IDS STRATEGY FUND INC, 485BPOS, 1997-05-29

IDS STRATEGY FUND INC
485BPOS, 1997-05-29

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PAGE 1
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 29 (File No. 2-89288) X
---- ---

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 31 (File No. 811-3956) X
---- ---

IDS STRATEGY FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010

Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on May 30, 1997 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Section 24f-2 of the Investment Company
Act of 1940. Registrant filed its 24f-2 Notice for its most recent fiscal year
on or about May 20, 1997.

<PAGE>

PAGE 2
Cross reference sheet showing the location in its prospectus and the Statement
of Additional Information of the information called for by the items enumerated
in Parts A and B of Form N-1A.

Negative answers omitted from prospectus are so indicated.
<TABLE>
<CAPTION>

PART A PART B
<S> <C> <C> <C>
Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
1 Cover page of prospectus 10 Cover page of SAI

2(a) Sales charge and Fund expenses 11 Table of Contents
(b) The Fund in brief
(c) The Fund in brief 12 NA

3(a) Financial highlights 13(a) Additional Investment Policies; all
(b) NA appendices except Dollar-Cost Averaging
(c) Performance (b) Additional Investment Policies
(d) Financial highlights (c) Additional Investment Policies
(d) Portfolio Transactions
4(a) The Fund in brief; Investment policies and
risks; How the Fund is organized 14(a) Board members and officers of the Fund;**
(b) Investment policies and risks Board members and officers
(c) Investment policies and risks (b) Board members and Officers
(c) Board members and Officers
5(a) Board members and officers; Board members
and officers of the Fund (listing) 15(a) NA
(b)(i) Investment manager and transfer agent; (b) NA
About American Express Financial (c) Board members and Officers
Corporation -- General Information
(b)(ii) Investment manager and transfer agent 16(a)(i) How the Fund is organized; About American
(b)(iii) Investment manager and transfer agent Express Financial Corporation**
(c) Portfolio manager (a)(ii) Agreements: Investment Management Services
(d) Investment manager and transfer agent Agreement, Plan and Supplemental
(e) Investment manager and transfer agent Agreement of Distribution
(f) Distributor (a)(iii) Agreements: Investment Management Services Agreement
(g) Investment manager and transfer agent; (b) Agreements: Investment Management Services Agreement
About American Express Financial (c) NA
Corporation -- General Information (d) Agreements: Administrative Services
Agreement, Shareholder Service Agreement
5A(a) * (e) NA
(b) * (f) Agreements: Distribution Agreement
(g) NA
6(a) Shares; Voting rights (h) Custodian; Independent Auditors
(b) NA (i) Agreements: Transfer Agency Agreement; Custodian
(c) NA
(d) Voting rights 17(a) Portfolio Transactions
(e) Cover page; Special shareholder services (b) Brokerage Commissions Paid to Brokers Affiliated
(f) Dividends and capital gains distributions; with American Express Financial Corporation
Reinvestments (c) Portfolio Transactions
(g) Taxes (d) Portfolio Transactions
(h) Alternative sales arrangements (e) Portfolio Transactions

7(a) Distributor 18(a) Shares; Voting rights**
(b) Valuing Fund shares (b) NA
(c) How to purchase, exchange or redeem shares
(d) How to purchase shares 19(a) Investing in the Fund
(e) NA (b) Valuing Fund Shares; Investing in the Fund
(f) Distributor (c) NA

8(a) How to redeem shares 20 Taxes
(b) NA
(c) How to purchase shares: Three ways to invest 21(a) Agreements: Distribution Agreement
(d) How to purchase, exchange or redeem shares: (b) Agreements: Distribution Agreement
Redemption policies -- "Important..." (c) NA

9 None 22(a) Performance Information (for money market
funds only)
(b) Performance Information (for all funds except
money market funds)

23 Financial Statements
</TABLE>
*Designates information is located in annual report.
**Designates location in prospectus.

<PAGE>

PAGE 3
IDS Strategy Aggressive Fund

Prospectus
May 30, 1997

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

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

Additional facts about the Fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI is incorporated here by reference. For a free
copy, contact American Express Shareholder Service.

Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor has the Securities and Exchange Commission or any state
securities commission passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.

Please note that the Fund:

o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
800-862-7919
TTY: 800-846-4852

<PAGE>

PAGE 4

Table of contents

The Fund in brief
Goal
Investment policies and risks
Manager and distributor
Portfolio manager
Alternative purchase arrangements

Sales charge and Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Alternative investment option
Valuing Fund shares

How to purchase, exchange or redeem shares Alternative purchase arrangements
How to purchase shares How to exchange shares How to redeem shares
Reductions and waivers of the sales charge

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Fund is organized
Shares
Voting rights
Shareholder meetings
Board members and officers
Investment manager
Administrator and transfer agent
Distributor

About American Express Financial Corporation
General information

Appendix

Descriptions of derivative instruments

<PAGE>

PAGE 5
The Fund in brief

Goal

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

Investment policies and risks

The Fund is a diversified mutual fund that invests primarily in common stocks
that are selected for their above-average growth potential. Some of the Fund's
investments may be considered speculative and involve additional investment
risk. For further information, refer to the later section in the prospectus
titled "Investment policies and risks."

Manager and distributor

The Fund is managed by American Express Financial Corporation (AEFC), a provider
of financial services since 1894. AEFC currently manages more than $58 billion
in assets for the IDS MUTUAL FUND GROUP. Shares of the Fund are sold through
American Express Financial Advisors Inc., a wholly-owned subsidiary of AEFC.

Portfolio manager

David Bayer joined AEFC in 1992 and became portfolio manager of this Fund in
July 1994. He previously held the position of senior analyst. Prior to joining
AEFC, he had been an analyst with Montgomery Securities.

Alternative purchase arrangements

The Fund offers its shares in three classes. Class A shares are subject to a
sales charge at the time of purchase. Class B shares are subject to a contingent
deferred sales charge (CDSC) on redemptions made within six years of purchase
and an annual distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors.

Sales charge and Fund expenses

Shareholder transaction expenses are incurred directly by an investor on the
purchase or redemption of Fund shares. Fund operating expenses are paid out of
Fund assets for each class of shares. Operating expenses are reflected in the
Fund's daily share price and dividends, and are not charged directly to
shareholder accounts.

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PAGE 6
Shareholder transaction expenses
Class A Class B Class Y
Maximum sales charge on purchases*
(as a percentage of offering price).......5% 0% 0%
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase price)....0% 5% 0%

Annual Fund operating expenses (as a percentage of average daily net assets):

Class A Class B Class Y
Management fee 0.60% 0.60% 0.60%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses** 0.44% 0.45% 0.25%
Total 1.04% 1.80% 0.85%

*This charge may be reduced depending on your total investments in
IDS funds. See "Reductions of the sales charge."

**Other expenses include an administrative services fee, a shareholder services
fee for Class A and Class B, a transfer agency fee and other nonadvisory
expenses.

Example: Suppose for each year for the next 10 years, Fund expenses are as above
and annual return is 5%. If you sold your shares at the end of the following
years, for each $1,000 invested, you would pay total expenses of:

1 year 3 years 5 years 10 years
Class A $ 60 $ 81 $105 $ 171
Class B $ 68 $ 97 $118 $ 192 **
Class B* $ 18 $ 57 $ 98 $ 192 **
Class Y $ 9 $ 27 $ 47 $ 105

*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.

This example does not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown. Because Class B pays annual
distribution (12b-1) fees, long-term shareholders of Class B may indirectly pay
an equivalent of more than a 6.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.

<PAGE>

PAGE 7
Performance

Financial highlights

Fiscal period ended March 31,
Per share income and capital changes*

Class B

1997 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 (.18) (.18) (.05) (.14) (.11) (.03) .15 .01 (.02) (.01)
(loss)
Net gains (losses) .52 5.21 .71 .83 .61 2.35 2.01 2.43 .83 (2.71)
(both realized and
unrealized)

Total from investment .34 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 (1.13) (1.10) (.15) (1.42) (.75) (.67) (.69) -- -- (.40)
realized gains

Total distributions (1.13) (1.10) (.15) (1.42) (.75) (.68) (.85) -- -- (.40)

Net asset value, $18.04 $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
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988

Net assets, end of period $737 $710 $776 $652 $582 $473 $352 $283 $246 $261
(in millions)

Ratio of expenses to 1.80% 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) (.91%) (.77%) (.41%) (.99%) (.82%) (.27%) 1.17% .14% (.17%) (.12%)
to average daily net assets

Portfolio turnover rate 80% 101% 111% 55% 49% 52% 64% 33% 48% 39%
(excluding short-term
securities)

Total return** 1.2% 34.1% 4.7% 4.1% 3.2% 16.8% 18.9% 24.4% 8.8% (21.9%)

Average brokerage $.0245 -- -- -- -- -- -- -- -- --
commission rate##
</TABLE>

*For a share outstanding throughout the period.
Rounded to the nearest cent.
**Total return does not reflect payment of a sales
charge.
#Effective fiscal year 1996, 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 per
share for security trades on which commissions are
charged. The comparability of this information may be
affected by the fact that commission rates per share
vary significantly among foreign countries.

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PAGE 8
Fiscal period ended March 31,
Per share income and capital changes*
<TABLE>
<CAPTION>

Class A Class Y
1997 1996 1995** 1997 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 (loss) (.03) -- .01 -- .03 --

Net gains (losses) (both .51 5.18 .03 .37 5.34 (.30)
realized and unrealized)

Total from investment .48 5.18 .04 .37 5.37 (.30)
operations
Less distributions:

Distributions from (1.13) (1.10) -- (1.13) (1.10) --
realized gains

Net asset value, $18.34 $18.99 $14.91 $18.40 $19.16 $14.89
end of period

Ratios/supplemental data

Class A Class Y
1997 1996 1995** 1997 1996 1995**

Net assets, end of period $386 $348 $7 $-- $-- $--
(in millions)

Ratio of expenses to 1.04% 1.07% 1.18%++ .85% .92% --%+
average daily net assets#

Ratio of net income (loss) (15%) -- 1.26%++ .03% .12% --%+
to average daily net assets

Portfolio turnover rate 80% 101% 111% 80% 101% 111%
(excluding short-term
securities)

Total return*** 2.0% 35.1% .04% 2.2% 35.3% (2.0%)

Average brokerage $.0245 -- -- $.0245 -- --
commission rate##
</TABLE>

*For a share outstanding throughout the period.
Rounded to the nearest cent.
**Inception date was March 20, 1995.
***Total return does not reflect payment of a sales
charge.
+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.
#Effective fiscal year 1996, 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 per
share for security trades on which commissions are
charged. The comparability of this information may be
affected by the fact that commission rates per share
vary significantly among foreign countries.

The information in these tables has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditors' report and additional
information about the performance of the Fund are contained in the Fund's annual
report which, if not included with this prospectus, may be obtained without
charge.

<PAGE>

PAGE 9
Total returns

Total return is the sum of all of your returns for a given period, assuming you
reinvest all distributions. It is calculated by taking the total value of shares
you own at the end of the period (including shares acquired by reinvestment),
less the price of shares you purchased at the beginning of the period.

Average annual total return is the annually compounded rate of return over a
given time period (usually two or more years). It is the total return for the
period converted to an equivalent annual figure.

Average annual total returns as of March 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
Strategy Aggressive:
Class A -3.10% 14.35% -- --
Class B -2.61% -- 8.70% 8.41%
Class Y 2.18% 16.22% -- --

S&P 500 19.81% 25.67%** 16.38% 13.35%

Lipper Small
Co. Growth
Fund Index -1.94% 13.62%** 11.78% 10.05%

*Inception date was March 20, 1995.
**Measurment period started April 1, 1995.

Cumulative total returns as of March 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
Strategy Aggressive:
Class A -3.10% 31.35% -- --
Class B -2.61% -- 51.76% 124.46%
Class Y 2.18% 35.72% -- --

S&P 500 19.81% 58.03%** 113.55% 250.43%

Lipper Small
Co. Growth
Fund Index -1.94% 29.10%** 74.49% 160.47%

*Inception date was March 20, 1995.
**Measurment period started April 1, 1995.

These examples show total returns from hypothetical investments in Class A,
Class B and Class Y shares of the Fund. These returns are compared to those of
popular indexes for the same periods. The performance of Class A and Class Y
will vary from the performance of Class B based on differences in sales charges
and fees. March 20, 1995 was the inception date for Class A and Class Y. Past

<PAGE>

PAGE 10

performance for Class Y for the periods prior to March 20, 1995 may be
calculated based on the performance of Class A, adjusted to reflect differences
in sales charges although not for other differences in expenses.

For purposes of calculation, information about the Fund assumes:
o a sales charge of 5% for Class A shares
o redemption at the end of each period and deduction of the
applicable contingent deferred sales charge for Class B shares
o no sales charge for Class Y shares
o no adjustments for taxes an investor may have paid on the
reinvested income and capital gains
o a period of widely fluctuating securities prices. Returns
shown should not be considered a representation of the Fund's
future performance.

Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of common stocks,
is frequently used as a general measure of market performance. However, the S&P
500 companies are generally larger than those in which the Fund invests. The
index reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.

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

Investment policies and risks

The Fund invests primarily in securities of companies the investment manager
expects to grow at a rate faster than the average of the companies that make up
the S&P 500 Stock Index. Under normal market conditions, 65% of its total assets
will be invested in equity securities. The Fund may invest in preferred stocks,
convertible securities, debt securities, foreign investments, derivative
instruments and money market instruments.

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

Facts about investments and their risks

Common stocks: Stock prices are subject to market fluctuations. Stocks of
larger, established companies that pay dividends may be less volatile than the
stock market as a whole. Stocks of smaller companies (defined as having market
capitalization of $1 billion or less) may be subject to more abrupt or erratic
price movements than large company stock. Also, small companies often have
limited product lines, smaller markets or fewer financial resources. Therefore,
some of the securities in which the Fund invests involve substantial risk and
may be considered speculative.

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PAGE 11
Preferred stocks: If a company earns a profit, it generally must pay its
preferred stockholders a dividend at a pre-established rate.

Convertible securities: These securities generally are preferred stocks or bonds
that can be exchanged for other securities, usually common stock, at prestated
prices. When the trading price of the common stock makes the exchange likely,
convertible securities trade more like common stock.

Debt securities: The price of bonds generally falls as interest rates increase,
and rises as interest rates decrease. The price of bonds also fluctuates if the
credit rating is upgraded or downgraded. The price of bonds below investment
grade may react more to the ability of the issuing company to pay interest and
principal when due than to changes in interest rates. These bonds have greater
price fluctuations and are more likely to experience a default. The Fund may not
invest in debt securities rated lower than B by Moody's Investors Service, Inc.
or by Standard & Poor's Corporation or in bonds of comparable quality in the
judgment of the portfolio manager. Debt securities rated BB or B are considered
below investment grade. The Fund will not invest more than 5% of its net assets
in bonds rated BB or B, or in unrated bonds of equivalent quality. Securities
that are subsequently downgraded in quality may continue to be held by the Fund
and will be sold only when the investment manager believes it is advantageous to
do so.

Foreign investments: Securities of foreign companies and governments may be
traded in the United States, but often they are traded only on foreign markets.
Frequently, there is less information about foreign companies and less
government supervision of foreign markets. Foreign investments are subject to
political and economic risks of the countries in which the investments are made,
including the possibility of seizure or nationalization of companies, imposition
of withholding taxes on income, establishment of exchange controls or adoption
of other restrictions that might affect an investment adversely. If an
investment is made in a foreign market, the local currency may be purchased
using a forward contract in which the price of the foreign currency in U.S.
dollars is established on the date the trade is made, but delivery of the
currency is not made until the securities are received. As long as the Fund
holds foreign currencies or securities valued in foreign currencies, the value
of those assets will be affected by changes in the value of the currencies
relative to the U.S. dollar. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction. The Fund may
invest up to 25% of its total assets in foreign investments.

<PAGE>

PAGE 12

reserves while remaining fully invested, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs or to
pursue higher investment returns. Derivative instruments are characterized by
requiring little or no initial payment and a daily change in price based on or
derived from a security, a currency, a group of securities or currencies, or an
index. A number of strategies or combination of instruments can be used to
achieve the desired investment performance characteristics. A small change in
the value of the underlying security, currency or index will cause a sizable
gain or loss in the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance characteristics
very quickly and at lower costs. Risks include losses of premiums, rapid changes
in prices, defaults by other parties and inability to close such instruments.
The Fund will use derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding those
securities and currencies permitted under the investment policies. The Fund will
designate cash or appropriate liquid assets to cover its portfolio obligations.
No more than 5% of the Fund's net assets can be used at any one time for good
faith deposits on futures and premiums for options on futures that do not offset
existing investment positions. This does not, however, limit the portion of the
Fund's assets at risk to 5%. The Fund is not limited as to the percentage of its
assets that may be invested in permissible investments, including derivatives,
except as otherwise explicitly provided in this prospectus or the SAI. For
descriptions of these and other types of derivative instruments, see the
Appendix to this prospectus and the SAI.

Securities and other instruments that are illiquid: A security or other
instrument is illiquid if it cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. Securities and instruments, however, can be
sold in private sales, and many may be sold to other institutions and qualified
buyers or on foreign markets. The portfolio manager will follow guidelines
established by the board and consider relevant factors such as the nature of the
security and the number of likely buyers when determining whether a security is
illiquid. No more than 10% of the Fund's net assets will be held in securities
and other instruments that are illiquid.

Money market instruments: Short-term debt securities rated in the top two grades
or the equivalent are used to meet daily cash needs and at various times to hold
assets until better investment opportunities arise. Generally, less than 25% of
the Fund's total assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that amount for a
limited period of time.

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

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PAGE 13
Lending portfolio securities: The Fund may lend its securities to earn income so
long as borrowers provide collateral equal to the market value of the loans. The
risks are that borrowers will not provide collateral when required or return
securities when due. Unless a majority of the outstanding voting securities
approve otherwise, loans may not exceed 30% of the Fund's net assets.

Alternative investment option

In the future, the board of the Fund may determine for operating efficiencies to
use a master/feeder structure. Under that structure, the Fund's assets would be
invested in an investment company with the same goal as the Fund, rather than
invested directly in a portfolio of securities.

Valuing Fund shares

The public offering price is the net asset value (NAV) adjusted for the sales
charge for Class A. It is the NAV for Class B and Class Y.

The NAV is the value of a single Fund share. The NAV usually changes daily, and
is calculated at the close of business, normally 3 p.m. Central time, each
business day (any day the New York Stock Exchange is open).

To establish the net assets, all securities are valued as of the close of each
business day. In valuing assets:

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

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

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

How to purchase, exchange or redeem shares

Alternative purchase arrangements

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

<PAGE>

PAGE 14
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales charge and
distribution
(12b-1) fee Service fee Other information

Class A Maximum initial 0.175% of average Initial sales charge
sales charge of daily net assets waived or reduced
5%; no 12b-1 fee for certain purchases

Class B No initial sales 0.175% of average Shares convert to
charge; maximum CDSC daily net assets Class A after eight
of 5% declines to 0% years; CDSC waived in
after six years; 12b-1 certain circumstances
fee of 0.75% of average
daily net assets

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

Conversion of Class B shares to Class A shares - Eight calendar years after
Class B shares are purchased, Class B shares will convert to Class A shares and
will no longer be subject to a distribution fee. The conversion will be on the
basis of relative net asset values of the two classes, without the imposition of
any sales charge. Class B shares purchased through reinvested dividends and
distributions will convert to Class A shares in the same pro rata portion as
other Class B shares.

Considerations in determining whether to purchase Class A or Class B shares -
You should consider the information below in determining whether to purchase
Class A or Class B shares. The distribution fee (included in "Ongoing expenses")
and sales charges are structured so that you will have approximately the same
total return at the end of eight years regardless of which class you chose.

Sales charges on purchase or redemption

If you purchase Class A If you purchase Class B
shares shares

o You will not have all o All of your money is
of your purchase price invested in shares of
invested. Part of your stock. However, you will
purchase price will go pay a sales charge if you
to pay the sales charge. redeem your shares within
You will not pay a sales six years of purchase.
charge when you redeem
your shares.

o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.

<PAGE>

PAGE 15
If your investments in IDS funds that are subject to a sales charge total
$250,000 or more, you are better off paying the reduced sales charge in Class A
than paying the higher fees in Class B. If you qualify for a waiver of the sales
charge, you should purchase Class A shares.

Ongoing expenses

If you purchase Class A If you purchase Class B
shares shares

o Your shares will have o The distribution and
a lower expense ratio transfer agency fees for
than Class B shares Class B will cause your
because Class A does not shares to have a higher
pay a distribution fee expense ratio and to pay
and the transfer agency lower dividends than
fee for Class A is lower Class A shares. After
than the fee for Class B. eight years, Class B
As a result, Class A shares shares will convert to
will pay higher dividends Class A shares and you
than Class B shares. will no longer be
subject to higher fees.

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

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

o Qualified employee benefit plans* if the plan:
- uses a daily transfer recordkeeping service offering
participants daily access to IDS funds and has
- at least $10 million in plan assets or
- 500 or more participants; or
- does not use daily transfer recordkeeping and has
- at least $3 million invested in funds of the IDS MUTUAL FUND GROUP or
- 500 or more participants.

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

<PAGE>

PAGE 16
o Nonqualified deferred compensation plans* whose participants are
included in a qualified employee benefit plan described above.

* Eligibility must be determined in advance by American Express Financial
Advisors. To do so, contact your financial advisor.

How to purchase shares

If you're investing in this Fund for the first time, you'll need to set up an
account. Your financial advisor will help you fill out and submit an
application. Once your account is set up, you can choose among several
convenient ways to invest.

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

When you purchase shares for a new or existing account, the price you pay per
share is determined at the close of business on the day your investment is
received and accepted at the Minneapolis headquarters.

Purchase policies:

o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be included
in your account that day and to receive that day's share price.
Otherwise, your purchase will be processed the next business day and you
will pay the next day's share price.

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

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

o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.

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

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

o The Fund reserves the right to reject any application for any
reason.

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

<PAGE>

PAGE 17
Three ways to invest
<TABLE>
<CAPTION>
<S> <C> <C>
1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Additional
to: investments: $ 100
American Express Financial Advisors Inc. Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none

Your financial advisor will help you with this process.

2
By scheduled Contact your financial advisor Minimum amounts
investment plan to set up one of the following Initial investment: $100
scheduled plans: Additional
investments: $100/mo.
o automatic payroll deduction Account balances: none
(on active plans of
o bank authorization monthly payments)

o direct deposit of
Social Security check

o other plan approved by the Fund

3
By wire If you have an established account, If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the Fund, less
Routing No. 091000019 any costs the Fund or AEFC
Minneapolis, MN incurs, will be returned
Attn: Domestic Wire Dept. promptly.

Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).
</TABLE>

*If your account balance falls below $300, you will be asked in writing to bring
it up to $300 or establish a scheduled investment plan. If you don't do so
within 30 days, your shares can be redeemed and the proceeds mailed to you.

How to exchange shares

You can exchange your shares of the Fund at no charge for shares of the same
class of any other publicly offered fund in the IDS MUTUAL FUND GROUP available
in your state. Exchanges into IDS Tax-Free Money Fund must be made from Class A
shares. For complete information, including fees and expenses, read the
prospectus carefully before exchanging into a new fund.

If your exchange request arrives at the Minneapolis headquarters before the
close of business, your shares will be redeemed at the net asset value set for
that day. The proceeds will be used to purchase new fund shares the same day.
Otherwise, your exchange will take place the next business day at that day's net
asset value.

<PAGE>

PAGE 18

For tax purposes, an exchange represents a redemption and purchase and may
result in a gain or loss. However, you cannot use the sales charge imposed on
the purchase of Class A shares to create or increase a tax loss (or reduce a
taxable gain) by exchanging from the Fund within 91 days of your purchase. For
further explanation, see the SAI.

How to redeem shares

You can redeem your shares at any time. American Express Shareholder Service
will mail payment within seven days after receiving your request.

When you redeem shares, the amount you receive may be more or less than the
amount you invested. Your shares will be redeemed at net asset value, minus any
applicable sales charge, at the close of business on the day your request is
accepted at the Minneapolis headquarters. If your request arrives after the
close of business, the price per share will be the net asset value, minus any
applicable sales charge, at the close of business on the next business day.

A redemption is a taxable transaction. If your proceeds from your redemption are
more or less than the cost of your shares, you will have a gain or loss, which
can affect your tax liability. Redeeming shares held in an IRA or qualified
retirement account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.
<TABLE>
<CAPTION>

Two ways to request an exchange or redemption of shares
<S> <C>
1
By letter Include in your letter:
o the name of the fund(s)
o the class of shares to be exchanged or redeemed
o your account number(s) (for exchanges, both funds must be registered in the same
ownership)
o your Taxpayer Identification Number (TIN)
o the dollar amount or number of shares you want to exchange or redeem
o signature of all registered account owners
o for redemptions, indicate how you want your money delivered to you
o any paper certificates of shares you hold

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

Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402

<PAGE>

PAGE 19

2
By phone
American Express Financial o The Fund and AEFC will honor any telephone exchange or redemption request believed to be
Advisors Telephone authentic and will use reasonable procedures to confirm that they are. This includes
Transaction Service: or asking identifying questions and tape recording calls. If reasonable procedures are not
800-437-3133 or followed, the Fund or AEFC will be liable for any loss resulting from fraudulent requests.
612-671-3800 o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified
retirement accounts unless you request
these privileges NOT apply by writing
American Express Shareholder Service. Each
registered owner must sign the request.
o AEFC answers phone requests promptly, but
you may experience delays when call volume
is high. If you are unable to get through,
use mail procedure as an alternative.
o Acting on your instructions, your financial
advisor may conduct telephone transactions
on your behalf.
o Phone privileges may be modified or discontinued at any time.

Minimum amount
Redemption: $100

Maximum amount
Redemption: $50,000
</TABLE>

Exchange policies:

o You may make up to three exchanges within any 30-day period, with each limited
to $300,000. These limits do not apply to scheduled exchange programs and
certain employee benefit plans or other arrangements through which one
shareholder represents the interests of several. Exceptions may be allowed with
pre-approval of the Fund.

o Exchanges must be made into the same class of shares of the new
fund.

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

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

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

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

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

<PAGE>

PAGE 20
Redemption policies:

o A "change of mind" option allows you to change your mind after requesting a
redemption and to use all or part of the proceeds to purchase new shares in the
same account from which you redeemed. If you reinvest in Class A, you will
purchase the new shares at net asset value rather than the offering price on the
date of a new purchase. If you reinvest in Class B, any CDSC you paid on the
amount you are reinvesting also will be reinvested. To take advantage of this
option, send a written request within 30 days of the date your redemption
request was received. Include your account number and mention this option. This
privilege may be limited or withdrawn at any time, and it may have tax
consequences.

o A telephone redemption request will not be allowed within 30 days of a
phoned-in address change.

Important: If you request a redemption of shares you recently purchased by a
check or money order that is not guaranteed, the Fund will wait for your check
to clear. It may take up to 10 days from the date of purchase before a check is
mailed to you. (A check may be mailed earlier if your bank provides evidence
satisfactory to the Fund and AEFC that your check has cleared.)
<TABLE>
<CAPTION>

Three ways to receive payment when you redeem shares
<S> <C>
1
By regular or express mail o Mailed to the address on record
o Payable to names listed on the account

NOTE: You will be charged a fee if you
request express mail delivery.

2
By wire o Minimum wire redemption: $1,000
o Request that money be wired to your bank
o Bank account must be in the same
ownership as the IDS fund account

NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.

3
By scheduled payout plan o Minimum payment: $50
o Contact your financial
advisor or American
Express Shareholder
Service to set up regular
payments to you on a
monthly, bimonthly,
quarterly, semiannual or
annual basis

o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges

</TABLE>

<PAGE>

PAGE 21
Reductions and waivers of the sales charge
Class A - initial sales charge alternative

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

Total investment Sales charge as a
percent of:*

Public Net
offering amount
price invested
Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

* To calculate the actual sales charge on an investment greater than $50,000 and
less than $1,000,000, amounts for each applicable increment must be totaled. See
the SAI.

Reductions of the sales charge on Class A shares

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

o the amount you are investing in this Fund now,

o the amount of your existing investment in this Fund, if any, and

o the amount you and your primary household group are investing or have in other
funds in the IDS MUTUAL FUND GROUP that carry a sales charge. (The primary
household group consists of accounts in any ownership for spouses or domestic
partners and their unmarried children under 21. Domestic partners are
individuals who maintain a shared primary residence and have joint property or
other insurable interests.)

Other policies that affect your sales charge:

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

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

<PAGE>

PAGE 22
o If you intend to invest $1 million over a period of 13 months, you can reduce
the sales charges in Class A by filing a letter of intent.

For more details, see the SAI.

Waivers of the sales charge for Class A shares

Sales charges do not apply to:

o Current or retired board members, officers or employees of the Fund or AEFC or
its subsidiaries, their spouses and unmarried children under 21.

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

o Investors who have a business relationship with a newly associated financial
advisor who joined AEFA from another investment firm provided that (1) the
purchase is made within six months of the advisor's appointment date with AEFA,
(2) the purchase is made with proceeds of a redemption of shares that were
sponsored by the financial advisor's previous broker dealer and, (3) the
proceeds must be the result of a redemption of an equal or greater value where a
sales load was previously assessed.

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

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

o Shareholders who have at least $1 million invested in funds of the IDS MUTUAL
FUND GROUP. If the investment is redeemed in the first year after purchase, a
CDSC of 1% will be charged on the redemption. The CDSC will be waived only in
the circumstances described for waivers for Class B shares.

o Purchases made within 30 days after a redemption of shares (up to the amount
redeemed):
- of a product distributed by American Express Financial
Advisors in a qualified plan subject to a deferred sales
charge or
- in a qualified plan where American Express Trust Company has a
recordkeeping, trustee, investment management or investment servicing
relationship.

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

<PAGE>

PAGE 23

o Purchases made with dividend or capital gain distributions from the same class
of another fund in the IDS MUTUAL FUND GROUP that has a sales charge.

o Purchases made through American Express Strategic Portfolio Service (total
amount of all investments made in the Strategic Portfolio Service must be at
least $50,000).

o Purchases made under the University of Texas System ORP.

*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.

Class B - contingent deferred sales charge alternative

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

If a redemption is The percentage rate
made during the for the CDSC is:

First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%

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

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

<PAGE>

PAGE 24
Because the CDSC is imposed only on redemptions that reduce the total of your
purchase payments, you never have to pay a CDSC on any amount you redeem that
represents appreciation in the value of your shares, income earned by your
shares or capital gains. In addition, when determining the rate of any CDSC,
your redemption will be made from the oldest purchase payment you made. Of
course, once a purchase payment is considered to have been redeemed, the next
amount redeemed is the next oldest purchase payment. By redeeming the oldest
purchase payments first, lower CDSCs are imposed than would otherwise be the
case.

Waivers of the contingent deferred sales charge

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

o In the event of the shareholder's death,
o Purchased by any board member, officer or employee of a fund or
AEFC or its subsidiaries,
o Held in a trusteed employee benefit plan, o Held in IRAs or certain qualified
plans for which American Express Trust Company acts as custodian, such as Keogh
plans, tax-sheltered custodial accounts or corporate pension plans, provided
that the shareholder is:
- at least 59-1/2 years old, and
- taking a retirement distribution (if the redemption is part of a
transfer to an IRA or qualified plan in a product distributed by
American Express Financial Advisors, or a custodian-to-custodian
transfer to a product not distributed by American Express Financial
Advisors, the CDSC will not be waived), or
- redeeming under an approved substantially equal periodic payment
arrangement.

For investors in Class A shares who have over $1 million invested in one year,
the 1% CDSC on redemption of those shares will be waived in the same
circumstances described for Class B.

Special shareholder services

Services

To help you track and evaluate the performance of your investments, AEFC
provides these services:

Quarterly statements listing all of your holdings and transactions during the
previous three months.

Yearly tax statements featuring average-cost-basis reporting of capital gains or
losses if you redeem your shares along with distribution information which
simplifies tax calculations.

<PAGE>

PAGE 25
A personalized mutual fund progress report detailing returns on your initial
investment and cash-flow activity in your account. It calculates a total return
to reflect your individual history in owning Fund shares. This report is
available from your financial advisor.

Quick telephone reference

American Express Financial Advisors 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

TTY Service
For the hearing impaired
800-846-4852

American Express Financial Advisors Easy Access Line Automated account
information (TouchToneR phones only), including current Fund prices and
performance, account values and recent account transactions
800-272-4445

Distributions and taxes

As a shareholder you are entitled to your share of the Fund's net income and any
net gains realized on its investments. The Fund distributes dividends and
capital gain distributions to qualify as a regulated investment company and to
avoid paying corporate income and excise taxes. Dividend and capital gain
distributions will have tax consequences you should know about.

Dividend and capital gain distributions

The Fund's net investment income from dividends and interest is distributed to
you by the end of the calendar year as dividends. Short-term capital gains are
included in net investment income. Long-term capital gains are realized whenever
a security held for more than one year is sold for a higher price than was paid
for it. The Fund will offset any net realized capital gains by any available
capital loss carryovers. Net realized long-term capital gains, if any, are
distributed at the end of the calendar year as capital gain distributions.
Before they are distributed, both net investment income and net long-term
capital gains are included in the value of each share. After they are
distributed, the value of each share drops by the per-share amount of the
distribution. (If your distributions are reinvested, the total value of your
holdings will not change.)

<PAGE>

PAGE 26

Dividends for each class will be calculated at the same time, in the same manner
and will be the same amount prior to deduction of expenses. Expenses
attributable solely to a class of shares will be paid exclusively by that class.

Reinvestments

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

o you request the Fund in writing or by phone to pay
distributions to you in cash, or

o you direct the Fund to invest your distributions in the same class of
another publicly available IDS fund for which you've previously opened
an account.

The reinvestment price is the net asset value at close of business on the day
the distribution is paid. (Your quarterly statement will confirm the amount
invested and the number of shares purchased.)

If you choose cash distributions, you will receive only those declared after
your request has been processed.

If the U.S. Postal Service cannot deliver the checks for the cash distributions,
we will reinvest the checks into your account at the then-current net asset
value and make future distributions in the form of additional shares.

Taxes

Distributions are subject to federal income tax and also may be subject to state
and local taxes. Distributions are taxable in the year the Fund declares them
regardless of whether you take them in cash or reinvest them.

Each January, you will receive a tax statement showing the kinds and total
amount of all distributions you received during the previous year. You must
report distributions on your tax returns, even if they are reinvested in
additional shares.

Buying a dividend creates a tax liability. This means buying shares shortly
before a net investment income or a capital gain distribution. You pay the full
pre-distribution price for the shares, then receive a portion of your investment
back as a distribution, which is taxable.

Redemptions and exchanges subject you to a tax on any capital gain. If you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be either short term (for shares held for one year or less) or long term (for
shares held for more than one year).

<PAGE>

PAGE 27
Your Taxpayer Identification Number (TIN) is important. As with any financial
account you open, you must list your current and correct Taxpayer Identification
Number (TIN) -- either your Social Security or Employer Identification number.
The TIN must be certified under penalties of perjury on your application when
you open an account at AEFC.

If you don't provide the TIN, or the TIN you report is incorrect, you could be
subject to backup withholding of 31% of taxable distributions and proceeds from
certain sales and exchanges. You also could be subject to further penalties,
such as:

o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information

You also could be subject to backup withholding because you failed to report
interest or dividends on your tax return as required.
<TABLE>
<CAPTION>
<S> <C>
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:

Individual or joint account The individual or individuals
listed on the account

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

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

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

Sole proprietorship The owner

Partnership The partnership

Corporate The corporation

Association, club or The organization
tax-exempt organization

</TABLE>

<PAGE>

PAGE 28
For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors office for federal Form W-9, "Request for Taxpayer
Identification Number and Certification."

Important: This information is a brief and selective summary of certain federal
tax rules that apply to this Fund. Tax matters are highly individual and
complex, and you should consult a qualified tax advisor about your personal
situation.

How the Fund is organized

IDS Strategy Fund, Inc. currently is composed of two funds, each issuing its own
series of capital stock: IDS Equity Value and IDS Strategy Aggressive Fund. Each
fund is owned by its shareholders. Each fund issues shares in three classes -
Class A, Class B and Class Y. Each class has different sales arrangements and
bears different expenses. Each class represents interests in the assets of a
fund. Par value is one cent per share. Both full and fractional shares can be
issued.

The shares of each fund making up IDS Strategy Fund, Inc. represent an interest
in that fund's assets only (and profits or losses), and, in the event of
liquidation, each share of a fund would have the same rights to dividends and
assets as every other share of that fund.

The Fund no longer issues stock certificates.

Voting rights

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

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

Shareholder meetings

The Fund does not hold annual shareholder meetings. However, the board members
may call meetings at their discretion, or on demand by holders of 10% or more of
the outstanding shares, to elect or remove board members.

<PAGE>

PAGE 29
Board members and officers

Shareholders elect a board that oversees the operations of the Fund and chooses
its officers. Its officers are responsible for day-to-day business decisions
based on policies set by the board. The board has named an executive committee
that has authority to act on its behalf between meetings. Board members and
officers serve 47 IDS and IDS Life funds and 15 Master Trust portfolios, except
for William H. Dudley, who does not serve the nine IDS Life funds.

Board members and officers of the Fund

President and interested board member

William R. Pearce
President and director, Board Services Corporation (provides administrative
services to boards including the boards of the IDS and IDS Life funds and Master
Trust portfolios).

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 Reader's Digest
Association, Inc.

Alan K. Simpson
Former United States senator for Wyoming.

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

<PAGE>

PAGE 30
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
Senior vice president, AEFC. Vice president - Investments for the Fund.

Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the Fund.

Other officer

Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services Corporation.
Vice president, general counsel and secretary for the Fund.

Refer to the SAI for the board members' and officers' biographies.

Investment manager

The Fund pays AEFC for managing its assets. Under its Investment Management
Services Agreement, AEFC is paid a fee for these services based on the average
daily net assets of the Fund, as follows:

Assets Annual rate
(billions) at each asset level

First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500

For the fiscal year ended March 31, 1997, the Fund paid AEFC a total investment
management fee of 0.60% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory expenses.

Administrator and transfer agent

<PAGE>

PAGE 31

The second agreement, the Transfer Agency Agreement, has an annual fee per
shareholder account as follows:

o Class A $15
o Class B $16
o Class Y $15

Distributor

The Fund has an exclusive distribution agreement with American Express Financial
Advisors, a wholly-owned subsidiary of AEFC. Financial advisors representing
American Express Financial Advisors provide information to investors about
individual investment programs, the Fund and its operations, new account
applications, and exchange and redemption requests. The cost of these services
is paid partially by the Fund's sales charges.

Persons who buy Class A shares pay a sales charge at the time of purchase.
Persons who buy Class B shares are subject to a contingent deferred sales charge
on a redemption in the first six years and pay an asset-based sales charge (also
known as a 12b-1 fee) of 0.75% of the Fund's average daily net assets. Class Y
shares are sold without a sales charge and without an asset-based sales charge.

Financial advisors may receive different compensation for selling Class A, Class
B and Class Y shares. Portions of the sales charge also may be paid to
securities dealers who have sold the Fund's shares or to banks and other
financial institutions. The amounts of those payments range from 0.8% to 4% of
the Fund's offering price depending on the monthly sales volume.

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

Total expenses paid by the Fund's Class A shares for the fiscal year ended March
31, 1997, were 1.04% of its average daily net assets. Expenses for Class B and
Class Y were 1.80% and 0.85%, respectively.

About American Express Financial Corporation

General information

The AEFC family of companies offers not only mutual funds but also insurance,
annuities, investment certificates and a broad range of financial management
services.

<PAGE>

PAGE 32

Besides managing investments for all funds in the IDS MUTUAL FUND GROUP, AEFC
also manages investments for itself and its subsidiaries, IDS Certificate
Company and IDS Life Insurance Company. Total assets under management on March
31, 1997 were more than $149 billion.

American Express Financial Advisors serves individuals and businesses through
its nationwide network of more than 178 offices and more than 8,426 advisors.

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

AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is a
wholly-owned subsidiary of American Express Company (American Express), a
financial services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285. The Fund may pay brokerage commissions to
broker-dealer affiliates of AEFC.

<PAGE>

PAGE 33
Appendix

Descriptions of derivative instruments

What follows are brief descriptions of derivative instruments the Fund may use.
At various times the Fund may use some or all of these instruments and is not
limited to these instruments. It may use other similar types of instruments if
they are consistent with the Fund's investment goal and policies. For more
information on these instruments, see the SAI.

Options and futures contracts. An option is an agreement to buy or sell an
instrument at a set price during a certain period of time. A futures contract is
an agreement to buy or sell an instrument for a set price on a future date. The
Fund may buy and sell options and futures contracts to manage its exposure to
changing interest rates, security prices and currency exchange rates. Options
and futures may be used to hedge the Fund's investments against price
fluctuations or to increase market exposure.

Indexed securities. The value of indexed securities is linked to currencies,
interest rates, commodities, indexes or other financial indicators. Most indexed
securities are short- to intermediate- term fixed income securities whose values
at maturity or interest rates rise or fall according to the change in one or
more specified underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.

Structured products. Structured products are over-the-counter financial
instruments created specifically to meet the needs of one or a small number of
investors. The instrument may consist of a warrant, an option or a forward
contract embedded in a note or any of a wide variety of debt, equity and/or
currency combinations. Risks of structured products include the inability to
close such instruments, rapid changes in the market and defaults by other
parties.

<PAGE>

PAGE 34
IDS Equity Value Fund

Prospectus
May 30, 1997

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

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

Please note that the Fund:

o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goals

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
800-862-7919
TTY: 800-846-4852

<PAGE>

PAGE 35
Table of contents

The Fund in brief
Goal
Investment policies and risks
Manager and distributor
Portfolio manager
Alternative purchase arrangements

Sales charge and Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Alternative investment option
Valuing Fund shares

How to purchase, exchange or redeem shares Alternative purchase arrangements
How to purchase shares How to exchange shares How to redeem shares
Reductions and waivers of the sales charge

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Fund is organized
Shares
Voting rights
Shareholder meetings
Board members and officers
Investment manager
Administrator and transfer agent
Distributor

About American Express Financial Corporation
General information

Appendix

Descriptions of derivative instruments

<PAGE>

PAGE 36
The Fund in brief

Goal

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

Investment policies and risks

The Fund is a diversified mutual fund that invests primarily in equity
securities that the investment manager believes are undervalued and therefore
have intrinsic investment value. Some of the Fund's investments may be
considered speculative and involve additional investment risk. For further
information, refer to the later section in the prospectus titled "Investment
policies and risks."

Manager and distributor

Portfolio manager

Tom Medcalf joined AEFC in 1977 and serves as vice president and senior
portfolio manager. He has managed this Fund since 1989 and also serves as
portfolio manager of the equity portion of Balanced Portfolio.

Alternative purchase arrangements

Sales charge and Fund expenses

Shareholder transaction expenses
Class A Class B Class Y
Maximum sales charge on purchases*
(as a percentage of offering price).......5% 0% 0%

<PAGE>

PAGE 37
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase price)....0% 5% 0%

Annual Fund operating expenses (as a percentage of average daily net assets):

Class A Class B Class Y
Management fee 0.50% 0.50% 0.50%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses** 0.39% 0.39% 0.21%
Total 0.89% 1.64% 0.71%

*This charge may be reduced depending on your total investments in
IDS funds. See "Reductions of the sales charge."

**Other expenses include an administrative services fee, a shareholder services
fee for Class A and Class B, a transfer agency fee and other nonadvisory
expenses.

1 year 3 years 5 years 10 years
Class A $59 $77 $ 97 $155
Class B $67 $92 $109 $175 **
Class B* $17 $52 $ 89 $175 **
Class Y $ 7 $23 $ 40 $ 89

*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.

<PAGE>

PAGE 38
Performance

Financial highlights

IDS Equity Value Fund, Inc.

Performance
Financial highlights
<TABLE>
<CAPTION>

Fiscal period ended ended March 31,
Per share income and capital changes*
Class B
1997 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 .21 .18 .19 .18 .19 .22 .26 .29 .27 .27

Net gains (losses) 1.69 2.12 .47 .37 1.18 .98 .48 .51 1.29 (.19)
(both realized
and unrealized)

Total from investment 1.90 2.30 .66 .55 1.37 1.20 .74 .80 1.56 .08
operations

Less distributions:
Dividends from net (.22) (.16) (.19) (.18) (.19) (.22) (.26) (.31) (.27) (.27)
investment income

Distributions from (1.12) (.28) (.43) (.66) (.62) (.30) (.18) (.53) (.59) (.40)
realized gains

Total distributions (1.34) (.44) (.62) (.84) (.81) (.52) (.44) (.84) (.86) (.67)

Net asset value, $11.63 $11.07 $9.21 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26
end of period

Class B
Ratios/supplemental data
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988

Net assets, end of $1,509 $1,296 $1,304 $1,031 $758 $497 $370 $311 $230 $162
period (in millions)

Ratio of expenses to 1.64% 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 to 1.83% 1.71% 2.10% 1.93% 2.15% 2.56% 3.41% 3.61% 3.70% 3.78%
average daily net assets

Portfolio turnover rate 60% 54% 85% 70% 48% 72% 65% 67% 54% 49%
(excluding short-term
securities)

Total return** 17.6% 25.2% 7.7% 5.5% 16.0% 15.0% 10.1% 9.9% 22.2% 1.3%

Average brokerage $.0516 -- -- -- -- -- -- -- -- --
commission rate##

</TABLE>

*For a share outstanding throughout the period. Rounded to the nearest cent.
**Total return does not reflect payment of a sales charge.
#Effective fiscal year 1996, 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 per share for security trades on which commissions
are charged. The comparability of this information may be affected by the fact
that commission rates per share vary significantly among foreign countries.

<PAGE>

PAGE 39
<TABLE>
<CAPTION>

Fiscal period ended March 31,
Per share income and capital changes*
Class A Class Y
1997 1996 1995** 1997 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 .29 .21 .01 .32 .26 --

Net gains 1.70 2.16 .15 1.70 2.14 .03
(both realized
and unrealized)

Total from investment 1.99 2.37 .16 2.02 2.40 .03
operations

Less distributions:
Dividends from net (.31) (.24) (.05) (.33) (.26) (.05)
investment income

Distributions from (1.12) (.28) -- (1.12) (.28) --
realized gains

Total distributions (1.43) (.52) (.05) (1.45) (.54) (.05)

Net asset value, $11.62 $11.06 $9.21 $11.64 $11.07 $9.21
end of period

Class A Class Y
Ratios/supplemental data
1997 1996 1995** 1997 1996 1995**
Net assets, end of $426 $332 $6 $-- $-- $--
period (in millions)

Ratio of expenses to .89% .90% .91%+ .71% .75% --%++
average daily net assets#

Ratio of net income 2.60% 2.74% 2.43%+ 2.78% 2.73% --%++
to average
daily net assets

Portfolio turnover rate 60% 54% 85% 60% 54% 85%
(excluding short-term
securities)

Total return*** 18.5% 26.1% 1.8% 18.7% 26.4% .3%

Average brokerage $.0516 -- -- $.0516 -- --
commission rate##
</TABLE>

*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class A and for Class Y.
***Total return does not reflect payment of a sales charge.
+Adjusted to an annual basis.
++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.
#Effective fiscal year 1996, 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 per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly among
foreign countries.

<PAGE>

PAGE 40
Total returns

Average annual total returns as of March 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
Equity Value:
Class A +12.53% +19.63% --% --%
Class B +13.55% --% +14.06% +12.83%
Class Y +18.67% +22.57% --% --%

S&P 500 +19.81% +25.67%** +16.38% +13.35%

Lipper Growth and
Income Fund Index +16.05% +22.15%** +15.05% +11.99%

*Inception date was March 20, 1995.
**Measurement period started April 1, 1995.

Cumulative total returns as of March 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
Equity Value:
Class A +12.53% +44.18% --% --%
Class B +13.55% --% +93.10% +234.69%
Class Y +18.67% +50.49% --% --%

S&P 500 +19.81% +58.03%** +113.55% +250.43%

Lipper Growth and
Income Fund Index +16.05% +49.22%** +101.58% +210.32%

*Inception date was March 20, 1995.
**Measurement period started April 1, 1995.

<PAGE>

PAGE 41
be calculated based on the performance of Class A, adjusted to reflect
differences in sales charges although not for other differences in expenses.

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

Investment policies and risks

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

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

Facts about investments and their risks

Common stocks: Stock prices are subject to market fluctuations. Stocks of
larger, established companies that pay dividends may be less volatile than the
stock market as a whole. Stocks of smaller companies may be subject to abrupt or
erratic price movements. Also, small companies often have limited product lines,
smaller markets or fewer financial resources. Therefore, some of the securities
in which the Fund invests involve substantial risk and may be considered
speculative.

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

<PAGE>

PAGE 42
Convertible securities: These securities generally are preferred stocks or bonds
that can be exchanged for other securities, usually common stock, at prestated
prices. When the trading price of the common stock makes the exchange likely,
convertible securities trade more like common stock.

Derivative instruments: The portfolio manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns.

<PAGE>

PAGE 43

Derivative instruments are characterized by requiring little or no initial
payment and a daily change in price based on or derived from a security, a
currency, a group of securities or currencies, or an index. A number of
strategies or combination of instruments can be used to achieve the desired
investment performance characteristics. A small change in the value of the
underlying security, currency or index will cause a sizable gain or loss in the
price of the derivative instrument. Derivative instruments allow the portfolio
manager to change the investment performance characteristics very quickly and at
lower costs. Risks include losses of premiums, rapid changes in prices, defaults
by other parties and inability to close such instruments. The Fund will use
derivative instruments only to achieve the same investment performance
characteristics it could achieve by directly holding those securities and
currencies permitted under the investment policies. The Fund will designate cash
or appropriate liquid assets to cover its portfolio obligations. No more than 5%
of the Fund's net assets can be used at any one time for good faith deposits on
futures and premiums for options on futures that do not offset existing
investment positions. This does not, however, limit the portion of the Fund's
assets at risk to 5%. The Fund is not limited as to the percentage of its assets
that may be invested in permissible investments, including derivatives, except
as otherwise explicitly provided in this prospectus or the SAI. For descriptions
of these and other types of derivative instruments, see the Appendix to this
prospectus and the SAI.

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

<PAGE>

PAGE 44
Lending portfolio securities: The Fund may lend its securities to earn income so
long as borrowers provide collateral equal to the market value of the loans. The
risks are that borrowers will not provide collateral when required or return
securities when due. Unless a majority of the outstanding voting securities
approve otherwise, loans may not exceed 30% of the Fund's net assets.

Alternative investment option

Valuing Fund shares

The public offering price is the net asset value (NAV) adjusted for the sales
charge for Class A. It is the NAV for Class B and Class Y.

To establish the net assets, all securities are valued as of the close of each
business day. In valuing assets:

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

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

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

How to purchase, exchange or redeem shares

Alternative purchase arrangements

<PAGE>

PAGE 45
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales charge and
distribution
(12b-1) fee Service fee Other information

Class A Maximum initial 0.175% of average Initial sales charge
sales charge of daily net assets waived or reduced
5%; no 12b-1 fee for certain purchases

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

Sales charges on purchase or redemption

If you purchase Class A If you purchase Class B
shares shares

o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.

<PAGE>

PAGE 46
If your investments in IDS funds that are subject to a sales charge total
$250,000 or more, you are better off paying the reduced sales charge in Class A
than paying the higher fees in Class B. If you qualify for a waiver of the sales
charge, you should purchase Class A shares.

Ongoing expenses

If you purchase Class A If you purchase Class B
shares shares

<PAGE>

PAGE 47
o Nonqualified deferred compensation plans* whose participants are
included in a qualified employee benefit plan described above.

* Eligibility must be determined in advance by American Express Financial
Advisors. To do so, contact your financial advisor.

How to purchase shares

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

Purchase policies:

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

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

o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.

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

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

o The Fund reserves the right to reject any application for any
reason.

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

<PAGE>

PAGE 48
<TABLE>
<CAPTION>

Three ways to invest

<S> <C> <C>
1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Additional
to: investments: $ 100
American Express Financial Advisors Inc. Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none

Your financial advisor will help you with this process.

o direct deposit of
Social Security check

o other plan approved by the Fund

Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).
</TABLE>
*If your account balance falls below $300, you will be asked in writing to bring
it up to $300 or establish a scheduled investment plan. If you don't do so
within 30 days, your shares can be redeemed and the proceeds mailed to you.

How to exchange shares

<PAGE>

PAGE 49
How to redeem shares

You can redeem your shares at any time. American Express Shareholder Service
will mail payment within seven days after receiving your request.

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

Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402

2
By phone
American Express Financial o The Fund and AEFC will honor any telephone exchange
Advisors Telephone or redemption request believed to be authentic and
Transaction Service: will use reasonable procedures to confirm that
800-437-3133 or they are. This includes asking identifying
612-671-3800 questions and tape recording calls. If reasonable
procedures are not followed, the Fund or AEFC
will be liable for any loss resulting from fraudulent
requests.
o Phone exchange and redemption privileges
automatically apply to all accounts except
custodial, corporate or qualified
retirement accounts unless you request
these privileges NOT apply by writing
American Express Shareholder Service. Each
registered owner must sign the request.
o AEFC answers phone requests promptly, but
you may experience delays when call volume
is high. If you are unable to get through,
use mail procedure as an alternative.
o Acting on your instructions, your financial
advisor may conduct telephone transactions
on your behalf.
o Phone privileges may be modified or discontinued at any time.

Minimum amount
Redemption: $100

Maximum amount
Redemption: $50,000

</TABLE>

<PAGE>

PAGE 50
Exchange policies:

o Exchanges must be made into the same class of shares of the new
fund.

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

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

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

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

Redemption policies:

o A telephone redemption request will not be allowed within 30 days of a
phoned-in address change.

<PAGE>

PAGE 51
<TABLE>
<CAPTION>

Three ways to receive payment when you redeem shares
<S> <C>
1
By regular or express mail o Mailed to the address on record
o Payable to names listed on the account

NOTE: You will be charged a fee if you
request express mail delivery.

2
By wire o Minimum wire redemption: $1,000
o Request that money be wired to your bank
o Bank account must be in the same
ownership as the IDS fund account

NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.

o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges
</TABLE>

Reductions and waivers of the sales charge
Class A - initial sales charge alternative

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

Total investment Sales charge as a
percent of:*

Public Net
offering amount
price invested

Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

* To calculate the actual sales charge on an investment greater than $50,000 and
less than $1,000,000, amounts for each applicable increment must be totaled. See
the SAI.

Reductions of the sales charge on Class A shares

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

o the amount you are investing in this Fund now,

o the amount of your existing investment in this Fund, if any, and

<PAGE>

PAGE 52

Other policies that affect your sales charge:

o If you intend to invest $1 million over a period of 13 months, you can reduce
the sales charges in Class A by filing a letter of intent.

For more details, see the SAI.

Waivers of the sales charge for Class A shares

Sales charges do not apply to:

o Current or retired board members, officers or employees of the Fund or AEFC or
its subsidiaries, their spouses and unmarried children under 21.

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

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

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

<PAGE>

PAGE 53

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

o Purchases made with dividend or capital gain distributions from the same class
of another fund in the IDS MUTUAL FUND GROUP that has a sales charge.

o Purchases made through American Express Strategic Portfolio Service (total
amount of all investments made in the Strategic Portfolio Service must be at
least $50,000).

o Purchases made under the University of Texas System ORP.

*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.

Class B - contingent deferred sales charge alternative

If a redemption is The percentage rate
made during the for the CDSC is:

First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%

<PAGE>

PAGE 54
The following example illustrates how the CDSC is applied. Assume you had
invested $10,000 in Class B shares and that your investment had appreciated in
value to $12,000 after 15 months, including reinvested dividend and capital gain
distributions. You could redeem any amount up to $2,000 without paying a CDSC
($12,000 current value less $10,000 purchase amount). If you redeemed $2,500,
the CDSC would apply only to the $500 that represented part of your original
purchase price. The CDSC rate would be 4% because a redemption after 15 months
would take place during the second year after purchase.

Because the CDSC is imposed only on redemptions that reduce the total of your
purchase payments, you never have to pay a CDSC on any amount you redeem that
represents appreciation in the value of your shares, income earned by your
shares or capital gains. In addition, when determining the rate of any CDSC,
your redemption will be made from the oldest purchase payment you made. Of
course, once a purchase payment is considered to have been redeemed, the next
amount redeemed is the next oldest purchase payment. By redeeming the oldest
purchase payments first, lower CDSCs are imposed than would otherwise be the
case.

Waivers of the contingent deferred sales charge

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

For investors in Class A shares who have over $1 million invested in one year,
the 1% CDSC on redemption of those shares will be waived in the same
circumstances described for Class B.

Special shareholder services

Services

To help you track and evaluate the performance of your investments, AEFC
provides these services:

<PAGE>

PAGE 55
Quarterly statements listing all of your holdings and transactions during the
previous three months.

Yearly tax statements featuring average-cost-basis reporting of capital gains or
losses if you redeem your shares along with distribution information which
simplifies tax calculations.

A personalized mutual fund progress report detailing returns on your initial
investment and cash-flow activity in your account. It calculates a total return
to reflect your individual history in owning Fund shares. This report is
available from your financial advisor.

Quick telephone reference

TTY Service
For the hearing impaired
800-846-4852

American Express Financial Advisors Easy Access line Automated account
information (TouchToneR phones only), including current Fund prices and
performance, account values and recent account transactions
800-862-7919

Distributions and taxes

Dividend and capital gain distributions

The Fund's net investment income from dividends and interest is distributed to
you at the end of each calendar quarter as dividends. Short-term capital gains
are distributed at the end of the calendar year and are included in net
investment income. Long- term capital gains are realized whenever a security
held for more than one year is sold for a higher price than was paid for it. The
Fund will offset any net realized capital gains by any

<PAGE>

PAGE 56

available capital loss carryovers. Net realized long-term capital gains, if any,
are distributed at the end of the calendar year as capital gain distributions.
Before they are distributed, both net investment income and net long-term
capital gains are included in the value of each share. After they are
distributed, the value of each share drops by the per-share amount of the
distribution. (If your distributions are reinvested, the total value of your
holdings will not change.)

Reinvestments

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

o you request the Fund in writing or by phone to pay
distributions to you in cash, or

o you direct the Fund to invest your distributions in the same class of
another publicly available IDS fund for which you've previously opened
an account.

The reinvestment price is the net asset value at close of business on the day
the distribution is paid. (Your quarterly statement will confirm the amount
invested and the number of shares purchased.)

If you choose cash distributions, you will receive only those declared after
your request has been processed.

Taxes

<PAGE>

PAGE 57
Buying a dividend creates a tax liability. This means buying shares shortly
before a net investment income or a capital gain distribution. You pay the full
pre-distribution price for the shares, then receive a portion of your investment
back as a distribution, which is taxable.

Your Taxpayer Identification Number (TIN) is important. As with any financial
account you open, you must list your current and correct Taxpayer Identification
Number (TIN) -- either your Social Security or Employer Identification number.
The TIN must be certified under penalties of perjury on your application when
you open an account at AEFC.

You also could be subject to backup withholding because you failed to report
interest or dividends on your tax return as required.

How to determine the correct TIN
<TABLE>
<CAPTION>
<S> <C>
Use the Social Security or
For this type of account: Employer Identification number
of:

Individual or joint account The individual or individuals
listed on the account

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

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

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

<PAGE>

PAGE 58
Sole proprietorship The owner

Partnership The partnership

Corporate The corporation

Association, club or The organization
tax-exempt organization

For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors office for federal Form W-9, "Request for Taxpayer
Identification Number and Certification."

How the Fund is organized

The Fund no longer issues stock certificates.

Voting rights

As a shareholder, you have voting rights over the Fund's management and
fundamental policies. You are entitled to one vote for each share you own.
Shares of the Fund have cumulative voting rights. Each class has exclusive
voting rights with respect to the provisions of the Fund's distribution plan
that pertain to a particular class and other matters for which separate class
voting is appropriate under applicable law.

Shareholder meetings

<PAGE>

PAGE 59
Board members and officers

Board members and officers of the Fund

President and interested board member

William R. Pearce
President and director, Board Services Corporation (provides administrative
services to boards including the boards of the IDS and IDS Life funds and Master
Trust portfolios).

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 Reader's Digest
Association, Inc.

Alan K. Simpson
Former United States senator for Wyoming.

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.

<PAGE>

PAGE 60
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
Senior vice president, AEFC. Vice president - Investments for the Fund.

Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the Fund.

Other officer

Leslie L. Ogg
Vice president, treasurer and corporate secretary of Board Services Corporation.
Vice president, general counsel and secretary for the Fund.

Refer to the SAI for the board members' and officers' biographies.

Investment manager

The Fund pays AEFC for managing its assets. Under its Investment Management
Services Agreement, AEFC is paid a fee for these services based on the average
daily net assets of the Fund, as follows:

Assets Annual rate
(billions) at each asset level

First $0.50 0.530%
Next 0.50 0.505
Next 1.0 0.480
Next 1.0 0.455
Next 3.0 0.430
Over 6.0 0.400

For the fiscal year ended March 31, 1997, the Fund paid AEFC a total investment
management fee of 0.50% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory expenses.

<PAGE>

PAGE 61

Administrator and transfer agent

The Fund pays AEFC for shareholder accounting and transfer agent services under
two agreements. The first agreement, the Administrative Services Agreement, has
a declining annual rate beginning at 0.04% and decreasing to 0.02% as assets
increase. The second agreement, the Transfer Agency Agreement, has an annual fee
per shareholder account as follows:

o Class A $15
o Class B $16
o Class Y $15

Distributor

Total expenses paid by the Fund's Class A shares for the fiscal year ended March
31, 1997, were 0.89% of its average daily net assets. Expenses for Class B and
Class Y were 1.64% and 0.71%, respectively.

<PAGE>

PAGE 62
About American Express Financial Corporation

General information

The AEFC family of companies offers not only mutual funds but also insurance,
annuities, investment certificates and a broad range of financial management
services.

American Express Financial Advisors serves individuals and businesses through
its nationwide network of more than 178 offices and more than 8,426 advisors.

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

<PAGE>

PAGE 63
Appendix

Descriptions of derivative instruments

<PAGE>

PAGE 64

IDS STRATEGY FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS STRATEGY AGGRESSIVE FUND

May 30, 1997

This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus and the financial statements contained in the
Annual Report which may be obtained from your American Express financial advisor
or by writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534.

This SAI is dated May 30, 1997, and it is to be used with the prospectus dated
May 30, 1997, and the Annual Report for the fiscal year ended March 31, 1997.

<PAGE>

PAGE 65
TABLE OF CONTENTS

Goal and Investment Policies.................See Prospectus

Additional Investment Policies..........................p. 3

Security Transactions...................................p. 6

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation..................p. 9

Performance Information.................................p. 10

Valuing Fund Shares.....................................p. 11

Investing in the Fund...................................p. 12

Redeeming Shares........................................p. 17

Pay-out Plans...........................................p. 18

Taxes...................................................p. 19

Agreements..............................................p. 20

Organizational Information..............................p. 24

Board Members and Officers..............................p. 24

Compensation for Board Members..........................p. 28

Independent Auditors....................................p. 29

Financial Statements......................See Annual Report

Prospectus..............................................p. 29

Appendix A: Description of Bond Ratings................p. 30

Appendix B: Foreign Currency Transactions..............p. 33

Appendix C: Options and Stock Index Futures Contracts..p. 38

Appendix D: Mortgage-Backed Securities.................p. 46

Appendix E: Dollar-Cost Averaging......................p. 47

<PAGE>

PAGE 66
ADDITIONAL INVESTMENT POLICIES

These are investment policies in addition to those presented in the prospectus.
The policies below are fundamental policies of the Fund and may be changed only
with shareholder approval. Unless holders of a majority of the outstanding
voting securities agree to make the change the Fund will not:

'Act as an underwriter (sell securities for others). However, under the
securities laws, the Fund may be deemed to be an underwriter when it purchases
securities directly from the issuer and later resells them.

'Borrow money or property, except as a temporary measure for extraordinary or
emergency purposes, in an amount not exceeding one-third of the market value of
its total assets (including borrowings) less liabilities (other than borrowings)
immediately after the borrowing. The Fund has not borrowed in the past and has
no present intention to borrow.

'Make cash loans if the total commitment amount exceeds 5% of the Fund's total
assets.

'Purchase more than 10% of the outstanding voting securities of an
issuer.

'Invest more than 5% of its total assets in securities of any one company,
government or political subdivision thereof, except the limitation will not
apply to investments in securities issued by the U.S. government, its agencies
or instrumentalities, and except that up to 25% of the Fund's total assets may
be invested without regard to this 5% limitation.

'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the Fund from investing in
securities or other instruments backed by real estate or securities of companies
engaged in the real estate business or real estate investment trusts. For
purposes of this policy, real estate includes real estate limited partnerships.

'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the Fund from
buying or selling financial instruments (such as options and futures contracts)
or from investing in securities or other instruments backed by, or whose value
is derived from, physical commodities.

'Make a loan of any part of its assets to American Express Financial Corporation
(AEFC), to the board members and officers of AEFC or to its own board members
and officers.

<PAGE>

PAGE 67
'Purchase securities of an issuer if the board members and officers of the Fund
and of American Express Financial Corporation (AEFC) hold more than a certain
percentage of the issuer's outstanding securities. If the holdings of all board
members and officers of the Fund and of AEFC who own more than 0.5% of an
issuer's securities are added together, and if in total they own more than 5%,
the Fund will not purchase securities of that issuer.

'Lend Fund securities in excess of 30% of its net assets. The current policy of
the Fund's board is to make these loans, either long- or short-term, to
broker-dealers. In making loans, the Fund receives the market price in cash,
U.S. government securities, letters of credit or such other collateral as may be
permitted by regulatory agencies and approved by the board. If the market price
of the loaned securities goes up, the Fund will get additional collateral on a
daily basis. The risks are that the borrower may not provide additional
collateral when required or return the securities when due. During the existence
of the loan, the Fund receives cash payments equivalent to all interest or other
distributions paid on the loaned securities. A loan will not be made unless the
investment manager believes the opportunity for additional income outweighs the
risks.

'Issue senior securities, except to the extent that borrowing from banks and
using options, foreign currency forward contracts or future contracts (as
discussed elsewhere in the Fund's prospectus and SAI) may be deemed to
constitute issuing a senior security.

'Concentrate in any one industry. According to the present interpretation by the
Securities and Exchange Commission (SEC), this means no more than 25% of the
Fund's total assets, based on current market value at the time of purchase, can
be invested in any one industry.

Unless changed by the board, the Fund will not:

'Pledge or mortgage its assets beyond 15% of total assets. If the Fund were ever
to do so, valuation of the pledged or mortgaged assets would be based on market
values. For the purposes of this policy, collateral arrangements with respect to
margin for futures contracts are not deemed to be a pledge of assets.

'Invest more than 5% of its total assets in securities of companies, including
any predecessors, that have a record of less than three years continuous
operations.

'Invest more than 10% of its total assets in the securities of investment
companies. The Fund has no current intention to invest in securities of other
investment companies.

<PAGE>

PAGE 68
'Invest in a company to control or manage it.

'Invest in exploration or development programs, such as oil, gas or
mineral leases.

'Buy on margin or sell securities short but the Fund may make margin payments in
connection with transactions in futures contracts.

'Invest more than 5% of its net assets in warrants.

'Invest more than 10% of the Fund's net assets in securities and other
instruments that are illiquid. For purposes of this policy illiquid securities
include some privately placed securities, public securities and Rule 144A
securities that for one reason or another may no longer have a readily available
market, repurchase agreements with maturities greater than seven days,
non-negotiable fixed-time deposits and over-the-counter options.

In determining the liquidity of Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the U.S.
government or its agencies and instrumentalities, the investment manager, under
guidelines established by the board, will consider any relevant factors
including the frequency of trades, the number of dealers willing to purchase or
sell the security and the nature of marketplace trades.

In determining the liquidity of commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933,
the investment manager, under guidelines established by the board, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.

The Fund may purchase debt securities on a when-issued basis, which means that
it may take as long as 45 days after the purchase before the securities are
delivered to the Fund. Payment and interest terms, however, are fixed at the
time the purchaser enters into a commitment. Under normal market conditions, the
Fund does not intend to commit more than 5% of its total assets to these
practices. The Fund does not pay for the securities or start earning interest on
them until the contractual settlement date. When-issued securities are subject
to market fluctuations and they may affect a Fund's total assets the same as
owned securities.

<PAGE>

PAGE 69
The Fund may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Fund may use are short-term
U.S. and Canadian government securities and negotiable certificates of deposit,
non-negotiable fixed-time deposits, bankers' acceptances and letters of credit
of banks or savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual financial
statements) in excess of $100 million (or the equivalent in the instance of a
foreign branch of a U.S. bank) at the date of investment. Any cash-equivalent
investment in foreign securities will be subject to the limitations on foreign
investments described in the prospectus. The Fund also may repurchase short-term
corporate notes and obligations rated in the top two classifications by Moody's
Investors Service, Inc. (Moody's) or Standard & Poor's Corporation (S&P) or the
equivalent and may use repurchase agreements with broker-dealers registered
under the Securities Exchange Act of 1934 and with commercial banks. A risk of a
repurchase agreement is that if the seller seeks the protection of the
bankruptcy laws, the Fund's ability to liquidate the security involved could be
impaired.

Notwithstanding any of the Fund's other investment policies, the Fund may invest
its assets in an open-end management investment company having substantially the
same investment objectives, policies and restrictions as the Fund for the
purpose of having those assets managed as part of a combined pool.

For a description of bond ratings, see Appendix A. For a discussion on foreign
currency transactions, see Appendix B. For a discussion on options and stock
index futures contracts, see Appendix C. For a discussion on mortgage-backed
securities see Appendix D.

SECURITY TRANSACTIONS

Subject to policies set by the board, AEFC is authorized to determine,
consistent with the Fund's investment goal and policies, which securities will
be purchased, held or sold. In determining where the buy and sell orders are to
be placed, AEFC has been directed to use its best efforts to obtain the best
available price and the most favorable execution except where otherwise
authorized by the board. In selecting broker-dealers to execute transactions,
AEFC may consider the price of the security, including commission or mark-up,
the size and difficulty of the order, the reliability, integrity, financial
soundness and general operation and execution capabilities of the broker, the
broker's expertise in particular markets, and research services provided by the
broker.

AEFC has a strict Code of Ethics that prohibits its affiliated personnel from
engaging in personal investment activities that compete with or attempt to take
advantage of planned portfolio transactions for any fund in the IDS MUTUAL FUND
GROUP. AEFC carefully monitors compliance with its Code of Ethics.

<PAGE>

PAGE 70
On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board has adopted a policy authorizing AEFC to do so to the extent authorized by
law, if AEFC determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage or research services provided by a broker
or dealer, viewed either in the light of that transaction or AEFC's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP and other funds for
which it acts as investment advisor.

Research provided by brokers supplements AEFC's own research activities. Such
services include economic data on, and analysis of, U.S. and foreign economies;
information on specific industries; information about specific companies,
including earnings estimates; purchase recommendations for stocks and bonds;
portfolio strategy services; political, economic, business and industry trend
assessments; historical statistical information; market data services providing
information on specific issues and prices; and technical analysis of various
aspects of the securities markets, including technical charts. Research services
may take the form of written reports, computer software or personal contact by
telephone or at seminars or other meetings. AEFC has obtained and in the future
may obtain computer hardware from brokers, including but not limited to personal
computers that will be used exclusively for investment decision-making purposes,
which include the research, portfolio management and trading functions and other
services to the extent permitted under an interpretation by the SEC.

When paying a commission that might not otherwise be charged or a commission in
excess of the amount another broker might charge, AEFC must follow procedures
authorized by the board. To date, three procedures have been authorized. One
procedure permits AEFC to direct an order to buy or sell a security traded on a
national securities exchange to a specific broker for research services it has
provided. The second procedure permits AEFC, in order to obtain research, to
direct an order on an agency basis to buy or sell a security traded in the
over-the-counter market to a firm that does not make a market in that security.
The commission paid generally includes compensation for research services. The
third procedure permits AEFC, in order to obtain research and brokerage
services, to cause the Fund to pay a commission in excess of the amount another
broker might have charged. AEFC has advised the Fund that it is necessary to do
business with a number of brokerage firms on a continuing basis to obtain such
services as the handling of large orders, the willingness of a broker to risk
its own money by taking a position in a security, and the specialized handling
of a particular group of securities that only certain brokers may be able to
offer. As a result of this arrangement, some portfolio

<PAGE>

PAGE 71
transactions may not be effected at the lowest commission, but AEFC believes it
may obtain better overall execution. AEFC has assured the Fund that under all
three procedures the amount of commission paid will be reasonable and
competitive in relation to the value of the brokerage services performed or
research provided.

All other transactions shall be placed on the basis of obtaining the best
available price and the most favorable execution. In so doing, if in the
professional opinion of the person responsible for selecting the broker or
dealer, several firms can execute the transaction on the same basis,
consideration will be given to those firms offering research services. Research
services may be used by AEFC in providing advice to all the funds in the IDS
MUTUAL FUND GROUP even though it is not possible to relate the benefits to any
particular fund or account.

Each investment decision made for the Fund is made independently from any
decision made for another fund in the IDS MUTUAL FUND GROUP or other account
advised by AEFC or any AEFC subsidiary. When a Fund buys or sells the same
security as another fund or account, AEFC carries out the purchase or sale in a
way the Fund agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the Fund, the Fund
hopes to gain an overall advantage in execution. AEFC has assured the Fund it
will continue to seek ways to reduce brokerage costs.

On a periodic basis, AEFC makes a comprehensive review of the broker-dealers and
the overall reasonableness of their commissions. The review evaluates execution,
operational efficiency and research services.

The Fund paid total brokerage commissions of $1,675,148 for the fiscal year
ended March 31, 1997, $1,574,064 for fiscal year 1996, and $1,620,083 for fiscal
year 1995. Substantially all firms through whom transactions were executed
provide research services.

In fiscal year 1997, transactions amounting to $2,729,000, on which $13,644 in
commissions were imputed or paid, were specifically directed to firms in
exchange for research services.

As of the fiscal year ended March 31, 1997, the Fund held securities of its
regular brokers or dealers or of the parent of those brokers or dealers that
derived more than 15% of gross revenue from securities-related activities as
presented below:

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Dean Witter, Discover & Co $13,049,082
Morgan Stanley 11,597,250

<PAGE>

PAGE 72
The portfolio turnover rate was 80% in the fiscal year ended March 31, 1997, and
101% in fiscal year 1996. Higher turnover rates may result in higher brokerage
expenses.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION

Affiliates of American Express Company (American Express), of which AEFC is a
wholly-owned subsidiary may engage in brokerage and other securities
transactions on behalf of the Fund according to procedures adopted by the Fund's
board and to the extent consistent with applicable provisions of the federal
securities laws. AEFC will use an American Express affiliate only if (i) AEFC
determines that the Fund will receive prices and executions at least as
favorable as those offered by qualified independent brokers performing similar
brokerage and other services for the Fund and (ii) the affiliate charges the
Fund commission rates consistent with those the affiliate charges comparable
unaffiliated customers in similar transactions and if such use is consistent
with terms of the Investment Management Services Agreement.

AEFC may direct brokerage to compensate an affiliate. AEFC will receive research
on South Africa from New Africa Advisors, a wholly-owned subsidiary of Sloan
Financial Group. AEFC owns 100% of IDS Capital Holdings Inc. which in turn owns
40% of Sloan Financial Group. New Africa Advisors will send research to AEFC and
in turn AEFC will direct trades to a particular broker. The broker will have an
agreement to pay New Africa Advisors. All transactions will be on a best
execution basis. Compensation received will be reasonable for the services
rendered.

Information about brokerage commissions paid by the Fund for the last three
fiscal years to brokers affiliated with AEFC is contained in the following
table:
<TABLE>
<CAPTION>

For the Fiscal Year Ended March 31,

1997 1996 1995
------------------------------------------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
- ------ ----------- ------ ----------- -------------- ------ ------
Lehman (1) None None None None $39,402
Brothers Inc.

American (2) $132 None 0.02% $9,363 36,212
Enterprise Investment
Services Inc.
</TABLE>

(1) Under common control with AEFC as a subsidiary of American Express until May
31, 1994.
(2) Wholly owned subsidiary of AEFC.

<PAGE>

PAGE 73
PERFORMANCE INFORMATION

The Fund may quote various performance figures to illustrate past performance.
Average annual total return quotations used by the Fund are based on
standardized methods of computing performance as required by the SEC. An
explanation of the methods used by the Fund to compute performance follows
below.

Average annual total return

The Fund may calculate average annual total return for a class for certain
periods by finding the average annual compounded rates of return over the period
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:

P(1+T) n = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment, made
at the beginning of a period, at the end of the period (or
fractional portion thereof)

Aggregate total return

The Fund may calculate aggregate total return for a class for certain periods
representing the cumulative change in the value of an investment in the Fund
over a specified period of time according to the following formula:

ERV - P
P

where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)

In its sales material and other communications, the Fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.

<PAGE>

PAGE 74
VALUING FUND SHARES

The value of an individual share for each class is determined by using the net
asset value before shareholder transactions for the day. On April 1, 1997, the
first business day following the end of the fiscal year, the computation looked
like this:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
Class A $ 384,304,973 divided by 21,023,248 equals $18.28
Class B 734,267,240 40,838,000 17.98
Class Y 1,430 78 18.33
</TABLE>

In determining net assets before shareholder transactions, the Fund's securities
are valued as follows as of the close of the New York Stock Exchange (the
Exchange):

'Securities, except bonds other than convertibles, traded on a securities
exchange for which a last-quoted sales price is readily available are valued at
the last-quoted sales price on the exchange where such security is primarily
traded.

'Securities traded on a securities exchange for which a last-quoted sales price
is not readily available are valued at the mean of the closing bid and asked
prices, looking first to the bid and asked prices on the exchange where the
security is primarily traded and, if none exist, to the over-the-counter market.

'Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.

'Securities included in the NASDAQ National Market System for which a
last-quoted sales price is not readily available, and other securities traded
over-the-counter but not included in the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.

'Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.

'Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the board.

<PAGE>

PAGE 75
'Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short- term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of market value determined
by systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to the maturity value on the maturity date.

'Securities without a readily available market price, bonds other than
convertibles and other assets are valued at fair value as determined in good
faith by the board. The board is responsible for selecting methods it believes
provide fair value.

When possible, bonds are valued by a pricing service independent from the fund.
If a valuation of a bond is not available from a pricing service, the bond will
be valued by a dealer knowledgeable about the bond if such a dealer is
available.

The by-laws provide that during any period in which the sale of shares of the
fund shall be discontinued, the board, in arriving at net asset value for such
fund, may deduct from the value of the net assets an amount equal to the
brokerage commissions, transfer taxes and charges, if any, that would be payable
on the sale of all securities in the portfolio if they were then sold. The
purpose of this provision is to distribute these charges over all outstanding
shares when no further sales are being made.

The Exchange, AEFC and the Fund will be closed on the following
holidays: New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined at the close
of business on the day an application is accepted. The public offering price is
the net asset value of one share plus a sales charge, if applicable. For Class B
and Class Y, there is no initial sales charge so the public offering price is
the same as the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made April 1, 1997, was determined by dividing
the net asset value of one share, $18.28, by 0.95 (1.00-0.05 for a maximum 5%
sales charge) for a public offering price of $19.24. The sales charge is paid to
American Express Financial Advisors by the person buying the shares.

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PAGE 76
Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested

First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

Sales charges on an investment greater than $50,000 and less than $1,000,000 are
calculated for each increment separately and then totaled. The resulting total
sales charge, expressed as a percentage of the public offering price and of the
net amount invested, will vary depending on the proportion of the investment at
different sales charge levels.

For example, compare an investment of $60,000 with an investment of $85,000. The
$60,000 investment is composed of $50,000 that incurs a sales charge of $2,500
(5.0% x $50,000) and $10,000 that incurs a sales charge of $450 (4.5% x
$10,000). The total sales charge of $2,950 is 4.92% of the public offering price
and 5.17% of the net amount invested.

In the case of the $85,000 investment, the first $50,000 also incurs a sales
charge of $2,500 (5.0% x $50,000) and $35,000 incurs a sales charge of $1,575
(4.5% x $35,000). The total sales charge of $4,075 is 4.79% of the public
offering price and 5.04% of the net amount invested.

The following table shows the range of sales charges as a percentage of the
public offering price and of the net amount invested on total investments at
each applicable level.

On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:

First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00

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PAGE 77
The initial sales charge is waived for certain qualified plans that meet the
requirements described in the prospectus. Participants in these qualified plans
may be subject to a deferred sales charge on certain redemptions. The deferred
sales charge on certain redemptions will be waived if the redemption is a result
of a participant's death, disability, retirement, attaining age 59 1/2, loans or
hardship withdrawals. The deferred sales charge varies depending on the number
of participants in the qualified plan and total plan assets as follows:

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more

Less than $1 million 4% 0%

$1 million or more 0% 0%
- ---------------------------------------------------------

Class A - Reducing the Sales Charge

Sales charges are based on the total amount of your investments in the Fund. The
amount of all prior investments plus any new purchase is referred to as your
"total amount invested." For example, suppose you have made an investment of
$20,000 and later decide to invest $40,000 more. Your total amount invested
would be $60,000. As a result, $10,000 of your $40,000 investment qualifies for
the lower 4.5% sales charge that applies to investments of more than $50,000 and
up to $100,000.

The total amount invested includes any shares held in the Fund in the name of a
member of your primary household group. (The primary household group consists of
accounts in any ownership for spouses or domestic partners and their unmarried
children under 21. Domestic partners are individuals who maintain a shared
primary residence and have joint property or other insurable interests.) For
instance, if your spouse already has invested $20,000 and you want to invest
$40,000, your total amount invested will be $60,000 and therefore you will pay
the lower charge of 4.5% on $10,000 of the $40,000.

Until a spouse remarries, the sales charge is waived for spouses and unmarried
children under 21 of deceased board members, officers or employees of the Fund
or AEFC or its subsidiaries and deceased advisors.

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PAGE 78

The total amount invested also includes any investment you or your immediate
family already have in the other publicly offered funds in the IDS MUTUAL FUND
GROUP where the investment is subject to a sales charge. For example, suppose
you already have an investment of $30,000 in another IDS fund. If you invest
$40,000 more in this Fund, your total amount invested in the funds will be
$70,000 and therefore $20,000 of your $40,000 investment will incur a 4.5% sales
charge.

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

Class A - Letter of Intent (LOI)

If you intend to invest $1 million over a period of 13 months, you can reduce
the sales charges in Class A by filing a LOI. The agreement can start at any
time and will remain in effect for 13 months. Your investment will be charged
normal sales charges until you have invested $1 million. At that time, your
account will be credited with the sales charges previously paid. Class A
investments made prior to signing an LOI may be used to reach the $1 million
total, excluding Cash Management Fund and Tax-Free Money Fund. However, we will
not adjust for sales charges on investments made prior to the signing of the
LOI. If you do not invest $1 million by the end of 13 months, there is no
penalty, you'll just miss out on the sales charge adjustment. A LOI is not an
option (absolute right) to buy shares.

Here's an example. You file a LOI to invest $1 million and make an investment of
$100,000 at that time. You pay the normal 5% sales charge on the first $50,000
and 4.5% sales charge on the next $50,000 of this investment. Let's say you make
a second investment of $900,000 (bringing the total up to $1 million) one month
before the 13-month period is up. On the date that you bring your total to $1
million, AEFC makes an adjustment to your account. The adjustment is made by
crediting your account with additional shares, in an amount equivalent to the
sales charge previously paid.

Systematic Investment Programs

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PAGE 79
program altogether. The Fund also can change the program or end it at any time.
If there is no obligation, why do it? Putting money aside is an important part
of financial planning. With a systematic investment program, you have a goal to
work for.

How does this work? Your regular investment amount will purchase more shares
when the net asset value per share decreases, and fewer shares when the net
asset value per share increases. Each purchase is a separate transaction. After
each purchase your new shares will be added to your account. Shares bought
through these programs are exactly the same as any other fund shares. They can
be bought and sold at any time. A systematic investment program is not an option
or an absolute right to buy shares.

The systematic investment program itself cannot ensure a profit, nor can it
protect against a loss in a declining market. If you decide to discontinue the
program and redeem your shares when their net asset value is less than what you
paid for them, you will incur a loss.

For a discussion on dollar-cost averaging, see Appendix E.

Automatic Directed Dividends

Dividends, including capital gain distributions, paid by another fund in the IDS
MUTUAL FUND GROUP subject to a sales charge, may be used to automatically
purchase shares in the same class of this Fund without paying a sales charge.
Dividends may be directed to existing accounts only. Dividends declared by a
fund are exchanged to this Fund the following day. Dividends can be exchanged
into the same class of another fund in the IDS MUTUAL FUND GROUP but cannot be
split to make purchases in two or more funds. Automatic directed dividends are
available between accounts of any ownership except:

Between a non-custodial account and an IRA, or 401(k) plan account or other
qualified retirement account of which American Express Trust Company acts as
custodian;

Between two American Express Trust Company custodial accounts with different
owners (for example, you may not exchange dividends from your IRA to the IRA of
your spouse);

Between different kinds of custodial accounts with the same ownership (for
example, you may not exchange dividends from your IRA to your 401(k) plan
account, although you may exchange dividends from one IRA to another IRA).

Dividends may be directed from accounts established under the Uniform Gifts to
Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) only into other UGMA
or UTMA accounts with identical ownership.

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PAGE 80
The Fund's investment goal is described in its prospectus along with other
information, including fees and expense ratios. Before exchanging dividends into
another fund, you should read its prospectus. You will receive a confirmation
that the automatic directed dividend service has been set up for your account.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.

During an emergency, the board can suspend the computation of net asset value,
stop accepting payments for purchase of shares or suspend the duty of the Fund
to redeem shares for more than seven days. Such emergency situations would occur
if:

'The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or

'Disposal of the Fund's securities is not reasonably practicable or
it is not reasonably practicable for the Fund to determine the fair
value of its net assets, or

'The SEC, under the provisions of the Investment Company Act of 1940 (the 1940
Act), as amended, declares a period of emergency to exist.

Should the Fund stop selling shares, the board may make a deduction from the
value of the assets held by the Fund to cover the cost of future liquidations of
the assets so as to distribute fairly these costs among all shareholders.

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to the lesser of $250,000 or 1% of the net assets
of the Fund at the beginning of the period. Although redemptions in excess of
this limitation would normally be paid in cash, the Fund reserves the right to
make these payments in whole or in part in securities or other assets in case of
an emergency, or if the payment of a redemption in cash would be detrimental to
the existing shareholders of the Fund as determined by the board. In these
circumstances, the securities distributed would be valued as set forth in the
prospectus. Should the Fund distribute securities, a shareholder may incur
brokerage fees or other transaction costs in converting the securities to cash.

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PAGE 81
PAY-OUT PLANS

You can use any of several pay-out plans to redeem your investment in regular
installments. If you redeem Class B shares you may be subject to a contingent
deferred sales charge as discussed in the prospectus. While the plans differ on
how the pay-out is figured, they all are based on the redemption of your
investment. Net investment income dividends and any capital gain distributions
will automatically be reinvested, unless you elect to receive them in cash. If
you are redeeming a tax-qualified plan account for which American Express Trust
Company acts as custodian, you can elect to receive your dividends and other
distributions in cash when permitted by law. If you redeem an IRA or a qualified
retirement account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should consult your tax
advisor about this complex area of the tax law.

Applications for a systematic investment in a class of the Fund
subject to a sales charge normally will not be accepted while a
pay-out plan for any of those funds is in effect. Occasional
investments, however, may be accepted.

To start any of these plans, please write American Express Shareholder Service,
P.O. Box 534, Minneapolis, MN 55440-0534, or call American Express Financial
Advisors Telephone Transaction Service, at 800-437-3133 (National/Minnesota) or
612-671-3800 (Mpls./St. Paul). Your authorization must be received in the
Minneapolis headquarters at least five days before the date you want your
payments to begin. The initial payment must be at least $50. Payments will be
made on a monthly, bimonthly, quarterly, semiannual or annual basis. Your choice
is effective until you change or cancel it.

The following pay-out plans are designed to take care of the needs of most
shareholders in a way AEFC can handle efficiently and at a reasonable cost. If
you need a more irregular schedule of payments, it may be necessary for you to
make a series of individual redemptions, in which case you'll have to send in a
separate redemption request for each pay-out. The Fund reserves the right to
change or stop any pay-out plan and to stop making such plans available.

Plan #1: Pay-out for a fixed period of time

If you choose this plan, a varying number of shares will be redeemed at regular
intervals during the time period you choose. This plan is designed to end in
complete redemption of all shares in your account by the end of the fixed
period.

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PAGE 82
Plan #2: Redemption of a fixed number of shares

If you choose this plan, a fixed number of shares will be redeemed for each
payment and that amount will be sent to you. The length of time these payments
continue is based on the number of shares in your account.

Plan #3: Redemption of a fixed dollar amount

If you decide on a fixed dollar amount, whatever number of shares is necessary
to make the payment will be redeemed in regular installments until the account
is closed.

Plan #4: Redemption of a percentage of net asset value

Payments are made based on a fixed percentage of the net asset value of the
shares in the account computed on the day of each payment. Percentages range
from 0.25% to 0.75%. For example, if you are on this plan and arrange to take
0.5% each month, you will get $50 if the value of your account is $10,000 on the
payment date.

TAXES

If you buy shares in the Fund and then exchange into another fund, it is
considered a sale and subsequent purchase of shares. Under the tax laws, if this
exchange is done within 91 days, any sales charge waived on Class A shares on a
subsequent purchase of shares applies to the new shares acquired in the
exchange. Therefore, you cannot create a tax loss or reduce a tax gain
attributable to the sales charge when exchanging shares within 91 days.

Retirement Accounts

If you have a nonqualified investment in the Fund and you wish to move part or
all of those shares to an IRA or qualified retirement account in the Fund, you
can do so without paying a sales charge. However, this type of exchange is
considered a sale of shares and may result in a gain or loss for tax purposes.
In addition, this type of exchange may result in an excess contribution under
IRA or qualified plan regulations if the amount exchanged plus the amount of the
initial sales charge applied to the amount exchanged exceeds annual contribution
limitations. For example: If you were to exchange $2,000 in Class A shares from
a nonqualified account to an IRA without considering the 5% ($100) initial sales
charge applicable to that $2,000, you may be deemed to have exceeded current IRA
annual contribution limitations. You should consult your tax advisor for further
details about this complex subject.

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PAGE 83
Net investment income dividends received should be treated as dividend income
for federal income tax purposes. Corporate shareholders are generally entitled
to a deduction equal to 70% of that portion of the Fund's dividend that is
attributable to dividends the Fund received from domestic (U.S.) securities.

Capital gain distributions received by individual and corporate shareholders, if
any, should be treated as long-term capital gains regardless of how long they
owned their shares. Short-term capital gains earned by the Fund are paid to
shareholders as part of their ordinary income dividend and are taxable.

Under federal tax law and an election made by the Fund under federal tax
regulations, by the end of a calendar year the Fund must declare and pay
dividends representing 98% of ordinary income for that calendar year and 98% of
net capital gains (both long-term and short-term) for the 12-month period ending
Oct. 31 of that calendar year. The Fund is subject to an excise tax equal to 4%
of the excess, if any, of the amount required to be distributed over the amount
actually distributed. The Fund intends to comply with federal tax law and avoid
any excise tax.

The Fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or
more of its gross income for the taxable year is passive income or if 50% or
more of the average value of its assets consists of assets that produce or could
produce passive income.

This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state and local income tax laws to Fund distributions.

AGREEMENTS

Investment Management Services Agreement

The Fund has an Investment Management Services Agreement with AEFC. For its
services, AEFC is paid a fee based on the following schedule:

Group assets Annual rate at
(billions) each asset level

First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500

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PAGE 84

On March 31, 1997, the daily rate applied to the Fund's net assets was equal to
0.597% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made.

The management fee is paid monthly. Under the agreement, the total amount paid
was $7,247,884 for the fiscal year ended March 31, 1997, $5,462,516 for 1996,
and $4,322,860 for 1995.

Under the agreement, the Fund also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees; audit and certain legal
fees; costs of printing and postage of prospectuses; proxies and reports sent to
shareholders; fidelity bond premiums; registration fees for shares; office
expenses; postage of confirmations except purchase confirmations; consultants'
fees; compensation of board members, officers and employees; corporate filing
fees; organizational expenses; expenses incurred in connection with lending
securities of the Fund; and expenses properly payable by the Fund, approved by
the board. Under the agreement, the Fund paid nonadvisory expenses of $384,043
for the fiscal year ended March 31, 1997, $516,329 for fiscal year 1996, and
$598,898 for fiscal year 1995.

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under this
agreement, the Fund pays AEFC for providing administration and accounting
services. The fee is calculated as follows:

Assets Annual rate
(billions) each asset level

First $1.0 0.050%
Next 1.0 0.045
Next 1.0 0.040
Next 3.0 0.035
Over 6.0 0.030

On March 31, 1997, the daily rate applied to the Fund's net assets was equal to
0.049% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made. Under the agreement, the Fund paid fees
of $603,995 for the fiscal year ended March 31, 1997.

Transfer Agency Agreement

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PAGE 85

shareholder account administration agent functions in connection with the
issuance, exchange and redemption or repurchase of the Fund's shares. Under the
agreement, AEFC will earn a fee from the Fund determined by multiplying the
number of shareholder accounts at the end of the day by a rate determined for
each class per year and dividing by the number of days in the year. The rate for
Class A and Class Y is $15 per year and for Class B is $16 per year. The fees
paid to AEFC may be changed from time to time upon agreement of the parties
without shareholder approval. Under the agreement, the Fund paid fees of
$2,406,484 for the fiscal year ended March 31, 1997.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing Fund
shares are paid to American Express Financial Advisors daily. These charges
amounted to $1,630,480 for the fiscal year ended March 31, 1997. After paying
commissions to personal financial advisors, and other expenses, the amount
retained was $(899,019). The amounts were $1,128,387 and $(622,389) for fiscal
year 1996, and $649,150 and $(269,464) for fiscal year 1995.

Additional information about commissions and compensation for the fiscal year
ended March 31, 1997, is contained in the following table:

(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation

AEFC None None $132* $6,031,993**

American
Express
Financial
Advisors $1,630,480 None None None

*For further information see "Brokerage Commissions Paid to Brokers Affiliated
with AEFC." **Distribution fees paid pursuant to the Plan and Agreement of
Distribution.

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.

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PAGE 86
Plan and Agreement of Distribution

For Class B shares, to help American Express Financial Advisors defray the cost
of distribution and servicing, not covered by the sales charges received under
the Distribution Agreement, the Fund and American Express Financial Advisors
entered into a Plan and Agreement of Distribution (Plan). These costs cover
almost all aspects of distributing the Fund's shares except compensation to the
sales force. A substantial portion of the costs are not specifically identified
to any one fund in the IDS MUTUAL FUND GROUP. Under the Plan, American Express
Financial Advisors is paid a fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares.

The Plan must be approved annually by the board, including a majority of the
disinterested board members, if it is to continue for more than a year. At least
quarterly, the board must review written reports concerning the amounts expended
under the Plan and the purposes for which such expenditures were made. The Plan
and any agreement related to it may be terminated at any time by vote of a
majority of board members who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, or by vote of a majority of the outstanding
voting securities of the Fund's Class B shares or by American Express Financial
Advisors. The Plan (or any agreement related to it) will terminate in the event
of its assignment, as that term is defined in the 1940 Act, as amended. The Plan
may not be amended to increase the amount to be spent for distribution without
shareholder approval, and all material amendments to the Plan must be approved
by a majority of the board members, including a majority of the board members
who are not interested persons of the Fund and who do not have a financial
interest in the operation of the Plan or any agreement related to it. The
selection and nomination of disinterested board members is the responsibility of
the other disinterested board members. No board member who is not an interested
person, has any direct or indirect financial interest in the operation of the
Plan or any related agreement. For the fiscal year ended March 31, 1997, under
the agreement, the Fund paid fees of $6,031,993.

Custodian Agreement

The Fund's securities and cash are held by American Express Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-2307, through a
custodian agreement. The custodian is permitted to deposit some or all of its
securities in central depository systems as allowed by federal law. For its
services, the Fund pays the custodian a maintenance charge and a charge per
transaction in addition to reimbursing the custodian's out-of-pocket expenses.

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PAGE 87
The custodian has entered into a sub-custodian arrangement with the Morgan
Stanley Trust Company (Morgan Stanley), One Pierrepont Plaza, Eighth Floor,
Brooklyn, NY 11201-2775. As part of this arrangement, securities purchased
outside the United States are maintained in the custody of various foreign
branches of Morgan Stanley or in such other financial institutions as may be
permitted by law and by the Fund's sub-custodian agreement.

Total fees and expenses

The Fund paid total fees and nonadvisory expenses of $18,773,909 for the fiscal
year ended March 31, 1997.

ORGANIZATIONAL INFORMATION

IDS Strategy Fund, Inc., of which IDS Strategy Aggressive Fund is a part, is an
open-end management investment company, as defined in the Investment Company Act
of 1940. It was incorporated on Jan. 24, 1984 in Minnesota. The Fund
headquarters are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN
55402-3268.

BOARD MEMBERS AND OFFICERS

The following is a list of the Fund's board members. They serve 15 Master Trust
portfolios and 47 IDS and IDS Life funds (except for William H. Dudley, who does
not serve on the nine IDS Life fund boards.) All shares have cumulative voting
rights with respect to the election of board members.

H. Brewster Atwater, Jr.
Born in 1931
4900 IDS Tower
Minneapolis, MN

Former chairman and chief executive officer, General Mills, Inc.
Director, Merck & Co., Inc. and Darden Restaurants, Inc.

Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, Union Pacific Resources, and FPL Group, Inc.
(holding company for Florida Power and Light).

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PAGE 88
William H. Dudley**
Born in 1932
2900 IDS Tower
Minneapolis, MN

Executive vice president and director of AEFC.

Robert F. Froehlke+
Born in 1922
1201 Yale Place
Minneapolis, MN

Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.

David R. Hubers+**
Born in 1943
2900 IDS Tower
Minneapolis, MN

President, chief executive officer and director of AEFC. Previously, senior vice
president, finance and chief financial officer of AEFC.

Heinz F. Hutter+'
Born in 1929
P.O. Box 2187
Minneapolis, MN

Former president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).

Anne P. Jones
Born in 1935
5716 Bent Branch Rd.
Bethesda, MD

Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.

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PAGE 89
Melvin R. Laird
Born in 1922
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.

Senior counsellor for national and international affairs, The Reader's Digest
Association, Inc. Former nine-term U.S. Congressman, U.S. Secretary of Defense
and Presidential Counsellor. Director, Metropolitan Life Insurance Co., The
Reader's Digest Association, Inc., Science Applications International Corp.,
Wallace Reader's Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).

William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN

President and director, Board Services Corporation (provides administrative
services to boards). Director, trustee and officer of registered investment
companies whose boards are served by the company. Former vice chairman of the
board, Cargill, Incorporated (commodity merchants and processors).

Alan K. Simpson
Born in 1931
1201 Sunshine Ave.
Cody, WY

Former three-term United States Senator for Wyoming. Former
Assistant Republican Leader, U.S. Senate. Director, PacifiCorp
(electric power).

Edson W. Spencer+
Born in 1926
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

President, Spencer Associates Inc. (consulting). Former chairman
of the board and chief executive officer, Honeywell Inc. Director,
Boise Cascade Corporation (forest products). Member of
International Advisory Council of NEC (Japan).

John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

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PAGE 90
Wheelock Whitney+
Born in 1926
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN

Chairman of the board and retired chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging), Donaldson Company
(air cleaners & mufflers) and
General Mills, Inc. (consumer foods).

+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of the Fund.
**Interested person by reason of being an officer, board member, employee and/or
shareholder of AEFC or American Express.

The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.

In addition to Mr. Pearce, who is president, the Fund's other officers are:

Leslie L. Ogg
Born in 1938
901 S. Marquette Ave.
Minneapolis, MN

Vice president, treasurer and corporate secretary of Board Services Corporation.
Vice president, general counsel and secretary for the Fund.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN

Director and senior vice president-investments of AEFC. Vice
president-investments for the Fund.

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PAGE 91
Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN

Director, senior vice president and chief financial officer of AEFC. Director,
executive vice president and controller of IDS Life Insurance Company. Treasurer
for the Fund.

COMPENSATION FOR FUND BOARD MEMBERS

Members of the board who are not officers of the Fund or AEFC receive an annual
fee of $900 and the Chair of the Contracts Committee receives an additional $90.
Board members receive a $50 per day attendance fee for board meetings. The
attendance fee for meetings of the Contracts and Investment Review Committees is
$50; for meetings of the Audit Committee and Personnel Committee $25 and for
traveling from out-of-state $8. Expenses for attending meetings are reimbursed.

During the fiscal year ended March 31, 1997, the members of the board, for
attending up to 28 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table
<S> <C> <C> <C> <C>
Pension or Estimated Total cash compensation
Aggregate Retirement annual from the IDS MUTUAL FUND
compensation benefits accrued benefit upon GROUP and the Preferred
Board member from the Fund as Fund expenses* retirement Master Trust Group
- -----------------------------------------------------------------------------------------------
H. Brewster Atwater, Jr. $ 725 $ 0 $ 0 $ 41,400
(part of year)
Lynne V. Cheney 1,526 0 500 86,500
Robert F. Froehlke 1,675 0 500 95,100
Heinz F. Hutter 1,584 0 242 89,600
Anne P. Jones 1,660 0 500 94,400
Donald M. Kendall 136 0 500 7,000
(part of year)
Melvin R. Laird 1,537 0 500 87,100
Lewis W. Lehr 164 0 488 8,000
(part of year)
Alan K. Simpson 393 0 0 22,600
(part of year)
Edson W. Spencer 1,716 0 267 98,700
Wheelock Whitney 1,641 0 500 94,100
C. Angus Wurtele 1,581 0 496 89,600
</TABLE>

*The Fund had a retirement plan for its independent board members.
The plan was terminated April 30, 1996.

On March 31, 1997, the Fund's board members and officers as a group owned less
than 1% of the outstanding shares. During the fiscal year ended March 31, 1997,
no board member or officer earned more than $60,000 from this Fund. All board
members and officers as a group earned $31,368 from this Fund.

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PAGE 92
INDEPENDENT AUDITORS

The financial statements contained in the Annual Report to shareholders for the
fiscal year ended March 31, 1997, were audited by independent auditors, KPMG
Peat Marwick LLP, 4200 Norwest Center, 90 S. Seventh St., Minneapolis, MN
55402-3900. The independent auditors also provide other accounting and
tax-related services as requested by the Fund.

FINANCIAL STATEMENTS

The Independent Auditors' Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the Annual Report to shareholders for the fiscal year ended 1997,
pursuant to Section 30(d) of the Investment Company Act of 1940, as amended, are
hereby incorporated in this SAI by reference. No other portion of the Annual
Report, however, is incorporated by reference.

PROSPECTUS

The prospectus for IDS Strategy Aggressive Fund, dated May 30, 1997, is hereby
incorporated in this SAI by reference.

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PAGE 93
APPENDIX A

DESCRIPTION OF BOND RATINGS

These ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price.

Ratings by Moody's Investors Service, Inc. are Aaa, Aa, A, Baa, Ba,
B, Caa, Ca, and C.

Bonds rated:

Aaa are judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risk
appear somewhat larger than the Aaa securities.

A possess many favorable investment attributes and are to be considered as
upper-medium-grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment some time in the future.

Baa are considered as medium-grade obligations (i.e., they are neither highly
protected nor poorly secured). Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba are judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.

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PAGE 94
B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.

Caa are of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.

Ca represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.

C are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C
and D.

AAA has the highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.

AA has a very strong capacity to pay interest and repay principal and differs
from the highest rated issues only in small degree.

A has a strong capacity to pay interest and repay principal, although it is
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher-rated categories.

BBB is regarded as having adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher-rated categories.

BB has less near-term vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or implied BBB-
rating.

B has a greater vulnerability to default but currently has the capacity to meet
interest payments and principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or willingness to pay interest
and repay principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.

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PAGE 95
CCC has a currently identifiable vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet timely payment of
interest and repayment of principal. In the event of adverse business,
financial, or economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating.

CC typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC rating.

C typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC- rating. The C rating may be used to cover a situation
where a bankruptcy petition has been filed, but debt service payments are
continued.

D is in payment default. The D rating category is used when interest payments or
principal payments are not made on the due date, even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.

Non-rated securities will be considered for investment when they possess a risk
comparable to that of rated securities consistent with the Fund's objectives and
policies. When assessing the risk involved in each non-rated security, the Fund
will consider the financial condition of the issuer or the protection afforded
by the terms of the security.

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PAGE 96
APPENDIX B

FOREIGN CURRENCY TRANSACTIONS

Since investments in foreign countries usually involve currencies of foreign
countries, and since the Fund may hold cash and cash-equivalent investments in
foreign currencies, the value of the Fund's assets as measured in U.S. dollars
may be affected favorably or unfavorably by changes in currency exchange rates
and exchange control regulations. Also, the Fund may incur costs in connection
with conversions between various currencies.

Spot Rates and Forward Contracts. The Fund conducts its foreign currency
exchange transactions either at the spot (cash) rate prevailing in the foreign
currency exchange market or by entering into forward currency exchange contracts
(forward contracts) as a hedge against fluctuations in future foreign exchange
rates. A forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days from the
contract date, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirements. No commissions are charged at any stage
for trades.

The Fund may enter into forward contracts to settle a security transaction or
handle dividend and interest collection. When the Fund enters into a contract
for the purchase or sale of a security denominated in a foreign currency or has
been notified of a dividend or interest payment, it may desire to lock in the
price of the security or the amount of the payment in dollars. By entering into
a forward contract, the Fund will be able to protect itself against a possible
loss resulting from an adverse change in the relationship between different
currencies from the date the security is purchased or sold to the date on which
payment is made or received or when the dividend or interest is actually
received.

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PAGE 97
execution of a short-term hedging strategy is highly uncertain. The Fund will
not enter into such forward contracts or maintain a net exposure to such
contracts when consummating the contracts would obligate the Fund to deliver an
amount of foreign currency in excess of the value of the Fund's securities or
other assets denominated in that currency.

The Fund will designate cash or securities in an amount equal to the value of
the Fund's total assets committed to consummating forward contracts entered into
under the second circumstance set forth above. If the value of the securities
declines, additional cash or securities will be designated on a daily basis so
that the value of the cash or securities will equal the amount of the Fund's
commitments on such contracts.

At maturity of a forward contract, the Fund may either sell the security and
make delivery of the foreign currency or retain the security and terminate its
contractual obligation to deliver the foreign currency by purchasing an
offsetting contract with the same currency trader obligating it to buy, on the
same maturity date, the same amount of foreign currency.

If the Fund retains the security and engages in an offsetting transaction, the
Fund will incur a gain or a loss (as described below) to the extent there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline between the date the Fund enters
into a forward contract for selling foreign currency and the date it enters into
an offsetting contract for purchasing the foreign currency, the Fund will
realize a gain to the extent that the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to buy. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to buy exceeds the price of the currency it has agreed to
sell.

It is impossible to forecast what the market value of securities will be at the
expiration of a contract. Accordingly, it may be necessary for the Fund to buy
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver.

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PAGE 98
The Fund's dealing in forward contracts will be limited to the transactions
described above. This method of protecting the value of the Fund's securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange that can be achieved at some point in time. Although such forward
contracts tend to minimize the risk of loss due to a decline in value of hedged
currency, they tend to limit any potential gain that might result should the
value of such currency increase.

Although the Fund values its assets each business day in terms of U.S. dollars,
it does not intend to convert its foreign currencies into U.S. dollars on a
daily basis. It will do so from time to time, and shareholders should be aware
of currency conversion costs. Although foreign exchange dealers do not charge a
fee for conversion, they do realize a profit based on the difference (spread)
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.

Options on Foreign Currencies. The Fund may buy put and write covered call
options on foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which securities are denominated will
reduce the dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminutions in the
value of securities, the Fund may buy put options on the foreign currency. If
the value of the currency does decline, the Fund will have the right to sell
such currency for a fixed amount in dollars and will thereby offset, in whole or
in part, the adverse effect on its portfolio which otherwise would have
resulted.

As in the case of other types of options, however, the benefit to the Fund
derived from purchases of foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, the
Fund could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.

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PAGE 99
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the option will most likely not be exercised and the
diminution in value of securities will be fully or partially offset by the
amount of the premium received.

As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the Fund would be required to buy or sell
the underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Fund also may
be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements on exchange rates.

All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if the Fund holds currency sufficient to cover the
option or has an absolute and immediate right to acquire that currency without
additional cash consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An option writer
could lose amounts substantially in excess of its initial investments, due to
the margin and collateral requirements associated with such positions.

Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost.

Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the Options Clearing Corporation (OCC), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting the Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

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PAGE 100
The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in certain foreign countries
for the purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

Foreign Currency Futures and Related Options. The Fund may enter into currency
futures contracts to sell currencies. It also may buy put options and write
covered call options on currency futures. Currency futures contracts are similar
to currency forward contracts, except that they are traded on exchanges (and
have margin requirements) and are standardized as to contract size and delivery
date. Most currency futures call for payment of delivery in U.S. dollars. The
Fund may use currency futures for the same purposes as currency forward
contracts, subject to Commodity Futures Trading Commission (CFTC) limitations.
All futures contracts are aggregated for purposes of the percentage limitations.

Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the values of
the Fund's investments. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect the Fund
against price decline if the issuer's creditworthiness deteriorates. Because the
value of the Fund's investments denominated in foreign currency will change in
response to many factors other than exchange rates, it may not be possible to
match the amount of a forward contract to the value of the Fund's investments
denominated in that currency over time.

The Fund will hold securities or other options or futures positions whose values
are expected to offset its obligations. The Fund will not enter into an option
or futures position that exposes the Fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or (ii) cash,
receivables and short-term debt securities with a value sufficient to cover its
potential obligations.

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PAGE 101
APPENDIX C

OPTIONS AND STOCK INDEX FUTURES CONTRACTS

The Fund may buy or write options traded on any U.S. or foreign exchange or in
the over-the-counter market. The Fund may enter into stock index futures
contracts traded on any U.S. or foreign exchange. The Fund also may buy or write
put and call options on these futures and on stock indexes. Options in the
over-the-counter market will be purchased only when the investment manager
believes a liquid secondary market exists for the options and only from dealers
and institutions the investment manager believes present a minimal credit risk.
Some options are exercisable only on a specific date. In that case, or if a
liquid secondary market does not exist, the Fund could be required to buy or
sell securities at disadvantageous prices, thereby incurring losses.

OPTIONS. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees to sell the security at the set price when the buyer wants to exercise
the option, no matter what the market price of the security is at that time. A
person who buys a put option has the right to sell a security at a set price for
the length of the contract. A person who writes a put option agrees to buy the
security at the set price if the purchaser wants to exercise the option, no
matter what the market price of the security is at that time. An option is
covered if the writer owns the security (in the case of a call) or sets aside
the cash or securities of equivalent value (in the case of a put) that would be
required upon exercise.

The price paid by the buyer for an option is called a premium. In addition the
buyer generally pays a broker a commission. The writer receives a premium, less
another commission, at the time the option is written. The cash received is
retained by the writer whether or not the option is exercised. A writer of a
call option may have to sell the security for a below-market price if the market
price rises above the exercise price. A writer of a put option may have to pay
an above-market price for the security if its market price decreases below the
exercise price. The risk of the writer is potentially unlimited, unless the
option is covered.

Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options may benefit the Fund and its shareholders by improving the Fund's
liquidity and by helping to stabilize the value of its net assets.

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PAGE 102
Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. Options are
used as a trading technique to take advantage of any disparity between the price
of the underlying security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized only to effect
a transaction when the price of the security plus the option price will be as
good or better than the price at which the security could be bought or sold
directly. When the option is purchased, the Fund pays a premium and a
commission. It then pays a second commission on the purchase or sale of the
underlying security when the option is exercised. For record keeping and tax
purposes, the price obtained on the purchase of the underlying security will be
the combination of the exercise price, the premium and both commissions. When
using options as a trading technique, commissions on the option will be set as
if only the underlying securities were traded.

Put and call options also may be held by the Fund for investment purposes.
Options permit the Fund to experience the change in the value of a security with
a relatively small initial cash investment.

The risk the Fund assumes when it buys an option is the loss of the premium. To
be beneficial to the Fund, the price of the underlying security must change
within the time set by the option contract. Furthermore, the change must be
sufficient to cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the exercise of the
option and sale (in the case of a call) or purchase (in the case of a put) of
the underlying security. Even then the price change in the underlying security
does not ensure a profit since prices in the option market may not reflect such
a change.

Writing covered options. The Fund will write covered options when it feels it is
appropriate and will follow these guidelines:

'All options written by the Fund will be covered. For covered call options if a
decision is made to sell the security, the Fund will attempt to terminate the
option contract through a closing purchase transaction.

'The Fund will deal only in standard option contracts traded on national
securities exchanges or those that may be quoted on NASDAQ (a system of price
quotations developed by the National Association of Securities Dealers, Inc.)

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PAGE 103
'The Fund will write options only as permitted under federal or state laws or
regulations, such as those that limit the amount of total assets subject to the
options. While no limit has been set by the Fund, it will conform to the
requirements of those states. For example, California limits the writing of
options to 50% of the assets of a fund.

Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains. Since the Fund is taxed as a regulated
investment company under the Internal Revenue Code, any gains on options and
other securities held less than three months must be limited to less than 30% of
its annual gross income.

If a covered call option is exercised, the security is sold by the Fund. The
premium received upon writing the option is added to the proceeds received from
the sale of the security. The Fund will recognize a capital gain or loss based
upon the difference between the proceeds and the security's basis. Premiums
received from writing outstanding call options are included as a deferred credit
in the Statement of Assets and Liabilities and adjusted daily to the current
market value.

Options are valued at the close of the New York Stock Exchange. An option listed
on a national exchange, CBOE or NASDAQ will be valued at the last-quoted sales
price or, if such a price is not readily available, at the mean of the last bid
and asked prices.

STOCK INDEX FUTURES CONTRACTS. Stock index futures contracts are commodity
contracts listed on commodity exchanges. They currently include contracts on the
Standard & Poor's 500 Stock Index (S&P 500 Index) and other broad stock market
indexes such as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Index, as well as narrower sub-indexes such as the S&P 100
Energy Stock Index and the New York Stock Exchange Utilities Stock Index. A
stock index assigns relative values to common stocks included in the index and
the index fluctuates with the value of the common stocks so included.

A futures contract is a legal agreement between a buyer or seller and the
clearinghouse of a futures exchange in which the parties agree to make a cash
settlement on a specified future date in an amount determined by the stock index
on the last trading day of the contract. The amount is a specified dollar amount
(usually $100 or $500) multiplied by the difference between the index value on
the last trading day and the value on the day the contract was struck.

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PAGE 104
For example, the S&P 500 Index consists of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative weightings to the common stocks included in the Index, and the Index
fluctuates with changes in the market values of those stocks. In the case of S&P
500 Index futures contracts, the specified multiple is $500. Thus, if the value
of the S&P 500 Index were 150, the value of one contract would be $75,000 (150 x
$500). Unlike other futures contracts, a stock index futures contract specifies
that no delivery of the actual stocks making up the index will take place.
Instead, settlement in cash must occur upon the termination of the contract. For
example, excluding any transaction costs, if the Fund enters into one futures
contract to buy the S&P 500 Index at a specified future date at a contract value
of 150 and the S&P 500 Index is at 154 on that future date, the Fund will gain
$500 x (154-150) or $2,000. If the Fund enters into one futures contract to sell
the S&P 500 Index at a specified future date at a contract value of 150 and the
S&P 500 Index is at 152 on that future date, the Fund will lose $500 x (152-150)
or $1,000.

Unlike the purchase or sale of an equity security, no price would be paid or
received by the Fund upon entering into futures contracts. However, the Fund
would be required to deposit with its custodian, in a segregated account in the
name of the futures broker, an amount of cash or U.S. Treasury bills equal to
approximately 5% of the contract value. This amount is known as initial margin.
The nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
borrowing funds by the Fund to finance the transactions. Rather, the initial
margin is in the nature of a performance bond or good-faith deposit on the
contract that is returned to the Fund upon termination of the contract, assuming
all contractual obligations have been satisfied.

Subsequent payments, called variation margin, to and from the broker would be
made on a daily basis as the price of the underlying stock index fluctuates,
making the long and short positions in the contract more or less valuable, a
process known as marking to market. For example, when the Fund enters into a
contract in which it benefits from a rise in the value of an index and the price
of the underlying stock index has risen, the Fund will receive from the broker a
variation margin payment equal to that increase in value. Conversely, if the
price of the underlying stock index declines, the Fund would be required to make
a variation margin payment to the broker equal to the decline in value.

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PAGE 105
How the Fund Would Use Stock Index Futures Contracts. The Fund intends to use
stock index futures contracts and related options for hedging and not for
speculation. Hedging permits the Fund to gain rapid exposure to or protect
itself from changes in the market. For example, the Fund may find itself with a
high cash position at the beginning of a market rally. Conventional procedures
of purchasing a number of individual issues entail the lapse of time and the
possibility of missing a significant market movement. By using futures
contracts, the Fund can obtain immediate exposure to the market and benefit from
the beginning stages of a rally. The buying program can then proceed and once it
is completed (or as it proceeds), the contracts can be closed. Conversely, in
the early stages of a market decline, market exposure can be promptly offset by
entering into stock index futures contracts to sell units of an index and
individual stocks can be sold over a longer period under cover of the resulting
short contract position.

The Fund may enter into contracts with respect to any stock index or sub-index.
To hedge the Fund's portfolio successfully, however, the Fund must enter into
contracts with respect to indexes or sub- indexes whose movements will have a
significant correlation with movements in the prices of the Fund's securities.

Special Risks of Transactions in Stock Index Futures Contracts

1. Liquidity. The Fund may elect to close some or all of its contracts prior to
expiration. The purpose of making such a move would be to reduce or eliminate
the hedge position held by the Fund. The Fund may close its positions by taking
opposite positions. Final determinations of variation margin are then made,
additional cash as required is paid by or to the Fund, and the Fund realizes a
gain or a loss.

Positions in stock index futures contracts may be closed only on an exchange or
board of trade providing a secondary market for such futures contracts. For
example, futures contracts transactions can currently be entered into with
respect to the S&P 500 Stock Index on the Chicago Mercantile Exchange, the New
York Stock Exchange Composite Stock Index on the New York Futures Exchange and
the Value Line Composite Stock Index on the Kansas City Board of Trade. Although
the Fund intends to enter into futures contracts only on exchanges or boards of
trade where there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular contract
at any particular time. In such event, it may not be possible to close a futures
contract position, and in the event of adverse price movements, the Fund would
have to make daily cash payments of variation margin. Such price movements,
however, will be offset all or in part by the price movements of the securities
subject to the hedge. Of course, there is no guarantee the price of the
securities will correlate with the price movements in the futures contract and
thus provide an offset to losses on a futures contract.

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PAGE 106
2. Hedging Risks. There are several risks in using stock index futures contracts
as a hedging device. One risk arises because the prices of futures contracts may
not correlate perfectly with movements in the underlying stock index due to
certain market distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements. Rather than making
additional variation margin payments, investors may close the contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, the margin requirements in the futures market
are lower than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market also may cause
temporary price distortions. Because of price distortion in the futures market
and because of imperfect correlation between movements in stock indexes and
movements in prices of futures contracts, even a correct forecast of general
market trends may not result in a successful hedging transaction over a short
period.

Another risk arises because of imperfect correlation between movements in the
value of the futures contracts and movements in the value of securities subject
to the hedge. If this occurred, the Fund could lose money on the contracts and
also experience a decline in the value of its portfolio securities. While this
could occur, the investment manager believes that over time the value of the
Fund's portfolio will tend to move in the same direction as the market indexes
and will attempt to reduce this risk, to the extent possible, by entering into
futures contracts on indexes whose movements it believes will have a significant
correlation with movements in the value of the Fund's securities sought to be
hedged. It also is possible that if the Fund has hedged against a decline in the
value of the stocks held in its portfolio and stock prices increase instead, the
Fund will lose part or all of the benefit of the increased value of its stock
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has insufficient cash,
it may have to sell securities to meet daily variation margin requirements. Such
sales of securities may be, but will not necessarily be, at increased prices
which reflect the rising market. The Fund may have to sell securities at a time
when it may be disadvantageous to do so.

<PAGE>

PAGE 107
short position if the option is a put) at a specified exercise price at any time
during the period of the option. If the option is closed instead of exercised,
the holder of the option receives an amount that represents the amount by which
the market price of the contract exceeds (in the case of a call) or is less than
(in the case of a put) the exercise price of the option on the futures contract.
If the option does not appreciate in value prior to the exercise date, the Fund
will suffer a loss of the premium paid.

OPTIONS ON STOCK INDEXES. Options on stock indexes are securities traded on
national securities exchanges. An option on a stock index is similar to an
option on a futures contract except all settlements are in cash. A fund
exercising a put, for example, would receive the difference between the exercise
price and the current index level. Such options would be used in the same manner
as options on futures contracts.

SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES CONTRACTS AND
OPTIONS ON STOCK INDEXES. As with options on stocks, the holder of an option on
a futures contract or on a stock index may terminate a position by selling an
option covering the same contract or index and having the same exercise price
and expiration date. The ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid secondary
market. The Fund will not purchase options unless the market for such options
has developed sufficiently, so that the risks in connection with options are not
greater than the risks in connection with stock index futures contracts
transactions themselves. Compared to using futures contracts, purchasing options
involves less risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). There may be circumstances,
however, when using an option would result in a greater loss to the Fund than
using a futures contract, such as when there is no movement in the level of the
stock index.

TAX TREATMENT. As permitted under federal income tax laws, the Fund intends to
identify futures contracts as mixed straddles and not mark them to market, that
is, not treat them as having been sold at the end of the year at market value.
Such an election may result in the Fund being required to defer recognizing
losses incurred by entering into futures contracts and losses on underlying
securities identified as being hedged against.

Federal income tax treatment of gains or losses from transactions in options on
futures contracts and indexes will depend on whether such option is a section
1256 contract. If the option is a non-equity option, the Fund will either make a
1256(d) election and

<PAGE>

PAGE 108
treat the option as a mixed straddle or mark to market the option at fiscal year
end and treat the gain/loss as 40% short-term and 60% long-term. Certain
provisions of the Internal Revenue Code may also limit the Fund's ability to
engage in futures contracts and related options transactions. For example, at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its assets must consist of cash, government securities and other securities,
subject to certain diversification requirements. Less than 30% of its gross
income must be derived from sales of securities held less than three months.

The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50%-of-assets test and that its issuer is the issuer of the
underlying security, not the writer of the option, for purposes of the
diversification requirements. In order to avoid realizing a gain within the
three-month period, the Fund may be required to defer closing out a contract
beyond the time when it might otherwise be advantageous to do so. The Fund also
may be restricted in purchasing put options for the purpose of hedging
underlying securities because of applying the short sale holding period rules
with respect to such underlying securities.

Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (the Fund's agent in acquiring the futures position). During the
period the futures contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a daily basis
to reflect the market value of the contract at the end of each day's trading.
Variation margin payments will be made or received depending upon whether gains
or losses are incurred. All contracts and options will be valued at the
last-quoted sales price on their primary exchange.

<PAGE>

PAGE 109
APPENDIX D

MORTGAGE-BACKED SECURITIES

A mortgage pass-through certificate is one that represents an interest in a
pool, or group, of mortgage loans assembled by the Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal
National Mortgage Association (FNMA) or non-governmental entities. In
pass-through certificates, both principal and interest payments, including
prepayments, are passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and the actual
yield (or total return) to the Fund, which is influenced by both stated interest
rates and market conditions, may be different than the quoted yield on
certificates. Some U.S. government securities may be purchased on a when-issued
basis, which means that it may take as long as 45 days after the purchase before
the securities are delivered to the Fund.

Stripped Mortgage-Backed Securities. The Fund may invest in stripped
mortgage-backed securities. Generally, there are two classes of stripped
mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs
entitle the holder to receive distributions consisting of all or a portion of
the interest on the underlying pool of mortgage loans or mortgage-backed
securities. POs entitle the holder to receive distributions consisting of all or
a portion of the principal of the underlying pool of mortgage loans or
mortgage-backed securities. The cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments (including prepayments) on
the underlying mortgage loans or mortgage-backed securities. A rapid rate of
principal payments may adversely affect the yield to maturity of IOs. A slow
rate of principal payments may adversely affect the yield to maturity of POs. On
an IO, if prepayments of principal are greater than anticipated, an investor may
incur substantial losses. If prepayments of principal are slower than
anticipated, the yield on a PO will be affected more severely than would be the
case with a traditional mortgage-backed security.

Mortgage-Backed Security Spread Options. The Fund may purchase mortgage-backed
security (MBS) put spread options and write covered MBS call spread options. MBS
spread options are based upon the changes in the price spread between a
specified mortgage-backed security and a like-duration Treasury security. MBS
spread options are traded in the OTC market and are of short duration, typically
one to two months. The Fund would buy or sell covered MBS call spread options in
situations where mortgage-backed securities are expected to underperform
like-duration Treasury securities.

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PAGE 110
APPENDIX E

DOLLAR-COST AVERAGING

A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more shares will be purchased when
the price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
shares lower than the average market price of shares purchased, although there
is no guarantee.

While this technique does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many shareholders who
can continue investing on a regular basis through changing market conditions,
including times when the price of their shares falls or the market declines, to
accumulate shares in a fund to meet long-term goals.

Dollar-cost averaging

- -------------------------------------------------------------------
Regular Market Price Shares
Investment of a Share Acquired
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
---- ----- -----
$500 $25.00 103.4

Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).

<PAGE>

PAGE 111

IDS STRATEGY FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS EQUITY VALUE FUND

May 30, 1997

This SAI is dated May 30, 1997, and it is to be used with the prospectus dated
May 30, 1997, and the Annual Report for the fiscal year ended March 31, 1997.

<PAGE>

PAGE 112 TABLE OF CONTENTS

Goal and Investment Policies......................See Prospectus

Additional Investment Policies.................................3

Security Transactions..........................................6

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation.........................8

Performance Information........................................9

Valuing Fund Shares...........................................10

Investing in the Fund.........................................12

Redeeming Shares..............................................16

Pay-out Plans.................................................17

Taxes.........................................................18

Agreements....................................................19

Organizational Information....................................22

Board Members and Officers....................................23

Compensation for Board Members................................26

Independent Auditors..........................................27

Financial Statements...........................See Annual Report

Prospectus....................................................27

Appendix A: Description of Bond Ratings......................28

Appendix B: Foreign Currency Transactions....................31

Appendix C: Options and Stock Index Futures Contracts........36

Appendix D: Mortgage-Backed Securities.......................43

Appendix E: Dollar-Cost Averaging............................44

<PAGE>

PAGE 113
ADDITIONAL INVESTMENT POLICIES

'Make cash loans if the total commitment amount exceeds 5% of the Fund's total
assets.

'Purchase more than 10% of the outstanding voting securities of an
issuer.

Invest more than 5% of its total assets in securities of any one company,
government or political subdivision thereof, except the limitation will not
apply to investments in securities issued by the U.S. government, its agencies
or instrumentalities, and except that up to 25% of the Fund's total assets may
be invested without regard to this 5% limitation.

'Make a loan of any part of its assets to American Express Financial Corporation
(AEFC), to the board members and officers of AEFC or to its own board members
and officers.

'Purchase securities of an issuer if the board members and officers
of the Fund and AEFC hold more than a certain percentage of the
issuer's outstanding securities. If the holdings of all board

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PAGE 114
members and officers of the Fund and of AEFC who own more than 0.5% of an
issuer's securities are added together, and if in total they own more than 5%,
the Fund will not purchase securities of that issuer.

Unless changed by the board, the Fund will not:

'Pledge or mortgage its assets beyond 15% of total assets. If the Fund were ever
to do so, valuation of the pledged or mortgaged assets would be based on market
values. For the purposes of this policy, collateral arrangements for margin
deposits on futures contracts are not deemed to be a pledge of assets.

'Invest more than 5% of its total assets in securities of companies, including
any predecessor, that have a record of less than three years continuous
operations.

'Invest more than 10% of its total assets in the securities of investment
companies. The Fund has no current intention to invest in securities of other
investment companies.

'Invest in a company to control or manage it.

'Invest in exploration or development programs, such as oil, gas or
mineral leases.

'Buy on margin or sell securities short but the Fund may make margin payments in
connection with transactions in futures contracts.

<PAGE>

PAGE 115

'Invest more than 5% of its net assets in warrants.

'Invest more than 10% of its net assets in securities and other instruments that
are illiquid. For purposes of this policy illiquid securities include some
privately placed securities, public securities and Rule 144A securities that for
one reason or another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable fixed-time
deposits and over-the-counter options.

The Fund may purchase securities on a when-issued basis, which means that it may
take as long as 45 days after the purchase before the securities are delivered
to the Fund. Payment and interest terms, however, are fixed at the time the
purchaser enters into a commitment. Under normal market conditions, the Fund
does not intend to commit more than 5% of its total assets to these practices.
The Fund does not pay for the securities or start earning interest on them until
the contractual settlement date. When-issued securities are subject to market
fluctuations and they may affect the Fund's total assets the same as owned
securities.

The Fund may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Fund may use are short-term
U.S. and Canadian government securities and negotiable certificates of deposit,
non-negotiable fixed-time deposits, bankers' acceptances and letters of credit
of banks or savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual financial
statements) in excess of $100 million (or the equivalent in the instance of a
foreign branch of a U.S. bank) at the date of investment. Any cash-equivalent
investment in foreign securities will be subject to the limitations on foreign
investments described in the prospectus. The Fund also may repurchase short-term
corporate notes and obligations rated in the top two

<PAGE>

PAGE 116
classifications by Moody's Investors Service, Inc. (Moody's) or Standard &
Poor's Corporation (S&P) or the equivalent and may use repurchase agreements
with broker-dealers registered under the Securities Exchange Act of 1934 and
with commercial banks. A risk of a repurchase agreement is that if the seller
seeks the protection of the bankruptcy laws, the Fund's ability to liquidate the
security involved could be impaired.

For a description of bond ratings, see Appendix A. For a discussion on foreign
currency transactions, see Appendix B. For a discussion on options and stock
index futures contracts see Appendix C. For a discussion on mortgage-backed
securities, see Appendix D.

SECURITY TRANSACTIONS

On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board has adopted a policy authorizing AEFC to do so to the extent authorized by
law, if AEFC determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage or research services provided by a broker
or dealer, viewed either in the light of that transaction or AEFC's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP and other funds for
which it acts as investment advisor.

<PAGE>

PAGE 117
purchase recommendations for stocks and bonds; portfolio strategy services;
political, economic, business and industry trend assessments; historical
statistical information; market data services providing information on specific
issues and prices; and technical analysis of various aspects of the securities
markets, including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone or at
seminars or other meetings. AEFC has obtained and in the future may obtain
computer hardware from brokers, including but not limited to personal computers
that will be used exclusively for investment decision-making purposes, which
include the research, portfolio management and trading functions and other
services to the extent permitted under an interpretation by the SEC.

<PAGE>

PAGE 118
agrees in advance is fair. Although sharing in large transactions may adversely
affect the price or volume purchased or sold by the Fund, the Fund hopes to gain
an overall advantage in execution. AEFC has assured the Fund it will continue to
seek ways to reduce brokerage costs.

The Fund paid total brokerage commissions of $2,303,338 for the fiscal year
ended March 31, 1997, $2,195,842 for fiscal year 1996, and $3,414,046 for fiscal
year 1995. Substantially all firms through whom transactions were executed
provide research services.

In fiscal year 1997, transactions amounting to $73,900,000, on which $124,559 in
commissions were imputed or paid, were specifically directed to firms in
exchange for research services.

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Bank of America $ 6,499,988
Morgan (JP) 24,562,500
Morgan Stanley Group 595,329
Nations Bank 21,319,375

The portfolio turnover rate was 60% in the fiscal year ended March 31, 1997, and
54% in fiscal year 1996.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION

Affiliates of American Express Company (American Express) (of which AEFC is a
wholly owned subsidiary) may engage in brokerage and other securities
transactions on behalf of the [each] Fund according to procedures adopted by the
Fund's board and to the extent consistent with applicable provisions of the
federal securities laws. AEFC will use an American Express affiliate only if (i)
AEFC determines that the [each] Fund will receive prices and executions at least
as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for the Fund and (ii) the affiliate charges
the [each] Fund commission rates consistent with those the affiliate charges
comparable unaffiliated customers in similar transactions and if such use is
consistent with terms of the Investment Management Services Agreement.

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PAGE 119
AEFC may direct brokerage to compensate an affiliate. AEFC will receive research
on South Africa from New Africa Advisors, a wholly-owned subsidiary of Sloan
Financial Group. AEFC owns 100% of IDS Capital Holdings Inc. which in turn owns
40% of Sloan Financial Group. New Africa Advisors will send research to AEFC and
in turn AEFC will direct trades to a particular broker. The broker will have an
agreement to pay New Africa Advisors. All transactions will be on a best
execution basis. Compensation received will be reasonable for the services
rendered.

Information about brokerage commissions paid by the Fund for the last three
fiscal years to brokers affiliated with AEFC is contained in the following
table:
<TABLE>
<CAPTION>

For the Fiscal Year Ended March 31,

1997 1996 1995
------------------------------------------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
- ------ ----------- ------ ----------- -------------- ------- ------
Lehman Brothers Inc. (1) None None None None $69,750

American Enterprise
Investment Services
Inc. (2) $18,845 0.82% 2.04% $9,088 51,235
</TABLE>

(1) Under common control with AEFC as a subsidiary of American Express until May
31, 1994.
(2) Wholly owned subsidiary of AEFC.

PERFORMANCE INFORMATION

Average annual total return

P(1+T) n = ERV

<PAGE>

PAGE 120
Aggregate total return

ERV - P
P

VALUING FUND SHARES

Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
Class A $ 426,235,848 divided by 36,618,200 equals $11.64
Class B 1,511,865,178 129,773,835 11.65
Class Y 1,702 146 11.66
</TABLE>

In determining net assets before shareholder transactions, the Fund's securities
are valued as follows as of the close of the New York Stock Exchange (the
Exchange):

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PAGE 121
'Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.

'Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.

'Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short- term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of market value determined
by systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to the maturity value on the maturity date.

<PAGE>

PAGE 122

The Exchange, AEFC and the Fund will be closed on the following
holidays: New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined at the close
of business on the day an application is accepted. The public offering price is
the net asset value of one share plus a sales charge, if applicable. For Class B
and Class Y, there is no initial sales charge so the public offering price is
the same as the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made April 1, 1997, was determined by dividing
the net asset value of one share, $11.64, by 0.95 (1.00-0.05 for a maximum 5%
sales charge) for a public offering price of $12.25. The sales charge is paid to
American Express Financial Advisors by the person buying the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested

First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

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PAGE 123
The following table shows the range of sales charges as a percentage of the
public offering price and of the net amount invested on total investments at
each applicable level.

On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:

The initial sales charge is waived for certain qualified plans that meet the
requirements described in the prospectus. Participants in these qualified plans
may be subject to a deferred sales charge on certain redemptions. The deferred
sales charge on certain redemptions will be waived if the redemption is a result
of a participant's death, disability, retirement, attaining age 59 1/2, loans or
hardship withdrawals. The deferred sales charge varies depending on the number
of participants in the qualified plan and total plan assets as follows:

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more

Less than $1 million 4% 0%

$1 million or more 0% 0%
- ---------------------------------------------------------

Class A - Reducing the Sales Charge

<PAGE>

PAGE 124

residence and have joint property or other insurable interests.) For instance,
if your spouse already has invested $20,000 and you want to invest $40,000, your
total amount invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.

Class A - Letter of Intent (LOI)

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PAGE 125
Systematic Investment Programs

After you make your initial investment of $2,000 or more, you can arrange to
make additional payments of $100 or more on a regular basis. These minimums do
not apply to all systematic investment programs. You decide how often to make
payments - monthly, quarterly, or semiannually. You are not obligated to make
any payments. You can omit payments or discontinue the investment program
altogether. The Fund also can change the program or end it at any time. If there
is no obligation, why do it? Putting money aside is an important part of
financial planning. With a systematic investment program, you have a goal to
work for.

For a discussion on dollar-cost averaging, see Appendix E.

Automatic Directed Dividends

Between a non-custodial account and an IRA, or 401(k) plan account or other
qualified retirement account of which American Express Trust Company acts as
custodian;

Between two American Express Trust Company custodial accounts with different
owners (for example, you may not exchange dividends from your IRA to the IRA of
your spouse);

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PAGE 126
Dividends may be directed from accounts established under the Uniform Gifts to
Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) only into other UGMA
or UTMA accounts with identical ownership.

The Fund's investment goal is described in its prospectus along with other
information, including fees and expense ratios. Before exchanging dividends into
another fund, you should read its prospectus. You will receive a confirmation
that the automatic directed dividend service has been set up for your account.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.

'The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or

'Disposal of the Fund's securities is not reasonably practicable or
it is not reasonably practicable for the Fund to determine the fair
value of its net assets, or

'The SEC, under the provisions of the Investment Company Act of 1940 (the 1940
Act), as amended, declares a period of emergency to exist.

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to lesser of $250,000 or 1% of the net assets of
the Fund at the beginning of the period. Although redemptions in excess of this
limitation would normally be paid in cash, the Fund reserves the right to make
these payments in whole or in part in securities or other assets in case of an
emergency, or if the payment of a redemption in cash would be detrimental to the
existing shareholders of the Fund as determined by the board. In these
circumstances, the securities distributed would be valued as set forth in the
prospectus. Should the Fund distribute securities, a shareholder may incur
brokerage fees or other transaction costs in converting the securities to cash.

<PAGE>

PAGE 127
PAY-OUT PLANS

To start any of these plans, please write American Express Shareholder Service,
P.O. Box 534, Minneapolis, MN 55440-0534, or call American Express Financial
Advisors Telephone Transaction Service at 800-437-3133 (National/Minnesota) or
612-671-3800 (Mpls./St.Paul). Your authorization must be received in the
Minneapolis headquarters at least five days before the date you want your
payments to begin. The initial payment must be at least $50. Payments will be
made on a monthly, bimonthly, quarterly, semiannual or annual basis. Your choice
is effective until you change or cancel it.

Plan #1: Pay-out for a fixed period of time

Plan #2: Redemption of a fixed number of shares

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PAGE 128
Plan #3: Redemption of a fixed dollar amount

If you decide on a fixed dollar amount, whatever number of shares is necessary
to make the payment will be redeemed in regular installments until the account
is closed.

Plan #4: Redemption of a percentage of net asset value

TAXES

Retirement Accounts

Net investment income dividends received should be treated as dividend income
for federal income tax purposes. Corporate shareholders are generally entitled
to a deduction equal to 70% of that portion of the Fund's dividend that is
attributable to dividends the Fund received from domestic (U.S.) securities. For
the fiscal year ended March 31, 1997, 45.75% of the Fund's net investment income
dividends qualified for the corporate deduction.

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PAGE 129
Under federal tax law and an election made by the Fund under federal tax
regulations, by the end of a calendar year the Fund must declare and pay
dividends representing 98% of ordinary income for that calendar year and 98% of
net capital gains (both long-term and short-term) for the 12-month period ending
Oct. 31 of that calendar year. The Fund is subject to an excise tax equal to 4%
of the excess, if any, of the amount required to be distributed over the amount
actually distributed. The Fund intends to comply with federal tax law and avoid
any excise tax.

AGREEMENTS

Investment Management Services Agreement

The Fund has an Investment Management Services Agreement with AEFC. For its
services, AEFC is paid a fee based on the following schedule:

Assets Annual rate at
(billions) each asset level

First $0.50 0.530%
Next 0.50 0.505
Next 1.0 0.480
Next 1.0 0.455
Next 3.0 0.430
Over 6.0 0.400

On March 31, 1997, the daily rate applied to the Fund's net assets was equal to
0.499% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made.

The management fee is paid monthly. Under the agreement, the total amount paid
was $8,882,479 for the fiscal year ended March 31, 1997, $7,365,378 for fiscal
year 1996, and $6,217,085 for fiscal year 1995.

Under the agreement, the Fund also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees; audit and certain legal
fees; fidelity bond premiums; registration fees for shares; office expenses;
consultants' fees; compensation of board members, officers and employees;
corporate filing fees;

<PAGE>

PAGE 130

organizational expenses; expenses incurred in connection with lending securities
of the Fund; and expenses properly payable by the Fund, approved by the board.
Under the agreement, the Fund paid nonadvisory expenses of $429,531 for the
fiscal year ended March 31, 1997, $699,027 for fiscal year 1996, and $978,996
for fiscal year 1995.

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under this
agreement, the Fund pays AEFC for providing administration and accounting
services. The fee is calculated as follows:

Assets Annual rate
(billions) each asset level

First $0.50 0.040%
Next 0.50 0.035
Next 1.0 0.030
Next 1.0 0.025
Next 3.0 0.020
Over 6.0 0.020

On March 31, 1997, the daily rate applied to the Fund's net assets was equal to
0.034% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made. Under the agreement, the Fund paid fees
of $616,197 for the fiscal year ended March 31, 1997.

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with AEFC. This agreement governs
AEFC's responsibility for administering and/or performing transfer agent
functions, for acting as service agent in connection with dividend and
distribution functions and for performing shareholder account administration
agent functions in connection with the issuance, exchange and redemption or
repurchase of the Fund's shares. Under the agreement, AEFC will earn a fee from
the Fund determined by multiplying the number of shareholder accounts at the end
of the day by a rate determined for each class per year and dividing by the
number of days in the year. The rate for Class A and Class Y is $15 per year and
for Class B is $16 per year. The fees paid to AEFC may be changed from time to
time upon agreement of the parties without shareholder approval. Under the
agreement, the Fund paid fees of $2,847,243 for the fiscal year ended March 31,
1997.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing Fund
shares are paid to American Express Financial Advisors daily. These charges
amounted to $1,850,163 for the fiscal year ended March 31, 1997. After paying
commissions to

<PAGE>

PAGE 131

personal financial advisors, and other expenses, the amount retained was
$(1,255,823). The amounts were $374,392 and $(1,965,754) for fiscal year 1996,
and $968,796 and $(799,944) for fiscal year 1995.

Additional information about commissions and compensation for the fiscal year
ended March 31, 1997, is contained in the following table:

(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation

AEFC None None $18,845* $10,517,714**

American
Express
Financial
Advisors $1,850,163 None None None

*For further information see "Brokerage Commissions Paid to Brokers Affiliated
with AEFC." **Distribution fees paid pursuant to the Plan and Agreement of
Distribution.

Shareholder Service Agreement

Plan and Agreement of Distribution

<PAGE>

PAGE 132

operation of the Plan or in any agreement related to the Plan, or by vote of a
majority of the outstanding voting securities of the Fund's Class B shares or by
American Express Financial Advisors. The Plan (or any agreement related to it)
will terminate in the event of its assignment, as that term is defined in the
1940 Act, as amended. The Plan may not be amended to increase the amount to be
spent for distribution without shareholder approval, and all material amendments
to the Plan must be approved by a majority of the board members, including a
majority of the board members who are not interested persons of the Fund and who
do not have a financial interest in the operation of the Plan or any agreement
related to it. The selection and nomination of disinterested board members is
the responsibility of the other disinterested board members. No board member who
is not an interested person, has any direct or indirect financial interest in
the operation of the Plan or any related agreement. For the fiscal year ended
March 31, 1997, under the agreement, the Fund paid fees of $10,517,714.

Custodian Agreement

The custodian has entered into a sub-custodian arrangement with the Morgan
Stanley Trust Company (Morgan Stanley), One Pierrepont Plaza, Eighth Floor,
Brooklyn, NY 11201-2775. As part of this arrangement, securities purchased
outside the United States are maintained in the custody of various foreign
branches of Morgan Stanley or in such other financial institutions as may be
permitted by law and by the Fund's sub-custodian agreement.

Total fees and expenses

The Fund paid total fees and nonadvisory expenses of $26,354,141 for the fiscal
year ended March 31, 1997.

ORGANIZATIONAL INFORMATION

IDS Strategy Fund, Inc., of which Equity Value Fund is a part, is an open-end
management investment company, as defined in the Investment Company Act of 1940.
It was incorporated on Jan. 24, 1984 in Minnesota. The Fund headquarters are at
901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268.

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PAGE 133
BOARD MEMBERS AND OFFICERS

H. Brewster Atwater, Jr.
Born in 1931
4900 IDS Tower
Minneapolis, MN

Former chairman and chief executive officer, General Mills, Inc.
Director, Merck & Co., Inc. and Darden Restaurants, Inc.

Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

William H. Dudley**
Born in 1932
2900 IDS Tower
Minneapolis, MN

Executive vice president and director of AEFC.

Robert F. Froehlke+
Born in 1922
1201 Yale Place
Minneapolis, MN

David R. Hubers+**
Born in 1943
2900 IDS Tower
Minneapolis, MN

President, chief executive officer and director of AEFC. Previously, senior vice
president, finance and chief financial officer of AEFC.

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PAGE 134

Heinz F. Hutter+'
Born in 1929
P.O. Box 2187
Minneapolis, MN

Former president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).

Anne P. Jones
Born in 1935
5716 Bent Branch Rd.
Bethesda, MD

Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.

Melvin R. Laird
Born in 1922
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.

William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN

Alan K. Simpson
Born in 1931
1201 Sunshine Ave.
Cody, WY

Former three-term United States Senator for Wyoming. Former
Assistant Republican Leader, U.S. Senate. Director, PacifiCorp
(electric power).

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PAGE 135
Edson W. Spencer+
Born in 1926
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

Wheelock Whitney+
Born in 1926
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN

The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.

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PAGE 136
In addition to Mr. Pearce, who is president, the Fund's other officers are:

Leslie L. Ogg
Born in 1938
901 S. Marquette Ave.
Minneapolis, MN

Vice president, treasurer and corporate secretary of Board Services Corporation.
Vice president, general counsel and secretary for the Fund.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN

Director and senior vice president-investments of AEFC. Vice
president-investments for the Fund.

Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN

Director, senior vice president and chief financial officer of AEFC. Director,
executive vice president and controller of IDS Life Insurance Company. Treasurer
for the Fund.

COMPENSATION FOR FUND BOARD MEMBERS

Members of the board who are not officers of the Fund or AEFC receive an annual
fee of $1,200, and the chair of the Contracts Committee receives an additional
$90. Board members receive a $50 per day attendance fee for board meetings. The
attendance fee for meetings of the Contracts and Investment Review Committees is
$50; for meetings of the Audit Committee and Personnel Committee $25 and for
traveling from out-of-state $8. Expenses for attending meetings are reimbursed.

<PAGE>

PAGE 137

During the fiscal year ended March 31, 1997, the members of the board, for
attending up to 28 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table
<S> <C> <C> <C> <C>
Pension or Estimated Total cash compensation
Aggregate Retirement annual from the IDS MUTUAL FUND
compensation benefits accrued benefit upon GROUP and the Preferred
Board member from the Fund as Fund expenses* retirement Master Trust Group
- --------------------------------------------------------------------------------------------------
H. Brewster Atwater, Jr. $ 850 $ 0 $ 0 $ 41,400
(part of year)
Lynne V. Cheney 1,932 260 750 86,500
Robert F. Froehlke 2,075 1,282 750 95,100
Heinz F. Hutter 1,984 338 363 89,600
Anne P. Jones 2,069 299 750 94,400
Donald M. Kendall 178 2,109 750 7,000
(part of year)
Melvin R. Laird 1,943 1,227 750 87,100
Lewis W. Lehr 205 1,046 731 8,000
(part of year)
Alan K. Simpson 474 0 0 22,600
(part of year)
Edson W. Spencer 2,116 197 400 98,700
Wheelock Whitney 2,041 614 750 94,100
C. Angus Wurtele 1,981 417 744 89,600

</TABLE>

*The Fund had a retirement plan for its independent board members.
The plan was terminated April 30, 1996.

INDEPENDENT AUDITORS

FINANCIAL STATEMENTS

The Independent Auditors' Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the Annual Report to shareholders for the fiscal year ended March
31, 1997, pursuant to Section 30(d) of the Investment Company Act of 1940, as
amended, are hereby incorporated in this SAI by reference. No other portion of
the Annual Report, however, is incorporated by reference.

PROSPECTUS

The prospectus for IDS Equity Value Fund, dated May 30, 1997, is hereby
incorporated in this SAI by reference.

<PAGE>

PAGE 138
APPENDIX A

DESCRIPTION OF BOND RATINGS

Ratings by Moody's Investors Service, Inc. are Aaa, Aa, A, Baa, Ba,
B, Caa, Ca, and C.

Bonds rated:

B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.

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PAGE 139
Caa are of poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.

Ca represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings.

C are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C
and D.

AAA has the highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.

AA has a very strong capacity to pay interest and repay principal and differs
from the highest rated issues only in small degree.

CCC has a currently identifiable vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet timely payment of
interest and repayment of principal. In the event of adverse business,
financial, or economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating.

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PAGE 140
CC typically is applied to debt subordinated to senior debt that is assigned an
actual or implied CCC rating.

<PAGE>

PAGE 141
APPENDIX B

FOREIGN CURRENCY TRANSACTIONS

The Fund also may enter into forward contracts when management of the Fund
believes the currency of a particular foreign country may suffer a substantial
decline against another currency. It may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of foreign currency approximating the
value of some or all of the Fund's securities denominated in such foreign
currency. The precise matching of forward contract amounts and the value of
securities involved generally will not be possible since the future value of
such securities in foreign currencies more than likely will change between the
date the forward contract is entered into and the date it matures. The
projection of short-term currency market movements is extremely difficult and
successful execution of a short-term hedging strategy is highly uncertain. The
Fund will not enter into such forward contracts or maintain a net exposure to
such contracts when consummating the contracts would obligate the Fund to
deliver an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in that currency.

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PAGE 142
The Fund will designate cash or securities in an amount equal to the value of
the Fund's total assets committed to consummating forward contracts entered into
under the second circumstance set forth above. If the value of the securities
declines, additional cash or securities will be designated on a daily basis so
that the value of the cash or securities will equal the amount of the Fund's
commitments on such contracts.

The Fund's dealing in forward contracts will be limited to the transactions
described above. This method of protecting the value of the Fund's securities
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange that can be achieved at some point in time. Although such forward
contracts tend to minimize the risk of loss due to a decline in value of hedged
currency, they tend to limit any potential gain that might result should the
value of such currency increase.

Although the Fund values its assets each business day in terms of
U.S. dollars, it does not intend to convert its foreign currencies
into U.S. dollars on a daily basis. It will do so from time to

<PAGE>

PAGE 143
time, and shareholders should be aware of currency conversion costs. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (spread) between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.

The Fund may write options on foreign currencies for the same types of hedging
purposes. For example, when the Fund anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in exchange rates
it could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most likely
not be exercised and the diminution in value of securities will be fully or
partially offset by the amount of the premium received.

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PAGE 144
consideration upon conversion of assets denominated in that currency or exchange
of other currency held in its portfolio. An option writer could lose amounts
substantially in excess of its initial investments, due to the margin and
collateral requirements associated with such positions.

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively through the
OCC, which has established banking relationships in certain foreign countries
for the purpose. As a result, the OCC may, if it determines that foreign
governmental restrictions or taxes would prevent the orderly settlement of
foreign currency option exercises, or would result in undue burdens on OCC or
its clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

<PAGE>

PAGE 145
purposes as currency forward contracts, subject to Commodity
Futures Trading Commission (CFTC) limitations. All futures
contracts are aggregated for purposes of the percentage
limitations.

<PAGE>

PAGE 146
APPENDIX C

OPTIONS AND STOCK INDEX FUTURES CONTRACTS

Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. Options are
used as a trading technique to take advantage of any disparity between the price
of the underlying security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized only to effect
a transaction when the price of the security plus

<PAGE>

PAGE 147
the option price will be as good or better than the price at which the security
could be bought or sold directly. When the option is purchased, the Fund pays a
premium and a commission. It then pays a second commission on the purchase or
sale of the underlying security when the option is exercised. For record keeping
and tax purposes, the price obtained on the purchase of the underlying security
will be the combination of the exercise price, the premium and both commissions.
When using options as a trading technique, commissions on the option will be set
as if only the underlying securities were traded.

Put and call options also may be held by the Fund for investment purposes.
Options permit the Fund to experience the change in the value of a security with
a relatively small initial cash investment.

Writing covered options. The Fund will write covered options when it feels it is
appropriate and will follow these guidelines:

'The Fund will write options only as permitted under federal or state laws or
regulations, such as those that limit the amount of total assets subject to the
options.

<PAGE>

PAGE 148
writing outstanding call options are included as a deferred credit in the
Statement of Assets and Liabilities and adjusted daily to the current market
value.

For example, the S&P 500 Index consists of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative weightings to the common stocks included in the Index, and the Index
fluctuates with changes in the market values of those stocks. In the case of S&P
500 Index futures contracts, the specified multiple is $500. Thus, if the value
of the S&P 500 Index were 150, the value of one contract would be $75,000 (150 x
$500). Unlike other futures contracts, a stock index futures contract specifies
that no delivery of the actual stocks making up the index will take place.
Instead, settlement in cash must occur upon the termination of the contract. For
example, excluding any transaction costs, if the Fund enters into one futures
contract to buy the S&P 500 Index at a specified future date at a contract value
of 150 and the S&P 500 Index is at 154 on that future date, the Fund will gain
$500 x (154-150) or $2,000. If the Fund enters into one futures contract to sell
the S&P 500 Index at a specified future date at a contract value of 150 and the
S&P 500 Index is at 152 on that future date, the Fund will lose $500 x (152-150)
or $1,000.

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PAGE 149
approximately 5% of the contract value. This amount is known as initial margin.
The nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
borrowing funds by the Fund to finance the transactions. Rather, the initial
margin is in the nature of a performance bond or good-faith deposit on the
contract that is returned to the Fund upon termination of the contract, assuming
all contractual obligations have been satisfied.

How the Fund Would Use Stock Index Futures Contracts. The Fund intends to use
stock index futures contracts and related options for hedging and not for
speculation. Hedging permits the Fund to gain rapid exposure to or protect
itself from changes in the market. For example, the Fund may find itself with a
high cash position at the beginning of a market rally. Conventional procedures
of purchasing a number of individual issues entail the lapse of time and the
possibility of missing a significant market movement. By using futures
contracts, the Fund can obtain immediate exposure to the market and benefit from
the beginning stages of a rally. The buying program can then proceed and once it
is completed (or as it proceeds), the contracts can be closed. Conversely, in
the early stages of a market decline, market exposure can be promptly offset by
entering into stock index futures contracts to sell units of an index and
individual stocks can be sold over a longer period under cover of the resulting
short contract position.

Special Risks of Transactions in Stock Index Futures Contracts

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PAGE 150
Positions in stock index futures contracts may be closed only on an exchange or
board of trade providing a secondary market for such futures contracts. For
example, futures contracts transactions can currently be entered into with
respect to the S&P 500 Stock Index on the Chicago Mercantile Exchange, the New
York Stock Exchange Composite Stock Index on the New York Futures Exchange and
the Value Line Composite Stock Index on the Kansas City Board of Trade. Although
the Fund intends to enter into futures contracts only on exchanges or boards of
trade where there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular contract
at any particular time. In such event, it may not be possible to close a futures
contract position, and in the event of adverse price movements, the Fund would
have to make daily cash payments of variation margin. Such price movements,
however, will be offset all or in part by the price movements of the securities
subject to the hedge. Of course, there is no guarantee the price of the
securities will correlate with the price movements in the futures contract and
thus provide an offset to losses on a futures contract.

2. Hedging Risks. There are several risks in using stock index futures contracts
as a hedging device. One risk arises because the prices of futures contracts may
not correlate perfectly with movements in the underlying stock index due to
certain market distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements. Rather than making
additional variation margin payments, investors may close the contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, the margin requirements in the futures market
are lower than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market also may cause
temporary price distortions. Because of price distortion in the futures market
and because of imperfect correlation between movements in stock indexes and
movements in prices of futures contracts, even a correct forecast of general
market trends may not result in a successful hedging transaction over a short
period.

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PAGE 151
In addition, in such situations, if the Fund has insufficient cash, it may have
to sell securities to meet daily variation margin requirements. Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Fund may have to sell securities at a time when
it may be disadvantageous to do so.

OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index futures
contracts are similar to options on stock except that options on futures
contracts give the purchaser the right, in return for the premium paid, to
assume a position in a stock index futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. If the option is
closed instead of exercised, the holder of the option receives an amount that
represents the amount by which the market price of the contract exceeds (in the
case of a call) or is less than (in the case of a put) the exercise price of the
option on the futures contract. If the option does not appreciate in value prior
to the exercise date, the Fund will suffer a loss of the premium paid.

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PAGE 152
Federal income tax treatment of gains or losses from transactions in options on
futures contracts and indexes will depend on whether such option is a section
1256 contract. If the option is a non-equity option, the Fund will either make a
1256(d) election and treat the option as a mixed straddle or mark to market the
option at fiscal year end and treat the gain/loss as 40% short-term and 60%
long-term. Certain provisions of the Internal Revenue Code may also limit the
Fund's ability to engage in futures contracts and related options transactions.
For example, at the close of each quarter of the Fund's taxable year, at least
50% of the value of its assets must consist of cash, government securities and
other securities, subject to certain diversification requirements. Less than 30%
of its gross income must be derived from sales of securities held less than
three months.

<PAGE>

PAGE 153
APPENDIX D

MORTGAGE-BACKED SECURITIES

<PAGE>

PAGE 154
APPENDIX E

DOLLAR-COST AVERAGING

Dollar-cost averaging

Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).

<PAGE>

Independent auditors' report The board and shareholders IDS Strategy Fund,
Inc.:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of IDS Equity Value
Fund (a series of IDS Strategy Fund, Inc.) as of March 31, 1997, and the
related statement of operations for the year then ended, and the statements
of changes in net assets for each of the years in the two-year period ended
March 31, 1997, and the financial highlights for each of the years in the
ten-year period ended March 31, 1997. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and
the financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and sold but
not received or delivered and securities on loan, we request confirmations
from brokers, and where replies are not received, we carry out other
appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects,
the financial position of IDS Equity Value Fund at March 31, 1997, and the
results of its operations, changes in its net assets and the financial
highlights for the periods stated in the first paragraph above, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 2, 1997
<PAGE>

Financial statements

Statement of assets and liabilities
IDS Equity Value Fund
March 31, 1997

Assets

Investments in securities, at value (Note 1)
(identified cost $1,649,355,094) $1,927,052,511
Cash in bank on demand deposit 356,793
Dividends and accrued interest receivable 7,025,395
Receivable for investment securities sold 10,333,244
U.S. government securities held as collateral (Note 6) 36,232,758
----------
Total assets 1,981,000,701
=============

Liabilities

Payable for investment securities purchased 9,356,585
Unrealized depreciation on foreign currency contracts
held, at value (Notes 1 and 4) 465,150
Payable upon return of securities loaned (Note 6) 36,232,758
Accrued investment management services fee 109,001
Accrued distribution fee 127,979
Accrued service fee 38,241
Accrued transfer agency fee 31,539
Accrued administrative services fee 7,378
Other accrued expenses 211,679
-------
Total liabilities 46,580,310
----------
Net assets applicable to outstanding capital stock $1,934,420,391
==============

Represented by

Capital stock-- authorized 10,000,000,000 shares
of $.01 par value $ 1,663,922
Additional paid-in capital 1,511,557,612
Undistributed net investment income 1,350,747
Accumulated net realized gain (Note 1) 142,616,648
Unrealized appreciation of investments and on
translation of assets and liabilities in foreign
currencies (Note 4) 277,231,462
- -----------
Total -- representing net assets applicable to
outstanding capital stock $1,934,420,391
==============
Net assets applicable to outstanding shares:
Class A $ 425,532,573
Class B $1,508,886,118
Class Y $ 1,700
Net asset value per share of outstanding capital stock:
Class A shares 36,618,200 $11.62
Class B shares 129,773,835 $11.63
Class Y shares 146 $11.64

See accompanying notes to financial statements.
<PAGE>

Statement of operations
IDS Equity Value Fund
Year ended March 31, 1997

Investment income

Income:
Dividends (net of foreign taxes withheld of $535,750)$ 55,366,418
Interest 6,380,235
---------
Total income 61,746,653
----------
Expenses (Note 2):
Investment management services fee 8,882,479
Distribution fee -- Class B 10,517,714
Transfer agency fee 2,713,103
Incremental transfer agency fee-- Class B 134,140
Service fee
Class A 642,609
Class B 2,418,368
Administrative services fees and expenses 616,197
Compensation of board members 25,710
Compensation of officers 9,663
Custodian fees 134,624
Postage 136,747
Registration fees 47,160
Reports to shareholders 64,774
Audit fees 20,500
Other 34,645
------
Total expenses 26,398,433
Earnings credits on cash balances (Note 2) (44,292)
- -------
Total net expenses 26,354,141
----------
Investment income-- net 35,392,512
----------

Realized and unrealized gain -- net

Net realized gain on security and foreign currency
transactions (including loss of $527,786 from foreign
currency transactions) (Note 3) 216,062,214
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 37,239,689
----------
Net gain on investments and foreign currencies 253,301,903
-----------
Net increase in net assets resulting from operations $288,694,415
============

See accompanying notes to financial statements.

<PAGE>

Statements of changes in net assets
IDS Equity Value Fund
Year ended March 31,

Operations and distributions 1997 1996

Investment income-- net $ 35,392,512 $ 25,287,534
Net realized gain on investments and foreign
currencies 216,062,214 140,762,006
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 37,239,689 163,767,246
---------- -----------
Net increase in net assets resulting from operations 288,694,415 329,816,786
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (9,867,957) (2,245,881)
Class B (26,600,773) (21,676,993)
Class Y (40) (29)
Net realized gain
Class A (35,092,077) (528,216)
Class B (132,059,401) (39,027,529)
Class Y (131) (31)
---- ---
Total distributions (203,620,379) (63,478,679)
------------ -----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 76,098,515 323,695,285
Class B shares 156,897,400 147,229,281
Class Y shares 192 1,000
Reinvestment of distributions at net asset value
Class A shares 44,127,954 2,717,827
Class B shares 157,476,976 60,152,086
Class Y shares 171 59
Payments for redemptions
Class A shares (43,387,495) (5,090,416)
Class B shares (Note 2) (169,611,548) (477,467,959)
- ------------ ------------
Increase in net assets from capital share
transactions 221,602,165 51,237,163
----------- ----------
Total increase in net assets 306,676,201 317,575,270
Net assets at beginning of year 1,627,744,190 1,310,168,920
------------- -------------
Net assets at end of year
(including undistributed net investment income of
$1,350,747 and $2,316,910) $1,934,420,391 $1,627,744,190
============== ==============

See accompanying notes to financial statements.
<PAGE>

Notes to financial statements
1.Summary of significant accounting policies

The Fund is a series of IDS Strategy Fund, Inc. and is 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 financial 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.

On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, undistributed net investment income has been
increased by $110,095 and accumulated net realized gain has been decreased
$110,095.

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 its Administrative Services Agreement, the Fund pays AEFC a fee 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. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, organizational expenses, and any other
expenses properly payable by the Fund approved by the board.

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:
oClass A $15
oClass B $16
oClass 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.

Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $1,045,732 for Class A and $804,431 for
Class B for the year ended March 31, 1997. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.

During the year ended March 31, 1997, the Fund's custodian and transfer
agency fees were reduced by $44,292 as a result of earnings credits from
overnight cash balances.

3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,024,866,621 and $989,744,909,
respectively, for the year ended March 31, 1997. Realized gains and losses
are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $18,845
for the year ended March 31, 1997.

4. Foreign currency contracts

At March 31, 1997, the Fund had entered into a foreign currency exchange
contract that obligates the Fund to deliver currency at a specified future
date. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on this contract is included in the
accompanying financial statements. The terms of the open contract are as
follows: Currency to Currency to Unrealized Unrealized Exchange date be
delivered be received appreciation depreciation

May 27, 1997 15,000,000 $24,195,000 $ -- $465,150
British Pound U.S. Dollar

5. Capital share transactions

Transactions in shares of capital stock for the years indicated are as
follows:

Year ended March 31, 1997
Class A Class B Class Y

Sold 6,521,398 13,553,488 16

Issued for reinvested 3,846,126 13,720,719 15
distributions

Redeemed (3,736,247)(14,621,584) --

Net increase 6,631,277 12,652,623 31

Year ended March 31, 1996
Class A Class B Class Y

Sold 29,532,052 14,555,513 107

Issued for reinvested 250,311 5,792,693 6
distributions

Redeemed (475,563) (44,795,828) --

Net increase(decrease) 29,306,800 (24,447,622) 113

6. Lending of portfolio securities

At March 31, 1997, securities valued at $34,987,500 were on loan to
brokers. For collateral, the Fund received U.S. government securities
valued at $36,232,758. Income from securities lending amounted to $160,284
for the year ended March 31, 1997. The risks to the Fund of securities
lending are that the borrower may not provide additional collateral when
required or return the securities when due.

7. Financial highlights

"Financial highlights" showing per share data and selected information is
presented on pages 6 and 7 of the prospectus.

<PAGE>

Investments in securities
IDS Equity Value Fund
March 31, 1997

(Percentages represent
value of investments
compared to net assets)

Common stocks (92.7%)
Issuer Shares Value(a)

Aerospace & defense (1.0%)
Rockwell Intl 300,000 $19,462,500

Automotive & related (2.7%)
Ford Motor 825,000 25,884,375
Genuine Parts 550,000 25,643,750
Total 51,528,125

Banks and savings & loans (7.9%)
Banc One 500,000 (c)19,875,000
Barnett Banks 327,900 (c)15,247,350
First Union 315,000 25,554,375
KeyCorp 450,000 21,937,500
Morgan (JP) 250,000 24,562,500
NationsBank 385,000 21,319,375
Norwest 525,000 24,281,250
Total 152,777,350

Beverages & tobacco (3.7%)
Anheuser-Busch 625,000 26,328,125
Philip Morris 230,000 26,248,750
UST 700,000 19,512,500
Total 72,089,375

Building materials & construction (1.7%)
Martin Marietta Materials 400,000 10,300,000
Weyerhaueser 500,000 22,312,500
Total 32,612,500

Chemicals (5.7%)
Air Product & Chemical 375,000 25,453,125
ARCO Chemical 212,500 9,243,750
Dow Chemical 375,000 30,000,000
Geon 475,000 11,043,750
Lubrizol 525,000 17,062,500
PPG Inds 325,000 17,550,000
Total 110,353,125

Computers & office equipment (1.4%)
Xerox 475,000 27,015,625

Electronics (2.0%)
AMP 450,000 15,468,750
Thomas & Betts 550,000 23,512,500
Total 38,981,250

Energy (6.7%)
Amoco 300,000 25,987,500
Atlantic Richfield 185,000 24,975,000
Chevron 400,000 27,850,000
Exxon 200,000 21,550,000
Mobil 225,000 29,390,625
Total 129,753,125

Financial services (0.8%)
Meditrust 400,000 14,900,000

Food (2.3%)
CPC Intl 250,000 20,500,000
Heinz (HJ) 600,000 23,700,000
Total 44,200,000

Health care (5.7%)
American Home Products 425,000 25,500,000
Baxter Intl 650,000 28,031,250
Beckman Instruments 425,000 17,850,000
Bristol-Myers Squibb 330,000 19,470,000
Schering-Plough 275,000 20,006,250
Total 110,857,500

Industrial equipment & services (0.4%)
General Signal 200,000 7,825,000

Insurance (6.0%)
Lincoln Natl 350,000 18,725,000
Marsh & McLennan 200,000 22,650,000
SAFECO 625,000 25,000,000
St. Paul Companies 400,000 25,950,000
Transamerica 275,000 24,612,500
Total 116,937,500

Media (4.9%)
American Greetings 477,900 15,262,931
Deluxe 700,000 22,662,500
Gannett 375,000 32,203,125
McGraw-Hill 500,000 25,562,500
Total 95,691,056

Metals (1.3%)
Reynolds Metals 400,000 24,800,000

Multi-industry conglomerates (2.0%)
Emerson Electric 600,000 27,000,000
General Electric 110,000 10,917,500
Total 37,917,500

Paper & packaging (1.8%)
Kimberly-Clark 125,000 12,421,875
Union Camp 475,000 22,384,375
Total 34,806,250

Real estate investment trust (3.9%)
Chateau Properties 392,700(f) 10,161,112
Developers Diversified
Realty 300,000 11,325,000
Merry Land & Investment 300,000 6,150,000
Nationwide Health Properties150,000 3,206,250
Shurgard Storage Centers 200,000 5,525,000
Simon DeBartolo Group 515,000 15,578,750
United Dominion RealtyTrust 625,000 9,140,625
Urban Shopping Centers 472,400 14,172,000
Total 75,258,737

Retail (4.5%)
Autozone 300,000 (b) 6,750,000
Limited 1,500,000 27,562,500
May Dept Stores 525,000 23,887,500
Penney (JC) 600,000 28,575,000
Total 86,775,000

Transportation (1.1%)
Union Pacific 375,000 21,281,250

Utilities -- electric (5.4%)
Entergy 725,000 17,762,500
General Public Utilities 525,000 16,865,625
Northern States Power 300,000 14,212,500
PECO Energy 750,000 15,281,250
Southern Co 825,000 17,428,125
Union Electric 300,000 11,062,500
Western Resources 400,000 12,000,000
Total 104,612,500

Utilities -- telephone (7.1%)
AT&T 825,000 28,668,750
Bell Atlantic 450,000 27,393,750
BellSouth 650,000 27,462,500
GTE 550,000 25,643,750
SBC Communications 550,000 28,943,750
Total 138,112,500

Foreign (12.7%)(d)
B.A.T. Inds 2,800,000 23,884,966
BTR 4,500,000 19,730,021
Grand Metropolitan 3,100,000 25,041,540
Imperial Chemical Inds 1,500,000 17,188,194
KPN ADR 575,000 20,843,750
Natl Westminster Bank 2,150,000 24,282,693
Repsol ADR 275,000 11,206,250
Royal Dutch Petroleum 175,000 30,625,000
SmithKline Beecham ADR 400,000 28,000,000
Tele Danmark ADR 800,000 20,900,000
Tomkins 5,138,888 23,038,462
Total 244,740,876

Total common stocks
(Cost: $1,515,589,300) $1,793,288,644

Short-term securities (6.9%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agency (0.4%)
Federal Natl Mtge Assn Disc Nt
04-09-97 5.24% $7,100,000 $7,091,764

Certificate of deposit (0.3%)
Bank of America
04-07-97 5.32 6,500,000 6,499,988

Commercial paper (6.2%)
Associates Corp North America
04-23-97 5.31 5,100,000 5,083,575
Bell Atlantic
04-17-97 5.37 4,000,000 3,990,489
Beneficial
04-15-97 5.32 2,200,000 2,195,466
BHP Finance
04-03-97 5.27 5,000,000 4,998,542
04-14-97 5.33 5,100,000 5,090,239
BOC Group
04-01-97 5.28 4,100,000 4,100,000
CAFCO
04-28-97 5.36 6,200,000 (e)6,175,262
Ciesco LP
04-25-97 5.55 3,200,000 3,188,203
05-05-97 5.37 1,200,000 (e)1,193,959
Commerzbank U.S. Finance
05-20-97 5.48 5,500,000 5,457,830
Deutsche Bank Financial
04-10-97 5.28 6,900,000 6,890,944
Gannett
04-22-97 5.32 4,450,000 (e)4,436,268
Gateway Fuel
04-17-97 5.32 3,563,000 3,554,607
Household Finance
05-05-97 5.54 6,700,000 6,665,134
Kredietbank North America Finance
04-18-97 5.31 7,200,000 7,182,082
Metlife Funding
04-10-97 5.30 4,400,000 4,394,192
05-02-97 5.58 500,000 497,610
Morgan Stanley Group
05-19-97 5.38 600,000 595,329
Natl Australia Funding (Delaware)
04-28-97 5.49 3,900,000 3,884,029
Novartis Finance
04-04-97 5.32 6,100,000 6,097,306
04-17-97 5.36 4,400,000(e) 4,389,557
Paccar Financial
04-28-97 5.58 5,200,000 5,178,316
Reed Elsevier
04-09-97 5.33 3,200,000(e) 3,196,231
Siemens
04-15-97 5.32 5,300,000 5,289,076
Toyota
04-08-97 5.32 7,400,000 7,392,388
04-29-97 5.54 4,200,000 4,181,968
USAA Capital
05-06-97 5.59 4,900,000 4,873,513
Total 120,172,115

Total short-term securities
(Cost: $133,765,794) $133,763,867

Total investments in securities
(Cost: $1,649,355,094)(g) $1,927,052,511
Notes to investments in securities

(a) Securities are valued by procedures described in Note 1 to the financial
statements.

(b) Non-income producing.

(d) Foreign security values are stated in U.S. dollars.

(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.

(f) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
year ended March 31, 1997 are as follows:

Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income

Chateau Properties* -- $11,069,250 $1,878,375 $9,190,875 --

*Issuer was not an affiliate as of March 31, 1997.

(g) At March 31, 1997, the cost of securities for federal income tax purposes
was $1,648,469,445 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:

Unrealized appreciation...........$308,119,200
Unrealized depreciation............(29,536,134)
-----------
Net unrealized appreciation.......$278,583,066
============
<PAGE>

Independent auditors' report

The board and shareholders IDS Strategy Fund, Inc.:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of IDS Strategy
Aggressive Fund (a series of IDS Strategy Fund, Inc.) as of March 31,
1997, and the related statement of operations for the year then ended, and
the statements of changes in net assets for each of the years in the
two-year period ended March 31, 1997, and the financial highlights for
each of the years in the ten-year period ended March 31, 1997. These
financial statements and the financial highlights are the responsibility
of fund management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Investment securities held in
custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we request confirmations from
brokers, and where replies are not received, we carry out other
appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of IDS Strategy
Aggressive Fund at March 31, 1997, and the results of its operations,
changes in its net assets and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
May 2, 1997

Statement of assets and liabilities
IDS Strategy Aggressive Fund
March 31, 1997
Assets
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $896,252,877) $1,121,324,498
Dividends and accrued interest receivable 294,209
Receivable for investment securities sold 13,610,651
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 307
---
Total assets 1,135,229,665
-------------
Liabilities
Disbursements in excess of cash on demand deposit 1,587,093
Payable for investment securities purchased 11,000,187
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 23
Accrued investment management services fee 77,673
Accrued distribution fee 63,847
Accrued service fee 22,806
Accrued transfer agency fee 20,624
Accrued administrative services fee 6,412
Other accrued expenses 162,505
-------
Total liabilities 12,941,170
----------
Net assets applicable to outstanding capital stock $1,122,288,495
==============
Represented by
Capital stock-- authorized 10,000,000,000 shares of $.01 par value $ 618,613
Additional paid-in capital 805,951,239
Accumulated net realized gain (Note 1) 90,647,263
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies (Note 4) 225,071,380
- -----------
Total-- representing net assets applicable to outstanding capital stock $1,122,288,495
==============
Net assets applicable to outstanding shares: Class A $ 385,643,850
Class B $ 736,643,210
Class Y $ 1,435
Net asset value per share of outstanding capital stock: Class A shares 21,023,248 $ 18.34
Class B shares 40,838,000 $ 18.04
Class Y shares 78 $ 18.40

See accompanying notes to financial statements.

<PAGE>
Statement of operations
IDS Strategy Aggressive Fund
Year ended March 31, 1997

Investment income
Income:
Interest $ 6,862,636
Dividends (net of foreign taxes withheld of $10,534) 3,914,423
Total income 10,777,059
----------
Expenses (Note 2):
Investment management services fee 7,247,884
Distribution fee -- Class B 6,031,993
Transfer agency fee 2,307,930
Incremental transfer agency fee-- Class B 98,554
Service fee
Class A 716,710
Class B 1,382,800
Administrative services fees and expenses 603,995
Compensation of board members 25,153
Compensation of officers 6,215
Custodian fees 114,480
Postage 76,258
Registration fees 78,157
Reports to shareholders 69,223
Audit fees 20,500
Other 25,939
------
Total expenses 18,805,791
Earnings credits on cash balances (Note 2) (31,882)
- -------
Total net expenses 18,773,909
----------
Investment loss -- net (7,996,850)
----------
Realized and unrealized gain (loss) -- net
Net realized gain on security and foreign currency transactions
(including loss of $381 from foreign currency transactions) (Note 3) 112,521,564
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies (90,128,715)
-----------
Net gain on investments and foreign currencies 22,392,849
----------
Net increase in net assets resulting from operations $14,395,999
===========

See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
IDS Strategy Aggressive Fund
Year ended March 31,

Operations and distributions 1997 1996
Investment loss-- net $ (7,996,850) $ (6,657,264)
Net realized gain on investments and foreign currencies 112,521,564 101,695,416
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (90,128,715) 170,135,689
----------- -----------
Net increase in net assets resulting from operations 14,395,999 265,173,841
---------- -----------
Distributions to shareholders from:
Net realized gain
Class A (22,923,292) (1,780,677)
Class B (44,486,289) (55,138,913)
Class Y (83) (76)
--- ---
Total distributions (67,409,664) (56,919,666)
----------- -----------

Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 318,487,417 378,779,240
Class B shares 128,249,450 105,680,879
Class Y shares -- 834
Reinvestment of distributions at net asset value
Class A shares 22,628,239 1,767,117
Class B shares 44,346,773 54,926,178
Class Y shares 83 76
Payments for redemptions
Class A shares (286,813,134) (48,918,744)
Class B shares (Note 2) (110,379,938) (425,111,420)
- ------------ ------------
Increase in net assets from capital share transactions 116,518,890 67,124,160
----------- ----------
Total increase in net assets 63,505,225 275,378,335
Net assets at beginning of year 1,058,783,270 783,404,935
------------- -----------
Net assets at end of year $1,122,288,495 $1,058,783,270
============== ==============

See accompanying notes to financial statements.

</TABLE>
<PAGE>

Notes to financial statements

IDS Strategy Aggressive Fund

1.Summary of significant accounting policies

The Fund is a series of IDS Strategy Fund, Inc. and is 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.

Significant accounting policies followed by the Fund are summarized below:

Use of estimates

Valuation of securities

Option transactions

Futures transactions

Foreign currency translations and
foreign currency contracts

Federal taxes

On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, undistributed net investment income has been
increased by $7,996,850 and accumulated net realized gain has been
decreased by $3,358,856 resulting in a net reclassification adjustment to
decrease paid-in capital by $4,637,994.

Dividends to shareholders

An annual dividend declared and paid by the end of the calendar year from
net investment income, when available, 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

2. Expenses and sales charges

Under its Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's
average daily net assets in reducing percentages from 0.05% to 0.03%
annually. Additional administrative service expenses paid by the Fund are
office expenses, consultants' fees and compensation of officers and
employees. Under this agreement, the Fund also pays taxes, audit and
certain legal fees, registration fees for shares, compensation of board
members, corporate filing fees, organizational expenses, and any other
expenses properly payable by the Fund approved by the board.

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.

Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $1,154,051 for Class A and $476,429 for
Class B for the year ended March 31, 1997. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.

During the year ended March 31, 1997, the Fund's custodian and transfer
agency fees were reduced by $31,882 as a result of earnings credits from
overnight cash balances.

3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $920,540,733 and $868,722,343
respectively, for the year ended March 31,1997. Realized gains and losses
are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $132 for
the year ended March 31, 1997.

4. Foreign currency contracts

At March 31, 1997, the Fund had entered into two foreign currency exchange
contracts that obligate the Fund to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation (see Summary of
significant accounting policies) on these contracts is included in the
accompanying financial statements. The terms of the open contracts are as
follows:

Currency to Currency to Unrealized Unrealized
Exchange date be delivered be received appreciation depreciation

April 2, 1997 249,492 1,933,062 $-- $23
U.S. Dollar Hong Kong

April 7, 1997 1,015,744 2,518,030 307 --
U.S. Dollar Malaysian
$307 $23
5. Capital share transactions

Transactions in shares of capital stock for the years indicated are as
follows:

Year ended March 31, 1997
Class A Class B Class Y

Sold 15,432,324 6,342,861 --

Issued for reinvested 1,119,539 2,226,935 5
distributions

Redeemed (13,875,166) (5,454,426) --

Net increase 2,676,697 3,115,370 5

Year ended March 31, 1996
Class A Class B Class Y

Sold 20,461,833 6,139,128 68

Issued for reinvested 98,502 3,081,595 4
distributions

Redeemed (2,702,011) (23,585,510) --

Net increase (decrease) 17,858,324 (14,364,787) 72

6. Financial highlights

"Financial highlights" showing per share data and selected information is
presented on pages 6 and 7 of the prospectus.

<PAGE>

Investments in securities

IDS Strategy Aggressive Fund
March 31, 1997

(Percentages represent
value of investments
compared to net assets)

Common stocks (91.0%)
Issuer Shares Value(a)

Aerospace & defense (0.5%)
Rohr 301,100(b) $ ,193,975

Airlines (0.4%)
Northwest Airlines 109,700(b) 4,127,463

Banks and savings & loans (1.5%)
Crestar Financial 268,600 9,300,275
Washington Mutual 158,300 7,647,869
Total 16,948,144

Building materials & construction (1.4%)
Martin Marietta Materials 121,100(b) 3,118,325
Tyco Intl 228,500 12,567,500
Total 15,685,825

Chemicals (3.7%)
Culligan Water 327,500(b) 12,813,438
Ecolab 317,600(b) 12,068,800
Praxair 376,300(b) 16,886,462
Total 41,768,700

Communications equipment & services (4.1%)
Andrew 85,350(b) 3,083,269
Ascend Communications 311,600(b) 12,697,700
Pairgain Technologies 330,700(b) 9,796,987
Tellabs 557,600(b) 20,143,300
Total 45,721,256

Computers & office equipment (12.5%)
Affiliated Computer
Services Cl A 247,400(b) 5,659,275
BMC Software 148,800(b) 6,863,400
Cambridge Technology
Partners 81,850(b) 1,892,781
Cisco Systems 391,700(b) 18,850,563
Computer Sciences 138,400(b) 8,546,200
Fiserv 18,300(b) 681,675
Ikon Office Solutions 195,850 6,560,975
McAfee Associates 198,800(b) 8,796,900
Oracle Systems 475,850(b) 18,349,965
Parametric Technology 645,400(b) 29,123,675
PeopleSoft 387,000(b) 15,480,000
Reynolds & Reynolds Cl A 281,000 6,708,875
Silicon Graphics 363,700(b) 7,092,150
Synopsys 212,300(b) 5,307,500
Total 139,913,934

Electronics (3.1%)
Analog Devices 241,700(b) 5,438,250
KLA Instruments 258,000(b) 9,417,000
Lattice Semiconductor 120,800(b) 5,526,600
LSI Logic 294,100(b) 10,219,975
Microchip Technology 54,900(b) 1,647,000
Tencor Instruments 75,100(b) 2,712,988
Total 34,961,813

Energy (4.5%)
Enron Oil & Gas 481,200 9,984,900
Newfield Exploration 183,100(b) 3,478,900
Noble Affiliates 337,100 12,725,525
Pogo Producing 382,800 13,780,800
United Meridian 352,900(b) 10,631,113
Total 50,601,238

Energy equipment & services (0.5%)
Smith Intl 133,000(b) 6,068,125

Financial services (6.5%)
Dean Witter,
Discover & Co 322,600 11,250,675
Finova Group 146,900 9,934,113
Green Tree Financial 195,400 6,594,750
Household Intl 105,400 9,051,225
MBNA 352,725 9,832,209
Morgan Stanley 197,400 11,597,250
Paychex 187,750 7,721,219
Sirrom Capital 179,450 6,505,062
Total 72,486,503

Food (0.4%)
Delta & Pine Land 155,400 4,817,400

Health care (8.9%)
ALZA 217,100(b) 5,970,250
Biogen 263,800(b) 9,859,525
Boston Scientific 417,500(b) 25,780,625
Centocor 252,600(b) 7,704,300
Genzyme 217,200(b) 4,887,000
Guidant 111,500 6,857,250
IDEC Pharmaceuticals 98,700(b) 2,350,294
Medtronic 246,200 15,325,950
Pfizer 66,400 5,585,900
Physio-Control Intl 104,200(b) 1,445,775
Sybron Intl 187,400(b) 5,200,350
Target Therapeutics 81,200(b) 5,338,900
Watson Pharmaceuticals 105,000(b) 3,753,750
Total 100,059,869

Health care services (9.0%)
Cardinal Health 215,850 11,736,843
Equity Corp Intl 19,100(b) 401,100
FPA Medical Management 374,700(b) 7,212,975
HBO & Co 570,800 27,113,000
Health Management
Associates 651,650(b) 15,476,688
HEALTHSOUTH 490,800(b) 9,386,550
PhyCor 223,800(b) 6,098,550
Service Corp Intl 420,900 12,521,775
Stewart Enterprises 228,700 8,347,550
Vivra 108,400(b) 2,926,800
Total 101,221,831

Industrial equipment & services (4.4%)
U.S. Filter 358,550(b) 11,070,231
United Waste Systems 360,600(b) 13,432,350
USA Waste Service 706,750(b) 25,089,625
Total 49,592,206

Insurance (4.9%)
Everest Reinsurance
Holdings 246,100 7,229,187
Nationwide Financial 19,600(b) 504,700
PennCorp Financial Group 440,700 14,102,400
Providian 112,700 6,029,450
Travelers Property Casualty252,800 8,026,400
UNUM 263,100 19,206,300
Total 55,098,437

Leisure time & entertainment (0.3%)
Carnival 87,200 3,226,400

Media (2.7%)
American Radio Systems 184,600(b) 5,630,300
Clear Channel
Communications 232,950(b) 9,987,731
Emmis Broadcasting Cl A 248,800(b) 9,625,450
Gartner Group 246,700(b) 5,334,888
Total 30,578,369

Metals (0.5%)
Pittston Brink's Group 226,200 5,711,550

Multi-industry conglomerates (3.0%)
Fisher Scientific Intl 148,500 6,552,562
Interim Services 79,100(b) 3,075,013
Robert Half Intl 423,600(b) 14,773,050
Westinghouse Electric 506,926 8,997,937
Total 33,398,562

Restaurants & lodging (5.8%)
Applebee's Intl 461,800 11,140,925
HFS423,700(b) 24,945,338
Lone Star Steak
House & Saloon 115,300(b) 2,637,487
Promus Hotel 537,900(b) 17,885,175
Starbucks 306,500(b) 9,080,062
Total 65,688,987

Retail (6.1%)
Dollar General 339,625 10,613,281
Kohl's 263,900(b) 11,182,762
Lowe's 269,700 10,080,038
PETsMART 672,500(b) 13,618,125
Republic Inds 179,300(b) 6,219,469
Richfood Holdings Cl A 279,450 5,239,688
Rite Aid 277,810 11,668,020
Total 68,621,383

Textiles & apparel (1.3%)
Nike Cl B 238,300 14,774,600

Utilities -- telephone (0.4%)
Brooks Fiber Properties 229,500(b) 4,102,313

Foreign (4.6%)(c)
ACE 117,200 7,500,800
Baan 249,350(b) 11,127,244
Banco Latinoamerica
de Exportaciones 61,600(b) 2,910,600
Belle 25,632,000(b) 8,166,458
BioChem Pharma 179,800(b) 7,731,400
DCB Holdings 570,000(b) 2,150,509
Diversified Resources 164,000(b) 536,023
Kimberly-Clark ADR 490,750 1,977,607
Multicanal
Participacoes ADR 64,350(b) 892,856
National Mutual Asia 244,000(b) 255,062
Perez Companc ADR 503,100 7,838,298
Total 51,086,857

Total common stocks
(Cost: $796,380,573) $1,021,455,740

Other (--%)
Issuer Shares Value(a)
Jan Bell
Warrants 2,473 19

Total other
(Cost: $--) $19

Short-term securities (8.9%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Nt
04-21-97 5.38% $1,600,000 $1,595,236

Commercial paper (8.4%)
ABB Treasury Center USA
04-30-97 5.57 7,100,000(d) 7,068,257
Alabama Power
04-07-97 5.31 5,000,000 4,995,592
04-24-97 5.29 6,200,000 6,179,204
Barclays U.S. Funding
04-16-97 5.31 6,300,000 6,283,996
BHP Finance
04-03-97 5.27 5,000,000 4,998,542
CAFCO
04-24-97 5.35 4,100,000(d) 4,086,064
Cargill
04-18-97 5.34 9,700,000 9,675,631
Ciesco LP
04-25-97 5.55 3,300,000 3,287,834
Commercial Credit
04-08-97 5.31 6,600,000 6,593,237
Dean Witter, Discover & Co
04-07-97 5.33 1,800,000 1,798,407
Deutsche Bank Financial
04-10-97 5.28 7,900,000 7,889,631
Fleet Funding
04-17-97 5.33 2,600,000(d) 2,593,864
Kellogg
04-09-97 5.28% 3,800,000 3,795,567
National Australia Funding (Delaware)
05-15-97 5.37 2,400,000 2,383,386
Pfizer
04-14-97 5.32 600,000(d) 598,852
04-21-97 5.32 3,800,000(d) 3,788,832
Reed Elsevier
04-21-97 5.39 1,400,000(d) 1,395,505
St. Paul Companies
04-01-97 5.27 5,700,000(d) 5,700,000
Siemens
04-15-97 5.32 7,500,000 7,484,541
Southwestern Bell Capital
04-11-97 5.32 3,800,000 3,794,427
Total 94,391,369

Letter of credit (0.4%)
BankAmerica-
AES Barbers Point
05-02-97 5.35 3,900,000 3,882,134

Total short-term securities
(Cost: $99,872,304) $ 99,868,739

Total investments in securities
(Cost: $896,252,877)(e) $1,121,324,498

Notes to investments in securities

(a) Securities are valued by procedures described in Note 1 to the financial
statements.

(b) Non-income producing.

(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 March 31, 1997, the cost of securities for federal income tax purposes
was $896,252,877 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:

Unrealized appreciation $260,701,895
Unrealized depreciation (35,630,274)
-----------
Net unrealized appreciation $225,071,621
============

<PAGE>

PAGE 155
PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements included in Part B of this Registration
Statement:

IDS Strategy Aggressive

- Independent Auditors' Report dated May 2, 1997
- Statement of Assets and Liabilities, March 31, 1997
- Statement of Operations, Year ended March 31, 1997
- Statements of Changes in Net Assets, for the two-year
period ended March 31, 1996 and March 31, 1997
- Notes to Financial Statements
- Investments in Securities, March 31, 1997
- Notes to Investments in Securities

IDS Equity Value

(b) EXHIBITS:

1. Copy of Articles of Incorporation, as amended dated Nov. 14,
1991, filed as Exhibit 1 to Registrant's Post-Effective Amendment
No. 18 to Registration Statement No. 2-89288 is incorporated herein
by reference.

2. Copy of By-laws, as amended January 1, 1989, filed
electronically, as Exhibit 2 to Registrant's Post-Effective
Amendment No. 11 to Registration Statement No. 2-89288 is
incorporated herein by reference.

3. Not Applicable.

4. Form of Stock Certificate, filed as Exhibit 4 to Post-
Effective Amendment No. 3 to Registration Statement No. 2-89288, is
herein incorporated by reference.

5. Form of Investment Management and Services Agreement between
Registrant and American Express Financial Corporation, dated March
20, 1995, filed electronically as Exhibit 5 to Registrant's Post-
Effective Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

<PAGE>

PAGE 156
6. Form of Distribution Agreement between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, filed
electronically as Exhibit 6 to Registrant's Post-Effective
Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

7. All employees are eligible to participate in a profit sharing plan. Entry
into the plan is Jan. 1 or July 1. The Registrant contributes each year an
amount up to 15 percent of their annual salaries, the maximum deductible amount
permitted under Section 404(a) of the Internal Revenue Code.

8(a). Form of Custodian Agreement between Registrant and American
Express Trust Company, dated March 20, 1995, filed electronically
as Exhibit 8(a) to Registrant's Post-Effective Amendment No. 25 to
Registration Statement No. 2-89288 is incorporated herein by
reference.

8(b). Form of Custody Agreement between Morgan Stanley Trust
Company and IDS Bank and Trust dated May, 1993, filed
electronically as Exhibit 8(b) to Registrant's Post-Effective
Amendment No. 26 to Registration Statement No. 2-89288 is
incorporated herein by reference.

9(a). Form of Transfer Agency Agreement between Registrant and
American Express Financial Corporation, dated March 20, 1995, filed
electronically as Exhibit 9(a) to Registrant's Post-Effective
Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

9(b). Copy of License Agreement between the Registrant and IDS
Financial Corporation dated January 25, 1988, filed electronically
as Exhibit 9(b) to Registrant's Post-Effective Amendment No. 11 to
Registration Statement No. 2-89288 is incorporated herein by
reference.

9(c). Form of Shareholder Service Agreement between Registrant and
American Express Financial Advisors Inc., dated March 20, 1995,
filed electronically as Exhibit 9(c) to Registrant's Post-Effective
Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

9(d). Form of Administrative Services Agreement between Registrant
and American Express Financial Corporation, dated March 20, 1995,
filed electronically as Exhibit 9(d) to Registrant's Post-Effective
Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

9(e). Copy of the Class Y Shareholder Service Agreement between IDS
Precious Metals Fund, Inc. and American Express Financial Advisors
Inc., dated May 9, 1997 filed electronically on or about May 27, as
Exhibit 9(e) to IDS Precious Metals Fund, Inc.'s Amendment No. 30
to Registration Statement No. 2-93745, is incorporated herein by
reference.

Registrant's Class Y Shareholder Service Agreement differs from the one
incorporated by reference only by the fact that Registrant is one executing
party.

<PAGE>

PAGE 157
10. Opinion and Consent of Counsel as to the legality of the securities being
registered is filed with Registrant's most recent 24f-2 notice.

11. Independent Auditors' Consent is filed electronically
herewith.

12. None.

13. Not Applicable.

14. Forms of Keogh, IRA and other retirement plans, filed as Exhibits 14(a)
through 14(n) to IDS Growth Fund, Inc., Post- Effective Amendment No. 19 to
Registration Statement 2-54516, are incorporated herein by reference.

15. Form of Plan and Agreement of Distribution between Registrant
and American Express Financial Advisors Inc., dated March 20, 1995,
filed electronically as Exhibit 15 to Registrant's Post-Effective
Amendment No. 25 to Registration Statement No. 2-89288 is
incorporated herein by reference.

16. Copy of Schedule for computation of each performance quotation
provided in the Registration Statement in response to Item 22,
filed as Exhibit 16 to Post-Effective Amendment No. 19 to
Registration Statement No. 2-89288, is incorporated herein by
reference.

17. Financial Data Schedule is filed electronically herewith.

18. Copy of Plan pursuant to Rule 18f-3 under the 1940 Act, filed
electronically as Exhibit 18 to Registrant's Post-Effective
Amendment No. 26 to Registration Statement No. 2-89288, is
incorporated herein by reference.

19(a). Directors/Trustees Power of Attorney to sign amendments to
this Registration Statement dated Jan. 8, 1997 is filed
electronically herewith as Exhibit 19(a).

19(b). Officers' Power of Attorney to sign amendments to this
Registration Statement dated Nov. 1, 1995, filed electronically as
Exhibit 19(b) to Registrant's Post-Effective Amendment No. 28 is
incorporated herein by reference.

Item 25. Persons Controlled by or under Common Control with
Registrant
None.

<PAGE>

PAGE 158
Item 26. Number of Holders of Securities

(1) (2)

Number of Record
Title of Holders as of
Class May 20, 1997

Common Stock IDS Strategy -
Aggressive - 151,107
Equity Value - 186,893

Item 27. Indemnification

The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.

<PAGE>

PAGE 159

<PAGE>
PAGE 1<PAGE>
Item 29(c). Not applicable.

Item 30. Location of Accounts and Records

American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>

PAGE 160
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, IDS Strategy Fund, Inc., certifies that it
meets the requirements for the effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis and the State of Minnesota on the 27th day of May, 1997.

IDS STRATEGY FUND INC.

By /s/ Melinda S. Urion
Melinda S. Urion, Treasurer

By /s/ William R. Pearce**
William R. Pearce, President

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Statement has been signed below by the following persons in the
capacities indicated on the 27th day of May, 1997.

Signature Capacity

/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director

/s/ H. Brewster Atwater, Jr.* Director
H. Brewster Atwater, Jr.

/s/ Lynne V. Cheney* Director
Lynne V. Cheney

/s/ William H. Dudley* Director
William H. Dudley

/s/ Robert F. Froehlke* Director
Robert F. Froehlke

/s/ David R. Hubers* Director
David R. Hubers

/s/ Heinz F. Hutter* Director
Heinz F. Hutter

/s/ Anne P. Jones* Director
Anne P. Jones

<PAGE>

PAGE 161
Signatures Capacity

/s/ Melvin R. Laird* Director
Melvin R. Laird

/s/ Alan K. Simpson* Director
Alan K. Simpson

/s/ Edson W. Spencer* Director
Edson W. Spencer

/s/ John R. Thomas* Director
John R. Thomas

/s/ Wheelock Whitney* Director
Wheelock Whitney

/s/ C. Angus Wurtele* Director
C. Angus Wurtele

*Signed pursuant to Directors/Trustees Power of Attorney dated Jan.
8, 1997 filed electronically herewith as Exhibit 19(a).

- --------------------------
Leslie L. Ogg

**Signed pursuant to Officers' Power of Attorney dated Nov. 1,
1995, filed electronically as Exhibit 19(b) to Registrant's Post-
Effective Amendment No. 28 is incorporated herein by reference.

- --------------------------
Leslie L. Ogg

<PAGE>

PAGE 162
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 29
TO REGISTRATION STATEMENT NO. 2-89288

This post-effective amendment comprises the following papers and documents:

The facing sheet.

Cross reference sheet.

Part A.

The prospectus for IDS Strategy Aggressive. The prospectus for IDS Equity
Value.

Part B.

Statement of Additional Information for IDS Strategy
Aggressive.
Statement for Additional Information for IDS Equity Value.

Financial Statements for IDS Strategy Aggressive.
Financial Statements for IDS Equity Value.

Part C.

Other information.

Exhibits.

The signatures.

PAGE 1
IDS STRATEGY FUND, INC.
Registration Number 2-89288/811-3956

EXHIBIT INDEX

Exhibit 11. Independent Auditors' Consent
Exhibit 17. Financial Data Schedules
Exhibit 19a. Directors/Trustees' Power of Attorney

PAGE 1

Independent auditors' consent

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

The board and shareholders IDS Strategy Fund, Inc.
IDS Equity Value Fund
IDS Strategy Aggressive Fund

We consent to the use of our report incorporated herein by reference and the
references to our Firm under the headings "Financial highlights" in Part A and
"INDEPENDENT AUDITORS" in Part B of the Registration Statement.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
May 28, 1997

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 896252877
<INVESTMENTS-AT-VALUE> 1121324498
<RECEIVABLES> 13904860
<ASSETS-OTHER> 307
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1135229665
<PAYABLE-FOR-SECURITIES> 11000187
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<TOTAL-LIABILITIES> 12941170
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<PAID-IN-CAPITAL-COMMON> 806569852
<SHARES-COMMON-STOCK> 21023248
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<DIVIDEND-INCOME> 3914423
<INTEREST-INCOME> 6862636
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<EXPENSES-NET> 18773909
<NET-INVESTMENT-INCOME> (7996850)
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<APPREC-INCREASE-CURRENT> (90128715)
<NET-CHANGE-FROM-OPS> 14395999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 22923292
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<NUMBER-OF-SHARES-SOLD> 15432324
<NUMBER-OF-SHARES-REDEEMED> 13875166
<SHARES-REINVESTED> 1119539
<NET-CHANGE-IN-ASSETS> 63505225
<ACCUMULATED-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18805791
<AVERAGE-NET-ASSETS> 411187815

<PER-SHARE-NAV-BEGIN> 18.99
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> .51
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.34
<EXPENSE-RATIO> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 896252877
<INVESTMENTS-AT-VALUE> 1121324498
<RECEIVABLES> 13904860
<ASSETS-OTHER> 307
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1135229665
<PAYABLE-FOR-SECURITIES> 11000187
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1940983
<TOTAL-LIABILITIES> 12941170
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 806569852
<SHARES-COMMON-STOCK> 40838000
<SHARES-COMMON-PRIOR> 37722630
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90647263
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 225071380
<NET-ASSETS> 736643210
<DIVIDEND-INCOME> 3914423
<INTEREST-INCOME> 6862636
<OTHER-INCOME> 0
<EXPENSES-NET> 18773909
<NET-INVESTMENT-INCOME> (7996850)
<REALIZED-GAINS-CURRENT> 112521564
<APPREC-INCREASE-CURRENT> (90128715)
<NET-CHANGE-FROM-OPS> 14395999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 44486289
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<NUMBER-OF-SHARES-SOLD> 6342861
<NUMBER-OF-SHARES-REDEEMED> 5454426
<SHARES-REINVESTED> 2226935
<NET-CHANGE-IN-ASSETS> 63505225
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 48894219
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 7247884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18805791
<AVERAGE-NET-ASSETS> 801517715

<PER-SHARE-NAV-BEGIN> 18.83
<PER-SHARE-NII> (.18)
<PER-SHARE-GAIN-APPREC> .52
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.04
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 896252877
<INVESTMENTS-AT-VALUE> 1121324498
<RECEIVABLES> 13904860
<ASSETS-OTHER> 307
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1135229665
<PAYABLE-FOR-SECURITIES> 11000187
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1940983
<TOTAL-LIABILITIES> 12941170
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 806569852
<SHARES-COMMON-STOCK> 78
<SHARES-COMMON-PRIOR> 73
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 90647263
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 225071380
<NET-ASSETS> 1435
<DIVIDEND-INCOME> 3914423
<INTEREST-INCOME> 6862636
<OTHER-INCOME> 0
<EXPENSES-NET> 18773909
<NET-INVESTMENT-INCOME> (7996850)
<REALIZED-GAINS-CURRENT> 112521564
<APPREC-INCREASE-CURRENT> (90128715)
<NET-CHANGE-FROM-OPS> 14395999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 83
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 63505225
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 48894219
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7247884
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18805791
<AVERAGE-NET-ASSETS> 1538

<PER-SHARE-NAV-BEGIN> 19.16
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .37
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.40
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> EQUITY VALUE FUND CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 1649355094
<INVESTMENTS-AT-VALUE> 1927052511
<RECEIVABLES> 46922795
<ASSETS-OTHER> 7025395
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1981000701
<PAYABLE-FOR-SECURITIES> 9356585
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37223725
<TOTAL-LIABILITIES> 46580310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1511557612
<SHARES-COMMON-STOCK> 36618200
<SHARES-COMMON-PRIOR> 29986923
<ACCUMULATED-NII-CURRENT> 1350747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 142616648
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 277231462
<NET-ASSETS> 425532573
<DIVIDEND-INCOME> 55366418
<INTEREST-INCOME> 6380235
<OTHER-INCOME> 0
<EXPENSES-NET> 26354141
<NET-INVESTMENT-INCOME> 35392512
<REALIZED-GAINS-CURRENT> 216062214
<APPREC-INCREASE-CURRENT> 37239689
<NET-CHANGE-FROM-OPS> 288694415
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9867957)
<DISTRIBUTIONS-OF-GAINS> (35092077)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6521398
<NUMBER-OF-SHARES-REDEEMED> (3736247)
<SHARES-REINVESTED> 3846126
<NET-CHANGE-IN-ASSETS> 306676201
<ACCUMULATED-NII-PRIOR> 2316910
<ACCUMULATED-GAINS-PRIOR> 93816138
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8882479
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26398433
<AVERAGE-NET-ASSETS> 368498483

<PER-SHARE-NAV-BEGIN> 11.06
<PER-SHARE-NII> .29
<PER-SHARE-GAIN-APPREC> 1.70
<PER-SHARE-DIVIDEND> (.31)
<PER-SHARE-DISTRIBUTIONS> (1.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.62
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> EQUITY VALUE FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 1649355094
<INVESTMENTS-AT-VALUE> 1927052511
<RECEIVABLES> 46922795
<ASSETS-OTHER> 7025395
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1981000701
<PAYABLE-FOR-SECURITIES> 9356585
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37223725
<TOTAL-LIABILITIES> 46580310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1511557612
<SHARES-COMMON-STOCK> 129773835
<SHARES-COMMON-PRIOR> 117121212
<ACCUMULATED-NII-CURRENT> 1350747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 142616648
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 277231462
<NET-ASSETS> 1508886118
<DIVIDEND-INCOME> 55366418
<INTEREST-INCOME> 6380235
<OTHER-INCOME> 0
<EXPENSES-NET> 26354141
<NET-INVESTMENT-INCOME> 35392512
<REALIZED-GAINS-CURRENT> 216062214
<APPREC-INCREASE-CURRENT> 37239689
<NET-CHANGE-FROM-OPS> 288694415
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (26600773)
<DISTRIBUTIONS-OF-GAINS> (132059401)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13533488
<NUMBER-OF-SHARES-REDEEMED> (14621584)
<SHARES-REINVESTED> 13720719
<NET-CHANGE-IN-ASSETS> 306676201
<ACCUMULATED-NII-PRIOR> 2316910
<ACCUMULATED-GAINS-PRIOR> 93816138
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8882479
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26398433
<AVERAGE-NET-ASSETS> 1397511247

<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 1.69
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (1.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.63
<EXPENSE-RATIO> 1.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> EQUITY VALUE FUND CLASS y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 1649355094
<INVESTMENTS-AT-VALUE> 1927052511
<RECEIVABLES> 46922795
<ASSETS-OTHER> 7025395
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1981000701
<PAYABLE-FOR-SECURITIES> 9356585
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37223725
<TOTAL-LIABILITIES> 46580310
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1511557612
<SHARES-COMMON-STOCK> 146
<SHARES-COMMON-PRIOR> 115
<ACCUMULATED-NII-CURRENT> 1350747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 142616648
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 277231462
<NET-ASSETS> 1700
<DIVIDEND-INCOME> 55366418
<INTEREST-INCOME> 6380235
<OTHER-INCOME> 0
<EXPENSES-NET> 26354141
<NET-INVESTMENT-INCOME> 35392512
<REALIZED-GAINS-CURRENT> 216062214
<APPREC-INCREASE-CURRENT> 37239689
<NET-CHANGE-FROM-OPS> 288694415
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (40)
<DISTRIBUTIONS-OF-GAINS> (131)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 15
<NET-CHANGE-IN-ASSETS> 306676201
<ACCUMULATED-NII-PRIOR> 2316910
<ACCUMULATED-GAINS-PRIOR> 93816138
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8882479
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26398433
<AVERAGE-NET-ASSETS> 1426

<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> 1.70
<PER-SHARE-DIVIDEND> (.33)
<PER-SHARE-DISTRIBUTIONS> (1.12)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.64
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

PAGE 1

DIRECTORS/TRUSTEES POWER OF ATTORNEY

City of Minneapolis

State of Minnesota

Each of the undersigned, as directors and trustees of the below listed
open-end, diversified investment companies that previously have filed
registration statements and amendments thereto pursuant to the requirements of
the Securities Act of 1933 and the Investment Company Act of 1940 with the
Securities and Exchange Commission:

1933 Act 1940 Act
Reg. Number Reg. Number

IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Select Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522

hereby constitutes and appoints William R. Pearce and Leslie L. Ogg or either
one of them, as her or his attorney-in-fact and agent, to sign for her or him in
her or his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Acts and any rules and
regulations thereunder, and to file such amendments with all exhibits thereto
and other documents in

PAGE 2
connection therewith with the Securities and Exchange Commission, granting to
either of them the full power and authority to do and perform each and every act
required and necessary to be done in connection therewith.

Dated the 8th day of January, 1997.

/s/ H. Brewster Atwater, Jr. /s/ Melvin R. Laird
H. Brewster Atwater, Jr. Melvin R. Laird

/s/ Lynne V. Cheney /s/ William R. Pearce
Lynne V. Cheney William R. Pearce

/s/ William H. Dudley /s/ Alan K. Simpson
William H. Dudley Alan K. Simpson

/s/ Robert F. Froehlke /s/ Edson W. Spencer
Robert F. Froehlke Edson W. Spencer

/s/ David R. Hubers /s/ John R. Thomas
David R. Hubers John R. Thomas

/s/ Heinz F. Hutter /s/ Wheelock Whitney
Heinz F. Hutter Wheelock Whitney

/s/ Anne P. Jones /s/ C. Angus Wurtele
Anne P. Jones C. Angus Wurtele