1997 SEMIANNUAL REPORT
IDS
Strategy
Aggressive
Fund
(icon of) chess piece
The goal of IDS Strategy Aggressive Fund, a part of IDS Strategy Fund, Inc., is
long-term growth of capital. The Fund invests primarily in common stocks that
are selected for their above-average growth potential.
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
(icon of) chess piece
Corporate climbers
All rapidly growing companies pass through various stages. During their middle
stage, they're known in the investment world as "mid-caps." Stocks of such
companies, which are the main focus of this Fund, offer investors an attractive
combination: the potential for above-average corporate growth without the
initial risks that are inherent in brand-new businesses.
Contents
From the chairman 3
From the portfolio manager 3
The Fund's ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 24
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong ones in many financial markets. Perhaps just as
important, history shows that bull markets don't last forever. Though
they're often unpredictable, declines -- whether they're brief or
long-lasting, moderate or substantial -- are always a possibility. We saw
evidence of that in late October, when declines in certain Asian markets
spawned a sharp drop in the U.S. stock market.
That fact reinforces the need for investors to review periodically their
long-term goals and examine whether their investment program remains on
track to achieving them. Your quarterly investment statements are one part
of that monitoring process. The other is a meeting with your American
Express financial advisor. That becomes even more important if there's a
major change in your financial situation or in the financial markets.
William R. Pearce
(picture of) William R. Pearce
Chairman of the board
<PAGE>
From the portfolio manager
A favorable investment environment and an improvement in the performance
of mid-size growth stocks set the stage for a substantial gain by IDS
Strategy Aggressive Fund in the first half of the fiscal year. For the six
months -- April through September 1997 -- investors in Class A shares were
rewarded with a total return of 27.0%.
The period began almost on cue with a rebound by the stock market, which
had been in a several-week slump brought on by a rise in long-term
interest rates. By May, the market had reached full speed, which it
maintained until August, when another run-up in interest rates caused it
to stumble slightly. All in all, though, it was an excellent time to be
invested in stocks.
Market begins to broaden out
Through the first few months of the period, stocks of large, blue-chip
companies (commonly called "large-caps") maintained their long-time
leadership role in the market. But at that point small- and mid-cap stocks
began to pick up the pace and, in fact, even outperformed their larger
counterpoints at times over the ensuing months. For example, in July alone
the Fund generated a return of approximately 9.5%.
This "broadening out" of the market worked to the advantage of this fund,
which primarily focuses on mid-cap stocks of rapidly growing companies.
While its largest areas of investment remained in the technology, health
care and business services sectors, the best-performing stocks represented
a wide range of businesses that also included energy services,
travel/leisure and retailing.
A long-term growth strategy
Although I added a number of new stocks to the portfolio, including some
in the energy services sector, I didn't alter my fundamental strategy of
investing in companies -- most of them mid-size, or mid-cap -- that strike
me as having excellent long-term growth prospects.
As the second half of the fiscal year begins, the investment environment
remains basically unchanged: Inflation still appears to be under control;
the economy continues to grow at a solid pace; long-term interest rates
are at a comfortable level; and corporate profits look generally healthy.
Beyond those fundamentals, and more to the purpose of this fund, mid-cap
stocks appear to be in good position to sustain their recent strength.
Therefore, if the stock market enjoys positive performance in the months
ahead, I expect this Fund to fare especially well.
David Bayer
(picture of) David Bayer
Portfolio Manager
<PAGE>
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 23.29
March 31, 1997 $ 18.34
Increase $ 4.95
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return* 27.0%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 22.82
March 31, 1997 $ 18.04
Increase $ 4.78
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return* 26.5%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 23.37
March 31, 1997 $ 18.40
Increase $ 4.97
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return* 27.1%**
* The prospectus discusses the effects of the sales charge, if any, on the
various classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The Fund's ten largest holdings
Percent Value
(of Fund's net assets) (as of Sept. 30, 1997)
HBO & Co 3.60% $48,055,750
USA Waste Services 2.94 39,257,416
PeopleSoft 2.71 36,262,275
Robert Half Intl 2.41 32,142,169
Paychex 2.24 29,993,372
Tellabs 2.15 28,716,400
Cisco Systems 2.14 28,618,581
Promus Hotel 2.00 26,744,100
Oracle 1.85 24,711,002
KLA-Tencor 1.82 24,261,694
(icon of) pie chart
The ten holdings listed here make up 23.86% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Strategy Aggressive Fund
Sept. 30, 1997
Assets
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $916,148,965) $1,347,009,051
Dividends and accrued interest receivable 188,665
Receivable for investment securities sold 23,465,907
----------
Total assets 1,370,663,623
-------------
Liabilities
Disbursements in excess of cash on demand deposit
(includes bank overdraft of $7,872,894) 8,622,280
Payable for investment securities purchased 25,921,391
Accrued investment management services fee 21,588
Accrued distribution fee 16,901
Accrued service fee 6,362
Accrued transfer agency fee 2,232
Accrued administrative services fee 1,773
Other accrued expenses 185,417
Open option contracts written, at value
(premium received $1,431,054) (Note 4) 171,369
-------
Total liabilities 34,949,313
----------
Net assets applicable to outstanding capital stock $1,335,714,310
==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 580,839
Additional paid-in capital 727,506,205
Net operating loss (5,351,303)
Accumulated net realized gain (loss) 180,858,798
Unrealized appreciation (depreciation) on investments 432,119,771
-----------
Total-- representing net assets applicable to outstanding capital stock $1,335,714,310
==============
Net assets applicable to outstanding shares: Class A $ 507,823,701
Class B $ 827,888,786
Class Y $ 1,823
Net asset value per share of outstanding capital stock: Class A shares 21,801,295 $ 23.29
Class B shares 36,282,526 $ 22.82
Class Y shares 78 $ 23.37
See accompanying notes to financial statements.
<PAGE>
Statement of operations
IDS Strategy Aggressive Fund
Six months ended Sept. 30, 1997
Investment income
(Unaudited)
Income:
Dividends $ 1,983,157
Interest 2,017,046
Less: Foreign taxes withheld (8,980)
------
Total income 3,991,223
---------
Expenses (Note 2):
Investment management services fee 3,701,057
Distribution fee -- Class B 2,971,923
Transfer agency fee 1,128,770
Incremental transfer agency fee-- Class B 46,796
Service fee
Class A 388,396
Class B 684,338
Administrative services fees and expenses 318,062
Compensation of board members 8,756
Custodian fees 84,044
Postage 30,962
Registration fees 15,356
Reports to shareholders 12,749
Audit fees 10,250
Other 3,695
-----
Total expenses 9,405,154
Earnings credits on cash balances (Note 2) (62,628)
- -------
Total net expenses 9,342,526
---------
Investment income (loss) -- net (5,351,303)
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 90,211,853
Foreign currency transactions (318)
----
Net realized gain (loss) on investments 90,211,535
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 207,048,391
-----------
Net gain (loss) on investments and foreign currencies 297,259,926
-----------
Net increase (decrease) in net assets resulting from operations $291,908,623
------------
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
IDS Strategy Aggressive Fund
Operations and distributions Sept. 30, 1997 March 31, 1997
Six months ended Year ended
(Unaudited)
Investment income (loss)-- net $ (5,351,303) $ (7,996,850)
Net realized gain (loss) on investments 90,211,535 112,521,564
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 207,048,391 (90,128,715)
----------- -----------
Net increase (decrease) in net assets resulting from operations 291,908,623 14,395,999
----------- ----------
Distributions to shareholders from:
Net realized gain
Class A -- (22,923,292)
Class B -- (44,486,289)
Class Y -- (83)
----------- ----------
Total distributions -- (67,409,664)
----------- ----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 194,998,172 318,487,417
Class B shares 37,565,805 128,249,450
Reinvestment of distributions at net asset value
Class A shares -- 22,628,239
Class B shares -- 44,346,773
Class Y shares -- 83
Payments for redemptions
Class A shares (178,574,113) (286,813,134)
Class B shares (Note 2) (132,472,672) (110,379,938)
----------- ----------
Increase (decrease) in net assets from capital share transactions (78,482,808) 116,518,890
----------- ----------
Total increase (decrease) in net assets 213,425,815 63,505,225
Net assets at beginning of period 1,122,288,495 1,058,783,270
----------- ----------
Net assets at end of period $1,335,714,310 $1,122,288,495
============== ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Strategy Aggressive Fund
(Unaudited as to Sept. 30, 1997)
1
Summary of
significant
accounting policies
IDS Strategy Aggressive 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 has 10
billion authorized shares of capital stock. 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 shares during the ninth calendar year of ownership. 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. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. 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
and 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 and write put and call options
on these futures contracts. Risks of entering into futures contracts and
related options include the possibility that there may be an illiquid
market and that a change in the value of the contract or option may not
correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments
are equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Fund recognizes a realized gain or loss
when the contract is closed or expires.
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Fund is subject to
the credit risk that the other party will not complete the obligations of
the contract.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of the deferral
of losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and
losses deferred due to "wash sale" transactions. The character of
distributions made during the year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year
that the income or realized gains (losses) were recorded by the Fund.
Dividends to shareholders
An annual dividend declared and paid by the end of the calendar year from
net investment income, 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
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2
Expenses and
sales charges
Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio, providing
administrative services and serving as transfer agent. Under its
Investment Management Services Agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage of the
Fund's average daily net assets in reducing percentages from 0.6% to 0.5%
annually.
Under 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 and 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:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the Fund entered into agreements with
American Express Financial Advisors Inc. for distribution and shareholder
servicing-related services. Under a Plan and Agreement of Distribution,
the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares for
distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the Fund's average daily net
assets attributable to Class A and Class B shares and commencing on May 9,
1997, the fee is calculated at a rate of 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $266,525 for Class A and $253,078 for Class
B for the six months ended Sept. 30, 1997. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 1997, the Fund's custodian and
transfer agency fees were reduced by $62,628 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 $708,445,765 and $728,644,508,
respectively, for the six months ended Sept. 30,1997. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $1,194 for
the six months ended Sept. 30, 1997.
4
Option contracts
written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended Sept. 30, 1997
Calls
Contracts Premium
Balance March 31, 1997 -- $ --
Opened 3,917 1,431,054
Closed -- --
Exercised -- --
Expired -- --
Balance Sept. 30, 1997 3,917 $1,431,054
5
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 1997
Class A Class B Class Y
Sold 9,184,160 1,877,375 --
Issued for reinvested
distributions -- -- --
Redeemed (8,406,113) (6,432,849) --
---------- ---------- ----
Net increase (decrease) 778,047 (4,555,474) --
Year ended March 31, 1997
Class A Class B Class Y
Sold 15,432,324 6,342,861 --
Issued for reinvested
distributions 1,119,539 2,226,935 5
Redeemed (13,875,166) (5,454,426) --
----------- ---------- ----
Net increase (decrease) 2,676,697 3,115,370 5
<PAGE>
<TABLE>
<CAPTION>
6. Financial highlights
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended ended March 31,
Per share income and capital changes(a)
Class B
1997(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $18.04 $18.83 $14.90 $14.39 $15.12 $15.37 $13.73 $12.42 $9.98 $9.17
beginning of period
Income from investment operations:
Net investment income (loss) (.12) (.18) (.18) (.05) (.14) (.11) (.03) .15 .01 (.02)
Net gains (losses) 4.90 .52 5.21 .71 .83 .61 2.35 2.01 2.43 .83
(both realized
and unrealized)
Total from investment 4.78 .34 5.03 .66 .69 .50 2.32 2.16 2.44 .81
operations
Less distributions:
Dividends from net -- -- -- -- -- -- (.01) (.16) -- --
investment income
Distributions from -- (1.13) (1.10) (.15) (1.42) (.75) (.67) (.69) -- --
realized gains
Total distributions -- (1.13) (1.10) (.15) (1.42) (.75) (.68) (.85) -- --
Net asset value, $22.82 $18.04 $18.83 $14.90 $14.39 $15.12 $15.37 $13.73 $12.42 $9.98
end of period
Class B
Ratios/supplemental data
1997(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $828 $737 $710 $776 $652 $582 $473 $352 $283 $246
period (in millions)
Ratio of expenses to 1.79%(c) 1.80% 1.85% 1.80% 1.71% 1.75% 1.62% 1.61% 1.49% 1.69%
average daily net assets(d)
Ratio of net income (loss) to (1.13%)(c)(.91%) (.77%) (.41%) (.99%) (.82%) (.27%) 1.17% .14% (.17%)
average daily net assets
Portfolio turnover rate 62% 80% 101% 111% 55% 49% 52% 64% 33% 48%
(excluding short-term
securities)
Total returne 26.5% 1.2% 34.1% 4.7% 4.1% 3.2% 16.8% 18.9% 24.4% 8.8%
Average brokerage $.0200 $.0245 -- -- -- -- -- -- -- --
commission rate(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Six months ended Sept. 30, 1997 (Unaudited).
(c) Adjusted to an annual basis.
(d) Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances. eTotal return does
not reflect payment of a sales charge.
(f) 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>
Fiscal period ended March 31,
Per share income and capital changes(a)
Class A Class Y
1997(c) 1997 1996 1995(b) 1997(c) 1997 1996 1995(b)
Net asset value, $18.34 $18.99 $14.91 $14.87 $18.40 $19.16 $14.89 $15.19
beginning of period
Income from investment operations:
Net investment income (loss) (.04) (.03) -- .01 (.02) -- .03 --
Net gains (losses) 4.99 .51 5.18 .03 4.99 .37 5.34 (.30)
(both realized
and unrealized)
Total from investment 4.95 .48 5.18 .04 4.97 .37 5.37 (.30)
operations
Less distributions:
Distributions from -- (1.13) (1.10) -- -- (1.13) (1.10) --
realized gains
Net asset value, $23.29 $18.34 $18.99 $14.91 $23.37 $18.40 $19.16 $14.89
end of period
Class A Class Y
Ratios/supplemental data
1997(c) 1997 1996 1995(b) 1997(c) 1997 1996 1995(b)
Net assets, end of $508 $386 $348 $7 $-- $-- $-- $--
period (in millions)
Ratio of expenses to 1.03%(d) 1.04% 1.07% 1.18%(d) .86%(d) .85% .92% --%(e)
average daily net assetsf
Ratio of net income (loss) (.38%)(d) (.15%) -- 1.26%(d) (.22%)(d) .03% .12% --%(e)
to average
daily net assets
Portfolio turnover rate 62% 80% 101% 111% 62% 80% 101% 111%
(excluding short-term
securities)
Total return(g) 27.0% 2.0% 35.1% .04% 27.1% 2.2% 35.3% (2.0%)
Average brokerage $.0200 $.0245 -- -- $.0200 $.0245 -- --
commission rateh
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was March 20, 1995.
(c) Six months ended Sept. 30, 1997 (Unaudited).
(d) Adjusted to an annual basis.
(e) 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.
(f) Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
(g) Total return does not reflect payment of a sales charge.
(h) 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.
</TABLE>
<PAGE>
Investments in securities
IDS Strategy Aggressive Fund
Sept. 30, 1997 (Unaudited)
Common stocks (96.3%)
Issuer Shares Value(a)
Aerospace & defense (0.5%)
Hexcel 237,000 $ 6,798,938
Airlines (0.3%)
Comair Holdings 125,500 3,372,813
Automotive & related (0.4%)
Avis 41,600(b) 993,200
Budget Group 138,500(b) 4,570,500
Total 5,563,700
Banks and savings & loans (2.6%)
Crestar Financial 268,600 12,590,625
Firstar 97,800 3,545,250
Imperial Credit Inds 170,300(b) 4,512,950
Washington Mutual 204,000 14,229,000
Total 34,877,825
Building materials & construction (1.7%)
Tyco Intl 279,400 22,928,262
Chemicals (3.5%)
Culligan Water 453,600(b) 20,865,600
Ecolab 317,600 15,423,450
Praxair 199,417 10,207,658
Total 46,496,708
Communications equipment & services (6.6%)
ADC Telecommunications 421,700(b) 13,705,250
Advanced Fibre
Communications 446,400(b) 18,302,400
Brightpoint 222,700(b) 10,327,713
CIENA 245,000(b) 12,135,156
Intermedia Communications 100,900(b) 4,735,994
Network Solutions 6,700(b) 145,725
NEXTLINK Communications 27,300(b) 655,200
Tellabs 557,600(b) 28,716,400
Total 88,723,838
Computers & office equipment (16.5%)
Adaptec 154,500(b) 7,222,875
BMC Software 272,400(b) 17,637,900
Cadence Design Systems 398,700(b) 21,330,450
CDW Computer Centers 172,400(b) 11,162,900
Cisco Systems 391,700(b) 28,618,581
Edwards (JD) & Co 19,700(b) 659,950
Electronic Arts 103,600(b) 4,001,550
Fiserv 208,700(b) 9,156,713
Inacom 99,500(b) 3,700,156
Intuit 172,300(b) 5,513,600
McAfee Associates 176,950(b) 9,378,350
Oracle 678,175(b) 24,711,002
Parametric Technology 152,700(b) 6,737,888
PeopleSoft 606,900(b) 36,262,275
Sterling Commerce 82,800(b) 2,975,625
Technology Solutions 158,650(b) 5,116,463
VERITAS Software 202,050(b) 8,877,572
Viasoft 195,300(b) 9,667,350
Whittman-Hart 230,000(b) 7,015,000
Total 219,746,200
Electronics (5.2%)
Altera 58,600(b) 3,003,250
Analog Devices 378,300(b) 12,673,050
KLA-Tencor 359,100(b) 24,261,694
Lattice Semiconductor 155,900(b) 10,152,988
Maxim Integrated Products 46,400(b) 3,314,700
Microchip Technology 187,100(b) 8,448,734
Xilinx 161,600(b) 8,181,000
Total 70,035,416
Energy (2.4%)
Anadarko Petroleum 44,500 3,195,656
Newfield Exploration 243,400(b) 6,830,413
Noble Affiliates 267,000 11,948,250
Pogo Producing 242,400 10,589,850
Total 32,564,169
Energy equipment & services (2.6%)
Cooper Cameron 239,450(b) 17,195,503
Key Energy Group 106,500(b) 3,467,906
Smith Intl 133,000 10,332,438
Tidewater 59,300 3,513,525
Total 34,509,372
Financial services (5.1%)
Finova Group 185,200 17,524,550
Patriot American
Hospitality REIT 297,100 9,470,062
Paychex 860,025 29,993,372
Providian Financial 296,500 11,767,344
Total 68,755,328
Furniture & appliances (0.3%)
Maytag 116,100 3,961,912
Health care (6.2%)
Centocor 252,600(b) 12,014,288
Dura Pharmaceuticals 174,050(b) 7,592,931
ESC Medical Systems 95,000(b) 3,574,375
Guidant 290,200 16,251,200
Medtronic 434,600 20,426,200
Sybron Intl 213,800(b) 9,180,037
Watson Pharmaceuticals 219,700(b) 13,127,075
Total 82,166,106
Health care services (8.4%)
American Oncology Resources234,300(b) 3,778,087
Atria Communities 406,900(b) 7,324,200
Cardinal Health 215,850 15,325,350
HBO & Co 1,273,000 48,055,750
Health Management
Associates 651,650(b) 20,608,431
HEALTHSOUTH 490,800(b) 13,098,225
Quorum Health Group 141,300(b) 3,453,019
Stewart Enterprises 294,700 218,750
Total 111,861,812
Household products (0.5%)
Action Performance 252,800(b) 7,362,800
Industrial equipment & services (2.9%)
USA Waste Services 984,512(b) 39,257,416
Insurance (3.4%)
Frontier Insurance Group 100,300 3,811,400
Provident Cos 160,400 11,217,975
SunAmerica 175,950 6,895,041
Travelers Property Casualty252,800 10,238,400
UNUM 279,700 12,761,312
Total 44,924,128
Leisure time & entertainment (1.3%)
Carnival 218,900 10,124,125
Royal Caribbean Cruises 164,400 7,192,500
Total 17,316,625
Media (2.9%)
Chancellor Media 148,300(b) 7,804,287
Clear Channel
Communications 232,950(b) 15,112,631
Outdoor Systems 358,500(b) 9,410,625
Sinclair Broadcast Group 42,650(b) 1,721,994
Universal Outdoor Holdings 124,000(b) 4,650,000
Total 38,699,537
Metals (1.3%)
Pittston Brink's Group 226,200 9,062,137
Martin Marietta 213,200 7,675,200
Total 16,737,337
Multi-industry conglomerates (6.3%)
AccuStaff 224,600(b) 7,074,900
CORESTAFF 151,000(b) 4,888,625
Electronics for Imaging 124,800(b) 6,364,800
Interim Services 339,300(b) 9,542,812
Registry 66,800(b) 3,081,150
Robert Half Intl 776,850(b) 32,142,169
Sylvan Learning 174,300(b) 7,647,412
Westinghouse Electric 506,926 13,718,685
Total 84,460,553
Restaurants & lodging (3.4%)
Papa John's Intl 111,800(b) 3,822,162
Promus Hotel 596,800(b) 26,744,100
Starbucks 351,100(b) 14,680,369
Total 45,246,631
Retail (4.7%)
Corporate Express 471,300(b) 9,956,213
Kohl's 263,900(b) 18,736,900
Office Depot 512,700(b) 10,350,131
Rite Aid 292,410 16,210,479
Stage Stores 163,700(b) 7,059,563
Total 62,313,286
Transportation & services (1.1%)
CNF Transportation 139,400 6,072,612
Kansas City Southern Inds 257,600 8,871,100
Total 14,943,712
Utilities -- telephone (0.1%)
Colt 52,250(b) 1,658,937
Foreign (6.1%)(c)
ACE 132,400 12,445,600
BioChem Pharma 359,600(b) 11,327,400
CBT Group 141,500(b) 11,355,375
Check Point Software
Technologies 54,600(b) 1,692,600
Elan 169,200(b) 8,470,575
Mutual Risk Management 123,350 6,267,722
Perez Companc ADR 417,633 6,740,597
Petroleum Geo-Services
ADR 73,200(b) 4,950,150
Saville Systems Ireland ADR144,000(b) 10,116,000
Terra Nova 302,150 8,195,819
Total 81,561,838
Total common stocks
(Cost: $856,397,651) $1,286,845,199
Bond (0.8%)
Issuer Coupon Maturity Principal Value(a)
rate year amount
Energy equipment & services (0.8%)
Diamond Offshore
Cv 3.125% 2007 $10,000,000 $10,412,500
Total bond
(Cost: $10,000,000) $10,412,500
Other (--%)
Issuer Shares Value(a)
Jan Bell
Warrants 2,473 $ 38
Total other
(Cost: $--) $ 38
Short-term securities (3.7%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies (0.4%)
Federal Home Loan Mtge Corp Disc Nt
10-14-97 5.44% $ 100,000 $ 99,804
Federal Natl Mtge Assn Disc Nt
10-24-97 5.49 5,000,000 4,982,526
Total 5,082,330
Commercial paper (2.6%)
BellSouth
11-03-97 5.54 4,500,000 4,477,230
Deutsche Bank Financial
10-29-97 5.53 3,400,000 3,385,455
Dresdner
10-02-97 5.55 12,200,000 12,198,123
Merrill Lynch
10-08-97 5.54% 3,800,000 3,795,929
Novartis Finance
10-01-97 5.52 2,500,000(d) 2,500,000
SBC Communications Capital
11-07-97 5.56 8,400,000(d) 8,352,258
Total 34,708,995
Letters of credit (0.7%)
Bank of America-
AES Barbers Point
10-21-97 5.57 4,000,000 3,987,689
Student Loan Marketing Assn-
Nebraska Higher Education
10-31-97 5.56 6,000,000 5,972,300
Total 9,959,989
Total short-term securities
(Cost: $49,751,314) 49,751,314
Total investments in securities
(Cost: $916,148,965)(e) $1,347,009,051
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the board.
(e) At Sept. 30, 1997, the cost of securities for federal income tax purposes
was approximately $916,149,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation.........................$433,141,000
Unrealized depreciation...........................(2,281,000)
----------
Net unrealized appreciation.....................$430,860,000
============
<PAGE>
Board members and officers of the Fund
Independent board members and officers
William R. Pearce*
Chairman of the board
Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
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.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
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.
Officer
Leslie L. Ogg*
Vice president, general counsel and secretary for the Fund.
President, treasurer and corporate secretary of Board Services
Corporation.
Board members and
officers associated
with AEFC
John R. Thomas*
President
Senior vice president, AEFC.
William H. Dudley*
Senior advisor to the chief executive officer, AEFC.
David R. Hubers*
President and chief executive officer, AEFC.
Officers associated
with AEFC
Peter J. Anderson*
Vice president
Senior vice president, AEFC.
Melinda S. Urion*
Treasurer
Senior vice president and chief financial officer, AEFC.
* Interested persons as defined by the Investment Company Act of 1940.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies throughout the
world that are positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer potential for
superior growth. The Fund may invest up to 20% of its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies that
explore for, mine and process or distribute gold and other precious metals. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds larger
growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected for their
potential for above-average growth. Above-average means that their growth
potential is better, in the opinion of the portfolio's investment manager, than
the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have above-average
potential for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) trees
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in
technology, marketing or management. The Fund frequently
changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds stocks for the
long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-established companies
that offer long-term growth of capital and reasonable income from dividends and
interest. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks, higher-yielding
equities and bonds. Seeks growth of capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities purchased are
those recommended by our research analysts as the best from each industry
represented on the index. Offers potential for long-term growth as well as
dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity securities, U.S. and
foreign debt securities, foreign equity securities and money market instruments.
The Fund provides diversification among these major investment categories and
has a target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek high current
income and growth of income and capital with reduced volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily in high-yielding common stocks to
seek high current income and, secondarily, to benefit from the growth potential
offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks and senior
securities (preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate bonds or
government securities to seek interest income. Secondary objective is capital
growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding corporate
fixed-income securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) two coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk
bond categories, or the equivalent, and in government bonds.
(icon of) Greek column
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality corporate bonds and
other highly rated debt instruments including government securities and
short-term investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or guaranteed as
to the timely payment of principal and interest by the U.S. government, its
agencies and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) shield with eagle head
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government units, with at
least 75% in the four highest rated, lowest risk bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to the timely
payment of principal and interest. The insurance feature minimizes credit risk
of the Fund but does not guarantee the market value of the Fund's shares.
(icon of) shield with star
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to provide
income to residents of each respective state that is exempt from federal, state
and local income taxes. (New York is the only state that is exempt at the local
level.)
(icon of) shield with U.S. enclosed
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-quality
municipal bonds and notes. Lower-quality securities generally involve greater
risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial paper,
bankers' acceptances, certificates of deposit (CDs) and other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and local
governments to seek high current income exempt from federal income taxes.
(icon of) shield with piggy bank enclosed
For more complete information about any of these funds, including charges and
expenses, you can obtain a prospectus by contacting your financial advisor or
writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534. Read it carefully before you invest or send money.
<PAGE>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Strategy Aggressive Fund
IDS Tower 10
Minneapolis, MN 55440-0010
