie L. Ogg
- -------------------------------------------
Leslie L. Ogg
II-4
<PAGE>
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 25
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.
Financial Statements.
Part C.
Other information.
Exhibits.
The signatures.
<PAGE>
EXHIBIT INDEX
IDS Strategy Fund
Registration Number 2-89288/811-3956
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<C> <S>
5: Form of Investment Management Services Agreement between Registrant and American Express Financial
Corporation, dated March 20, 1995.
6: Form of Distribution Agreement between Registrant and American Express Financial Advisors Inc., dated
March 20, 1995.
8a: Form of Custodian Agreement between Registrant and American Express Trust Company, dated March 20, 1995.
9a: Form of Transfer Agency Agreement between Registrant and American Express Financial Corporation, dated
March 20, 1995.
9c: Form of Shareholder Service Agreement between Registrant and American Express Financial Advisors Inc.,
dated March 20, 1995.
9d: Form of Administrative Services Agreement between Registrant and American Express Financial Corporation,
dated March 20, 1995.
11: Independent Auditors' Consent.
15: Form of Plan and Agreement of Distribution between Registrant and American Express Financial Advisors
Inc., dated March 20, 1995.
17a: Financial Data Schedule for IDS Strategy Aggressive Fund.
17b: Financial Data Schedule for IDS Equity Value Fund.
</TABLE>
<PAGE>
FORM OF
INVESTMENT MANAGEMENT SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS Strategy
Fund, Inc. (the "Corporation") on behalf of its underlying series funds, IDS
Strategy Aggressive Fund and IDS Equity Value Fund (individually a "Fund"
and collectively the "Funds"), a Minnesota corporation, and American Express
Financial Corporation, a Delaware corporation.
PART ONE: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1) The Corporation hereby retains American Express Financial Corporation,
and American Express Financial Corporation hereby agrees, for the period of this
Agreement and under the terms and conditions hereinafter set forth, to furnish
the Corporation continuously with suggested investment planning; to determine,
consistent with the Funds' investment objectives and policies, which securities
in American Express Financial Corporation' discretion shall be purchased, held
or sold and to execute or cause the execution of purchase or sell orders; to
prepare and make available to the Funds all necessary research and statistical
data in connection therewith; to furnish all other services of whatever nature
required in connection with the management of the Funds as provided under this
Agreement; and to pay such expenses as may be provided for in Part Three;
subject always to the direction and control of the Board of Directors (the
"Board"), the Executive Committee and the authorized officers of the
Corporation. American Express Financial Corporation agrees to maintain an
adequate organization of competent persons to provide the services and to
perform the functions herein mentioned. American Express Financial Corporation
agrees to meet with any persons at such times as the Board deems appropriate for
the purpose of reviewing American Express Financial Corporation' performance
under this Agreement.
(2) American Express Financial Corporation agrees that the investment
planning and investment decisions will be in accordance with general investment
policies of the Funds as disclosed to American Express Financial Corporation
from time to time by the Funds and as set forth in its prospectuses and
registration statements filed with the United States Securities and Exchange
Commission (the "SEC").
(3) American Express Financial Corporation agrees that it will maintain
all required records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for the Funds.
(4) The Corporation agrees that it will furnish to American Express
Financial Corporation any information that the latter may reasonably request
with respect to the services performed or to be performed by American Express
Financial Corporation under this Agreement.
(5) American Express Financial Corporation is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities for the Funds and is directed to use its best efforts to obtain the
best available price and most favorable execution, except as prescribed herein.
Subject to prior authorization by the Board of appropriate policies and
procedures, and subject to termination at any time by the Board, American
Express Financial Corporation may also be authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, to the extent authorized by law, if American Express Financial
Corporation determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or American Express Financial Corporation's overall responsibilities
with respect to the Funds and other funds for which it acts as investment
adviser.
(6) It is understood and agreed that in furnishing the Funds with the
services as herein provided, neither American Express Financial Corporation, nor
any officer, director or agent thereof shall be held liable to a Fund or its
creditors or shareholders for errors of judgment or for anything except willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that American Express Financial
Corporation may rely upon information furnished to it reasonably believed to be
accurate and reliable.
PART TWO: COMPENSATION TO INVESTMENT MANAGER
<PAGE>
(1) The Corporation agrees to pay to American Express Financial
Corporation, and American Express Financial Corporation covenants and agrees to
accept from the Corporation in full payment for the services furnished a fee for
each calendar day of each year equal to the total of 1/365th (1/366th in each
leap year) of the amount computed as shown below. The computation shall be made
for each day on the basis of net assets as of the close of business of the full
business day two (2) business days prior to the day for which the computation is
being made. In the case of the suspension of the computation of net asset value,
the asset charge for each day during such suspension shall be computed as of the
close of business on the last full business day on which the net assets were
computed. Net assets as of the close of a full business day shall include all
transactions in shares of the Funds recorded on the books of the Funds for that
day.
The asset charge shall be based on the net assets of each Fund as set forth
in the following table.
ASSET CHARGE
<TABLE>
<CAPTION>
Assets Annual Rate At Assets Annual Rate At
-------------- --------------
(Billions) Each Asset Level (Billions) Each Asset Level
---------- ---------------- ----------- ----------------
Aggressive Equity
----------------- Equity
------
<S> <C> <C> <C>
First $1 0.600% First $0.5 0.530%
Next $1 0.575 Next $0.5 0.505
Next $1 0.550 Next $1 0.480
Next $3 0.525 Next $1 0.455
Over $6 0.500 Next $3 0.430
Over $6 0.400
</TABLE>
(2) The fee shall be paid on a monthly basis and, in the event of the
termination of this Agreement, the fee accrued shall be prorated on the basis of
the number of days that this Agreement is in effect during the month with
respect to which such payment is made.
(3) The fee provided for hereunder shall be paid in cash by the Funds to
American Express Financial Corporation within five business days after the last
day of each month.
PART THREE: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Fees payable to American Express Financial Corporation for its
services under the terms of this Agreement.
(b) Taxes.
(c) Brokerage commissions and charges in connection with the purchase
and sale of assets.
(d) Custodian fees and charges.
(e) Fees and charges of its independent certified public accountants for
services the Funds request.
(f) Premium on the bond required by Rule 17g-1 under the Investment
Company Act of 1940.
(g) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the Corporation,
its directors and officers, (ii) it employs in conjunction with a claim asserted
by the Board against American Express Financial Corporation, except that
American Express Financial Corporation shall reimburse the Corporation for such
fees and expenses if it is ultimately determined by a court of competent
jurisdiction, or American Express Financial Corporation agrees, that it is
liable in whole or in part to the Corporation, and (iii) it employs to assert a
claim against a third party.
<PAGE>
(h) Fees paid for the qualification and registration for public sale of
the securities of the Funds under the laws of the United States and of the
several states in which such securities shall be offered for sale.
(i) Fees of consultants employed by the Funds.
(j) Directors, officers and employees expenses which shall include fees,
salaries, memberships, dues, travel, seminars, pension, profit sharing, and
all other benefits paid to or provided for directors, officers and employees,
directors and officers liability insurance, errors and omissions liability
insurance, worker's compensation insurance and other expenses applicable to the
directors, officers and employees, except the Corporation will not pay any fees
or expenses of any person who is an officer or employee of American Express
Financial Corporation or its affiliates.
(k) Filing fees and charges incurred by the Corporation in connection
with filing any amendment to its articles of incorporation, or incurred in
filing any other document with the State of Minnesota or its political
subdivisions.
(l) Organizational expenses of the Corporation.
(m) Expenses incurred in connection with lending portfolio securities of
the Funds.
(n) Expenses properly payable by the Funds, approved by the Board.
(2) American Express Financial Corporation agrees to pay all expenses
associated with the services it provides under the terms of this Agreement.
Further, American Express Financial Corporation agrees that if, at the end of
any month, the expenses of a Fund under this Agreement and any other agreement
between the Fund and American Express Financial Corporation, but excluding those
expenses set forth in (1)(b) and (1)(c) of this Part Three, exceed the most
restrictive applicable state expenses limitation, the Fund shall not pay those
expenses set forth in (1)(a) and (d) through (n) of this Part Three to the
extent necessary to keep the Fund's expenses from exceeding the limitation, it
being understood that American Express Financial Corporation will assume all
unpaid expenses and bill the Fund for them in subsequent months but in no
event can the accumulation of unpaid expenses or billing be carried past the end
of the Fund's fiscal year.
PART FOUR: MISCELLANEOUS
(1) American Express Financial Corporation shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Funds.
(2) A "full business day" shall be as defined in the By-laws.
(3) Each Fund recognizes that American Express Financial Corporation now
renders and may continue to render investment advice and other services to other
investment companies and persons which may or may not have investment policies
and investments similar to those of the Funds and that American Express
Financial Corporation manages its own investments and/ or those of its
subsidiaries. American Express Financial Corporation shall be free to render
such investment advice and other services and each Fund hereby consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto shall
be invalidated or in any way affected by the fact that directors, officers,
agents and/or shareholders of the Funds are or may be interested in American
Express Financial Corporation or any successor or assignee thereof, as
directors, officers, stockholders or otherwise; that directors, officers,
stockholders or agents of American Express Financial Corporation are or may be
interested in the Funds as directors, officers, shareholders, or otherwise; or
that American Express Financial Corporation or any successor or assignee, is or
may be interested in the Funds as shareholder or otherwise, provided, however,
that neither American Express Financial Corporation, nor any officer, director
or employee thereof or of the Funds, shall sell to or buy from the Funds any
property or security other than shares issued by the Funds, except in accordance
with applicable regulations or orders of the SEC.
(5) Any notice under this Agreement shall be given in writing, addressed,
and delivered, or mailed postpaid, to the party to this Agreement entitled to
receive such, at such party's principal place of business in Minneapolis,
Minnesota, or to such other address as either party may designate in writing
mailed to the other.
<PAGE>
(6) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will deal for
or on behalf of the Funds with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors or employees of American Express Financial
Corporation from having a financial interest in the Funds or in American Express
Financial Corporation.
(b) The purchase of securities for the Funds, or the sale of securities
owned by the Funds, through a security broker or dealer, one or more of
whose partners, officers, directors or employees is an officer, director or
employee of American Express Financial Corporation, provided such transactions
are handled in the capacity of broker only and provided commissions charged do
not exceed customary brokerage charges for such services.
(c) Transactions with the Funds by a broker-dealer affiliate of American
Express Financial Corporation as may be allowed by rule or order of the SEC and
if made pursuant to procedures adopted by the Board.
(7) American Express Financial Corporation agrees that, except as herein
otherwise expressly provided or as may be permitted consistent with the use of a
broker-dealer affiliate of American Express Financial Corporation under
applicable provisions of the federal securities laws, neither it nor any of its
officers, directors or employees shall at any time during the period of this
Agreement, make, accept or receive, directly or indirectly, any fees, profits or
emoluments of any character in connection with the purchase or sale of
securities (except shares issued by the Funds) or other assets by or for the
Funds.
PART FIVE: RENEWAL AND TERMINATION
(1) This Agreement shall continue in effect until March 19, 1997, or until
a new agreement is approved by a vote of the majority of the outstanding shares
of each Fund and by vote of the Fund's Board, including the vote required by (b)
of this paragraph, and if no new agreement is so approved, this Agreement shall
continue from year to year thereafter unless and until terminated by either
party as hereinafter provided, except that such continuance shall be
specifically approved at least annually (a) by the Board or by a vote of the
majority of the outstanding shares of the Funds and (b) by the vote of a
majority of the directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. As used in this paragraph, the term "interested person"
shall have the same meaning as set forth in the Investment Company Act of 1940,
as amended (the "1940 Act").
(2) This Agreement may be terminated by either a Fund or American Express
Financial Corporation at any time by giving the other party 60 days' written
notice of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that termination
may be effected either by the Board or by a vote of the majority of the
outstanding voting shares of the Fund. The vote of the majority of the
outstanding voting shares of a Fund for the purpose of this Part Five shall be
the vote at a shareholders' regular meeting, or a special meeting duly called
for the purpose, of 67% or more of the Fund's shares present at such meeting if
the holders of more than 50% of the outstanding voting shares are present or
represented by proxy, or more than 50% of the outstanding voting shares of the
Fund, whichever is less.
(3) This Agreement shall terminate in the event of its assignment, the
term "assignment" for this purpose having the same meaning as set forth in the
1940 Act.
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement
as of the day and year first above written.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
By: Leslie L. Ogg, Vice President
-----------------------------
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
-----------------------------
<PAGE>
DISTRIBUTION AGREEMENT
Agreement made as of the 20th day of March, 1995, by and between
IDS Strategy Fund, Inc. (the "Corporation"), a Minnesota
corporation, for and on behalf of each class of its underlying
Funds, and American Express Financial Advisors Inc., a Delaware
corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Corporation covenants and agrees that, during the term of
this agreement and any renewal or extension, American Express
Financial Advisors shall have the exclusive right to act as
principal underwriter for the Corporation and to offer for sale
and to distribute either directly or through any affiliate any and
all shares of each class of capital stock issued or to be issued by
the Corporation.
(2) American Express Financial Advisors hereby covenants and
agrees to act as the principal underwriter of each class of capital
shares issued and to be issued by the Corporation during the
period of this agreement and agrees during such period to offer for
sale such shares as long as such shares remain available for sale,
unless American Express Financial Advisors is unable or unwilling
to make such offer for sale or sales or solicitations therefor
legally because of any federal, state, provincial or governmental
law, rule or agency or for any financial reason.
(3) With respect to the offering for sale and sale of shares of
each class to be issued by the Corporation, it is mutually
understood and agreed that such shares are to be sold on the
following terms:
(a) All sales shall be made by means of an application, and
every application shall be subject to acceptance or rejection by
the Corporation at its principal place of business. Shares are to
be sold for cash, payable at the time the application and payment
for such shares are received at the principal place of business of
the Corporation.
(b) No shares shall be sold at less than the asset value
(computed in the manner provided by the currently effective
prospectus or Statement of Additional Information and the
Investment Company Act of 1940, and rules thereunder). The number
of shares or fractional shares to be acquired by each applicant
shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the
capital stock of the appropriate class as of the close of business
on the day when the application, together with payment, is received
by the Corporation at its principal place of business. The
computation as to the number of shares and fractional shares shall
be carried to three decimal points of one share with the
computation being carried to the nearest 1/l000th of a share. If
the day of receipt of the application and payment is not a full
business day, then the asset value of the share for use in such
computation shall be determined as of the close of business on the
next succeeding full business day. In the event of a period of
emergency, the computation of the asset value for the purpose of
<PAGE>
determining the number of shares or fractional shares to be
acquired by the applicant may be deferred until the close of
business on the first full business day following the termination
of the period of emergency. A period of emergency shall have the
definition given thereto in the Investment Company Act of 1940, and
rules thereunder.
(4) The Corporation agrees to make prompt and reasonable effort
to do any and all things necessary, in the opinion of American
Express Financial Advisors, to have and to keep the Corporation
and the shares properly registered or qualified in all appropriate
jurisdictions and, as to shares, in such amounts as American
Express Financial Advisors may from time to time designate in order
that the Corporation's shares may be offered or sold in such
jurisdictions.
(5) The Corporation agrees that it will furnish American Express
Financial Advisors with information with respect to the affairs and
accounts of the Corporation , and in such form, as American Express
Financial Advisors may from time to time reasonably require and
further agrees that American Express Financial Advisors, at all
reasonable times, shall be permitted to inspect the books and
records of the Corporation.
(6) American Express Financial Advisors Inc. or its agents may
prepare or cause to be prepared from time to time circulars, sales
literature, broadcast material, publicity data and other
advertising material to be used in the sales of shares issued by
the Corporation , including material which may be deemed to be a
prospectus under rules promulgated by the Securities and Exchange
Commission (each separate promotional piece is referred to as an
"Item of Soliciting Material"). At its option, American Express
Financial Advisors may submit any Item of Soliciting Material to
the Corporation for its prior approval. Unless a particular Item of
Soliciting Material is approved in writing by the Corporation
prior to its use, American Express Financial Advisors Inc. agrees
to indemnify the Corporation and its directors and officers
against any and all claims, demands, liabilities and expenses which
the Corporation or such persons may incur arising out of or based
upon the use of any Item of Soliciting Material. The term
"expenses" includes amounts paid in satisfaction of judgments or in
settlements. The foregoing right of indemnification shall be in
addition to any other rights to which the Corporation or any
director or officer may be entitled as a matter of law.
Notwithstanding the foregoing, such indemnification shall not be
deemed to abrogate or diminish in any way any right or claim
American Express Financial Advisors may have against the
Corporation or its officers or directors in connection with the
Corporation's registration statement, prospectus, Statement of
Additional Information or other information furnished by or caused
to be furnished by the Corporation.
(7) American Express Financial Advisors agrees to submit to the
Corporation each application for shares immediately after the
receipt of such application and payment therefor by American
Express Financial Advisors at its principal place or business.
<PAGE>
(8) American Express Financial Advisors agrees to cause to be
delivered to each person submitting an application a prospectus or
circular to be furnished by the Corporation in the form required by
the applicable federal laws or by the acts or statutes of any
applicable state, province or country.
(9) The Corporation shall have the right to extend to
shareholders of each class the right to use the proceeds of any
cash dividend paid by the Corporation to that shareholder to
purchase shares of the same class at the net asset value at the
close of business upon the day of purchase, to the extent set forth
in the currently effective prospectus or Statement of Additional
Information.
(10) Shares of each class issued by the Corporation may be
offered and sold at their asset value to the shareholders of the
same class of other Corporation s in the IDS MUTUAL FUND GROUP who
wish to exchange their investments in shares of the other funds in
the IDS MUTUAL FUND GROUP to investments in shares of the
Corporation, to the extent set forth in the currently effective
prospectus or Statement of Additional Information, such asset value
to be computed as of the close of business on the day of sale of
such shares of the Corporation.
(11) American Express Financial Advisors and the Corporation agree
to use their best efforts to conform with all applicable state and
federal laws and regulations relating to any rights or obligations
under the term of this agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties,
American Express Financial Advisors covenants and agrees that
during the period of this agreement it will pay or cause or be paid
all expenses incurred by American Express Financial Advisors, or
any of its affiliates, in the offering for sale or sale of each
class of the Corporation's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that American Express Financial
Advisors shall be paid:
(i) for a class of shares imposing a front-end sales charge,
by the purchasers of Corporation shares in an amount equal to the
difference between the total amount received upon each sale of
shares issued by the Corporation and the asset value of such shares
at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge,
by owners of Corporation shares at the time the sales charge is
imposed in an amount equal to any deferred sales charge, as
described in the Corporation's prospectus.
Such sums as are received by the Corporation shall be received as
Agent for American Express Financial Advisors and shall be remitted
to American Express Financial Advisors daily as soon as
practicable after receipt.
<PAGE>
(2)The asset value of any share of each class of the Corporation
shall be determined in the manner provided by the classes currently
effective prospectus and Statement of Additional Information and
the Investment Company Act of 1940, and rules thereunder.
Part Four: MISCELLANEOUS
(1) American Express Financial Advisors shall be deemed to be an
independent contractor and, except as expressly provided or
authorized in this agreement, shall have no authority to act for or
represent the Corporation .
(2) American Express Financial Advisors shall be free to render
to others services similar to those rendered under this agreement.
(3) Neither this agreement nor any transaction had pursuant
hereto shall be invalidated or in any way affected by the fact that
directors, officers, agents and/or shareholders of the Corporation
are or may be interested in American Express Financial Advisors as
directors, officers, shareholders or otherwise; that directors,
officers, shareholders or agents of American Express Financial
Advisors are or may be interested in the Corporation as directors,
officers, shareholders or otherwise; or that American Express
Financial Advisors is or may be interested in the Corporation as
shareholder or otherwise, provided, however, that neither American
Express Financial Advisors nor any officer or director of American
Express Financial Advisors or any officers or directors of the
Corporation shall sell to or buy from the Corporation any property
or security other than a security issued by the Corporation, except
in accordance with a rule, regulation or order of the federal
Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall
have the same meaning as is given to the term in the By-laws of the
Corporation.
(5) Any notice under this agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the parties to this
agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party
may designate in writing mailed to the other.
(6) American Express Financial Advisors agrees that no officer,
director or employee of American Express Financial Advisors will
deal for or on behalf of the Corporation with himself as principal
or agent, or with any corporation or partnership in which he may
have a financial interest, except that this shall not prohibit:
(a) Officers, directors and employees of American Express
Financial Advisors from having a financial interest in the
Corporation or in American Express Financial Advisors.
(b) The purchase of securities for the Corporation, or the
sale of securities owned by the Corporation, through a security
broker or dealer, one or more of whose partners, officers,
directors or employees is an officer, director or employee of
American Express Financial Advisors, provided such transactions are
<PAGE>
handled in the capacity of broker only and provided commissions
charged do not exceed customary brokerage charges for such
services.
(c) Transactions with the Corporation by a broker-dealer
affiliate of American Express Financial Advisors if allowed by rule
or order of the Securities and Exchange Commission and if made
pursuant to procedures adopted by the Corporation 's Board of
Directors.
(7) American Express Financial Advisors agrees that, except as
otherwise provided in this agreement, or as may be permitted
consistent with the use of a broker-dealer affiliate of American
Express Financial Advisors under applicable provisions of the
federal securities laws, neither it nor any of its officers,
directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the
purchase or sale of securities (except securities issued by the
Corporation) or other assets by or for the Corporation.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and
until terminated by American Express Financial Advisors or the
Corporation, except that such continuance shall be specifically
approved at least annually by a vote of a majority of the Board of
Directors who are not parties to this agreement or interested
persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and by a majority of the
Board of Directors or by vote of a majority of the outstanding
voting securities of the Corporation. As used in this paragraph,
the term "interested person" shall have the meaning as set forth in
the Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by American Express
Financial Advisors or the Corporation at any time by giving the
other party sixty (60) days written notice of such intention to
terminate.
(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same
meaning as set forth in the Investment Company Act of 1940, as
amended.
<PAGE>
IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
By _____________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By _____________________________________
Vice President
<PAGE>
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated March 20, 1995, between IDS Strategy
Fund, Inc., a Minnesota corporation, (the "Corporation"), on behalf
of its underlying series funds, and American Express Trust Company,
a corporation organized under the laws of the State of Minnesota
with its principal place of business at Minneapolis, Minnesota (the
"Custodian").
WHEREAS, the Corporation desires that its securities and cash be
hereafter held and administered by Custodian pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Corporation and the Custodian agree as follows:
SECTION 1. DEFINITIONS
The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks,
including any stocks of this Corporation, notes, bonds, debentures,
evidences of indebtedness, options to buy or sell stocks or stock
indexes, certificates of interest or participation in any profit-
sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment
contracts, voting trust certificates, certificates of deposit for a
security, fractional or undivided interests in oil, gas or other
mineral rights, or any certificates of interest or participation
in, temporary or interim certificates for, receipts for, guarantees
of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of
any right or interest in or to any cash, property or assets and any
interest or instrument commonly known as a security. In addition,
for the purpose of this Custodian Agreement, the word "securities"
also shall include other instruments in which the Corporation may
invest including currency forward contracts and commodities such as
interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.
The words "custodian order" shall mean a request or direction,
including a computer printout, directed to the Custodian and signed
in the name of the Corporation by any two individuals designated in
the current certified list referred to in Section 2.
The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
SECTION 2. NAMES, TITLES AND SIGNATURES OF AUTHORIZED PERSONS
The Corporation will certify to the Custodian the names and
signatures of its present officers and other designated persons
authorized on behalf of the Corporation to direct the Custodian by
custodian order as herein before defined. The Corporation agrees
<PAGE>
that whenever any change occurs in this list it will file with the
Custodian a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Corporation as having been duly adopted
by the Board of Directors or the Executive Committee of the Board
of Directors of the Corporation designating those persons currently
authorized on behalf of the Corporation to direct the Custodian by
custodian order, as herein before defined, and upon such filing (to
be accompanied by the filing of specimen signatures of the
designated persons) the persons so designated in said resolution
shall constitute the current certified list. The Custodian is
authorized to rely and act upon the names and signatures of the
individuals as they appear in the most recent certified list from
the Corporation which has been delivered to the Custodian as herein
above provided.
SECTION 3. USE OF SUBCUSTODIANS
The Custodian may make arrangements, where appropriate, with other
banks having not less than two million dollars aggregate capital,
surplus and undivided profits for the custody of securities. Any
such bank selected by the Custodian to act as subcustodian shall be
deemed to be the agent of the Custodian.
The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of United
States banks; through foreign banks, banking institutions or trust
companies; through foreign subsidiaries of United States banks or
bank holding companies, or through foreign securities depositories
or clearing agencies (hereinafter also called, collectively, the
"Foreign Subcustodian" or indirectly through an agent, established
under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940
and the rules promulgated by the Securities and Exchange Commission
thereunder, any order issued by the Securities and Exchange
Commission, or any "no-action" letter received from the staff of
the Securities and Exchange Commission. To the extent the existing
provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter,
they shall apply to all such foreign custodianships. To the extent
such provisions are inconsistent with or additional requirements
are established by such Section, rules, order or no-action letter,
the requirements of such Section, rules, order or no-action letter
will prevail and the parties will adhere to such requirements;
provided, however, in the absence of notification from the
Corporation of any changes or additions to such requirements, the
Custodian shall have no duty or responsibility to inquire as to any
such changes or additions.
SECTION 4. RECEIPT AND DISBURSEMENT OF MONEY
(1) The Custodian shall open and maintain a separate account or
accounts in the name of the Corporation or cause its agent to open
and maintain such account or accounts subject only to checks,
drafts or directives by the Custodian pursuant to the terms of this
Agreement. The Custodian or its agent shall hold in such account
or accounts, subject to the provisions hereof, all cash received by
<PAGE>
it from or for the account of the Corporation. The Custodian or
its agent shall make payments of cash to or for the account of the
Corporation from such cash only:
(a) for the purchase of securities for the portfolio of the
Corporation upon the receipt of such securities by the
Custodian or its agent unless otherwise instructed on
behalf of the Corporation;
(b) for the purchase or redemption of shares of capital
stock of the Corporation;
(c) for the payment of interest, dividends, taxes,
management fees, or operating expenses (including,
without limitation thereto, fees for legal, accounting
and auditing services);
(d) for payment of distribution fees, commissions, or
redemption fees, if any;
(e) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed
to by the Corporation held by or to be delivered to the
Custodian;
(f) for payments in connection with the return of
securities loaned by the Corporation upon receipt of
such securities or the reduction of collateral upon
receipt of proper notice;
(g) for payments for other proper corporate purposes;
(h) or upon the termination of this Agreement.
Before making any such payment for the purposes permitted under the
terms of items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1)
of this section, the Custodian shall receive and may rely upon a
custodian order directing such payment and stating that the payment
is for such a purpose permitted under these items (a), (b), (c),
(d), (e), (f) or (g) and that in respect to item (g), a copy of a
resolution of the Board of Directors or of the Executive Committee
of the Board of Directors of the Corporation signed by an officer
of the Corporation and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose to be a proper corporate purpose, and naming the person or
persons to whom such payment is made. Notwithstanding the above,
for the purposes permitted under items (a) or (f) of paragraph (1)
of this section, the Custodian may rely upon a facsimile order.
(2) The Custodian is hereby appointed the attorney-in-fact of the
Corporation to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the
account of the Corporation and drawn on or to the order of the
Corporation and to deposit same to the account of the Corporation
pursuant to this Agreement.
<PAGE>
SECTION 5. RECEIPT OF SECURITIES
Except as permitted by the second paragraph of this section, the
Custodian or its agent shall hold in a separate account or
accounts, and physically segregated at all times from those of any
other persons, firms or corporations, pursuant to the provisions
hereof, all securities received by it for the account of the
Corporation. The Custodian shall record and maintain a record of
all certificate numbers. Securities so received shall be held in
the name of the Corporation, in the name of an exclusive nominee
duly appointed by the Custodian or in bearer form, as appropriate.
Subject to such rules, regulations or guidelines as the Securities
and Exchange Commission may adopt, the Custodian may deposit all or
any part of the securities owned by the Corporation in a securities
depository which includes any system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant
to which system all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical
delivery of such securities.
All securities are to be held or disposed of by the Custodian for,
and subject at all times to the instructions of, the Corporation
pursuant to the terms of this Agreement. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise
dispose of any such securities, except pursuant to the directive of
the Corporation and only for the account of the Corporation as set
forth in Section 6 of this Agreement.
Section 6. Transfer Exchange, Delivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Corporation held by it pursuant to this
Agreement. The Custodian agrees to transfer, exchange or deliver
securities held by it or its agent hereunder only:
(a) for sales of such securities for the account of the
Corporation, upon receipt of payment therefor;
(b) when such securities are called, redeemed, retired or
otherwise become payable;
(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would include
delivery against interim receipts or other proper delivery
receipts;
(d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any
plan of
(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
<PAGE>
(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;
(g) upon conversion of such securities pursuant to their terms
into other securities;
(h) upon exercise of subscription, purchase or other similar
rights represented by such securities; for loans of such
securities by the Corporation upon receipt of collateral; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a),
(b), (c), (d), (e), (f), (g) and (h), securities or cash received
in exchange therefore shall be delivered to the Custodian, its
agent, or to a securities depository. Before making any such
transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Corporation requesting such
transfer, exchange or delivery and stating that it is for a purpose
permitted under Section 6 (whenever a facsimile is utilized, the
Corporation will also deliver an original signed custodian order)
and, in respect to item (i), a copy of a resolution of the Board of
Directors or of the Executive Committee of the Board of Directors
of the Corporation signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary, specifying
the securities, setting forth the purpose for which such payment,
transfer, exchange or delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom such transfer, exchange or delivery of such
securities shall be made.
SECTION 7. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until the Custodian receives a contrary custodian order
from the Corporation, the Custodian shall or shall cause its agent
to:
(a) present for payment all coupons and other income items held
by the Custodian or its agent for the account of the
Corporation which call for payment upon presentation and hold
all cash received by it upon such payment for the account of
the Corporation;
(b) present for payment all securities held by it or its agent
which mature or when called, redeemed, retired or otherwise
become payable;
(c) ascertain all stock dividends, rights and similar securities
to be issued with respect to any securities held by the
Custodian or its agent hereunder, and to collect and hold for
the account of the Corporation all such securities; and
(d) ascertain all interest and cash dividends to be paid to
security holders with respect to any securities held by the
Custodian or its agent, and to collect and hold such interest
and cash dividends for the account of the Corporation.
<PAGE>
SECTION 8. VOTING AND OTHER ACTION
Neither the Custodian nor any nominee of the Custodian shall vote
any of the securities held hereunder by or for the account of the
Corporation. The Custodian shall promptly deliver to the
Corporation all notices, proxies and proxy soliciting materials
with relation to such securities, such proxies to be executed by
the registered holder of such securities (if registered otherwise
than in the name of the Corporation), but without indicating the
manner in which such proxies are to be voted.
Custodian shall transmit promptly to the Corporation all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Corporation. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Corporation
all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
SECTION 9. TRANSFER TAXES
The Corporation shall pay or reimburse the Custodian for any
transfer taxes payable upon transfers of securities made hereunder,
including transfers resulting from the termination of this
Agreement. The Custodian shall execute such certificates in
connection with securities delivered to it under this Agreement as
may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such
securities which may be entitled to such exemption.
SECTION 10. CUSTODIAN'S REPORTS
The Custodian shall furnish the Corporation as of the close of
business each day a statement showing all transactions and entries
for the account of the Corporation. The books and records of the
Custodian pertaining to its actions as Custodian under this
Agreement and securities held hereunder by the Custodian shall be
open to inspection and audit by officers of the Corporation,
internal auditors employed by the Corporation's investment adviser,
and independent auditors employed by the Corporation. The
Custodian shall furnish the Corporation in such form as may
reasonably be requested by the Corporation a report, including a
list of the securities held by it in custody for the account of the
Corporation, identification of any subcustodian, and identification
of such securities held by such subcustodian, as of the close of
business of the last business day of each month, which shall be
certified by a duly authorized officer of the Custodian. It is
further understood that additional reports may from time to time be
requested by the Corporation. Should any report ever be filed with
any governmental authority pertaining to lost or stolen securities,
the Custodian will concurrently provide the Corporation with a copy
of that report.
<PAGE>
The Custodian also shall furnish such reports on its systems of
internal accounting control as the Corporation may reasonably
request from time to time.
SECTION 11. CONCERNING CUSTODIAN
For its services hereunder the Custodian shall be paid such
compensation at such times as may from time to time be agreed on in
writing by the parties hereto in a Custodian Fee Agreement.
The Custodian shall not be liable for any action taken in good
faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board of Directors or of
the Executive Committee of the Board of Directors of the
Corporation, and may rely on the genuineness of any such document
which it may in good faith believe to have been validly executed.
The Corporation agrees to indemnify and hold harmless Custodian and
its nominee from all taxes, charges, expenses, assessments, claims
and liabilities (including counsel fees) incurred or assessed
against it or its nominee in connection with the performance of
this Agreement, except such as may arise from the Custodian's or
its nominee's own negligent action, negligent failure to act or
willful misconduct. Custodian is authorized to charge any account
of the Corporation for such items. In the event of any advance of
cash for any purpose made by Custodian resulting from orders or
instructions of the Corporation, or in the event that Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or
its nominee's own negligent action, negligent failure to act or
willful misconduct, any property at any time held for the account
of the Corporation shall be security therefor.
The Custodian shall maintain a standard of care equivalent to that
which would be required of a bailee for hire and shall not be
liable for any loss or damage to the Corporation resulting from
participation in a securities depository unless such loss or damage
arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against
any securities depository or from use of an agent, unless such loss
or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or
from its failure to enforce effectively such rights as it may have
against any agent.
SECTION 12. TERMINATION AND AMENDMENT OF AGREEMENT
The Corporation and the Custodian mutually may agree from time to
time in writing to amend, to add to, or to delete from any
provision of this Agreement.
The Custodian may terminate this Agreement by giving the
Corporation ninety days' written notice of such termination by
registered mail addressed to the Corporation at its principal place
of business.
<PAGE>
The Corporation may terminate this Agreement at any time by written
notice thereof delivered, together with a copy of the resolution of
the Board of Directors authorizing such termination and certified
by the Secretary of the Corporation, by registered mail to the
Custodian.
Upon such termination of this Agreement, assets of the Corporation
held by the Custodian shall be delivered by the Custodian to a
successor custodian, if one has been appointed by the Corporation,
upon receipt by the Custodian of a copy of the resolution of the
Board of Directors of the Corporation certified by the Secretary,
showing appointment of the successor custodian, and provided that
such successor custodian is a bank or trust company, organized
under the laws of the United States or of any State of the United
States, having not less than two million dollars aggregate capital,
surplus and undivided profits. Upon the termination of this
Agreement as a part of the transfer of assets, either to a
successor custodian or otherwise, the Custodian will deliver
securities held by it hereunder, when so authorized and directed by
resolution of the Board of Directors of the Corporation, to a duly
appointed agent of the successor custodian or to the appropriate
transfer agents for transfer of registration and delivery as
directed. Delivery of assets on termination of this Agreement
shall be effected in a reasonable, expeditious and orderly manner;
and in order to accomplish an orderly transition from the Custodian
to the successor custodian, the Custodian shall continue to act as
such under this Agreement as to assets in its possession or
control. Termination as to each security shall become effective
upon delivery to the successor custodian, its agent, or to a
transfer agent for a specific security for the account of the
successor custodian, and such delivery shall constitute effective
delivery by the Custodian to the successor under this Agreement.
In addition to the means of termination herein before authorized,
this Agreement may be terminated at any time by the vote of a
majority of the outstanding shares of the Corporation and after
written notice of such action to the Custodian.
SECTION 13. GENERAL
Nothing expressed or mentioned in or to be implied from any
provision of this Agreement is intended to, or shall be construed
to give any person or corporation other than the parties hereto,
any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any covenant, condition or provision herein
contained, this Agreement and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and
<PAGE>
exclusive benefit of the parties hereto and their respective
successors and assigns.
This Agreement shall be governed by the laws of the State of
Minnesota.
This Agreement supersedes all prior agreements between the parties.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
By:
---------------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS TRUST COMPANY
By:
----------------------------------------
Vice President
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of March 20, 1995, between IDS Strategy Fund,
Inc. (the "Corporation"), a Minnesota corporation, on behalf of its
underlying series funds, and American Express Financial Corporation
(the "Transfer Agent"), a Delaware corporation.
In consideration of the mutual promises set forth below, the
Corporation and the Transfer Agent agree as follows:
1. Appointment of the Transfer Agent. The Corporation hereby
appoints the Transfer Agent, as transfer agent for its shares and
as shareholder servicing agent for the Corporation, and the
Transfer Agent accepts such appointment and agrees to perform the
duties set forth below.
2. Compensation. The Corporation will compensate the Transfer Agent
for the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the
Transfer Agent for which the Transfer Agent shall be entitled to
bill the Corporation separately.
The Transfer Agent will bill the Corporation monthly. The fee
provided for hereunder shall be paid in cash by the Corporation to
American Express Financial Corporation within five (5) business
days after the last day of each month.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in Schedule B. Reimbursement by the
Corporation for expenses incurred by the Transfer Agent in any
month shall be made as soon as practicable after the receipt of an
itemized bill from the Transfer Agent.
Any compensation jointly agreed to hereunder may be adjusted from
time to time by attaching to this Agreement a revised Schedule A,
dated and signed by an officer of each party.
3. Documents. The Corporation will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to
be appropriate or necessary for the proper performance of its
duties.
4. Representations of the Corporation and the Transfer Agent.
(a) The Corporation represents to the Transfer Agent that all
outstanding shares are validly issued, fully paid and
non-assessable by the Corporation. When shares are hereafter
issued in accordance with the terms of the Corporation's Articles
of Incorporation and its prospectus, such shares shall be validly
issued, fully paid and non-assessable by the Corporation.
(b) The Transfer Agent represents that it is registered under
Section 17A(c) of the Securities Exchange Act of 1934. The
Transfer Agent agrees to maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under
this agreement and to comply with all applicable laws.
<PAGE>
5. Duties of the Transfer Agent. The Transfer Agent shall be
responsible, separately and through its subsidiaries or affiliates,
for the following functions:
(a) Sale of Corporation Shares.
(1) On receipt of an application and payment, wired instructions
and payment, or payment identified as being for the account of a
shareholder, the Transfer Agent will deposit the payment, prepare
and present the necessary report to the Custodian and record the
purchase of shares in a timely fashion in accordance with the terms
of the prospectus. All shares shall be held in book entry form and
no certificate shall be issued unless the Corporation is permitted
to do so by the prospectus and the purchaser so requests.
(2) On receipt of notice that payment was dishonored, the Transfer
Agent shall stop redemptions of all shares owned by the purchaser
related to that payment, place a stop payment on any checks that
have been issued to redeem shares of the purchaser and take such
other action as it deems appropriate.
(b) Redemption of Corporation Shares. On receipt of instructions to
redeem shares in accordance with the terms of the Corporation's
prospectus, the Transfer Agent will record the redemption of shares
of the Corporation, prepare and present the necessary report to the
Custodian and pay the proceeds of the redemption to the
shareholder, an authorized agent or legal representative upon the
receipt of the monies from the Custodian.
(c) Transfer or Other Change Pertaining to Corporation Shares. On
receipt of instructions or forms acceptable to the Transfer Agent
to transfer the shares to the name of a new owner, change the name
or address of the present owner or take other legal action, the
Transfer Agent will take such action as is requested.
(d) Exchange of Corporation Shares. On receipt of instructions to
exchange the shares of the Corporation for the shares of another
fund in the IDS MUTUAL FUND GROUP or other American Express
Financial Corporation product in accordance with the terms of the
prospectus, the Transfer Agent will process the exchange in the
same manner as a redemption and sale of shares.
(e) Right to Seek Assurance. The Transfer Agent may refuse to
transfer, exchange or redeem shares of the Corporation or take any
action requested by a shareholder until it is satisfied that the
requested transaction or action is legally authorized or until it
is satisfied there is no basis for any claims adverse to the
transaction or action. It may rely on the provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers
or the Uniform Commercial Code. The Corporation shall indemnify
the Transfer Agent for any act done or omitted to be done in
reliance on such laws or for refusing to transfer, exchange or
redeem shares or taking any requested action if it acts on a good
faith belief that the transaction or action is illegal or
unauthorized.
(f) Shareholder Records, Reports and Services.
<PAGE>
(1) The Transfer Agent shall maintain all shareholder accounts,
which shall contain all required tax, legally imposed and
regulatory information; shall provide shareholders, and file with
federal and state agencies, all required tax and other reports
pertaining to shareholder accounts; shall prepare shareholder
mailing lists; shall cause to be printed and mailed all required
prospectuses, annual reports, semiannual reports, statements of
additional information (upon request), proxies and other mailings
to shareholders; and shall cause proxies to be tabulated.
(2) The Transfer Agent shall respond to all valid inquiries related
to its duties under this Agreement.
(3) The Transfer Agent shall create and maintain all records in
accordance with all applicable laws, rules and regulations,
including, but not limited to, the records required by Section
31(a) of the Investment Company Act of 1940.
(g) Dividends and Distributions. The Transfer Agent shall prepare
and present the necessary report to the Custodian and shall cause
to be prepared and transmitted the payment of income dividends and
capital gains distributions or cause to be recorded the investment
of such dividends and distributions in additional shares of the
Corporation or as directed by instructions or forms acceptable to
the Transfer Agent.
(h) Confirmations and Statements. The Transfer Agent shall confirm
each transaction either at the time of the transaction or through
periodic reports as may be legally permitted.
(i) Lost or Stolen Checks. The Transfer Agent will replace lost or
stolen checks issued to shareholders upon receipt of proper
notification and will maintain any stop payment orders against the
lost or stolen checks as it is economically desirable to do.
(j) Reports to Corporation. The Transfer Agent will provide reports
pertaining to the services provided under this Agreement as the
Corporation may request to ascertain the quality and level of
services being provided or as required by law.
(k) Other Duties. The Transfer Agent may perform other duties for
additional compensation if agreed to in writing by the parties to
this Agreement.
6. Ownership and Confidentiality of Records. The Transfer Agent
agrees that all records prepared or maintained by it relating to
the services to be performed by it under the terms of this
Agreement are the property of the Corporation and may be inspected
by the Corporation or any person retained by the Corporation at
reasonable times. The Corporation and Transfer Agent agree to
protect the confidentiality of those records.
7. Action by Board and Opinion of Corporation's Counsel. The
Transfer Agent may rely on resolutions of the Board of Directors or
the Executive Committee of the Board of Directors and on opinion of
counsel for the Corporation.
<PAGE>
8. Duty of Care. It is understood and agreed that, in furnishing
the Corporation with the services as herein provided, neither the
Transfer Agent, nor any officer, director or agent thereof shall be
held liable for any loss arising out of or in connection with their
actions under this Agreement so long as they act in good faith and
with due diligence, and are not negligent or guilty of any willful
misconduct. It is further understood and agreed that the Transfer
Agent may rely upon information furnished to it reasonably believed
to be accurate and reliable. In the event the Transfer Agent is
unable to perform its obligations under the terms of this Agreement
because of an act of God, strike or equipment or transmission
failure reasonably beyond its control, the Transfer Agent shall not
be liable for any damages resulting from such failure.
9. Term and Termination. This Agreement shall become effective on
the date first set forth above (the "Effective Date") and shall
continue in effect from year to year thereafter as the parties may
mutually agree; provided that either party may terminate this
Agreement by giving the other party notice in writing specifying
the date of such termination, which shall be not less than 60 days
after the date of receipt of such notice. In the event such notice
is given by the Corporation, it shall be accompanied by a vote of
the Board of Directors, certified by the Secretary, electing to
terminate this Agreement and designating a successor transfer agent
or transfer agents. Upon such termination and at the expense of
the Corporation, the Transfer Agent will deliver to such successor
a certified list of shareholders of the Corporation (with name,
address and taxpayer identification or Social Security number), a
historical record of the account of each shareholder and the status
thereof, and all other relevant books, records, correspondence, and
other data established or maintained by the Transfer Agent under
this Agreement in the form reasonably acceptable to the
Corporation, and will cooperate in the transfer of such duties and
responsibilities, including provisions for assistance from the
Transfer Agent's personnel in the establishment of books, records
and other data by such successor or successors.
10. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
11. Subcontracting. The Corporation agrees that the Transfer Agent
may subcontract for certain of the services described under this
Agreement with the understanding that there shall be no diminution
in the quality or level of the services and that the Transfer Agent
remains fully responsible for the services. Except for
out-of-pocket expenses identified in Schedule B, the Transfer Agent
shall bear the cost of subcontracting such services, unless
otherwise agreed by the parties.
12. Miscellaneous.
(a) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party.
<PAGE>
(b) This Agreement shall be governed by the laws of the State of
Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers as of the day and year
written above.
IDS STRATEGY FUND INC.
IDS Equity Value Fund
IDS Strategy Agressive Fund
By:
----------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
----------------------------------
Vice President
<PAGE>
SCHEDULE A
IDS STRATEGY FUND, INC.
TRANSFER AGENT FEE
Effective the 20th day of March, 1995, the ANNUAL PER ACCOUNT
FEE accrued daily and payable monthly is revised as follows:
CLASS A CLASS B CLASS Y
------- ------- -------
$15 $16 $15
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Corporation shall reimburse the Transfer Agent monthly for the
following out-of-pocket expenses:
- - typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs
- - printing, paper, envelopes and postage for dividend notices,
dividend checks, records of account, purchase confirmations,
exchange confirmations and exchange prospectuses, redemption
confirmations, redemption checks, confirmations on changes of
address and any other communication required to be sent to
shareholders
- - typesetting, printing, paper, envelopes and postage for
prospectuses, annual and semiannual reports, statements of
additional information, supplements for prospectuses and statements
of additional information and other required mailings to
shareholders
- - stop orders
- - outgoing wire charges
- - other expenses incurred at the request or with the consent of the
Corporation
<PAGE>
SHAREHOLDER SERVICE AGREEMENT
This agreement is between IDS Strategy Fund, Inc. (the
"Corporation"), on behalf of its underlying series funds and
American Express Financial Advisors Inc., the principal underwriter
of the Corporation, for services to be provided to shareholders by
personal financial advisors and other servicing agents. It is
effective on the first day the Corporation offers multiple classes
of shares.
American Express Financial Advisors represents that shareholders
consider their financial advisor or servicing agent a significant
factor in their satisfaction with their investment and, to help
retain financial advisors or servicing agents, it is necessary for
the Corporation to pay annual servicing fees to financial advisors
and other servicing agents.
American Express Financial Advisors represents that fees paid to
financial advisors will be used by financial advisors to help
shareholders thoughtfully consider their investment goals and
objectively monitor how well the goals are being achieved. As
principal underwriter, American Express Financial Advisors will use
its best efforts to assure that other distributors provide
comparable services to shareholders for the servicing fees
received.
American Express Financial Advisors agrees to monitor the services
provided by financial advisors and servicing agents, to measure the
level and quality of services provided, to provide training and
support to financial advisors and servicing agents and to devise
methods for rewarding financial advisors and servicing agents who
achieve an exemplary level and quality of services.
The Corporation agrees to pay American Express financial advisors
and other servicing agents 0.15 percent of the net asset value for
each shareholder account assigned to a financial advisor or
servicing agent that holds either Class A or Class B shares. In
addition, the Corporation agrees to pay American Express Financial
Advisors' costs to monitor, measure, train and support services
provided by financial advisors or servicing agents up to 0.025
percent of the net asset value for each shareholder account
assigned to a financial advisor or servicing agent that holds
either Class A or Class B shares. The Corporation agrees to pay
American Express Financial Advisors in cash within five (5)
business days after the last day of each month.
American Express Financial Advisors agrees to provide the
Corporation, prior to the beginning of the calendar year, a budget
covering its expected costs to monitor, measure, train and support
services and a quarterly report of its actual expenditures.
American Express Financial Advisors agrees to meet with
representatives of the Corporation at their request to provide
information as may be reasonably necessary to evaluate its
performance under the terms of this agreement.
<PAGE>
American Express Financial Advisors agrees that if, at the end of
any month, the expenses of the Corporation, including fees under
this agreement and any other agreement between the Corporation and
American Express Financial Advisors or American Express Financial
Corporation, but excluding taxes, brokerage commissions and charges
in connection with the purchase and sale of assets exceed the most
restrictive applicable state expense limitation for the
Corporation's current fiscal year, the Corporation shall not pay
fees and expenses under this agreement to the extent necessary to
keep the Corporation's expenses from exceeding the limitation, it
being understood that American Express Financial Advisors will
assume all unpaid expenses and bill the Corporation for them in
subsequent months but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Corporation's
fiscal year.
This agreement shall continue in effect for a period of more than
one year so long as it is reapproved at least annually at a meeting
called for the purpose of voting on the agreement by a vote, in
person, of the members of the Board who are not interested persons
of the Corporation and have no financial interest in the operation
of the agreement, and of all the members of the Board.
This agreement may be terminated at any time without payment of any
penalty by a vote of a majority of the members of the Board who are
not interested persons of the Corporation and have no financial
interest in the operation of the agreement or by American Express
Financial Advisors. The agreement will terminate automatically in
the event of its assignment as that term is defined in the
Investment Company Act of 1940. This agreement may be amended at
any time provided the amendment is approved in the same manner the
agreement was initially approved and the amendment is agreed to by
American Express Financial Advisors.
Approved this 20th day of March, 1995.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
__________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
__________________________________
Vice President
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 20th day of March, 1995, by and between IDS
Strategy Fund, Inc. (the "Corporation"), a Minnesota Corporation,
on behalf of its underlying series funds, and American Express
Financial Corporation, a Delaware corporation.
PART ONE: SERVICES
(1) The Corporation hereby retains American Express Financial
Corporation, and American Express Financial Corporation hereby
agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Corporation
continuously with all administrative, accounting, clerical,
statistical, correspondence, corporate and all other services of
whatever nature required in connection with the administration of
the Funds as provided under this Agreement; and to pay such
expenses as may be provided for in Part Three hereof; subject
always to the direction and control of the Board of Directors, the
Executive Committee and the authorized officers of the Funds.
American Express Financial Corporation agrees to maintain an
adequate organization of competent persons to provide the services
and to perform the functions herein mentioned. American Express
Financial Corporation agrees to meet with any persons at such times
as the Board of Directors deems appropriate for the purpose of
reviewing American Express Financial Corporation's performance
under this Agreement.
(2) The Corporation agrees that it will furnish to American Express
Financial Corporation any information that the latter may
reasonably request with respect to the services performed or to be
performed by American Express Financial Corporation under this
Agreement.
(3) It is understood and agreed that in furnishing the Corporation
with the services as herein provided, neither American Express
Financial Corporation, nor any officer, director or agent thereof
shall be held liable to the Corporation or its creditors or
shareholders for errors of judgment or for anything except willful
misfeasance, bad faith, or gross negligence in the performance of
its duties, or reckless disregard of its obligations and duties
under the terms of this Agreement. It is further understood and
agreed that American Express Financial Corporation may rely upon
information furnished to it reasonably believed to be accurate and
reliable.
PART TWO: COMPENSATION FOR SERVICES
(1) The Corporation agrees to pay to American Express Financial
Corporation, and American Express Financial Corporation covenants
and agrees to accept from the Corporation in full payment for the
services furnished, based on the net assets of the Corporation as
set forth in the following table:
<PAGE>
Assets Annual Rate At Assets Annual Rate At
(Billions) Each Asset Level (Billions) Each Asset Level
- ---------- ---------------- ---------- ----------------
Equity Value Strategy Aggressive
First $0.5 0.040% First $1 0.050%
Next 0.5 0.035 Next 1 0.045
Next 1 0.030 Next 1 0.040
Next 1 0.025 Next 1 0.035
Next 1 0.020 Over 6 0.030
Over 6 0.020
The administrative fee for each calendar day of each year shall be
equal to 1/365th (1/366th in each leap year) of the total amount
computed. The computation shall be made for each such day on the
basis of net assets as of the close of business of the full
business day two (2) business days prior to the day for which the
computation is being made. In the case of the suspension of the
computation of net asset value, the administrative fee for each day
during such suspension shall be computed as of the close of
business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full
business day shall include all transactions in shares of the Funds
recorded on the books of the Funds for that day.
(2) The administrative fee shall be paid on a monthly basis and, in
the event of the termination of this Agreement, the administrative
fee accrued shall be prorated on the basis of the number of days
that this Agreement is in effect during the month with respect to
which such payment is made.
(3) The administrative fee provided for hereunder shall be paid in
cash by the Corporation to American Express Financial Corporation
within five (5) business days after the last day of each month.
PART THREE: ALLOCATION OF EXPENSES
(1) The Corporation agrees to pay:
(a) Administrative fees payable to American Express Financial
Corporation for its services under the terms of this Agreement.
(b) Taxes.
(c) Fees and charges of its independent certified public
accountants for services the Corporation requests.
(d) Fees and expenses of attorneys (i) it employs in matters not
involving the assertion of a claim by a third party against the
Corporation, its directors and officers, (ii) it employs in
conjunction with a claim asserted by the Board of Directors against
American Express Financial Corporation, except that American
Express Financial Corporation shall reimburse the Corporation for
such fees and expenses if it is ultimately determined by a court of
competent jurisdiction, or American Express Financial Corporation
agrees, that it is liable in whole or in part to the Corporation,
and (iii) it employs to assert a claim against a third party.
<PAGE>
(e) Fees paid for the qualification and registration for public
sale of the securities of the Corporation under the laws of the
United States and of the several states in which such securities
shall be offered for sale.
(f) Office expenses which shall include a charge for occupancy,
insurance on the premises, furniture and equipment, telephone,
telegraph, electronic information services, books, periodicals,
published services, and office supplies used by the Corporation,
equal to the cost of such incurred by American Express Financial
Corporation.
(g) Fees of consultants employed by the Corporation.
(h) Directors, officers and employees expenses which shall include
fees, salaries, memberships, dues, travel, seminars, pension,
profit sharing, and all other benefits paid to or provided for
directors, officers and employees, directors and officers liability
insurance, errors and omissions liability insurance, worker's
compensation insurance and other expenses applicable to the
directors, officers and employees, except the Corporation will not
pay any fees or expenses of any person who is an officer or
employee of American Express Financial Corporation or its
affiliates.
(i) Filing fees and charges incurred by the Corporation in
connection with filing any amendment to its articles of
incorporation, or incurred in filing any other document with the
State of Minnesota or its political subdivisions.
(j) Organizational expenses of the Corporation.
(k) One-half of the Investment Company Institute membership dues
charged jointly to the IDS MUTUAL FUND GROUP and American Express
Financial Corporation.
(l) Expenses properly payable by the Corporation, approved by the
Board of Directors.
(2) American Express Financial Corporation agrees to pay all
expenses associated with the services it provides under the terms
of this Agreement. Further, American Express Financial Corporation
agrees that if, at the end of any month, the expenses of the
Corporation under this Agreement and any other agreement between
the Corporation and American Express Financial Corporation, but
excluding those expenses set forth in (1)(b) of this Part Three,
exceed the most restrictive applicable state expenses limitation,
the Corporation shall not pay those expenses set forth in (1)(a)
and (c) through (m) of this Part Three to the extent necessary to
keep the Corporation's expenses from exceeding the limitation, it
being understood that American Express Financial Corporation will
assume all unpaid expenses and bill the Corporation for them in
subsequent months but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Corporation's
fiscal year.
<PAGE>
PART FOUR: MISCELLANEOUS
(1) American Express Financial Corporation shall be deemed to be an
independent contractor and, except as expressly provided or
authorized in this Agreement, shall have no authority to act for or
represent the Corporation.
(2) A "full business day" shall be as defined in the By-laws.
(3) The Corporation recognizes that American Express Financial
Corporation now renders and may continue to render investment
advice and other services to other investment companies and persons
which may or may not have investment policies and investments
similar to those of the Corporation and that American Express
Financial Corporation manages its own investments and/or those of
its subsidiaries. American Express Financial Corporation shall be
free to render such investment advice and other services and the
Corporation hereby consents thereto.
(4) Neither this Agreement nor any transaction had pursuant hereto
shall be invalidated or in anyway affected by the fact that
directors, officers, agents and/or shareholders of the Corporation
are or may be interested in American Express Financial Corporation
or any successor or assignee thereof, as directors, officers,
stockholders or otherwise; that directors, officers, stockholders
or agents of American Express Financial Corporation are or may be
interested in the Corporation as directors, officers, shareholders,
or otherwise; or that American Express Financial Corporation or any
successor or assignee, is or may be interested in the Corporation
as shareholder or otherwise, provided, however, that neither
American Express Financial Corporation, nor any officer, director
or employee thereof or of the Corporation, shall sell to or buy
from the Corporation any property or security other than shares
issued by the Corporation, except in accordance with applicable
regulations or orders of the United States Securities and Exchange
Commission.
(5) Any notice under this Agreement shall be given in writing,
addressed, and delivered, or mailed postpaid, to the party to this
Agreement entitled to receive such, at such party's principal place
of business in Minneapolis, Minnesota, or to such other address as
either party may designate in writing mailed to the other.
(6) American Express Financial Corporation agrees that no officer,
director or employee of American Express Financial Corporation will
deal for or on behalf of the Corporation with himself as principal
or agent, or with any corporation or partnership in which he may
have a financial interest, except that this shall not prohibit
officers, directors or employees of American Express Financial
Corporation from having a financial interest in the Corporation or
in American Express Financial Corporation.
(7) The Corporation agrees that American Express Financial
Corporation may subcontract for certain of the services described
under this Agreement with the understanding that there shall be no
diminution in the quality or level of the services and that
American Express Financial Corporation remains fully responsible
for the services.
<PAGE>
(8) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party. This Agreement
shall be governed by the laws of the State of Minnesota.
PART FIVE: RENEWAL AND TERMINATION
(1) This Agreement shall become effective on the date first set
forth above (the "Effective Date") and shall continue in effect
from year to year thereafter as the parties may mutually agree;
provided that either party may terminate this Agreement by giving
the other party notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice.
(2) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
By:
----------------------------------
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL CORPORATION
By:
----------------------------------
Vice President
<PAGE>
INDEPENDENT AUDITORS' CONSENT
______________________________________________________________________________
The Board of Directors and Shareholders
IDS Strategy Fund, Inc.:
We consent to the use of our report incorporated herein by
reference and to the references to our Firm under the headings
"Financial highlights" in Part A and "INDEPENDENT AUDITORS" in Part B
of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 27, 1995
<PAGE>
PLAN AND AGREEMENT OF DISTRIBUTION
This plan and agreement is between IDS Strategy Fund, Inc. (the
"Corporation"), on behalf of its underlying series funds and
American Express Financial Advisors Inc. , the principal
underwriter of the Corporation, for distribution services to the
Corporation. It is effective on the first day the Corporation
offers multiple classes of shares.
The plan and agreement has been approved by members of the Board of
Directors (the "Board") of the Corporation who are not interested
persons of the Corporation and have no direct or indirect financial
interest in the operation of the plan or any related agreement, and
all of the members of the Board, in person, at a meeting called for
the purpose of voting on the plan and agreement.
The plan and agreement provides that:
1. The Corporation will reimburse American Express Financial
Advisors for all sales and promotional expenses attributable to the
sale of Class B shares, including sales commissions, business and
employee expenses charged to distribution of Class B shares, and
corporate overhead appropriately allocated to the sale of Class B
shares.
2. The amount of the reimbursement shall be equal on an annual
basis to 0.75% of the average daily net assets of the Corporation
attributable to Class B shares. The amount so determined shall be
paid to American Express Financial Advisors in cash within five (5)
business days after the last day of each month. American Express
Financial Advisors agrees that if, at the end of any month, the
expenses of the Corporation, including fees under this agreement
and any other agreement between the Corporation and American
Express Financial Advisors or American Express Financial
Corporation, but excluding taxes, brokerage commissions and charges
in connection with the purchase and sale of assets exceed the most
restrictive applicable state expense limitation for the
Corporation's current fiscal year, the Corporation shall not pay
fees and expenses under this agreement to the extent necessary to
keep the Corporation's expenses from exceeding the limitation, it
being understood that American Express Financial Advisors will
assume all unpaid expenses and bill the Corporation for them in
subsequent months, but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Corporation's
fiscal year.
3. For each purchase of Class B shares, after eight years the
Class B shares will be converted to Class A shares and those assets
will no longer be included in determining the reimbursement amount.
4. The Corporation understands that if a shareholder redeems
Class B shares before they are converted to Class A shares,
American Express Financial Advisors will impose a sales charge
directly on the redemption proceeds to cover those expenses it has
previously incurred on the sale of those shares.
<PAGE>
5. American Express Financial Advisors agrees to provide at
least quarterly an analysis of distribution expenses and to meet
with representatives of the Corporation as reasonably requested to
provide additional information.
6. The plan and agreement shall continue in effect for a period
of more than one year provided it is reapproved at least annually
in the same manner in which it was initially approved.
7. The plan and agreement may not be amended to increase
materially the amount that may be paid by the Corporation without
the approval of a least a majority of the outstanding shares of
Class B. Any other amendment must be approved in the manner in
which the plan and agreement was initially approved.
8. This agreement may be terminated at any time without payment
of any penalty by a vote of a majority of the members of the Board
who are not interested persons of the Corporation and have no
financial interest in the operation of the plan and agreement, or
by vote of a majority of the outstanding Class B shares, or by
American Express Financial Advisors. The plan and agreement will
terminate automatically in the event of its assignment as that term
is defined in the Investment Company Act of 1940.
Approved this 20th day of March, 1995.
IDS STRATEGY FUND, INC.
IDS Strategy Aggressive Fund
IDS Equity Value Fund
__________________________________
Leslie L. Ogg
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
__________________________________
Vice President
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] MAR-31-1995
[PERIOD-END] SEP-30-1994
[INVESTMENTS-AT-COST] 608579329
[INVESTMENTS-AT-VALUE] 716736589
[RECEIVABLES] 18479883
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 735216472
[PAYABLE-FOR-SECURITIES] 22333568
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 10907133
[TOTAL-LIABILITIES] 33240701
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 592814424
[SHARES-COMMON-STOCK] 49450588
[SHARES-COMMON-PRIOR] 45323834
[ACCUMULATED-NII-CURRENT] (1149749)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 2153836
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 108157260
[NET-ASSETS] 701975771
[DIVIDEND-INCOME] 2178989
[INTEREST-INCOME] 2754599
[OTHER-INCOME] 0
[EXPENSES-NET] 6083337
[NET-INVESTMENT-INCOME] (1149749)
[REALIZED-GAINS-CURRENT] (5634693)
[APPREC-INCREASE-CURRENT] (631584)
[NET-CHANGE-FROM-OPS] (7416026)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 6925302
[NUMBER-OF-SHARES-REDEEMED] (2798548)
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 49723535
[ACCUMULATED-NII-PRIOR] (6219834)
[ACCUMULATED-GAINS-PRIOR] 41579148
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2055548
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6083337
[AVERAGE-NET-ASSETS] 656233481
[PER-SHARE-NAV-BEGIN] 14.39
[PER-SHARE-NII] (.02)
[PER-SHARE-GAIN-APPREC] (.17)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 14.20
[EXPENSE-RATIO] 1.85
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] MAR-31-1995
[PERIOD-END] SEP-30-1994
[INVESTMENTS-AT-COST] 1139351926
[INVESTMENTS-AT-VALUE] 1167584354
[RECEIVABLES] 37812127
[ASSETS-OTHER] 22759895
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1228156376
[PAYABLE-FOR-SECURITIES] 9698805
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 38926985
[TOTAL-LIABILITIES] 48625790
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1096770996
[SHARES-COMMON-STOCK] 126083198
[SHARES-COMMON-PRIOR] 112526528
[ACCUMULATED-NII-CURRENT] 673354
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 53745012
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 28341224
[NET-ASSETS] 1179530586
[DIVIDEND-INCOME] 15023333
[INTEREST-INCOME] 4468320
[OTHER-INCOME] 0
[EXPENSES-NET] 8888359
[NET-INVESTMENT-INCOME] 10603294
[REALIZED-GAINS-CURRENT] 12788070
[APPREC-INCREASE-CURRENT] 9311694
[NET-CHANGE-FROM-OPS] 32703058
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (11290938)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 17724827
[NUMBER-OF-SHARES-REDEEMED] (5372323)
[SHARES-REINVESTED] 1204166
[NET-CHANGE-IN-ASSETS] 148212778
[ACCUMULATED-NII-PRIOR] 17634417
[ACCUMULATED-GAINS-PRIOR] 81083334
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3001174
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 8888359
[AVERAGE-NET-ASSETS] 1119421337
[PER-SHARE-NAV-BEGIN] 9.17
[PER-SHARE-NII] .09
[PER-SHARE-GAIN-APPREC] .19
[PER-SHARE-DIVIDEND] (.09)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.36
[EXPENSE-RATIO] 1.58
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
