IDS Strategy
Aggressive
Fund
1999 ANNUAL REPORT
(prospectus enclosed)
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 annual report includes a prospectus that describes in detail the Fund's
objective, investment strategy, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
AMERICAN
EXPRESS
Financial
Distributed by American Express Financial Advisors Inc. Advisors
<PAGE>
Corporate Climbers
All rapidly growing companies pass through various stages. During their middle
stage, they're known in the investment world as "mid-caps." Stocks of such
companies, which are the main focus of this Fund, offer investors an attractive
combination: the potential for above-average corporate growth without the
initial risks that are inherent in brand-new businesses.
IDS STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report 10
Financial Statements 11
Notes to Financial Statements 14
Investments in Securities 22
Federal Income Tax Information 35
1999 PROSPECTUS
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 5p
Past Performance 6p
Fees and Expenses 8p
Management 9p
Buying and Selling Shares 9p
Valuing Fund Shares 9p
Investment Options 10p
Purchasing Shares 11p
Sales Charges 14p
Exchanging/Selling Shares 18p
Distributions and Taxes 23p
Personalized Shareholder
Information 25p
About the Company 26p
Quick Telephone Reference 28p
Financial Highlights 29p
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1999
<PAGE>
From the Chairman
(photo of) Arne H. Carlson
Chairman of the Board
It is an honor for me to join the IDS Mutual Fund Group as chairman of the board
and chief executive officer for each of the funds. I have served for the past
eight years as governor of Minnesota and also
for the past 20 years as a constitutional officer responsible for the pension
investments made on behalf of government employees. My responsibility in the
upcoming years is to serve your interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation (AEFC), nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of AEFC
and for the services it provides to investors. Your financial advisor assists
you in financial planning, conducts regular investment reviews and responds to
your questions and needs. This is a very personal service that makes AEFC a
partner in your financial future. I know that AEFC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
(signature of) Arne H. Carlson
Arne H. Carlson
From the Portfolio Manager
(photo of) Louis Giglio
Portfolio Manager
IDS Strategy Aggressive Fund mounted a strong comeback during the second half of
the fiscal year to ultimately register positive results for the April 1998
through March 1999 period. For the 12 months, the Fund's Class A shares produced
a total return of 4.68%. (A portion of the return came in the form of a capital
gain that was paid to shareholders in December 1998 and reduced the Fund's net
asset value by the same amount at that time.)
IDS STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
Thanks to a favorable investment environment, the stock market, though quite
volatile, made its way to higher ground by the middle of last summer. It was
then that a second bout of the "Asian flu" (the financial crisis that ran
through Southeast Asia in the fall of 1997) hit, this time in Russia and Latin
America. Already fearful that profits of U.S. companies would decline as a
result of reduced exports to Asia, investors took this latest outbreak a sure
sell signal. As a result, the Dow Jones Industrial Average fell by nearly 20%
from mid-July to early October.
But, with the remarkable resilience that has been its hallmark, the market soon
got on its feet and began to regain the lost ground. Supported by three
reductions in short-term interest rates by the Federal Reserve, stocks not only
recouped their losses by autumn's end but went on to reach an all-time high in
late March.
TECHNOLOGY IS BIGGEST EXPOSURE
Consistent with the pattern of recent years, stocks of the very largest
companies ("large-caps") most often led the market's resurgence. That worked to
the disadvantage of this Fund, which concentrates on small- and mid-cap stocks.
The biggest contributors to the Fund's gain were technology-related stocks,
which because of additional investments and price run-ups among several
holdings, accounted for more than
50% of the portfolio at times. Most of the rest of the investments were spread
among consumer, especially health care, and financial services stocks.
As for changes to the portfolio, I sold some telecommunications equipment and
financial services stocks that appeared especially vulnerable to weakness in
foreign economies. I also eliminated holdings among oil-services stocks, which
struggled in the wake of falling oil prices for most of the 12 months. One
benefit of those sales was that they greatly reduced a capital gain that had
built up in the Fund and would have resulted in a larger taxable distribution to
shareholders at the end of 1998.
At period-end, there were about 90 stocks in the portfolio (compared with about
100 a year earlier), which reflects my view that a more concentrated portfolio
has better potential for gain. The mix of the holdings is largely unchanged,
though; the largest exposure is to the technology and health care sectors, which
continue to offer the best earnings-growth potential, followed by financial
services.
(signature of) Louis Giglio
Louis Giglio
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1999
<PAGE>
Fund Facts
<TABLE>
<CAPTION>
===================================================================================================
Class A -- 12-month performance
(All figures per share)
<S> <C>
Net asset value (NAV)
March 31, 1999 $22.88
March 31, 1998 $22.12
Increase $ 0.76
Distributions -- April 1, 1998 - March 31, 1999
From income $ --
From capital gains $ 0.26
Total distribution $ 0.26
Total return* +4.68%**
===================================================================================================
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $22.05
March 31, 1998 $21.48
Increase $ 0.57
Distributions -- April 1, 1998 - March 31, 1999
From income $ --
From capital gains $ 0.26
Total distribution $ 0.26
Total return* +3.88%**
===================================================================================================
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $23.00
March 31, 1998 $22.22
Increase $ 0.78
Distributions -- April 1, 1998 - March 31, 1999
From income $ --
From capital gains $ 0.26
Total distribution $ 0.26
Total return* +4.74%**
</TABLE>
* The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
IDS STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
The 10 Largest Holdings
<TABLE>
<CAPTION>
===================================================================================================
Percent Value
(of net assets) (as of March 31, 1999)
===================================================================================================
<S> <C> <C>
Cisco Systems 6.48% $91,629,857
Univision Communications Cl A 3.00 42,499,999
Knight/Trimark Group Cl A 2.84 40,200,000
Network Associates 2.60 36,824,999
America Online 2.48 35,039,999
Sterling Commerce 2.39 33,824,999
McKesson HBOC 2.33 32,999,999
VeriSign 2.29 32,339,999
Tyco Intl 2.03 28,699,999
Outdoor Systems 1.91 26,999,999
</TABLE>
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
The 10 holdings listed here
(Pie Graph)
make up 28.35% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1999
<PAGE>
Making the Most of the Fund
Build your assets systematically
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Accumulated Average Your average
shares* market price cost per share
per share
Jan Feb Mar Apr May Jun
$20
$18
$16
$15 42.25 $15 $14.20
$14
$12
$10 $10
$5
$15
$10 $10
$8 $8 $10 85.0 $7.66 $7.05
$5 $5 $5
$15
$10 $10
$8
$7 103.5 $6.50 $5.80
$6
$5
$4 $4
$100 invested per month. Total invested: $600
*Shares purchased is determined by dividing the amount invested per month by the
current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. You potentially can increase your
investment if, like most investors, you reinvest your dividends and capital gain
distributions to buy additional shares of the Fund or another fund.
IDS STRATEGY AGGRESSIVE FUND (This annual report is not part of the prospectus.)
<PAGE>
The Fund's Long-term Performance
How $10,000 has grown in IDS Strategy Aggressive Fund
$60,000
$50,000
$40,000 S&P 500 $39,781
Stock Index IDS Strategy
Aggressive Fund
Class B
$30,000
Russell Midcap
$20,000 Growth Index
$10,000
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99
<TABLE>
<CAPTION>
===================================================================================================
Average annual total return (as of March 31, 1999)
1 year Since inception (A &Y) 5 years 10 years (B)
===================================================================================================
<S> <C> <C> <C> <C>
Class A -0.55% +18.90%* --% --%
===================================================================================================
Class B -0.12% --% +16.36% +14.81%
===================================================================================================
Class Y +4.74% +20.54%* --% --%
</TABLE>
* Inception date was March 20, 1995.
Assumes: Holding period from 4/1/89 to 3/31/99. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $17,689. Also see "Past Performance"
in the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the S&P 500 Index and the Russell Midcap
Growth Index. Sales charges are not reflected in the performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the applicable sales charge up to a maximum of 5%.
This was a period of widely fluctuating security prices. Past performance is no
guarantee of future results.
S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. However, the S&P 500 companies are
generally larger than those in which the Fund invests.
Russell Midcap Growth Index, an unmanaged list of common stocks, measures the
performance of the 800 smallest companies in the Russell 1000 Index,
representing approximately 35% of the total market capitalization of the Russell
1000 Index.
(This annual report is not part of the prospectus ANNUAL REPORT -- 1999
<PAGE>
The financial statements contained in Post-Effective Amendment #34 to
Registration Statement No. 2-89288 filed on or about May 26, 1999, are
incorporated herein by reference.
<PAGE>
Federal Income Tax Information
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below were reported to you on Form 1099-DIV,
Dividends and Distributions. Shareholders should consult a tax advisor on how to
report distributions for state and local purposes.
IDS Strategy Aggressive Fund
Fiscal year ended March 31, 1999
Class A
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.25816
The long-term capital gains distribution is divided into two rate categories:
28% -- $0.10670 and 20% -- $0.15146.
Class B
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.25816
The long-term capital gains distribution is divided into two rate categories:
28% -- $0.10670 and 20% -- $0.15146.
Class Y
Capital gain distribution taxable as long-term capital gain.
Payable date Per share
Dec. 23, 1998 $0.25816
The long-term capital gains distribution is divided into two rate categories:
28% -- $0.10670 and 20% -- $0.15146.
See accompanying notes to investments in securities.
(This annual report is not part of the prospectus.) ANNUAL REPORT -- 1999
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
This page left blank intentionally
<PAGE>
AMERICAN
EXPRESS
Financial
Advisors
IDS Strategy Aggressive Fund
IDS Tower 10
Minneapolis, MN 55440-0010
S-6381 G (5/99)
<PAGE>
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) There are pictures, icons 2) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
