IDS STRATEGY FUND INC, 485BPOS, 1998-05-29

IDS STRATEGY FUND INC
485BPOS, 1998-05-29

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 30 (File No. 2-89288) X
--- -

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 32 (File No. 811-3956) X
--- -

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

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

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
on May 29, 1998 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 29, 1998.

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

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

PART A
<S> <C>
Item No. Section in Prospectus
1 Cover page of prospectus

2 (a) Sales charge and Fund expenses
(b) The Fund in brief
(c) The Fund in brief

3 (a) Financial highlights
(b) NA
(c) Performance
(d) Financial highlights

4 (a) The Fund in brief; Investment policies and risks; How the Fund is organized
(b) Investment policies and risks
(c) Investment policies and risks

5 (a) Board members and officers
(b)(i) Investment manager; About American Express Financial Corporation - General information
(b)(ii) Investment manager
(b)(iii) Investment manager
(c) Portfolio manager
(d) Administrator and transfer agent
(e) Administrator and transfer agent
(f) Distributor
(g) Investment manager; About American Express Financial Corporation - General information

5A(a) *
(b) *

6 (a) Shares; Voting rights
(b) NA
(c) NA
(d) Voting rights
(e) Cover page; Special shareholder services
(f) Dividend and capital gain distributions; Reinvestments
(g) Taxes
(h) Alternative purchase arrangements

7 (a) Distributor
(b) Valuing Fund shares
(c) How to purchase, exchange or redeem shares
(d) How to purchase shares
(e) NA
(f) Distributor
(g) Alternative purchase arrangements; Reductions and waivers of the sales charge

8 (a) How to redeem shares
(b) NA
(c) How to purchase shares: Three ways to invest
(d) How to purchase, exchange or redeem shares: Redemption policies
- Important

9 None
</TABLE>

<PAGE>

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

11 Table of Contents

12 NA

13 (a) Additional Investment Policies; all appendices except Dollar-Cost Averaging
(b) Additional Investment Policies
(c) Additional Investment Policies
(d) Security Transactions

14 (a) Board members and officers**; Board Members and Officers
(b) Board Members and Officers
(c) Board Members and Officers

15 (a) NA
(b) Principal Holders of Securities, if applicable
(c) Board Members and Officers

16 (a)(i) How the Fund is organized; About the American Express Financial Corporation**
(a)(ii) Agreements: Investment Management Services Agreement, Plan and Agreement of Distribution
(a)(iii) Agreements: Investment Management Services Agreement
(b) Agreements: Investment Management Services Agreement
(c) NA
(d) Agreements: Administrative Services Agreement, Shareholder Service Agreement
(e) NA
(f) Agreement: Distribution Agreement
(g) NA
(h) Custodian Agreement; Independent Auditors
(i) Agreements: Transfer Agency Agreement; Custodian Agreement
17 (a) Security Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with American Express Financial Corporation
(c) Security Transactions
(d) Security Transactions
(e) Security Transactions

18 (a) Shares; Voting rights**
(b) NA

19(a) Investing in the Fund
(b) Valuing Fund Shares; Investing in the Fund
(c) Redeeming Shares

20 Taxes

21 (a) Agreements: Distribution Agreement
(b) NA
(c) NA

22 (a) Performance Information (for money market funds only)
(b) Performance Information (for all funds except money market funds)
23 Financial Statements

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

<PAGE>

IDS Strategy Aggressive Fund

Prospectus
May 30, 1998

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 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
Web site address: http://www.americanexpress.com/advisors

<PAGE>

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

<PAGE>

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

Year 2000

Appendix
Descriptions of derivative instruments

<PAGE>

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
risks. 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 $78 billion
in assets for the IDS MUTUAL FUND GROUP. Shares of the Fund are sold through
American Express Financial Advisors Inc. (AEFA), a wholly-owned subsidiary of
AEFC.

Portfolio manager

Louis Giglio joined AEFC in January 1994 as Senior equity analyst and serves s
portfolio manager. He has managed the assets of the Fund since April 1998. He
also serves as portfolio manager of IDS Life Series Fund, Equity Portfolio and
World Technologies Portfolio. Prior to joining AEFC he had eight years of
experience as a financial analyst with Bear, Stearns & Co. Inc. covering the
microcomputer software and computer services industries.

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.

<PAGE>

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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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** 0.41 0.42 0.33
Total 1.01 1.77 0.93
</TABLE>

*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, a transfer agency fee and other
nonadvisory expenses. Class Y expenses have been restated to reflect the 0.10%
shareholder services fee effective May 9, 1997.

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

1 year 3 years 5 years 10 years
Class A $ 60 $ 81 $103 $168
Class B $ 68 $ 96 $116 $189**
Class B* $ 18 $ 56 $ 96 $189**
Class Y $ 9 $ 30 $ 52 $115
</TABLE>

*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>

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.

<TABLE>
<CAPTION>
IDS Strategy Aggressive Fund, Inc.

Performance

Financial highlights

Fiscal period ended ended March 31,
Per share income and capital changesa
Class B
1998 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) (.18) (.18) (.18) (.05) (.14) (.11) (.03) .15 .01 (.02)

Net gains (losses) 7.57 .52 5.21 .71 .83 .61 2.35 2.01 2.43 .83
(both realized
and unrealized)

Total from investment 7.39 .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 (3.95) (1.13) (1.10) (.15) (1.42) (.75) (.67) (.69) -- --
realized gains

Total distributions (3.95) (1.13) (1.10) (.15) (1.42) (.75) (.68) (.85) -- --

Net asset value, $21.48 $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
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989

Net assets, end of $892 $737 $710 $776 $652 $582 $473 $352 $283 $246
period (in millions)

Ratio of expenses to 1.77% 1.80% 1.85% 1.80% 1.71% 1.75% 1.62% 1.61% 1.49% 1.69%
average daily net assetsb

Ratio of net income (loss) to (1.21%) (.91%) (.77%) (.41%) (.99%) (.82%) (.27%) 1.17% .14% (.17%)
average daily net assets

Portfolio turnover rate 95% 80% 101% 111% 55% 49% 52% 64% 33% 48%
(excluding short-term
securities)

Total returnc 45.1% 1.2% 34.1% 4.7% 4.1% 3.2% 16.8% 18.9% 24.4% 8.8%

Average brokerage $.0262 $.0245 -- -- -- -- -- -- -- --
commission rated

aFor a share outstanding throughout the period. Rounded to the nearest cent.

bEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.

cTotal return does not reflect payment of a sales charge.

dEffective 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>

Fiscal period ended March 31,
Per share income and capital changesa
Class A Class Y
1998 1997 1996 1995b 1998 1997 1996 1995b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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) (.03) (.03) -- .01 -- -- .03 --

Net gains (losses) 7.76 .51 5.18 .03 7.77 .37 5.34 (.30)
(both realized
and unrealized)

Total from investment 7.73 .48 5.18 .04 7.77 .37 5.37 (.30)
operations

Less distributions:
Distributions from (3.95) (1.13) (1.10) -- (3.95) (1.13) (1.10) --
realized gains

Net asset value, $22.12 $18.34 $18.99 $14.91 $22.22 $18.40 $19.16 $14.89
end of period

Class A Class Y
Ratios/supplemental data
1998 1997 1996 1995b 1998 1997 1996 1995b

Net assets, end of $548 $386 $348 $7 $-- $-- $-- $--
period (in millions)

Ratio of expenses to 1.01% 1.04% 1.07% 1.18%d .88% .85% .92% --%e
average daily net assetsc

Ratio of net income (loss) (.45%) (.15%) --% 1.26%d (.35%) .03% .12% --%e
to average
daily net assets

Portfolio turnover rate 95% 80% 101% 111% 95% 80% 101% 111%
(excluding short-term
securities)

Total returnf 46.2% 2.0% 35.1% .04% 46.3% 2.2% 35.3% (2.0%)

Average brokerage $.0262 $.0245 -- -- $.0262 $.0245 -- --
commission rateg

aFor a share outstanding throughout the period. Rounded to the nearest cent.

bInception date was March 20, 1995.

cEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.

dAdjusted to an annual basis.

eRatios 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.

fTotal return does not reflect payment of a sales charge.

gEffective 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 KMPG 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.
</TABLE>

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, 1998
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C>
Purchase 1 year Since 5 years 10 years
made ago inception ago ago
- ---------------------------- ----------------- --------------------- ------------------- -------------------
Strategy Aggressive:

Class A 38.87% 23.30%* --% --%
Class B 41.08% --% 16.40% 15.34%
Class Y 46.34% 24.96% --% --%

S&P 500 47.78% 32.68%** 22.33% 18.90%

Lipper Small Cap Fund Index
40.61% 21.99%** 17.15% 15.02%
Russell Midcap Growth Index
42.36% 24.90%** 18.41% 17.02%
</TABLE>

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

<PAGE>

Cumulative total returns as of March 31, 1998
<TABLE>
<CAPTION>

Purchase 1 year Since 5 years 10 years
made ago inception ago ago
- ---------------------------- ----------------- --------------------- ------------------- -------------------
Strategy Aggressive:
Class A 38.87% 87.86%* --% --%
Class B 41.08% --% 113.71% 316.81%
Class Y 46.34% 95.62%* --% --%

S&P 500 47.78% 133.57%** 173.91% 464.81%

Lipper Small Cap Fund Index
40.61% 81.52%** 120.63% 305.23%
Russell Midcap Growth Index
42.36% 94.83%** 132.78% 381.61%
</TABLE>

*Inception date was March 20, 1995.
**Measurement 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. Past performance for Class Y for the periods prior to March 20, 1995
may be calculated based on the performance of Class B, 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. The index
reflects reinvestment of all distributions and changes in market prices, but
excludes brokerage commissions or other fees.

<PAGE>

Lipper Small Cap 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.

Russell Midcap Growth Index, an unmanaged list of common stocks, measures the
performance of the 800 smallest companies in the Russell 1000 Index,
representing 35% of the total market capitalization of the Russell 1000 Index.

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 investment 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 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.

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.

<PAGE>

of equivalent quality. 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 investment manager.
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: There are risks when investing in securities of foreign
companies and governments in addition to those assumed when investing in
domestic securities. These risks are classified as country risk, currency risk,
and custody risk. Each can adversely affect the value of an investment. Country
risk includes the political, economic, and other conditions of a country. These
conditions include lack of publicly available information, less government
oversight, the possibility of government-imposed restrictions, even the
nationalization of assets. Currency risk results from the constantly changing
exchange rate between local currency and the U.S. dollar. Whenever the fund
holds securities valued in local currency or holds the currency, changes in the
exchange rate add or subtract from the asset value of the fund. Custody risk
refers to the process of clearing and settling trades. It also covers holding
securities with local agents and depositories. Low trading volumes and volatile
prices in less developed markets make trades harder to complete and settle.
Local agents are held only to the standard of care of the local market.
Governments or trade groups may compel local agents to hold securities in
designated depositories that are not subject to independent evaluation. The less
developed a country's securities market is, the greater the likelihood of
problems occurring. The risks of foreign investments are managed carefully but
the fund cannot guarantee against losses that might result from them. The fund
may invest up to 25% of its total assets in foreign investments.

Derivative instruments: The investment manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance characteristics. A
small change in the value of the underlying security, currency or index will
cause a sizable gain or loss in the price of the derivative instrument.
Derivative instruments allow the investment 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

<PAGE>

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 investment 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.

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.

<PAGE>

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 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 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales charge and
distribution
(12b-1) fee Service fee Other information
Class A Maximum initial sales 0.175% of average daily net Initial sales charge waived
charge of 5%; no 12b-1 fee assets or reduced for certain
purchases
Class B No initial sales charge; 0.175% of average daily net Shares convert to Class A
maximum CDSC of 5% assets in the ninth year of
declines to 0% after six ownership; CDSC waived in
years; 12b-1 fee of 0.75% certain circumstances
of average daily net
assets

Class Y None 0.10% of average daily net Available only to certain
assets qualifying institutional
investors

</TABLE>

<PAGE>

Conversion of Class B shares to Class A shares - During the ninth calendar year
of owning your Class B shares, Class B shares will convert to Class A shares and
will no longer be subject to a distribution fee. Class B shares that convert to
Class A shares are not subject to a sales charge. Class B shares purchased
through reinvested dividends and distributions also will convert to Class A
shares in the same proportion as the other Class B shares. This means more of
your money will be put to work for you.

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 shares

o You will not have all of your purchase price invested. Part of your
purchase price will go to pay the sales charge. You will not pay a
sales charge when you redeem your shares.

o You will be able to take advantage of reductions in the sales charge.

If you purchase Class B shares

o All of your money is invested in shares of stock. However, you will pay
a sales charge if you redeem your shares within six years of purchase.

o No reductions of the sales charge are available for large purchases.

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 shares

o Your shares will have a lower expense ratio than Class B shares because
Class A does not pay a distribution fee and the transfer agency fee for
Class A is lower than the fee for Class B. As a result, Class A shares
will pay higher dividends than Class B shares.

<PAGE>

If you purchase Class B shares

o The distribution and transfer agency fees for Class B will cause your
shares to have a higher expense ratio and to pay lower dividends than
Class A shares. In the ninth year of ownership, Class B shares will
convert to Class A shares and you 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 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.

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

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

How to purchase shares

If you are investing in this Fund for the first time, you will 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.

<PAGE>

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

When you 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, American
Express Client Service Corporation (AECSC), 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 AECSC 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.

Three ways to invest

1 By regular account

Send your check and application (or your name and account number if you have an
established account) to:

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

<PAGE>

Your financial advisor will help you with this process.

Minimum amounts
Initial investment: $ 2,000
Additional investments: $ 100
Account balances: $ 300*
Qualified retirement accounts: none

2 By scheduled investment plan

Contact your financial advisor to set up one of the following scheduled plans:

o automatic payroll deduction

o bank authorization

o direct deposit of Social Security check

o other plan approved by the Fund

Minimum amounts
Initial investment: $ 100
Additional investments: $ 100/each payment
Account balances: none
(on active plans of monthly payments)

If account balance is below $2,000, frequency of payments must be at least
monthly.

3 By wire

If you have an established account, you may wire money to:

Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit IDS Account #00-30-015 for personal account #
(your account number) for (your name).

If this information is not included, the order may be rejected and all money
received by the Fund, less any costs the Fund or AECSC incurs, will be returned
promptly.

<PAGE>

Minimum amounts
Each wire investment: $ 1,000

*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 do not do so
within 30 days, your shares can be redeemed and the proceeds mailed to you. If
you are in a "wrap-fee" program sponsored by AEFA and your wrap program balance
falls below the required program minimum or is terminated, your shares will 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 on any other fund, including fees and expenses,
read that fund's prospectus carefully.

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

For tax purposes, an exchange represents a 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 the 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.

<PAGE>

Two ways to request an exchange or redemption of shares

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

2 By phone
American Express Financial Advisors Telephone Transaction Service:
800-437-3133 or
612-671-3800

o The Fund and AECSC will honor any telephone exchange or redemption
request believed to be authentic and will use reasonable procedures to
confirm that they are. This includes asking identifying questions and
tape recording calls. If reasonable procedures are followed, the Fund
or AECSC will not 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.

<PAGE>

o AECSC 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

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 AECSC 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>

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.)

Three ways to receive payment when you redeem shares

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.

<PAGE>

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

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
percentage 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>

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.

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 are the result of a redemption
of an equal or greater value where a sales load was previously assessed.

<PAGE>

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 AEFA 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.

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 or under a "wrap fee" product sponsored by AEFA
(total amount of all investments must be $50,000); the University of
Massachusetts After-Tax Savings Program; the University of Texas System
ORP; or a segregated separate account offered by Nationwide Life Insurance
Company or Nationwide Life and Annuity Insurance Company.

o Purchases made with the proceeds from IDS Life Real Estate Variable Annuity
surrenders.

* Eligibility must be determined in advance by AEFA. 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:

<PAGE>

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.

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,

<PAGE>

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 AEFA, or a custodian-to-custodian transfer to a
product not distributed by AEFA, the CDSC will not be waived), or
- redeeming under an approved substantially equal periodic payment
arrangement.

Special shareholder services

Services

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

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

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

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

Quick telephone reference

American Express 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

<PAGE>

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

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. Capital gains are realized
when a security is sold for a higher price than was paid for it. Short-term
capital gains are included in net investment income. Long-term capital gains are
realized when a security is held for more than one year. 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. These long-term capital gains will
be subject to differing tax rates depending on the holding period of the
underlying investments. 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.)

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 have previously
opened an account.

<PAGE>

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

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

If the U.S. Postal Service cannot deliver the checks for the cash distributions,
we will reinvest the checks into your account at the then-current net asset
value and make future distributions in the form of additional shares. Prior to
reinvestment, no interest will accrue on amounts represented by uncashed
distribution or redemption checks.

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 short term (for shares held for one year or less) or long term (for shares
held for more than one year). Long-term capital gains will be taxed at rates
that vary depending upon the holding period. Long-term capital gains are divided
into two holding periods: (1) shares held more than one year but not more than
18 months and (2) shares held more than 18 months.

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.

<PAGE>

If you do not 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 (Uniform The minor
Gifts/Transfers to Minors Act)

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

An irrevocable trust, The legal entity (not the personal representative
pension trust or estate 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 tax-exempt organization The organization
</TABLE>

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

<PAGE>

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.

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.

<PAGE>

Independent board members and officers

Chairman of the board

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

H. Brewster Atwater, Jr.
Retired chairman and chief executive officer, General Mills, Inc.

Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public Policy Research.

Heinz F. Hutter
Retired 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
Retired chairman and chief executive officer, Honeywell, Inc.

Wheelock Whitney
Chairman, Whitney Management Company.

C. Angus Wurtele
Chairman of the board, The Valspar Corporation.

Officer

Vice president, general counsel and secretary

Leslie L. Ogg*
President of Board Services Corporation.

<PAGE>

Board members and officers associated with AEFC

President

John R. Thomas*
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

Vice president

Peter J. Anderson*
Senior vice president, AEFC.

Vice president

Frederick C. Quirsfeld*
Vice president, AEFC.

Treasurer

Matthew N. Karstetter*
Vice president, AEFC.

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

* Interested person as defined by the Investment Company Act of 1940.

<PAGE>

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, 1998, 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

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

Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service 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
AEFA 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.

<PAGE>

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 average daily net assets for Class A
and Class B shares and 0.10% for Class Y shares.

Total expenses paid by the Fund's Class A shares for the fiscal year ended March
31, 1998, were 1.01% of its average daily net assets. Expenses for Class B and
Class Y were 1.77% and 0.88%, 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.

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, 1998 were more than $195 billion.

AEFA serves individuals and businesses through its nationwide network of more
than 175 offices and more than 8,700 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>

Year 2000

The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which would have a material impact on the operation of the Fund. The Fund has no
computer systems of its own but is dependent upon the systems maintained by AEFC
and certain other third parties.

A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification of existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each of its critical systems
by the end of 1998 and to continue compliance efforts through 1999. The Year
2000 readiness of other third parties whose system failures could have an impact
on the Fund's operations currently is being evaluated. The companies or
governments in which the Fund invests also may be adversely affected by Year
2000 issues. This may affect the value of the Fund's investments. The potential
materiality of any such impact is not known at this time.

<PAGE>

Appendix

Descriptions of derivative instruments

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

IDS Equity Value Fund

Prospectus
May 29, 1998

The goal of IDS Equity Value Fund, a part of IDS Strategy Fund, Inc., is growth
of capital and income. The Fund invests primarily in equity securities that
provide income, offer 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 goal

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
800-862-7919
TTY: 800-846-4852
Web site address: http://www.americanexpress.com/advisors

<PAGE>

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

<PAGE>

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
Year 2000

Appendix
Descriptions of derivative instruments

<PAGE>

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 risks. For further
information, refer to the later section in the prospectus titled "Investment
policies and risks."

Manager and distributor

Portfolio manager

Kurt Winters joined AEFC in 1987 and serves as senior portfolio manager. He has
managed this Fund since December 1997. Kurt is responsible for overall
investment management, including the determination of the sectors in which the
Fund will invest. A team of research professionals makes investment decisions
within those sectors. From 1992 to 1995, he managed IDS Life Series Fund,
Managed Portfolio. He was appointed to manage IDS Discovery Fund in 1995. He
also manages IDS Progressive Fund, Balanced Portfolio and Equity Income
Portfolio.

Alternative purchase arrangements

<PAGE>

Sales charge and Fund expenses

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

Class A Class B Class Y
Management fee 0.49% 0.49% 0.49%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses** 0.36% 0.37% 0.27%
Total 0.85% 1.61% 0.76%
</TABLE>

<S> <C> <C> <C> <C>
1 year 3 years 5 years 10 years
Class A $58 $76 $ 95 $150
Class B $66 $91 $108 $171**
Class B* $16 $51 $ 88 $171**
Class Y $ 8 $24 $42 $ 95
</TABLE>

*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>

<TABLE>
<CAPTION>
IDS Equity Value Fund

Performance

Financial highlights

Fiscal period ended ended March 31,
Per share income and capital changesa
Class B
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $11.63 $11.07 $9.21 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96 $7.26
beginning of period

Income from investment operations:
Net investment income (loss) .21 .21 .18 .19 .18 .19 .22 .26 .29 .27

Net gains (losses) 3.30 1.69 2.12 .47 .37 1.18 .98 .48 .51 1.29
(both realized
and unrealized)

Total from investment 3.51 1.90 2.30 .66 .55 1.37 1.20 .74 .80 1.56
operations

Less distributions:
Dividends from net (.20) (.22) (.16) (.19) (.18) (.19) (.22) (.26) (.31) (.27)
investment income

Distributions from (2.09) (1.12) (.28) (.43) (.66) (.62) (.30) (.18) (.53) (.59)
realized gains

Total distributions (2.29) (1.34) (.44) (.62) (.84) (.81) (.52) (.44) (.84) (.86)

Net asset value, $12.85 $11.63 $11.07 $9.21 $9.17 $9.46 $8.90 $8.22 $7.92 $7.96
end of period

Class B
Ratios/supplemental data
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989

Net assets, end of $1,922 $1,509 $1,296 $1,304 $1,031 $758 $497 $370 $311 $230
period (in millions)

Ratio of expenses to 1.61% 1.64% 1.69% 1.61% 1.56% 1.63% 1.66% 1.66% 1.61% 1.65%
average daily net assetsb

Ratio of net income (loss) to 1.69% 1.83% 1.71% 2.10% 1.93% 2.15% 2.56% 3.41% 3.61% 3.70%
average daily net assets

Portfolio turnover rate 95% 60% 54% 85% 70% 48% 72% 65% 67% 54%
(excluding short-term
securities)

Total returnc 32.6% 17.6% 25.2% 7.7% 5.5% 16.0% 15.0% 10.1% 9.9% 22.2%

Average brokerage $.0461 $.0516 -- -- -- -- -- -- -- --
commission rated

aFor a share outstanding throughout the period. Rounded to the nearest cent.

bEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.

cTotal return does not reflect payment of a sales charge.

</TABLE>

Fiscal period ended March 31,
Per share income and capital changesa
Class A Class Y
1998 1997 1996 1995b 1998 1997 1996 1995b
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $11.62 $11.06 $9.21 $9.10 $11.64 $11.07 $9.21 $9.23
beginning of period

Income from investment operations:
Net investment income (loss) .32 .29 .21 .01 .34 .32 .26 --

Net gains (losses) 3.30 1.70 2.16 .15 3.29 1.70 2.14 .03
(both realized
and unrealized)

Total from investment 3.62 1.99 2.37 .16 3.63 2.02 2.40 .03
operations

Less distributions:
Dividends from net (.30) (.31) (.24) (.05) (.31) (.33) (.26) (.05)
investment income

Distributions from (2.09) (1.12) (.28) -- (2.09) (1.12) (.28) --
realized gains

Total distributions (2.39) (1.43) (.52) (.05) (2.40) (1.45) (.54) (.05)

Net asset value, $12.85 $11.62 $11.06 $9.21 $12.87 $11.64 $11.07 $9.21
end of period

Class A Class Y
Ratios/supplemental data
1998 1997 1996 1995b 1998 1997 1996 1995b

Net assets, end of $835 $426 $332 $6 $1 $-- $-- $--
period (in millions)

Ratio of expenses to .85% .89% .90% .91%d .76% .71% .75% --%e
average daily net assetsc

Ratio of net income (loss) 2.43% 2.60% 2.74% 2.43%d 2.10% 2.78% 2.73% --%e
to average
daily net assets

Portfolio turnover rate 95% 60% 54% 85% 95% 60% 54% 85%
(excluding short-term
securities)

Total returnf 33.6% 18.5% 26.1% 1.8% 33.8% 18.7% 26.4% .3%

Average brokerage $.0461 $.0516 -- -- $.0461 $.0516 -- --
commission rateg

aFor a share outstanding throughout the period. Rounded to the nearest cent.

bInception date was March 20, 1995.

cEffective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.

dAdjusted to an annual basis.

eRatios 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.

fTotal return does not reflect payment of a sales charge.

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.
</TABLE>

<PAGE>

Total returns

Average annual total returns as of March 31, 1998
<S> <C> <C> <C> <C>
Purchase 1 year Since 5 years 10 years
made ago inception ago ago
- ----------------------------- ------------------ ------------------ ------------------- ------------------
Equity Value:
Class A +26.93% +23.82%* --% --%
Class B +28.61% --% 17.17% +15.92%
Class Y +33.76% +26.09%* --% --%

S&P 500 +47.78% +32.68%** +22.33% +18.90%

Lipper Growth and Income
Fund Index +39.09% +27.56%** +19.26% +16.41%
</TABLE>

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

Cumulative total returns as of March 31, 1998
<S> <C> <C> <C> <C>

Purchase 1 year Since 5 years 10 years
made ago inception ago ago
- ----------------------------- ------------------ ------------------- --------------------- -----------------
Equity Value:
Class A +26.93% +90.28%* --% --%
Class B +28.61% --% +120.86% +338.00%
Class Y +33.76% +100.98%* --% --%

S&P 500 +47.78% +133.57%** +173.91% +464.81%

Lipper Growth and Income
Fund Index +39.09% +107.55%** +141.21% +357.14%
</TABLE>

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

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

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.

<PAGE>

Investment policies and risks

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

The various types of investments the investment 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.

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 investment 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.

<PAGE>

adversely affect the value of an investment. Country risk includes the
political, economic, and other conditions of a country. These conditions include
lack of publicly available information, less government oversight, the
possibility of government-imposed restrictions, even the nationalization of
assets. Currency risk results from the constantly changing exchange rate between
local currency and the U.S. dollar. Whenever the Fund holds securities valued in
local currency or holds the currency, changes in the exchange rate add or
subtract from the asset value of the Fund. Custody risk refers to the process of
clearing and settling trades. It also covers holding securities with local
agents and depositories. Low trading volumes and volatile prices in less
developed markets make trades harder to complete and settle. Local agents are
held only to the standard of care of the local market. Governments or trade
groups may compel local agents to hold securities in designated depositories
that are not subject to independent evaluation. The less developed a country's
securities market is, the greater the likelihood of problems occurring. The
risks of foreign investments are managed carefully but the Fund cannot guarantee
against losses that might result from them. The Fund may invest up to 25% of its
total assets in foreign investments.

<PAGE>

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

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 and assets with available market values are valued on that
basis

<PAGE>

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

o 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

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

Class Y None 0.10% of average daily net Available only to certain
assets qualifying institutional
investors
</TABLE>

<PAGE>

Sales charges on purchase or redemption

If you purchase Class A shares

o You will not have all of your purchase price invested. Part of your
purchase price will go to pay the sales charge. You will not pay a
sales charge when you redeem your shares.

o You will be able to take advantage of reductions in the sales charge.

If you purchase Class B shares

o All of your money is invested in shares of stock. However, you will pay
a sales charge if you redeem your shares within six years of purchase.

o No reductions of the sales charge are available for large purchases.

Ongoing expenses

If you purchase Class A shares

If you purchase Class B shares

<PAGE>

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

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

How to purchase shares

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

Purchase policies:

<PAGE>

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

o Wire orders can be accepted only on days when your bank, American
Express Client Service Corporation (AECSC), 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 AECSC 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.

Three ways to invest

1 By regular account

Send your check and application (or your name and account number if you have an
established account) to:

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

Your financial advisor will help you with this process.

Minimum amounts
Initial investment: $ 2,000
Additional investments: $ 100
Account balances: $ 300*
Qualified retirement accounts: none

2 By scheduled investment plan

Contact your financial advisor to set up one of the following scheduled plans:

o automatic payroll deduction

o bank authorization

<PAGE>

o direct deposit of Social Security check

o other plan approved by the Fund

Minimum amounts
Initial investment: $ 100
Additional investments: $ 100/each payment
Account balances: none
(on active plans of monthly payments)

If account balance is below $2,000, frequency of payments must be at least
monthly.

3 By wire

If you have an established account, you may wire money to:

Norwest Bank Minneapolis
Routing No. 091000019
Minneapolis, MN
Attn: Domestic Wire Dept.

Give these instructions: Credit IDS Account #00-30-015 for personal account #
(your account number) for (your name).

If this information is not included, the order may be rejected and all money
received by the Fund, less any costs the Fund or AECSC incurs, will be returned
promptly.

Minimum amounts
Each wire investment: $ 1,000

How to exchange shares

<PAGE>

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.

Two ways to request an exchange or redemption of shares

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

<PAGE>

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 Advisors Telephone Transaction Service:
800-437-3133 or
612-671-3800

o AECSC 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

<PAGE>

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

Redemption policies:

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.

<PAGE>

Three ways to receive payment when you redeem shares

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

<PAGE>

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

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

Total investment Sales charge as a
percentage 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.

<PAGE>

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.

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 AEFA 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.

<PAGE>

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 or under a "wrap fee" product sponsored by AEFA (total
amount of all investments must be $50,000); the University of Texas System ORP;
or a segregated separate account offered by Nationwide Life Insurance Company or
Nationwide Life and Annuity Insurance Company.

o Purchases made with the proceeds from IDS Life Real Estate Variable Annuity
surrenders.

* Eligibility must be determined in advance by AEFA. 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>

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.

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 AEFA,
or a custodian-to-custodian transfer to a product not distributed by
AEFA, the CDSC will not be waived), or
- redeeming under an approved substantially equal periodic payment
arrangement.

Special shareholder services

Services

To help you track and evaluate the performance of your investments, AECSC
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>

Quick telephone reference

TTY Service
For the hearing impaired
800-846-4852

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. Capital gains are realized
when a security is sold for a higher price than was paid for it. 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 when a security
is held for more than one year. 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. These long-term capital gains will be subject to differing tax
rates depending on the holding period of the underlying investments. 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>

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 have 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>

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 (Uniform The minor
Gifts/Transfers to Minors Act)

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

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

Sole proprietorship The owner
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Partnership The partnership

Corporate The corporation

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

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

How the Fund is organized

The Fund no longer issues stock certificates.

Voting rights

<PAGE>

Shareholder meetings

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.

Independent board members and officers

Chairman of the board

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

H. Brewster Atwater, Jr.
Retired chairman and chief executive officer, General Mills, Inc.

Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public Policy Research.

Heinz F. Hutter
Retired 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
Retired chairman and chief executive officer, Honeywell, Inc.

Wheelock Whitney
Chairman, Whitney Management Company.

<PAGE>

C. Angus Wurtele
Chairman of the board, The Valspar Corporation.

Officer

Vice president, general counsel and secretary

Leslie L. Ogg*
President of Board Services Corporation.

Board members and officers associated with AEFC

President

John R. Thomas*
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

Vice president

Peter J. Anderson*
Senior vice president, AEFC.

Vice president

Frederick C. Quirsfeld*
Vice president, AEFC.

Treasurer

Matthew N. Karstetter*
Vice president, AEFC.

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

* Interested person as defined by the Investment Company Act of 1940.

<PAGE>

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, 1998, the Fund paid AEFC a total investment
management fee of 0.49% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory expenses.

Administrator and transfer agent

Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at an annual rate of 0.04% decreasing in
gradual percentages to 0.02% as assets increase.

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

Distributor

<PAGE>

Total expenses paid by the Fund's Class A shares for the fiscal year ended March
31, 1998, were 0.85% of its average daily net assets. Expenses for Class B and
Class Y were 1.61% and 0.76%, 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.

AEFA serves individuals and businesses through its nationwide network of more
than 179 offices and more than 8,700 advisors.

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

<PAGE>

Year 2000

The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which would have a material impact on the operations of the Fund. The Fund has
no computer systems of its own but is dependent upon the systems maintained by
AEFC and certain other third parties.

A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification of existing software and purchase of new software. These measures
are scheduled to be completed and tested on a timely basis. AEFC's goal is to
complete internal remediation and testing of each of its critical systems by the
end of 1998 and to continue compliance efforts through 1999. The Year 2000
readiness of other third parties whose system failures could have an impact on
the Fund's operations currently is being evaluated. The companies or governments
in which the Fund invests also may be adversely affected by Year 2000 issues.
This may affect the value of the Fund's investments. The potential materiality
of any such impact is not known at this time.

<PAGE>

Appendix

Descriptions of derivative instruments

<PAGE>

IDS STRATEGY FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS STRATEGY AGGRESSIVE FUND

May 30, 1998

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, 1998, and it is to be used with the prospectus dated
May 30, 1998, and the Annual Report for the fiscal year ended March 31, 1998.

<PAGE>

TABLE OF CONTENTS

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

Additional Investment Policies.............................................p. 4

Security Transactions......................................................p. 8

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation.....................................p. 10

Performance Information.....................................................p.11

Valuing Fund Shares.........................................................p.12

Investing in the Fund.......................................................p.14

Redeeming Shares............................................................p.18

Pay-out Plans...............................................................p.19

Taxes.......................................................................p.21

Agreements..................................................................p.22

Organizational Information..................................................p.25

Board Members and Officers..................................................p.25

Compensation for Fund Board Members.........................................p.29

Independent Auditors........................................................p.30

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

Prospectus..................................................................p.30

<PAGE>

Appendix A: Description of Bond Ratings....................................p.31

Appendix B: Foreign Currency Transactions..................................p.34

Appendix C: Investing in Foreign Securities................................p.39

Appendix D: Options and Stock Index Futures Contracts......................p.40

Appendix E: Mortgage-Backed Securities.....................................p.47

Appendix F: Dollar-Cost Averaging..........................................p.48

<PAGE>

ADDITIONAL INVESTMENT POLICIES

These are investment policies in addition to those presented in the prospectus.
The policies below are fundamental policies of IDS Strategy Aggressive Fund,
(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 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>

`Purchase securities of an issuer if the board members and officers of the Fund
and of 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:

`Buy on margin or sell securities short, except the Fund may make margin
payments in connection with transactions in futures contracts

`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 a futures contract are not deemed to be a pledge of assets.

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

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

<PAGE>

`Invest in a company to control or manage it.

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

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

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

In determining the liquidity of Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the 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>

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.

The Fund may invest in foreign securities that are traded in the form of
American Depositary Receipts (ADRs). ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities of
foreign issuers. European Depositary Receipts (EDRs) and Global Depositary
Receipts (GDRs) are receipts typically issued by foreign banks or trust
companies, evidencing ownership of underlying securities issued by either a
foreign or U.S. issuer. Generally Depositary Receipts in registered form are
designed for use in the U.S. securities market and Depositary Receipts in bearer
form are designed for use in securities markets outside the U.S. Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. Depositary Receipts also
involve the risks of other investments in foreign securities.

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

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

<PAGE>

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.

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 with respect to the Fund and other funds and trusts in the IDS
MUTUAL FUND GROUP 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.

<PAGE>

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 transactions may not be
effected at the lowest commission, but AEFC believes it may obtain better
overall execution. AEFC has represented 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.

<PAGE>

The Fund paid total brokerage commissions of $2,039,258 for the fiscal year
ended March 31, 1998, $1,675,148 for fiscal year 1997, and $1,574,064 for fiscal
year 1996. Substantially all firms through whom transactions were executed
provide research services.

In fiscal year 1998, transactions amounting to $2,902,000, on which $14,514 in
commissions were imputed or paid, were specifically directed to firms in
exchange for research services.

As of the fiscal year ended March 31, 1998, 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
Name of Issuer End of Fiscal Year
- -------------------------- ------------------------------
Bank of America $3,189,205

The portfolio turnover rate was 95% in the fiscal year ended March 31, 1998, and
80% in fiscal year 1997.

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 that
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.

<PAGE>

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,

1998 1997 1996
---- ----
------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Percent of
Aggregate Percent of Aggregate Dollar Aggregate Aggregate
Dollar Amount Aggregate Amount of Dollar Amount Dollar Amount
Nature of of Brokerage Transactions of Commissions of Commissions
Broker Affiliation Commissions Commissions Involving Payment Paid to Broker Paid to Broker
- ------ ----------- ----------- -------------- --------------
Paid to Broker of Commissions

American (1) $7,404 .36% .81% $132 $9,363
Enterprise
Investment
Services Inc.

(1) Wholly-owned subsidiary of AEFC.
</TABLE>

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)

<PAGE>

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.

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, 1998, the
first business day following the end of the fiscal year, the computation looked
like this:
<TABLE>
<CAPTION>

Net assets before Shares
shareholder outstanding at Net asset
transactions the end of value of one
previous day share
---------------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>

Class A $553,959,874 divided by 24,762,410 equals $22.37
Class B 902,294,207 41,530,618 21.73
Class Y 2,112 94 22.47
</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 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.

<PAGE>

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

`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 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.

<PAGE>

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

The 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 adjusted for the sales charge for Class A. 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, 1998, was determined by
dividing the net asset value of one share, $22.37, by 0.95 (1.00-0.05 for a
maximum 5% sales charge) for a public offering price of $23.55. The sales charge
is paid to American Express Financial Advisors Inc. (AEFA) by the person buying
the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:
<TABLE>
<CAPTION>

Within each increment,
sales charge as a percentage of:
-------------------------------------------------------------
<S> <C> <C>
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
</TABLE>

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.

<PAGE>

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.
<TABLE>
<CAPTION>

On total investment, sales
charge as a percentage of:
-------------------------------------------------------------
Public Net
Offering Price Amount Invested
Amount of investment ranges from:
-------------------------------------------------------------
<S> <C> <C> <C>
First $ 50,000 5.00% 5.26%
Next 50,000 to 100,000 5.00-4.50 5.26-4.71
Next 100,000 to 500,000 4.50-3.80 4.71-3.95
Next 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00
</TABLE>

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

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more
- ----------------- ---- -----------
Less than $1 million 4% 0%
$1 million or more 0% 0%

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

<PAGE>

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.

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 a LOI may be used to

<PAGE>

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

After you make your initial investment of $100 or more, you must make additional
payments of $100 or more on at least a monthly basis until your balance reaches
$2,000. 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.

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 F.

<PAGE>

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.

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 that fund's 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

<PAGE>

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

`The SEC, under the provisions of the Investment Company Act of 1940, as amended
(the 1940 Act), 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.

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.

<PAGE>

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.

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.

<PAGE>

TAXES

If you buy shares in the Fund and then exchange into another fund, it is
considered a redemption 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 redemption 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.

Capital gain distributions, if any, received by corporate shareholders should be
treated as long-term capital gains regardless of how long they owned their
shares. Capital gain distributions, if any, received by individuals should be
treated as long-term if held for more than one year; however, recent tax laws
have divided long-term capital gains into two holding periods: (1) shares held
more than one year but not more than 18 months and (2) shares held more than 18
months. 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.

<PAGE>

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

On March 31, 1998, the daily rate applied to the Fund's net assets was equal to
0.592% 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 $7,578,435 for the fiscal year ended March 31, 1998, $7,247,884 for 1997,
and $5,462,516 for 1996.

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

<PAGE>

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 $54,545 for the fiscal year ended March 31,
1998, $384,043 for fiscal year 1997, and $516,329 for fiscal year 1996.

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, 1998, the daily rate applied to the Fund's net assets was equal to
0.048% 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 $642,964 for the fiscal year ended March 3, 1998.

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with American Express Client Service
Corporation (AECSC). This agreement governs AECSC'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, AECSC 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 AECSC may be changed from time to time upon agreement of the parties
without shareholder approval. Under the agreement, the Fund paid fees of
$2,290,176 for the fiscal year ended March 31, 1998.

<PAGE>

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing Fund
shares are paid to AEFA daily. These charges amounted to $952,105 for the fiscal
year ended March 31, 1998. After paying commissions to personal financial
advisors, and other expenses, the amount retained was $(294,562). The amounts
were $1,630,480 and $(899,019) for fiscal year 1997, and $1,128,387 and
$(622,389) for fiscal year 1996.

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 average
daily net assets for Class A and Class B and 0.10% for Class Y.

Plan and Agreement of Distribution

For Class B shares, to help AEFA defray the cost of distribution and servicing,
not covered by the sales charges received under the Distribution Agreement, the
Fund and AEFA 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, AEFA 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 AEFA. 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. 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, 1998, under the agreement, the
Fund paid fees of $6,004,726.

<PAGE>

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.

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, net of earnings credits, of
$18,771,111 for the fiscal year ended March 31, 1998.

ORGANIZATIONAL INFORMATION

IDS Strategy Fund, Inc., of which Strategy Aggressive Fund is a part, is an
open-end management investment company, as defined in the 1940 Act. 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

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

<PAGE>

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 and Union
Pacific Resources.

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

Senior advisor to the chief executive officer of AEFC.

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

President and chief executive officer of AEFC since August 1993, 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

Retired 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.

<PAGE>

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

Chairman of the board, Board Services Corporation (provides administrative
services to boards). Director, trustee and officer of registered investment
companies whose boards are served by the company. Retired 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) and Biogen
(pharmaceuticals).

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

President, Spencer Associates Inc. (consulting). Retired 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 of AEFC.

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

Chairman, Whitney Management Company (manages family assets).

<PAGE>

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 chairman of the board and Mr. Thomas, who is
president, the Fund's other officers are:

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

President 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.

<PAGE>

Frederick C. Quirsfeld
Born in 1947
IDS Tower 10
Minneapolis, MN

Vice president - taxable mutual fund investments of AEFC. Vice president - fixed
income investments for the Fund.

Matthew N. Karstetter
Born in 1961
IDS Tower 10
Minneapolis, MN

Vice president of Investment Accounting for AEFC since 1996. Prior to joining
AEFC, he served as vice president of State Street Bank's mutual fund service
operation from 1991 to 1996. Treasurer for the Fund.

COMPENSATION FOR FUND BOARD MEMBERS

Members of the Fund board who are not officers of the Fund or of AEFC receive an
annual fee of $700, and the chair of the Contracts Committee receives an
additional fee of $86. 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 $7. Expenses for attending
meetings are reimbursed.

During the fiscal year ended March 31, 1998, the independent members of the
board, for attending up to 30 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table

Total cash
Aggregate compensation from
Aggregate compensation Pension or the IDS MUTUAL FUND
compensation from the Retirement benefits Estimated annual GROUP and Preferred
Board member from the Fund Portfolio accrued as Fund benefit upon Master Trust Group
expenses retirement
- ------------------------------ ----------------- ---------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C> <C> <C>
H.Brewster Atwater, Jr. $1,759 $0 $0 $0 $104,200
Lynne V. Cheney 1,609 0 0 0 95,300
Robert F. Froehlke 1,184 0 0 0 68,000
Heinz F. Hutter 1,809 0 0 0 107,100
Anne P. Jones 1,766 0 0 0 104,600
Melvin R. Laird 1,011 0 0 0 57,800
Alan K. Simpson 1,500 0 0 0 88,800
Edson W. Spencer 2,195 0 0 0 129,900
Wheelock Whitney 1,859 0 0 0 110,200
C. Angus Wurtele 2,009 0 0 0 119,000
</TABLE>

On March 31, 1998, the Fund's board members and officers as a group owned less
than 1% of the outstanding shares of any class.

<PAGE>

INDEPENDENT AUDITORS

The financial statements contained in the Annual Report to shareholders for the
fiscal year ended March 31, 1998 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 1998,
pursuant to Section 30(d) of the 1940 Act, 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, 1998, is hereby
incorporated in this SAI by reference.

<PAGE>

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.

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.

<PAGE>

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.

<PAGE>

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.

<PAGE>

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.

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.

<PAGE>

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

At maturity of a forward contract, the Fund may either sell the 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.

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.

<PAGE>

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.

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.

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.

<PAGE>

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.

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>

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.

<PAGE>

APPENDIX C

INVESTING IN FOREIGN SECURITIES

Investors should recognize that investing in foreign securities
involves certain special considerations, including those set forth below and
those described in the prospectus, which are not typically associated with
investing in United States securities. Foreign companies are not generally
subject to uniform accounting and auditing and financial reporting standards
comparable to those applicable to domestic companies. Additionally, many foreign
stock markets, while growing in volume of trading activity, have substantially
less volume than the New York Stock Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of domestic
companies. Similarly, volume and liquidity in the United States and at times,
volatility of price can be greater than in the United States, Further, foreign
markets have different clearance, settlement, registration and communication
procedures and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions making it
difficult to conduct such transactions. Delays in such procedures could result
in temporary periods when assets of the Fund are uninvested and no return is
earned thereon. The inability of the Fund to make intended security purchases
due to such problems could cause that Fund to miss attractive investment
opportunities. Payment for securities without delivery may be required in
certain foreign markets and, when participating in new issues, some foreign
countries require payment to be made in advance of issuance (at the time of
issuance, the market value of the security may be more or less than the purchase
price). Some foreign markets also have compulsory depositories (i.e., the fund
does not have a choice as to where the securities are held). Fixed commissions
on some foreign stock exchanges are generally higher than negotiated commissions
on U.S. exchanges, although the Fund will endeavor to achieve the most favorable
net results on their portfolio transactions. Further, a Fund may encounter
difficulties or be unable to pursue legal remedies and obtain judgments in
foreign courts. There is generally less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States. It may be more difficult for the Funds' agents to
keep currently informed about corporate actions such as stock dividends or other
matters which may affect the prices of portfolio securities. Communications
between the United States and foreign countries may be less reliable than within
the United States, thus increasing the risk of delays or loss of certificates
for portfolio securities. In addition, with respect to certain foreign
countries, there is the possibility of nationalization, expropriation, the
imposition of withholding or confiscatory taxes, political, social, or economic
instability, diplomatic developments which could affect United States
investments in those countries, or other unforeseen actions by regulatory bodies
(such as changes to settlement or custody procedures). Investments in foreign
securities may also entail certain risks, such as possible currency blockages or
transfer restrictions, and the difficulty of enforcing rights in other
countries.

<PAGE>

APPENDIX D

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.

<PAGE>

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.)

Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains.

<PAGE>

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

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

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

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

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

<PAGE>

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

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

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

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

<PAGE>

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.

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.

<PAGE>

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.

OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index futures
contracts are similar to options on stock except that options on futures
contracts give the purchaser the right, in return for the premium paid, to
assume a position in a stock index futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. If the option is
closed instead of exercised, the holder of the option receives an amount that
represents the amount by which the market price of the contract exceeds (in the
case of a call) or is less than (in the case of a put) the exercise price of the
option on the futures contract. If the option does not appreciate in value prior
to the exercise date, the Fund will suffer a loss of the premium paid.

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

SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES CONTRACTS AND
OPTIONS ON STOCK INDEXES. As with options on stocks, the holder of an option on
a futures contract or on a stock index may terminate a position by selling an
option covering the same contract or index and having the same exercise price
and expiration date. The ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid secondary
market. The Fund will not purchase options unless the market for such options
has developed

<PAGE>

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 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.

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.

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>

APPENDIX E

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.

<PAGE>

APPENDIX F

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>

IDS STRATEGY FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

FOR

EQUITY VALUE FUND

May 29, 1998

This SAI is dated May 29, 1998, and it is to be used with the prospectus dated
May 29, 1998, and the Annual Report for the fiscal year ended March 31, 1998.

<PAGE>

TABLE OF CONTENTS

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

Additional Investment Policies.............................................p.4

Security Transactions......................................................p.7

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation....................................p.10

Performance Information...................................................p.11

Valuing Fund Shares.......................................................p.12

Investing in the Fund.....................................................p.14

Redeeming Shares..........................................................p.18

Pay-out Plans.............................................................p.19

Taxes.....................................................................p.20

Agreements................................................................p.22

Organizational Information................................................p.25

Board Members and Officers................................................p.25

Compensation for Fund Board Members.......................................p.29

Independent Auditors......................................................p.30

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

Prospectus................................................................p.30

<PAGE>

Appendix A: Description of Bond Ratings...................................p.31

Appendix B: Foreign Currency Transactions.................................p.34

Appendix C: Investing in Foreign Securities...............................p.39

Appendix D: Options and Stock Index Futures Contracts.....................p.40

Appendix E: Mortgage-Backed Securities....................................p.47

Appendix F: Dollar-Cost Averaging.........................................p.48

<PAGE>

ADDITIONAL INVESTMENT POLICIES

These are investment policies in addition to those presented in the prospectus.
The policies below are fundamental policies of IDS Equity Value Fund, (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:

`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.

`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>

Unless changed by the board, the Fund will not:

`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.

<PAGE>

`Buy on margin or sell securities short, except the Fund may make margin
payments in connection with transactions in futures contracts.

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

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.

<PAGE>

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.

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

SECURITY TRANSACTIONS

<PAGE>

brokers may be able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but AEFC believes it
may obtain better overall execution. AEFC has represented 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.

The Fund paid total brokerage commissions of $4,585,954 for the fiscal year
ended March 31, 1998, $2,303,338 for fiscal year 1997, and $2,195,842 for fiscal
year 1996. Substantially all firms through whom transactions were executed
provide research services.

In fiscal year 1998, transactions amounting to $109,318,000, on which $218,213
in commissions were imputed or paid, were specifically directed to firms in
exchange for research services.

<PAGE>

Value of Securities owned at
Name of Issuer End of Fiscal Year
-------------- ------------------
Bank America $33,050,000
First Chicago NBD 33,046,875
Goldman Sachs Group 10,490,322
Morgan (JP) 33,578,125
Morgan Stanley Group 11,889,012
Nations Bank 32,821,875
Travelers Group 30,900,000

The portfolio turnover rate was 95% in the fiscal year ended March 31, 1998, and
60% in fiscal year 1997.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN EXPRESS FINANCIAL
CORPORATION

<PAGE>

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,

1998 1997 1996
------------------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Percent of
Aggregate
Dollar Amount
Aggregate Percent of of Aggregate Aggregate
Dollar Amount Aggregate Transactions Dollar Amount Dollar Amount
Nature of Brokerage Involving of of
Broker of Commissions Commissions Payment of Commissions Commissions
- ------ -----------
Affiliation Paid to Broker Commissions Paid to Broker Paid to Broker
------------------------- ----------- -------------- --------------
American (1) $5,643 .12% .33% $18,845 $9,088
Enterprise
Investment
Services Inc.

(1) Wholly-owned subsidiary of AEFC.
</TABLE>

PERFORMANCE INFORMATION

Average annual total return

<PAGE>

Aggregate total return

ERV - P
P

VALUING FUND SHARES

Net assets Shares
before outstanding at Net asset value
shareholder the end of of one share
transactions previous day
----------------- ----------------- ----------------- ----------------- -----------------
Class A $ 836,245,779 divided by 64,976,362 equals $12.87
Class B 1,924,242,887 149,490,591 12.87
Class Y 1,061,979 82,407 12.89
</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 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.

<PAGE>

`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.

<PAGE>

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 adjusted for the sales charge for Class A. 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, 1998, was determined by
dividing the net asset value of one share, $12.87, by 0.95 (1.00-0.05 for a
maximum 5% sales charge) for a public offering price of $13.55. The sales charge
is paid to American Express Financial Advisors Inc. (AEFA) by the person buying
the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:
<TABLE>
<CAPTION>

Within each increment,
sales charge as a percentage of:
-------------------------------------------------------------
Public Net
Amount of Investment Offering Price Amount Invested
- -------------------- -------------- ---------------
<S> <C> <C> <C>
First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00
</TABLE>

<PAGE>

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

On total investment, sales
charge as a percentage of:
-------------------------------------------------------------
Public Net
Offering Price Amount Invested
Amount of investment ranges from:
- --------------------------------------------
<S> <C> <C> <C>
First $ 50,000 5.00% 5.26%
Next 50,000 to 100,000 5.00-4.50 5.26-4.71
Next 100,000 to 500,000 4.50-3.80 4.71-3.95
Next 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00
</TABLE>

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%

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

<PAGE>

Class A - Reducing the Sales Charge

Class A - Letter of Intent (LOI)

<PAGE>

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.

Systematic Investment Programs

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

Automatic Directed Dividends

<PAGE>

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);

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

<PAGE>

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

PAY-OUT PLANS

<PAGE>

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

Plan #2: Redemption of a fixed number of shares

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

<PAGE>

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, 1998, 43.81% of the Fund's net investment income
dividends qualified for the corporate deduction.

<PAGE>

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, 1998, the daily rate applied to the Fund's net assets was equal to
.487% 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 $11,485,241 for the fiscal year ended March 31, 1998, $8,882,479 for fiscal
year 1997, and $7,365,378 for fiscal year 1996.

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; 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 $277,438 for the fiscal year ended March 31, 1998, $429,531 for fiscal year
1997, and $699,027 for fiscal year 1996.

<PAGE>

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, 1998, the daily rate applied to the Fund's net assets was equal to
0.031% 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 $786,903 for the fiscal year ended March 31, 1998.

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with American Express Client Service
Corporation (AECSC). This agreement governs AECSC'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, AECSC 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 AECSC may be changed from time to time upon agreement of the parties
without shareholder approval. Under the agreement, the Fund paid fees of
$3,115,731 for the fiscal year ended March 31, 1998.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing Fund
shares are paid to AEFA daily. These charges amounted to $3,903,621 for the
fiscal year ended March 31, 1998. After paying commissions to personal financial
advisors, and other expenses, the amount retained was $(1,423,211). The amounts
were $1,850,163 and $(1,255,823) for fiscal year 1997, and $374,392 and
$(1,965,754) for fiscal year 1996.

<PAGE>

Shareholder Service Agreement

Plan and Agreement of Distribution

<PAGE>

Custodian Agreement

Total fees and expenses

The Fund paid total fees and nonadvisory expenses, net of earnings credits, of
$32,363,664 for the fiscal year ended March 31, 1998.

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 1940 Act. 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

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

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

<PAGE>

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 and Union
Pacific Resources.

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

Senior advisor to the chief executive officer of AEFC.

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

President and chief executive officer of AEFC since August 1993, 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

Retired 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. (electronics), C-Cor
Electronics, Inc. and Annex, Inc. (communications).

<PAGE>

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) and Biogen
(pharmaceuticals).

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 of AEFC.

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

Chairman, Whitney Management Company (manages family assets).

<PAGE>

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.

In addition to Mr. Pearce, who is chairman of the board and Mr. Thomas, who is
president, the Fund's other officers are:

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

President 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.

<PAGE>

Frederick C. Quirsfeld
Born in 1947
IDS Tower 10
Minneapolis, MN

Vice president - taxable mutual fund investments of AEFC. HE joined AEFC in 1985
and serves as senior portfolio manager. He manages IDS Bond Fund and is a member
of the portfolio management team for Total Return Portfolio. Vice president -
fixed income investments for the Fund.

Matthew N. Karstetter
Born in 1961
IDS Tower 10
Minneapolis, MN

COMPENSATION FOR FUND BOARD MEMBERS

Members of the Fund board who are not officers of the Fund or of AEFC receive an
annual fee of $1,400, and the chair of the Contracts Committee receives an
additional fee of $86. 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 $14. Expenses for attending
meetings are reimbursed.

During the fiscal year ended March 31, 1998, the independent members of the
board, for attending up to 30 meetings, received the following compensation:

Compensation Table
<S> <C> <C> <C> <C>
Total cash
compensation from
Aggregate Pension or the IDS MUTUAL
compensation from Retirement Estimated annual FUND GROUP and
Board member the Fund benefits accrued benefit upon Preferred Master
as Fund expenses retirement Trust Group

H. Brewster Atwater, $2,162 $0 $0 $104,200
Jr.
Lynne V. Cheney 2,038 0 0 95,300
Robert F. Froehlke 1,387 0 0 68,000
Heinz F. Hutter 2,212 0 0 107,100
Anne P. Jones 2,202 0 0 104,600
Melvin R. Laird 1,198 0 0 57,800
Alan K. Simpson 1,926 0 0 88,800
Edson W. Spencer 2,598 0 0 129,900
Wheelock Whitney 2,262 0 0 110,200
C. Angus Wurtele 2,412 0 0 119,000
</TABLE>
On March 31, 1998, the Fund's board members and officers as a group owned less
than 1% of the outstanding shares of any class.

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, 1998, pursuant to Section 30(d) of the 1940 Act, 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 29, 1998, is hereby
incorporated in this SAI by reference.

<PAGE>

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:

<PAGE>

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.

<PAGE>

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

<PAGE>

APPENDIX B

FOREIGN CURRENCY TRANSACTIONS

<PAGE>

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.

<PAGE>

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>

APPENDIX C

INVESTING IN FOREIGN SECURITIES

Investors should recognize that investing in foreign securities involves
certain special considerations, including those set forth below and those
described in the prospectus, which are not typically associated with investing
in United States securities. Foreign companies are not generally subject to
uniform accounting and auditing and financial reporting standards comparable to
those applicable to domestic companies. Additionally, many foreign stock
markets, while growing in volume of trading activity, have substantially less
volume than the New York Stock Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of domestic
companies. Similarly, volume and liquidity in most foreign bond markets are less
than the volume and liquidity in the United States and at times, volatility of
price can be greater than in the United States. Further, foreign markets have
different clearance, settlement, registration and communication procedures and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions making it difficult to
conduct such transactions. Delays in such procedures could result in temporary
periods when assets of the Fund are uninvested and no return is earned thereon.
The inability of the Fund to make intended security purchases due to such
problems could cause the Fund to miss attractive investment opportunities.
Payment for securities without delivery may be required in certain foreign
markets and, when participating in new issues, some foreign countries require
payment to be made in advance of issuance (at the time of issuance, the market
value of the security may be more or less than the purchase price). Some foreign
markets also have compulsory depositories (i.e., the Fund does not have a choice
as to where the securities are held). Fixed commissions on some foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges,
although the Fund will endeavor to achieve the most favorable net results on its
portfolio transactions. Further, the Fund may encounter difficulties or be
unable to pursue legal remedies and obtain judgments in foreign courts. There is
generally less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in the United
States. It may be more difficult for the Fund's agents to keep currently
informed about corporate actions such as stock dividends or other matters which
may affect the prices of portfolio securities. Communications between the United
States and foreign countries may be less reliable than within the United States,
thus increasing the risk of delays or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of nationalization, expropriation, the imposition of withholding or
confiscatory taxes, political, social, or economic instability, diplomatic
developments which could affect United States investments in those countries, or
other unforeseen actions by regulatory bodies (such as changes to settlement or
custody procedures). Investments in foreign securities may also entail certain
risks, such as possible currency blockages or transfer restrictions, and the
difficulty of enforcing rights in other countries.

<PAGE>

APPENDIX D

OPTIONS AND STOCK INDEX FUTURES CONTRACTS

<PAGE>

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:

Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains.

<PAGE>

Special Risks of Transactions in Stock Index Futures Contracts

<PAGE>

APPENDIX E

MORTGAGE-BACKED SECURITIES

<PAGE>

APPENDIX F

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, 1998, 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, 1998, and the financial highlights for each of the years
in the ten-year period ended March 31, 1998. 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 Equity Value Fund
at March 31, 1998, 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 1, 1998

(This annual report is not part of the prospectus.)

<PAGE>

Financial statements

Statement of assets and liabilities
IDS Equity Value Fund
March 31, 1998

Assets

Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $2,271,078,184) $2,738,102,499
Cash in bank on demand deposit 173,292
Dividends and accrued interest receivable 4,769,008
Receivable for investment securities sold 31,922,308
----------
Total assets 2,774,967,107
-------------

Liabilities

Payable for investment securities purchased 16,756,242
Accrued investment management services fee 36,674
Accrued distribution fee 39,379
Accrued service fee 13,175
Accrued transfer agency fee 9,091
Accrued administrative services fee 2,363
Other accrued expenses 189,193
Open option contracts written, at value
(Premium received $573,794) (Note 4) 288,519
-------
Total liabilities 17,334,636
----------
Net assets applicable to outstanding capital stock $2,757,632,471
==============

Represented by

Capital stock-- $.01 par value (Note 1) $ 2,145,494
Additional paid-in capital 2,084,694,443
Undistributed net investment income 2,423,991
Accumulated net realized gain (loss) 196,532,833
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (Note 6) 471,835,710
-----------
Total-- representing net assets applicable to outstanding capital stock $2,757,632,471
==============
Net assets applicable to outstanding shares: Class A $ 834,929,361
Class B $1,921,642,595
Class Y $ 1,060,515
Net asset value per share of outstanding capital stock: Class A shares 64,976,362 $ 12.85
Class B shares 149,490,591 $ 12.85
Class Y shares 82,407 $ 12.87

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)

</TABLE>

Statement of operations
IDS Equity Value Fund
Year ended March 31, 1998

Investment income

Income:
<S> <C>
Dividends $ 57,894,110
Interest 18,825,094
Less foreign taxes withheld (206,339)
Total income 76,512,865
----------
Expenses (Note 2):
Investment management services fee 11,485,241
Distribution fee -- Class B 12,659,839
Transfer agency fee 2,981,633
Incremental transfer agency fee-- Class B 134,098
Service fee
Class A 1,113,607
Class B 2,924,597
Class Y 308
Administrative services fees and expenses 786,903
Compensation of board members 20,395
Custodian fees 242,477
Postage 158,359
Registration fees 71,212
Audit fees 21,500
Other 6,018
-----
Total expenses 32,606,187
Earnings credits on cash balances (Note 2) (242,523)
--------
Total net expenses 32,363,664
----------
Investment income (loss) -- net 44,149,201
----------

Realized and unrealized gain (loss) -- net

Net realized gain (loss) on:
Security transactions (Note 3) 408,712,976
Foreign currency transactions (1,798,617)
Financial futures contracts (Note 6) 15,278,653
----------
Net realized gain (loss) on investments 422,193,012
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 194,604,248
-----------
Net gain (loss) on investments and foreign currencies 616,797,260
-----------
Net increase (decrease) in net assets resulting from operations $660,946,461
============

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)

</TABLE>

Financial statements

Statements of changes in net assets
IDS Equity Value Fund
Year ended March 31,

Operations and distributions 1998 1997

<S> <C> <C>
Investment income (loss)-- net $ 44,149,201 $ 35,392,512
Net realized gain (loss) on investments 422,193,012 216,062,214
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 194,604,248 37,239,689
----------- ----------
Net increase (decrease) in net assets resulting from operations 660,946,461 288,694,415
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (14,592,544) (9,867,957)
Class B (25,394,091) (26,600,773)
Class Y (8,643) (40)
Net realized gain
Class A (109,070,518) (35,092,077)
Class B (262,181,189) (132,059,401)
Class Y (105,799) (131)
-------- ----
Total distributions (411,352,784) (203,620,379)
------------ ------------

Capital share transactions (Note 5)

Proceeds from sales
Class A shares (Note 2) 313,592,254 76,098,515
Class B shares 228,336,652 156,897,400
Class Y shares 1,662,004 192
Reinvestment of distributions at net asset value
Class A shares 119,771,945 44,127,954
Class B shares 285,215,356 157,476,976
Class Y shares 114,442 171
Payments for redemptions
Class A shares (79,284,928) (43,387,495)
Class B shares (Note 2) (295,082,643) (169,611,548)
Class Y shares (706,679) --
-------- -----------
Increase (decrease) in net assets from capital share transactions 573,618,403 221,602,165
----------- -----------
Total increase (decrease) in net assets 823,212,080 306,676,201
Net assets at beginning of year 1,934,420,391 1,627,744,190
------------- -------------
Net assets at end of year $2,757,632,471 $1,934,420,391
============== ==============
Undistributed net investment income $ 2,423,991 $ 1,350,747
-------------- --------------

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)

</TABLE>
<PAGE>

Notes to financial statements

IDS Equity Value Fund

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 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 and/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
decreased by $3,080,679 and accumulated net realized gain has been
increased by $3,080,679.

Dividends to shareholders

Dividends from net investment income, declared and paid each calendar
quarter, 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 income dividend of the calendar year.

Other

Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.

Expenses and
sales charges

Effective March 20, 1995, the Fund entered into agreements with American
Express Financial Corporation (AEFC) for managing its portfolio and
providing administrative services. 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 and approved by the board.

Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC 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 $3,234,782 for Class A and $668,839 for
Class B for the year ended March 31, 1998. The Fund also pays custodian
fees to American Express Trust Company, an affiliate of AEFC.

During the year ended March 31, 1998, the Fund's custodian and transfer
agency fees were reduced by $242,523 as a result of earnings credits from
overnight cash balances.

Securities
transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,932,696,766 and $1,905,130,120,
respectively, for the year ended March 31, 1998. Realized gains and losses
are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $5,643 for
the year ended March 31, 1998.

Income from securities lending amounted to $114,792 for the year ended
March 31, 1998. 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.

Option contracts
written

The number of contracts and premium amounts associated with option
contracts written is as follows:
Year ended March 31, 1998

Calls
Contracts Premium

Balance March 31, 1997 -- $ --

Opened 871 573,794

Balance March 31, 1998 871 $573,794

Capital share
transactions

Transactions in shares of capital stock for the years indicated are as
follows:

Year ended March 31, 1998
Class A Class B Class Y

Sold 24,247,788 17,906,145 126,503

Issued for reinvested 10,301,681 24,578,884 9,895
distributions

Redeemed (6,191,307) (22,768,273) (54,137)

Net increase (decrease) 28,358,162 19,716,756 82,261

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 (decrease) 6,631,277 12,652,623 31

Stock index
futures contracts

At March 31, 1998, investments in securities included securities valued at
$1,023,000 that were pledged as collateral to cover initial margin
deposits on 820 open purchase contracts. The market value of the open
purchase contracts at March 31, 1998 was $22,652,500 with a net unrealized
gain of $4,529,392. See summary of significant accounting policies.

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, 1998

(Percentages represent
value of investments
compared to net assets)

Common stocks - 87.6%
Issuer Shares Value(a)

Aerospace & defense - 2.7%
AlliedSignal 690,000 $28,980,000
Litton Inds 159,300(b) 9,189,619
Rockwell Intl 620,000 35,572,500
Total 73,742,119

Airlines - 0.9%
AMR180,000(b) 25,773,750

Automotive & related - 3.7%
Ford Motor 550,000 35,646,875
Genuine Parts 949,000 36,180,625
Meritor Automotive 146,666 3,895,816
TRW 472,000 26,019,000
Total 101,742,316

Banks and savings & loans - 7.3%
BankAmerica 400,000 33,050,000
First Chicago NBD 375,000 33,046,875
First Union 670,000 38,022,499
Morgan (JP) 250,000 33,578,125
NationsBank 450,000 32,821,875
Washington Mutual 425,000 30,480,469
Total 200,999,843

Beverages & tobacco - 2.5%
Fortune Brands 640,000 25,520,000
Philip Morris 1,022,000 42,604,625
Total 68,124,625

Building materials & construction - 2.6%
American Standard 890,000(b) 40,828,750
Weyerhaeuser 525,000 29,662,500
Total 70,491,250

Chemicals - 2.0%
Air Products & Chemicals 325,000 26,934,375
Du Pont (EI) de Nemours 420,000 28,560,000
Total 55,494,375

Communications equipment & services - 1.4%
Motorola 625,000 37,890,625

Computers & office equipment - 1.3%
Xerox 340,000 36,188,750

Electronics - 2.3%
AMP 300,000 $13,143,750
Applied Materials 465,000(b) 16,420,313
Texas Instruments 345,000 18,673,125
Thomas & Betts 227,200 14,540,800
Total 62,777,988

Energy - 5.5%
Amoco 1,000,000 86,375,000
Mobil 869,800 66,648,425
Total 153,023,425

Energy equipment & services - 0.5%
Santa Fe Intl 375,400 14,241,738

Financial services - 1.4%
Boston Properties 237,500(b) 8,357,031
Travelers Group 515,000 30,900,000
Total 39,257,031

Food - 2.9%
Bestfoods 247,000 28,868,125
General Mills 313,300 23,810,800
Sara Lee 430,000 26,498,750
Total 79,177,675

Foreign - 6.4%(c)
B.A.T. Inds 2,500,000 25,099,518
BCE 775,000 32,356,249
Elf Aquitaine ADR 400,000 25,900,000
KLM Royal Dutch Air Lines 168,500 6,845,313
Royal Dutch Petroleum 1,500,000 85,218,749
Total 175,419,829

Health care - 7.9%
American Home Products 500,000 47,687,499
Amgen 695,000(b) 42,308,125
Baxter Intl 760,500 41,922,563
Johnson & Johnson 570,000 41,788,125
Merck & Co 345,000 44,289,375
Total 217,995,687

Health care services - 1.5%
Columbia/HCA
Healthcare 1,292,700 41,689,575

Household products - 1.6%
Kimberly-Clark 860,000 43,107,500

Industrial equipment & services - 1.7%
Browning-Ferris Inds 530,000 $17,291,250
Case 430,000 29,293,750
Total 46,585,000

Insurance - 3.4%
Allstate 310,000 28,500,625
Marsh & McLennan 240,000 20,955,000
Provident Cos 329,800 11,316,263
St. Paul Cos 375,000 33,421,875
Total 94,193,763

Media - 2.9%
American Greetings Cl A 255,700 11,762,200
Gannett 809,500 58,182,813
Tribune 160,000 11,280,000
Total 81,225,013

Metals - 1.9%
Aluminum Co of America 368,000 25,323,000
Reynolds Metals 433,500(e) 26,633,156
Total 51,956,156

Multi-industry conglomerates - 1.5%
Emerson Electric 650,000 42,371,875

Paper & packaging - 2.1%
Tenneco 750,000 32,015,625
Union Camp 414,000 24,736,500
Total 56,752,125

Real estate investment trust - 2.3%
Equity Office Properties
Trust 310,000 9,493,750
Meditrust 330,000 10,188,750
Nationwide Health
Properties 250,000 6,250,000
Security Capital Industrial
Trust 540,000 13,837,500

Simon DeBartolo Group 525,000 17,981,250
Spieker Properties 98,700 4,071,375
Urban Shopping Centers 41,300(e) 1,362,900
Total 63,185,525

Retail - 4.1%
American Stores 1,800,000 46,800,000
Circuit City Stores 334,000(g) 14,278,500
Penney (JC) 699,000 52,905,563
Total 113,984,063

Transportation - 0.5%
Burlington Northern
Santa Fe 120,000 12,480,000

Utilities -- electric - 5.1%
CMS Energy 1,000,000 46,937,500
Duke Energy 312,000 18,583,500
GPU 525,000 23,231,250
New Century Energies 700,000 35,262,500
Northern States Power 300,000 17,700,000
Total 141,714,750

Utilities -- gas - 0.4%
Consolidated Natural Gas 200,000 11,537,500

Utilities -- telephone - 7.3%
Ameritech 900,000 44,493,750
BellSouth 600,000 40,537,500
GTE 485,000 29,039,375
SBC Communications 690,000 30,101,250
U S WEST Communications
Group 1,025,000 56,118,749
Total 200,290,624

Total common stocks
(Cost: $1,947,439,675) $2,413,414,495

Bonds - 0.6%
Issuer Coupon Principal Value(a)
rate amount

Baker Hughes
Zero Coupon Cv Nts
05-05-08 2.47% $15,000,000(f) $12,450,000
Diamond Offshore Drilling
Cv Sr Sub Nts
09-15-07 3.13 5,190,000 5,112,150

Total bonds
(Cost: $16,507,186) $17,562,150

Short-term securities - 11.1%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agencies - 1.0%
Federal Home Loan Mtge Corp Disc Nts
04-17-98 5.48% $8,800,000 $8,778,645
04-17-98 5.49 10,000,000 9,975,644
04-21-98 5.48 3,500,000 3,489,383
Federal Natl Mtge Assn Disc Nt
05-04-98 5.48 5,000,000 4,974,975
Total 27,218,647

Commercial paper - 10.1%
ANZ (Delaware)
04-06-98 5.55 10,500,000 10,491,935
BBV Finance (Delaware)
04-08-98 5.54 2,700,000 2,697,102
Bell Atlantic
04-28-98 5.58 6,050,000 6,024,772
BellSouth Capital Funding
04-06-98 5.56 12,000,000 11,990,767
CAFCO
04-29-98 5.57 15,000,000(d) 14,935,368
Ciesco LP
04-15-98 5.56 9,500,000 9,479,570
04-20-98 5.54 8,400,000 8,375,617
Clorox
05-13-98 5.59 9,400,000 9,339,025
Commerzbank U.S. Finance
05-01-98 5.58 4,300,000 4,280,077
Consolidated Natural Gas
04-21-98 5.54 8,400,000 8,374,240
Daimler-Benz
04-23-98 5.52 12,000,000 11,959,813
Dresdner US Finance
04-02-98 5.59% $5,200,000 $5,199,195
Fleet Funding
05-05-98 5.55 10,000,000(d) 9,947,867
Ford Motor Credit
04-03-98 5.57 10,000,000 9,996,917
Gateway Fuel
04-08-98 5.54 1,592,000 1,590,291
Glaxo Wellcome
04-06-98 5.55 10,000,000(d) 9,992,319
Goldman Sachs Group
04-07-98 5.55 10,500,000 10,490,322
Heinz (HJ)
04-28-98 5.54 8,900,000 8,863,287
Intl Lease Finance
04-09-98 5.55 5,800,000 5,792,872
Kellogg
05-01-98 5.57 10,600,000 10,550,975
Kredietbank North America Finance
05-04-98 5.55 12,500,000 12,433,342
05-06-98 5.55 6,200,000 6,165,017
05-08-98 5.55 10,000,000 9,943,472
Michigan Consolidated Gas
04-06-98 5.58 5,200,000 5,195,992
Morgan Stanley, Dean Witter, Discover & Co
04-07-98 5.56 11,900,000 11,889,012
Natl Australia Funding (Delaware)
04-02-98 5.51 5,700,000 5,699,132
NBD Bank Canada
04-13-98 5.56 2,700,000 2,695,014
Novartis Finance
05-11-98 5.56 12,100,000 12,025,652
Pacific Life Insurance
04-30-98 5.57 5,900,000 5,873,622
Reed Elsevier
04-08-98 5.55 5,300,000(d) 5,294,301
Toyota Motor Credit
04-07-98 5.58 10,000,000 9,990,750
05-01-98 5.56 13,500,000 13,437,788
Westpac Capital
04-07-98 5.57 8,900,000 8,891,782
Total 279,907,207

Total short-term securities
(Cost: $307,131,323) $307,125,854

Total investments in securities
(Cost $2,271,078,184)(h) $2,738,102,499

See accompanying notes to investments in securities.

(This annual report is not part of the prospectus.)

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) Partially pledged as initial margin deposit on the following open stock
index futures purchase contracts (see Note 6 to the financial statements):

Type of security Contracts

Standard & Poor's 500 Stock Index, June 1998 820

(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.

(g) At March 31, 1998, securities valued at $3,723,525 were held to cover open
call options written as follows:

Issuer Shares Exercise Expiration Value (a)
price date

Circuit City Stores 87,100 $40 April 1998 $288,519

(h) At March 31, 1998, the cost of securities for federal income tax purposes
was $2,269,826,792 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:

Unrealized appreciation...................................$474,808,243
Unrealized depreciation.....................................(6,532,536)

Net unrealized appreciation...............................$468,275,707

(This annual report is not part of the prospectus.)

<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,
1998, 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, 1998, and the financial highlights for
each of the years in the ten-year period ended March 31, 1998. 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.

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, 1998, 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 1, 1998

(This annual report is not part of the prospectus.)

Financial statements

Statement of assets and liabilities
IDS Strategy Aggressive Fund
March 31, 1998

Assets
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $866,649,239) $1,428,640,995
Cash in bank on demand deposit 2,729,378
Dividends and accrued interest receivable 155,674
Receivable for investment securities sold 13,064,830
----------
Total assets 1,444,590,877
-------------

Liabilities

Payable for investment securities purchased 4,449,600
Accrued investment management services fee 23,203
Accrued distribution fee 18,186
Accrued service fee 6,853
Accrued transfer agency fee 5,947
Accrued administrative services fee 1,899
Other accrued expenses 75,647
------
Total liabilities 4,581,335
---------
Net assets applicable to outstanding capital stock $1,440,009,542
==============

Represented by

Capital stock-- $.01 par value (Note 1) $ 662,931
Additional paid-in capital 856,419,122
Accumulated net realized gain (loss) 20,935,733
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies 561,991,756
-----------
Total-- representing net assets applicable to outstanding capital stock $1,440,009,542
--------------
Net assets applicable to outstanding shares: Class A $ 547,775,953
Class B $ 892,231,500
Class Y $ 2,089
Net asset value per share of outstanding capital stock: Class A shares 24,762,410 $ 22.12
Class B shares 41,530,618 $ 21.48
Class Y shares 94 $ 22.22

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)

</TABLE>

Statement of operations
IDS Strategy Aggressive Fund
Year ended March 31, 1998

Investment income

Income:
<S> <C>
Dividends $ 3,795,274
Interest 3,181,583
Less foreign taxes withheld (8,980)
Total income 6,967,877
---------
Expenses (Note 2):
Investment management services fee 7,578,435
Distribution fee -- Class B 6,004,726
Transfer agency fee 2,199,988
Incremental transfer agency fee-- Class B 90,188
Service fee
Class A 816,876
Class B 1,383,389
Administrative services fees and expenses 642,964
Compensation of board members 16,699
Custodian fees 124,680
Postage 29,714
Registration fees 16,263
Reports to shareholders 10,860
Audit fees 20,500
Other 841
---
Total expenses 18,936,123
Earnings credits on cash balances (Note 2) (165,012)
--------
Total net expenses 18,771,111
----------
Investment income (loss) -- net (11,803,234)
-----------

Realized and unrealized gain (loss) -- net

Net realized gain (loss) on:
Security transactions (Note 3) 153,196,608
Foreign currency transactions (318)
Options contracts written (Note 4) 1,275,454
Net realized gain (loss) on investments 154,471,744
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 336,920,376
-----------
Net gain (loss) on investments and foreign currencies 491,392,120
-----------
Net increase (decrease) in net assets resulting from operations $479,588,886
------------

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)

</TABLE>

<PAGE>

Statements of changes in net assets
IDS Strategy Aggressive Fund
Year ended March 31,

Operations and distributions 1998 1997

<S> <C> <C>
Investment income (loss)-- net $ (11,803,234) $ (7,996,850)
Net realized gain (loss) on investments 154,471,744 112,521,564
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 336,920,376 (90,128,715)
----------- -----------
Net increase (decrease) in net assets resulting from operations 479,588,886 14,395,999
----------- ----------
Distributions to shareholders from:
Net realized gains
Class A (83,874,202) (22,923,292)
Class B (140,309,083) (44,486,289)
Class Y (307) (83)
Total distributions (224,183,592) (67,409,664)
------------ -----------

Capital share transactions (Note 5)

Proceeds from sales
Class A shares (Note 2) 340,431,367 318,487,417
Class B shares 66,677,585 128,249,450
Reinvestment of distributions at net asset value
Class A shares 82,381,141 22,628,239
Class B shares 139,598,839 44,346,773
Class Y shares 307 83
Payments for redemptions
Class A shares (355,498,254) (286,813,134)
Class B shares (Note 2) (211,275,232) (110,379,938)
------------ ------------
Increase (decrease) in net assets from capital share transactions 62,315,753 116,518,890
---------- -----------
Total increase (decrease) in net assets 317,721,047 63,505,225
Net assets at beginning of year 1,122,288,495 1,058,783,270
------------- -------------
Net assets at end of year $1,440,009,542 $1,122,288,495
============== ==============

See accompanying notes to financial statements.

(This annual report is not part of the prospectus.)
</TABLE>

<PAGE>

Notes to financial statements

IDS Strategy Aggressive Fund

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 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.

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

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

On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, undistributed net investment income has been
increased by $11,803,234 and accumulated net realized gain has been
increased by $318 resulting in a net reclassification adjustment to
decrease paid-in capital by $11,803,552.

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

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 and approved by the board.

Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
The Fund pays AECSC 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.

Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $477,079 for Class A and $475,026 for Class
B for the year ended March 31, 1998. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.

During the year ended March 31, 1998, the Fund's custodian and transfer
agency fees were reduced by $165,012 as a result of earnings credits from
overnight cash balances.

Securities
transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,146,954,221 and $1,259,190,144,
respectively, for the year ended March 31,1998. Realized gains and losses
are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $7,404 for
the year ended March 31, 1998.

Income from securities lending amounted to $1,710 for the year ended March
31, 1998. 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.

Option
contracts written

The number of contracts and premium amounts associated with option
contracts written is as follows: Year ended March 31, 1998

Calls

Contracts Premium

Balance March 31, 1997 -- $ --

Opened 3,917 1,431,054

Closed (3,515) (1,276,490)

Exercised (200) (76,898)

Expired (202) (77,666)

Balance March 31, 1998 -- $ --

See "Summary of significant accounting policies."

Capital share
transactions

Transactions in shares of capital stock for the years indicated are as
follows:

Year ended March 31, 1998
Class A Class B Class Y

Sold 16,117,055 3,275,267 --

Issued for reinvested 4,427,898 7,710,962 16
distributions

Redeemed (16,805,791) (10,293,611) --

Net increase (decrease) 3,739,162 692,618 16

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 (decrease) 2,676,697 3,115,370 5

Financial
highlights

"Financial highlights" showing per share data and selected information is
presented on pages 6 and 7 of the prospectus.

(This annual report is not part of the prospectus.)

<PAGE>

Investments in securities

IDS Strategy Aggressive Fund
March 31, 1998

(Percentages represent
value of investments
compared to net assets)

Common stocks - 97.2%
Issuer Shares Value(a)

Airlines - 0.3%
Northwest Airlines Cl A 78,600(b) $4,848,638

Automotive & related - 0.6%
Avis Rent A Car 170,650(b) 5,535,459
Central Parking 79,100 3,777,025
Total 9,312,484

Banks and savings & loans - 3.9%
Centura Banks 139,850 9,964,313
Crestar Financial 297,800 17,607,425
Firstar 191,000 7,544,500
Ocwen Financial 246,300(b) 6,834,825
Washington Mutual 204,000 14,630,625
Total 56,581,688

Building materials & construction - 2.7%
Martin Marietta Materials 158,300 6,836,581
Toll Brothers 238,000(b) 6,693,750
Tyco Intl 475,400 25,968,725
Total 39,499,056

Chemicals - 0.7%
USA Waste Services 218,312(b) 9,728,529

Commercial finance - 2.1%
Finova Group 509,200 29,979,150

Communications equipment & services - 3.2%
Advanced Fibre
Communications 446,400(b) 16,237,800
CIENA 150,700(b) 6,423,588
Tellabs 354,200(b) 23,775,675
Total 46,437,063

Computers & office equipment - 18.7%
BMC Software 272,400(b) 22,830,525
Cadence Design Systems 797,400(b) 27,609,974
Cisco Systems 557,550(b) 38,122,480
Compuware 142,300(b) 7,026,063
Fiserv 137,200(b) 8,695,050
Intuit 114,900(b) 5,558,288
Metzler Group 83,800(b) 4,169,050
Network Associates 199,350(b) 13,206,938
PeopleSoft 1,213,800(b) 63,952,087
Platinum Technology 222,100(b) 5,719,075
Policy Management
Systems 23,150(b) 1,859,234
Renaissance Worldwide 133,600(b) 3,665,650
Sterling Commerce 427,000(b) 19,802,125
Technology Solutions 187,600(b) 4,971,400
Vantive 119,500(b) 4,369,219
Veritas Software 234,850(b) $13,885,506
Viasoft 251,500(b) 6,884,813
Visio 81,100(b) 3,487,300
Whittman-Hart 275,800(b) 12,479,950
Total 268,294,727

Electronics - 1.0%
Analog Devices 219,700(b) 7,305,025
Uniphase 171,700(b) 7,222,131
Total 14,527,156

Energy - 1.7%
Anadarko Petroleum 91,600 6,320,400
Newfield Exploration 243,400(b) 6,343,613
Noble Affiliates 267,000 11,113,875
Total 23,777,888

Energy equipment & services - 2.7%
Baker Hughes 153,200 6,166,300
Cooper Cameron 239,450(b) 14,456,793
Smith Intl 133,000(b) 7,323,312
Tidewater 115,000 5,038,438
Transocean Offshore 120,200 6,182,788
Total 39,167,631

Financial services - 4.5%
Capital One Financial 90,400 7,130,300
Paychex 674,925 38,934,735
Providian Financial 331,000 19,011,813
Total 65,076,848

Food - 0.5%
Suiza Foods 110,700(b) 6,808,050

Foreign - 6.3%(c)
ACE 439,500 16,563,656
BioChem Pharma 359,600(b) 8,697,825
CBT Group ADR 176,000(b) 9,108,000
COLT Telecom Group ADR 85,600 8,099,900
Elan ADR 169,200(b) 10,934,550
Mutual Risk Management 301,500 10,213,313
Petroleum
Geo-Services ADR 148,700(b) 8,829,063
Saville Systems
Ireland ADR 363,000(b) 18,603,749
Total 91,050,056

Health care - 4.2%
Dura Pharmaceuticals 308,450(b) 7,595,581
Guidant 290,200 21,293,425
Sybron Intl 427,600(b) 11,171,050
Watson Pharmaceuticals 562,200(b) 20,239,200
Total 60,299,256

Health care services - 10.6%
Atria Communities 406,900(b) $7,832,825
Cardinal Health 215,850 19,035,272
HBO & Co 1,157,700 69,896,137
Health Management
Associates Cl A 977,475(b) 27,980,222
HEALTHSOUTH
Rehabilitation 490,800(b) 13,773,075
Schein (Henry) 134,600(b) 5,585,900
Total Renal Care Holdings 229,200(b) 7,635,225
Total 151,738,656

Insurance - 3.2%
Life Re 104,100 7,677,375
Nationwide Financial
Services Cl A 181,300 7,863,888
Provident Cos 158,300 5,431,669
SunAmerica 209,750 10,041,781
UNUM 279,700 15,435,943
Total 46,450,656

Leisure time & entertainment - 2.2%
Carnival Cl A 218,900 15,268,275
Premier Parks 80,200(b) 4,651,600
Royal Caribbean Cruises 164,400 11,518,275
Total 31,438,150

Media - 10.3%
CBS 506,926 17,203,801
Chancellor Media 531,400(b) 24,377,975
Clear Channel
Communications 236,050(b) 23,132,900
Outdoor Systems 937,500(b) 32,871,093
Sinclair Broadcast
Group Cl A 256,100(b) 14,757,763
Snyder Communications 260,500(b) 12,210,938
Universal Outdoor
Holdings 218,100(b) 14,067,450
Univision
Communications Cl A 251,600(b) 9,372,100
Total 147,994,020

Multi-industry conglomerates - 4.5%
AccuStaff 224,600(b) 7,748,700
Interim Services 339,300(b) 11,451,375
Robert Half Intl 776,850(b) 37,288,800
Sylvan Learning Systems 174,300 8,213,888
Total 64,702,763

Restaurants & lodging - 3.4%
Papa John's Intl 182,700(b) $7,011,113
Promus Hotel 552,040(b) 26,359,909
Starbucks 351,100(b) 15,909,219
Total 49,280,241

Retail - 7.8%
CDW Computer Centers 196,300(b) 11,753,463
Consolidated Stores 189,700(b) 8,145,244
Dollar General 275,500 10,658,406
Kohl's 263,900(b) 21,573,824
Office Depot 512,700(b) 15,957,788
Proffitt's 106,900(b) 3,875,125
Rite Aid 584,820 20,030,085
Stage Stores 404,500(b) 20,882,313
Total 112,876,248

Transportation - 0.7%
Kansas City Southern Inds 214,900 9,455,600

Utilities -- telephone - 1.4%
Cincinnati Bell 182,000 6,483,750
Intermedia
Communications 169,900(b) 13,528,288
Total 20,012,038

Total common stocks
(Cost: $837,344,855) $1,399,336,592

Other - 0.0%
Issuer Shares Value(a)

Jan Bell 2,473 19
Warrants

Total other
(Cost: $--) $19

Short-term securities - 2.0%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agencies - 1.1%
Federal Home Loan Bank Disc Nt
04-13-98 5.48% $1,000,000 $998,180
Federal Home Loan Mtge Corp Disc Nts
04-06-98 5.46 500,000 499,622
04-16-98 5.48 6,300,000 6,285,669
04-20-98 5.50 3,900,000 3,888,720
04-23-98 5.48 2,700,000 2,691,007
04-24-98 5.47 1,200,000 1,195,829
Total 15,559,027

Commercial paper - 0.7%
Pacific Life Insurance
04-30-98 5.57 4,600,000 4,579,434
SBC Communications Capital
04-14-98 5.54 1,700,000(d) 1,696,605
Toyota Motor Credit
05-01-98 5.58 4,300,000 4,280,113
Total 10,556,152
Letter of credit - 0.2%
Bank of America-
AES Hawaii
04-23-98 5.54% $3,200,000 $3,189,205

Total short-term securities
(Cost: $29,304,384) $29,304,384

Total investments in securities
(Cost $866,649,239)(e) $1,428,640,995

See accompanying notes to investments in securities.

(This annual report is not part of the prospectus.)

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, 1998, the cost of securities for federal income tax purposes
was $866,710,069 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:

Unrealized appreciation $580,454,563
Unrealized depreciation (18,523,637)

Net realized appreciation $561,930,926

(This annual report is not part of the prospectus.)

<PAGE>

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 1, 1998
- Statement of Assets and Liabilities, March 31, 1998
- Statement of Operations, Year ended March 31, 1998
- Statements of Changes in Net Assets, for the two-year period
ended March 31, 1997 and March 31, 1998
- Notes to Financial Statements
- Investments in Securities, March 31, 1998
- 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 herein incorporated by reference.

2. Copy of By-laws, as amended January 1, 1989, filed electronically, as
Exhibit 2 to Registrant's Post-Effective Amendment No. 11 to Registration
Statement No. 2-89288 is herein incorporated by reference.

3. Not Applicable.

4. Form of Stock Certificate, filed as Exhibit 4 to Post-Effective Amendment
No. 3 to Registration Statement No. 2-89288, is herein incorporated by
reference.

<PAGE>

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.

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 by reference.

8(c).Copy of Custodian Agreement Amendment between IDS International Fund, Inc.
and American Express Trust Company, dated October 9, 1997, filed
electronically on or about December 23, 1997 as Exhibit 8(c) to IDS
International Fund, Inc.'s Post-Effective Amendment No. 26 to Registration
Statement No. 2-92309, is incorporated herein by reference. Registrant's
Custodian Agreement Amendment differs from the one incorporated by
reference only by the fact that Registrant is one executing party.

9(a).Copy of Transfer Agency Agreement between Registrant and American Express
Client Service Corporation, dated January 1, 1998, is filed electronically
herewith.

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 herein incorporated by reference.

<PAGE>

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, 1997 as Exhibit
9(e) to IDS Precious Metals Fund, Inc.'s Post-Effective 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.

10. Opinion and Consent of Counsel as to the legality of the securities
being registered is filed electronically herewith.

11. Independent Auditors' Consent is filed electronically herewith.

12. None.

13. Not Applicable.

14. Forms of Keogh, IRA and other retirement plans, filed as Exhibits 14(a)
through 14(n) to IDS Growth Fund, Inc., Post-Effective Amendment No. 19
to Registration Statement 2-54516, are herein incorporated by
reference.

15. Form of Plan and Agreement of Distribution between Registrant and
American Express Financial Advisors Inc., dated March 20, 1995, 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 herein incorporated by reference.

17. Financial Data Schedule is filed electronically herewith.

<PAGE>

18. Copy of 18f-3 Plan, dated May 9, 1997, filed electronically on or about
January 27, 1998 as Exhibit 18 to IDS Equity Select Fund, Inc.'s
Post-Effective Amendment No. 86 to Registration Statement No. 2-13188,
is incorporated herein by reference.

19(a). Directors/Trustees Power of Attorney to sign amendments to this
Registration Statement dated Jan. 7, 1998 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.

Item 26. Number of Holders of Securities

(1) (2)

Number of Record
Title of Holders as of
Class May 19, 1998

Common Stock IDS Strategy -
Aggressive - 137,985
Equity Value - 215,382

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.

<PAGE>

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.

<TABLE>
<CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)

Directors and officers of American Express Financial Corporation who are
directors and/or officers of one or more other companies:
<S> <C> <C> <C>
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Name and Title Other company(s) Address Title within other
company(s)
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Ronald G. Abrahamson, American Express Client IDS Tower 10 Director and Vice President
Vice President Service Corporation Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.

North Dakota Public Director and Vice President
Employee Payment Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Douglas A. Alger, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Peter J. Anderson, Advisory Capital Strategies IDS Tower 10 Director
Director and Senior Vice Group Inc. Minneapolis, MN 55440
President

American Express Asset Director and Chairman of
Management Group Inc. the Board

American Express Asset Director, Chairman of the
Management International, Board and Executive Vice
Inc. President

American Express Financial Senior Vice President
Advisors Inc.

IDS Capital Holdings Inc. Director and President

IDS Futures Corporation Director

NCM Capital Management 2 Mutual Plaza Director
Group, Inc. 501 Willard Street
Durham, NC 27701
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
Ward D. Armstrong,
Vice President American Express Financial IDS Tower 10 Vice President
Advisors Inc. Minneapolis, MN 55440

American Express Service Vice President
Corporation

American Express Trust Director and Chairman of
Company the Board
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

John M. Baker, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

American Express Trust Senior Vice President
Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Joseph M. Barsky III, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Robert C. Basten, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Timothy V. Bechtold, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Executive Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

John C. Boeder, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Douglas W. Brewers, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Karl J. Breyer, American Express Financial IDS Tower 10 Senior Vice President
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440
President

American Express Minnesota Director
Foundation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Daniel J. Candura, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Cynthia M. Carlson, American Enterprise IDS Tower 10 Director, President and
Vice President Investment Services Inc. Minneapolis, MN 55440 Chief Executive Officer

American Express Financial Vice President
Advisors Inc.

American Express Service Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Mark W. Carter, American Express Financial IDS Tower 10 Senior Vice President and
Senior Vice President and Advisors Inc. Minneapolis, MN 55440 Chief Marketing Officer
Chief Marketing Officer

IDS Life Insurance Company Executive Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James E. Choat, American Enterprise Life IDS Tower 10 Director, President and
Senior Vice President Insurance Company Minneapolis, MN 55440 Chief Executive Officer

American Express Financial Senior Vice President
Advisors Inc.

American Express Insurance Vice President
Agency of Idaho Inc.

American Express Insurance Vice President
Agency of Nevada Inc.

American Express Insurance Vice President
Agency of Oregon Inc.

American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.

IDS Insurance Agency of Vice President
Alabama Inc.

IDS Insurance Agency of Vice President
Arkansas Inc.

IDS Insurance Agency of Vice President
Massachusetts Inc.

IDS Insurance Agency of New Vice President
Mexico Inc.

IDS Insurance Agency of Vice President
North Carolina Inc.

IDS Insurance Agency of Vice President
Ohio Inc.

IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Kenneth J. Ciak, AMEX Assurance Company IDS Tower 10 Director and President
Vice President and General Minneapolis, MN 55440
Manager

American Express Financial Vice President and General
Advisors Inc. Manager

IDS Property Casualty 1 WEG Blvd. Director and President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Paul A. Connolly, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Colleen Curran, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel

American Express Service Vice President and Chief
Corporation Legal Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Regenia David, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Luz Maria Davis American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Gordon L. Eid, American Express Financial IDS Tower 10 Senior Vice President,
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440 General Counsel and Chief
President, Deputy General Compliance Officer
Counsel and Chief
Compliance Officer

American Express Insurance Director and Vice President
Agency of Arizona Inc.

American Express Insurance Director and Vice President
Agency of Idaho Inc.

American Express Insurance Director and Vice President
Agency of Nevada Inc.

American Express Insurance Director and Vice President
Agency of Oregon Inc.

American Express Property Director and Vice President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Director and Vice President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Director and Vice President
Casualty Insurance Agency
of Pennsylvania Inc.

IDS Insurance Agency of Director and Vice President
Alabama Inc.

IDS Insurance Agency of Director and Vice President
Arkansas Inc.

IDS Insurance Agency of Director and Vice President
Massachusetts Inc.

IDS Insurance Agency of New Director and Vice President
Mexico Inc.

IDS Insurance Agency of Director and Vice President
North Carolina Inc.

IDS Insurance Agency of Director and Vice President
Ohio Inc.

IDS Insurance Agency of Director and Vice President
Wyoming Inc.

IDS Real Estate Services, Vice President
Inc.

Investors Syndicate Director
Development Corp.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Robert M. Elconin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Mark A. Ernst, American Enterprise IDS Tower 10 Director and Senior Vice
Senior Vice President Investment Services Inc. Minneapolis, MN 55440 President

American Enterprise Life Director
Insurance Company

American Express Financial Senior Vice President
Advisors Inc.

American Express Service Senior Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Gordon M. Fines, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Douglas L. Forsberg, American Centurion Life IDS Tower 10 Director
Vice President Assurance Company Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Jeffrey P. Fox, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Corporate Controller
Corporate Controller
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Harvey Golub, American Express Company American Express Tower Chairman and Chief
Director World Financial Center Executive Officer
New York, NY 10285

American Express Travel Chairman and Chief
Related Services Company, Executive Officer
Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

David A. Hammer, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Marketing Controller
Marketing Controller

IDS Plan Services of Director and Vice President
California, Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Lorraine R. Hart, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440

American Enterprise Life Vice President
Insurance Company

American Express Financial Vice President
Advisors Inc.

American Partners Life Director and Vice
Insurance Company President

IDS Certificate Company Vice President

IDS Life Insurance Company Vice President

IDS Life Series Fund, Inc. Vice President

IDS Life Variable Annuity Vice President
Funds A and B

Investors Syndicate Director and Vice
Development Corp. President

IDS Life Insurance Company P.O. Box 5144 Investment Officer
of New York Albany, NY 12205

IDS Property Casualty 1 WEG Blvd. Vice President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Scott A. Hawkinson, American Centurion Life IDS Tower 10 Chief Actuary
Vice President Assurance Company Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Janis K. Heaney, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James G. Hirsh, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Darryl G. Horsman, American Express Trust IDS Tower 10 Director and President
Vice President Company Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Jeffrey S. Horton, AMEX Assurance Company IDS Tower 10 Vice President, Treasurer
Vice President and Minneapolis, MN 55440 and Assistant Secretary
Corporate Treasurer

American Centurion Life Vice President and
Assurance Company Treasurer

American Enterprise Vice President and
Investment Services Inc. Treasurer

American Enterprise Life Vice President and
Insurance Company Treasurer

American Express Asset Vice President and
Management Group Inc. Treasurer

American Express Asset Vice President and
Management International Treasurer
Inc.

American Express Client Vice President and
Service Corporation Treasurer

American Express Corporation Vice President and
Treasurer

American Express Financial Vice President and
Advisors Inc. Treasurer

American Express Insurance Vice President and
Agency of Arizona Inc. Treasurer

American Express Insurance Vice President and
Agency of Idaho Inc. Treasurer

American Express Insurance Vice President and
Agency of Nevada Inc. Treasurer

American Express Minnesota Vice President and
Foundation Treasurer

American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Kentucky Inc.

American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Maryland Inc.

American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Pennsylvania Inc.

American Express Partners Vice President and
Life Insurance Company Treasurer

IDS Cable Corporation Director, Vice President
and Treasurer

IDS Cable II Corporation Director, Vice President
and Treasurer

IDS Capital Holdings Inc. Vice President, Treasurer
and Assistant Secretary

IDS Certificate Company Vice President and
Treasurer

IDS Insurance Agency of Vice President and
Alabama Inc. Treasurer

IDS Insurance Agency of Vice President and
Arkansas Inc. Treasurer

IDS Insurance Agency of Vice President and
Massachusetts Inc. Treasurer

IDS Insurance Agency of New Vice President and
Mexico Inc. Treasurer

IDS Insurance Agency of Vice President and
North Carolina Inc. Treasurer

IDS Insurance Agency of Vice President and
Ohio Inc. Treasurer

IDS Insurance Agency of Vice President and
Wyoming Inc. Treasurer

IDS Life Insurance Company Vice President, Treasurer
and Assistant Secretary

IDS Life Series Fund Inc. Vice President and
Treasurer

IDS Life Variable Annuity Vice President and
Funds A & B Treasurer

IDS Management Corporation Director, Vice President
and Treasurer

IDS Partnership Services Vice President and
Corporation Treasurer

IDS Plan Services of Vice President and
California, Inc. Treasurer

IDS Real Estate Services, Vice President and
Inc. Treasurer

IDS Realty Corporation Vice President and
Treasurer

IDS Sales Support Inc. Vice President and
Treasurer

IDS Securities Corporation Vice President and
Treasurer

Investors Syndicate Vice President and
Development Corp. Treasurer

IDS Property Casualty 1 WEG Blvd. Vice President, Treasurer
Insurance Company DePere, WI 54115 and Assistant Secretary

North Dakota Public Vice President and
Employee Payment Company Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

David R. Hubers, AMEX Assurance Company IDS Tower 10 Director
Director, President and Minneapolis, MN 55440
Chief Executive Officer

American Express Financial Chairman, President and
Advisors Inc. Chief Executive Officer

American Express Service Director and President
Corporation

IDS Certificate Company Director

IDS Life Insurance Company Director

IDS Plan Services of Director and President
California, Inc.

IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Martin G. Hurwitz, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James M. Jensen, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Marietta L. Johns, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Nancy E. Jones, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

American Express Service Vice President
Corporation
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James E. Kaarre, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Matthew N. Karstetter, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Linda B. Keene, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

G. Michael Kennedy, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Susan D. Kinder, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President

IDS Securities Corporation Director
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Brian C. Kleinberg, American Express Financial IDS Tower 10 Executive Vice President
Executive Vice President Advisors Inc. Minneapolis, MN 55440

American Express Service Director
Corporation

AMEX Assurance Company Director and Chairman of
the Board

IDS Property Casualty 1 WEG Blvd. Director and Chairman of
Insurance Company DePere, WI 54115 the Board
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Richard W. Kling, AMEX Assurance Company IDS Tower 10 Director
Director and Senior Vice Minneapolis, MN 55440
President

American Centurion Life Director
Assurance Company

American Enterprise Life Director and Chairman of
Insurance Company the Board

American Express Corporation Director and President

American Express Financial Senior Vice President
Advisors Inc.

American Express Insurance Director and President
Agency of Arizona Inc.

American Express Insurance Director and President
Agency of Idaho Inc.

American Express Insurance Director and President
Agency of Nevada Inc.

American Express Insurance Director and President
Agency of Oregon Inc.

American Express Property Director and President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Director and President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Director and President
Casualty Insurance Agency
of Pennsylvania Inc.

American Express Service Vice President
Corporation

American Partners Life Director and Chairman of
Insurance Company the Board

IDS Certificate Company Director and Chairman of
the Board

IDS Insurance Agency of Director and President
Alabama Inc.

IDS Insurance Agency of Director and President
Arkansas Inc.

IDS Insurance Agency of Director and President
Massachusetts Inc.

IDS Insurance Agency of New Director and President
Mexico Inc.

IDS Insurance Agency of Director and President
North Carolina Inc.

IDS Insurance Agency of Director and President
Ohio Inc.

IDS Insurance Agency of Director and President
Wyoming Inc.

IDS Life Insurance Company Director and President

IDS Life Series Fund, Inc. Director and President

IDS Life Variable Annuity Manager, Chairman of the
Funds A and B Board and President

IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115

IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Paul F. Kolkman, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Director and Executive
Vice President

IDS Life Series Fund, Inc. Vice President and Chief
Actuary

IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Claire Kolmodin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Steve C. Kumagai, American Express Financial IDS Tower 10 Director and Senior Vice
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440 President
President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Edward Labenski, Jr., American Express Asset IDS Tower 10 Senior Vice President
Vice President Management Group Inc. Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Kurt A Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Lori J. Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Futures Corporation Director
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Daniel E. Laufenberg, American Express Financial IDS Tower 10 Vice President and Chief
Vice President and Chief Advisors Inc. Minneapolis, MN 55440 U.S. Economist
U.S. Economist
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Richard J. Lazarchic, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Peter A. Lefferts, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President

American Express Trust Director
Company

IDS Plan Services of Director
California, Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Douglas A. Lennick, American Express Financial IDS Tower 10 Director and Executive
Director and Executive Vice Advisors Inc. Minneapolis, MN 55440 Vice President
President

IDS Securities Corporation Director, President and
Chief Executive Officer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Mary J. Malevich, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Fred A. Mandell, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Thomas W. Medcalf, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

William C. Melton, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James A. Mitchell, AMEX Assurance Company IDS Tower 10 Director
Director and Executive Vice Minneapolis, MN 55440
President

American Enterprise Director
Investment Services Inc.

American Express Financial Executive Vice President
Advisors Inc.

American Express Service Director and Senior Vice
Corporation President

American Express Tax and Director
Business Services Inc.

IDS Certificate Company Director

IDS Life Insurance Company Director, Chairman of the
Board and Chief Executive
Officer

IDS Plan Services of Director
California, Inc.

IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

William P. Miller, Advisory Capital Strategies IDS Tower 10 Vice President
Vice President and Senior Group Inc. Minneapolis, MN 55440
Portfolio Manager

American Express Asset Senior Vice President
Management Group Inc.

American Express Financial Vice President and Senior
Advisors Inc. Portfolio Manager
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Pamela J. Moret, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

American Express Trust Vice President
Company

IDS Life Insurance Company Executive Vice President

IDS Life Insurance Company P.O. Box 5144 Vice President
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Barry J. Murphy, American Express Client IDS Tower 10 Director and President
Director and Senior Vice Service Corporation Minneapolis, MN 55440
President

American Express Financial Senior Vice President
Advisors Inc.

IDS Life Insurance Company Director and Executive
Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Mary Owens Neal, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Robert J. Neis, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James R. Palmer, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Life Insurance Company Vice President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Carla P. Pavone, American Express Client IDS Tower 10 Director and Vice President
Vice President Service Corporation Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.

North Dakota Public Director and President
Employee Payment Company
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Thomas P. Perrine, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Susan B. Plimpton, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Ronald W. Powell, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel

IDS Cable Corporation Vice President and
Assistant Secretary

IDS Cable II Corporation Vice President and
Assistant Secretary

IDS Management Corporation Vice President and
Assistant Secretary

IDS Partnership Services Vice President and
Corporation Assistant Secretary

IDS Plan Services of Vice President and
California, Inc. Assistant Secretary

IDS Realty Corporation Vice President and
Assistant Secretary
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
James M. Punch,
Vice President American Express Financial IDS Tower 10 Vice President
Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Frederick C. Quirsfeld, American Express Asset IDS Tower 10 Vice President
Senior Vice President Management Group Inc. Minneapolis, MN 55440

American Express Financial Senior Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Debra J. Rabe, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

ReBecca K. Roloff, American Express Financial IDS Tower 10 Senior Vice President
Senior Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Stephen W. Roszell, Advisory Capital Strategies IDS Tower 10 Director
Senior Vice President Group Inc. Minneapolis, MN 55440

American Express Asset Director, President and
Management Group Inc. Chief Executive Officer

American Express Asset Director
Management International,
Inc.

American Express Asset Director
Management Ltd.

American Express Financial Senior Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

John P. Ryan, American Express Financial IDS Tower 10 Vice President and General
Vice President and General Advisors Inc. Minneapolis, MN 55440 Auditor
Auditor
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Erven A. Samsel, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President

American Express Insurance Vice President
Agency of Idaho Inc.

American Express Insurance Vice President
Agency of Nevada Inc.

American Express Insurance Vice President
Agency of Oregon Inc.

American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.

IDS Insurance Agency of Vice President
Alabama Inc.

IDS Insurance Agency of Vice President
Arkansas Inc.

IDS Insurance Agency of Vice President
Massachusetts Inc.

IDS Insurance Agency of New Vice President
Mexico Inc.

IDS Insurance Agency of Vice President
North Carolina Inc.

IDS Insurance Agency of Vice President
Ohio Inc.

IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Stuart A. Sedlacek, American Centurion Life IDS Tower 10 Director, Chairman and
Senior Vice President and Assurance Company Minneapolis, MN 55440 President
Chief Financial Officer

American Enterprise Life Director and Executive
Insurance Company Vice President

American Express Corporation Director

American Express Financial Senior Vice President and
Advisors Inc. Chief Financial Officer

American Partners Life Director and President
Insurance Agency

IDS Certificate Company Director and President

IDS Life Insurance Company Director and Executive
Vice President

Investors Syndicate Director, Chairman of the
Development Corp. Board and President
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Donald K. Shanks, AMEX Assurance Company IDS Tower 10 Senior Vice President
Vice President Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.

IDS Property Casualty 1 WEG Blvd. Senior Vice President
Insurance Company DePere, WI 54115
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

F. Dale Simmons, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440

American Enterprise Life Vice President
Insurance

American Express Financial Vice President
Advisors Inc.

American Partners Life Vice President
Insurance Company

IDS Certificate Company Vice President

IDS Life Insurance Company Vice President

IDS Partnership Services Director and Vice President
Corporation

IDS Real Estate Services Director and Vice President
Inc.

IDS Realty Corporation Director and Vice President

IDS Life Insurance Company Box 5144 Vice President and
of New York Albany, NY 12205 Assistant Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Judy P. Skoglund, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Ben C. Smith, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

William A. Smith, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Controller
Controller
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Bridget Sperl, American Express Client IDS Tower 10 Vice President
Vice President Service Corporation Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

William A. Stoltzmann, American Enterprise Life IDS Tower 10 Director, Vice President,
Vice President and Insurance Company Minneapolis, MN 55440 General Counsel and
Assistant General Counsel Secretary

American Express Corporation Director, Vice President
and Secretary

American Express Financial Vice President and
Advisors Inc. Assistant General Counsel

American Partners Life Director, Vice President,
Insurance Company General Counsel and
Secretary

IDS Life Insurance Company Vice President, General
Counsel and Secretary

IDS Life Series Fund Inc. General Counsel and
Assistant Secretary

IDS Life Variable Annuity General Counsel and
Funds A & B Assistant Secretary
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

James J. Strauss, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Jeffrey J. Stremcha, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Barbara Stroup Stewart, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Wesley W. Wadman, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440

American Express Asset Director and Senior Vice
Management International, President
Inc.

American Express Asset Director and Vice Chairman
Management Ltd.

American Express Financial Vice President
Advisors Inc.

IDS Fund Management Limited Director and Vice Chairman
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Norman Weaver Jr., American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President

American Express Insurance Vice President
Agency of Arizona Inc.

American Express Insurance Vice President
Agency of Idaho Inc.

American Express Insurance Vice President
Agency of Nevada Inc.

American Express Insurance Vice President
Agency of Oregon Inc.

American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.

IDS Insurance Agency of Vice President
Alabama Inc.

IDS Insurance Agency of Vice President
Arkansas Inc.

IDS Insurance Agency of Vice President
Massachusetts Inc.

IDS Insurance Agency of New Vice President
Mexico Inc.

IDS Insurance Agency of Vice President
North Carolina Inc.

IDS Insurance Agency of Vice President
Ohio Inc.

IDS Insurance Agency of Vice President
Wyoming Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Michael L. Weiner, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440

IDS Capital Holdings Inc. Vice President

IDS Futures Brokerage Group Vice President

IDS Futures Corporation Vice President, Treasurer
and Secretary

IDS Sales Support Inc. Director, Vice President
and Assistant Treasurer
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Lawrence J. Welte, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Jeffrey F. Welter, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Edwin M. Wistrand, American Express Financial IDS Tower 10 Vice President and
Vice President and Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
Assistant General Counsel
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Michael D. Wolf, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440

American Express Financial Vice President
Advisors Inc.
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

Michael R. Woodward, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President

American Express Insurance Vice President
Agency of Idaho Inc.

American Express Insurance Vice President
Agency of Nevada Inc.

American Express Insurance Vice President
Agency of Oregon Inc.

American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.

American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.

American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.

IDS Insurance Agency of Vice President
Alabama Inc.

IDS Insurance Agency of Vice President
Arkansas Inc.

IDS Insurance Agency of Vice President
Massachusetts Inc.

IDS Insurance Agency of New Vice President
Mexico Inc.

IDS Insurance Agency of Vice President
North Carolina Inc.

IDS Insurance Agency of Vice President
Ohio Inc.

IDS Insurance Agency of Vice President
Wyoming Inc.

IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
- ----------------------------- ----------------------------- ---------------------------- ----------------------------

</TABLE>
<TABLE>
<CAPTION>
Item 29. Principal Underwriters.

(a) American Express Financial Advisors acts as principal underwriter for the following investment
companies:

IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS Discovery Fund, Inc.; IDS Equity
Select Fund, Inc.; IDS Extra Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt Fund, Inc.; IDS International
Fund, Inc.; IDS Investment Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New Dimensions Fund, Inc.; IDS
Precious Metals Fund, Inc.; IDS Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy Fund, Inc.; IDS Tax-Exempt Bond
Fund, Inc.; IDS Tax-Free Money Fund, Inc.; IDS Utilities Income Fund, Inc., Growth Trust;
Growth and Income Trust; Income Trust, Tax-Free Income Trust, World Trust and IDS Certificate
Company.

(b) As to each director, officer or partner of the principal underwriter:

<S> <C> <C>
Name and Principal Business Address Position and Offices with Offices with Registrant
Underwriter
- --------------------------------------------- --------------------------------- --------------------------

Ronald G. Abrahamson Vice President-Service Quality None
IDS Tower 10 and Reengineering
Minneapolis, MN 55440

Douglas A. Alger Senior Vice President-Human None
IDS Tower 10 Resources
Minneapolis, MN 55440

Peter J. Anderson Senior Vice Vice President
IDS Tower 10 President-Investment Operations
Minneapolis, MN 55440

Ward D. Armstrong Vice President-American None
IDS Tower 10 Express, Institutional Services
Minneapolis, MN 55440

John M. Baker Vice President-Plan Sponsor None
IDS Tower 10 Services
Minneapolis, MN 55440

Joseph M. Barsky III Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Robert C. Basten Vice President-Tax and Business None
IDS Tower 10 Services
Minneapolis, MN 55440

Timothy V. Bechtold Vice President-Risk Management None
IDS Tower 10 Products
Minneapolis, MN 55440

John D. Begley Group Vice None
Suite 100 President-Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235

Jack A. Benjamin Group Vice President-Greater None
Suite 200 Pennsylvania
3500 Market Street
Camp Hill, PA 17011

Brent L. Bisson Group Vice President-Los None
Suite 900, E. Westside Twr Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064

John C. Boeder Vice President-Mature Market None
IDS Tower 10 Group
Minneapolis, MN 55440

Walter K. Booker Group Vice President-New Jersey None
Suite 200, 3500 Market Street
Camp Hill, NJ 17011

Bruce J. Bordelon Group Vice President-Gulf States None
Galleria One Suite 1900
Galleria Blvd.
Metairie, LA 70001

Charles R. Branch Group Vice President-Northwest None
Suite 200
West 111 North River Dr.
Spokane, WA 99201

Douglas W. Brewers Vice President-Sales Support None
IDS Tower 10
Minneapolis, MN 55440

Karl J. Breyer Senior Vice President-Law and None
IDS Tower 10 Corporate
Minneapolis, MN 55440 Affairs

Daniel J. Candura Vice President-Marketing Support None
IDS Tower 10
Minneapolis, MN 55440

Cynthia M. Carlson Vice President-American Express None
IDS Tower 10 Securities Services
Minneapolis, MN 55440

Mark W. Carter Senior Vice President and Chief None
IDS Tower 10 Marketing Officer
Minneapolis, MN 55440

James E. Choat Senior Vice None
IDS Tower 10 President-Institutional
Minneapolis, MN 55440 Products Group

Kenneth J. Ciak Vice President and General None
IDS Property Casualty Manager-IDS Property Casualty
1400 Lombardi Avenue
Green Bay, WI 54304

Paul A. Connolly Vice President - Advisor None
IDS Tower 10 Staffing, Training and Support
Minneapolis, MN 55440

Roger C. Corea Group Vice President-Upstate None
290 Woodcliff Drive New York
Fairport, NY 14450

Henry J. Cormier Group Vice President-Connecticut None
Commerce Center One
333 East River Drive
East Hartford, CT 06108

John M. Crawford Group Vice President-Arkansas / None
Suite 200 Springfield / Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211

Kevin F. Crowe Group Vice None
Suite 312 President-Carolinas/Eastern
7300 Carmel Executive Pk Georgia
Charlotte, NC 28226

Colleen Curran Vice President and assistant None
IDS Tower 10 General Counsel
Minneapolis, MN 55440

Reginia David Vice President-Systems Services None
IDS Tower 10
Minneapolis, MN 55440

Luz Maria Davis Vice President-Communications None
IDS Tower 10
Minneapolis, MN 55440

Scott M. DiGiammarino Group Vice None
Suite 500, 8045 Leesburg Pike President-Washington/Baltimore
Vienna, VA 22182

Bradford L. Drew Group Vice President-Eastern None
Two Datran Center Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156

Gordon L. Eid Senior Vice President, General None
IDS Tower 10 Counsel and Chief Compliance
Minneapolis, MN 55440 Officer

Robert M. Elconin Vice President-Government None
IDS Tower 10 Relations
Minneapolis, MN 55440

Mark A. Ernst Senior Vice President-Third None
IDS Tower 10 Party Distribution
Minneapolis, MN 55440

Louise P. Evenson Group Vice President-San None
Suite 200 Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596

Gordon M. Fines Vice President-Mutual Fund None
IDS Tower 10 Equity Investments
Minneapolis, MN 55440

Douglas L. Forsberg Vice President-Institutional None
IDS Tower 10 Products Group
Minneapolis, MN 55440

Jeffrey P. Fox Vice President and Corporate None
IDS Tower 10 Controller
Minneapolis, MN 55440

William P. Fritz Group Vice President-Gateway None
Suite 160
12855 Flushing Meadows Dr
St. Louis, MO 63131

Carl W. Gans Group Vice President-Twin City None
8500 Tower Suite 1770 Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437

David A. Hammer Vice President and Marketing None
IDS Tower 10 Controller
Minneapolis, MN 55440

Teresa A. Hanratty Group Vice President-Northern None
Suites 6&7 New England
169 South River Road
Bedford, NH 03110

Robert L. Harden Group Vice President-Boston None
Two Constitution Plaza Metro
Boston, MA 02129

Lorraine R. Hart Vice President-Insurance None
IDS Tower 10 Investments
Minneapolis, MN 55440

Scott A. Hawkinson Vice President-Assured Assets None
IDS Tower 10 Product Development and
Minneapolis, MN 55440 Management

Brian M. Heath Group Vice President-North Texas None
Suite 150
801 E. Campbell Road
Richardson, TX 75081

Janis K. Heaney Vice President-Incentive None
IDS Tower 10 Compensation
Minneapolis, MN 55440

James G. Hirsh Vice President and Assistant None
IDS Tower 10 General Counsel
Minneapolis, MN 55440

Jon E. Hjelm Group Vice President-Rhode None
319 Southbridge Street Island/Central-Western
Auburn, MA 01501 Massachusetts

David J. Hockenberry Group Vice President-Eastern None
30 Burton Hills Blvd. Tennessee
Suite 175
Nashville, TN 37215

Jeffrey S. Horton Vice President and Treasurer None
IDS Tower 10
Minneapolis, MN 55440

David R. Hubers Chairman, President and Chief Board member
IDS Tower 10 Executive Officer
Minneapolis, MN 55440

Martin G. Hurwitz Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

James M. Jensen Vice President-Insurance None
IDS Tower 10 Product Development and
Minneapolis, MN 55440 Management

Marietta L. Johns Senior Vice President-Field None
IDS Tower 10 Management
Minneapolis, MN 55440

Nancy E. Jones Vice President - Business None
IDS Tower 10 Development
Minneapolis, MN 55440

James E. Kaarre Vice President-Marketing None
IDS Tower 10 Promotions
Minneapolis, MN 55440

Matthew N. Karstetter Vice President-Investment None
IDS Tower 10 Accounting
Minneapolis, MN 55440

Linda B. Keene Vice President-Market None
IDS Tower 10 Development
Minneapolis, MN 55440

G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment Research
Minneapolis, MN 55440

Susan D. Kinder Senior Vice None
IDS Tower 10 President-Distribution Services
Minneapolis, MN 55440

Brian Kleinberg Executive Vice None
IDS Tower 10 President-Financial Direct
Minneapolis, MN 55440

Richard W. Kling Senior Vice President-Products None
IDS Tower 10
Minneapolis, MN 55440

Paul F. Kolkman Vice President-Actuarial Finance None
IDS Tower 10
Minneapolis, MN 55440

Claire Kolmodin Vice President-Service Quality None
IDS Tower 10
Minneapolis, MN 55440

David S. Kreager Group Vice President-Greater None
Suite 108 Michigan
Trestle Bridge V
5136 Lovers Lane
Kalamazoo, MI 49002

Steven C. Kumagai Director and Senior Vice None
IDS Tower 10 President-Field Management and
Minneapolis, MN 55440 Business Systems

Mitre Kutanovski Group Vice President-Chicago None
Suite 680 Metro
8585 Broadway
Merrillville, IN 48410

Edward Labenski Jr. Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Kurt A. Larson Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Lori J. Larson Vice President - Brokerage and None
IDS Tower 10 Direct Services
Minneapolis, MN 55440

Daniel E. Laufenberg Vice President and Chief U.S. None
IDS Tower 10 Economist
Minneapolis, MN 55440

Richard J. Lazarchic Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Peter A. Lefferts Senior Vice President-Corporate None
IDS Tower 10 Strategy and Development
Minneapolis, MN 55440

Douglas A. Lennick Director and Executive Vice None
IDS Tower 10 President-Private Client Group
Minneapolis, MN 55440

Mary J. Malevich Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Fred A. Mandell Vice President-Field Marketing None
IDS Tower 10 Readiness
Minneapolis, MN 55440

Daniel E. Martin Group Vice President-Pittsburgh None
Suite 650 Metro
5700 Corporate Drive
Pittsburgh, PA 15237

Thomas W. Medcalf Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

William C. Melton Vice President-International None
IDS Tower 10 Research and Chief
Minneapolis, MN 55440 International Economist

William P. Miller Vice President and Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440

James A. Mitchell Executive Vice None
IDS Tower 10 President-Marketing and Products
Minneapolis, MN 55440

Pamela J. Moret Vice President-Variable Assets None
IDS Tower 10
Minneapolis, MN 55440

Alan D. Morgenstern Group Vice President-Central None
Suite 200 California/Western Nevada
3500 Market Street
Camp Hill, NJ 17011

Barry J. Murphy Senior Vice President-Client None
IDS Tower 10 Service
Minneapolis, MN 55440

Mary Owens Neal Vice President-Mature Market None
IDS Tower 10 Segment
Minneapolis, MN 55440

Robert J. Neis Vice President-Technology None
IDS Tower 10 Services
Minneapolis, MN 55440

Thomas V. Nicolosi Group Vice President-New York None
Suite 220 Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528

James R. Palmer Vice President-Taxes None
IDS Tower 10
Minneapolis, MN 55440

Marc A. Parker Group Vice President - None
10200 SW Greenburg Road Portland/Eugene
Suite 110
Portland OR 97223

Carla P. Pavone Vice President-Compensation and None
IDS Tower 10 Field Administration
Minneapolis, MN 55440

Thomas P. Perrine Senior Vice President - Group
IDS Tower 10 Relationship Leader/AXP
Minneapolis, MN 55440 Technologies Financial Services

Susan B. Plimpton Vice President-Marketing None
IDS Tower 10 Services
Minneapolis, MN 55440

Larry M. Post Group Vice None
One Tower Bridge President-Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428

Ronald W. Powell Vice President and Assistant None
IDS Tower 10 General Counsel
Minneapolis, MN 55440

Diana R. Prost Group Vice President - None
3030 N.W. Expressway Kansas/Oklahoma
Suite 900
Oklahoma City, OK 73112

James M. Punch Vice President-Special Projects None
IDS Tower 10
Minneapolis, MN 55440

Frederick C. Quirsfeld Senior Vice President - Fixed None
IDS Tower 10 Income
Minneapolis, MN 55440

Debra J. Rabe Vice President-Financial None
IDS Tower 10 Planning
Minneapolis, MN 55440

R. Daniel Richardson Group Vice President-Southern None
Suite 800 Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759

ReBecca K. Roloff Senior Vice President-Field None
IDS Tower 10 Management and Financial
Minneapolis, MN 55440 Advisory Service

Stephen W. Roszell Senior Vice None
IDS Tower 10 President-Institutional
Minneapolis, MN 55440

Max G. Roth Group Vice None
Suite 201 S IDS Ctr President-Wisconsin/Upper
1400 Lombardi Avenue Michigan
Green Bay, WI 54304

John P. Ryan Vice President and General None
IDS Tower 10 Auditor
Minneapolis, MN 55440

Erven A. Samsel Senior Vice President-Field None
45 Braintree Hill Park Management
Suite 402
Braintree, MA 02184

Russell L. Scalfano Group Vice None
Suite 201 President-Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715

William G. Scholz Group Vice None
Suite 205 President-Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258

Stuart A. Sedlacek Senior Vice President and Chief None
IDS Tower 10 Financial Officer
Minneapolis, MN 55440

Donald K. Shanks Vice President-Property Casualty None
IDS Tower 10
Minneapolis, MN 55440

F. Dale Simmons Vice President-Senior Portfolio None
IDS Tower 10 Manager, Insurance Investments
Minneapolis, MN 55440

Judy P. Skoglund Vice President-Human Resources None
IDS Tower 10 and Organization Development
Minneapolis, MN 55440

Ben C. Smith Vice President- Workplace None
IDS Tower 10 Marketing
Minneapolis, MN 55440

William A. Smith Vice President and None
IDS Tower 10 Controller-Private Client Group
Minneapolis, MN 55440

James B. Solberg Group Vice President-Eastern None
466 Westdale Mall Iowa Area
Cedar Rapids, IA 52404

Bridget Sperl Vice President-Geographic None
IDS Tower 10 Service Teams
Minneapolis, MN 55440

Paul J. Stanislaw Group Vice President-Southern None
Suite 1100 California
Two Park Plaza
Irvine, CA 92714

Lois A. Stilwell Group Vice President-Outstate None
Suite 433 Minnesota Area/ North
9900 East Bren Road Dakota/Western Wisconsin
Minnetonka, MN 55343

William A. Stoltzmann Vice President and Assistant None
IDS Tower 10 General Counsel
Minneapolis, MN 55440

James J. Strauss Vice President-Corporate None
IDS Tower 10 Planning and Analysis
Minneapolis, MN 55440

Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440

Barbara Stroup Stewart Vice President - Channel None
IDS Tower 10 Development
Minneapolis, MN 55440

Craig P. Taucher Group Vice None
Suite 150 President-Orlando/Jacksonville
4190 Belfort Road
Jacksonville, FL 32216

Neil G. Taylor Group Vice None
Suite 425 President-Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119

Peter S. Velardi Group Vice None
Suite 180 President-Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338

Charles F. Wachendorfer Group Vice President - Detroit None
8115 East Jefferson Avenue Metro
Detroit, MI 48214

Wesley W. Wadman Vice President-Senior Portfolio None
IDS Tower 10 Manager
Minneapolis, MN 55440

Norman Weaver Jr. Senior Vice President-Field None
1010 Main St. Suite 2B Management
Huntington Beach, CA 92648

Michael L. Weiner Vice President-Tax Research and None
IDS Tower 10 Audit
Minneapolis, MN 55440

Lawrence J. Welte Vice President-Investment None
IDS Tower 10 Administration
Minneapolis, MN 55440

Jeffry M. Welter Vice President-Equity and Fixed None
IDS Tower 10 Income Trading
Minneapolis, MN 55440

Thomas L. White Group Vice President-Cleveland None
Suite 200 Metro
28601 Chagrin Blvd.
Woodmere, OH 44122

Eric S. Williams Group Vice President-Virginia None
Suite 250
3951 Westerre Parkway
Richmond, VA 23233

William J. Williams Group Vice President-Western None
Two North Tamiami Trail Florida
Suite 702
Sarasota, FL 34236

Edwin M. Wistrand Vice President and Assistant None
IDS Tower 10 General Counsel
Minneapolis, MN 55440

Michael D. Wolf Vice President- Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440

Michael R. Woodward Senior Vice President-Field None
32 Ellicott St Management
Suite 100
Batavia, NY 14020

</TABLE>

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>
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 28th day of May, 1998.

IDS STRATEGY FUND INC.

By __________________________________
Matthew Karstetter, 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 28th day of May, 1998.

Signature Capacity

/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director

/s/ John R. Thomas* Director
John R. Thomas

/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/ David R. Hubers* Director
David R. Hubers

<PAGE>

Signatures Capacity

/s/ Heinz F. Hutter* Director
Heinz F. Hutter

/s/ Anne P. Jones* Director
Anne P. Jones

/s/ Alan K. Simpson* Director
Alan K. Simpson

/s/ Edson W. Spencer* Director
Edson W. Spencer

/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>

CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 30
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>

IDS Strategy Fund, Inc.
File No. 2-89288/811-3956

EXHIBIT INDEX

Exhibit 9a: Copy of Transfer Agency Agreement dated Jan. 1, 1998

Exhibit 10: Opinion and Consent of Counsel

Exhibit 11: Consent of Independent Auditors

Exhibit 17: Financial Data Schedules

Exhibit 19a: Directors/Trustees Power of Attorney

May 28, 1998

IDS Strategy Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010

Gentlemen:

I have examined the Articles of Incorporation and the By-Laws of the Company and
all necessary certificates, permits, minute books, documents and records of the
Company, and the applicable statutes of the State of Minnesota, and it is my
opinion:

(a) That the Company is a corporation duly organized and existing under the
laws of the State of Minnesota with an authorized capital stock of
10,000,000,000 shares, all of $.01 par value, that such shares may be
issued as full or fractional shares;

(b) That all such authorized shares are, under the laws of the State of
Minnesota, redeemable as provided in the Articles of Incorporation of
the Company and upon redemption shall have the status of authorized and
unissued shares;

(d) That shares which were sold at not less that their par value and in
accordance with applicable federal and state securities laws were
legally issued, fully paid and nonassessable.

I hereby consent that the foregoing opinion may be used in connection with
this Post-Effective Amendment.

Very truly yours,

Leslie L. Ogg
Attorney at Law
901 S. Marquette Ave., Suite 2810
Minneapolis, Minnesota 55402-3268

LLO/lal

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 , 1998

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> IDS EQUITY VALUE CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 2271078184
<INVESTMENTS-AT-VALUE> 2738102499
<RECEIVABLES> 36691316
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2774967107
<PAYABLE-FOR-SECURITIES> 16756242
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578394
<TOTAL-LIABILITIES> 17334636
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2086839937
<SHARES-COMMON-STOCK> 64976362
<SHARES-COMMON-PRIOR> 36618200
<ACCUMULATED-NII-CURRENT> 2423991
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 196532833
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 471835710
<NET-ASSETS> 834929361
<DIVIDEND-INCOME> 57687771
<INTEREST-INCOME> 18825094
<OTHER-INCOME> 0
<EXPENSES-NET> 32363664
<NET-INVESTMENT-INCOME> 44149201
<REALIZED-GAINS-CURRENT> 422193012
<APPREC-INCREASE-CURRENT> 194604248
<NET-CHANGE-FROM-OPS> 660946461
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14592544
<DISTRIBUTIONS-OF-GAINS> 109070518
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24247788
<NUMBER-OF-SHARES-REDEEMED> 6191307
<SHARES-REINVESTED> 10301681
<NET-CHANGE-IN-ASSETS> 823212080
<ACCUMULATED-NII-PRIOR> 1350747
<ACCUMULATED-GAINS-PRIOR> 142616648
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11485241
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32606187
<AVERAGE-NET-ASSETS> 643907986
<PER-SHARE-NAV-BEGIN> 11.62
<PER-SHARE-NII> .32
<PER-SHARE-GAIN-APPREC> 3.30
<PER-SHARE-DIVIDEND> .30
<PER-SHARE-DISTRIBUTIONS> 2.09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.85
<EXPENSE-RATIO> .85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> IDS EQUITY VALUE CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 2271078184
<INVESTMENTS-AT-VALUE> 2738102499
<RECEIVABLES> 36691316
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2774967107
<PAYABLE-FOR-SECURITIES> 16756242
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578394
<TOTAL-LIABILITIES> 17334636
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2086839937
<SHARES-COMMON-STOCK> 149490591
<SHARES-COMMON-PRIOR> 129773835
<ACCUMULATED-NII-CURRENT> 2423991
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 196532833
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 471835710
<NET-ASSETS> 1921642595
<DIVIDEND-INCOME> 57687771
<INTEREST-INCOME> 18825094
<OTHER-INCOME> 0
<EXPENSES-NET> 32363664
<NET-INVESTMENT-INCOME> 44149201
<REALIZED-GAINS-CURRENT> 422193012
<APPREC-INCREASE-CURRENT> 194604248
<NET-CHANGE-FROM-OPS> 660946461
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25394091
<DISTRIBUTIONS-OF-GAINS> 262181189
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17906145
<NUMBER-OF-SHARES-REDEEMED> 22768273
<SHARES-REINVESTED> 24578884
<NET-CHANGE-IN-ASSETS> 823212080
<ACCUMULATED-NII-PRIOR> 1350747
<ACCUMULATED-GAINS-PRIOR> 142616648
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11485241
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32606187
<AVERAGE-NET-ASSETS> 1687983512
<PER-SHARE-NAV-BEGIN> 11.63
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 3.30
<PER-SHARE-DIVIDEND> .20
<PER-SHARE-DISTRIBUTIONS> 2.09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.85
<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> IDS EQUITY VALUE CLASS Y

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 2271078184
<INVESTMENTS-AT-VALUE> 2738102499
<RECEIVABLES> 36691316
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2774967107
<PAYABLE-FOR-SECURITIES> 16756242
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578394
<TOTAL-LIABILITIES> 17334636
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2086839937
<SHARES-COMMON-STOCK> 82407
<SHARES-COMMON-PRIOR> 146
<ACCUMULATED-NII-CURRENT> 2423991
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 196532833
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 471835710
<NET-ASSETS> 1060515
<DIVIDEND-INCOME> 57687771
<INTEREST-INCOME> 18825094
<OTHER-INCOME> 0
<EXPENSES-NET> 32363664
<NET-INVESTMENT-INCOME> 44149201
<REALIZED-GAINS-CURRENT> 422193012
<APPREC-INCREASE-CURRENT> 194604248
<NET-CHANGE-FROM-OPS> 660946461
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8643
<DISTRIBUTIONS-OF-GAINS> 105799
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 126503
<NUMBER-OF-SHARES-REDEEMED> 54137
<SHARES-REINVESTED> 9895
<NET-CHANGE-IN-ASSETS> 823212080
<ACCUMULATED-NII-PRIOR> 1350747
<ACCUMULATED-GAINS-PRIOR> 142616648
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11485241
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32606187
<AVERAGE-NET-ASSETS> 308597
<PER-SHARE-NAV-BEGIN> 11.64
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 3.29
<PER-SHARE-DIVIDEND> .31
<PER-SHARE-DISTRIBUTIONS> 2.09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.87
<EXPENSE-RATIO> .76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS A

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 866649239
<INVESTMENTS-AT-VALUE> 1428640995
<RECEIVABLES> 13220504
<ASSETS-OTHER> 2729378
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1444590877
<PAYABLE-FOR-SECURITIES> 4449600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131735
<TOTAL-LIABILITIES> 4581335
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 857082053
<SHARES-COMMON-STOCK> 24762410
<SHARES-COMMON-PRIOR> 21023248
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20935733
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 561991756
<NET-ASSETS> 547775953
<DIVIDEND-INCOME> 3786294
<INTEREST-INCOME> 3181583
<OTHER-INCOME> 0
<EXPENSES-NET> 18771111
<NET-INVESTMENT-INCOME> 11803234
<REALIZED-GAINS-CURRENT> 154471744
<APPREC-INCREASE-CURRENT> 336920376
<NET-CHANGE-FROM-OPS> 491392120
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 83,874,202
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16117055
<NUMBER-OF-SHARES-REDEEMED> 16805791
<SHARES-REINVESTED> 4427898
<NET-CHANGE-IN-ASSETS> 317721047
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 90647263
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7578435
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18936123
<AVERAGE-NET-ASSETS> 473885654
<PER-SHARE-NAV-BEGIN> 18.34
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 7.76
<PER-SHARE-DIVIDEND> 3.95
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.12
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS B

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 866649239
<INVESTMENTS-AT-VALUE> 1428640995
<RECEIVABLES> 13220504
<ASSETS-OTHER> 2729378
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1444590877
<PAYABLE-FOR-SECURITIES> 4449600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131735
<TOTAL-LIABILITIES> 4581335
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 857082053
<SHARES-COMMON-STOCK> 41530618
<SHARES-COMMON-PRIOR> 40838000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20935733
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 561991756
<NET-ASSETS> 892231500
<DIVIDEND-INCOME> 3786294
<INTEREST-INCOME> 3181583
<OTHER-INCOME> 0
<EXPENSES-NET> 18771111
<NET-INVESTMENT-INCOME> 11803234
<REALIZED-GAINS-CURRENT> 154471744
<APPREC-INCREASE-CURRENT> 336920376
<NET-CHANGE-FROM-OPS> 491392120
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 140309083
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3275267
<NUMBER-OF-SHARES-REDEEMED> 10293611
<SHARES-REINVESTED> 7710962
<NET-CHANGE-IN-ASSETS> 317721047
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 90647263
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7578435
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18936123
<AVERAGE-NET-ASSETS> 800646359
<PER-SHARE-NAV-BEGIN> 18.04
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> 7.57
<PER-SHARE-DIVIDEND> 3.95
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.48
<EXPENSE-RATIO> 1.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> IDS STRATEGY AGGRESSIVE FUND CLASS Y

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 866649239
<INVESTMENTS-AT-VALUE> 1428640995
<RECEIVABLES> 13220504
<ASSETS-OTHER> 2729378
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1444590877
<PAYABLE-FOR-SECURITIES> 4449600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 131735
<TOTAL-LIABILITIES> 4581335
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 857082053
<SHARES-COMMON-STOCK> 94
<SHARES-COMMON-PRIOR> 78
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20935733
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 561991756
<NET-ASSETS> 2089
<DIVIDEND-INCOME> 3786294
<INTEREST-INCOME> 3181583
<OTHER-INCOME> 0
<EXPENSES-NET> 18771111
<NET-INVESTMENT-INCOME> 11803234
<REALIZED-GAINS-CURRENT> 154471744
<APPREC-INCREASE-CURRENT> 336920376
<NET-CHANGE-FROM-OPS> 491392120
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 307
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 16
<NET-CHANGE-IN-ASSETS> 317721047
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 90647263
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7578435
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18936123
<AVERAGE-NET-ASSETS> 1730
<PER-SHARE-NAV-BEGIN> 18.40
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 7.77
<PER-SHARE-DIVIDEND> 3.95
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.22
<EXPENSE-RATIO> 0.88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

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:
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>

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 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.

<PAGE>

Dated the 7th day of January, 1998.

/s/ H. Brewster Atwater, Jr. /s/ William R. Pearce
H. Brewster Atwater, Jr. William R. Pearce

/s/ Lynne V. Cheney /s/ Alan K. Simpson
Lynne V. Cheney Alan K. Simpson

/s/ William H. Dudley /s/ Edson W. Spencer
William H. Dudley 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