1996 SEMIANNUAL REPORT
IDS
Strategy
Aggressive
Fund
(icon of) chess piece
The goal of IDS Strategy Aggressive Fund, a part
of IDS Strategy Fund, Inc., is long-term growth of
capital. The Fund invests primarily in common
stocks that are selected for their above-average
growth potential.
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors
Inc.
(icon of) chess piece
Corporate climbers
All rapidly growing companies pass through various
stages. During their middle stage, they're known
in the investment world as "mid-caps." Stocks of
such companies, which are the main focus of this
Fund, offer investors an attractive combination:
the potential for above-average corporate growth
without the initial risks that are inherent in
brand-new businesses.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements9
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
To our shareholders
William R. Pearce
President of the Fund
David Bayer
Portfolio manager
From the president
The volatility in the stock market in recent
months has put some investors, even experienced
ones, on edge. Although no one can know exactly
what will happen next, history tells us that ups
and downs are intrinsic to stock investing.
But, history also shows that changing strategies
with every twist and turn of the market is an
impractical and, worse yet, typically unproductive
way to invest. What matters more, therefore, is
how we react to market volatility. If we take a
long-term view and accept the downs with the ups,
we improve our chances of success. For in the
investment world, the race most often goes not to
the swift, but to the persistent.
Along the way, of course, you'll still want to
review your investment program to make sure it's
on track to achieving your financial goals. Your
American Express financial advisor will help you
do just that, and I suggest you take advantage of
his or her services on a regular basis.
William R. Pearce
From the portfolio manager
IDS Strategy Aggressive Fund took good advantage
of a volatile, yet overall productive period for
growth stocks during the first half of the fiscal
year. As a result, for the April through September
1996 period, the Fund's Class A shares generated a
total return of 13.8%, more than double that of
the Standard & Poor's 500 (an unmanaged group of
stocks commonly used to gauge the market's
performance).
Thanks to a low inflation rate, relatively low
long-term interest rates and moderate economic
growth, stocks in general, and growth stocks in
particular, found the environment much to their
liking during April and May. By mid-June, though,
growth stocks began to stall out, and by July,
under the weight of higher long-term interest
rates, they were in a rapid retreat led by
formerly high-flying technology issues.
But, true to their often volatile nature, growth
stocks staged a strong rally in August and
September, more than making up for their
mid-summer decline. As is often the case with
aggressive funds such as this one, persistence
clearly paid off for investors.
Ups far exceed downs
The Fund's performance essentially followed the
growth-stock trend, with monthly performance
swings reaching as high as 7%. Much of the time,
stocks of technology companies, which comprised
roughly 30% of portfolio assets, were the driving
force. Although there were some disappointments,
of course, the bulk of the Fund's technology
holdings recorded positive, and sometimes
spectacular, gains. Among the best were Parametric
Technology, Ascend Communications, Peoplesoft and
Cascade Communications.
Two other sectors in which the Fund has maintained
substantial exposure for some time - health care
and business services - also made considerable
contributions. In the former group, HBO & Company
and Cardinal Health were standouts, while in
business services, U.S. Filter and Culligan
performed especially well. Although they
constituted relatively small positions, holdings
in the financial services (banks and insurance and
brokerage firms) and energy (oil drilling and
exploration companies) sectors also provided
positive results while adding diversification to
the portfolio.
No major portfolio changes
As for portfolio changes during the period, they
chiefly consisted of periodic refinements -
selling some under-performing stocks and putting
the money to work in more promising ones - as
opposed to sector shifts. I did allow the level of
cash reserves to build up over the six months to
provide something of a cushion for the Fund should
stocks hit rough going at some point, as well as
increase the Fund's buying power when attractive
stock opportunities become available.
At this writing (mid-October), the investment
fundamentals are little changed from what we've
seen for some time. Inflation remains well-
behaved, the economy continues to chug along and
long-term interest rates have yet to reach a
threatening level. While that constitutes a
virtually perfect world for growth stocks, I don't
expect them to enjoy completely smooth sailing in
the months ahead. They almost never do. But what's
more important, for a long-term, persistent
investor, I think the reward potential is as
exciting as ever.
David Bayer
IDS Strategy Aggressive Fund
Class A
6 - month performance
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $21.61
____________________________
March 31, 1996 $18.99
____________________________
Increase $ 2.62
____________________________
Distributions
April 1, 1996 - Sept. 30, 1996
____________________________
From income $ --
____________________________
From capital gains $ --
____________________________
Total distributions $ --
____________________________
Total return* +13.8%**
____________________________
Class B
6 - month performance
____________________________
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $21.34
____________________________
March 31, 1996 $18.83
____________________________
Increase $ 2.51
____________________________
Distributions
April 1, 1996 - Sept. 30, 1996
____________________________
From income $ --
____________________________
From capital gains $ --
____________________________
Total distributions $ --
____________________________
Total return* +13.3%**
____________________________
Class Y
6 - month performance
____________________________
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $21.84
____________________________
March 31, 1996 $19.16
____________________________
Increase $ 2.68
____________________________
Distributions
April 1, 1996 - Sept. 30, 1996
____________________________
From income $ --
____________________________
From capital gains $ --
____________________________
Total distributions $ --
____________________________
Total return* +13.9%**
____________________________
*The prospectus discusses the
effect of sales charges, if any,
on the various classes.
**The total return is a hypothetical
investment in the Fund with all
distributions reinvested.
<PAGE>
PAGE
<TABLE>
<CAPTION>
The Fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 23.89% of the Fund's net assets
_____________________________________________________________________________________________________________
Percent Value
(of Fund's net assets)(as of Sept. 30, 1996)
______________________________________________________________________________________________________________
<S> <C> <C>
Cisco Systems 3.64% $46,075,200
A leader in the "router" segment of the networking industry. Cisco routers allow interconnection of
PCs, minicomputers and mainframes to local and global networks.
Parametric Technology 3.13 39,544,437
A producer of software products for the automation of complex engineering tasks that are essential
to the development of virtually all manufactured products.
HBO & Company 3.01 38,100,900
A health-care information services company that provides a variety of computer-based information
systems and services to hospitals and their affiliates.
HFS 2.50 31,638,563
One of the largest hotel franchisers in the world. The company also provides operational and administrative
services to its franchises.
3Com 2.14 26,998,094
Designs, manufactures, markets, and supports a wide range of networked client-server computing
systems based on industry standards and open systems architecture.
Ascend Communications 2.09 26,489,675
Designs and manufactures the high-end microprocessor chips and related components used in IBM and
IBM-compatible personal computers.
Cascade Communications 2.07 26,210,400
Designs, manufactures and markets a family of multi-service, wide-area network switches for data
communications.
Boston Scientific 1.90 24,006,250
Develops, manufactures and markets medical devices. The company's products are used in a broad range
of medical specialties, including cardiology, vascular surgery, urology, gastroenterology and radiology.
IDEXX Laboratories 1.78 22,471,150
Manufacturer of animal biomedical test products.
Medtronic 1.63 20,616,188
A major, diversified medical device company.
</TABLE>
<PAGE>
PAGE
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Strategy Aggressive Fund
Sept. 30, 1996
______________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $814,001,048) $1,258,211,859
Dividends and accrued interest receivable 233,236
Receivable for investment securities sold 14,228,730
_____________________________________________________________________________________________________________
Total assets 1,272,673,825
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 849,281
Payable for investment securities purchased 6,648,930
Accrued investment management services fee 61,803
Accrued distribution fee 51,363
Accrued service fee 18,186
Accrued transfer agency fee 19,807
Accrued administrative services fee 5,086
Other accrued expenses 263,442
_____________________________________________________________________________________________________________
Total liabilities 7,917,898
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,264,755,927
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 590,137
Additional paid-in capital 752,319,804
Net operating loss (3,727,531)
Accumulated net realized gain (Note 1) 71,362,547
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 444,210,970
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,264,755,927
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $ 428,619,551
Class B $ 836,134,782
Class Y $ 1,594
Net asset value per share of outstanding capital stock: Class A shares 19,838,494 $ 21.61
Class B shares 39,175,162 $ 21.34
Class Y shares 73 $ 21.84
See accompanying notes to financial statements. <PAGE>
Statement of operations
IDS Strategy Aggressive Fund
Six months ended Sept. 30, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $ 3,560,547
Dividends (net of foreign taxes withheld of $10,534) 1,853,955
_____________________________________________________________________________________________________________
Total income 5,414,502
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 3,471,934
Distribution fee -- Class B 2,904,323
Transfer agency fee 1,153,032
Incremental transfer agency fee -- Class B 49,512
Service fee
Class A 340,270
Class B 662,841
Administrative services fee 287,100
Compensation of board members 16,032
Compensation of officers 4,468
Custodian fees 58,638
Postage 54,376
Registration fees 42,970
Reports to shareholders 72,884
Audit fees 10,250
Administrative 4,000
Other 15,255
_____________________________________________________________________________________________________________
Total expenses 9,147,885
Earnings credits on cash balances (Note 2) (8,693)
_____________________________________________________________________________________________________________
Total net expenses 9,139,192
_____________________________________________________________________________________________________________
Investment loss -- net (3,724,690)
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including loss of $381 from foreign currency transactions) (Note 3) 22,468,328
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 129,010,875
_____________________________________________________________________________________________________________
Net gain on investments and foreign currencies 151,479,203
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $147,754,513
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Strategy Aggressive Fund
_____________________________________________________________________________________________________________
Operations and distributions Sept. 30, 1996 March 31, 1996
_____________________________________________________________________________________________________________
<S> <C> <C>
Six months ended Year ended
(Unaudited)
Investment loss -- net $ (3,724,690) $ (6,657,264)
Net realized gain on investments and foreign currencies 22,468,328 101,695,416
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 129,010,875 170,135,689
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 147,754,513 265,173,841
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class B (2,841) --
Net realized gain
Class A -- (1,780,677)
Class B -- (55,138,913)
Class Y -- (76)
_____________________________________________________________________________________________________________
Total distributions (2,841) (56,919,666)
_____________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 154,393,008 91,207,686
Class B shares 70,675,114 105,680,879
Class Y shares -- 834
Reinvestment of distributions at net asset value
Class A shares -- 1,767,117
Class B shares 1,951 54,926,178
Class Y shares -- 76
Payments for redemptions
Class A shares (124,906,728) (48,918,744)
Class B shares (Note 2) (41,942,360) (137,539,866)
Conversion of shares (Note 1)
Class A shares -- 287,571,554
Class B shares -- (287,571,554)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 58,220,985 67,124,160
_____________________________________________________________________________________________________________
Total increase in net assets 205,972,657 275,378,335
Net assets at beginning of period 1,058,783,270 783,404,935
_____________________________________________________________________________________________________________
Net assets at end of period $1,264,755,927 $1,058,783,270
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE
Notes to financial statements
IDS Strategy Aggressive Fund
(Unaudited as to Sept. 30, 1996)
___________________________________________________________________________
1. Summary of significant accounting policies
The Fund is a series of IDS Strategy Fund, Inc. and registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. The Fund invests primarily in common stocks
that are selected for their above-average growth potential. The Fund offers
Class A, Class B and Class Y shares. Class A shares are sold with a front-
end sales charge. Class B shares may be subject to a contingent deferred
sales charge and such shares automatically convert to Class A after eight
years. Class Y shares have no sales charge and are offered only to
qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
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 are valued at fair value
according to methods selected in good faith by the board. Determination of
fair value involves, among other things, reference to market indexes,
matrixes and data from independent brokers. Short-term securities maturing
in more than 60 days from the valuation date are valued at the market price
or approximate market value based on current interest rates; those maturing
in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate
buying and selling of securities for investment purposes, the Fund may buy
or write options traded on any U.S. or foreign exchange or in the over-the-
counter market where the completion of the obligation is dependent upon the
credit standing of the other party. The Fund also may buy and sell put and
call options and write covered call options on portfolio securities and may
write cash-secured put options. The risk in writing a call option is that
the Fund gives up the opportunity of profit if the market price of the
security increases. The risk in writing a put option is that the Fund may
incur a loss if the market price of the security decreases and the option
is exercised. The risk in buying an option is that the Fund pays a premium
whether or not the option is exercised. The Fund also has the additional
risk of not being able to enter into a closing transaction if a liquid
secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost
of a security for a purchased put or call option is adjusted by the amount
of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Fund may buy and sell stock index futures contracts traded on any U.S.
or foreign exchange. The Fund also may buy or write put and call options on
these futures contracts. Risks of entering into futures contracts and
related options include the possibility that there may be an illiquid
market and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments
are equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Fund recognizes a realized gain or loss
when the contract is closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the
credit risk that the other party will not complete the obligations of the
contract.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to shareholders, no provision for income or
excise taxes is required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and
losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. 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
An annual dividend declared and paid by the end of the calendar year from
net investment income is reinvested in additional shares of the Fund at net
asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
___________________________________________________________________________
2. Expenses and sales charges
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio, providing
administrative services and serving as transfer agent. Under its Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.6% to 0.5% annually.
Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services as a percentage of the Fund's average
daily net assets in reducing percentages from 0.05% to 0.03% annually.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder
accounts and records. The Fund pays AEFC an annual fee per shareholder account
for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder servicing-
related services. Under a Plan and Agreement of Distribution, the Fund pays a
distribution fee at an annual rate of 0.75% of the Fund's average daily net
assets attributable to Class B shares for distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents. The
fee is calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares.
AEFC will assume and pay any expenses (except taxes and brokerage commissions)
that exceed the most restrictive applicable state expense limitation.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $728,005 for Class A and $236,255 for Class B
for the six months ended Sept. 30, 1996. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 1996, the Fund's custodian and transfer
agency fees were reduced by $8,693 as a result of earnings credits from
overnight cash balances.
Prior to April 30, 1996, the Fund had a retirement plan for its independent
board members. The plan terminated on April 30, 1996. The total liability for
the plan is $18,114, which will be paid out at some future date.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $480,336,656 and $450,866,995, respectively, for the
six months ended Sept. 30, 1996. Realized gains and losses are determined on
an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $132 for the
six months ended Sept. 30, 1996.
Income from securities lending amounted to $6,822 for the six months ended
Sept. 30, 1996. The risks to the Fund of securities lending are that the
borrower may not provide additional collateral when required or return the
securities when due.
______________________________________________________________________________
4. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
Six months ended Sept. 30, 1996
Class A Class B Class Y
_________________________________________________________________________
<S> <C> <C> <C>
Sold 7,669,930 3,568,915 --
Issued for reinvested -- 159 --
distributions
Redeemed (6,177,987) (2,116,542) --
_________________________________________________________________________
Net increase 1,491,943 1,452,532 --
_________________________________________________________________________
Year ended March 31, 1996
Class A Class B Class Y
_________________________________________________________________________
Sold 5,063,088 6,139,128 68
Issued for reinvested 98,502 3,081,595 4
distributions
Redeemed (2,702,011) (8,067,106) --
Conversion of shares 15,398,745 (15,518,404) --
_________________________________________________________________________
Net increase (decrease) 17,858,324 (14,364,787) 72
_________________________________________________________________________
</TABLE>
<PAGE>
5. Financial highlights
<TABLE>
<CAPTION>
IDS Strategy Aggressive Fund
The table below shows certain important financial
information for evaluating the Fund's results.
Fiscal period ended March 31,
Per share income and capital changes*
Class B
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $18.83 $14.90 $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17 $12.29
beginning of period
Income from investment operations:
Net investment income (.09) (.18) (.05) (.14) (.11) (.03) .15 .01 (.02) (.01)
(loss)
Net gains (losses) 2.60 5.21 .71 .83 .61 2.35 2.01 2.43 .83 (2.71)
(both realized and
unrealized)
Total from investment 2.51 5.03 .66 .69 .50 2.32 2.16 2.44 .81 (2.72)
operations
Less distributions:
Dividends from net -- -- -- -- -- (.01) (.16) -- -- --
investment income
Distributions from -- (1.10) (.15) (1.42) (.75) (.67) (.69) -- -- (.40)
realized gains
Total distributions -- (1.10) (.15) (1.42) (.75) (.68) (.85) -- -- (.40)
Net asset value, $21.34 $18.83 $14.90 $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17
end of period
Ratios/supplemental data
Class B
1996** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period $836 $710 $776 $652 $582 $473 $352 $283 $246 $261
(in millions)
Ratio of expenses to 1.82%+ 1.85% 1.80% 1.71% 1.75% 1.62% 1.61% 1.49% 1.69% 1.68%
average daily net assets#
Ratio of net income (loss) (.89%)+ (.77%) (.41%) (.99%) (.82%) (.27%) 1.17% .14% (.17%) (.12%)
to average daily net assets
Portfolio turnover rate 44% 101% 111% 55% 49% 52% 64% 33% 48% 39%
(excluding short-term
securities)
Total return*** 13.3% 34.1% 4.7% 4.1% 3.2% 16.8% 18.9% 24.4% 8.8% (21.9%)
Average brokerage $0.0392 -- -- -- -- -- -- -- -- --
commission rate##
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1996 (Unaudited).
***Total return does not reflect payment of a sales charge.
#Effective fiscal year 1997, expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
##Effective fiscal year 1997, the Fund is required to disclose an average brokerage commission rate. The
rate is calculated by dividing the total brokerage commissions paid on applicable purchases and sales
of portfolio securities for the period by the total number of related shares purchased and sold.
+Adjusted to an annual basis.
/TABLE
<PAGE>
IDS Strategy Aggressive Fund
<TABLE>
<CAPTION>
Fiscal period ended March 31,
Per share income and capital changes*
Class A Class Y
1996** 1996 1995*** 1996** 1996 1995***
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $18.99 $14.91 $14.87 $19.16 $14.89 $15.19
beginning of period
Income from investment operations:
Net investment income .02 -- .01 .08 .03 --
(loss)
Net gains (losses) both 2.60 5.18 .03 2.60 5.34 (.30)
realized and unrealized)
Total from investment 2.62 5.18 .04 2.68 5.37 (.30)
operations
Less distributions:
Distributions from -- (1.10) -- -- (1.10) --
realized gains
Net asset value, $21.61 $18.99 $14.91 $21.84 $19.16 $14.89
end of period
Ratios/supplemental data
Class A Class Y
1996** 1996 1995*** 1996** 1996 1995***
Net assets, end of period $429 $348 $7 $2 $-- $--
(in millions)
Ratio of expenses to 1.06%++ 1.07% 1.18%++ .83%++ .92% --%+
average daily net assets#
Ratio of net income (.13%)++ -- 1.26%++ .11%++ .12% --%+
to average daily net assets
Portfolio turnover rate 44% 101% 111% 44% 101% 111%
(excluding short-term
securities)
Total return+++ 13.8% 35.1% .04% 13.9% 35.3% (2.0%)
Average brokerage $0.0392 -- -- $0.0392 -- --
commission rate##
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Sept. 30, 1996 (Unaudited).
***Inception date was March 20, 1995 for Class A and Class Y.
+Ratios of expenses and net investment income to average daily net assets is
not presented for Class Y as only one share was outstanding during the period.
++Adjusted to an annual basis.
+++Total return does not reflect payment of a sales charge.
#Effective fiscal year 1997, expense ratio is based
on total expenses of the Fund before reduction of
earnings credits on cash balances.
##Effective fiscal year 1997, the Fund is required to
disclose an average brokerage commission rate. The
rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales
of portfolio securities for the period by the total
number of related shares purchased and sold.
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Investments in securities
IDS Strategy Aggressive Fund (Percentages represent value of
Sept. 30, 1996 (Unaudited) investments compared to net assets)
Common stocks (88.9%)
Issuer Shares Value (a)
<S> <C> <C>
Aerospace & defense (0.7%)
Rohr 301,100 (b) 5,909,087
Team Rental Group 147,000 (b) 2,793,000
Total 8,702,087
Banks and savings & loans (1.3%)
MBNA 235,150 8,171,463
Washington Mutual 225,400 8,396,150
Total 16,567,613
Building materials & construction (3.2%)
Culligan Water Technology 185,300 (b) 7,018,237
Ecolab 317,600 10,719,000
Praxair 376,300 16,180,900
Tyco Intl 138,000 5,951,250
Total 39,869,387
Communications equipment & services (5.7%)
Ascend Communications 400,600 26,489,675
Cascade Communications 321,600 26,210,400
Tellabs 278,800 (b) 19,690,250
Total 72,390,325
Computers & office equipment (19.6%)
Affiliated Computer Services Cl A 123,700 (b) 7,267,375
BMC Software 74,400 (b) 5,914,800
Ceridian 188,700 (b) 9,435,000
Cisco Systems 742,400 46,075,200
Computer Associates Intl 138,700 8,287,325
Computer Sciences 176,300 (b) 13,553,062
First Data 118,942 9,708,641
FORE Systems 185,400 7,670,925
See accompanying notes to investments in securities.
Microsoft 74,500 (b) 9,824,687
Oracle 475,850 20,253,366
Parametric Technology 800,900 39,544,437
PeopleSoft 193,500 16,108,875
Pure Atria 137,200 (b) 5,179,300
Reynolds & Reynolds Cl A 281,000 7,341,125
Synopsys 321,500 (b) 14,829,187
Technology Modeling Associates 12,800 (b) 166,400
3Com 449,500 (b) 26,998,094
Total 248,157,799
Electronics (0.5%)
American Residential Services 30,600 (b) 585,225
Cymer 10,900 (b) 193,475
Maxim Integrated Products 166,100 5,875,787
Total 6,654,487
Energy (3.5%)
Enron Oil & Gas 481,200 11,969,850
Houston Exploration 20,600 (b) 350,200
Noble Affiliates 214,900 9,079,525
Pogo Producing 354,300 12,666,225
United Meridian 229,700 (b) 10,451,350
Total 44,517,150
Energy equipment & services (1.6%)
Fluor 78,900 4,852,350
Input/Output 180,800 5,378,800
Smith Intl 101,100 (b) 3,551,137
Transocean Offshore 103,600 6,345,500
Total 20,127,787
Financial services (4.5%)
ADVANTA Cl B 71,100 3,039,525
Dean Witter 161,300 8,871,500
Green Tree Financial 195,400 7,669,450
Hambrecht & Quist Group 274,450 (b) 5,317,469
Household Intl 105,400 8,669,150
Morgan Stanley 168,300 8,372,925
Paychex 249,450 14,468,100
Total 56,408,119
Health care (8.4%)
Amgen 234,800 (b) 14,821,750
Boston Scientific 417,500 (b) 24,006,250
Genzyme 217,200 5,538,600
IDEXX Laboratories 496,600 (b) 22,471,150
Medtronic 321,500 20,616,188
Pfizer 232,700 18,412,388
Total 105,866,326
Health care services (8.7%)
Cardinal Health 143,900 11,889,737
HBO & Company 570,800 38,100,900
Health Mgmt Associates 651,650 16,209,794
HEALTHSOUTH 245,400 (b) 9,417,225
PhyCor 223,800 8,518,388
Service Corp Intl 420,900 12,732,225
Stewart Enterprises 228,700 7,718,625
Vivra 184,200 (b) 6,009,525
Total 110,596,419
Industrial equipment & services (2.0%)
Case 159,800 7,790,250
U. S. Filter 281,150 9,594,244
USA Waste Service 265,050 (b) 8,349,075
Total 25,733,569
Insurance (3.7%)
ACE 117,200 6,196,950
Everest Reinsurance Holdings 197,400 4,885,650
PennCorp Financial Group 403,100 12,999,975
Travelers/Aetna Property Casualty 214,600 5,901,500
UNUM 268,800 17,236,800
Total 47,220,875
Leisure time & entertainment (1.1%)
Gaylord Entertainment Cl A 305,815 6,919,064
Harley-Davidson 170,500 7,331,500
Total 14,250,564
Media (3.3%)
American Radio Systems Cl A 80,600 (b) 3,002,350
Clear Channel Communications 110,400 9,770,400
Cox Radio 30,600 673,200
Emmis Broadcasting Cl A 248,800 (b) 11,507,000
Gartner Group 273,000 9,282,000
Infinity Broadcasting Cl A 220,600 6,948,900
Univision Communications 18,600 (b) 623,100
Total 41,806,950
Multi-industry conglomerates (4.2%)
AccuStaff 239,000 6,184,125
Alco Standard 191,650 9,558,544
Manpower 176,500 5,868,625
Olsten 196,500 4,887,938
Pittston Brinks Group 226,200 7,097,025
Robert Half Intl 514,000 18,953,750
Total 52,550,007
Restaurants & lodging (5.4%)
Applebee's Intl 461,800 12,237,700
HFS 473,100 31,638,563
Prime Hospitality 48,300 (b) 796,950
Promus Hotel 463,400 (b) 13,091,050
Sun Intl Hotels 195,500 10,019,375
Total 67,783,638
Retail (6.6%)
Corporate Express 392,900 (b) 15,273,987
Cross-Continent Auto Retailers 27,700 (b) 637,100
Dollar General 140,700 4,379,287
Eagle Hardware & Garden 157,200 (b) 4,244,400
Kohl's 263,900 9,500,400
Lowe's 161,300 6,593,138
OfficeMax 649,300 9,090,200
PETsMART 388,700 10,057,612
Richfood Holdings 186,300 6,939,675
Thrifty Payless Holding Cl B 427,400 (b) 7,960,325
Viking Office Products 295,600 8,868,000
Total 83,544,124
Textiles & apparel (1.2%)
Nike Cl B 127,800 15,527,700
Utilities -- telephone (1.1%)
LCI Intl 400,200 12,606,300
Orckit Communications 29,800 (b) 547,575
Rental Service 19,600 (b) 423,850
Total 13,577,725
Foreign (2.6%)(c)
Baan 278,400 9,291,600
Perez Companc ADR 381,150 4,825,359
Reuters Holdings ADR 97,100 6,724,175
SAP ADR 42,000 (b,d) 2,356,255
SGS-THOMSON Microelectronics 97,160 (b) 4,602,955
Telefonica del Peru-B ADR 199,800 4,570,425
Total 32,370,769
Total common stocks
(Cost: $680,333,770) 1,124,223,420
Preferred stocks & other (0.3%)
Issuer Shares Value (a)
Jan Bell 2,473 386
Warrants
SAP Preferred 23,600 3,964,374
Total 3,964,760
Total preferred stocks & other
(Cost: $3,641,960) 3,964,760
Short-term securities (10.3%)
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
AT&T
10-01-96 5.30% 5,900,000 5,900,000
Beneficial
10-15-96 5.38 6,500,000 6,486,476
Cargill
10-04-96 5.30 7,100,000 7,096,882
Ciesco LP
10-16-96 5.38 900,000 897,994
CPC Intl
10-22-96 5.49 6,700,000 (d) 6,677,178
Dean Witter
10-30-96 5.34 8,300,000 8,264,497
Fleet Funding
10-10-96 5.38 3,600,000 (d) 3,595,185
10-24-96 5.39 4,778,000 (d) 4,761,668
Hewlett Packard
10-25-96 5.38 9,000,000 8,967,960
Merrill Lynch
10-11-96 5.32 7,500,000 7,489,000
Metlife
10-23-96 5.45 3,200,000 3,189,381
10-24-96 5.36 5,500,000 5,481,271
10-29-96 5.33 5,500,000 5,477,328
Mobil Australia Finance (Delaware)
10-03-96 5.37 4,000,000 (d) 3,998,811
10-25-96 5.45 5,000,000 (d) 4,981,933
Morgan Stanley
10-09-96 5.37 3,600,000 3,595,720
Penney (JC)
10-02-96 5.29 4,200,000 4,199,386
11-01-96 5.33 6,500,000 6,470,335
Reed Elsevier
10-21-96 5.32 6,300,000 (d) 6,281,520
SAFECO
10-11-96 5.34 1,200,000 1,198,237
St. Paul Companies
11-04-96 5.33 5,100,000 (d) 5,074,472
Sandoz
10-18-96 5.38 5,100,000 5,087,115
Transamerica Financial
10-09-96 5.38 4,200,000 4,195,007
10-28-96 5.43 6,800,000 6,772,460
U S WEST Communications
10-29-96 5.35 3,900,000 3,883,863
Total short-term securities
(Cost: $130,025,318) 130,023,679
Total investment in securities
(Cost: $814,001,048)(e) 1,258,211,859
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) 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.
(e) At Sept. 30, 1996, the cost of securities for federal income tax purposes was approximately
$814,001,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation 446,436,000
Unrealized depreciation -2,225,000
444,211,000
</TABLE>
<PAGE>
PAGE
Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board members
H. Brewster Atwater Jr.
Former chairman and chief executive officer, General Mills, Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Readers's Digest Association, Inc.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
_____________________________________________________________________
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Vice President of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
___________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in
the IDS MUTUAL FUND GROUP.
<PAGE>
PAGE
IDS mutual funds
Global/International funds
Funds in this group seek Capital growth and/or income by investing
primarily in foreign securities. Foreign investments may be subject to
currency fluctuations and political and economic risks of the countries in
which the investments are made. They are high risk mutual funds with a
potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in
developing countries throughout the world that are believed to offer growth
potential. Seeks to provide long-term growth of capital.
icon of (globe)
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies
throughout the world that are positioned to meet market needs in a changing
world economy. These companies offer above-average potential for long-term
growth.
icon of (globe)
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The Fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout
the world, including the U.S. Seeks to provide a balance of growth of
capital and current income.
(icon of) balance
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of
capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They
are high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. A highly aggressive and speculative
fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities
comprising the S&P SmallCap 600 Index, as it strives to provide long-term
capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of
companies included in the S&P 500 Index that are believed to have strong
growth potential. The Portfolio is managed using a research methodology by
the Research Department of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-
average potential for long-term growth as a result of new management,
marketing opportunities or technoligical superiority.
(icon of) flower
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The Fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income from
dividends and interest.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S.
and foreign debt securities, foreign equity securities and money market
instruments. The Fund provides diversification among these
major investments categories and has a target mix that
represents the way the Fund's investments will be allocated
over the long term. Seeks maximum total return.
(icon of) world
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth
of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks
to seek high current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and
senior securities (preferred stocks and bonds). Seeks a balance of growth
of capital and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding
corporate fixed-income securities in the lower rated, higher risk bond
categories to seek high current income. Secondary objective is capital
growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds
and other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or
guaranteed as to the timely payment of principal and interest by the U.S.
government, its agencies and instrumentalities. Seeks a high level of
current income and safety of principal consistent with its type of
investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax, but a portion of the
income may be subject to state and local taxes. Risk varies
by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk bond
categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the Fund but does not guarantee
the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve
greater risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units.
Goal is to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. An investment in these funds is neither
insured nor guaranteed by the U.S. government, and there can be no
assurance that these funds will be able to maintain a stable net asset
value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
<PAGE>
PAGE
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS Financial Advisors
IDS Strategy Aggressive Fund
IDS Tower 10
Minneapolis, MN 55440-0010
1996 SEMIANNUAL REPORT
IDS
Equity Value
Fund
(icon of) three growing flowers
The goal of IDS Equity Value Fund, a part of IDS Strategy Fund, Inc., is
growth of capital and income. The Fund invests primarily in equity
securities that provide income, offer opportunity for long-term capital
growth, or both.
Distributed by American Express Financial Advisors Inc.
Stocks for the bargain-hunter
Just like almost everything else, prices of companies that are believed to
be sound sometimes are reduced. That is, for any of a variety of reasons,
they fall out of favor with investors and their stock prices decline. These
so-called "value" stocks represent a classic opportunity to buy low in the
market, which is what Equity Value Fund seeks to do. Should investors
rediscover the potential of such companies, the stocks may well recover and
benefit shareholders accordingly.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
To our shareholders
William R. Pearce
President of the Fund
From the president
The volatility in the stock market in recent months has put some investors,
even experienced ones, on edge. Although no one can know exactly what will
happen next, history tells us that ups and downs are intrinsic to stock
investing.
But, history also shows that changing strategies with every twist and turn
of the market is an impractical and, worse yet, typically unproductive way
to invest. What matters more, therefore, is how we react to market
volatility. If we take a long-term view and accept the downs with the ups,
we improve our chances of success. For in the investment world, the race
most often goes not to the swift, but to the persistent.
Along the way, of
course, you'll still want to review your investment program to make sure
it's on track to achieving your financial goals. Your American Express
financial advisor will help you do just that, and I suggest you take
advantage of his or her services on a regular basis.
William R. Pearce
Thomas W. Medcalf
Portfolio manager
From the portfolio manager
The first half of IDS Equity Value Fund's fiscal year was a reasonably good
period for value stocks, as they gained ground overall while proving to be
less volatile than the stock market as a whole. The result was a 5.7% total
return (which includes net asset value change and dividends) for investors
in Class A shares during the six months from April through September 1996.
Unlike its virtually uninterrupted advance during 1995 and the first two
months of 1996, the stock market found the going more difficult over the
past six months. The principal hurdle was higher long-term interest rates,
which began rising last February when stronger economic data spawned fear
of a run-up in the inflation rate.
Portfolio weathers
summer slump well
After months of choppiness, the market finally succumbed to the pressure
and, in July, slumped by more than 4%. True to their nature, value stocks
clearly showed their mettle that month, as the Fund declined much less than
that of the broad market and even less than racier growth stocks, which
were in especially rapid retreat. But, with the resilience that has
characterized this market in recent years, it snapped back in August and
September to more than make up for the lost ground. The Fund rebounded as
well, but a bit less robustly.
The Fund's long-time emphasis on stocks of banks and insurance companies
paid off particularly well during the six months, as a consolidation trend
in those businesses drove up the prices of leading companies, several of
which were in the portfolio. Stocks of retailers, another substantial
investment sector for the Fund, also made a good contribution before I cut
back on those holdings last summer. That scenario also applied to
"cyclicals" (stocks of economically sensitive companies such as autos and
chemicals).
Other portfolio changes included the addition of some high-yielding real
estate investment trusts
(REITS), a relatively small investment that proved productive. I also added
a modest amount of utility stocks, which also provided a generous yield.
Foreign stocks
in the Fund underperformed somewhat. I reduced these holdings, but continue
to find some very attractively priced value stocks in Europe.
Comfortable with conservative structure
Although the stock market certainly could continue to move higher in the
second half of the fiscal year, I won't be surprised to see it follow a
rather choppy course. If so, the portfolio's conservative structure,
highlighted by an above-average-dividend, should provide some support to
performance. Therefore, unless there's a marked change in market
fundamentals, I intend to keep the portfolio fully invested in a well-
diversified group of stocks that offer good investment value.
Thomas W. Medcalf
PAGE
IDS Equity Value Fund
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $11.51
____________________________
March 31, 1996 $11.06
____________________________
Increase $ .45
____________________________
Distributions
April 1, 1996-Sept. 30, 1996
____________________________
From income $ .18
____________________________
From capital gains $ --
____________________________
Total distributions $ .18
____________________________
Total return* +5.7%**
____________________________
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $11.52
____________________________
March 31, 1996 $11.07
____________________________
Increase $ .45
____________________________
Distributions
April 1, 1996-Sept. 30, 1996
____________________________
From income $ .13
____________________________
From capital gains $ --
____________________________
Total distributions $ .13
____________________________
Total return* +5.3%**
____________________________
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
____________________________
Sept. 30, 1996 $11.53
____________________________
March 31, 1996 $11.07
____________________________
Increase $ .46
____________________________
Distributions
April 1, 1996-Sept. 30, 1996
____________________________
From income $ .19
____________________________
From capital gains $ --
____________________________
Total distributions $ .19
____________________________
Total return* +5.8%**
____________________________
*The prospectus discusses the
effect of sales charges, if any,
on the various classes.
**The total return is a hypothetical
investment in the Fund with all
distributions reinvested.
<PAGE>
<TABLE>
<CABLE>
Your Fund's ten largest holdings
(Pie chart) The ten holdings listed here make up 16.04% of the Fund's net
assets
Equity Value Fund
___________________________________________________________________________
Percent Value
(of Fund's net assets)(as of Sept. 30, 1996)
___________________________________________________________________________
<S> <C> <C>
(Unaudited)
General Electric 1.72% $29,575,000
A diversified company with interest in maufacturing, broadcasting (NBC),
financial services and technology.
Gannett 1.64 28,150,000
A diversified news and information company with interests in newspaper
publishing, television and radio broadcast, outdoor adverising and other
related business services.
Dow Chemical 1.63 28,087,500
The second largest U.S. chemical company. Dow produces basic chemicals and
plastics, industrial specialties and household, drug and agricultural
products.
International Business Machines 1.63 28,012,500
Provides sustomer solutions worldwide through the use of advanced
information technologies. The solutions include, either singularly or in
some combination, services software, systems, finacing and technologies.
SmithKline Beecham 1.59 27,393,750
One of the world's largest pharmaceutical and health-care companies,
providing a wide range of prescription and over-the-counter drugs and
clinical laboratory services.
Royal Dutch Petroleum 1.59 27,321,875
A major oil company which includes Royal Dutch (the Dutch version) and
Shell Transport (the English version).
Emerson Electric 1.57 27,037,500
A diversified manufacturer of electrical and electronic products for use in
commercial and industrial products, appliances and construction-related
components.
Bell Atlantic 1.57 26,943,750
One of seven regional holding companies formed by the divestiture of assets
of American Telephone and Telegraph (AT&T) related to exchange
telecommunications, exhange access functions, printed directories and
cellular mobile communications.
First Union Corp 1.55 26,700,000
A bank-holding company based in Charlotte, North Carolina, with strategic
market position in North Carolina, South Carolina and Florida.
Banc One Corp 1.55 26,650,000
A multi-bank holding company that engages in credit card and merchant
processing, consumer finance, mortgage banking insurance, trust and
investment management, brokerage, investment and merchant banking, venture
capital, equiptment leasing and data processing activities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial Statement
Statement of assets and liabilities
IDS Equity Value Fund
Sept. 30, 1996
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $1,462,236,088) $1,718,096,959
Dividends and accrued interest receivable 6,090,103
U.S. government securities held as collateral (Note 4) 22,972,038
Unrealized appreciation of foreign currency contracts held, at value (Notes 1 and 5) 1,314,310
_____________________________________________________________________________________________________________
Total assets 1,748,473,410
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 224,359
Dividends payable to shareholders 34,129
Payable for investment securities purchased 4,485,846
Payable upon return of securities loaned (Note 4) 22,972,038
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 5) 845,154
Accrued investment management services fee 70,325
Accrued distribution fee 83,279
Accrued service fee 24,519
Accrued transfer agency fee 23,191
Accrued administrative services fee 4,818
Other accrued expenses 274,233
_____________________________________________________________________________________________________________
Total liabilities 29,041,891
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,719,431,519
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 100,000,000,000 shares of $.01 par value $ 1,492,743
Additional paid-in capital 1,314,649,856
Undistributed net investment income (1,647,491)
Accumulated net realized gain (Note 1) 148,592,748
Unrealized appreciation of investments and on translation of assets
and liabilities in foreign currencies (Note 5) 256,343,663
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,719,431,519
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $ 356,849,044
Class B $1,362,581,126
Class Y $ 1,349
Net asset value per share of outstanding capital stock: Class A shares 30,994,148 $ 11.51
Class B shares 118,280,008 $ 11.52
Class Y shares 117 $ 11.53
See accompanying notes to financial statements.<PAGE>
Statement of operations
IDS Equity Value Fund
Six months ended Sept. 30, 1996
_____________________________________________________________________________________________________________
Investment income (Unaudited)
_____________________________________________________________________________________________________________
Income:
Interest $ 3,355,858
Dividends (net of foreign taxes withheld of $384,599) 26,443,518
_____________________________________________________________________________________________________________
Total income 29,799,376
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 4,211,357
Distribution fee -- Class B 4,994,886
Transfer agency fee 1,367,812
Incremental transfer agency fee -- Class B 67,913
Service fee
Class A 300,628
Class B 1,145,320
Administrative services fee 289,273
Compensation of board members 16,754
Compensation of officers 5,825
Custodian fees 58,390
Postage 73,330
Registration fees 12,299
Reports to shareholders 41,094
Audit fees 10,000
Administrative 4,596
Other 12,530
_____________________________________________________________________________________________________________
Total expenses 12,612,007
Earnings credits on cash balances (Note 2) (8,574)
_____________
Total net expenses 12,603,433
_____________________________________________________________________________________________________________
Investment income -- net 17,195,943
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions 54,776,610
(including gain of $1,173,473 from foreign currency transactions) (Note 3)
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 16,351,890
_____________________________________________________________________________________________________________
Net gain on investments and foreign currencies 71,128,500
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $88,324,443
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Equity Value Fund
_____________________________________________________________________________________________________________
Operations and distributions Sept. 30, 1996 March 31, 1996
Six months ended Year ended
(Unaudited)
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $17,195,943 $ 25,287,534
Net realized gain on investments and foreign currencies 54,776,610 140,762,006
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 16,351,890 163,767,246
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 88,324,443 329,816,786
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (5,381,256) (2,245,881)
Class B (15,779,067) (21,676,993)
Class Y (21) (29)
Net realized gains
Class A -- (528,216)
Class B -- (39,027,529)
Class Y -- (31)
_____________________________________________________________________________________________________________
Total distributions (21,160,344) (63,478,679)
_____________________________________________________________________________________________________________
Capital share transactions (Note 6)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 25,316,340 23,920,155
Class B shares 73,772,618 147,229,281
Class Y shares -- 1,000
Reinvestment of distributions at net asset value
Class A shares 5,276,719 2,717,827
Class B shares 15,619,256 60,152,086
Class Y shares 21 59
Payments for redemptions
Class A shares (19,243,264) (5,090,416)
Class B shares (Note 2) (76,218,460) (177,692,829)
Conversion of shares
Class A shares -- 299,775,130
Class B shares -- (299,775,130)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions 24,523,230 51,237,163
_____________________________________________________________________________________________________________
Total increase in net assets 91,687,329 317,575,270
Net assets at beginning of period 1,627,744,190 1,310,168,920
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of $(1,647,491)
and $2,316,910) $1,719,431,519 $1,627,744,190
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
PAGE
Notes to financial statements
IDS Equity Value Fund
(Unaudited as to Sept. 30, 1996)
__________________________________________________________________________
1. Summary of significant accounting policies
The Fund is a series of IDS Strategy Fund, Inc. and registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. The Fund invests primarily in equity
securities that provide income, offer the opportunity for long term
capital growth, or both. The Fund offers Class A, Class B and Class Y
shares. Class A shares, are sold with a front-end sales charge. Class B
shares may be subject to a contingent deferred sales charge and such
shares automatically convert to Class A after eight years. Class Y shares,
have no sales charge and are offered only to qualifying institutional
investors.
All classes of shares have identical voting, dividend, liquidation and
other rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative
net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
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 are valued at fair value
according to methods selected in good faith by the board. Determination of
fair value involves, among other things, reference to market indexes,
matrixes and data from independent brokers. Short-term securities maturing
in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate
buying and selling of securities for investment purposes, the Fund may
buy or write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Fund also may
buy or 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.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Fund may buy and sell 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 contracts. Risks of entering into futures contracts and related
options include the possibility that there may be an illiquid market and that
a change in the value of the contract or option may not correlate with changes
in the value of the underlying securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and losses
deferred due to "wash sale" transactions. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. 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 quarterly are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last
dividend at the end of the calendar quarter.
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
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio, providing
administrative services and serving as transfer agent. Under its Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
average daily net assets in reducing percentages from 0.53% to 0.4% annually.
Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder
accounts and records. The Fund pays AEFC an annual fee per shareholder account
for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder servicing-
related services. Under a Plan and Agreement of Distribution, the Fund pays a
distribution fee at an annual rate of 0.75% of the Fund's average daily net
assets attributable to Class B shares for distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents. The
fee is calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares.
AEFC will assume and pay any expenses (except taxes and brokerage commissions)
that exceed the most restrictive applicable state expense limitation.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $405,801 for Class A and $426,672 for Class B
for the six months ended Sept. 30, 1996. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 1996, the Fund's custodian and transfer
agency fees were reduced by $8,574 as a result of earnings credits from
overnight cash balances.
Prior to April 30, 1996, the Fund had a retirement plan for it's independent
board members. The plan was terminated April 30, 1996. The retirement plan
expense amounted to $7,789 for the period. The total liability for the plan is
$25,360, which will be paid out at some future date.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $410,729,209 and $369,132,525 respectively, for the
six months ended Sept. 30, 1996. Realized gains and losses are determined on
an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $14,873 for
the six months ended Sept. 30, 1996.
______________________________________________________________________________
4. Lending of portfolio securities
At Sept. 30, 1996, securities valued at $23,468,400 were on loan to brokers.
For collateral, the Fund received U.S. government securities valued at
$22,972,038. Income from securities lending amounted to $128,052 for the six
months ended Sept. 30, 1996. 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.
______________________________________________________________________________
<TABLE>
<CAPTION>
5. Foreign currency contracts
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
At Sept. 30, 1996, the Fund had entered into three foreign currency exchange
contracts that obligate the Fund to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation on these contracts is
included in the accompanying financial statements. The terms of the open
contracts are as follows:
Currency to be Currency to be Unrealized Unrealized
Exchange date delivered received appreciation depreciation
______________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Nov. 22, 1996 48,600,000 75,184,200 $ -- $845,154
British Pound U.S. Dollar
Nov. 22, 1996 57,000,000 34,378,770 961,013 --
Dutch Guilder U.S. Dollar
Nov. 22, 1996 99,000,000 17,285,028 353,297 --
Danish Krona U.S. Dollar
____________ ____________
$1,314,310 $845,154
</TABLE>
______________________________________________________________________________
6. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
_____________________________________________________________________________
Six months ended Sept. 30, 1996
Class A Class B Class Y
___________________________________________________________________________
Sold 2,260,051 6,591,513 --
Issued for reinvested 464,884 1,375,426 2
distributions
Redeemed (1,717,710) (6,808,143) --
___________________________________________________________________________
Net increase 1,007,225 1,158,796 2
___________________________________________________________________________
Year ended March 31, 1996
Class A Class B Class Y
___________________________________________________________________________
Sold 2,299,573 14,555,513 107
Issued for reinvested 250,311 5,792,693 6
distributions
Redeemed (475,563) (17,528,671) --
Conversion of shares 27,232,479 (27,267,157) --
___________________________________________________________________________
Net increase (decrease) 29,306,800 (24,447,622) 113
___________________________________________________________________________
______________________________________________________________________________
7. Illiquid securities
At Sept. 30, 1996, investments in securities included issues that are
illiquid. The Fund currently limits investments in illiquid secruities
to 10% of the net assets, at market value, at the time of purchase. The
aggregate value of such securities at Sept. 30, 1996 was $15,244,318
representing 0.89% of net assets. Pursuant to guidelines adopted by the
Fund's board, certain unregistered securities are determined to be
liquid and are not included within the 10% limitation specified above.
________________________________________________________________________________
<TABLE>
<CAPTION>
8. Financial highlights
The table below shows certain important financial information for evaluating
the Fund's results.
Fiscal period ended March 31,
Per share income and capital changes*
Class B
1996*** 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $11.07 $9.21 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26 $7.85
beginning of period
Income from investment operations:
Net investment income .11 .18 .19 .18 .19 .22 .26 .29 .27 .27
Net gains (losses) .47 2.12 .47 .37 1.18 .98 .48 .51 1.29 (.19)
(both realized and
unrealized)
Total from investment .58 2.30 .66 .55 1.37 1.20 .74 .80 1.56 .08
operations
Less distributions:
Dividends from net (.13) (.16) (.19) (.18) (.19) (.22) (.26) (.31) (.27) (.27)
investment income
Distributions from -- (.28) (.43) (.66) (.62) (.30) (.18) (.53) (.59) (.40)
realized gains
Total distributions (.13) (.44) (.62) (.84) (.81) (.52) (.44) (.84) (.86) (.67)
Net asset value, $11.52 $11.07 $9.21 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26
end of period
Ratios/supplemental data
Class B
1996*** 1996 1995 1994 1993 1992 1991 1990 1989 1988
Net assets, end of period $1,363 $1,296 ,$1,304 $1,031 $758 $497 $370 $311 $230 $162
(in millions)
Ratio of expenses to 1.66%# 1.69% 1.61% 1.56% 1.63% 1.66% 1.66% 1.61% 1.65% 1.65%
average daily net assets++
Ratio of net income 1.89%# 1.71% 2.10% 1.93% 2.15% 2.56% 3.41% 3.61% 3.70% 3.78%
to average daily net assets
Portfolio turnover rate 24% 54% 85% 70% 48% 72% 65% 67% 54% 49%
(excluding short-term
securities)
Total return** 5.3% 25.2% 7.7% 5.5% 16.0% 15.0% 10.1% 9.9% 22.2% 1.3%
Average brokerage
commission rate+ $.0565 -- -- -- -- -- -- -- -- --
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Total return does not reflect payment of a sales charge.
***Six months ended Sept. 30, 1996 (Unaudited).
+Beginning in fiscal year 1997, the Fund is required to disclose an average brokerage
commission rate. The rate is calculated by dividing the total brokerage commissions
paid on applicable purchases and sales of portfolio securities for the period by
the total number of related shares purchased and sold.
++Effective fiscal year 1997, expense ratio is based on total expenses of the Fund
before reduction of earnings credits on cash balances.
#Adjusted to an annual basis.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
IDS Equity Value Fund
Financial highlights
Fiscal period ended March. 31,
Per share income and capital changes*
Class A Class Y
1996*** 1996 1995** 1996*** 1996 1995**
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $11.06 $9.21 $9.10 $11.07 $9.21 $9.23
beginning of period
Income from investment operations:
Net investment income .16 .21 .01 .15 .26 --
Net gains both .47 2.16 .15 .50 2.14 .03
realized and unrealized)
Total from investment .63 2.37 .16 .65 2.40 .03
operations
Less distributions:
Dividends from net (.18) (.24) (.05) (.19) (.27) (.05)
investment income
Distributions from -- (.28) -- -- (.27) --
realized gains
Total distributions (.18) (.52) (.05) (.19) (.54) (.05)
Net asset value, $11.51 $11.06 $9.21 $11.53 $11.07 $9.21
end of period
Ratios/supplemental data
1996*** 1996 1995** 1996*** 1996 1995**
Class A Class Y
Net assets, end of period $357 $332 $6 $-- $-- $--+
(in millions)
Ratio of expenses to .90%++.90% .91%++ .74%++ .75% --%+
average daily net assets##
Ratio of net income 2.65%++2.74% 2.43%++ 2.82%++ 2.73% --%+
to average daily net assets
Portfolio turnover rate 24% 54% 85% 24% 54% 85%
(excluding short-term
securities)
Total return+++ 5.7% 26.1% 1.79% 5.8% 26.4% .3%
Average brokerage
commissions rate# $.0565 -- -- $.0565 -- --
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class A and Class Y.
***Six months ended Sept. 30, 1996 (Unaudited).
+Ratios of expenses and net investment income to average daily net assets is
not presented for Class Y as only two shares were outstanding during the period.
++Adjusted to an annual basis.
+++Total return does not reflect payment of a sales charge.
#Beginning in fiscal year 1997, the Fund is required to disclose an average brokerage
commission rate. The rate is calculated by dividing the total broderage commissions
paid on applicable purchases and sales of portfolio securities for the period by
the total number of related shares purchased and sold.
##Effective fiscal year 1997, expense ratio is based on total expenses of the Fund
before reduction of earnings credits on cash balances.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in securities
IDS Equity Value Fund (Percentages represent value of
Sept. 30, 1996 (Unaudited) investments compared to net assets)
Common stocks (93.9%)
Issuer Shares Value (a)
<S> <C> <C>
Aerospace & defense (2.8%)
Raytheon 450,000 $ 25,031,250
Rockwell Intl 400,000 22,550,000
Total 47,581,250
Automotive & related (3.9%)
Ford Motor 600,000 18,750,000
General Motors 525,000 25,200,000
Genuine Parts 525,000 22,968,750
Total 66,918,750
Banks and savings & loans (10.6%)
Banc One 650,000 (c) 26,650,000
Barnett Banks 700,000 23,625,000
First Union 400,000 26,700,000
Fleet Financial Group 221,100 9,838,950
KeyCorp 500,000 22,000,000
Morgan (JP) 275,000 24,440,625
NationsBank 250,000 21,718,750
Norwest 650,000 26,568,750
Total 181,542,075
Beverages & tobacco (3.9%)
Anheuser-Busch 600,000 22,575,000
Philip Morris 265,000 23,783,750
UST 700,000 20,737,500
Total 67,096,250
Chemicals (7.0%)
Air Product & Chemical 375,000 21,843,750
ARCO Chemical 212,500 10,625,000
Betz Laboratories 350,000 18,375,000
Dow Chemical 350,000 28,087,500
Lubrizol 525,000 15,093,750
PPG Inds 475,000 25,828,125
Total 119,853,125
Computers & office equipment (2.9%)
Intl Business Machines 225,000 28,012,500
Xerox 425,000 22,790,625
Total 50,803,125
See accompanying notes to investments in securities.
Electronics (2.3%)
AMP 450,000 17,437,500
Thomas & Betts 550,000 22,550,000
Total 39,987,500
Energy (6.4%)
Amoco 350,000 24,675,000
Atlantic Richfield 185,000 23,587,500
Exxon 250,000 20,812,500
Mobil 215,000 24,886,250
Texaco 175,000 16,100,000
Total 110,061,250
Financial services (3.3%)
Dean Witter 350,000 19,250,000
Developers Diversified Realty 300,000 9,637,500
Meditrust 400,000 13,850,000
Simon DeBartolo Group 526,000 13,413,000
Total 56,150,500
Food (1.3%)
Heinz (HJ) 650,000 21,937,500
Furniture & appliances (0.5%)
Maytag 450,000 8,775,000
Health care (4.9%)
Baxter Intl 550,000 25,712,500
Beckman Instruments 212,000 8,241,500
Bristol-Myers Squibb 250,000 24,093,750
Schering-Plough 425,000 26,137,500
Total 84,185,250
Industrial equipment & services (0.6%)
General Signal 250,000 11,000,000
Industrial transportation (1.4%)
Union Pacific 325,000 23,806,250
Insurance (5.9%)
ITT Hartford Group 400,000 23,600,000
Marsh & McLennan 200,000 19,425,000
Providian 400,000 17,200,000
SAFECO 475,000 16,625,000
St. Paul Companies 450,000 24,975,000
Total 101,825,000
Media (2.9%)
Gannett 400,000 28,150,000
McGraw-Hill 500,000 21,312,500
Total 49,462,500
Metals (1.2%)
Reynolds Metals 400,000 20,450,000
Multi-industry conglomerates (4.2%)
Emerson Electric 300,000 27,037,500
General Electric 325,000 29,575,000
Textron 182,400 15,504,000
Total 72,116,500
Paper & packaging (2.6%)
Kimberly-Clark 300,000 26,437,500
Union Camp 375,000 18,328,125
Total 44,765,625
Retail (5.3%)
Limited 1,200,000 22,950,000
May Dept Stores 500,000 24,312,500
Penney (JC) 425,000 23,003,125
Rite Aid 600,000 21,750,000
Total 92,015,625
Utilities -- electric (3.0%)
Edison Intl 1,000,000 17,875,000
General Public Utilities 500,000 15,375,000
PECO Energy 750,000 17,812,500
Total 51,062,500
Utilities -- telephone (4.2%)
Bell Atlantic 450,000 26,943,750
BellSouth 600,000 22,200,000
SBC Communications 500,000 24,062,500
Total 73,206,250
Foreign (12.8%)
B.A.T. Inds 3,000,000 19,979,139
BTR 3,500,000 14,818,055
Grand Metropolitan 3,100,000 23,119,611
Imperial Chemical Inds 1,000,000 13,225,517
KPN ADR 575,000 19,837,500
Repsol (SA) ADR 550,000 18,218,750
Royal Dutch Petroleum 175,000 27,321,875
SmithKline Beecham ADR 450,000 27,393,750
Tele Danmark ADR 800,000 18,900,000
Tempest Reinsurance 77,000 (b, f) 15,244,318
Tomkins 5,138,888 22,279,469
Total 220,337,984
Total common stocks
(Cost: $1,359,076,815) $1,614,939,809
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Short-term securities (6.0%)
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
<S> <C> <C> <C>
U.S. government agency (0.2%)
Federal Home Loan Mtge Corp Disc Nt
10-15-96 5.19% $2,800,000 $ 2,794,360
Commercial paper (5.8%)
Alabama Power
10-08-96 5.37 2,900,000 2,896,983
Associates North America
10-29-96 5.39 1,800,000 1,792,496
Barclays
10-16-96 5.38 3,800,000 3,791,529
BBV Finance
10-25-96 5.38 3,400,000 3,387,851
Beneficial
10-15-96 5.38 5,700,000 5,688,141
CAFCO
10-10-96 5.30 6,900,000 6,890,909
11-21-96 5.40 4,000,000 (d) 3,967,717
Consolidated Natural Gas
10-08-96 5.37 6,000,000 5,993,758
Deutsche Bank Financial
10-16-96 5.32 800,000 798,084
Gannett
10-22-96 5.34 5,400,000 (d) 5,383,242
Metlife Funding
10-09-96 5.30 7,900,000 7,890,748
10-29-96 5.32 7,200,000 7,170,320
Mobil Australia Finance
10-07-96 5.36 1,800,000 (d) 1,798,398
10-11-96 5.37 800,000 (d) 798,811
10-11-96 5.37 6,000,000 (d) 5,991,083
PACCAR
10-04-96 5.36 1,000,000 999,555
10-09-96 5.36 3,100,000 3,096,321
Pacificorp
10-15-96 5.35 4,000,000 3,991,709
Penney (JC) Funding
10-02-96 5.28 3,400,000 3,399,503
10-18-96 5.37 4,300,000 4,289,137
PepsiCo
10-23-96 5.35 7,800,000 7,774,641
Reed Elsevier
10-24-96 5.39 6,000,000 (d) 5,979,415
St. Paul Companies
10-17-96 5.37 2,400,000 (d) 2,394,294
USAA Capital
10-04-96 5.34 4,200,000 4,198,145
Total $ 100,362,790
Total short-term securities
(Cost: $103,159,273) $ 103,157,150
Total investment in securities
(Cost: $1,462,236,088) $1,718,096,959
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to the financial statements.
(d) Foreign security values are stated in U.S. dollars.
(e) Commercial paper sold within terms of 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.
(f) Identifies issues considered to be illiquid (see Note 7 to the financial statements). Information
concerning such security holdings at Sept. 30, 1996, is as follows:
Acquisition
Security date Cost
Tempest Reinsurance 09-13-93 $7,700,000
(g) At Sept. 30,1996, the cost of securities for federal income tax purposes was approximately
$1,462,236,000 and the approximate aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $ 273,705,000
Unrealized depreciation (17,844,000)
Net unrealized appreciation $ 255,861,000
</TABLE>
PAGE
Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board members
H. Brewster Atwater Jr.
Former chairman and chief executive officer, General Mills, Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Readers's Digest Association, Inc.
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
_____________________________________________________________________
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
Officers who also are officers and/or employees of AEFC
Peter J. Anderson
Vice President of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
___________________________________________________________________
Other officer
Leslie L. Ogg
Vice president, general counsel and secretary of all funds in
the IDS MUTUAL FUND GROUP.
<PAGE>
PAGE
IDS mutual funds
Global/International funds
Funds in this group seek Capital growth and/or income by investing
primarily in foreign securities. Foreign investments may be subject to
currency fluctuations and political and economic risks of the countries in
which the investments are made. They are high risk mutual funds with a
potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in
developing countries throughout the world that are believed to offer growth
potential. Seeks to provide long-term growth of capital.
icon of (globe)
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies
throughout the world that are positioned to meet market needs in a changing
world economy. These companies offer above-average potential for long-term
growth.
icon of (globe)
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The Fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout
the world, including the U.S. Seeks to provide a balance of growth of
capital and current income.
(icon of) balance
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of
capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They
are high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. A highly aggressive and speculative
fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities
comprising the S&P SmallCap 600 Index, as it strives to provide long-term
capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of
companies included in the S&P 500 Index that are believed to have strong
growth potential. The Portfolio is managed using a research methodology by
the Research Department of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-
average potential for long-term growth as a result of new management,
marketing opportunities or technoligical superiority.
(icon of) flower
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The Fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income from
dividends and interest.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S.
and foreign debt securities, foreign equity securities and money market
instruments. The Fund provides diversification among these
major investments categories and has a target mix that
represents the way the Fund's investments will be allocated
over the long term. Seeks maximum total return.
(icon of) world
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stocks of companies
representing many sectors of the economy. Seeks current income and growth
of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks
to seek high current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and
senior securities (preferred stocks and bonds). Seeks a balance of growth
of capital and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding
corporate fixed-income securities in the lower rated, higher risk bond
categories to seek high current income. Secondary objective is capital
growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds
and other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or
guaranteed as to the timely payment of principal and interest by the U.S.
government, its agencies and instrumentalities. Seeks a high level of
current income and safety of principal consistent with its type of
investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax, but a portion of the
income may be subject to state and local taxes. Risk varies
by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk bond
categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the Fund but does not guarantee
the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve
greater risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units.
Goal is to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. An investment in these funds is neither
insured nor guaranteed by the U.S. government, and there can be no
assurance that these funds will be able to maintain a stable net asset
value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
<PAGE>
PAGE
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS Financial Advisors
IDS Equity Value Fund
IDS Tower 10
Minneapolis, MN 55440-0010
